November 21, 2015

Luxury Apartments … Going Up In The Hood

A weekend topic on rents, affordability and the housing bubble. WWLTV in Louisiana. “Uptown remains one of the most expensive places to live in New Orleans. Realtor Greg Jeanfreau said the current growth and demand for housing in New Orleans is unprecedented. It has its plus and minuses. ‘You have people moving here from other parts of the country. To them, $500,000 is like $50,000 to us, and it doesn’t seem like that much. It’s a pretty wild time. There’s a lot of excitement, but there’s a lot of things happening and there’s people that aren’t happy about it.’”

“According to a report by HousingNOLA, rent in New Orleans have jumped 50 percent from 2000 to 2013. Home values have soared 54 percent in that same time frame. Harold Brooks said he’s feeling that pressure. For almost 20 years, Brooks has lived at a house on St. Claude Avenue near Poland Avenue in the Upper 9th Ward. It’s an area that Brooks says is increasingly gentrifying, driving up the costs of homes and rent around him. ‘You’re going to do one of two things: If you own a house, you’re going to sell it, if you’re renting, well, you’re just going to move.’ Brooks said.”

The Star Tribune in Minnesota. “Ralph Gilbertsen, 74, lives on about $900 a month from Social Security and pays around $250 for his one-bedroom apartment. The balance of his $750 rent is covered by Section 8, a federal government program that provides housing subsidies to low-income people. But Gilbertsen, along with hundreds of other residents, will have to find a new home. The Crossroads has been sold to a developer who’s spending millions of dollars to bring it upmarket.”

“It’s a scenario being played out across the Twin Cities, housing advocates say. With apartment vacancy rates in the metro area hovering around 2 percent, landlords have the market clout to raise rents and refuse vouchers, both steps that tend to force out low-income residents. ‘Crossroads is a huge example of this happening, and I think we’re going to continue to see it across the metro area,’ said Eric Hauge, an organizer with Home Line, a nonprofit tenant advocacy group. ‘It’s not illegal to discriminate against poor people.’”

The Yale Daily News on Connecticut. “I hadn’t come to the New Haven mayoral debate expecting fireworks. Everyone knew incumbent Mayor Toni Harp was going to win re-election in a landslide. But the forum had a tense moment when her opponent Ron Smith, former city clerk and Newhallville alder, criticized the new wave of ‘luxury apartments … going up in the hood.’ He cited Winchester Lofts in Newhallville as one example, whose units are unaffordable to many residents of the Elm City. ‘You know good and well,’ he said, his voice rising, ‘we can’t afford $1,900 a month.’”

The News Press in Florida. “The good news from a Zillow market report Friday was more apartments are opening across the county, slowing the rate of rising rents. The operative word is slowing. Rents continue to rise much faster than the historical norm, and faster than incomes, the Zillow October Real Estate Market Report says. ‘The owners I deal with, who read the national reports of rising rental trends, push me to raise their rents even higher. What they don’t realize is we’ve already increased them by a couple hundred dollars,’ says Larry Simons of Home Hunters USA, a leader in the local apartment market.”

Vegas Inc. in Nevada. “Las Vegas’ rental market has heated up in recent years, with investors buying cheap homes in bulk to lease out and landlords buying and building apartment complexes. The growth in rental prices, however, is far from robust, a new report shows. The median home-rental price in Southern Nevada was $1,214 a month in October, up 2.6 percent from a year earlier, according to Zillow.”

“Investors flooded Las Vegas and other hard-hit cities after the housing bubble burst to scoop up cheap rental homes. The buying binge pushed up local home values at one of the fastest rates nationally, raising fears of another bubble. Apartment investors also flocked to Southern Nevada to buy and build properties. In Southern Nevada, by comparison, investors are paying an average of $80,401 per unit for rental complexes this year, according to brokerage firm Colliers International.”

“Most of the construction today is in the southwest valley and Henderson, and some real estate pros have said developers might be overbuilding.”

Nevada Public Radio. “Keith Lynam, president of the Greater Las Vegas Association of Realtors, told KNPR’s State of Nevada that stability has returned to the Valley’s housing market. He said home appreciation is getting closer to where it should be and there are no ‘hot pockets’ of neighborhoods that are outpacing the rest of the valley. ‘It’s a great time to buy and a great time to sell,’ Lynam said.”

“However, Lynam said there are still 40,000 vacant homes in Southern Nevada that need to be dealt with. ‘We’ve got a tremendous amount of vacant homes out there that we need to address,’ Lynam said, ‘And unfortunately none of us can do anything about. It’s those people in the financial institutions that need to take an action on that.’”

The Union Tribune in California. “A new report from the federally backed National Resource Network published a long list of economically challenged cities, with a focus on California. The report spotlights our state because of its size and urbanization – and its high concentration of distressed places. The ‘Hidden In Plain Sight’ report lists 77 distressed California cities – defined as those with at least one of the following: unemployment rates above 9 percent as of 2013, where 20 percent or more adults are in poverty or where the population had declined by at least 5 percent over the last decade.”

“The report echoes data from the U.S. Census Bureau. Using the bureau’s newer supplemental poverty measure, California’s poverty rate over 2011 to 2013 was 23.4 percent, representing about 9 million people. This is the highest poverty rate of any state ‘largely due to California’s high housing costs relative to the rest of the country.’ The data is a bit old, but there’s little question that distress levels remain high in these places.”

“Urban writer Joel Kotkin, a fellow at Chapman University in Orange, fears California is becoming a ‘feudal society’ – an economic system with rich and poor and where people lack the opportunities to move into a different economic class. In his view, the state’s tax and regulatory policies are driving good blue-collar jobs to other states, while California’s land-use policies drive up the cost of housing, making it harder than ever to climb those economic rungs.”

The Kingman Daily Miner in Arizona. “David Sexton recently moved to Golden Valley from ‘Commie-fornia’ to escape government overreach, and that’s what he sees in a Mohave County zoning ordinance that would restrict the sale and relocation of manufactured homes older than seven years. ‘They’ve regulated themselves into Third-World status,’ Sexton said of California’s failing economy. ‘Old mobile homes have a following like old cars. People love them for what they are, and unfortunately, they’re both being regulated into oblivion.’”

“Sexton was among more than a dozen people who spoke Monday at the Board of Supervisors regular meeting in opposition to the ordinance that was scheduled to take effect Dec. 2. Supervisor Jean Bishop, whose district covers Golden Valley, Dolan Springs and Chloride, made a motion to postpone enforcement of the ordinance and send it back to the Planning and Zoning Commission for reconsideration or repeal. The board voted 5-0 to approve her motion.”

“The purpose of the ordinance, which was recently adopted by the board, is to make sure manufactured homes meet federal construction standards and that they’re consistent with surrounding development. Bullhead City enacted a similar ordinance a few years ago to clean up blighted neighborhoods. ‘We already have a tool called code enforcement,’ Elise Herron told the board.”

“Golden Valley resident Carmen Johnson asked for a complete repeal of the ordinance, saying it creates a hardship for low-income families wanting to move to the valley and for anyone who wants to buy a mobile home over seven years old. ‘Effectively, this eliminates growth and the creation of jobs and business,’ Johnson said. ‘It’s condemnation,’ added Margaret Wene. ‘You destroyed the values of our property, but you want to put a value on it and tax us. You’re going to destroy the valley and all the other areas.’”

“Supervisor Hildy Angius agreed with citizens’ comments about code enforcement issues and overregulation. ‘I think this is a really misguided ordinance and if it was up to me, I’d take it off now and don’t even waste any more time,’ she said.”




RSS feed

60 Comments »

Comment by Ben Jones
2015-11-21 06:37:29

‘The owners I deal with, who read the national reports of rising rental trends, push me to raise their rents even higher. What they don’t realize is we’ve already increased them by a couple hundred dollars’

And they are paying too much because of the hype.

‘Residential rents are rising more than normal — but those gains are getting smaller. Rents in October were 4.5 percent higher nationally than they were a year ago, according to a new report from Zillow. Compare that with 5.3 percent annual gains in September and 6.6 percent gains in July, when rents hit their high.’

‘It will take a lot more supply in more affordable neighborhoods to ease the pain. Apartment developers have largely been focusing on prime, downtown locations, where demand and price returns are highest.’

‘After a boom in multifamily construction over the past five years, the numbers are coming down. Multifamily housing starts fell over 8 percent in October compared with October of 2014, according to the U.S. Census. There have also been some high profile sales in the market.’

‘At least 1 in 4 renters, or 11.2 million renter households, were severely burdened by rents that took up over half their incomes, according to Harvard’s Joint Center for Housing’s last count in 2013. Looking at recent demographic trends, researchers there project that number could increase by 11 percent to 13.1 million by 2025.’

Comment by Ben Jones
2015-11-21 07:04:01

‘At least 1 in 4 renters, or 11.2 million renter households, were severely burdened by rents that took up over half their incomes’

How progressive! The market will fix this situation, but not before many billions in loans are defaulted on and millions of lower income people have seen years of being grinded into more poverty. And we see Yellens magic money machine, hard at work to create more inflation! Mel is hard at work, providing easy money to apartment “investors” so they can “upgrade” and jack up rents. That grinning ape at HUD is doing his part too.

Where’s the shame for these people? Who is qualifying renters at half their income?

‘Lynam said there are still 40,000 vacant homes in Southern Nevada that need to be dealt with…‘And unfortunately none of us can do anything about. It’s those people in the financial institutions that need to take an action on that.’

These 40,000 houses have been sitting there for many years.

‘The owners I deal with, who read the national reports of rising rental trends, push me to raise their rents even higher. What they don’t realize is we’ve already increased them by a couple hundred dollars’

You know why this guy is worried? Because he has to collect these rents. He knows like I do that if people can’t afford their rent, the result is stress. Stress for the tenant, stress on their families, stress on the landlord, stress on everybody that deals with these people.

Comment by Combotechie
2015-11-21 07:42:31

High rents serve as backing for the high prices of houses.

The high prices of houses serve as backing for equity.

Equity equals wealth.

Destroy the prices and you destroy equity, hence you destroy wealth.

This is stupid but this is where we are.

Comment by Professor Bear
2015-11-21 15:37:04

What I don’t get is, at what point did protecting the equity in absentee Chinese investor-owners’ U.S. residential property investments become such a high political priority for the Federal Reserve?

(Comments wont nest below this level)
 
 
Comment by Professor Bear
2015-11-21 14:19:12

“Where’s the shame for these people? Who is qualifying renters at half their income?”

Those are the lucky ones whose incomes barely enable them to pay rent.

Lots of less fortunate folks live homeless because they can’t afford to pay rent.

 
Comment by snake charmer
2015-11-21 15:23:14

Apart from those individuals and entities who are acting in an actively malevolent manner, amongst our leadership there doesn’t seem to be the slightest clue as to what’s going on. Greed-driven malinvestment is being opposed by … what, exactly? Maybe we think that people will be distracted by sports, Kardashians, ISIS, and their phones forever.

And yes, the Democratic Party flunks this situation. Both political parties flunk this situation. And a lot of situations related to the bubble.

 
 
 
Comment by Ben Jones
2015-11-21 06:41:10

‘This chart shows something’s gone wrong with the US housing market’

‘Here’s a chart that appears in a talk White House Council of Economic Advisers Chair Jason Furman delivered this morning at the Urban Institute. It shows that across the country as a whole, the price of houses has grown much more rapidly than the price of building houses.’

Comment by Professor Bear
2015-11-21 16:09:01

‘This chart shows something’s gone wrong with the US housing market. It shows that across the country as a whole, the price of houses has grown much more rapidly than the price of building houses.’

This must be due to the foreign savings glut. It is a foregone conclusion that endless liftoff postponement has nothing to do with the situation.

 
 
Comment by Ben Jones
2015-11-21 07:12:14

‘New rules intended to protect renters in Portland’s red-hot housing market led to an unprecedented number of rent increases for low-income tenants, according to housing authority officials. The Portland City Council approved new renter protections last month in response to the city’s record-high rent increases and record-low vacancy rates. Tenants must now receive 90 days’ notice of an increase of 5 percent or more, or for a no-cause eviction.’

‘The new rules took effect Nov. 13, 30 days after the City Council vote. Housing advocates openly worried that landlords would rush to raise rents and evict tenants in the interim.’

‘Michael Buonocore, Home Forward’s executive director, called the flood of requests unprecedented, but he also noted a three-year trend of rising rents for low-income Portlanders. Still, “this year is higher,” he said, with more than 3,000 requests so far this year. That means most Section 8 voucher-holders will see rent increases this year.’

“I’ve never seen where we’ve had the majority of our owners raise the rent,” said Dena Ford-Avery, Home Forward’s director of housing choice vouchers, who’s worked for the agency for nearly 28 years.’

 
Comment by Ben Jones
2015-11-21 07:21:41

‘Lynard Khan grew up watching his immigrant father run several low-rent apartment buildings in downtown Sacramento and co-owned one himself a quarter-century ago. Now Khan, a 64-year-old real estate investor, is getting back into the “family business.”

‘He recently acquired the historic Golden Hotel, one of the single-room-occupancy buildings his father managed and the same property he owned with his half-brother, Mohammad, for 15 years until 1990. The century-old building at 1010 10th St. had fallen into disrepair. Crime and nuisance issues were mounting, And Mohammad, who had remained as owner, began looking for a buyer. Khan stepped up.’

‘But Khan said he’s not sure an SRO makes sense anymore right in the heart of downtown redevelopment, next door to the upscale Grange Restaurant & Bar. And with just 24 rooms, the operation simply doesn’t “pencil” with current rents around $400 a month.’

‘One option is to refurbish the entire building and make it a “completely different caliber” of SRO, Khan said. But he’s not sure there are enough people willing to pay the $500 to $700 a month he’d need to charge to justify that investment.’

‘Another possibility is making it into a hostel or European-style pensione for visitors to the city seeking a night’s stay for under $100. Also under consideration: converting the building into office suites available for rent by the day, week or month.’

‘Whatever the decision, Khan said he’s committed to helping out the people still living at his building by upgrading their current space or finding them new housing. “They were the source of our livelihood,” Khan said of those who populated the family’s low-rent properties.’

So your half-brother lets it fall apart and now you are “stepping up”. I’m sure the “finding them new housing” will basically be handing them an eviction notice.

Comment by taxpayers
2015-11-21 07:30:42

A tad late Mr Conn

 
 
Comment by Ben Jones
2015-11-21 07:32:28

‘Germany’s housing market is hot. Rents are rising in big cities including Berlin and Hamburg as young people seeking work move there from rural areas and elsewhere in Europe. Construction, however, has been slow to catch up, which has led to housing shortages and made leasing apartments a bonanza for landlords.’

‘Low interest rates make it cheaper than ever for companies to buy apartments, fueling record acquisitions by landlords. The surge in mergers and acquisitions, coupled with rising stocks, have allowed the market value of Germany’s publicly traded landlords to grow tenfold since 2012. The top two — Vonovia and Deutsche Wohnen AG — are now among the world’s biggest owners of homes, surpassing peers in the U.S. What’s more, Vonovia wants to buy its rival to create Europe’s No. 2 property company.’

Comment by FL_Skeptic
2015-11-21 09:18:15

So how are all these “Syrian Refugees” that are headed there, going to live? It does not look like they can afford that red hot market price.

Comment by Ben Jones
2015-11-21 09:59:33

THE PRESIDENT: Is this about housing? (Laughter.) All right.

And keep in mind, hundreds of thousands of new buyers is going to mean a healthier housing market for everybody. So how many people here own their own home? (Applause.) All right. So even though you’ve already got your mortgage or your loan, already have your home, if your neighbors are buying more homes, that’s lifting the whole market here, which means the value of your home starts going up. And that’s good for you.

https://www.whitehouse.gov/the-press-office/2015/01/08/remarks-president-housing-phoenix-az

‘Today, our housing market is healing. Home prices are rising at the fastest pace in 7 years…And even though we’re not where we were need to be yet, Phoenix has led one of the biggest comebacks in the country. Home prices have risen by nearly 20% over the last year.’

http://www.abc15.com/news/region-phoenix-metro/central-phoenix/full-text-president-obama-delivers-speech-at-desert-vista-high-school

‘Step three is something you don’t always hear about when it comes to the housing market – and that’s fixing a broken immigration system. It’s pretty simple: when more people buy homes, and play by the rules, home values go up for everybody. According to one recent study, the average homeowner has already seen the value of their home boosted by thousands of dollars, just because of immigration.’

http://blogs.wsj.com/washwire/2013/08/06/text-of-obama-speech-on-homeownership/

Comment by Ben Jones
2015-11-21 10:36:56

‘Welcoming refugees to the United States has become a highly charged political issue in the wake of last week’s terror attacks in Paris. But the small group of U.S. property owners who lease homes to refugees have come to learn something that has been noticed in this heated debate: Renters from regions suffering the gravest instability tend to make the most stable tenants. Renting to refugees, it turns out, has become a surprisingly steady business.’

‘Keith Raynor, who has rented apartments in Utica, New York, for the three decades, also prefers to sign leases with refugees. “There was less turnover, which helps with the bottom line,” he says. “I’m not doing this for charity.”

‘For the last five years, Daryl Anderson has been buying foreclosed homes in Cleveland on the west side of the Cuyahoga River, usually for less than $8,000. He fixes them up and rents most of the homes to new arrivals from Iraq, Somalia, and the Democratic Republic of the Congo, among other places mired in conflict.’

‘Anderson’s steady relationship with Us Together has created a dependable flow of new tenants, which in turn helps him bring two new rental apartments onto the market per month.’

‘When a tenant moves out, Us Together helps Anderson fill the vacancy. When he finishes a new renovation, the nonprofit often has someone ready to move in. “If I post on Craigslist, I’ll get 10 responses, and I’ll show the apartment to six of them,” the landlord says. “That’s harder.”

(Comments wont nest below this level)
 
 
Comment by taxpayers
2015-11-21 13:11:22

same as EU w 70% on welfare

 
 
 
Comment by FL_Skeptic
2015-11-21 08:37:02

I smell B.S. Here is an apartment, 10 miles from Miami, 2Bedrooms for $715 per month.
http://miami.craigslist.org/mdc/apa/5325340680.html

Comment by alphonso bedoya
2015-11-21 22:48:55

One cannot find a 2/2 in Coral Gables for $1715, let alone $715.

 
 
Comment by FL_Skeptic
2015-11-21 08:39:50

Here is a nice 2 Bedroom house, 30 miles from Miami, for $650/month

http://miami.craigslist.org/mdc/apa/5325267761.html

 
Comment by Bobby Mac
2015-11-21 08:55:44

Everything is affordable when you only have to put 3% down! Everything is affordable when LBO’s can borrow money on the cheap! Everything is affordable….until it isn’t….and then the blame game starts….nobody is responsible….everybody is a victim! How could I know housing was over priced? How could I know that we were still in a bubble??!!

Comment by Combotechie
2015-11-21 09:17:53

Yes! Affordable isn’t about the price, affordable is about the monthly payments.

Chop up a high price into many, many - MANY - pieces and then pay for the high price one little piece at a time and you will then have before you …

(ta da)

AFFORDABLE!

PFM (Pure Fkin’ Magic)

Comment by Combotechie
2015-11-21 09:28:18

Affordable defined as paying for something one-piece-at-a-time can support some mighty hefty prices, and some mighty hefty prices can represent some mighty chunks of equity - mighty chunks of wealth, so …

… it is all GOOD!

Comment by Mafia Blocks
2015-11-21 12:40:46

Ignoring the losses to depreciation, taxes and insurance results in default.

So much for affordability.

(Comments wont nest below this level)
 
 
 
 
Comment by Ben Jones
2015-11-21 10:09:59

‘The problems in Stephanie Wolff’s newly purchased home are drowning her in costly repairs and stress. “I settled on a Thursday. It rained that weekend, and I had a huge flood in the basement,” she said.’

‘A few blocks away from her Petworth neighborhood, another homeowner was experiencing his own problems. “My wife noticed the water,” said James Weigand. He shot home video of rain water streaming through the electrical panel box in the renovated home he bought. “That’s really dangerous,” he said.’

‘And Brian Jacobson had no idea that his new home would have housing code violations that touch every floor. “The place is only permitted for 25 lights,” he said. When WUSA9’s Lesli Foster asked, “How many lights do you have?” Brian said, “at least 70.” “So, that’s a fire hazard,” Lesli said. “It is a fire hazard,” said Brian.’

‘Three D.C. residents with homes that passed inspections have been left to fix poorly constructed properties, sold to them by three different developers. When it comes to house flipping in the city, one expert tole WUSA9 there is a network built around renovating, selling and misleading potential home buyers about the biggest investment many will make in their lives.’

‘DCRA Chief Melinda Bolling says that these “developers know what they’re doing,” and says that the agency is trying to tackle the problem more aggressively.’

 
Comment by Ben Jones
2015-11-21 10:14:41

‘Luxury construction projects typically need a rising economic tide to lift affluent renters or condo buyers into increasingly expensive apartments—and get hit hardest when the economy sours. Turner’s model doesn’t depend on that tide. Because there’s a shortage of housing affordable to poor and working-class renters, the theory goes, landlords committed to keeping rents cheap won’t have to lower them in a bad economy.’

“The vast majority of real estate investors are speculators, hoping someone will patronize stores or buy their condos,” he said. “Social impact is not speculating.”

‘The vast majority of real estate investors are speculators’

 
Comment by trader jack
2015-11-21 13:33:19

Sometimes I see the house flippers on a tv show, showing them remodeling a home in 3-6 weeks, and I wonder how in hell they can do that?

Are there no plan checks, permits, inspections, or other crap that normal people would have to have done.

Comment by Mafia Blocks
2015-11-21 13:43:59

Replacing materials doesn’t require a building permit, inspections. Do you really need a plan to strip and replace shingles with shingles?

 
Comment by oxide
2015-11-22 17:39:06

Flippers rarely work on the systems, that’s for sure. A lot of Zillow houses show a brand new Home Depot kitchen and a rusty old A/C unit outside.

 
 
Comment by Mafia Blocks
2015-11-21 13:50:28

“Recovery? We Never Came Close”

http://www.zerohedge.com/news/2015-11-21/recovery-we-never-came-close

“Americans have taken on more revolving debt (credit cards basically) since March than they did the previous three years combined.”

A national populace up to their neck in crushing debt. Is it a surprise that demand for all items is collapsing? Housing is a sick sick market.

Comment by puggs
2015-11-22 21:12:31

I can’t wait for the major sale coming! Half off or more on EVERYTHING.

 
 
Comment by Professor Bear
2015-11-21 16:13:48

How is it that inflating housing costs to a point where they drive the typical American family into poverty became a national policy priority?

Comment by GuillotineRenovator
2015-11-22 23:42:55

No banker left behind?

 
 
Comment by Housing Watch
2015-11-21 17:10:27
 
Comment by Housing Watch
 
Comment by rms
2015-11-22 01:27:42

From the Minnesota piece: “When Ralph “Gil” Gilbertsen retired from his job as a Wal-Mart greeter three years ago…”

This loser didn’t retire… he decided to stop working. Why not as long as Section-8 has his back?

 
Comment by Ben Jones
2015-11-22 07:02:49

http://wvpublic.org/post/inflation-tame-unless-youre-renter

‘Inflation ticked up in October, but still remains relatively low by historic standards. The Bureau of Labor Statistics reported the Consumer Price Index (CPI) rose 0.2 percent for all items; it rose the same percentage not accounting for volatile food and energy prices. For the past year, the CPI has risen just 0.2 percent — largely because gasoline prices have fallen by 28 percent.’

‘But for people who rent, especially in popular urban areas, there is significant inflation to contend with. The CPI report showed that rents have risen 3.7 percent in the past 12 months.’

‘Some metro areas, meanwhile, are experiencing double-digit rent inflation. According to data from the real estate firm Zillow, rents in San Francisco are up 13 percent year-over-year; Denver is up 11.5 percent; Portland, Oregon is up 10.5 percent. Other cities are rising much faster than rents nationwide, including Dallas, Texas; Boston, Massachusetts; Seattle, Washington; Cincinnati, Ohio; Kansas City, Missouri; Sacramento, California; and San Jose, California.’

‘Nicolas Retsinas of Harvard’s Joint Center for Housing Studies, which recently studied the affordable housing crisis, said developers are aiming much of their new multifamily housing at this relatively affluent market. “Last year, median rent of newly constructed rental housing was about $1,300 per month,” Retsinas said. “That would equal about 50 percent of the median income of renters nationwide — which means that over half of renters couldn’t afford that rent.”

‘Richard Seymour helps manage a local nonprofit that does electronics recycling. He lived in the same building for 15 years—it’s a large early-1900s single-family home that had been converted into four apartments. Over that time, his rent rose moderately—from $500 to $700 a month. Then, in September, the long-time owners of the building sold to a young couple from out of town: for $800,000.’

“And what happened the next day, everybody in the building got an eviction notice or a substantial rent-hike,” Seymour said. “So my $700 rent was suddenly $2,000.” Seymour and the other tenants moved out soon after; the building is now being renovated.’

’sold to a young couple from out of town: for $800,000′

What are the chances that this young couple had $800,000, plus the money for the renovation? Is it more likely they got a Mel Watts backed loan and then decided to more than double the rent?

Comment by Ben Jones
2015-11-22 07:35:01

http://www.cnbc.com/2015/11/20/housing-prices-are-on-a-roll-will-a-rate-hike-change-that.html?__source=yahoo

‘The housing market has been in a long, slow recovery, and the Federal Reserve has kept interest rates near zero for about seven years. Both dynamics, however, could be about to change. With the central bank all but certain to begin withdrawing some of its massive stimulus within the coming months, the recovering housing sector could be in for a change.’

“The Fed is keen on not shocking the system,” said Svenja Gudell, Zillow’s chief economist. “I don’t think we’ll see rates jumping up tremendously, we’ll see them growing over time,” Gudell said in an interview.’

‘She thinks now is a “good time to buy so if you can, you should, because rental rates are so high, so financially it makes a lot of sense.” Gudell added that paying a mortgage is more affordable than renting.’

Now we’re getting somewhere Svenja. Could this be one reason FHA/GSE’s lowered buying standards and “redefined affordability” so more money could be pumped into the multi-family boom? There is one fly in the ointment:

‘ Recently, the Zillow Home Value Index found home values in Denver and Dallas have soared by at least 16 percent in the last year, although Zillow classifies Denver as a “cool” buyer’s market. For context, the national median home value is $180,800. Yet in San Francisco, that figure is $764,600 — more than quadruple the national average. But Gudell says if interest rates do rise, even the “hot markets” will be impacted with possibly slower home price appreciation.’

“I do think it will cool off some markets. The markets we’ll see first cooling are the coastal markets, so San Francisco and Seattle, where homeowners are already stretching their dollars to be able to make monthly payments,” she said.’

“That’s where home values could essentially go flat or we might even see some declines.” The reason? Gudell suggested that “you can’t spend much more on a home once your buying power is reduced so much by higher rates.”

Wait a minute: ‘we might even see some declines’

You mean more than 3%? Why that would put some of these people you are telling to buy underwater. And what if it falls more than 3%, like 10%, or more?

Comment by Professor Bear
2015-11-22 14:11:22

“But Gudell says if interest rates do rise, even the “hot markets” will be impacted with possibly slower home price appreciation.’”

Appreciation may slow, but no way will we see any price declines.

In case the reason is not obvious, THIS TIME IS DIFFERENT.

 
 
 
Comment by Ben Jones
2015-11-22 07:48:32

Here’s an investment opportunity I was sent this morning:

1024 N Euclid Avenue
Tucson, AZ

Perfect Investment home within walking distance to the U of A. Front house is 748 sq ft, back house is 680 sq ft. The basement square footage is not included.
Lot: 9,147 sqft
Multi Family
Built in 1950
Last sold: Jul 2005 for $295,000
Price/sqft: $409

For Sale
$320,000
Zestimate®: $167,962

http://www.zillow.com/homedetails/1024-N-Euclid-Ave-Tucson-AZ-85719/8476082_zpid/

Some details from the MLS:

Gross Scheduled Rent: 21,240
Total Expenses: 7,583
Net Opp Income: 13,657
Cap Rate %: 4.27

Comment by Mafia Blocks
2015-11-22 07:50:55

Right now Jingle_Fraud is burning up the phone lines on this one.

Comment by Ben Jones
2015-11-22 08:27:30

Let’s look at this:

‘Net Opp Income: 13,657′

That’s with no vacancies. The mortgage payment would be higher than that. Not counting management fees, repairs on a crumbling 1950 house. $409/sq foot, for a money-losing pain in the butt. It won’t sell, I hope, at that price, but the point is; a buyer at this level could only be speculating that the price would go up, from a price higher than 2005! It doesn’t make any sense otherwise. And they would be speculating with a government backed loan.

Comment by azdude
2015-11-22 12:04:35

looks like a 75,000.00 house to me.some crackhead will buy it to flip.

(Comments wont nest below this level)
Comment by rms
2015-11-23 00:59:46

“looks like a 75,000.00 house to me.”

On a four lane street too!

 
 
Comment by rms
2015-11-23 00:54:40

“And they would be speculating with a government backed loan.”

Yep… an economy based on paper guaranteeing paper.

(Comments wont nest below this level)
 
 
 
Comment by Bill, just south of Irvine
2015-11-22 08:52:21

A trash heap. Why someone would live in an expensive dump because they would be a loan owner, instead of a clean luxury apartment rental which has the freedom of break lease, it’s beyond insanity.

Comment by Ben Jones
2015-11-22 08:56:10

If you look at the photos, it’s for students. And since 2005, there have been hundreds if not thousands of “luxury” apartments and condos built for students near U of A. Some have even said it’s a glut.

 
 
 
Comment by inchbyinch
2015-11-22 11:10:43

mafia- I’m under 60. You are a coward.

Comment by Mafia Blocks
2015-11-22 16:23:41

Oh yeah. A senior with MT Pockets.

How’d that happen?

 
 
Comment by inchbyinch
2015-11-22 11:17:30

I am really excited about the trolley in Los Angeles. The trolley will connect LACOMA (art museum) to The Grove. Rick Caruso is a genius. Urban traffic needs the relief. Rick said some of the great cities of the world have trolleys, Vienna, Portland, Seattle, San Fran. How exciting!

I always thought trolleys and electric street cars were great people movers. Buses have gotten less polluting as well.

 
Comment by Ben Jones
2015-11-22 12:03:06

http://finance.yahoo.com/news/feds-williams-says-central-banks-consider-tools-185611565–business.html

‘Fed may need permanently big balance sheet, Williams says’

‘The U.S. Federal Reserve and other global central banks may need to consider new tools in a world of permanently lower interest rates, including keeping big balance sheets or using negative interest rates to combat shocks, a top Fed official said on Saturday.’

“You could think about keeping a permanently higher balance sheet, lowering the term premium and therefore actually raising the natural rate of interest in the economy,” Williams said. The idea, he said, is “something that we haven’t studied that much, but I think needs a lot more thought.”

‘Central banks may also want to consider using negative interest rates in some situations, he said, an option that several central banks in Europe have already tried.’

‘One other possible central banking tool would be to loosen policy by targeting higher inflation rates, Williams said, although the effectiveness of such a move is unclear given stubbornly low inflation rates worldwide and the inability of many central banks, including the Fed, to reach even their current inflation targets.’

‘Because lower worldwide natural rates mean central banks are potentially less effective than before, fiscal policymakers should also consider new approaches, Williams said, including perhaps putting in place automatic tax cuts that could go into effect if the jobless rate surges.’

Tax cuts?

I don’t know. It isn’t good that these guys are already talking about the next “crisis” and what they might do. And we can’t ever consider doing something besides more of the same.

 
Comment by MikeStevens
2015-11-22 12:57:29

The situation is not as dire as it might appear to be. As an economist, I can say that there are many factors to take into account here. You mention Germany and its housing market, but Germany is a rapidly aging society and therefore housing prices are high only due mainly to migration and are limited only to large cities and are unlikely to remain high with less and less people around. In the rest of the country, and in the rest of Europe, for that matter, housing prices, especially in areas with lower population density, are plummeting. Therefore, a weak EU opens up possibilities for the US to reinstate its leading role as the number one developed country. The market is recovering and massive projects, such as this one / http://sabbiabeachcondos.com /
are emerging once more. I can tell you, the US is in a much better position now than it was 10 years ago.

Comment by Mafia Blocks
2015-11-22 15:21:27

Mike my friend,

Falling prices isn’t “dire”. Falling prices to dramatically lower and more affordable levels is exactly what the economy needs.

 
Comment by rms
2015-11-23 01:21:22

“I can tell you, the US is in a much better position now than it was 10 years ago.”

Indeed. The investment banking industry has recovered quite well thanks to main street sacrifice. Still waiting on Dubya’s middle-east democracy to take root and bloom too.

“…massive projects such as this one: sabbia beach condos…”

Pimping faux luxury to broke azz losers.

 
 
Comment by Ben Jones
2015-11-22 15:21:32

Behind a paywall:

Two- And Three-Family Purchase Prices Skyrocket
Banker & Tradesman-10 hours ago
Boston area rents have risen by at least 25 percent over the past few years, … rental market or convert yet another two- or three-family into high-priced condos.

Comment by Ben Jones
2015-11-22 15:31:45

Greysteel Leads Sale of Dallas Community

“Walker Place is a well-maintained property that presents a true value-add opportunity that is highly sought after in this marketplace,” Greysteel Director Doug Banerjee said in a prepared statement. “Since none of the units have been upgraded it would allow a new owner to push the rent levels up anywhere from $80-100 per month.”

https://www.multihousingnews.com/post/greysteel-leads-sale-of-dallas-community/

 
 
Comment by Senior Housing Analyst
2015-11-22 15:24:07

Winter Park, FL Housing Craters; Prices Plunge 14% YoY

http://www.zillow.com/market-report/11-15/34884/winter-park-fl.xls?rt=14

 
Comment by inchbyinch
2015-11-22 20:03:05

Home sales have come to a halt in our area, and prices are slowly leaking. This is a normal seasonal market, finally. Last year people were buying homes during the holiday season. DOM on a $525,000 starter home is much longer now. hohoho

Comment by Mafia Blocks
2015-11-22 20:14:39

Anything but typical MT Pockets.

 
 
Comment by puggs
2015-11-22 21:13:31

“However, Lynam said there are still 40,000 vacant homes in Southern Nevada that need to be dealt with. ‘We’ve got a tremendous amount of vacant homes out there that we need to address,’ Lynam said, ‘And unfortunately none of us can do anything about. It’s those people in the financial institutions that need to take an action on that.’”

Hmmmm, secrets out in Sin City. Too many houses!

Comment by rms
2015-11-23 07:59:27

Hmmmm, secrets out in Sin City. Too many houses!

Just auction them… like the twentieth century. They’ll sell.

 
 
Name (required)
E-mail (required - never shown publicly)
URI
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post