A Radical Oversupply Of Mortgage Debt
It’s Friday desk clearing time for this blogger. “Debbie Cooley-Guy bought the home in a suburb west of Tampa for $637,000 in 2002. Seven years later, after the economy tanked, she sold it for less than she owed on her mortgage to avoid foreclosure. As a mortgage loan originator herself, she should have known the pitfalls, but she said she was caught up in the boom. ‘I used to look at people like me and think, ‘How did you let this happen?’ she said. ‘In hindsight, I had set myself up so well. Just because you can afford things, it doesn’t mean you should buy them.’”
“Just a few years later, she’s back in a new, smaller home, one of America’s growing ranks of ‘boomerang buyers.’ John Councilman, president of the Association of Mortgage Professionals, said a wide swath of people with past credit problems are seeking mortgages, not only foreclosures or short sales. ‘We have a lot of people with issues and many are coming back into the market.’”
“It is sizzling like never before, since the beginning of time — by which I mean since the 2009-2010 Arizona real-estate crash. So is an ‘exceptional’ real-estate market in a state wallowing in a so-so economic recovery a plain, old good thing? Or is it a harbinger, in some ways, of the return of conditions that caused the crash?”
“As reported by Stephen D. Oliner, a former associate director in the Division of Research and Statistics at the Board of Governors of the Federal Reserve System, 40 percent of government-backed mortgage loans go through programs that are not as firm about qualifying as Fannie and Freddie. The median credit score for borrowers going through the Federal Housing Administration, for example was in the lower third of all credit scores in the U.S. Stress tests indicate that in a crash similar to what happened six years ago, 25 percent of those FHA mortgages would go into default.”
“That’s not something to lose sleep over, of course. Not tonight, anyway. But some powerful voices are arguing for a loosening of qualifying standards.”
“The Bay Area’s summer real estate market is shaping up as the busiest in years. In Silicon Valley and the East Bay, however, median prices fell just enough to make some agents and buyers wonder if a seasonal cooling was on hand. Deals can be found if one just looks hard enough, said agent Jennifer Branchini, past president of the East Bay Association of Realtors. This summer she has helped some buyers to ‘negotiate below asking price, which is actually kind of fun for a change.’”
“Her explanation for the change: ‘You’ve got sellers that are overzealous and thinking they can price their house way above, because, hey, some other house sold for some high amount, so why shouldn’t theirs sell for even higher? And by the end of the day, the consumer, the buyer, is saying, ‘No! You’re already at the top of the market,’ so you’re seeing those prices come down a little bit.’”
“It’s a renter’s market in Calgary for mid- to higher-priced properties as demand for rental accommodation drops in a weakened economy. ‘If you want to drop your prices, just go ahead, don’t be scared, having a lower rent is better than no renter,’ said Bany Declair, who rented out her three-bedroom townhouse in Marda Loop for $2,950 per month last year. She’s had to drop the rent $700 and offer an incentive — the first month for free.”
“Landlords will have to lower their prices as supply goes up. ‘Especially the ones that had their prices stretched upward, because they could, because there was very limited supply for the past few years so those prices did increase,’ said Darren Paddock, who runs the website RentFaster. ‘if you look downtown there’s still a lot of cranes in the sky — there’s still a lot of units coming and they will be pushed into the rental market.’”
“Until the beginning of 2014, Dhruv Kumar had a decent real estate brokerage business in Noida, near New Delhi. Suddenly, things started to fall apart. ‘Today, bookings in the Noida market are down 70-80% and my business is in tatters,’ he said. ‘The days when a builder used to sell 500 or 1,000 apartments in a month are gone,’ said Kumar, who even after diversifying into three different businesses today makes only 50% of what he used to earn selling homes.”
“Unsold housing in the top eight cities rose to 1,017 million square feet in the June quarter from 942 million sq. ft. in the previous quarter. Unsold inventory in the NCR rose 7% year-on-year to 325.9 million sq. ft. and may take 68 months to be sold, based on the current pace of buying. Unsold inventory rose 20% in Mumbai to 201.1 million sq. ft. and will take 45 months to sell.”
“A mini debt crisis in northern China is exposing cracks in a financial pillar of the country’s economic revival plan: the $430 billion loan-guarantee industry. ‘We see a lot of these companies in China, and we worry about the underlying fundamentals,’ said Sally Yim, senior credit officer with Moody’s Investors Service in Hong Kong. ‘You are bound to see more of these defaults, or troubles from these type of small guarantee companies.’”
“If lenders suspect local governments will not bail out guarantee companies in times of trouble, the broader economy becomes the loser as businesses are starved of finance. ‘This is unbelievable,’ said an executive of a trust company. ‘Who would dare to believe in the guarantee industry in the future? What’s the point of having this industry?’”
“Between 2002 and 2015, the mortgage books of National Australia Bank, ANZ, Commonwealth Bank and Westpac grew by 388%, 435%, 475% and 554% respectively. Put another way, the big four’s mortgage books escalated from a combined $242bn to a whopping $1.13tn, surging at such a consistent rate it would make Bernie Madoff proud.”
“The next time you’re watching an auction in Sydney or Melbourne, wondering where all these buyers managed to muster up so much cash, chances are they have a domestic retail bank prepared to lend them a colossal sum of debt using new equity in their existing property portfolio as collateral that didn’t exist just 12 months ago.”
“By cutting the cash rate to the lowest point in a long time, the RBA has simply furthered the Ponzi scheme running rampant in Sydney and Melbourne, which dominates Australia’s housing market in terms of size and value. If either of these two major housing markets hits a brick wall, it will burst the national housing bubble. Policymakers and the public, unfortunately, will come to realise there never was a dwelling shortage – rather, a radical oversupply of mortgage debt being the real culprit for abnormally-high housing prices.”
“Bitter former homeowners sometimes leave properties in poor condition and take things such as appliances, pipes and even cabinetry with them when they leave, said Joanne Finochio of Better Homes and Gardens Rand Realty in New City. She recalled a foreclosure in New City where the homeowners had taken the heating system, the appliances, some bushes and even the front door.”
“Finochio predicted the current high rate of foreclosures will last at least another two years. ‘They’re not even counting the people who are behind on their mortgage; when does that hit?’ she said.”
‘NYC’s Biggest Developers & Investors Talk Mixed-Use Residential Properties’
In terms of financing, talk about the market for mixed-use rental apartments versus mixed-use condos.
GG: With land going for north of $1,000 a square foot, it’s very hard to build rentals. A lot of the families that have owned [land] for a long time will often build rentals. But if you’re actively buying and building today, the economics speak very clearly to condos.
AR: At 70 Pine Street, which is a million-square-foot, mostly rental building, it’s going to be a slow return, but we’re doing it with another family, and it’s a long-term investment. Regarding land prices, with rental jobs we’re teaming up with other families who own the land. We did the Chelsea Landmark with the Locker family, we’re doing it right now at 210 Livingston in Brooklyn with the Benenson family. There are families who own big pieces of land that they don’t necessarily want to develop themselves.
Michael Shah: Or have the expertise…
AR: Or need help on the equity side, or all the above. Or can’t sign guarantees, or get construction loans.
MS: Or don’t want to.
AR: And so it’s a great opportunity for us. We never own, we don’t land bank. In previous cycles, we have seen very deeply financed entities completely vanish, getting wiped out on owning land in a downturn. We’re very conservative.
Michael Weiser: So you are not land banking in the process?
AR: No.
MS: Land banking at a peak is generally poor strategy.
MW: Don’t you find, though, that lenders are factually holding back on the financing for condos? They’re looking at exit prices. They’re getting concerned, certainly with hotels as well. That’s going to ultimately lead to more people being forced to look at rentals, and ultimately new rentals. Everybody wants to do a rental, but like you said, it just doesn’t make sense.
“it’s going to be a slow return, but we’re doing it with another family, and it’s a long-term investment. ”
Wow, thinking long term in real estate?????
The longer the term, the larger the personal financial losses. At least in terms of buying and financing a depreciating asset like a house at a grotesquely inflated price.
‘Bank repossesions on the national level jumped 81 percent from a year ago, to 46,957 properties in July, according to the report. A total of 44 states, including New Jersey, posted increases in bank repossessions in July over a year ago.’
‘But the state bucked another national trend: falling foreclosure starts. While properties starting the foreclosure process decreased nationwide in July, New Jersey posted a 76 percent increase year-over-year on that front.’
‘New Jersey’s foreclosure rate stood at one in every 520 housing units in July, the third highest rate among the states. Only Maryland and Florida posted higher foreclosure rates than New Jersey last month, according to the report.’
‘The Atlantic City Metropolitan area continues to lead the nation in foreclosure activity, with a rate four times the national average. “In a sense it’s worsening because the foreclosure numbers are getting higher, but I don’t see a major shift in trend,” said RealtyTrac Vice President Daren Blomquist. “In Atlantic City, we are continuing to see activity up across the board.”
‘In Atlantic County starts were up almost 72 percent from last July. “That is indication that Atlantic City is in for a tougher and longer haul back to a healthy housing market,” Blomquist said. It’s impossible to predict when the market might return to normal in Atlantic County, he said.’
“Since you are still ramping up, we don’t quite know what the peak is,” Blomquist said. “We believe some of the repossessions are still tied to the last crisis, while starts are more likely tied to recent economic problems.”
‘Both counties saw big jumps in the number of homes seized by lenders in July, continuing a recent trend, RealtyTrac said. Broward, had 1,324 completed foreclosures, more than double the 500 from a year ago. It was the sixth consecutive month with an annual increase. Palm Beach County had 714, up 66 percent from July 2014, the third increase in the past four months.’
‘The median sales price of homes sold in Volusia last month was $150,000, the highest in seven years. During the downturn, median sales prices for homes fell as low as $85,000 in Volusia and as low as $105,000 in Flagler, according to Realtor association data, which does not include new homes.’
‘The July home sales numbers were issued a day after a national report found Flagler in July had the nation’s highest foreclosure rate, while Volusia had the 50th highest.’
“I was shocked to see the RealtyTrac (foreclosure) numbers,” said Flagler County Commissioner Barbara Revels, who owns Coquina Real Estate & Construction in Flagler Beach. “I don’t believe the continued high foreclosure numbers are totally indicative of our economy in Flagler County.”
‘RealtyTrac reported 1 in every 192 homes in Flagler and 1 in every 429 homes in Volusia were in some stage of foreclosure last month.’
‘Jonita McCree, a Realtor in Palm Coast, said she believes home prices will keep climbing, “but I don’t think it’s going up as fast or as high as people (sellers) think it should.”
“according to Realtor association data, which does not include new homes.’”
Look around a bit. Median new housing prices are lower than resale housing prices anywhere in the mid-atlantic and New England.
use 2015 and the story changes to a losers tale
whoops meant 2005
Freudian slip.
‘How long can Nashville’s growth boom continue? As The Tennessean’s growth and development reporter, that’s a question I often get asked. Though I lack a crystal ball that can predict the end of the boom with pinpoint accuracy, there are certain indicators to watch.’
“If we didn’t have 1,500 people moving to town every month, we won’t have the job growth that we’re having,” said Ralph Schulz, CEO of the Nashville Area Chamber of Commerce. “Before you had to have the jobs and the population came. That’s not the case anymore. Now it’s workforce, then jobs.”
‘Moody’s Analytics economist Brisson isn’t worried yet about the Nashville area’s labor force being too tight to where it slows down growth. “Once we see the wages starting to rise more significantly, that’s when you know the labor force is getting stretched too thin.” he said. “There’s no time-frame on when that would happen (in Nashville). It doesn’t seem to be happening yet.”
1500 Elvis impersonators per month !
Wow
Turnover still brisk here,but w no appreciation= weird
Who are the biggest employers in Nashville, besides state and local government? Is it another “meds and eds” city? I see from the internet that Vanderbilt University employs over 22,000 people, which works out to more than three employees per undergraduate student.
From my last visit to my alma mater, which is not in Nashville, it’s clear that hundreds of millions of dollars had been spent on facilities, including some of questionable need. Yet the fundraising juggernaut goes on.
I have to wonder if 1,500 people a month are moving to a city with flat pay and no new jobs.
1500 people are month are sick to death of one of the insane bubble markets and will move just about anywhere to get away from it. That’s how I wound up in TN and I am making my own job market. I keep meeting fellow CA refugees here. Most agree that you couldnt pay us to go back regardless of what happens with the job market. There comes a point where things become so divorced from reality that you don’t care where you go as long as its away. My standard of living has risen dramatically since leaving that libtarded scamfest. I hope CA dries up and blows away.
Lots of tourism and entertainment, but not enough to support 1500 Elvis impersonators each month.
Billy Ray’s achy-breaky heart single-handedly destroyed country music in 1992. His daughter is doing her best to single-handedly destroy pop music now (not that it was worth saving to begin with.)
‘Single-family home construction made a strong move higher in July, but it was not enough to reverse a new dynamic in today’s housing market; multifamily construction and demand are leading the recovery. After a decade of underbuilding apartments, cranes are scattering city skylines, and the numbers are truly staggering.’
‘Multifamily construction activity is above historical averages in more than one-quarter of the nation’s largest metropolitan housing markets, according to Trulia. In New York, activity is four times the normal average, in Boston, triple the average, and in Newark, New Jersey, double the average.’
‘With so many new units coming on the market, however, it begs the question, are we overbuilding? “I don’t think we have a bubble,” said Hepp. “I think the demand is still there, and we are going to see more household formation among millennials.”
‘Millennial demand is actually still to come, as the economy improves and more young people do form their own households. The main concern now is that as they do look to rent, there is very little affordable supply available. Much of the new construction has been in luxury apartment rentals. Those are already starting to cool in markets such as Washington, D.C., which saw thousands of new luxury units come online in the last five years.’
‘Luxury rents aren’t exactly plummeting, but landlords are starting to offer more concessions, such as a free month’s rent to start. That is not at all the case in the nonluxury market.’
‘Economic forecasters have throttled back their ambitious predictions for growth in Montana as the commodities boom, which provided a huge spark to the state’s economy, slowed way down in the past year.’
“The question is, what do we do after the commodity boom is over?” asked Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana. “And it is over. It helped juice the Montana economy, but it’s over now.”
‘Commodities that are important to Montana include lumber, barley, beef, wheat, copper, lead, zinc and oil. The prices for all are well below their high, and the price of barley, wheat, oil and copper are nearing all-time lows.’
“Commodity prices are coming home to roost for Montana commodity producers,” Barkey said.’
“These forces that have been helping to propel the economy ahead are going to settle down into a less frothy marketplace,” Barkey said. “The economy is still going to perform well, but not quite as well as we had predicted a year and a half ago. The U.S. as a whole is not hitting growth targets.”
‘Barkey warned that as oil prices continue to plummet, the state may suffer the consequences. “Montana is more exposed to falling oil prices because there’s a lot of energy development,” he said.’
‘Paul Polzin, director emertis of the BBER, said there is a misconception among the public, probably because of misconceptions in the media, that falling oil prices have caused a steep drop in oil production. He pointed out several headlines in national media outlets that drew attention to the so-called “oil bust.” However, he said that huge gains in production efficiency have actually led to an increase in oil output in the Bakken oil fields.’
‘A report from the North Dakota Department of Mineral Resources showed that for most companies, the “break-even price” of oil, or the point at which new drilling would cease, is still well below the price of oil per barrel.’
‘The price at which production from existing wells would no longer be economically feasible is much lower still, at $15 per barrel. The price of a barrel of light sweet crude oil hit a six-year low of $42.26 on Thursday. “There has been no dramatic decline in oil production, despite a decline in price,” Polzin said.’
Funny as the fracked b/e was in the $60s
Who’s drilling regular hole wells and getting any oil ?
‘The price at which production from existing wells would no longer be economically feasible is much lower still, at $15 per barrel.’
Crude prices have much further to fall yet. Worse yet, US producers have to compete with OPEC at $6/bbl.
‘U.S. oil prices headed for their eighth consecutive week of falls on Friday, the longest losing streak since 1986, after a sharp drop in Chinese manufacturing increased worries over the health of the world’s biggest energy consumer.’
‘Activity in China’s factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled, adding to worries about lower consumption of crude in the second-biggest oil user.’
“The market is stuck in a relentless downtrend,” said Robin Bieber, a director at London brokerage PVM Oil Associates. “The trend is down - stick with it.”
‘In late 1985, oil prices slumped to $10 from around $30 over five months as OPEC raised output to regain market share following an increase in non-OPEC production.’
“Weighing on prices is the continued ample supply with crude oil builds in the U.S. and OPEC pumping at record levels,” said Michael Poulsen at Global Risk Management. “Fear of slowing growth in China is increasing.”
‘Technical charts for almost all the big oil futures markets looked bearish, PVM’s Bieber said. U.S. crude inventories continued to rise last week, as imports rose and shale production fell more slowly than anticipated, despite dropping prices.’
‘At a meeting in Phnom Penh yesterday, officials from several ministries met with representatives from the National Bank of Cambodia and private developers, to discuss rising concerns of a property bubble in the real estate market.’
“So far, the construction and real estate sectors have not been seen as [having] any risk, but we do not know where the risk could happen because we do not have enough information,” said Mey Vann, director of the Department of Industry and Finance at the MEF.’
‘Concerns that property speculation was artificially driving up prices was brushed off yesterday by Huy Nara, director general of the General Department of Construction at the Land Management Ministry, who said the problem was waning.’
“The speculation issue seems to be down to normal situation right now, unlike before,” he said. “This issue could happen anywhere, not only in Cambodia.”
‘Stephen Higgins, managing partner at investment firm Mekong Strategic Partners, was more cautious about the health of the industry. Higgins said that while there were “good, bankable” projects in the market, there are “quite a few marginal ones around at the moment”.
‘He added that there were already a lot of apartments sitting empty in the market, and that it would take a “fairly courageous” investor to consider investing in the slew of mega-projects recently announced. “I think you’d be hard pressed to say that the fundamentals support current valuations in Phnom Penh,” Higgins said.’
“I don’t think the MEF and MLMUPC would have had the meeting [yesterday] if they didn’t have at least some concern about a bubble.”
Huy Nara likely has a crash pad in Vancouver or Sydney that he will be making use of in the future. If these idiots aren’t careful, extreme political violence may be revived. Maybe the thinking is that peasants would discard ideology for the chance to participate in a glorious asset bubble; that’s the Chinese strategy.
Virginia Housing Demand Falls 29% Statewide Since 2013
http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv
‘Elizabeth Warren likes to refer to financial regulators as “cops on the beat.” If that’s the case, we’re having a cop shortage.’
‘Numerous high-level positions at multiple federal agencies overseeing the banks have gone unfilled since Republicans took over the Senate. This increases the power of habitually more conservative and bank-friendly staff, creates delays on the still-unfinished Dodd-Frank reform law and has stymied positive policy shifts. Given election-season pressures and ever-present gridlock, there’s only a short window of action before these key regulatory positions remain vacant for the rest of the Obama presidency.’
‘So what is the effect of all these vacancies? First of all, there remains plenty of unfinished business in Dodd-Frank rulemaking. According to law firm Davis Polk & Wardwell, 143 of the 390 total rules in Dodd-Frank, over 35 percent of the total, have yet to be finalized. Vacant seats reduce the ability to complete those rules.’
‘And then there are the changing policy concerns of short-timers waiting around at the financial regulators for their replacements. Luis Aguilar at the SEC is a good example. For a year or so, Aguilar joined Kara Stein in denying waivers to big banks for automatic penalties incurred when they commit fraud. This week, Citigroup, which the SEC fined $180 million on charges that it defrauded investors in two hedge fund subsidiaries, sought the same kind of waiver. And Republican Michael Piwowar actually agreed with Stein in dissenting from granting the waiver. But Aguilar changed his position, voting with the majority to issue it.’
‘There’s no official explanation for why Aguilar, who was staunchly opposed to removing consequences for fraudulent banks, reversed this viewpoint. But if he’s looking for his next job after the SEC, helping get banks off the hook might look good on a resume for Wall Street.’
‘There’s never a good time for a backlog of empty seats at the financial regulators. But with foreclosure filings inching up for the last five months, bubble-era states like Florida showing inflated home prices and the return of the private-label mortgage-backed securities that drove the financial crisis, fears of a regulatory apparatus asleep at the wheel are justified, if at a lower level than 2008.’
‘And that just covers the concerns of the last crisis. There are other trouble spots out there, from high leverage in energy-sector loans and rising defaults to instability in China and emerging markets infecting domestic financial firms. The shadow banking sector has still yet to be tamed by any rulemaking or supervision. The distortions and power shifts caused by vacancies make it difficult for an already-stressed regulatory apparatus to deal with fast-moving changes and tamp down threats to safety.’
‘Unfortunately, there’s not much reason to believe that this will get worked out.’
I wonder where a fake Indian gets 10 million?
Chief Caitlyn
‘Home sales are off to a sizzling start as the busy summer season gets under way. While that’s welcome news for sellers, some buyers are finding their house hunts challenging.’
“Very frustrating,” said Michelle Chapa, who needs to find a home and get moving now. She’s look at dozens of houses and even put in offers. “There’s a lot out there,” she said, “but it pretty much comes on, comes off (the market) the same day with multiple offers on the table that I am competing with.”
‘The competition is fierce. Updated homes priced at $250,000 and less are in big demand, according to Monique Bordelon, Chapa’s realtor. “One time she was one of 11 buyers, one of 11,” Bordelon said. “So, the people who won, they were cash buyers who came in above list price. And, if you’re a cash buyer, you don’t have an appraiser to worry about.”
‘Both Bordelon and the San Antonio Board of Realtors say most sellers are getting close to their asking price as the market sizzles. Last month, 2574 homes were sold. That’s a nine percent increase over the same time a year ago. And, for the first time, the median price busted the $200,000 mark at $202,500, according to SABOR. That’s 10 percent more than last year.’
‘Inventory is up slightly and at its highest for the year. With interest rates still attractive, the market is expected to be strong all summer. “For the rest of summer, I expect it to be just firecracker hot,” Bordelon said.’
‘The booming housing market in Dallas has started pricing some of the poorest residents out of their homes. Some advocates for ending homelessness worry that a rising number of expensive rentals will push low-income families onto the street.’
“We’ve got a surplus of luxury housing and a dearth of affordable housing. We have to balance that out,” said Jay Dunn, president of The Bridge.’
‘Look under a highway overpass spanning a bare stretch of land and you might see a tent or two pitched there. Under some overpasses, a sea of tents seem to make up small cities. Nearly 100 people have been living under the Interstate 45 overpass along Louise Avenue, Dawson Street and Hickory Street. It’s the largest and most visible of the tent cities in Dallas.’
‘Even before looking at long-term housing solutions, the group is looking at ways to improve the living circumstances in tent cities. The Dallas Police Department’s crisis intervention unit regularly visits the sites with a cleanup crew.’
‘They suggest putting dumpsters and portable toilets in the larger homeless encampments would cost the city less money and would create a cleaner and more sanitary area for homeless people to live.’
Poor people in Dallas? I thought the streets in Dallas were paved with gold.
No, that’s California:
Contra-Costa (Ctl. Cty.) $746,040 $839,910 $792,240 MoM -11.2% YoY-5.8%
http://www.car.org/newsstand/newsreleases/2015releases/july2015sales
Yesterday I was talking with a UHS in Dallas who told me prices were being cut:
4,134 properties found Dallas, TX Real Estate and Homes for Sale
http://www.realtor.com/realestateandhomes-search/Dallas_TX/type-single-family-home,condo-townhome-row-home-co-op,multi-family-home,mfd-mobile-home
1,338 properties found Dallas, TX Price Reduced Homes for Sale
http://www.realtor.com/realestateandhomes-search/Dallas_TX/type-single-family-home,condo-townhome-row-home-co-op,multi-family-home,mfd-mobile-home/show-price-reduced
Frisco, TX Housing Prices Crater 12% YoY
http://www.movoto.com/frisco-tx/market-trends/
‘As home prices rise ever higher in Los Angeles, some are beginning to wonder if the region is in another housing bubble, one that’s ready to burst. Real estate blogs add to the hysteria by pointing to the most ridiculous listings, the million-dollar bungalows in need of a complete renovation, the $3-million teardowns. But the data suggest that the market is not, in fact, on the brink of collapse.’
‘Even though Los Angeles is one of the least affordable cities in the U.S., all factors indicate that it is not in a housing bubble. Of course the bull market will end eventually, but that doesn’t mean we’re heading for a devastating crash, like in 1990 or 2007. Whether you should put up a million bucks for that bungalow is another story.’
‘William Yu is an economist at the UCLA Anderson School of Management.’
The Anderson School is never wrong.
I think my neighbor fired the contractor who was pulling up the roof inspecting for termite damage. Probably a contingency inspection and repair to complete the sale of the house.
They found more damage than neighbor wanted to fix ?
I did here the words ” we are done here go home” and ” many different opinions on what needs to be done”
It was spoken rather loudly hard not to over hear….
They priced too high and it lingered too long on the market now they are getting asked for repairs ?? That’s one of the tricks around here make a full price offer then make sellers repair everything or kick back 20K or more for everything.
Termites. My house had lots of termite damage on patio cover and balcony which I had fixed or fixed myself, termites are everywhere.
As i threw the bad wood in a dumpster Vietnamese landlords asked if they could have it to repair their rentals. I said yea go for it . Fancy gold chain wearing guys 2 of them who were friends of my Vietnamese neighbor a regular working guy with a fantastic koi pond in his back yard.
Expensive automobile and home repair quotes are often met with angry reactions.
‘Developer Don Peebles is pulling out of an ultra-luxury condo project he had planned for an oceanfront property in Miami Beach.’
‘Peebles has put the small lot at 6747 Collins Ave. on the market for an undisclosed price, a spokeswoman confirmed Tuesday. The original plan for the project, called the Bath Club Estates, was to build a 15-story tower with just 13 units, including a 9,000-square-foot penthouse marketed for $50 million.’
‘But spokeswoman Adriana Aragon said that Peebles ultimately decided the North Beach lot, which has less than an acre of land, was too small.’
‘Property records show that a company now controlled by Peebles paid $4.6 million for the Bath Club Estates land in 2010. It’s one of the last vacant oceanfront lots in Miami Beach.’
‘The developer has previously expressed concern that Miami’s real estate market is cooling. “This market is in for a leveling off, where it will get quiet. … Projects under construction will be built, but then there will be a slowdown,” Peebles said at a conference in June, according to the Real Deal.’
Oh, I weep for Debbie Cooley-Guy. Her story is so sorrowful that I’ll post more of it:
2002: DCG is making $250/year in Florida real estate, hubby making $150K/year with trucking company.
2002: The couples owns two vacation homes, $100K retirement, $60K cash.
2002: DCG buys a 3500 sq ft Key West style home for $637K, with $120K down. Wide sweeping porch, lagoon view, 12-ft X-mas tree.
2005: DCG’s office becomes quiet… late in the year, realtors suspect something is wrong with the market.
2006: Home is appraised at 1.2 mil. DCG takes out $100K heloc to start her own origination business.
2008: Market crashes, DCG makes $150K.
2009: DCG makes $38K, hubby’s business folds. They have to cash in the retirement savings and live on credit cards.
2009: On a “dark January day” (in Florida), a tree branch knocks off an outdoor railing. DCG is a sad panda.
2009: They short sell for $598K to break even on the house, still owe $60K for the heloc. DCG had a job as an underwriter. They rent, pay bills, rebuild credit.
2014: DCG saved enough for a $225K 3/2 2200 sq ft home 20 miles away. FHA loan. High ceilings, pool, canal view. But it’s not her dream home. She still has sads over it.
2015: The whole ordeal has made her a better listener.
A classic tale
Can you report on your hood
22151 has brisk turnover,but no appreciation
Sure about that?
http://files.zillowstatic.com/research/public/Zip/Zip_Turnover_AllHomes.csv
In my hood, the name of the game is reno flips.
4 years ago, the ranch houses on Zillow were clearly multiple-occupant, trashed and stuffed with junk. The embarrassing pictures were posted for all to see. (They were worse in person.)
Now, the people and their junk are gone. Almost all the inventory has been bought on the sly and then renovated with products straight outta Home Depot. Main floor gets a standard makeover, basement gets a bath/bed so it can be rented out, yard is upgraded with goodies like refinished decks and walkways and new sod. Every house is empty, or staged with rental furniture. (Stagers love to trick out the small bedroom as a nursery.)
Whoever is buying these houses is wowed like crazy, because they are paying premium prices for these reno. They sell for 30% more than my house did.
Doubling down in 2006 was a real bad move. But who at that time would have told her that? Right up until the crash, anyone here who spoke out about a bubble, or who simply suggested that prices wouldn’t keep rising and might fall, risked being the butt of jokes or worse. I remember the expressions on some people’s faces when I opened my mouth. It was the ultimate heresy in a culture where asset-based wealth had become God.
It doesn’t say exactly where she bought in 2002 (maybe Westchase), but I’m guessing some dull gated community with big houses and zero culture.
‘In a falling market, renters know that they should be able to get rent at or below the X-Value. The X-Value, generated by SRX Property, uses computers and comparable market analysis to estimate rents for properties in Singapore.’
‘In a down market, landlords have to reduce rents or leave the rental homes unoccupied until the uninitiated comes along and pays the full price. Both lead to a decline in rental income.’
‘Anecdotal evidence from renters in recent focus groups suggested that some landlords had tried to resist market forces and rent above the X-Value. However, these same renters said they later received SMS messages from the agents of these landlords telling them the rents had been lowered. It is very difficult to go against the market.’
‘Regardless of the type of property attainable from a housing budget, today’s rental market favours the tenant in price negotiations. It is a renter’s market. Don’t be surprised if prices continue to fall as more supply comes into the market and more tenants pressure landlords for lower rents.’
Somebody should mention this to the communists in Beijing:
‘It is very difficult to go against the market’
‘The Australian Securities and Investments Commission (ASIC) has completed a nine-month probe into interest-only home loans issued by 11 lenders, including the big four banks.’
‘The corporate regulator is cracking down on interest-only home loans, saying it has uncovered that a worrying proportion of those with this type of mortgage could be at risk of default.’
‘ASIC has found that while default rates for interest-only mortgages are currently low, demand for the loan type has grown by around 80 per cent in the past three years.’
‘The ASIC review of 140 individual loans found that in more than 30 per cent of cases there was no evidence the lender had considered whether the applicant could afford their repayments over the long term.’
‘ASIC said in 20 per cent of cases the lenders had not considered the actual living expenses of applicants and in 40 per cent of files they had incorrectly calculated the affordability of the loan.’
“Standards varied across the different sorts of issues that are covered by the responsible lending laws across different lenders,” said Mr Kell. “It’s not a case where we found there were just two or three bad apples, so to speak. This is a message for the entire industry.”
‘Interest-only loans are generally more popular with housing investors, especially those who are basing their purchase on rising property prices and using negative gearing to claim interest payments as a tax deduction.’
‘But ASIC has found a growing number of owner-occupiers are being tempted by the initially lower repayments, freeing up funds for refurbishments or other investments. “The growth in owner-occupiers taking out these loans has been quite significant. It was up to just over 40 per cent of interest-only loans in the December quarter last year,” said Mr Kell.’
“A significant proportion of those owner-occupiers are on what you might call lower incomes for this type of loan; $100,000 and less. So it’s very important that we don’t just think about people taking out interest only loans as wealthy investors.”
‘Vancouver watchers are getting increasingly used to Bizarro-type statistics about their city. How could they not, when the average detached house price is about C$1.4 milion?’
‘But I came across a true head-spinner this week, courtesy of mathematician Dr Jens von Bergmann, a former teacher at Notre Dame and the University of Calgary.’
‘According to Statistics Canada data from the 2011 National Household Survey that was mapped by von Bergmann, there are 24,960 households in the City of Vancouver where the amount spent on shelter (mortgage, rent, utilities, property tax and strata/condo fees) exceeds 100 per cent of their declared household income. Think about that: these households claim to earn less than they spend on accommodation alone.’
‘And it’s not an insignificant cohort. They represent 9.5 per cent of all households in the city.’
‘For instance, in dissemination area 59150581, a cosy pocket of Dunbar nestled between Arbutus and Macdonald streets, 44.8 per cent of households (65 out of 145) claim to earn less than their shelter costs. The median dwelling value in this apparently impoverished enclave? C$1.98 million. Median individual income from all sources? C$19,993.’
‘Another standout neighbourhood is dissemination area 59150507, in exclusive South Granville, where 43 per cent (65 out of 150) had shelter costs exceeding total income. Median dwelling value, C$1.80 million. Median income, C$13,572.’
‘There’s a whole new world of weird in dissemination area 59153466 - which abuts Coal Harbour and includes the swanky Fairmont Pacific Rim condos and hotel - a stunning 62 per cent of households claim to have lower income than shelter costs. Not only that, but a massive disparity between average and median individual incomes suggest that a large proportion declare virtually no income at all: the average is C$14,293, but the median just C$943 per year.’
‘To put all this in context, the relative presence of households spending more on housing than total income is far lower across Canada at about 4.4 per cent (meaning that Vancouver’s rate is, proportionally, 116 per cent greater). In Greater Toronto , it’s 5.9 per cent; Montreal 5 per cent and Victoria 5.4 per cent.’
‘So what are the possible explanations for Vancouver’s excess?’
‘The data is certainly consistent with immigration patterns to the city, which has received a globally exceptional number of millionaire migrants (50,000-plus individuals in the past decade, representing 14,000 plus wealthy households) who typically declare extremely low income. It doesn’t prove categorically that these rich immigrants – most of them Chinese of late - are using foreign-sourced wealth or non-declared foreign income to fund housing choices in Vancouver (which might also imply tax cheating). But I can’t think of a viable large-scale alternative explanation. It fits the ethnic Chinese “astronaut family” narrative.’
‘It’s demonstrable that ethnic enclaves do exist. In our Dunbar and South Granville dissemination areas, for example, the proportions of residents speaking a Chinese mother tongue are abnormally high at 51 per cent and 47 per cent (compared to 15 per cent across metro Vancouver).’
Good stuff, thanks. Wonder if their tax officials will start snooping around?
Boston Metro Housing Demand Falls 50% YoY; Prices Plunge 10% YoY
http://www.zillow.com/ma/home-values/
http://files.zillowstatic.com/research/public/Metro/Metro_Turnover_AllHomes.csv
Maryland Housing Prices Fall 8% YoY
http://www.zillow.com/md/home-values/
“‘You’ve got sellers that are overzealous and thinking they can price their house way above, because, hey, some other house sold for some high amount, so why shouldn’t theirs sell for even higher? And by the end of the day, the consumer, the buyer, is saying, ‘No! You’re already at the top of the market,’ so you’re seeing those prices come down a little bit.’”
But this will not happen as long as there is one - ONE - buyer (one buyer that can get hold of the needed money) that is nuts enough to pay the higher asking price.
One such buyer is needed for one house, no more, no less. And this one buyer will set the prices - set the values - for all the comparable houses. But as soon as the world runs out of these one buyers, or, more likely the case, these buyers are shut out from the access to money then the price rise will top out, and if the price rise tops out then the incentive to buy that is driven by the price rise evaporates.
Since there is no shortage of nuts that are willing to pay prices that have been elevated to nutsville the controlling factor ends up being the availability of money - and the terms that are connected to this availability of money, terms that make this available money “affordable”, affordable as defined not by price but by the cost of the monthly payments.
So the PTB needs to keep prices elevated into the realm of nutsville - evening increasing further into the realm of nutsville - or else the buying will dry up and the prices will top out and begin to drop and when prices drop they will take the values of the comps down with them and falling values erases wealth and erased wealth leads to recessions and depressions so the PTB has much incentive to keep the illusion going for as long as possible and no incentive at all to allow it to end.
And so here we are.
“When you combine ignorance and leverage, you get some pretty interesting results.” - Warren Buffett
We had an ample supply of ignorance and an ample supply of leverage so now it’s time to see how interesting the results will become.
Nobody wake up palmetto:
‘After yesterday’s 358-point slide, the Dow Jones Industrial Average is down nearly 5% for the year while the Standard & Poor’s 500 index is off about 1%. Yet that’s nothing compared to some of the losses that have gone somewhat unnoticed in key segments of the stock market.’
For instance, biotechnology shares, which had been the darlings of this bull market for more than four years, have now sunk around 12% in just the past month. And biotechs aren’t the market’s only soft spot.’
‘The basic materials sector is off more than 15%. Media stocks are down more than 13%. Real estate investment trusts are down about 10%. The industrial sector has fallen nearly 9%.’
‘Meanwhile, the so-called better burger bubble has officially burst. Earlier in the year, fast casual burger chains vying for the hearts and wallets of millennials, saw their shares soar. Yet after Thursday’s market slide, Shake Shack shares are now off more than 45% from their recent highs while The Habit Restaurants is down around 30%.’
‘Earlier in the year, fast casual burger chains vying for the hearts and wallets of millennials, saw their shares soar’
The bust doesn’t destroy wealth.
‘Feb 5, 2015′
‘Signs of excess and froth in the equity markets. Exhibit 1: Grilled Cheese Truck Inc., which began trading on the pink sheets last week after receiving OTCQB certification.’
‘Let’s look at the fundamentals of the Ft. Lauderdale, Florida-based company. Based on the 18 million shares outstanding and a recent stock price of $6 the company has a market value of about $108 million. No matter how much you like grilled cheese — and I like a good GAC BAC TOM as much as the next guy — I can’t see this as a reasonable valuation.’
‘If you go to the company’s website, you will learn that “The company currently operates and licenses grilled cheese food trucks in the Los Angeles, CA area and Phoenix, AZ and is expanding into additional markets with the goal of becoming the largest operator in the gourmet grilled cheese space.”
‘However, according to the company’s financial statements, it has about $1 million of assets and almost $3 million in liabilities. In the third quarter of 2014, it had sales of almost $1 million, on which it had a net loss of more than $900,000. The story is much the same for the first nine months of the year: $2.6 million in sales and a loss of $4.4 million.’
‘But forget the losses for a moment, and make the generous assumption that it will have sales of $4 million this year. This means its shares trade for more than 25 times sales, a very rich valuation.’
“The bust doesn’t destroy wealth.”
Last week many people’s mutual funds statements indicated to them that they were wealthy. Yesterday their mutual funds indicated to them that they were a bit less wealthy than last week.
Q. So, why is that?
A. There was a bit of a bust and this bust destroyed wealth.
The wealth was gone when they mailed the checks in.
Ah yes, the Sealy Posturpedic School of Economics. Gets eaten by inflation every time.
I remember the chatter on this blog back in the summer of 2008. More than a few people urging the rest of us to get our money out of stocks. Especially the retirement money.
I’m glad I listened to those people. Oh, am I ever!
Did you get back into the market in 2009? That was a great time to buy.
I went 50% liquid last month. Looking forward to buying more stock in 2016.
You’re better off liquidating those underwater houses Jingle_Fraud. The banks want their money back.
I tried the local Shake Shack (down on the Strip, in front of the NY NY hotel/casino) recently. It was tasty, but $14.xx for a burger, fries, and a shake (no other drink)?? Are all their stores that expensive?
Newcastle, WA Housing Prices Fall 9% YoY
http://www.zillow.com/newcastle-wa/home-values/
Zillow predicts IL up 2%+ ??
the state is BK folks
http://www.zillow.com/il/home-values/
Our forecast for Il is down 7%.
only if the bama gives them more loot
Don’t move here - you won’t like it.
‘Japanese Finance Minister Taro Aso said Friday that recent moves by China to allow its currency to depreciate are a concern and could pose problems for Tokyo. Japan’s Nikkei 225 stock index fell 3 percent to 19,435.83 on Friday, slipping below the psychological 20,000 mark on widespread selling.’
‘It was unclear what sorts of choices Aso was implying Japan might face, but the Japanese currency, the yen, has fallen by over 60 percent against the U.S. dollar since hitting a peak of 75.35 yen to the dollar in October 2011. It was trading near 123 yen per dollar on Friday. The yen’s decline has been hastened by massive monetary easing since 2013 by the Bank of Japan, which is buying trillions of yen in assets each month, seeking to spur growth.’
‘A few countries have followed China’s lead. Kazakhstan’s currency plunged by over 20 percent against the dollar on Thursday after its government decided to move to a free float to cope with big swings in global currencies and commodity prices.’
‘Uncertainty over future policy and over the impact of China’s economic slowdown is reverberating across global markets. “It’s not just China. It’s the emerging markets in general,” said Masamichi Adachi of JPMorgan in Tokyo. “At the end of the day, it’s all coming from China. Brazil, South Africa, many countries are commodity exporters and the final destination is all going to China.”
A couple of years ago a poster asked, “Why do you bother with China? I’m never going to buy a house in China.”
‘Even the pros got pulled in: Wang Yanwei, a planning director at Chongming Asset Management in Shenzhen, said she and many of her peers “ignored alarm bells,” borrowing heavily in the first half of the year, then losing big. “We were eaten up with stock fever and blindly optimistic,” she said.’
‘Buying on margin turned what some years ago might have been a relatively isolated stock bubble into a threat to the heavily indebted system as a whole.’
“It’s not about the stock market, it’s about the financial system, because now you have all this debt that rests on this system,” said Anne Stevenson-Yang, research director at J Capital, a firm that helps foreign investors in China do research and track macroeconomic trends. “If asset values come down, that’s when the debt pyramid starts to collapse, and then what they are concerned about is a financial crisis.”
The Colossus in Cupertino:
Apple Inc. (AAPL) -Nasdaq
108.84 Down 3.81(3.38%) 11:50AM EDT
http://finance.yahoo.com/q?s=AAPL&ql=1
They’ll be fleeing in their Teslas with the dishwasher tied to the roof.
this is the kind of day HA relishes
If you lost money today, it could’ve been worse:
‘China’s securities regulator will penalize major shareholders at publicly traded companies including Southwest Securities Co. and Guoxing Rongda Real Estate Co. for violating rules that limit stake sales.’
‘China’s benchmark Shanghai Composite Index plunged 4.3 percent on Friday, coming within one point of wiping out an 18 percent rebound since the July 8 low.’
‘Such violations “intensified volatility and disrupted normal operations on the market,” Zhang said. The CSRC will “enforce the law strictly,” he said.’
http://www.bloomberg.com/news/articles/2015-08-21/china-to-punish-some-major-holders-for-share-selling-violations?cmpid=yhoo
‘40 percent of government-backed mortgage loans go through programs that are not as firm about qualifying as Fannie and Freddie. The median credit score for borrowers going through the Federal Housing Administration, for example was in the lower third of all credit scores in the U.S. Stress tests indicate that in a crash similar to what happened six years ago, 25 percent of those FHA mortgages would go into default’
And these low-down FHA loans have exploded in the first half of 2015, along with the zero down VA loans.
It’s all on you Mel. You and Janet. I’ll be around to remind everybody too.
Maybe… maybe not. They could have the CIA send ninjas for you.
Pacific Beach-San Diego, CA Housing Prices Fall 4%
http://www.zillow.com/pacific-beach-san-diego-ca/home-values/