It’s Still A Serious Disconnect
CBS Boston reports from Massachusetts. “See a house for sale in Boston? Like the price? Don’t get too comfortable. If you want to buy property in certain areas around the city, real estate agent David Bates says you should be prepared to shell out a lot more money than what the sellers are asking. ‘We’re seeing, literally, condos selling for hundreds of thousands of dollars more than the list price,’ said Bates. ‘It’s almost like their listing prices don’t exist.’ Bates says buyers need to know that going in, so they’re not shocked when a bidding war ensues. ‘Buyers aren’t trying to negotiate value in Boston anymore,’ Bates said. ‘They’re trying to win.’”
The Merced Sun Star in California. “After a stretch of little growth, the housing market in Merced County has begun to show new signs of life, with cities beginning to issue more housing construction permits and home sale prices rising faster than the state and national averages. The impact of the Bay Area’s infamously tight housing market is once again spilling over to Los Banos, where the city’s Planning Commission issued 73 permits for new home construction in the first two months of this year. That compares to the 127 permits taken out in all of 2015. ‘(Homes) are not being built and sitting there,’ Senior Planner Stacy Souza Elms said. ‘They’re being sold, as well.’”
“About two-thirds of the Los Banos homes are being sold to people looking to commute to Bay Area jobs, she said.”
From Florida Today. “The new home construction market is moving along at a decent clip in some parts of Brevard County, most notably Suntree, Viera and West Melbourne. But who are most of those homes being built for? Daniel Levitan, a nationally recognized housing expert based in Plantation, said they’re mostly going to people moving into Brevard and not individuals who live here and are moving up from an existing home to a newly constructed one. The price barriers to the new home market currently are just too high for meaningful activity in the latter type of movement, he said.”
“‘What there is, is a disconnect between the pricing of resale housing and the price of new housing,’ Levitan said. ‘And, while improving, it’s still a serious disconnect. And what that has done is that the new housing market then becomes dependent on new ‘in-migrants’ - employee transfers, retirees, whatever - for a large percentage of its business because locals can’t afford to buy new housing.’”
12 News in Arizona. “The west Phoenix ‘urban village’ of Laveen is embarking on a new housing boom. Three new subdivisions are going up in the community of roughly 93,000 residents. A recent study by Brown and Burger forecasts an estimated 18,000 new homes will be built Valley-wide this year. But in Laveen, there are still reminders of what happens when the housing market gets ahead of itself. Another development just to the south of the Beazer subdivision remains half-finished. The site was abandoned by the builder six years ago, leaving dozens of lots empty next to finished homes.”
KFYR TV in North Dakota. “Mariah Schulte says the signs are all over town. ‘Five, six, probably at least seven on my street alone,’ said Schulte, Dickinson home owner. But the price tags on Dickinson homes don’t seem to be lower, even with more options and an economic slowdown. ‘People have lost way more than we have and housing prices just aren’t coming down,’ Schulte said.”
“Schulte’s family recently moved into the larger home, and says a house nearby is listed for more than what she paid. But those in real estate say business is steady and prices have lowered about 10 percent. Shirley Dukart, Home and Land Company broker associate, admits homes purchased by oil companies and rented have flooded the market, but says many who once couldn’t afford homes, now can and are looking. ‘They can afford the home prices because now they’re up to 250, before that we had 250 and higher,’ Dukart said.”
The Scotsman Guide. “In recent months, some economists have cited a lack of new homebuilding as the cause of tight housing inventories and rising home prices. National Association of Home Builders (NAHB) Chief Economist David Crowe spoke with Scotsman Guide News about why the supply of single-family homes has lagged behind traditional levels, and also why he doesn’t believe the nation is experiencing a housing shortage.”
“Q: Over the last couple of years, why haven’t builders been more aggressive on the single-family side? A: It is all about demand. For example, in one positive report this past week, we noticed that inventories of new homes for sale have continued to increase, but the [drop in] sales of new homes in general has [been the result of] a lack of demand. The lack of the buyers [is caused by] a number of things. One principal reason is that purchasers of new homes are almost always sellers of existing homes, and the turnover in existing homes has been extremely low. Without that feed from the existing market into the new market, the new market has been slow to recover.”
“Q: Are there factors that are holding building back? A: The number one factor is demand. There hasn’t been a robust demand from potential buyers, but it is also true that builders are having difficulty finding trained labor and also some difficulty in finding lots in desirable locations in places where people would want to live.”
Q: Some economists have said housing shortages are developing. Do agree with this? A: I don’t agree with that at all. It is a lower inventory than we would normally be used to. If you compare the level of the inventory now to what it would be normally, you could perhaps come to that conclusion, but that is ignoring the fact that we have lower demand. You wouldn’t want to see the inventory exceed the expected demand.”
“‘What there is, is a disconnect between the pricing of resale housing and the price of new housing,’
These realtors are economic wunderkinds!
Here’s another one:
‘Bill Gross, the widely followed investor who runs the Janus Global Unconstrained Bond Fund, said Thursday investors should not be tempted into buying beaten-down bank stocks against a backdrop of interest rates potentially turning negative. Gross noted the collapse in bank stock prices after the collapse of Lehman Brothers in 2008: Citi was at $500 in 2007, currently trades around $38; Bank of America at $50 but now trades around $12; Credit Suisse was at $70 and now trades around $13; Deutsche Bank at $130, now around $16, and Goldman Sachs was at $250, and is now at about $146.’
‘Gross warned investors: “Banking/finance seems to be either a screaming sector ready to be bought or a permanently damaged victim of write-offs, tighter regulation and significantly lower future margins. I’ll vote for the latter.”
‘Gross said investors should not reach for the “tantalizing apple of high yield or the low price/book ratio of bank stocks.” Those prices are where they are because of low or negative interest rates, Gross said.’
‘Financial cos. will be hard-pressed to meet long-term growth expectations as decades of credit expansion come to an end and central-bank policies and tighter regulations squeeze profits, writes Janus’s Bill Gross in monthly outlook.’
‘Citigroup, Bank of America, Credit Suisse, Deutsche Bank, Goldman Sachs trading far below their pre-crisis highs as credit growth that has fueled global economic expansion appears to near its end.’
Is this a lot?
‘decades of credit expansion come to an end’
Is the biggest expansion of credit in history over yet?
‘Mariah Schulte says the signs are all over town. ‘Five, six, probably at least seven on my street alone,’ said Schulte, Dickinson home owner. But the price tags on Dickinson homes don’t seem to be lower, even with more options and an economic slowdown. ‘People have lost way more than we have and housing prices just aren’t coming down,’ Schulte said.”
‘Schulte’s family recently moved into the larger home, and says a house nearby is listed for more than what she paid.’
Uh Mariah, I think ‘housing prices just aren’t coming down’ is you in the denial phase.
‘Buyers aren’t trying to negotiate value in Boston anymore,’ Bates said. ‘They’re trying to win.’
Yes, the Charlie Sheen school of real estate investing. So just who is financing these hundreds of thousand$ over asking for air boxes in Boston? Jingle mail, you want to chime in here on how how it’s different this time?
When you’ve got tiger blood running through your veins (or are trying to expatriate foreign dinero), no price is too high apparently.
The four lot short-plat behind me, when it was first announced a year and a half ago, has prices starting “in the low 900s.” Now the first home has already been sold for $1.35M, with asking prices for the remainder going as high as $1.6M.
This far exceeds the, um, er, ‘market exuberance’ that I witnessed here a decade ago.
the question is, how much longer will this go on for? Is it 2004 now again or 2006?
‘Another development just to the south of the Beazer subdivision remains half-finished. The site was abandoned by the builder six years ago’
I’ll have to go visit this place. Why doesn’t Beazer just finish the old subdivision? Oh, that’s right, they stuck a bunch of people with a bad loan and collapsed the LLC and ran away with the money.
That subdivision was probably sold, so the builder could take the tax loss and recapture tax dollars from the Feds for income taxes paid in prior years.
The current owner may not be willing to sell at today’s prices (which may still be below replacement cost–we see this phenomenon in inland CA).
In other words, the current owner paid too much.
Surprised?
“Retail is for suckers”
The current owner could be a bank. And we know foreclosures never sell below what was loaned.
(which may still be below replacement cost–we see this phenomenon in inland CA) ??
Yes we do…
‘It is all about demand. For example, in one positive report this past week, we noticed that inventories of new homes for sale have continued to increase, but the [drop in] sales of new homes in general has [been the result of] a lack of demand. The lack of the buyers [is caused by] a number of things. One principal reason is that purchasers of new homes are almost always sellers of existing homes, and the turnover in existing homes has been extremely low.’
Hmmm, so this low inventory we’re always hearing about is actually a low number of people looking to buy a house. Because if they aren’t selling they aren’t buying. Gosh, that’s pretty much the complete opposite of what we’ve been told for years!
“so this low inventory we’re always hearing about is actually a low number of people looking to buy a house.”
There it is.
Demand doesn’t look all that great…… it’s a 20 year lows. And falling.
http://2.bp.blogspot.com/-yX5B5Hn95bQ/VYC3Wr6ihBI/AAAAAAAAj7I/alOslZa-cK8/s1600/MBAJune172015.PNG
demand and bidding wars, the answer is there somwhere
Sigh. Not a lot to say here. We are a foolish people and we will get what we deserve. And thank you central bankers!
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House flipping enjoyed a big spurt of activity in 2015, and there were few busier places for flipping than the Tampa Bay area. Among 110 metro areas with at least 250 flips, the bay area tied with Las Vegas and Fresno, Calif., for second place in flips as a percentage of total single-family home sales — 9.2 percent.
“It was a banner year, probably the best year we’ve had on sales,” said Chris Smith, whose Tampa-based Bay to Gulf Holdings does its own flips and also sells properties at wholesale prices to other flippers.
Fueled by the interest in such popular TV shows as Flip or Flop, flipping hit levels last year not seen since 2007 as the housing bubble was about to burst. According to RealtyTrac, 5.5 percent of all single-family home sales in 2015 were flips, up from 5.3 percent the previous year, which marked the first annual increase in four years.
…
Smith said some of his customers are relatively experienced flippers, though “about once a week I sit down with someone who has never done it.” He’s currently speaking with a couple — she’s a nurse, he works in a hotel — who want a property to flip or keep as a rental.
“They will buy,” he said. “They have substantial money to put down, they’ve been saving money, which is what you have to do.”
Some lenders are offering short-term loans to flippers like Benjamin Cordoba of Tampa. Last summer he borrowed $75,000 to buy and renovate a three-bedroom house in Seminole Heights, one of the bay area’s most popular communities.
Cordoba sold the house for $137,5000 and closed Wednesday. After his loan costs and other costs, he made a net profit of about $50,000.
“Absolutely,” he said when asked if he planned to try another flip. “I’m looking for my next deal this month.”
http://tinyurl.com/hrxxl39
Just keep rolling that money into more and more flips until the music stops. It’s the American dream!
No different than how the 1%ers make their coin these days - profiting off of transactions of equities, currencies, commodities.
Can we really blame the little guy for trying to do the same?
Some of the last losers crawling out the BK hole are just re-entering the flippin’ market…so expect this puppy to hum along for at least another year….
“I’ve got it! We’ll incentivize an economy built around flipping houses to each other. Everyone will flip to everyone else, and they’ll all get rich! (and more importantly so will we).”
There are obviously people getting rich off this scheme (Lloyd and Jamie are newly minted billionaires). Somehow I doubt it’s most flippers though. They’re the cattle, not the farmer.
San Diego, CA Housing Market Caves; Prices Crater 9% YoY
http://www.zillow.com/san-diego-ca-92130/home-values/
‘About two-thirds of the Los Banos homes are being sold to people looking to commute to Bay Area jobs’
And they are paying around $300k. The last time bay areans were buying houses in Los Banos bad things happened.
Good gravy! That would be like commuting from San Diego to LA!
The last time bay areans were buying houses in Los Banos bad things happened ??
Yep….Many of those commuters are self employed or in the trades…Not uncommon to see a van pull up and 8 workers pile out…Its also very common for them to stay in a motel 4 to a room for a few days until they finish a certain phase of their work…Then head back home in the morning so they have the reverse commute…
‘About two-thirds of the Los Banos homes are being sold to people looking to commute to Bay Area jobs’
Let us hope for these poor fools that “Bay Area” means San Jose and not San Francisco so on a perfect day its a 3 hour round trip. But there are no perfect days. And if something goes wrong along Pacheco Pass these debt slaves are f@cked.
Arlington, VA Housing Market Caves; Prices Crater 9% YoY
http://www.zillow.com/arlington-va-22207/home-values/
Let’s connect some dots:
‘they’re mostly going to people moving into Brevard and not individuals who live here and are moving up from an existing home to a newly constructed one. The price barriers to the new home market currently are just too high for meaningful activity in the latter type of movement, he said.’
‘What there is, is a disconnect between the pricing of resale housing and the price of new housing,’ Levitan said. ‘And, while improving, it’s still a serious disconnect. And what that has done is that the new housing market then becomes dependent on new ‘in-migrants’
And this:
‘One principal reason is that purchasers of new homes are almost always sellers of existing homes, and the turnover in existing homes has been extremely low. Without that feed from the existing market into the new market, the new market has been slow to recover’
Help me out here David. This guy is saying the new houses cost too much to move up, and you say those are the people you need to buy new houses. It sounds like a model that ain’t working. Just thinking out loud; maybe you guys shouldn’t have paid so much for the land?
Ding ding ding.
That property ladder concept worked in the 90’s and early 00’s. But I ain’t ever seen a ladder that has more than a few dozen rungs. We’ve got a generation of boomers looking to offload 3 and 4,000 sqft shacks to a generation that can only afford 1,500 sqft homes. Something’s gotta give, and it ain’t gonna happen via ever lower interest rates, Janet.
That’s right. 70 million boomers with one foot in the grave and the other on a banana peel just starting to offload 35+million houses. That doesn’t include the tens of millions of excess, empty and defaulted houses out there.
Another thing is that the new house builders aren’t building the houses that most people want/need. Like single story and under 2,000 sqft
Here in the San Diego area almost all of the new homes being built are all 2 story monsters well in excess of 2,000 sqft and thereby making these new homes extremely expensive!
Have you seen the cost of a lot in any town ? And the park dedication fees, etc, etc.
You know the towns - the ones with life guards on $100,000 a year pensions !
Explains why demand is at 20 year lows and falling.
Sarasota, FL Housing Market Caves; Prices Crater 16% As Foreign Speculators Dump En Masse
http://www.movoto.com/sarasota-fl/market-trends/
wow 3100
+ days on Movoto
their data base ha a problem
Likely you have a beef with the data.
Falling housing prices. What’s not to like?
‘Bank of America is making a big push into auto lending just as regulators are sending warning signals, losses from auto loans are rising, and rivals are growing more cautious after years of strong returns.’
‘Industry-wide, banks classified $1.1 billion worth of auto loans as uncollectible in the fourth quarter, according to the Federal Deposit Insurance Corp. That is up 15 percent from the year-ago period, and up 39 percent since the fourth quarter of 2011. Ultimately, much of that bad debt turns into losses for the banks.’
For a graphic showing auto loans that are 30-89 days past due and an auto sales projection, see http://tmsnrt.rs/24xv9vV
‘All banks are struggling to boost revenue during a period of stubbornly low interest rates and tough post-crisis regulation, but Bank of America has felt the pain more acutely than most of its peers.’
Getting into risky loans because of low rates.
Where can I buy one of these “distressed” cars??
“Why OPEC Will Never Cut Production Again”
http://www.marketwatch.com/story/why-opec-will-never-cut-production-2016-03-02
Given the fact crude prices are 3X higher than the cost to produce, crude has a long way to fall.
Laveen? hahaha
That’s south of the 10 freeway past cow farms.
I visited a friend there shortly before he walked away from his house he had bought a couple of years earlier. For sale signs all over his subdivision and unkempt lawns. It was almost uninhabited….
Los Banos???!?!
hhahahaha commute to the Bay Area?!?
Are you sure these aren’t articles from the mid-2000s?!?!?!
I double checked because sometimes an old article gets recycled into the search engines. Merced story was March 1, 2016.
‘The housing market in Los Banos is booming, and the City said that is thanks to people commuting to and from the Bay Area. Realtors in Merced County said they’re also seeing older houses sell as well. Coldwell Banker manager Teresa Bartholomew said, “We have sold quite a few in the last month. They’ve closed probably 10 or 14 listings of new homes. They are being built. Sometimes we don’t have the inventory standing, so it’s a four month wait.”
‘Bartholomew said it comes down to supply and demand. “We have a lot of influx of people from San Jose, Gilroy, Hollister, Salinas coming over and commuting to work. Our prices are much cheaper and much larger than what they can buy in San Jose and that area,” stated Bartholomew.’
‘Los Banos Senior Planner Stacy Souza Elms said they’ve never seen so many permits issued in a three month period.’
http://www.yourcentralvalley.com/news/housing-market-booming-in-los-banos
Oh and it was 2010 when I my friend walked away from his Laveen home…
“Realtor Threatened To Kill Bank Employees”
http://www.ctpost.com/news/article/Police-Realtor-threatened-to-kill-bank-employees-6816192.php
When does it ever end with realtors?
good people