October 30, 2015

The Market Also Depends On Ability To Pay

It’s Friday desk clearing time for this blogger. “There were 4,603 new housing permits issued in Connecticut last year, the highest level since 2008. Donald Klepper-Smith, chief economist for DataCore Partners in New Haven said one of the factors holding back the new housing market in the state from posting more robust gains is a surplus of existing homes for sale. ‘There still is a lot of inventory to be worked off,’ he said. More than half of the housing permit activity last month came from development of five units or more, according to the DECD data. ‘People are looking for more flexible housing options in this economy, like apartments,’ Klepper-Smith said.”

“The U.S. home rental market cooled in September. The slowdown hit major hubs of the energy industry such as Dallas, Houston and Tulsa, while moderating the boom coming in tech centers such as San Francisco, San Jose and Denver. Real estate data firm Zillow said Tuesday that median rents rose a seasonally adjusted 3.7 percent from a year ago, down from the annual pace of 4.1 percent in August. The slowdown likely reflects the 14.8 percent surge in apartment construction during the first nine months of 2015, as increasing supplies have tempered price appreciation.”

“Research by the CoStar Group, a real estate marketer, found that 158,000 apartment units are being built this year, the highest level in more than three decades.”

“Sonoma County’s future could involve fewer surges in new home construction. California Association of Realtors chief economist Leslie Appleton-Young called it a seller’s market in housing today. But she noted that prices flattened this summer, homes are staying on the market longer and, looking ahead, ‘there’s going to be a little more power on the buyers’ side.’ Real estate experts historically have said Californians typically own a home for seven years before selling. But the association’s annual survey this year found agents reporting that sellers had owned the average home for 10 years. ‘That’s the highest we’ve recorded in 35 years,’ Appleton-Young said.”

“Nothing says retired and in debt as much as when 60-year-old Jerry Newbery and Lesley Bates, 51, moved in with her 87-year-old father for three months to save cash until they can downscale into a new townhouse. After working all their lives – Mr. Newbery has already retired once – they are in the midst of a severe financial overhaul to cut their debt load of $240,000. Mr. Newbery and Ms. Bates have had to sell their $300,000 home in Courtney, B.C., on Vancouver Island for cheaper digs and solvency.”

“Part of the problem was that they came out of previous marriages with half of the assets they should have had at this point in life. Mr. Newbery walked away with only $30,000 when the sale of his previous family home netted slightly less than $300,000, as a series of expensive vehicles were paid for from the home equity. Postdivorce, he bought a condo but it was later sold at a $54,000 loss. His $20,000 in RRSPs have diminished to $5,000 as funds were withdrawn to service his $18,000 line of credit and used to purchase his new home.”

“Stories like this are now woven through our retirement dreams and our bank accounts. A recent HSBC survey said 41 per cent of working Canadians believe they can’t adequately prepare for retirement because of debt. ‘I’d like to be debt free,’ said Mr. Newbery. ‘I don’t know if that’s a reality.’”

“Swiss apartment prices will decline for the first time in 15 years in 2016 as purchases by investors fail to offset a broader weakening of demand and rising supply, according to Wueest & Partner AG. The average house price in the Lake Geneva region was 1.4 million francs ($1.41 million) in the second quarter, while in Zurich it was 1.18 million francs, Wueest data show. ‘Demand is coming from people investing, but it’s not compensating for a widening gap with supply,’ Wueest partner Herve Froidevaux said in an interview. ‘Price corrections in the Lake Geneva region are linked to people having less money to spend.’”

“Ray White City Apartments sold six out of eight under the hammer at this week’s apartment auction, with two units passed in. The properties that sold ranged from a two bedroom apartment in the Metropolis tower that sold for $680,000 to a leasehold apartment in the Hudson Brown building near Vector Arena, which sold for $225,000. That would have been an ‘ouch’ moment for the vendor of the Hudson Brown apartment, who according to QV.co.nz had paid $469,000 for the property in 2005 before the bottom dropped out of the leasehold market.”

“To boost sluggish sales, realty firm Raheja Developers today said it has launched a housing project in Sohna, Gurgaon, at a price of Rs 2,500 per sq ft, about 30-35 per cent lower than the existing rate in the location. ‘Actual market depends on demand-supply and also customers’ ability to pay. Lately, the prices have gone up so much that it has affected the customers’ affordability. So, we have decided to bring down the prices to move the market,’ Raheja Developers Chairman Navin Raheja told PTI. He said the prices would be around Rs 2,900 per sq ft under the construction-linked payment plan. ‘At present, the prices in this location is about Rs 4,000 per sq ft,’ Raheja said.”

“While many people flock to make a fortune from the local property market, Oknha Yum Sui Sang, chairman of Union Commercial Bank PLC (UCB), chooses not to invest in this sector until Cambodia’s mortgage law system is better developed. ‘Whether the property market is blooming or not depends on how you see it,’ said Yum, a Hong Kong native. ‘Both investors and buyers in the local property market are mainly from overseas. Local people have a weak consuming power in terms of buying property, and many of them can only afford apartments priced at the range of several tens of thousands.’”

“However, the good news is that no matter how unpredictable the overseas business environment is, Chinese investors are still eager to ‘go out’. ‘China’s economy is very bad now. There is a Chinese saying that it is doomed if staying in China, but it could delay the doom if going out,’ said Yum.”

“Even the Chinese government encourages enterprises to ‘go out’ with the ‘one belt, one road’ initiative. In reality, as many Chinese investors told Yum, it is not that easy for them to liquefy their assets in China for overseas investment. ‘The problem of China’s economy is that the government only helps state-owned enterprises,’ said Yum. ‘Other small enterprises cannot get loans and are left on their own.’”

“Corporate investigator Violet Ho never put a lot of faith in the bad loan numbers reported by China’s banks. Crisscrossing provinces from Shandong to Xinjiang, she’s seen too much — from the shell game of moving assets between affiliated companies to disguise the true state of their finances to cover-ups by bankers loath to admit that loans they made won’t be recovered. ‘If I have one piece of advice for people worrying about the financial status of Chinese companies, it’s this: it’s right to be worried,’ said Ho, senior managing director in Hong Kong for Kroll Inc., a U.S. risk consultancy. ‘Often a credit report for a Chinese company is not worth the paper it’s written on.’”

“While corporate investigator Ho relies on her observations from hitting the road, Charlene Chu and her colleagues at Autonomous Research in Hong Kong take a top-down approach. They estimate how much money is being wasted after the nation began getting smaller and smaller economic returns on its credit from 2008. Their assessment is informed by data from economies such as Japan that have gone though similar debt explosions. While traditional bank loans are not Chu’s prime focus — she looks at the wider picture, including shadow banking — she says her work suggests that nonperforming loans may be at 20 percent to 21 percent, or even higher.”

“The amount of bad debt piling up in China is at the center of a debate about whether the country will continue as a locomotive of global growth or sink into decades of stagnation like Japan after its credit bubble burst. ‘A financial crisis is by no means preordained, but if losses don’t manifest in financial sector losses, they will do so via slowing growth and deflation, as they did in Japan,’ said Chu. ‘China is confronting a massive debt problem, the scale of which the world has never seen.’”

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Comment by Ben Jones
2015-10-30 03:07:39

‘There is a Chinese saying that it is doomed if staying in China, but it could delay the doom if going out’

Here’s an interesting report:

‘The Communist Party’s new disciplinary chief at a major state-run shipping company has given an internal speech excoriating the corruption at the firm and in the Party generally, while boasting of his prowess in taking down powerful cadres.’

‘Such speeches are usually considered highly secret—but this one, made by Xu Aisheng, the head of the Communist Party’s internal disciplinary group at the China Ocean Shipping Company, was leaked online.’

‘Summaries of the speech quickly spread on mainland Chinese websites, to the delight of Internet users, but were quickly purged. Though it was not possible to verify the authenticity of the document with the state shipping firm, the full version was archived on overseas Chinese sites and is widely considered genuine.’

Comment by Ben Jones
2015-10-30 07:33:55

‘The most egregious examples from the Chinese government’s long, sordid history of data-doctoring’

‘Of all of China’s official statistics, GDP is probably among best-known for being, shall we say, internally consistent. But the history of China’s lower-profile economic data is littered with disappearing data, mixed-up methodologies, and freak aberrations. Here’s a roundup of the most notorious examples.’

‘Housing is a pretty critical sector, ultimately driving more than a quarter of China’s economy. And while surging home prices signal strong impetus to keep building, when they’re rising faster than incomes, people understandably get upset. It’s easier for housing bubble fears to enter the national consciousness when there’s a national average—or, more specifically, an accurate one.’

‘The National Bureau of Statistics (NBS), China‘s official economic record-keeping agency, only publishes the change in average new home prices for each of 70 major cities, including huge cities. It does not release a nationwide figure, nor does it release other figures that allow someone to extrapolate a nationwide average. (Averaging the averages, of course, would yield a figure that did not properly account for the differing number of home sales in each city.)’

‘The NBS used to, though. But that stopped after many in China suspected the national average was doctored to make home prices look less frothy than they actually were. Public outrage peaked in 2010, when the NBS reported that the national home price index rose just 1.5% for all of 2009. That figure squared with neither the steep climb in prices documented by an independent firm, nor, apparently, with prices prospective Chinese homebuyers were encountering. One online commentator wondered if the NBS hadn’t accidentally placed the decimal point too far to the left (link in Chinese), and actually meant a 15% jump.’

‘In 2011, the NBS announced an overhaul in its home price methodology (link in Chinese), reflecting a much more complete picture of prices in the 70 cities. However, the NBS also stopped publishing the national index, explaining that the nationwide figure smoothed out important regional variation, according to Tom Orlik, a Bloomberg economist, in his book Understanding China’s Economic Indicators.’

“That is certainly true, but the national average was also the most straightforward and widely watched measure of developments in China’s housing market,” he wrote. “Cynics concluded that the real aim was to do away with a controversial number that had been the basis of both rumblings of social discontent and questions about the statisticians’ professional integrity.”

Comment by Ben Jones
2015-10-30 07:50:48

‘China Banks Enter Eye of Storm Adding Risky Debt to Wealth Funds’

‘While some WMPs are now bringing in less than what the lenders pay out, banks are reluctant to lower returns for fear of losing clients, according to Li Linxia, a researcher at CNBenefit.’

What could possibly go wrong? This line cracked me up:

‘Banks are piling into riskier debt despite warnings of a leverage-fueled bubble from local brokerages, at least five bond defaults this year…’

At least five, you mean they don’t know?

Comment by OzH
2015-10-30 11:28:58


Comment by Professor Bear
2015-10-30 04:00:44

“Real estate experts historically have said Californians typically own a home for seven years before selling. But the association’s annual survey this year found agents reporting that sellers had owned the average home for 10 years. ‘That’s the highest we’ve recorded in 35 years,’ Appleton-Young said.”

Could a a massive systematic effort to override lending standards by qualifying every underwater U.S. homeowner for a refi at generationally low interest rates possibly have increased the average period people stay in their homes?

Housing market liquidity is ossified for the foreseeable future, as many will not be able to find comparable housing at a similarly low monthly payment to what their bailout refi provided. This observation is especially relevant in places, such as California, with a high concentration of underwater home owners. Got frozen market liquidity?

Comment by Ben Jones
2015-10-30 04:59:49

Here’s an article from the same paper:

‘The sign along Dutton Avenue boldly announces the adjacent model units as “Sonoma County’s Lowest Priced New Homes.” The houses at the Paseo Vista subdivision in southwest Santa Rosa start at $329,000. During the first weekend, prospective buyers signed up to reserve all 29 properties offered in the first phase, with still more buyers placed on a waiting list.’

‘The project’s 122 single units and 15 triplexes are needed in a year when too many residents are struggling to find places to buy or rent, according to both the developers and community leaders. An added bonus is the project is being constructed without government subsidies.’

“This is exactly what we’ve been talking about, housing that’s affordable for a larger portion of our community,” said Sonoma County Supervisor Efren Carrillo, who represents the Roseland neighborhood where Paseo Vista is located.’

‘Many local families can’t afford to spend more than $350,000 for a home, said Mike Gasparini, who with business partner Allan Henderson developed the project. “So we’re filling that niche with a real quality product,” Gasparini said.’

‘The prices of the units have been kept down via higher density development and by using a Santa Rosa company that builds key sections of the homes in a factory.’

‘The local company, HybridCore Homes, can build its “core” sections in half the time and for 20 percent less cost compared to traditional, “stick-built” homes, said Shaun Faber, a company founder and creative director. Those sections come complete, with everything from kitchen appliances to window coverings and toilet paper holders.’

‘The two-story homes are built close together but are still considered single-family units because of a 2-inch gap between the exterior walls.’

Comment by Cracker Bob
2015-10-30 05:54:28

“‘The two-story homes are built close together but are still considered single-family units because of a 2-inch gap between the exterior walls.’”

I have dated women with more gap than that!

Comment by Tarara Boomdea
2015-10-30 10:46:58

Who’ll take the woman with the skinny legs? ;-)

Joe Tex - Skinny Legs

Love this too. I had a friend who would sing this song out of the blue…”She knocked me down!” “She broke my hip” He was a riot.

Joe Tex - Ain’t Gonna Bump No More

“I ain’t gonna bump no more with no big fat woman!”

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Comment by ProxyServer
2015-10-30 06:08:01

As “values” start cratering will the instantly underwater 3 percent down buyers from the last few years, who suddenly realize they are now 20 percent underwater, start mailing in the keys in numbers greater than ever before?

Or will they just hang on because there isn’t as much of an interest only reset problem this time?

Comment by Bluto
2015-10-30 10:18:13

I live in Santa Rosa and that is a VERY sketchy neighborhood, plenty of crime, gang members, etc. no thanks.
BTW the county supervisor quoted in the article has quite the arrest record himself but has refused to resign.
However in the meantime inventory is up 60% from a year ago and at a 4 year high so hopefully Bubble 2.0 will pop in Santa Rosa soon. Houses were relatively affordable here between 2009 and 2012 but it was very tough to buy one with a mortgage then due to competition from legions of 100% cash flippers and speculators, after the bubble pops hope that is not the case again.

Comment by Anonymous
2015-10-30 12:29:31

” …but are still considered single-family units because of a 2-inch gap between the exterior walls.”

How do you build two structures that close together? And then how do you apply the stucco or whatever is on the exterior, and paint it?

Comment by rms
2015-10-30 15:21:31

Maybe the adjoining walls are constructed on the ground and raised into position.

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Comment by scdave
2015-10-30 06:46:26

as many will not be able to find comparable housing at a similarly low monthly payment ??

And it will manifest itself when we see significantly higher mortgage rates…

Comment by Mafia Blocks
2015-10-30 06:50:23

…… driving transaction prices lower and lower.

Comment by Blue Skye
2015-10-30 07:22:00

Prices can fall without interest rates changing. Mania always finds a convenient excuse. So does panic.

Comment by Professor Bear
2015-10-30 04:11:36

“The amount of bad debt piling up in China is at the center of a debate about whether the country will continue as a locomotive of global growth or sink into decades of stagnation like Japan after its credit bubble burst. ‘A financial crisis is by no means preordained, but if losses don’t manifest in financial sector losses, they will do so via slowing growth and deflation, as they did in Japan,’ said Chu. ‘China is confronting a massive debt problem, the scale of which the world has never seen.’”

Maybe it’s different in China, and they will be able to chug along at their ever-steady 7 percent GDP growth rate forever, despite their ginormous debt buildup?

Comment by Blue Skye
2015-10-30 07:23:21

Massive accumulation of debt always preordains a financial crisis.

Comment by Ben Jones
2015-10-30 04:31:59

‘The disruptive economy — what the Internet Age equivalent of robber barons who ignore regulations to amass personal fortunes like to call their handiwork accomplished through sharing websites — is something many of us take part in.’

‘Why pay top dollar and wait 20 minutes for a taxi when you can get a ride on demand for a few dollars less and have them pick you up in half the time? The potential loss of taxi jobs are dismissed by noting economic turmoil has always been the case as inventions such as the automobile cost blacksmith jobs but created new ones such as auto mechanics.’

‘But what if the disruptive economy does more than simply transform the job market? What if it squeezes an entire economic class out of a city?’

‘That is what proponents of a Nov. 3 San Francisco ballot measure to limit short-term rentals to 75 nights a year in the City say they want to prevent. Airnb — the San Francisco-based Internet start-up that basically came up with a business model that side-stepped regulations governing hotels, hostels, bed and breakfasts as well other non-residential housing to be worth $25.5 billion virtually overnight — argues they are just making San Francisco affordable for more tourists. They also say they are helping struggling Middle Class San Franciscans earn extra cash so they can afford to live in The City.’

‘You will notice that Airnb and their supporters don’t worry too much about the working class or the poor. The poor — you know those people struggling to feed, clothe and shelter their kids that Internet robber barons after they have amassed $20 billion by costing many of them their jobs make a big deal out of donating $10 million so they can get free Internet access — are taking the biggest hits in the disruptive economy.’

‘There’s nothing new about that. Changing technologies since the dawn of the Industrial Age have always taken their toll the hardest on those on the lower rings of the economic ladder. But what is making Airnb in relation to San Francisco different is the fact it has the potential to take both jobs and housing from the poor.’

‘Let’s say you’re a hotel worker in San Francisco. You make good money but it’s a struggle to keep a roof over your head. RealFacts notes that in the first nine months of the year the average asking San Francisco rental price for a studio apartment is $33,936 a year or $2,828 a month. That’s up from $30,900 annual or $2,575 a month in 2014.’

‘The per-night charges through Airnb tend to be cheaper than hotels but are at least 50 percent more than what a landlord can get for a traditional long-term rental.’

‘Those opposing any plans to restrict the Airnb business model includes Gavin Newsom who wants to be our next governor. Someone should ask Newsom — definitely more a member of the jet set than the working class — exactly where are all those people that work at the fancy hotels and restaurants he stays at are ultimately going to live.’

‘This is a question that should be asked of anyone running for governor of California. Why should you care if you live in Manteca, Ripon, or Lathrop? The answer is simple. The ripple effects that the Bay Area housing market causes are felt for miles away.’

‘Bay Area housing — or more precisely the lack thereof — is why Manteca one-bedroom apartments have broken the $1,100 per month barrier. In Tracy, they are pushing $1,400 a month.’

‘If the Airnb model succeeds as the Internet Age robber barons hope, it won’t be too long until even more working class — and some middle class — San Francisco workers start heading east to look for housing. That will mean better paid SF workers will displace those from housing across the bay who are paid less. They in turn will head east and the domino effect is well underway.’

‘As an added bonus is will put more stress on transit and freeways all so tourists can save a few bucks and a handful of wealthy investors and Internet entrepreneurs can earn billions.’

‘Meanwhile that middle class that Airnb is so worried about will be taxed in a greater proportion to fund government solutions to the displacement issues that occurred in order to make Airnb filthy rich whether it is affordable housing, assistance to the needy or more infrastructure for extended commutes.’

Comment by clark
2015-10-30 06:07:08

‘The potential loss of taxi jobs are dismissed by noting economic turmoil has always been the case as inventions such as the automobile cost blacksmith jobs but created new ones such as auto mechanics.’

Blacksmiths built cars, then robots built the cars, then some of the ‘blacksmiths’ got jobs building robots.
What happens when all the robots are built by robots and all the cars are driverless drones?

Sure, some kind of ‘new’ field could open up for the former robot builders and taxi/truck drivers to work in, but what if that ‘new’ field does not materialize? Current laws and taxation tend to support the conglomerates, the corporations at the top, and lock out the new entrants. Is there any trend to reverse this? Other than AirBed and Uber? I saw a comment the other night suggesting that soon, all website operators must have a license, imagine the fees and regulations for that. That might keep a few bureaucrats employed.

The potential loss of … jobs are dismissed.

Comment by snake charmer
2015-10-30 06:57:47

If we were honest about this, we’d admit that, if we stay on this path, paying jobs for people largely will be eliminated, and the consumer economy won’t survive as a consequence. There will be disruption all right. But not the wealth-creating kind envisioned by the tech crowd. Maybe that’s why they want to live on a giant, stateless ocean liner.

Comment by Ben Jones
2015-10-30 07:20:28

‘Millions of Americans own a piece of the hottest private technology companies through their mutual funds. But no one knows what those investments are actually worth. Consider car-hailing king Uber Technologies Inc., the world’s most highly valued startup. As of June 30, mutual-fund managers at BlackRock Inc. valued the firm’s stake in Uber at $40.02 a share. Hartford Financial Services Group Inc. said $35.67. Fidelity Investments said $33.32.’

‘For individual investors, the risks are mushrooming as mutual funds buy more startup stocks than ever. Such stocks are highly appealing to managers whose investment returns have been hurt by abnormally low interest rates and this year’s lackluster stock market.’

‘Five of the biggest fund firms participated in funding rounds worth a combined $6.1 billion at startup companies last year, up from about $1 billion in 2011, according to data from CB Insights. This year’s total was $8.3 billion as of Sept. 30.’

‘In 2004, Van Wagoner Funds, a large investor in privately held startups during the tech-stock boom of the 1990s, settled civil charges in which the Securities and Exchange Commission alleged that the firm misled shareholders about the size and value of the funds’ investments in illiquid securities.’

‘The mutual-fund firm and its president, Garrett Van Wagoner, agreed to pay an $800,000 penalty without admitting or denying the allegations.’

‘Mr. Van Wagoner says the firm closely followed its valuation policies and procedures. “We thought deep and hard about what was the true value of these securities, but we found out the fundamentals of the companies were going into a nuclear winter, so we aggressively wrote them down,” he says.’

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Comment by rms
2015-10-30 15:28:20

“Blacksmiths built cars, then robots built the cars, then some of the ‘blacksmiths’ got jobs building robots.”
“What happens when all the robots are built by robots and all the cars are driverless drones?”

Give it a few more iterations, and you find yourself in the fetal position dreaming within a Matrix egg.

Comment by rj chicago
2015-10-30 08:21:28

Got net neutrality?

Comment by Mole Man
2015-10-30 10:51:40

This SF anti-AirBnB law is awful. Housecleaners who tidy up short term rentals without realizing could be fined and jailed. This kind of extremism is all but certain to be tossed by higher courts after a lot of expensive wrangling.

Short term rentals are not the problem. An extreme lack of housing units relative to demand is the problem.

Comment by toast on the coast
2015-10-30 11:30:24

When will the real estate biz be disrupted ?
Why can’t I make an offer through my phone directly to the seller?
It’s a $10 job to open a door

Comment by Ben Jones
2015-10-30 14:36:38

‘An extreme lack of housing units relative to demand is the problem’

I don’t agree. Look back a few years when prices were higher and higher in more places. Construction was going nuts. As soon as the mania was pierced, wham, abandoned subdivisions everywhere. Remember in California when the guys in tuxedos were auctioning new houses?

There wasn’t a shortage of houses then nor now. It’s the loans that are driving this thing. One easy thought experiment; what would happen if the government stopped backing loans? Crater. What would happen if FHA or the GSE’s lowered the loan cap in California to the same as say Phoenix? Crater. You could ask anyone with a knowledge of real estate those questions, even a used house salesman, and they would say the same thing.

Comment by Ben Jones
2015-10-30 14:39:43

And I’ll add this; if you did that just in California, Phoenix would crater too, because there are a bunch of Californians buying in Arizona. It’s speculation all around and without the easy money it wouldn’t exist.

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Comment by Professor Bear
2015-10-30 22:51:46

Don’t forget the easy money lending in China and Canada that funded the all-cash foreign investment craze. There has never been a better time to be a highly leveraged real estate gambler!

Comment by Ben Jones
2015-10-30 04:38:23

‘Construction companies are hiring more workers. But the picture for home builders and the commercial real estate industry remains mixed in part due to continued job market problems and a possible interest rate hike either before year’s end or in 2016.’

‘Arizona construction contractors and builders added 7,700 workers the past 12 months, according to the Associated General Contractors. That’s a 6.3 percent growth rate and ranks 11th among U.S. states. It is a better growth rate than Texas (1.5 percent), Colorado (4.1 percent) and Utah (5.1 percent). Those three states had post-recession recoveries quicker than Arizona.’

‘But that same jobs report shows some of the challenges facing the real estate and homebuilding industries when it comes to continued growth. Arizona only added 500 private sector jobs in September and the Phoenix area actually cut 600 private sector jobs in September, according to DOA economists.’

‘Still challenging job growth and employment prospects means employers still aren’t growing and expanding. That puts a downward pressure on demand for commercial real estate space. More than 20 percent of office space in the Phoenix metro area is vacant, according to third quarter data from Lee & Associates Commercial Real Estate Services.’

‘Lindsey Piegza, chief economist at Stifel Fixed Income, an arm of St. Louis-based investment and financial services firm Stifel Financial Corp, said builders are moving on new projects in part because of continued low interest rates and overall higher housing demand nationally.’

‘But she also sees the decline in permits foreshadowing a slower pace of residential construction activity in the coming quarters and continued growth in apartment development displaying wage challenges facing consumers.’

“Multi-family construction remains the name of the game with the majority of new projects focused on rental, condo, and co-op units, a reflection of both a change in preferences, as well as a declining ability to afford a home with stagnant wages,” Piegza said in an analysis of the recent housing data.’

‘Arizona State University housing guru Michael Orr reports out-of-state buyers accounted for 13.7 percent of Phoenix area home sales. That is the lowest since Sept. 2008.’

Comment by ProxyServer
2015-10-30 06:10:51

Prices have simply gone back up to where it makes no sense at all to buy as a snowbird or as an investment rental. Now Crater is underway.

Comment by Ben Jones
2015-10-30 05:02:26

‘Buyers gave luxury properties in Manhattan the cold shoulder last week, with just 25 contracts signed on properties $4 million and up, according to Olshan Realty’s weekly luxury market report. That’s a dip from 31 contracts signed last week, and this week’s average discount – the difference from the original asking price to the last asking price – was 7 percent, compared to 2 percent last year at this time.’

‘For the week of Oct. 19-25, the total weekly asking price sales volume was nearly $182 million, with an average asking price of $7.3 million and median asking price of $5.995 million. The average number of days on the market was 249.’

Comment by Ben Jones
2015-10-30 05:06:42

‘In a review of the month of September let’s start off with prices in the more affordable areas of the housing market in Cochrane. September activity in the apartment style of home shows that only three of these homes sold last month. The average price was $246,150 and the median price was $196,450. September saw 15 new listings in this category and a total of 28 were listed at the end of the month. On average it took 108 days to sell the ones that did sell. So, if you are selling an apartment style home, make sure you are priced properly. If you are considering buying this style of home this is good news.’

‘Moving on to attached-style homes, 13 of them sold in September, down from 16 this time last year. We had 29 new listings come on the market in this category and a total of 78 on the market for sale at the end of the month. The inventory has more than doubled this year. For the ones that sold, they averaged 63 days on the market, which is the same amount of time as in September 2014. Again, if you are selling, be smart with your list price as there are more than double the listings on the market compared to this time last year.’

‘For the detached home market there were 30 sales with 75 new listings coming on the market in September. The total number of detached homes on the market at the end of September equaled 162 homes as compared to 93 this time last year. The average price for the month was $469,183.00 and the median price was $441,000.00.’

‘So what does all this tell us? All three categories show that more homes are coming on the MLS ® for sale and less of them are selling. In all three categories prices have dropped slightly with the apartment style homes leading in this regard.’

‘Also remember that Cochrane is growing with lots of new homes being built. These numbers do not include many of the new homes that are for sale by builders.’

Comment by taxpayers
2015-10-30 05:22:03

Zillow predicts 12% + for LA ?
Free drugs ?

Comment by Jingle Male
2015-10-30 05:51:27

“Matt Miale, aa Connecticut realtor at Keller Williams, says the latest census numbers show that about 15,000 more people are leaving the state then moving in…….”

Building new homes in a declining population is a fools game. Go build in an area where people want to live.

Comment by Ben Jones
2015-10-30 06:26:42

‘The map above, from the U.S. Census, shows the 10 largest net migration flows between California and other states. The red arrows show the largest flows from 1955 to 1960, while the blue arrows show flows between 1995 and 2000. Between 1955 and 1960, people from all over the U.S., but especially the Midwest and Northeast, were moving to California. But by the late 1990s, nearly all of the largest migration streams were out-migration to other states.’

‘The map shows two very narrow time periods, but they follow the broader trend. California’s huge influx of migrants in the mid-20th Century had begun to wane by the late 1980s. In every year between 1990 and 2010, California experienced a net loss of domestic migrants.’

Maybe you can fill the gap with Guatemalans. But I have to wonder if they can afford your houses. Nah, they’ll just flop out on your welfare state.

I’ve been to California. I could have moved there anytime. I don’t really like it. It looks just like Arizona or Nevada to me, but a lot more expensive. Yet, I see California license plates all the time; in Sedona, Flagstaff, even Phoenix. When I go back to Texas, there are Californians everywhere. You guys don’t need any more houses.

Comment by Ben Jones
2015-10-30 08:01:17

‘Fresh & Easy, the European-styled twin to Trader Joe’s grocery chain, on Thursday was well into its final wind-down. Shelves, dairy cases and produce bins looked as if they were almost picked clean at several locations. The Torrance-based chain with 97 stores California, Arizona and Nevada – nearly a dozen in Inland Southern California – sent e-mail notices to customers on Wednesday, Oct. 22, to advise of plans to liquidate and close within a couple of weeks.’

‘Layoff notices have also been presented to roughly 3,000 workers, several of whom work in the Riverside distribution plant.’

‘Lisamarie Deatherage, a Calimesa customer who has shopped at the store since British retail king Tesco brought the conglomerate of stores to Southern California just as the real estate bubble was about to burst, said she is reeling over the news. Deatherage said she relied on the store because it relieved the pressure of making a good meal for her family while commuting to her job in San Dimas. “It takes me two hours to get to work, so standing in long lines at other grocery stores has never been an option for me.”

Comment by clark
2015-10-30 08:35:17

“It takes me two hours to get to work, so standing in long lines at other grocery stores has never been an option for me.”

That. Is. Just. Insane.

That, and two inch gaps between houses.

Just my perspective from fly-over country,… where there’s plenty of dribble out realestate price fixing and, Miles of cornfields, yet building is restricted to tiny spots here and there. It’d be so easy to build something on the cheap if it weren’t for all the building restrictions and such regulations our emperors proclaim. And buildings sit and rot for lack of someone doing something with them, because, regulation$.

SJW insert - ‘but, but, we have to protect the people from themselves, just like ‘we’ promote low cost housing via FHA et al.’

Protect them to death, they mean, but won’t ever admit. Serf city USA.

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Comment by Mafia Blocks
2015-10-30 08:37:48

The zoning restrictions you speak of are overstated.

Comment by WPA
2015-10-30 08:47:08

The zoning restrictions you speak of are overstated.

I agree. There are many parts of flyover where the building permit fees are a small fraction of what they cost here in Calif. and a lot less restrictive.

Comment by Mafia Blocks
2015-10-30 09:00:21

$500 building permits have nothing to do with grossly inflated asking prices of resale housing.

Comment by WPA
2015-10-30 09:44:38

$500 building permits have nothing to do with grossly inflated asking prices of resale housing.

I agree with that too.

Comment by Mafia Blocks
2015-10-30 10:09:18

Your schooling is sinking in Lola. Good for you.

Comment by Mafia Blocks
2015-10-30 10:23:12

You brought up the topic Lola.

Comment by Bluto
2015-10-30 10:42:54

The two inch house gaps are not so strange if you grew up with them, most houses in San Francisco (including many very old ones) are that way so it seemed perfectly normal to me as a kid…but do remember it was jarring for many visitors.
However having moved away 20 years ago and living in places with much more separation from the neighbors it would be hard to go back to that. For someone moving out of an apartment it might not be so bad….

Comment by MightyMike
2015-10-30 15:36:24

A lot of it does have to with what people are accustomed to. When you see houses so close together in a city like San Francisco, it makes sense. It’s part of urban living. When houses are built like that in the suburbs, it’s just looks bizarre. Places like that sometimes have many of the drawbacks of living in a city without the benefits.

Comment by redmondjp
2015-10-30 16:54:42

Wrong again, HA. Growth-management laws (thanks to UN Agenda 21 and implemented by local and state government) have a lot to do with it.

You know the argument you give me about why grocery prices are so high? Same deal here.

Comment by Mafia Blocks
2015-10-30 17:06:10

“Meat” Prices!

Comment by MightyMike
2015-10-30 14:23:09

“It takes me two hours to get to work, so standing in long lines at other grocery stores has never been an option for me.”

There’s must some time of the day or evening when she can go to a more conventional supermarket and not spend so much some time waiting in line.

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Comment by redmondjp
2015-10-30 16:55:54

She’s buying dinner at the deli, since she doesn’t have time to cook it. That’s why she is so upset - that the deli won’t be close to home any longer.

Comment by Mole Man
2015-10-30 11:02:07

Immigration from central and south America is way down from peak. Many of the newcomers have money, skills, and an entrepreneurial mindset. India and Pakistan are strongly represented along with east Africa: Ethiopia, Eritrea, Sudan. California has major challenges but that isn’t stopping skilled people from moving here.

Comment by Mafia Blocks
2015-10-30 13:27:59

The problem is more are baling out of CA than moving in.

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Comment by MightyMike
2015-10-30 14:25:54

The population is still growing. That’s the problem.

Comment by Mafia Blocks
2015-10-30 16:32:42

If it were true, it might be a problem. The fact remains population is falling in CA.


Comment by MightyMike
2015-10-30 17:01:21

2000 33,871,648
2010 37,253,956
Est. 2014 38,802,500


Comment by Mafia Blocks
2015-10-30 17:08:07

Updated data.

California Sustains Net Population Loss Of 1 Million


Comment by MightyMike
2015-10-30 17:23:00

That article doesn’t say that the population declined. It only considers migration between CA and other states. So it doesn’t consider foreign countries or births and deaths.

Comment by Mafia Blocks
2015-10-30 17:54:23

Sure it does. The article clearly states CA population is in decline and is inclusive of foreign immigration.

Comment by MightyMike
2015-10-30 18:04:05

You must not have read it.

Despite the loss of residents to other states, California continued to grow during the last decade because of natural increase - more births than deaths - and foreign migration.

Comment by Mafia Blocks
2015-10-30 18:10:32

Perhaps you’re ignoring the operative data.

About 5 million Californians left between 2004 and 2013. Roughly 3.9 million people came here from other states during that period, for a net population loss of more than 1 million people.

Comment by MightyMike
2015-10-30 18:19:24

Trust me, you’re not reading it correctly. As I stated previously, that section only covers domestic migration.

Comment by Mafia Blocks
2015-10-30 18:28:42

There’s only one way to read ‘net population loss’. Trust me on that one.

Comment by Jingle Male
2015-10-31 01:28:08

Mighty Mike, don’t try to confuse HA with facts or analysis. He cannot understand either.

California a is growing by over 1,600,000 people each year.

Comment by rj chicago
2015-10-30 08:20:12

And here in ILLANNOY - the same….


I can’t remember if it is WPA or who lambasting me a couple of weeks back about why it is that I post this stuff all the time about ILLANNOY - and yet - in the face of it all - facts and math are horrible things aren’t they?

If interested in how this state is just utterly ‘gone’ read a few of the posts here: https://www.illinoispolicy.org

Comment by Cracker Bob
2015-10-30 09:12:24

I am surprised that southern Illinois does not try to become the 51st state. It looks like a nice ag region.

Comment by snake charmer
2015-10-30 11:07:45

I’ve been hiking down there and you’d never guess that it and Chicago are in the same state, although the same could be said for Miami and some parts of north Florida. Some of the small towns were really struggling, just fast-food outlets, auto parts stores and a Wal-Mart at the edge of town.

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Comment by Anonymous
2015-10-30 12:33:47

“I’ve been hiking down there and you’d never guess that it and Chicago are in the same state…”

I think the same thing every time I visit the parts of California lying east of the Sierras!

Comment by WPA
2015-10-30 09:46:01

It wasn’t me :-) I don’t mind your posts about the slow-moving train wreck called Illinois…

Comment by rj chicago
2015-10-30 12:57:17

Sorry man - my near 60 yr old brain don’t hold much anymore. I rely way too much on anecdotes and such. No harm meant.

I found this one though that gave me a laugh…..Lifted this from Confounded Interest….

Puerto Rico leads all American States in terms of 2Y yield spread relative to the benchmark yield. In a distant second place is Illinois, the pension plan disaster state (new slogan for their license plate?)

No more the Land of Lincoln - now “The Pension Plan Disaster State.” That is just way too rich.

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Comment by WPA
2015-10-30 08:30:13

Latest official figures show California’s population is increasing

“SACRAMENTO — California’s population grew by 0.9 percent in 2014, adding 358,000 residents to total 38,715 ,000 as of January 1, 2015″

This excerpt is hilarious

“The City of Taft in Kern County was the fastest growing city in California, increasing by 6.3 per cent. All of the growth in Taft can be attributed to the reopening of a community correctional facility”


Comment by Mafia Blocks
2015-10-30 08:40:14

…. and down 1 million+ since 2003.

Given the poverty and rampant crime in CA, I’m shocked it’s far higher than 1 million.

Comment by Ben Jones
2015-10-30 08:59:37

From the land of the half-million double-wide:

‘Report commissioned guiding future of urban development in oilsands’

‘The 140-page document was developed by consulting firm Teleologic and commissioned by the Wood Buffalo Chamber of Commerce, Fort McMurray Realtors and the Wood Buffalo Urban Development Institute. It’s a follow-up to the Radke report, a 2006 document commissioned by then-premier Ed Stelmach to address the multiple needs and stresses created by the boom in oilsands development.’

‘Another recommendation has to do with land release and transportation. Fort McMurray is surrounded by Crown land, and the province controls its release and sale price. The province, the report states, has never clearly outlined its motivations for releasing land, whether it’s to promote development or to maximize revenues for the province.’

‘It cites as an example the 2011 negotiations by the Fort McMurray Rotary Club to buy land on Saline Creek Plateau. The province’s asking price was $360,000 an acre, which was eventually negotiated down to $110,000 an acre a year later.’

‘The primary reason for the high cost of development in Fort McMurray, the report argues, is that the province does not release land in a timely fashion and bases its land valuation on how much previous parcels of land sold for.’

‘When asked what impact a more regular land release would have on housing prices in Fort McMurray, the sponsors were emphatic that it would not result in a crash. The idea would be to stabilize housing prices until prices in the rest of Alberta catch up.’

‘No developer is going to build more houses than it can sell, said Bryan Lutes, President and CEO of the Wood Buffalo Housing and Development Corporation and board member of the Chamber of Commerce. “It’s been a bit of a red herring here for years that you flood the market with land and you drive the prices backwards, and everyone is going to fail.”

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Comment by taxpayers
2015-10-30 10:44:34

see howmoneywalks.com irs data
ca losing billions

Comment by WPA
2015-10-30 09:00:57

Not true. Calif population in 2003 was 35.3 million, and today it is 38.7 million. There has never been a year-over-year decline in California population. A slowing of growth but never a decline.


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Comment by Ben Jones
2015-10-30 09:03:18

In every year between 1990 and 2010, California experienced a net loss of domestic migrants

Like I said, load up on them Guatemalans California. You can then put them in your reopened prisons.

Comment by Mafia Blocks
2015-10-30 09:04:48

Nope. Your data is flawed and old.

Updated data.

California Sustains Net Population Loss Of 1 Million


Comment by Rental Watch
2015-10-30 09:24:40

Most years, but not every year. The total from about 1997-2003 was about even (with a couple of good in-migration years).


Higher home prices pushed people out during the housing bubble, despite the economy doing well.

Comment by WPA
2015-10-30 09:48:54

Nope. Your data is flawed and old. Updated data.
California Sustains Net Population Loss Of 1 Million

That headline is not true because in the article it says they only considered domestic migration and ignored foreign immigration.

Comment by Mafia Blocks
2015-10-30 10:05:28

Nonsense. In fact it specifies foreign migration.

Here’s what we need to keep in mind.

25 MILLION excess, empty and defaulted houses CHECK

Housing demand at 20 year lows and falling CHECK

Housing prices inflated by 250% CHECK

Household formation at multi decade lows CHECK

Rampant housing fraud CHECK

A media corrupted by the housing industry CHECK

Population growth the lowest in US history CHECK

Immigration flat to slightly negative CHECK

Comment by rms
2015-10-30 16:53:31

There’s only 500 people in California a la Half Moon Street.

Comment by Jingle Male
2015-10-31 01:57:19

HA, you must be a complete idiot.

CA 2003 population = 35,000,000

CA 2015 population = 40,000,000

You think an increase of 5,000,000 is a loss of 1,000,000. No wonder you believe there are 25,000,000 vacant houses in the US. You’re missing 6,000,000 people just in CA.

HA, Ha, ha, ha, hàaaaaaaaa!

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Comment by Mafia Blocks
2015-10-31 02:45:50

Data my friend. Data.

California Sustains Net Population Loss Of 1 Million Since 2003


Comment by Senior Housing Analyst
2015-10-30 06:16:04
Comment by Senior Housing Analyst
2015-10-30 06:20:52

San Diego, CA Housing Craters; Prices Plummet 15% YoY


Comment by Jingle Male
2015-10-31 01:58:23

PB, are you seeing prices drop 15%? HA!

Comment by Mafia Blocks
2015-10-31 02:47:10

Falling housing prices my friend. Falling housing prices.

Davis, CA Housing Craters; Prices Fall 5% YoY


Comment by Senior Housing Analyst
Comment by Senior Housing Analyst
2015-10-30 06:37:49

Sacramento, CA Foreclosures Balloon 49%


Comment by rms
2015-10-31 03:17:55

From the link: “But we still do have a lingering so-called shadow inventory of properties that got into trouble during the last housing bubble,” says Blomquist, “and still have not been resolved.”

That’s a long time. Who is stalling the re-sale process?

Comment by Senior Housing Analyst
2015-10-30 06:42:01

Rocklin, CA Housing Craters; Prices Fall 5% YoY


Comment by rj chicago
2015-10-30 08:14:29

Ben et. al.
Did any of you happen to catch Mark Hanson’s post today on the huge bubble in housing. His back of the envelope calcs for the SF Bay Area are very telling as to where that area is and me thinks many of the other hot momo markets in the US.

Comment by WPA
2015-10-30 09:33:04

I disagree with his analysis. He says “It’s NOT DIFFERENT THIS TIME…”

The current overpriced, overextended housing market bears no resemblance to 2005. 2005 was like the stock market in 1999 where Average Joe jumps in with both feet — a true Tulip-style mania where everybody is a buyer. This market is not like that, not at all — in fact, Average Joe isn’t buying because he can’t afford to and is renting instead. This time there’s cash investors, institutional buyers, foreign capital. It may end ugly but it will be a very different ugly than 2009-2011.

Comment by Mafia Blocks
2015-10-30 10:07:08

It’s is precisely like 2005 considering it’s the very same mania x10.

There is a reckoning just starting to play out and it’s positively bullish and good for the economy.

Comment by rms
2015-10-30 16:58:28

“It may end ugly but it will be a very different ugly than 2009-2011.”

I remember Japanese ugly; it was fugly.

Comment by SD_LI
2015-10-30 11:11:50

RJ Chicago, can you post a URL to Hanson’s blog post that you’re talking about? Thanks!

Comment by Ben Jones
Comment by rj chicago
2015-10-30 15:26:58

Ben - that is the one.
SD - sorry I forgot to paste the linky.

Comment by clark
2015-10-30 14:12:31

RE: ‘The zoning restrictions you speak of are overstated.’ I wasn’t talking about the permit fees, I was talking about the inability to build due to zoning restrictions. Many Midwestern cities are surrounded by miles and miles of dirt fields with plenty of potential yet zoning laws forbid building houses on them, or putting up mobile home lots, or building in a such a way as to not conform to certain expectations, i.e. no tiny homes, house must be X feet from the road and facing it, etc. Agriculturally zoned land stays that way unless you’re a developer with deep pockets and who can pull strings.
Tiny 1940’s and 1950’s two and three bedroom Alcoa slab homes in the city go for $100,000 here, two of them sold just across the street from me this year. I don’t think they were worth a Dollar more than $25,000 - maybe not even that - but they got buyers, and now they are rented. Fact is fact. I don’t know if they cash flow positive, but it’s all a bit ridiculous seeing as how there is so much empty and usable land around this city. Dribbled out price fixing, as far as the eye can see.
Can I buy a lot from a farmer and put up a tiny house or put in a mobile home? No. The overlords here won’t allow it. That’s a fact, Jack. … er, data, my friend, data.

Comment by Mafia Blocks
2015-10-30 16:35:30

I wasn’t talking about permit fee’s either.

The fact remains you’re overstating a false assertion about zoning restriction.

Comment by redmondjp
2015-10-30 17:02:27

It’s not false. Step out of the tiny box you have put yourself inside of. All of the information to back this up is easily available public information.

A friend of mine lives in rural Snohomish County on 5 wooded acres. There are now multiple code violations (for having too many unpermitted living structures, most of which are mobile homes) that have each maxed-out at $20K each. This is out in the country in the woods.

Comment by Mafia Blocks
2015-10-30 17:10:43

Code violations and zoning restrictions are entirely different things my friend. *Learn* the difference.

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