A Glut At The Higher End
The Press Democrat reports from California. “Sonoma County’s median home sales price hit $555,000 in January, the highest level for any month in nine years. The median price climbed nearly 16 percent from a year earlier, according to The Press Democrat’s monthly housing report, compiled by Rick Laws, senior vice president at Pacific Union International real estate firm. It was the highest median since March 2007, when the price was $560,000. Craig Curreri, a broker associate with Pacific Union in Santa Rosa, said over the past year homes that formerly sold for $450,000 are now going for $515,000. And relatively few such homes seem to be on the market. For buyers in that price range, he said, ‘it’s brutal. It’s absolutely brutal… The people who are achieving the most success are the ones willing to get uncomfortable.’”
From Realtor.com. “Renters in some of the most exorbitantly priced U.S. cities are beginning to get a bit of much-needed relief. Manhattan rents have spiked to such highs that more and more landlords are throwing in major perks to keep tenants from fleeing to cheaper neighborhoods. Meanwhile, a flurry of new construction in downtown Denver has pitted property owners against one another as they compete for choosier residents.”
“Landlords in San Francisco, where housing prices have reached mind-boggling heights, may soon have to woo residents, as more newly constructed apartment buildings come online. San Francisco Apartment Association spokesman Charley Goss recently saw a new building in an up-and-coming area offer a free month’s rent to prospective tenants. ‘That was the first time we’ve seen that in years,’ Goss says.”
The Colorado Real Estate Journal. “Rising apartment vacancies rates continue to fuel concern that the Denver multifamily market is facing overbuilding. The fourth-quarter vacancy rate jumped by 44.6 percent from the 4.7 percent rate in the fourth quarter of 2014, according to AAMD. That is the biggest year-over-year percentage increase since the second quarter of 2009. However, most of the pain is being felt in the newer, luxury communities being built in and around downtown, said Jerry Kendall, principal of Greenwood Village-based Multifamily Capital Partners, and one of the sponsors of the AAMD report. ‘These are the movie stars of our little apartment world,’ Kendall said. ‘They are the sexy, expensive, headline-making stuff.’”
“The truth is, only so many consumers, especially millennials, can afford to pay $3 or more per square foot in rent, he said. And it could get worse, before it gets better. ‘We are at a point of time where a lot of these new communities are coming on line, adding to the existing supply,’ Kendall said. Already, many downtown landlords are offering free rent and that trend will continue, he said. Indeed, the AAMD put the ‘economic’ vacancy rate, which includes concessions and discounts, at 13.7 percent, twice the actual vacancy rate.”
“Markets with a significant number of new buildings already are showing double-digit vacancy rates, he noted. For example, Boulder, outside of the city, has a vacancy rate of 14 percent, according to the AAMD, while downtown Denver is at 11.4 percent. Northwest Denver’s vacancy rate was at 17.4 percent. ‘There is a glut at the higher end,’ Kendall said. ‘But if you remove all of the units that were built after 2010, our market is looking pretty healthy.’”
The American Banker on Florida. “There is concern that a decline in condo pricing could create loan problems similar to those that cropped up before the financial crisis. Bankers in the area, however, believe foreign investors would take the biggest hit. ‘Prices will come down in high-end luxury’ condos, says Eddy Arriola, CEO of Apollo Bank. ‘You’re going to see that it won’t hit the banks, because we didn’t finance’ those deals.”
The Weston Forum in Connecticut. “The real estate market, both locally and statewide, was a mixed bag in 2015, with some strong movement and some backsliding. Weston was the only one to have increased both its number of listings sold and median sale price in 2015. ‘I think Weston is on sale,’ said Realtor Patrick Filley of Berkshire Hathaway. ‘If you go and look at houses there, there are large discounts from what some of them were purchased for before.’”
“While Easton’s median sale price fell by less than 2%, the town sold 12.5% fewer homes this year than last. Like Redding, though, ‘There’s a lot of shadow inventory there,’ said Peg Koellmer, principal broker at Wilton independent real estate agency Realty Seven.”
The New York Post. “New York’s swankiest skyscrapers have become the new Swiss banks for the world’s richest undesirables. It’s ironic, considering that for decades Washington led the charge against the Swiss and others for facilitating money laundering through numbered bank accounts. Today, Switzerland has cleaned up its act and the ‘filthy’ rich have turned to New York City, turning it into a secrecy haven to stash their cash through the use of shell companies.”
“The United States as a whole has become a magnet for unsavory people because its real estate developers and lawyers are not legally required to know who their clients are, as Swiss banks now must. Finally, despite years of lobbying by law enforcement officials, the federal government is starting to crack down on this loophole. But secrecy should have been made illegal years ago. Not only does it hide the identity of the crooked, violent and corrupt, it makes investigations or seizures impossible. It appears, however, that the tide is turning. Cases have shown that shell companies not only conceal sleazy foreigners but also have enabled American criminals who have defrauded Medicare, embezzled from public schools, scammed the elderly and made illegal contributions to American political candidates.”
“The concern is that countries with hot money outflows are being destabilized, while countries inundated with illicit cash are developing real estate bubbles and high housing costs for ordinary residents. Growing demand to ‘out’ ownership by law enforcement officials has been ignored due to intense lobbying by the real estate, legal and accounting industries. ‘We like the money,’ said Raymond Baker, the president of Global Financial Integrity, a Washington nonprofit that tracks and condemns the illicit flow of money. ‘It’s that simple. We like the money that comes into our accounts, and we are not nearly as judgmental about it as we should be.’”
“Today, Switzerland has cleaned up its act and the ‘filthy’ rich have turned to New York City, turning it into a secrecy haven to stash their cash through the use of shell companies.”
And in the process they priced the middle class right out of the city. Heckuva job NAR!
Worse yet, NAR imploded their very own market.
Cratering housing demand my friends. Cratering housing demand.
“And in the process they priced the middle class right out of the city.”
But think of the comps, think of what the price rise did to the values of the comps.
What you are seeing before your eye is the miraculous creation of …
WEALTH! Wealth for the many due to the actions of a few.
Magic!
Oh, and taxes too. More property taxes from the many due to the actions of a few.
There is a lot of grins shared by those who get to see their wealth increased month-by-month due to the actions of others but the one doing the most grinning is the tax man.
This newly-created wealth doesn’t have to be realized, meaning it doesn’t have to be cashed in the way that financial genius David Lereah says it should for the tax man to get his cut, no all that has to happen is for all this newly-created wealth to be recognized and tallied up by the tax assessor.
Real estate taxes are the only type of “wealth taxes” that I know of, meaning you get taxed on the amount of wealth you have (the amount of wealth you have as determined by strangers) each and every year for as long as you own the property.
This does not happen with stocks, bonds or other types of wealth, only real estate. Sure you get taxed on dividends and interest but that is not taxing the wealth itself, it is taxing what the wealth generates. With real estate you get taxed no matter what.
There is a lot of grins shared by those who get to see their wealth increased month-by-month due to the actions of others but the one doing the most grinning is the tax man.
Got TABOR?
Nope,got 5.5 +++ increase so gov workers can retire at age 55
Oh its worse than that. Those new ultra-luxury buildings are property-tax free for years and years under a break put into effect when people were fleeing NYC because of future-wrecking debts and pensions from the 1960s. The idea was if you build something new you don’t have to pay.
The REIC is fighting to keep those deals, which have expired. In their most recent permutation in lieu of property taxes the developers funded some “affordable housing.” Why not just collect the taxes, and spend it on affordable housing? Because the money might be diverted to something that benefits everyone, not just the fortunate few.
http://ny.curbed.com/archives/2016/01/29/over_7000_permits_approved_in_month_before_421a_expired.php
Property taxes (rent) is what will kill most “home owners” retirement plan who *think* their house is paid for.
Goss recently saw a new building in an up-and-coming area offer a free month’s rent to prospective tenants. ‘That was the first time we’ve seen that in years,’ Goss says.”
You know that sound a structure makes right before it collapses? This is the financial equivalent.
It’s interesting that everybody can see those Canadians were living it up a lot too much in yesterdays post, but many can’t understand that San Francisco is even worse. Notice the 70% drop in Hong Kong prices yesterday? Any city can be overbuilt. Of course, in a bubble what gets overbuilt is usually not what the population needs.
‘re taxes going up 5.5 % here in Soviet s of dc
“‘re taxes going up 5.5 % here in Soviet s of dc”
The game of Gotcha begins the very moment the dotted line is signed.
No dollar escapes.
Damning articles. What a way to choke the life out of the economy and cut your own throat. Back to the fundamentals- Construction costs at $55/sq ft(lot, labor, materials and profit).
What reason exists that would put your transaction price at such a level that drives your sale volume to record lows and total dollar volume in the gutter?
So it begins. Buckle up.
“Calgary’s Housing Market Collapses While “Three-Alarm Blaze” Burns Next Door In Vancouver”
http://www.zerohedge.com/news/2016-02-16/calgarys-housing-market-collapses-while-three-alarm-blaze-burns-next-door-vancouver
Then underlying debt Ponzi in China continues to smolder.
“Concerns about Chinese banks’ creditworthiness are mounting with the cost of insuring Industrial & Commercial Bank of China Ltd.’s debt against default reaching an all-time high of 199.5 basis points on Jan. 21.”
http://www.bloomberg.com/news/articles/2016-02-16/china-banks-seen-hiding-losses-in-opaque-receivables-accounts
Tampa, FL Housing Market Craters; Prices Dive 5% YoY
http://www.movoto.com/tampa-fl/market-trends/
fewer days on market and w 2% increase in per sq ft?
better try agian
It is the falling transaction price that is important here. $/sq ft will fall as demand plummets and transaction prices continue to fall.
What additional items were include in a sale where the transaction price fell YoY and the $/sq.ft. rose?
“Housing Starts, Permits Drop For Second Month As Homebuilding Activity Remains Far Below Prior Peak”
http://www.zerohedge.com/news/2016-02-17/housing-starts-permits-drop-second-month-homebuilding-activity-remains-far-below-pri
With housing demand at 20 year low and tens of millions of excess, empty and defaulted houses, why build more?
From the Press Democrat article:
‘Sales declined 33 percent compared to a year earlier for single-family homes selling for less than $500,000. For houses that sold at or above $500,000, the number of sales increased 76 percent.’
‘The sales increase of more-expensive homes could be due partly to increased purchases in more-affluent neighborhoods. But Curreri maintained that the increase is also partly due to appreciation.’
The Press Democrat story is bogus (as usual), there are plenty of houses for sale in Santa Rosa and nearby for $500K or so, and many have been on the market for a long time…however I’m not about to pay that kind of money for a crappy T111 tract house in a sketchy neighborhood. Prices have nearly doubled in the last 4 years, i.e. places that were $250K in 2011 are now about $450K. Will continue to rent until Bubble 2.o pops locally. (did try to buy in 2011/2012 but it was not possible for me without 100% cash thanks to flippers and speculators)
http://www.realtor.com/realestateandhomes-search/Sonoma-County_CA/type-single-family-home/price-na-500000/sby-6
Thank your lucky stars you didn’t get roped into buying a house 2008-2016.
‘Bankers in the area, however, believe foreign investors would take the biggest hit. ‘Prices will come down in high-end luxury’ condos, says Eddy Arriola, CEO of Apollo Bank. ‘You’re going to see that it won’t hit the banks, because we didn’t finance’ those deals.’
The Miami Times quoted a broker saying his clients had re-financed their down payments and bought more condos. Somebody is financing these deals Eddy.
‘The United States as a whole has become a magnet for unsavory people because its real estate developers and lawyers are not legally required to know who their clients are, as Swiss banks now must.’
If I take $3,000 in cash out of a bank account, a suspicious activity report is filed. If Louie the mobster buys a condo with cash, nothing. The NAR got real estate exempted from the Patriot act.
‘Former Secretary of the Treasury Lawrence H. Summers has called for the $100 bill’s execution, just as the Financial Times reported that the European Central Bank is planning on killing another big bill overseas, the €500.’
‘In an op-ed for the Washington Post, Summers cites a new study from Harvard’s Kennedy school by banker Peter Sands—he’s President Emeritus of Harvard—that made a strong case for the elimination of the £50, the €500, the Swiss CHF 1,000, as well as the $100 because large currency notes such as these are the “preferred payment mechanism of those pursuing illicit activities, given the anonymity and lack of transaction record they offer, and the relative ease with which they can be transported and moved.”
‘This is apparently an enormous problem. According to the study, only 1% of shady transactions are seized by authorities, and this has a massive effect on the world by way of tax evasion, corruption, terrorism, and garden-variety money laundering for criminal enterprise.’
The “enormous problem” is that our elites, of whom Summers is a spokesperson, are not subject to the rule of law. Would eliminating the $100 bill make it harder for JP Morgan Chase to rig LIBOR or commit fraud?
The preferred payment mechanism of those pursuing illicit activities is a campaign contribution. And Summers knows it. I’m also remembering the pallets of cash this country transported to Iraq. Will there be an exemption for futile nation-building?
By Catherine Austin Fitts
“In the summer of 2000, I asked a group of 100 people at a conference of spiritually committed people who would push a red button if it would immediately stop all narcotics trafficking in their neighborhood, city, state and country. Out of 100 people, 99 said they would not push such red button. When surveyed, they said they did not want their mutual funds to go down if the U.S. financial system suddenly stopped attracting an estimated $500 billion-$1 trillion a year in global money laundering. They did not want their government checks jeopardized or their taxes raised because of resulting problems financing the federal government deficit.”
“Our financial profiteering and complicity is not limited to aristocrats and the elites who do their bidding. Our financial dependency on unsustainable economics is broad, ingrained and deep.”
https://solari.com/blog/the-red-button-problem/
They aren’t fooling anyone with this 6 month looksie at money laundering in NYC and Miami - ONLY! Take the Canadians - if they catch a suitcase of money at the airport, they take a couple thousand and GIVE IT BACK! Occasionally someone in the bits bucket will say something interesting. Today one mentioned how Trump uses the word win a lot. Imagine that, win. Consider how a US general said a few months ago that it would take generations to beat ISIS. Russia has them about whipped. See, winning to the MIC is never leaving. Never stop spending vast sums of money while pretending to keep us “safe”. The war on drugs is a very lucrative business for the government.
Ever wonder how the drug cartels could be wrung out of Columbia, but El Chapo could sit around and tweet to Donald Trump?
The premise of last year’s excellent movie “Sicario” was the CIA attempting to move control of drug trafficking from Mexican groups back to a revived Medellin Cartel.
From Stockman’s blog:
“The crime is that we are ruled by a self-perpetuating elite of monetary cranks who have become so desperate that they want to eliminate something so irrelevant and harmless as hand-to-hand currency.”
http://tinyurl.com/hmmnp7y
Lawrence H. Summers, one of the great evils of our time.
‘Like Redding, though, ‘There’s a lot of shadow inventory there’
This is politically incorrect speak. Zombie foreclosures is the correct term.
“‘There is a glut at the higher end,’ Kendall said. ‘But if you remove all of the units that were built after 2010, our market is looking pretty healthy.’”
___________________________/
Uh, you can’t remove the units built after 2010. Is this what passes for persuasiveness these days?
Washington, DC Housing Market Craters; Prices Plunge 16% YoY
http://www.zillow.com/adams-morgan-washington-dc/home-values/
In Denver, job quality not keeping pace with home prices:
http://www.denverpost.com/business/ci_29520055/job-quality-not-keeping-pace-home-price-gains?source=most_viewed
‘Metro Denver, by contrast, saw a net gain of 2,500 high-paying jobs, for a 0.6 percent growth rate, which ranked 17th of 20 major housing markets. While revisions might lift that number, the weak oil and gas market appears to be a factor. Houston had a net decline in high-paying jobs last year, dropping 4,600 positions.’
“Have more confidence in the markets with strong high-income job growth, and become cautious if those growth trends begin to slow,” advised Adam Artunian, the author of the John Burns report.’
Dang Adam you hit that one out of the park. 17th out of 20. BTW, nationally income is down since 2009 while house prices skyrocketed in the same time period.
Denver is overpriced, badly polluted, and the traffic is horrible.
Don’t move here and expect to have any quality of life.
The job market in Denver has always been mediocre. Few good paying jobs, and they pay below national averages. Few Fortune 500 and .gov jobs. Mostly small firm jobs, with inferior pay and benefits.
There once was a time, before marriage and family, when I was interested in moving to Boulder, but it looked like I’d pretty much have to create my own job.
I still hope to run the “Bolder Boulder” 10k someday. Everyone is so super-fit out there, so look for me to finish in 20,000th place.
A man logs in to the Bits Bucket.
Man: Ah. I’d like to have an argument, please.
Regular poster: Certainly sir. Have you been here before?
Man: No, this is my first time.
Regular poster: Fine. I’ll see who’s free at the moment.
Regular poster: Mr. DeBakey’s free, but he’s a little bit conciliatory. Ahh yes, Try Mr. Barnard; room 12.
Man: Thank you. (Walks down the hall. Opens door.)
Angry man: WHADDAYOU WANT?
Man: Well, Well, I was told outside that…
Angry man: DON’T GIVE ME THAT, YOU SNOTTY-FACED HEAP OF PARROT DROPPINGS!
Man: What?
A: SHUT YOUR FESTERING GOB, YOU TIT! YOUR TYPE MAKES ME PUKE! YOU VACUOUS TOFFEE-NOSED MALODOROUS PERVERT!!!
M: Yes, but I came here for an argument!!
A: OH! Oh! I’m sorry! This is abuse!
M: Oh! Oh I see!
A: Aha! No, you want room 12A, next door.
M: Oh…Sorry…
A: Not at all!
A: (under his breath) stupid git.
(The man goes into room 12A. Another man is sitting behind a desk.)
Man: Is this the right room for an argument?
Other Man: I’ve told you once.
Man: No you haven’t!
Other Man: Yes I have.
M: When?
O: Just now.
M: No you didn’t!
O: Yes I did!
M: You didn’t!
O: I did!
M: You didn’t!
O: I’m telling you, I did!
M: You did not!
O: Now let’s get one thing quite clear: I most definitely told you!
M: Oh no you didn’t!
O: Oh yes I did!
M: Oh no you didn’t!
O: Oh yes I did!
M: Oh no you didn’t!
O: Oh yes I did!
M: Oh no you didn’t!
O: Oh yes I did!
M: Oh look, this isn’t an argument!
(pause)
O: Yes it is!
M: No it isn’t!
(pause)
M: It’s just contradiction!
O: No it isn’t!
M: It IS!
O: It is NOT!
M: You just contradicted me!
O: No I didn’t!
M: You DID!
O: No no no!
M: You did just then!
O: Nonsense!
M: (exasperated) Oh, this is futile!!
(pause)
O: No it isn’t!
M: Yes it is!
M: An argument isn’t just contradiction.
O: Well! it CAN be!
M: No it can’t!
M: An argument is a connected series of statements intended to establish a proposition.
O: No it isn’t!
M: Yes it is! ’tisn’t just contradiction.
O: Look, if I *argue* with you, I must take up a contrary position!
M: Yes but it isn’t just saying ‘no it isn’t’.
O: Yes it is!
M: No it isn’t!
M: I’ve had enough of this!
O: No you haven’t.
M: Oh shut up!
(Man logs off the Bits Bucket)
Deep six it. Bring it back when after you decide to release the inmates from their RageCages.
Just a thought.
Are you trying to tell us something? Like, you’re going to shut the blog down?
No he’s not!
No, just that the bits bucket is like Camelot in Monty Python’s Holy Grail. It’s such a silly place. That exchange yesterday with oddfellow and others was not much better than the argument sketch I paraphrased above.
Even after encouraging Lola to join the discussion on the daily topic thread last night, she continued to spiral into a meltdown.
Granted we are not as funny as Monty Python. Understood.
Denver, CO Housing Market Craters; Prices Plunge 14% YoY
http://www.zillow.com/washington-park-denver-co/home-values/
My friend paid $400 a square foot for a 90 year old shack in Washington Park with no driveway or garage then dumped another $25K into replacing all the windows.
And he works 6 days a week for 9 months of the year to pay for it. He doesn’t go skiing anymore. He doesn’t do anything anymore, actually, except work all the time to pay for a rotting, depreciating shack.
But now he can brag that he lives in Washington Park and not with the unwashed in a rental apartment in someplace like Aurora.
Oh dear…
1 to 100 of 2500
https://denver.craigslist.org/search/apa
1 to 100 of 1733
https://denver.craigslist.org/search/apa?is_paid=all&search_distance_type=mi&query=brand+new+free+rent
‘Uber has raised more than $8 billion from investors wanting a piece of the privately held ride-hailing giant. Yet even Uber’s CEO, Travis Kalanick, chides the “irrational funding going on” — and he’s not talking about his own company.’
‘Kalanick condemned the amount of money some competitors are raising to buy up market share, according to a report from BetaKit. “You can get your butt kicked by others who are raising more money and buying market share,” he said. “So you have to find a way to contain the irrational when it’s happening.”
‘Kalanick is not talking about Uber raising billions to edge out Lyft, but his Chinese competitor Didi Kuaidi, which has raised more than $3 billion to defeat Uber in China. “We’re profitable in the USA, but we’re losing over $1 billion a year in China. We have a fierce competitor that’s unprofitable in every city they exist in, but they’re buying up market share. I wish the world wasn’t that way,” Kalanick told the crowd.’
‘While Uber’s appetite for cash has shown no bounds, the company’s CEO seems to be weary of the continuous fundraising while accepting that this is how the game is played. “I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share,” Kalanick said.’
http://www.businessinsider.com/uber-ceo-travis-kalanick-on-irrational-funding-2016-2
‘Kalanick condemned the amount of money some competitors are raising to buy up market share, according to a report from BetaKit. “You can get your butt kicked by others who are raising more money and buying market share,” he said. “So you have to find a way to contain the irrational when it’s happening.”
Good luck with that Travis, as a good look in the mirror may help.
‘I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share’
A fundraising bonanza, eh? To buy money-losing market share. For taxis. You guys really have no clue how screwed you are, do you?
Along those lines Zenefits is in trouble and just ousted its CEO, in part due to his authoring software so agents could cheat on state licensing exams…good article on all this below.
http://www.nytimes.com/2016/02/18/technology/zenefits-scandal-highlights-perils-of-hypergrowth-at-start-ups.html?ref=business
Zenefits executives and employees could face criminal charges
San Francisco Business Times (blog)-6 hours ago
Regulatory agencies in California and Washington caution that Zenefits and current or former employees could face criminal charges related to …
‘After Zenefits, Will VCs Rein in Their Unicorns?’
‘The $4.5 billion benefits startup moved fast and broke things—maybe even the law.’
“For the last few years, valuations often became detached from the underlying fundamentals,” says Anand Sanwal, CEO of researcher CB Insights. “In the current climate, investors are starting to think about old-fashioned things like cash flow.”
http://www.bloomberg.com/news/articles/2016-02-17/after-zenefits-will-vcs-rein-in-their-unicorns
Well here’s the problem Anand. It’s kinda hard to make cash flow. When you’ve spent years in a fundraising bonanza, bubble-babies tend to forget how to do it, if they ever knew in the first place.
fundraising bonanza
fundraising bonanza == central-bank created liquidity tsunami desperately looking for a place to flood into…
Fayetteville, NC Housing Market Craters; Prices Nosedive 9% YoY As Declines Spread Nationally
http://www.zillow.com/fayetteville-nc/home-values/