Fear From The Seller’s Side And From The Buyer’s Side
Bloomberg reports on Canada. “In Canada, one of the first corners of the financial markets to start going haywire in the lead-up to 2008’s financial crisis is acting up again. The difference between a measure of the rate at which Canadian banks are willing to lend to each other and short-term instruments reflecting expectations for the Bank of Canada’s benchmark spiked to the widest in seven years. It suggests Canadian banks may find it harder to pass on the benefits of a central-bank rate cut with the country in the center of a global panic over slowing growth and collapsing oil prices, according to David Rosenberg, chief economist at Gluskin Sheff & Associates Inc.”
“‘The markets are telling you there could be some risk of financial contagion,’ he said. ‘And Canada certainly has a ‘For Sale’ sign on the front lawn.’”
From CBC News. “The Canadian Association of Petroleum Producers said in its most recent update that 40,000 jobs have been directly lost due to plummeting oil prices, and tens of thousands more have been affected indirectly by less money being spent in the wider economy. Fort McMurray’s once-hot housing market has also taken a hit. For sale signs dot residential streets and have become much more frequent — particularly in a new subdivision recently built in the north end of the city.”
“‘Everybody is complaining. Barber. Flooring guys. People that work on the sites. Everybody is complaining,’ said Nabil Abadi. Abadi installs flooring in homes, and when money is tight people don’t build new properties or invest in renovations, he said. ‘It is pretty scary right now,’ he said. ‘If it stays slow, I am packing up and leaving.’”
The Calgary Sun. “The buzzsaw of collapsing oil prices will shave 31,000 construction jobs in Alberta over the next three years, says a national industry advocate. In yet another hammer blow to Alberta’s wounded economy, 9,000 of those jobs are expected to come in the residential construction sector, said a report issued Monday by BuildForce Canada. A flock of construction cranes hovering over Calgary’s downtown and inner city are deceiving, said Executive Director Rosemary Sparks. Once those projects are completed, those construction workers are likely to pick up and join the exodus out of Alberta and may not return for some time, she added.”
“‘People coming in from other provinces are now not coming in as often,’ said Sparks. ‘You’re going to see that in housing starts.’”
From News Talk 650. “As signs for low and free rent speckle Saskatoon street corners, and the city remains a buyer’s market, small-time landlords are struggling to fill vacancies. Executive officer Chanda Lockhart blames unsold new homes being turned into rental properties. ‘There was a lot of house builds that went on in 2015, and those house builds have been flipped into renters because the builders were not able to sell them,’ she said. ‘General rule of thumb is 30 per cent of condos turn into rental stock, but it’s probably 50 or 60 per cent right now.’”
“Low prices and plenty of options is good news for the average renter, but bad news for small-time landlords. ‘When you’re talking about some of these smaller guys who maybe only have one to five houses, they usually don’t have a corporate name or signage,’ Lockhart said. ‘It’s very frustrating because a lot of them pay their mortgage with their rent payment; they’re not making an excess of money. So they’re having to pay that mortgage payment out of their pocket.’”
“A monthly rent of $17,000 wouldn’t fit most budgets, but the owner of a property management company that caters to high-end income earners says it does for some — and it’s getting cheaper. ‘The high-end rental market is still relatively active in terms of tenancies we are putting together for large homes and high-end condominiums,’ said Lisa Hamielec, who runs Citysearch rental network in Calgary. ‘However rents have dropped over the past six to 12 months in the order of about 30 to 35 per cent.’”
“David Bee leases properties with Citysearch and works with a lot of corporate relocations. He says numbers are down. ‘Anybody who’s going to rent a place for eight, nine, $10,000 a month either runs a company or owns a pretty significant company, and there’s less of those coming to town,’ Bee said.”
The Western Wheel. “It’s a buyer’s market moving into 2016, and sellers are urged to be realistic in a struggling economy. The Calgary Real Estate Board (CREB) released its annual forecast report on Jan. 13, which indicated sales in Okotoks declined by 27 per cent in 2015 over the previous year. It’s a common trend in the region, as sales in Calgary dropped 26 per cent. In Okotoks, this has resulted in a five-months’ supply of inventory in the housing market and a much slower real estate industry than previous years, according to Jacky van der Ven, a realtor with CIR Okotoks.”
“‘Some buyers are waiting for prices to come down more, but others are waiting because they’re worried about their jobs,’ she said. ‘They’re scared. There’s a lot of fear out there.’ However, she said the market is ‘not entirely doom and gloom.’”
“CREB predicts increased inventory and decreased activity throughout the Calgary region will decrease benchmark prices of single detached homes by 3.2 per cent as supply outweighs demand. Don Campbell, senior analyst with the Real Estate Investment Network, said this is the result of a real estate market riddled with fear. ‘Fear from the seller’s side, hence the increase in properties for sale, and fear from the buyer’s side thus limiting the number of sales,’ said Campbell. ‘This situation will get worse before it gets better.’”
“He said buyers are likely to remain on the sidelines through much of 2016, as they wait out the effects of oil prices and see what the provincial government does with the industry. Buyers began awaiting a market correction in 2015 while sellers held on to their expected prices, he said, and the skewed inventory level will impact the market in 2016. ‘We will see the fear increase and thus begin to see sellers making more dramatic cuts in their expected sell price,’ said Campbell. ‘The average sale price will move downwards more quickly than we witnessed in 2015.’”
“It suggests Canadian banks may find it harder to pass on the benefits of a central-bank rate cut with the country in the center of a global panic over slowing growth and collapsing oil prices, according to David Rosenberg, chief economist at Gluskin Sheff & Associates Inc.”
It seems we morphed from ‘oil prices will return to normal by next December’ to ‘global panic’ in a heartbeat.
Where’s Albuquerque Dan when you need assurances that the good times will be back again any day now?
Are hordes of all-cash Canadian investors still descending on U.S. residential properties with cash in hand these days?
Newsweek
U.S.
Feds Target Criminals Using Miami and NYC Real Estate to Hide Ill-Gotten Gains
By Reuters On 1/13/16 at 3:37 PM
WASHINGTON (Reuters) - The United States is going after international criminals who use real estate to launder money by ordering title insurance companies to report the identities of people making all-cash purchases of high-end real estate in Miami and Manhattan.
The Financial Crimes Enforcement Network, an arm of the U.S. Treasury, said on Wednesday it is concerned that individuals buy residential real estate in cash through shell companies to hide their assets and veil their identities.
Both cities are hotbeds for multi-million dollar purchases and details can be hard to find. The Treasury has looked into murky housing deals lately over worries that drug traffickers and corrupt leaders from China and elsewhere are investing ill-gotten gains in real estate.
“We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money,” FinCEN Director Jennifer Shasky Calvery said in a statement.
FinCEN has issued rules aimed at preventing money laundering through the mortgage market, but “cash purchases present a more complex gap that we seek to address,” Calvery added.
Between April 2014 and March 2015, there were about $104 billion in transactions involving foreign investors in the U.S. real estate market, with most purchases occurring in Florida, Texas, Arizona and California, Deborah Friedman, unit chief of the FBI’s money laundering intelligence unit said in September.
More than half the buyers in those deals were from China, Canada, India, Mexico, and the United Kingdom, and the majority of transactions from overseas buyers were in cash, she said.
…
How convenient that the feds are finally going after white collar criminals 7 YEARS after Obama was first elected?!
Lying, glib, slimy do-nothing snake oil salesman.
And I actually trusted & voted for him in 2008.
As repulsed as I am about Trump, I just might vote for him. Hell, why not? After all, we know the politicians all lie to us, so whats the harm?
Seriously, why does it even matter which end of the same butt cheek you vote for.?!?!
That’s a good question. During the 2010-11 time frame, Ben excerpted numerous articles about Canadians “snapping up” houses in Phoenix.
Considering they all overpaid by multiples with borrowed money, what is your thought?
Lola, you are a broken record.
Lola… Remember…. Nothing accelerates the economy and raises the standard of living like falling prices to dramatically lower and more affordable levels. Nothing.
The following is from September 2015 from a site called Canadian Real Estate wealth-http://www.canadianrealestatemagazine.ca/news/fewer-canadians-buying-property-in-montana-195955.aspx
They may not have enough staff to check spelling though- Alispell refers to the city of Kalispell and an invitation at the end to check out real estate in the state notes it as Montano instead of Montana.
The exchange rate today shows an American dollar value at $1.43 for every Canadian dollar.
Fewer Canadians buying property in Montana
HomeNews
by Vernon Clement Jones09 Sep 2015
Most Read
Bank of Canada announcement
The central bank reveals its rate decision
Proposed tax targets investors
Leading economists have proposed a unique tactic for reining in one of the country’s hottest housing markets
ALISPELL, Mont. – Fewer license plates from Canada are showing up in northern Montana as the Canadian dollar continues to weaken, and in the process drives property investors away.
As of Aug. 31, the U.S. dollar was worth $1.32 in Canadian currency, the strongest the U.S. dollar has been in at least five years.
The Canadian dollar is tied to the commodity market, unlike the U.S. greenback. So when oil prices began falling this summer, dipping below $40 a barrel for the first time since 2009, the Loonie followed suit.
Patrick Barkey, the director of the Bureau of Business and Economic Research at the University of Montana, said the drop in oil prices is the second gut-punch the Canadian dollar received, since the price for natural gas is also low.
“Oil is just the second shoe to drop there,” Barkey told the Flathead Beacon
But while restaurants and stores are feeling the decline in business. the construction and real estate industries are also positioned to feel the sting of fewer Canadians buying or building second homes here, said Barkey.
The phenomenon is being felt not only in Montana, but Florida, Arizona and Nevada – traditional hotspots for Canadian property investors. They’ve pulled back on new purchases in those states with the loss of parity between the greenback and the loonie.
Still, interest in Montano among investors continues to grow as they parse through data on population growth and property price appreciation that continues to outpace the US national average.
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Denver, CO Housing Prices Crater 5% YoY On Ballooning Housing Inventory
http://www.zillow.com/denver-co-80206/home-values/
wtf
denver is 40% higher than the 06/07 peak
WTF !
And not a buyer in sight.
Remember…. I can ask $50k for my 10 year old Chevy pickup but where is the buyer at that price?
So it is will all depreciating assets like houses.
denver is 40% higher than the 06/07 peak
WTF ! ??
Facts are irrelevant with the toad…Why engage with him/her/it…Don’t respond…Ignore the daily troll….
wtf
denver is 40% higher than the 06/07 peak
WTF !
Like I’ve said before, my coworkers are all VERY smug about their “equity” and are 100% confident that the party will continue.
I get to constantly hear about how someone they know or are related to was recently able to sell their house in one day with multiple offers. Telling them that there is a bubble that will pop earns you nothing but their derision and laughter.
we hear ya
co is running out of land
legal pot
mountains
snow
all exclusives
Housing in Northern CO to hit an AVERAGE of over $600,000 within the next 10 years:
http://www.9news.com/story/money/personal-finance/housing/2016/01/20/northern-colorado-home-prices/79098752/
That seems absolutely nuts to me… How would the average family ever afford that??
Oil was expected to be $200 a barrel too.
How’s that working out?
Is it money coming from California?
It’s a forecast in an environment of falling prices and collapsing housing demand.
Is it money coming from California?
What I’m seeing is that the migration is coming from the midwest and the great lakes area. I don’t seem to meet too many Californians migrating here like I did 10+ years ago. When I ask my Silly Valley colleagues if the would move here they emphatically say “no way. it’s too cold there”
I read in the paper the other day that some builder has announced that they will be building (in phases) about 100 townhouses in my little burg, starting at 300K. These are of the multiple level (3+ levels) variety that seem so popular these days. What is hilarious is that they are being marketed to “retirees”. As Ben mentioned a while ago, if you live in one of those townhouses you will be spending a lot of time climbing stairs (clomp, clomp). How that is supposed to appeal to seniors is beyond me.
That’s the case here in Florida too. You might be an active older adult, flying up and down those stairs, when you’re 60. But how many 75-year-olds can do that?
I shudder to think at what will happen to people in Miami living 40+ stories up if the elevators ever fail for a sustained period of time.
If someone has never been in one, they wouldn’t understand how bad it is. Why are they tall? To pack square footage into a small foot-print = make more money. Vertical means steep. Steep means more but smaller steps and less head-space, and usually two flights per floor. Have fun getting furniture up and down. When I’d do foreclosure work in one, I’d find myself sweating from the workout and the next day my legs would be sore.
Colorado is the poor man’s west for all those midwesterners that want to tow their wagons and brag that they moved “west”. Denver is a Hipster’s Microbrew Omaha.
What they fail to realize is that it’s just as cold in Denver but they’re paying A LOT more for housing thus can’t afford to drive 3 hours to ski.
What they fail to realize is that it’s just as cold in Denver but they’re paying A LOT more for housing thus can’t afford to drive 3 hours to ski.
Actually, the folks from the great lakes area say that winters are much milder on the front range. But, yeah, they’re no better than the lower midwest winters, and you have to deal with the high altitude as well.
Ethan- report in NVA
my hood has low inventory w stuff selling fast,but $ per sq ft going no where last year
Are you sure?
US Housing Demand Plummets To 20 Year Low
http://1.bp.blogspot.com/-0q8fIAsczFk/VUANHEhSbnI/AAAAAAAAjRs/oANwXOUviGw/s1600/MBAApr292015.PNG
‘It’s time for Canada to take action on its offshore real estate problem’
‘The U.S. Treasury Department has launched a new initiative aimed at identifying anonymous cash buyers of luxury properties. The law is aimed at stopping money laundering, an activity many suspect is occurring in the Vancouver real estate market as well.’
‘Meantime, in Australia, the government ordered the sale of another eight residential properties that were acquired in violation of new foreign-ownership laws (which restrict offshore buyers to purchasing new homes only) that were brought in to respond to growing cries that offshore buyers are driving up house prices. The sale of the eight now brings to 27 the number of homes the government has seized after declaring they were bought illegally, mostly by Chinese nationals.’
‘I mention these two items mostly to draw attention to the complete lack of action that is taking place in Canada to address the same real estate madness occurring elsewhere.’
‘In Canada, we hear the federal government is trying to learn more about the issue. But we haven’t seen anything from Ottawa or the B.C. government that suggests they’re prepared to go to the same kind of lengths the U.S. Treasury Department is, for example, to try to identify, and penalize, those largely responsible for what is happening.’
Let’s get to the heart of this “problem” of what is to be done about all this evil money flooding in …
“Under the proposal devised by the 10 economists from the universities’ business schools, a property surtax of 1.5 per cent would be levied on vacant properties whose owners have no or limited taxable earnings in Canada.
“The academics estimated the surtax could generate as much as $90-million in Vancouver alone, a sum they suggested could be redistributed to tax-paying residents of the city.”
Somebody proposed a tax. How about not giving the money back when you catch them with a suitcase full of money as is the current policy? If I take $3,000 out of my account the bank will file a suspicious activity report. But a foreigner can bring hundreds of thousands in to buy real estate and nobody says boo. These governments are terrified at the idea of stopping this. But it’s going to end one way or another.
In 2010, hedge fund manager David Tepper blew the minds of market participants the world over with what was quickly dubbed the ‘Tepper Corollary.’ Tepper argued that there was nowhere for equities to go but up. If the current economy stayed poor, a wave of stimulus would be applied. If the economy improved, well, the economy improved. So bad news was good news and good news was good news. And sure enough, from 2010 to 2014, with bad news and with good news, equities went nowhere but up.
But here we are in 2016. The global economy is on life support. Depreciation is rampant. There is excess debt everywhere you turn. And global central banks have emptied their bazookas, providing more stimulus than most ever imagined possible.
Equites aren’t going up anymore. So what should be done with investible moneys? Well, I’m here to argue the Double Flip Corollary. The first argument is that the economy just can’t improve on its own merits. That fact must be accepted for this idea to be a logical, can’t miss strategy.
If we accept that the global economy is too far gone to find any footing on its own, then we must own gold. Either the economy is going down without any further stimulus, at which time gold is the flight to safety in a world of credit risk. Or, as is already being thrown around by those savvy guys at Davos, QE4, QE5, QE4eva become reality. When every printing press in the world is in high gear, why not own the one currency that can’t be printed?
I’ll sum it up like this. People who really know markets know what gold truly is. It is the world’s permanent zero-yielding currency. Well, the global economy is screwed. The near future holds either massive deflation or massive inflation…or both. In a world of massive deflation, a zero yield is very good. In a world of massive inflation, you must own the one currency that can’t be created out of thin air.
I went fishing yesterday with a Canadian from Edmonton. He said Edmonton was holding up much better than Fort McMurry and Calgary, which are under pressure from oil. I asked him why, what drives the economy in Edmonton? He replied, “Construction.”. ‘Nuff said!
Hobos begging all around the center of Anchorage… wearing the Carharts and gear of ex roughnecks.
Gonna be a good time to pick up snow machines and other toys dirt cheap soon.
‘Uber Technoligies Inc. is preparing to go live with a full-scale meal delivery service across 10 cities in the U.S., an expansion that will test the company’s ability to use its drivers to move goods. Uber aims to build a new stream of revenue in food delivery, a highly competitive and still-speculative business where a range of venture-funded startups—from Postmates Inc. to DoorDash Inc.—already vie for customers. Some of these companies have struggled to demonstrate they can operate profitably.’
‘One of Uber’s early ride-hailing competitors, Sidecar Technologies Inc., experimented with delivering food and packages over the past year before shutting down last month and selling its assets to General Motors Co. In a blog post on Wednesday, Sidecar co-founder and Chief Executive Sunil Paul said his company “out-innovated Uber but still failed to win the market…because Uber is willing to win at any cost and they have practically limitless capital to do it.”
‘The UberEats app, expected to launch in the mobile app stores of Apple Inc. and Alphabet Inc.’s Google by the end of March, also represents Uber’s first attempt to build a mobile app from the ground up in the five years since it launched its flagship ride-hailing service.’
‘The app has been available for over a month in Toronto, where Uber has tested an expanded meal delivery service with more than 100 local restaurants. Customers there have been able to order any item from a full menu between 10 a.m. and 10 p.m., and have it delivered by an Uber driver in 30 to 40 minutes.’
‘In the coming weeks, UberEats will work mostly the same way in all 10 cities in the U.S. where the lunchtime service is already available. One challenge will be converting Uber drivers into delivery experts. Delivering food creates new challenges for drivers, who have to get out of their cars to pick up the food from a restaurant, quickly shuttle it to their destination and sometimes park illegally while they wait for customers to appear at the curb.’
‘They all plan to draw on what the company learned from its test in Toronto, including the discovery that typical customers prefer to rotate through about five of their favorite places. In Toronto, Thai food was the most popular order for dinner.’
Hey, Silicon Valley:
‘Uber is willing to win at any cost and they have practically limitless capital to do it’
They are throwing your money down a rat hole to deliver curry and tea.
Uber Technologies? It’s a cab service that loses money hand over fist.
‘They all plan to draw on what the company learned from its test in Toronto, including the discovery that typical customers prefer to rotate through about five of their favorite places. In Toronto, Thai food was the most popular order for dinner.’
Better get a patent on that discovery.
http://www.cityofmeriden.org/Customer-Content/WWW/CMS/images/MOWLogo.jpg
That’s all it is. They compete with government not to mention pizza joints, chinese kitchens and every other type of delivery service.
But the bottom line is that eating out at a restaurant, much less having a restaurant meal delivered to your home, is a luxury item, and people are less able to afford luxuries all the time.
There’s a reason they tried it in Toronto; people there are living in a huge bubble of money. Why not have the drivers cut up the food and drop it in the customers mouth?
We’ve seen this before; it’s billions of Yellen bucks looking for a business model. That’s why the reasoning is so tortured. It’s people sitting around a table trying to invent a need. It has only gone so far because governments allowed the illegal business to proceed.
Grilled cheese trucks exist not because people want it. It exists because they were able to take 100 million bucks out of “investors” pockets.
And the biggest invention of all? That’s right. Houses at massively inflated prices because of a “shortage” with millions of excess empty houses right in front of everyone.
There’s some stunning, painful losses.
And there’s no barrier to entry. A reader sent this to me:
‘Realstir.com, described as a hybrid of Zillow and Airbnb by Inman News, is in advanced discussions to add Realeflow’s community of 30,000 real estate investors to its user base. The development is particularly important because consumer demand for Try Before You Buy (TBYB) properties.’
Damn…. this is 1999 era stupidly comingled with 2006 era fraud x10.
‘Elevate Credit (ELVT), an online platform for payday-type lending, postponed plans to go public this week, further delaying the opening of the initial public offering market in 2016. The deal, which was expected to raise almost $80 million, would have been the first IPO of the year.’
‘While the entire stock market has suffered some this year, publicly traded online lenders like LendingClub (LC) and On Deck Capital (ONDK) have been absolutely crushed, down 28% and 25%, respectively, in just three weeks.’
‘The Elevate deal also would have come as the overall market for technology IPOs has shriveled after returns for many of last year’s pricings performed poorly. The volume of tech IPOs was the lowest since 2009 and high-profile deals like Square (SQ), Box (BOX) and Fitbit (FIT) were hit hard by the market sell-offs in August and December.’
‘However, unlike many other tech startups, Elevate’s financial disclosures show that its bottom-line results are moving in the right direction. The company’s revenue increased 58% to about $434 million last year and it about broke even in the fourth quarter, according to unaudited financial results included in one of the company’s most recent securities filing.’
‘Elevate offers three lending products online, all aimed at so-called non-prime borrowers. Elevate’s “Rise” product is a small installment loan offering, typically less than $5,000, pitched at low-income customers. Second, and in some ways like a classic payday lender operating out of a neighborhood store front, Elevate’s “Elastic” offers short-term cash advances for a small “fee,” typically 5%, that works out to a very high rate of interest when calculated on an annualized basis.’
‘While critics of payday lending say the industry is exploiting low income borrowers’ lack of access to adequate banking services, Elevate says its products are considerably cheaper than those offered by the older, retail chain-based lenders.’
Payday lending to non-prime borrowers. Get a patent.
Why not have the drivers cut up the food and drop it in the customers mouth ?? It’s people sitting around a table trying to invent a need ?? We’ve seen this before; it’s billions of Yellen bucks looking for a business model ??
Post of the year so far….I think you are spot on Ben…
I’ve been through this. I was an accountant for a dotcom. I remember our biggest customer, MCI Worldcom, was reinventing itself more than once and a lot of others were too. As it became obvious they would never make a profit at their core business, something had to be cooked up to keep the investment money coming in. Just when everybody was gaga about Worldcom stock, I was wondering why they couldn’t seem to pay their bills.
I think the company called Square has decided it will morph into a payroll company, and business finance. Stop the presses! Why didn’t anyone think of payroll services and lines of credit before? I’ll tell you another thing that I can’t see working, at least now; driver-less cars. I don’t want one. How come they never mention what it will cost? Who has the liability when somebody gets run over? “Never mind you doom and gloomer, thars venture capital to piss away!”
Uber is burning through hundreds of millions to “win” this taxi thing. How long have taxis been around? 200 years? More?
^Lola is a rickshaw operator in Chinatown.
I’ll tell you another thing that I can’t see working, at least now; driver-less cars.
Notice how quiet google has been on that topic lately?
“Uber is burning through hundreds of millions to “win” this taxi thing. How long have taxis been around? 200 years? More?”
The demand is there, and the service works great. Cabs in the bay area are generally filthy, piloted by foreigners with serious B.O. and an attitude… if you can get them to come for you at all.
The Uber/Lyft experience is miles ahead of a cab. If they quit pissing away money, they could be making bank. They’re not going to capture the market, it’s to easy to build an app like theirs. They can make a lot of money, but they want to make ALL the money.
“It has only gone so far because governments allowed the illegal business to proceed”.
It’s only gone this far for this long because we, the Citizens, have allowed it to continue.
I’ve been hearing a lot of “I’m willing to die for my Country” crap from people lately. My response which always causes a long pause is “Are you willing to kill for your Country”.
I have yet to get a direct answer to my query.
Come on Ben, don’t knock the roach coaches - they’ve been a staple of Silly-Con valley for a long time, and I’m sure can be profitable - and can provide a useful service (better quality food than McD’s without having to drive).
Now “gourmet” grilled cheese roach coaches financed by an IPO….
“We’ve seen this before; it’s billions of Yellen bucks looking for a business model. That’s why the reasoning is so tortured. It’s people sitting around a table trying to invent a need. It has only gone so far because governments allowed the illegal business to proceed.”
Get ready for QE4, and even worse levels of malinvestment.
….. and ever collapsing demand.
“Dow Could Fall 5000 Points And Still Not Be Cheap”
http://www.marketwatch.com/story/look-out-stocks-might-fall-a-lot-further-2016-01-21
Correct. Bottom is a long way down.
Dow needs to be below 10,000 to be affordable.
If you have to use margin to buy in at this level it’s not affordable nor can you afford it.
If the DOW drops below 10k it will scare main st. Only wall st will be buyers.
Tillamook County, OR Housing Prices Crater 15% YoY
http://www.zillow.com/tillamook-county-or/home-values/
‘Some buyers are waiting for prices to come down more, but others are waiting because they’re worried about their jobs,’ she said. ‘They’re scared. There’s a lot of fear out there.’ However, she said the market is ‘not entirely doom and gloom.’
Not entirely, but a bit.
‘Fear from the seller’s side, hence the increase in properties for sale, and fear from the buyer’s side thus limiting the number of sales,’ said Campbell. ‘This situation will get worse before it gets better.’
Fear all around, eh? I’d bet that will slow down the sales.
‘rents have dropped over the past six to 12 months in the order of about 30 to 35 per cent…When you’re talking about some of these smaller guys who maybe only have one to five houses, they usually don’t have a corporate name or signage,’ Lockhart said. ‘It’s very frustrating because a lot of them pay their mortgage with their rent payment; they’re not making an excess of money. So they’re having to pay that mortgage payment out of their pocket.’
And with house prices falling, how long will these guys service huge, multiple house loans even if they have the money? These 5% average price declines are before the foreclosures roll in. When distressed sales start, look out below.
The thing is, here in the U.S. those distressed sales just aren’t happening with anywhere near the frequency they should be. The brunt of those loans have been sold to the Fed and will sit on their balance sheet for eternity.
But how about moving forward? Who is originating loans now? Not the big commercial banks. They’re all pulling out of the game to be replaced by Quicken and all the other creepy online lenders. There was an article on CNBC discussing such a few days ago. Which I found quite hilarious. JPM, BAC, PNC were all pimping housing as the great sector to be investing in just six months ago. And yet at the same time they are pulling out of the game?
To quote A Clockwork Orange, “Enough of these words, actions speak louder than.”
“The thing is, here in the U.S. those distressed sales just aren’t happening with anywhere near the frequency they should be. The brunt of those loans have been sold to the Fed and will sit on their balance sheet for eternity.”
That doesn’t make tens of millions of excess, empty and defaulted houses go away.
I posted an article (in the Friday comments IIRC) showing foreclosures are still running double and triple the normal levels. In places like Las Vegas and parts of Florida it’s worse. Has anyone seen the days to foreclose do anything but go up, for years?
The GSE’s have quietly started bulk sales of the paper again. The number underwater is still over 20% in lots of cities like Phoenix. I see a bunch of Canadian license plates around here. I wonder if they are spending as much as the boom years?
Here in Chicago my wife and I make a habit of attending open houses. Most houses we go to are priced between $500k and $1MM. And, at the minimum, 80% of them are uninhabited. But the untrained eye wouldn’t know this. They don’t have the missing dishwasher and Saran-wrapped toilets you would expect to see at a foreclosed property. There is no documentation to be found online of any legal proceedings or sale to an investor. Instead they are artfully staged, many even down to closets filled with clothing. But there are no family portraits. There are no degrees hanging on the wall of the office. The televisions are not connected. Often times the TV’s aren’t even real.
It really is just an incredible facade. Makes one feel like Seth Rogen’s character in The Interview. It’s all fake. These are the houses some financial institution still owns. These loans aren’t sitting on Yellen’s books. This is the limited supply they are trying to trickle back onto the market. And this is exactly why commercial banks wouldn’t originate new loans, but at the same time would have their equity analysts pimping the housing sector.
And I don’t intend to sound like a kooky conspiracy theorist. Perhaps documentation of title transfers exists somewhere. Perhaps I’m just not seeing that the home was sold to an investor. Perhaps there are a ton of relocations and people carrying two mortgages. But one thing is for sure. Nobody lives in these homes. And very few people are buying these homes.
Kooky conspiracies are welcome here… don’t be shy!
Bellevue, WA Housing Market Craters; Prices Plummet 6% YoY On Ballooning Housing Inventory
http://www.zillow.com/bellevue-wa-98006/home-values/
Travel carders almost gone, now down to about 70% active = Alberta oil fields.
Who would have ever thought such a vibrant industry could be shellacked so fast !
First by prices - and then by a socialist government who are not consistent.