The Pastel-Colored Unicorn
The Ravalli Republic reports from Montana. “The Missoula real estate industry looks like it will keep up 2015’s brisk pace in 2016, but it’s still somewhat of a seller’s market – meaning affordability is climbing out of reach for many buyers. ‘As of now, we don’t see many reasons why the positive trends of 2015 wouldn’t continue into 2016,’ said Mike Nugent, president of the Missoula Organization of Realtors. ‘The biggest problem Missoula has had is lack of inventory. That has caused the median price to go up to a point we haven’t seen, well, ever, including pre-housing bubble.’”
The Idaho Statesman. “Median home prices have steadily increased across the Valley. They were up 8 percent in Ada County through the first three quarters of 2015, and 7 percent in Canyon. That is partly because out-of-state buyers are inflating the market, said Idaho Housing and Finance Association Executive Director Gerald Hunter. Real estate agent Lacey Beauvais was one of a handful of agents who have told the Statesman this year that 40 percent or more of their buying clients moved from another state. Many of those buyers sold homes in high-dollar markets in California, Washington or Oregon and bought larger houses for less money in high-end Valley neighborhoods.”
“Those buyers drive up prices even though they usually stick to the higher end of the Valley market, Hunter said. ‘If you drive up the upper end of the market, that will have a pulling effect on lower-price homes as well,’ Hunter said. ‘You can’t segregate them.’ Cash-rich buyers entering the market can also close more quickly than local, median-wage-earning buyers who need to line up financing, Beauvais said. ‘Last summer, I worked with buyers from Oregon, California, Colorado, and a lot of times we beat locals out of the market just because sellers like cash buyers,’ she said.”
The Boston Herald in Massachusetts. “Boston’s residential real estate market in 2016 looks to be as strong as last year with more new apartment buildings as well as a number of smaller, boutique condo buildings sprouting up. But it’s the Seaport that will see the largest influx of super-luxury condo complexes. Are we headed for a glut of luxury condos in the Seaport? ‘If all these condo projects time their openings properly, there shouldn’t be a problem selling them,’ said Fan Pier developer Joe Fallon of the Fallon Cos.”
The Milwaukee Business Journal in Wisconsin. “New development in the apartment market shows no signs of slowing in 2016. Roughly 4,000 apartments recenlty opened, are under construction or proposed, said David Behnke, president of Siegel-Gallagher Management Co. in Milwaukee. ‘I think we’re going to start to see a little bit of oversupply,’ he predicted.”
“That means pressure to lower rents for some units, and more use of concessions in new buildings that are first opening their doors to renters, Behnke said. Those concessions could include free rent for the first month, or months, for tenants, he said. ‘Developers want to get the buildings filled quickly, so their method of choice has been pretty sizable concessions,’ he said.”
The Benito Link in California. “So how has the market faired this year? I was doing some research and discovered the prices have come up in Hollister and San Benito County an average of 17 percent in the last 12 months. That’s actually a little scary. At the beginning of the year, it was definitely a seller’s market, with multiple offers being relatively common. Now, inventory is staying on the MLS for longer times. While having the luxury of picking from among several offers seems to have gone by the wayside, most properties are being sold at 98 percent of the list price. The average sales price this month has been $560,000. Properties are not selling for over list price as they were at the beginning of this year.”
“One of the worst strategies for both a seller and a buyer is the ‘Let’s Just See.’ For sellers, pricing a home too high makes it so the property shows poorly against its competition. And even worse, people who could afford to buy the home (and might really love it!) won’t even see it because they think it’s out of their price range. For buyers, throwing a lowball offer into the ring might actually insult the seller, who could then refuse to deal with you at all. As professionals, Realtors try to dissuade clients from Let’s Just See, but its siren song is strong.”
From Salon. “Earlier this month when Fed chair Janet Yellen offered her rationale for raising interest rates, it was sadly reminiscent of President George W. Bush’s infamous ‘Mission Accomplished’ speech. Yellen spoke from her well-feathered perch about the ‘considerable progress that has been made restoring jobs, raising incomes, and easing the economic hardship of millions of Americans.’ A few days later Congress passed a $1.1 trillion spending bill and $700 billion in tax breaks before they went on their holiday. The president signed off on it all and headed off for his spectacular vacation to Hawaii.”
“Just what country are these happy holiday revelers living in? Even the Hallmark Channel in 2015 has more social realism than the happy talk generated from the Beltway.”
“Down here at the pedestrian level, between 2010 and 2014 poverty increased in one third of America’s 3,000 counties, when compared to the 2005 to 2009 period, according to the U.S. Census’s American Community Survey. In fact, the ‘recovery,’ that pastel-colored unicorn, was only seen in the 4 percent of the nation’s counties where poverty actually declined. The rest remained stagnant. A wide swath of the Pacific Northwest and most all of California, down on through the Southwest, saw this rise in poverty. On the East Coast, the New England states and those in the mid-Atlantic region were equally hard hit, and the ‘new’ South did not escape unscathed.”
“And while Yellen and her colleagues, with their Inspector Clouseau magnifying glass, are unable to find inflation, there is plenty of evidence of deflation of the wages Americans are earning. NELP found this past Labor Day that wages in the 800 lowest-paying occupations they surveyed had actually declined by 5.7 percent from 2009 to 2014. Mid-level wage-paying positions saw a 2.6 decline in the real median wage while the best-paying jobs saw a 3 percent slide.”
“Historically, residential rental costs were deemed as affordable if they were below or at 30 percent of a household’s monthly income. According to a comprehensive Harvard University study, in 1960 only one in four renters paid more than that 30 percent threshold for housing. Today, half of all renters are defined as cost burdened. From 2007 through 2011 the number of households ’severely burdened,’ in that their rent claimed 50 percent of their income, spiked from 2.5 million to 11.3 million households.”
“While many Americans struggle to find safe and affordable housing, the U.S. Department of Housing and Urban Development reports, post-foreclosure meltdown, there are 2.5 million vacant homes in the hardest-hit 25 American cities. These homes, and millions more in the rest of the country, are rotting in place. Data published by the National Center for Homelessness and Poverty shows that the number of poor families that have doubled up with relatives or friends is approaching 8 million, up by 67 percent since 2007. Over the same period the number of poor households where more than 50 percent of their monthly income goes to rent is approaching several million, up 25 percent since 2007.”
“Back in 2012 in their seminal book ‘The Rich and the Rest of Us: A Poverty Manifesto,’ authors Tavis Smiley and Cornel West captured the essence of our national political discourse with an accuracy that endures. ‘Beyond sound bite competition, these candidates for high office, protected with gilded lives of wealth and privilege, seem to know nothing about poverty or the poor. They claim to be concerned about the middle class, but they must have not gotten the memo, the new poor are the former middle class.’”
“For buyers, throwing a lowball offer into the ring might actually insult the seller, who could then refuse to deal with you at all.”
Oh no, the seller insulted? Won’t deal with me? Squirrels upset too? Where will I live!
Yes, I can just picture the conversation. “I’m sorry, your money is no good here anymore.”
My wife (who negotiates a lot) will frequently say “they can’t say ‘no’ if you don’t ask”.
I did hear an interesting anecdote about a seller in Palo Alto recently. Apparently there are still Chinese buyers who are the ultimate owner of new transactions. Many people (for the sake of their neighbors) would prefer to be selling to owner-occupants (ie. people who are going to live in the home), not overseas buyers who are going to rent out.
As such, there are many cases where sellers are choosing to NOT sell to a Chinese buyer. And thus enter the American straw-man renter/”buyer”. Someone apparently was selling to a Chinese owner, but thought they were selling to an American owner occupant. The American represented that they would be living in the house…but they didn’t say that they would be a renter only. Apparently the seller didn’t dig into the ownership of the buyer very much…
there are many cases where sellers are choosing to NOT sell to a Chinese buyer ??
The seller is trending on thin ice…The broker is even on thinner ice…Even discussing how to is a violation…
The Fair Housing Act prohibits discrimination in housing on the basis of:
Race or color
National origin
Religion
Sex
Familial status (families with children)
Disability
And to be honest, if they’re moving away, what do they care if the house gets rented out? To pacify the soon to be ex-neighbors? They probably haven’t even met most of them.
In a lot of cases, from what I’ve seen, the remote buyers don’t even bother to rent the house out - they just leave it empty, and pay a landscaping service and maybe for a maid to check it on a periodic basis.
And you wonder why there are 25 million excess empty houses and growing?
Realturds are morons!
‘we don’t see many reasons why the positive trends of 2015 wouldn’t continue into 2016,’ said Mike Nugent, president of the Missoula Organization of Realtors. ‘The biggest problem Missoula has had is lack of inventory. That has caused the median price to go up to a point we haven’t seen, well, ever’
Watch out for that tree, Mike.
“The median home price is $240,000, but the healthy point of what Missoulians can afford, based on median income, is a house that is about $176,000,” he said.
Missoula, MT has a lack of family supporting jobs that are capable of sustaining a $176k house, and their weather is well below average.
‘prices have come up in Hollister and San Benito County an average of 17 percent in the last 12 months. That’s actually a little scary’
Now now, don’t be a doom and gloomer. I’m sure there is no fraud involved and the financing is all in order and prices never go down. Everybody in Hollister can afford a $500,000 house - it’s California!
‘A wide swath of the Pacific Northwest and most all of California, down on through the Southwest, saw this rise in poverty’
Well, maybe not.
Yellen’s job puzzle: Why are 20-somethings retiring?
‘For Americans between the ages of 20 and 24, the share of those sidelined over the past decade because they were in school increased, unsurprisingly, during the decade that included the Great Recession. What’s more unusual is that the share of 20- to 24-year-olds who say they’re retired doubled from 2004 to 2014.’
http://finance.yahoo.com/news/yellens-job-puzzle-why-20-130017298.html
get phone,stamps, welfare and why work?
see Singapore for how a low welfare workforce responds to recession
free $19 phone
food stamps $160 mo
welfare if you qualify, have kids, etc….
who would want this?
what is there to be jealous of?
$700 B per yr on military…. now we are talking $$$$
Interesting…Nice post Ben…
What’s more unusual is that the share of 20- to 24-year-olds who say they’re retired doubled from 2004 to 2014.’
What does that mean? Did the percentage of “retired” 24 year olds go from 0.001% to 0.002%? Are they really “retired” or did they inherit some money and are chilling in mom-n-dad’s basement until they pizz it away? Or are the chilling in the basement without a job, while they play videogames, working odd jobs under the table for spending or maybe just bumming it from their parents?
Labor Force Participation Rate Plummets To 37 Year Low; Jobless Population Soars To Record High
http://data.bls.gov/timeseries/LNS11300000
Everybody in Hollister can afford a $500,000 house - it’s California!
According to wikipedia: “Hollister is primarily an agricultural town.”
The strawberry pickers are back!
it’s a HA new year.
Better check in w local pols as they plan to raise re taxes big time. They see the end game and you renters are NOT exempt.
Renters are always exempt from current grossly inflated prices associated with a depreciating asset like housing.
Simply said, Why buy it when you can rent it for half the monthly cost?
‘Talking about competitive devaluation.’
‘Following China’s suit, the State Bank of Vietnam said on Monday it would pursue a more flexible foreign exchange mechanism as well and guided its dong fix rate lower for the first time since last August…Back in August, Vietnam devalued the dong by 1% and widened its trading band to 3% after China’s surprise devaluation.’
‘This morning, the People’s Bank of China guided its fix rate to below 6.50 per dollar, the lowest since May 2011. In 2015, the Market Vectors Vietnam ETF (VNM) lost 20% of its value.’
A bag of dong just doesn’t go as far as it used to.
Somebody is gonna get donged!
Airbnb Guest Throws Rowdy NYE Party, Trashes Oakland Home
“Next door neighbor texts me and says, ‘there are 40-50 youth here throwing a party, they’ve been shouting for over an hour and there’s 4 or 5 police out here,” said Santi-Owen.’
‘With cleanup underway, the couple is pressing charges against their guests. It isn’t likely they’ll be listing their home on the vacation rental site anytime soon. “I can’t see doing this again,” said Santi-Owen.’
http://sanfrancisco.cbslocal.com/2016/01/02/airbnb-guest-throws-rowdy-nye-party-trashes-oakland-home/
Meh. Wake me when some philandering anti-gay congressman strangles his transgender prostitute in a DC area AirBnB.
‘Wake me when…’
I always find it funny when someone says this. “Wake me when there are gigantic bubbles all over the world straining to pop.” OK, Rumpelstiltskin, nighty night.
‘it’s the Seaport that will see the largest influx of super-luxury condo complexes’
We used to joke that all condos were luxury. Now just how many super-luxury condos are needed out there?
F#@k if I know, I’m not the fool buying a $700K 1-bed in a shit city that can’t figure out WTF to do when it snows.
What is a “super-luxury” condo? Does it come with a built in prostitute like the murdered man’s apartment did in “Soylent Green”? Or maybe it has its own private lazy river in the living room? Or an elevator for your car?
It is Un-American to post links to articles such as this which casts the practice of renting one’s home out to strangers in a negative light. This will be one of the main drivers of our job growth for at least the next decade, Americans all paying their neighbors to stay in each other’s houses.
We must nurture this not discourage it.
There’s so much BS going around these days. I listened to a former Apple CEO on the radio this weekend. He went on about this and that, basically talking about uber andairbnb like it was some galactic change. He mentioned, they might end up doing stuff other than what they do now. Like scooping dog poo at the park? Delivering taco bell? Jeebus, if somebody could get funding for it, they’d bring rickshaws back and we’d have hipsters running around in sandals totting people.
It’s driving a cab and operating a motel people! There isn’t anything new here. Ask yourself, do you really want to be a cabbie or clean rooms every day? Well these people are going to get sick of it too.
I see you’ve not been to Boston during the summer in recent years. We have putzes towing rickshaws. It’s pathetic.
We have hipsters / preppies driving around town with golf carts. Donation only so that helps skirt a lot of regulations.
Yup, riding on the city streets in a golf cart - that’s got to be safe.
But probably safer than riding a bike at night without a light. I coulda wiped out a biker tonight (shudder).
if somebody could get funding for it, they’d bring rickshaws back and we’d have hipsters running around in sandals totting people.
You’re on to something here! This is green, it’s healthy, it reduces carbon emissions…I see no drawbacks. With the know-how on this board it could be made to happen.
“It’s driving a cab and operating a motel people!”
Worse than that, older than that.
It’s makeshift brothels and drug dens and the delivery thereof.
“if somebody could get funding for it, they’d bring rickshaws back and we’d have hipsters running around in sandals totting people”
lol. I smell a juicy IPO!
‘Federal Reserve Vice Chairman Stanley Fischer sounds concerned that the central bank may lack some key tools needed both to prevent another financial crisis and to contain the fallout should one occur.’
‘He told the American Economic Association on Sunday that the Fed is not as well-equipped with regulatory powers to rein in housing and other asset bubbles as some other central banks. And he questioned whether Congress had gone too far in limiting the Fed’s ability to intervene if a crisis erupted and threatened the financial system.’
‘Fischer’s comments suggest that the central bank may need to rely more on monetary policy to restrain financial excesses than it has in the past. In fact, he told the conference that it might be necessary for the Fed to increase interest rates if financial markets were overheating, though the first line of defense should be the use of regulatory measures to head off bubbles.’
More from Bloomberg.com: Global Stocks Tumble Following Shanghai’s 7% Crash
‘In arguing that the Fed has less leeway to restrain speculative excesses than other central banks, Fischer pointed in particular to the property market, the epicenter of the last financial crisis. Faced with run-away real estate prices, many other countries have tightened loan-to-value or debt-to-income ratios to curb borrowing.’
“In the United States, responding to such problems with these tools would require inter-agency coordination” between the Fed and other government regulators, he said. That “could make their use cumbersome at critical moments.”
http://finance.yahoo.com/news/fischer-worries-fed-cant-head-160006320.html
You aren’t fooling anybody Stan. The central bank/federal government has been busting it’s a$$ to run up bubbles and foam the runway for the banks since 2009.
“While many Americans struggle to find safe and affordable housing, the U.S. Department of Housing and Urban Development reports, post-foreclosure meltdown, there are 2.5 million vacant homes in the hardest-hit 25 American cities. These homes, and millions more in the rest of the country, are rotting in place. Data published by the National Center for Homelessness and Poverty shows that the number of poor families that have doubled up with relatives or friends is approaching 8 million, up by 67 percent since 2007. Over the same period the number of poor households where more than 50 percent of their monthly income goes to rent is approaching several million, up 25 percent since 2007.”
Yep - this is what Hope and Change looks like folks - Thanks Obama for accelerating an already fragile group of people and foisting them into a life of penury.
pen·u·ry
ˈpenyərē/Submit
noun
extreme poverty; destitution.
“he died in a state of virtual penury”
synonyms: extreme poverty, destitution, pennilessness, impecuniousness, impoverishment, indigence, pauperism, privation, beggary
Thanks Obama ??
Why the F*&^ blame Obama ?? He is only 1/3 of the decision making process…Congress has done ZERO in fiscal policy to help the middle class and the poor…ZEEEEEEEEEEEERO for 7 years….To busy voting on overturning Obama-Care and defunding Planned Parenthood…
Bedsides, it was the decider Bush that drove us into the ditch…Want to point the finger at someone, point it at him…Don’t point is at the janitor cleaning up the mess…
Obama has been driving the bus in the ditch for a while now.
Obama Taps Rep. Mel Watt to Head Fannie, Freddie Regulator…May 1, 2013
Obama appointed Bernanke and Yellen at the Fed.
Creating poverty with easy lending isn’t “cleaning up”.
Obama kicked the beehive, bees still pizzsed. more pain, more spending, more gov as a result.
The expiration date for “blame Bush” has passed, so Obama it is.
Sc - the deal is IT IS the President’s responsibility to raise policy in order to get the wheels (as rusty and busted as they are) in Congress to grind out some form of LAW that benefits the nation - seems that the wealthy have done much better under Obozo than any other President in the nation’s history - financially speaking. So….without sound policy there cannot be sound law and so we have what we have now - a mess where there we all lose in the end - ‘cepting the martini swirling class in DEE CEE.
That is all.
“As professionals, Realtors try to dissuade clients from Let’s Just See, but its siren song is strong.”
Gee, ya think? How exactly is it that realtors get paid? Can someone help me with this?
BAHstin is hot?
http://www.movoto.com/boston-ma/market-trends/
oh contrair
‘Beyond sound bite competition, these candidates for high office, protected with gilded lives of wealth and privilege, seem to know nothing about poverty or the poor. They claim to be concerned about the middle class, but they must have not gotten the memo, the new poor are the former middle class.’” ??
And guess what our leaders did on day one back from their fill of booze & food after banking another $15,000. in pay for December…
Lets get right to work boys & girls…The country is depending on us…First order of business; Overturn Obama-Care…
Will they overturn it without even reading it?
‘Actions have consequences. We all know this. But it appears that life lesson has been lost on central bankers. Central bankers have pushed interest rates to zero, and even into negative territory in parts of Europe for the first time in history. Now, the first “chickens” are coming home to roost, and they’re laying eggs that are trickling down to the average person.’
‘The life insurance industry had a long history of not raising rates on life insurance policies that were sold to consumers years ago. But now The Wall Street Journal reports that, in recent months, tens of thousands of policyholders have received an unwelcome surprise. The cost of their universal life policies are going up – in some cases, as high as 200% more. Even policyholders who bought their policies back in the 1980s are being affected.’
‘Universal life policies combine the normal death benefit with a tax-advantaged savings account. As the WSJ reported, these policies accounted for a quarter of all life policies sold since the 1980s and over a third of the policies sold in the past decade. The expectation is that this practice will spread to other types of insurance policies that have a clause allowing for increases.’
‘The reason is simple. With rates at zero or below, insurance companies can’t earn the investment income necessary to conduct business as normal. Pension funds are in the same boat. And the problems just appearing from zero interest rates haven’t discouraged central bankers from now diving into negative interest rates.’
‘The European Central Bank now has its deposit rate at negative 0.3%. Neighboring central banks in Switzerland, Sweden, and Denmark have interest rates even further into negative territory. And the consequences are only beginning. The Wall Street Journal reports a housing bubble is underway in those countries. The cost of a Danish apartment is up 8% in the first half of 2015 alone. Swedish apartments are up 16% in the past year.’
‘The reason for the growing bubble is obvious. In Denmark, many homeowners now have mortgage loans with negative interest rates! Instead of principal plus interest, it’s now principal minus interest.’
‘And obviously, insurance companies and pension funds in those countries have to be scrambling to make ends meet with rates negative. The central bankers are being urged on by eggheads like University of Michigan economist Miles Kimball.’
‘He’s the guy who wants negative 4% interest rates. So when you deposit $100 in cash into your bank account, your bank balance will read $96. Kimball wants you to spend that money, not save it. Minus 4% may not be the limit for Kimball, either. As he told the WSJ, “There’s no limit to how deep [into the negative] we can go.”
http://www.trefis.com/stock/spy/articles/329195/central-bank-policies-coming-home-to-roost/2016-01-04
2016 prediction: the term ‘NIRP’ will come into common usage.
Good start to new year? Oil,over priced houses, over valued stock market, Middle East out of control, America over 20 trillion or more in debt, Isis, Obamacare going broke, Tesla may be in serious problems, Wages stagnant, interest rates on the rise, few Americans feel good about their country and their future.
Have a nice 2016???
Hey, at least we didn’t lock up those wall street guys so they are free to financially innovate!
Love the movie ” The big Short” many should be in jail, for sure.
Hammer to fall?
Ben Jones:
Question - where are you going to go to film housing next?
Really liked your recent installments on Surprise / Denver-Co Spgs etc.
Where you headed?
Las Vegas - shadow inventory-palloza. Man, it has been one thing after another for my video plans. Something keeps popping up. I was going this past weekend and bam, my cat gets sick, needing round the clock care for 3 days. I’ll get back to it ASAP. I really like doing these videos. It’s fun, new and a completely different media.
Other places on my mind; Miami, I’m late on that. Houston, Alberta, North Dakota. Southern California; I read yesterday there’s a bit of a glut in Inland Empire new housing.
With all the rent free living you do, it would be nice to see some of the interiors you experience.
I guess in Hollister you can sell a ten year old pickup truck for $50,000.
Brazil Heads for Worst Recession Since 1901, Economists Forecast
http://www.bloomberg.com/news/articles/2016-01-04/brazil-analysts-ring-in-new-year-with-deeper-recession-forecast
How long do we wait before we buy up the farmland there? Brazil has great natural resources.
Bellevue, WA Housing Craters; Prices Plunge 6% YoY As Housing Inventory Skyrockets
http://www.zillow.com/bellevue-wa-98006/home-values/
Ben - You should come to San Diego and check out some of the new McMansions being built here. 2 story monstrosities with master showers big enough to bathe the husband and at least 5 wives! Starting at the low, low price of $920K!
LOL!