A Major Shift From When Sellers Held All The Cards
The Stockton Record reports from California. “A variety of advocates for low-income housing, for minorities and for the south side made those arguments at a Stockton City Council meeting Tuesday night focusing on a proposal by builders and Mayor Anthony Silva to slash permit fees citywide in an attempt to stimulate the Stockton economy for the next three years. The Building Industry Association of the Greater Valley proposal calls for a roughly one-third reduction in the fees Stockton charges. Those fees surpass $50,000 on single-family homes, rendering the Stockton housing market uncompetitive against neighboring cities that charge lower fees, Beckman said. The BIA proposal calls for a $17,000 fee reduction for 1,000 new single-family homes in the next three years.”
“Most council members said they are eager for action of some sort to boost dormant homebuilding. ‘I think everyone here recognizes the need to reduce fees,’ Councilman Dan Wright said.”
The Miami Herald in Florida. “The last time a building boom ended in South Florida, the region’s entire economy crashed, too. Now, as luxury condo sales slow and the dollar grows stronger, analysts fear the wheels of the current cycle are once again grinding to a halt. But this time they’re predicting a soft landing, in part because developers didn’t have enough money to overbuild.”
“‘Many Latin American buyers who have already put down deposits are choking on the additional costs of the stronger dollar and the difficulty of moving money into the U.S.,’ said Philip Spiegelman, principal of the International Sales Group, a preconstruction marketing and sales firm.”
“The waterfront real estate market, which was the first to recover after the crash, hasn’t been immune to the overall slowdown. ‘Anyone who tells you they’re not feeling the slowdown is lying,’ said Gil Dezer, who’s developing the Porsche Design Tower in Sunny Isles Beach where units start at $6.5 million.”
The Wall Street Journal on New York. “After two years on the market and price cuts totaling nearly $20 million, the triplex penthouse of a wellness-focused Manhattan condominium is in contract. The Greenwich Village penthouse was first listed in 2013 for $50 million as an unfinished unit. The price was cut several times, most recently to $30.5 million, according to Shlomi Reuveni of Town New Development, which is marketing the 6-unit building along with Dolly Lenz Real Estate. Construction was completed last year and the penthouse is ready to move into, Mr. Reuveni said.”
The Houston Chronicle in Texas. “For Houston homeowners expecting to make a lightning-fast deal on the sale of their home may want to have a little more patience. With the current inventory figure, the Houston market is beginning to ‘become more neutral,’ said David Jarvis, senior VP for John Burns Real Estate Consulting in Houston. That’s a major shift from last year, when sellers held all the cards.”
“‘There’s definitely a change in the market versus a couple years ago,’ said David Young of Coldwell Banker United, Realtors. ‘Up until a few months ago, if you put a home on the market within the first week you had multiple offers and that has definitely changed.’ Young said he’s seen a considerable slowdown in the Energy Corridor. ‘Properties are on the market much longer than they were a year or two ago,’ he said.”
Arizona Public Media. “A six-story student housing structure is being built west of the University of Arizona where three other high rises opened in the last two years. Tucson City Councilman Steve Kozachik represents the area and said this should be the last such building in the vicinity although there are additional student housing proposals for downtown Tucson. Kozachik said he would like to see more renovations of existing properties near the University.”
“‘What’s happened is these towers have siphoned off some of the students from the neighborhoods, and the result is we have a bunch of vacant property,’ Kozachik said.”
“But this time they’re predicting a soft landing, in part because developers didn’t have enough money to overbuild.”
Well that’s a relief because we wouldn’t any more of those pesky south Florida real estate crashes happening again. I remember reading right here on the HBB in 2006 that it would be a “soft” landing so this time we should be okay too. Thanks for that positive news from the developers Ben!
It will be interesting to see how deep this down cycle drops. I don’t see nearly as much frothiness today as I witnessed in 2006, 2007 in the CA market. The developers may not have much money…..the rest of the crowd has even less. I am still seeing houses being foreclosed from 2007 defaults.
This recovery is meek, but at least it kept a lid on the craziness we witnesses last time around.
You must not read much here.
So far NINJA loans are not pervasive, so while crazy, it is a little less crazy than last time.
That said, NINJAs might make a reappearance in a last ditch effort to prop up the market.
‘less crazy than last time’
Note
after 1929.
Do we speak of two stock bubbles in the 20’s and 30’s, or one?
One bifurcated bubble.
“So far NINJA loans are not pervasive”
3% down payment loans which are made far more than any other is the definition of a NINJA loan.
‘this down cycle’
Yes the cycle. I pointed out a year or two ago how odd it was that the cry of shortage had gone up in almost every US city and town, at the same time. When there were cycles, it would be here or there. But it was everywhere (even globally). Like something else was at work. Now the “cycle” is down, in more cites and towns every day.
“Its hard to see the truth when your pocketbook and/or retirement plan depends on you not seeing it”
They forgot to mention in that article that per square foot prices in downtown Miami and the beach are a lot higher that 2006.
“I don’t see nearly as much frothiness today as I witnessed in 2006, 2007 in the CA market.”
It must be different in CA than in South FL.
On the other hand, I’d say that it got frothier this time in Denver than last time.
The condo market is insane Professor. Single family, while it’s gone up sharply (even more so than last time), we’re still not to late 2005/2006 levels. If it continues much longer we will be back there.
My biggest question is where the money is coming from. We don’t have liar loans and folks must be at least qualified on paper to buy a home with a mortgage.
“We don’t have liar loans and folks must be at least qualified on paper to buy a home with a mortgage.”
Not entirely true. Colorado has CHFA (look it up), and I would assume most states have something like CHFA. FICO score of 620 only and down payment assistance that doesn’t need to be paid back.
Then there is NHF (at the national level). 640 FICO score, up to 91K income, and free money from the government for down payment.
Realtors are actively marketing these handouts. I know. Several have called me in the past two months letting me know how easy it is to buy a house. It worked out so well the last time. We never learn.
Some of the lowest income people I know are signing up for mortgages. And getting approved. One couple is already behind after the 6th month of 360.
That’s what happens when you pay too much for a depreciating asset that you could have rented for half the monthly cost.
wierdly Zillow has FL going up in their predictions
Are you sure?
Miami Beach, FL Housing Prices Plummet 14% YoY
http://www.zillow.com/miami-beach-fl/home-values/
wow 2 weeks ago most of FL was called +7%
world be turnin
“‘What’s happened is these towers have siphoned off some of the students from the neighborhoods, and the result is we have a bunch of vacant property,’ Kozachik said.”
Maybe the students got tired of paying the ridiculous rents for those run down federal style homes downtown and wanted to live in something modern and safe? I don’t miss living in Tucson…
The line about “more renovation of existing properties” line is interesting. If you read between the lines, the same concept shows up in the Stockton article. Builders clearly have their eye on raw land because it’s all they know how to do. Bulk materials on the cheap, one floor plan, builder grade. Tom Silva they ain’t.
Precisely how your stable was slapped together Donk.
on the show”love it or list it” they add ten percent
like a tip
looks like another rip off for stockton, If you couple the lowering of fees by lowering the final price, and if you sell in the first 5 years 90% of the profit goes back to the city to recover those lost fees. It would make sense.
there is going to be a lot of pain in nyc when people who have the 421a tax abatement start having to pay the full taxes on their high price kondozes.
developers priced their kondozes abased on the 80-90% reduction in property taxes this year that slowly increased for the next 10-15 years so the how much a month crowd thought they were getting a bargain.
check city and county retirement plans
age 55 here w 75% of pay
Well thank you for at least laying off the Feds this time.
The Stockton article is a soap opera. The CEO of the development company acted like he was a member of the city council. The developer wants a fee reduction for the whole city, not just for blighted south side. Of course, they’ll just build the usual crap on the raw parcels and let the blighted stuff stay blighted.* One former council member wanted the fee reduction for only the south side because “who’s going to pay for justice.” [new dogwhistle?] The reasonable members are waiting for another proposal to come in; that proposal sounds like a compromise.
—————-
*Evidently it’s cheaper to start with nothing than to build around existing infrastructure?
you’re a keeper
http://polobserver.wix.com/cutspending
a keeper of what?
“…slash permit fees citywide in an attempt to stimulate the Stockton economy for the next three years.”
Best low income housing proposal I’ve heard out of a California polotician. It would stimulate building and attract the workrrs needed to run a local economy. Where’s the downside?
It says there are thousands of lots. Note that house prices have “soared” in Stockton too. It’s not a 50k fee that’s kept these lots empty. Builders don’t want to lose their ass. The bubble has driven house prices up, not scarcity. Most people try to figure a mania out using rational processes. You can’t, it’s madness.
Those fees surpass $50,000 on single-family homes
So, on a 1500 square foot house you are already in $34.+ per square foot…The real question is why are they so high ?? Could it be a Pension prop-up fee ??
When the conservator took over for the Bankrupt Stockton, he said that under the current budget in five years, the Fire & Police Salary and pension contributions would consume 100% of the revenue…
Houston, we have a problem…
Mark to Market. Mark to Modesto…..
‘Foreclosure crisis lingers: Repossessions spike 66%’
“But this time they’re predicting a soft landing, in part because developers didn’t have enough money to overbuild.”
I’ve seen many a ’soft landing’ or ‘no landing’ prediction over the years. When it comes to hard landings, it seems that nobody can ever see them coming.
in the fees Stockton charges. Those fees surpass $50,000 on single-family homes,
70-80% goes to gov pay
check you county now
Your right, it doesn’t have anything to do with costs. It’s just a tax. These are almost certainly HOA’s. If so, the government doesn’t even pay for streets and sidewalks.
“hoa’s”
Correct. Otherwise the permit is $2500. No different than anywhere else.
Not true. In my nabe, the permit cost is directly proportional to the value of the structure to be built.
$2500
Redmondjp, Ben was referring to the cost of the permit to the city, not the cost of the house. The permit may be a profit center, unrelated to the cost of issuing it or the value of the “service” provided by issuing it.
What Bubble? The Unicorn Boom Has Just Begun
http://finance.yahoo.com/news/bubble-unicorn-boom-just-begun-094500947.html
He said chicken-little. Well that solves it, to the moon Alice!
Here’s a similar piece:
‘If someone would have suggested, as recently as six months ago, that China would sell over $150 billion of U.S Treasurys in a handful of months, analysts would have warned of an impending disaster in the U.S. bond markets. Forecasters would have said that the dollar would crash, rates would skyrocket and stocks would plunge as America’s reliance on the kindness of strangers to finance its budget deficits had finally exhausted their generosity.’
‘Well, guess what? China did just that and other global central banks have slashed their holdings of U.S. Treasurys with barely a ripple in the multi-trillion dollar bond market. Once again, the prophets of doom were wrong.
Doom - 4 times
‘end of the world’
‘the sale of U.S. Treasurys by the Chinese was far from a repudiation of America’s fiscal policies. It was an act of desperation to cover capital flight that has plagued China, and other emerging-market economies in the last several months.’
‘It has been reported that Chinese nationals, despite restrictions, have moved a half trillion dollars abroad … into the relative safety of U.S. real estate, among other offshore assets, as the Chinese market melted down. So, too, in other emerging-market nations.’
And the kicker:
‘In other words, the world is not choking on U.S. debt, instead, there is a relative shortage of it.’
http://finance.yahoo.com/news/china-selling-us-treasurys-really-110000250.html
What I’d like to know is, who bought all those bonds the Chicoms were selling? Was it the FedRes? US or foreign mutual funds? Other nations’ treasury departments or central banks?
Maybe the more important question is “Why” are they selling….And “What” are they doing with the proceeds…
Bleeding USD. It’s not a plan. The proceeds are gone.
Bubbles are the life blood of the porcine beautician industry, in which the writer is employed.
I’m ready with the popcorn to watch the next tech bubble implosion.
CGE Energy Inc. (CGEI) -Other OTC
0.51 Down 0.22(30.14%)
52wk Range: 0.51 - 10.48
Wal-Mart Stores Inc. (WMT) -NYSE
58.75 Down 1.28(2.13%)
52wk Range: 58.62 - 90.97
‘It takes about an hour to drive from downtown Houston to Plum Grove, Texas, the kind of reasonable commute that’s attracted oil industry executives to other northern suburbs such as the Woodlands. Trey Harris, whose company, Colony Ridge Land, is developing 9,000 lots in Plum Grove, is after a different market: poor Latino laborers who can’t afford the city.’
‘Harris is selling half-acre patches of dirt at $25,000 apiece with basic water and sewage hookups. Colony Ridge’s website advertises several subdivisions in Plum Grove with names like Grand San Jacinto and Camino Real, and notes commuters to Houston will soon have access to a newly built highway nearby. “You have no place to raise your little animals?” says one Spanish-language ad the company is running on Facebook, accompanied by images of blue skies and women on horses. “You lack space in your apartment?” Colony Ridge offers financing in return for as little as $500 down, with no credit check, though interest rates run as high as 12 percent. “We sell to them at a price point that’s significantly lower than they can find anywhere else,” says Harris. “It’s an opportunity for them.”
‘Built on newly cleared timberland, the Colony Ridge development in Plum Grove, which is part of Liberty County, is the largest of the new colonias, which usually cover fewer than 300 lots. People already live there in trailers or under tarps tossed over peeled pine logs or tool sheds. “I haven’t seen anything at this scale anyplace else,” says John Henneberger, an expert in housing laws at Texas Housers, an Austin-based nonprofit that’s tracked new colonias outside Austin, Dallas, and San Antonio.’
‘Plum Grove’s 600 longtime residents, almost all white, oppose Colony Ridge’s building plans. They fear their new neighbors—who could number as many as 30,000 once all the lots are sold—will overwhelm local schools and public services, as well as bring crime into the area. “They’re playing their mariachi music so loud your house is thumping at two in the morning,” says Plum Grove city councilwoman Lee Ann Penton-Walker, who is proposing a municipal tax to pay for a police force to patrol the development.’
‘Harris shrugs off the opposition, chalking it up to racism in a part of Texas where many residents fly the Confederate flag. “Some of the Rebel flag flyers, they don’t like the color of my people’s skin,” he says, meaning his customers. Liberty County officials, who are also trying to slow developments like the Colony Ridge projects, say that’s not so. “To me it’s not a racial issue—I speak Spanish as good as I speak English,” says Liberty County Judge Jay Knight. The county is moving to increase the minimum subdivision lot size to one acre, which would make new colonias financially unfeasible. “I’m gonna put it this way,” says Knight. “John Steinbeck could not write a better book.”
‘The bottom line: A housing crunch in Houston is pushing Latino laborers to buy land in rural areas with only basic municipal services.’
http://www.bloomberg.com/news/articles/2015-10-15/texas-towns-push-back-on-instant-slums
$25K, financed at 12% for 20 years…all for a patch of dirt with minimal hookups provided. These developers stand to make a killing.
poor poor donkz
Hi Ben Jones:
I have been thinking about the videos you have been posting and just thought: How is Ben going to catalogue these vids if they remain ‘buried’ in the daily posts?
So….suggest that you have a separate side bar on the site where the ‘inventory’ of vids can be accessed from time to time - transferred there after initial viewing inside the daily blog. What do you think?
Do you mean buried in the youtube channel?
Yes.
It is an interesting problem. I was thinking about when I start going back to place a second or third time. I’ll either want to reference the original video or include some original scenes. You’re right, an archive of some sort would be helpful. I’ll read up on it and see what other channels are doing. I appreciate the input.
Once again;
Why pay more than construction costs ($55/sq ft for lot, labor, materials and profit) for a run down 20 year old house?
52000 for fees is pretty close to your 55 #. They have u by the b@lls if you want a roof over your head.
$2500 in “fees” is a long way from 52000
u heard the man. not sure where u get 2500. this is ca chump.
there are pensions to pay for.
crushing.housing.losses.
Arvada, CO Housing Prices Crater 16% YoY
http://www.movoto.com/arvada-co/market-trends/
They have u by the b@lls
Only if you are a volunteer donkey. Once you decide to be a debtor and to live your working life paying off the debts for things you couldn’t afford and shouldn’t have bought, the price tag doesn’t matter. Then “they” have you, by everything from the hair to the toes.
Robert Shiller: “Don’t Invest In Housing. Houses Depreciate”
http://www.pragcap.com/robert-shiller-dont-invest-in-housing/
Falling prices to dramatically lower levels is positively bullish and good for the economy.
“US Producer Prices Sink In September”
http://forexreportdaily.com/2015/10/15/2766-u-s-producer-prices-sink-in-september/