An Upside To The Speculative Nightmare
It’s Friday desk clearing time for this blogger. “Home buyers and sellers took off their gloves and went at it in April, with an unusually large share of contracts — as many as 23 percent — falling through, according to a report from the Denver Metro Association of Realtors. ‘It is unbelievably brutal out there. Tempers are flaring. A lot of buyers are giving up and renting,’ said Richard Kelley, who oversees 117 brokers as owner and president of Metro Brokers DTC.”
“Buyers, once more willing to accept whatever sellers asked, are getting frustrated with requests to waive inspections or appraisal contingencies, long considered standard protections. Count John Forrest among the frustrated buyers. The writer/consultant and his wife decided at the start of the year to trade their Boulder condo for a larger property in the metro area. ‘There is a sense that the market just isn’t right, and something is waiting to adjust,’ he said. ‘We will cool our heels.’”
“The average price of a new home in the Houston area fell during the first three months of the year, the first such dip here since 2009 during the last national recession. Builders who had been dashing to put up as many new homes as possible are now facing weaker demand as upstream energy companies continue to slash jobs and cut spending. Chris Simmons started looking for a new house last year when he felt the market was beginning to slow.
“In March, Simmons closed on a two-story, 4,000-square-foot home in Woodtrace, a community north of Tomball. His builder ponied up $61,400 in incentives on the house, which was in the high $400,000s. ‘I knew I’d be able to negotiate some discounts,’ he said.”
“With much of the talk surrounding the housing market centered on ‘normalization’ or returning to its pre-crisis state, one metric which the market is watching is the distressed sales share—the share of REO and short sales that comprise total residential home sales. For February 2016, the distressed sales share declined by 2.9 percentage points over-the-year to 11 percent, according to data released by CoreLogic. The five metros with the highest distressed sales share in February were Baltimore (19.8), Chicago (19.4), Tampa (19.1), Orlando (19.1) and Las Vegas (14.1).”
“‘Prior to the housing crash, the distressed share of total sales averaged about 2 percent,’ CoreLogic Chief Economist Frank Nothaft said.”
“During the boom years, the moving trucks brought over the Altamont Pass families that were priced out of increasingly expensive communities around the Bay. Martin Saltzman, 64, bought his modest one-bedroom home in 2006, near the worst possible moment, with no money down. Then, shortly after he moved here, the economy collapsed, and he couldn’t find work. He took up substitute teaching, and when he was home he watched one cable news show after another in his living room.”
“‘I was watching them continuously to figure out why I was in the situation that I was,’ he says, ‘to try to get some sense it wasn’t necessarily my fault - I just made a good decision at a bad time, or a good decision at a good time that turned bad.’ His home now is worth about half the $126,000 he paid for it. Visionary Home Builders helped him refinance the property last year for a lower mortgage payment, which helped. But Saltzman wants to get out of homeowning entirely as soon as he can.”
“‘I have no idea how long that would be,’ he says. ‘Are we looking at another 10 years?’”
“Some mortgage banks in Sweden are turning away up to a quarter of customers trying to get home loans amid signs that private debt burdens are becoming unsustainable. ‘Our responsibility is also not to lend,’ Danielsson said Klas Danielsson, its chief executive officer. ‘Saying ‘no’ when circumstances are as they are today’ may be the more prudent response, he said. ‘I’m telling my kids ‘you’re not going to buy any flats in Stockholm’ in the next few years,’ he said. It’s ‘also fundamentally wrong for young people to buy,’ because ‘when you’re young you should be mobile and flexible before you settle down. You shouldn’t live in a market where you’re forced to buy to have somewhere to live, it’s just crazy.’”
“Sweden’s central bank resorted to negative interest rates a little over a year ago following a prolonged period of consumer price deflation. Policy makers at the bank have urged the government and regulator to step up efforts to ensure the lax monetary environment doesn’t fan a credit-driven housing bubble. Given the risks, banks are increasingly taking their own steps to cool the market.”
“Buyers in London have become more ‘hesitant’ and desperate sellers are now dropping asking prices by more than 10 per cent, estate agent Knight Frank warned. And price drops have spread across the country, with most regions feeling the squeeze, separate data showed. In exclusive Knightsbridge home values have dropped by seven per cent in the year to April, from 6.8 per cent March, Knight Frank found. Prices in Chelsea in the capital are now down three per cent year-on-year, while South Kensington has seen falls of 4.9 per cent.”
“Overall prices for ‘prime’ central London homes increased by just 0.5 per cent in the year to April from 0.8 per cent, according to Knight Frank. This is the lowest rate in six and a half years and means annual growth has been below five per cent for 16 consecutive months. Tom Bill, head of London residential research at the agent, said: ‘To put that into perspective, annual growth did not exceed five per cent for 17 months in the period preceding and following the collapse of Lehman Brothers.’”
“Unoccupied dwellings – those held as second homes or kept empty as a speculative investment – accounted for 14 per cent of inner-Melbourne’s total apartment stock. A study of water usage by think tank Prosper Australia also estimated one-fifth of all investor-owned properties was lying empty. Domain Group chief economist Andrew Wilson says despite increased building approvals, there has been no real surplus of rental stock, suggesting many of the units had not made it to the rental market. ‘I think the prospect that a number of these apartments are sitting empty is quite real,’ Dr Wilson says.”
“But while excessive targeting of investors is one reason for a looming market failure, another is the stock itself – the contentious issue of appropriate apartment size. Victorian planning minister Richard Wynne has been under pressure to introduce minimum apartment sizes, while developers maintain that such restrictions would bump up prices for entry-level buyers. ‘It’s a speculative nightmare and more akin to a gold rush, where people are buying land, but to gain a return, they are having to build higher and higher,’ Professor Buxton says. ‘That’s not really catering to needs of the emerging market in Melbourne, but it’s suiting developers very well, they are laughing all the way to the bank.’”
“Foreigners who had been banking on their investments in a biomedical research facility and a hotel and rental cottage project in Vermont to get green cards are scrambling to find a backup now that the project’s developers are accused of misusing hundreds of millions of dollars in what investigators called a ‘massive eight-year fraud scheme.’ ‘We were doing our business plans for the restaurant when this came up, so we have to change everything,’ said Wei Wang and his wife, who are from Beijing and living in Houston after graduate school. ‘It’s hard to accept that we may lose all of our almost 600K.’”
“Felipe Vieira, of Brazil, said he decided to invest in Jay Peak to create a more secure life for his small family. He sold a small farm about two hours outside of Rio de Janeiro and an apartment in the city and moved with his family to Stowe. Now he worries they may not be able to stay. Vieira, who works as a business analyst, said he can’t because of expenses for lawyers, moving, housing, and next year, his daughter is going to college. ‘To tell the truth, I don’t have money,’ he said.”
“A softening rental market means that for the first time in several years, the city’s largest emergency family shelter has enough space for clients. University of Calgary economist Ron Kneebone said shelters in Calgary typically record decreased use during economic downturns because the city is a magnet for job seekers during boom times. For Inn From the Cold, a lot has changed in just 18 months. While shelter clients searching for a rental home had to plead their case with landlords in 2014 and were typically turned away, that’s not the case today.”
“‘A year and a half ago, a client would go out to look at a rental and there would be 50 people there to see it, so a landlord was able to be exceptionally choosy and require greater levels of commitment, longer leases, bigger down payments,’ said Inn From the Cold executive director Linda McLean. ‘We’re actually seeing the reverse (now). A lot of landlords are offering incentives. They’re offering the first month free or throwing in free cable or whatever the case may be.’”
“There’s an upside to the downturn. A softening rental market means that for the first time in several years, the city’s largest emergency family shelter has enough space for clients. ‘It’s the first time since I’ve been with the organization that we’ve not been overcapacity,’ said McLean. ‘The rents have really, really come down, which makes all the difference for a lot of our families.’”
Tempers are flaring
What a sad way to live.
They could be watching the sun rise over Pikes Peak from elevation 14,000 feet instead:
http://www.picpaste.com/20160505_063531.jpg
Region VIII
‘Buyers, once more willing to accept whatever sellers asked’
Let that sink in.
‘are getting frustrated with requests to waive inspections or appraisal contingencies, long considered standard protections’
Waive long considered standard protections. Who do these buyers think they are? It’s like they are the ones taking the risks or something.
Re-post from the other day:
Millennials’ almost impossible quest: Buying homes in Boulder County
“Affordability is a problem for millennials all over the U.S. as wages have stagnated and the cost of education has left many with an average $25,000 in student loan debt per person.
But in pricey Boulder County (the seventh most expensive market for single family homes, according to data from the National Association of Realtors), the average renter income ($35,993 in 2014) is miles away from the income needed to purchase a median-priced home here at $495,000.”
http://www.dailycamera.com/boulder-business/ci_29830380/millennials-almost-impossible-quest-buying-homes-boulder-county
Local AM 850 is running ads to buy a house with only $1,000 down.
The ad says that renting will cost you first and last and security deposit for $1,500 x 3 = $4,500, and that buying with $1,000 down will save you $3,500. Oh, yeah and you can skip the first few mortgage payments too.
American Financing, and tell ‘em Mike Rosen sent you!
“Local AM 850 is running ads to buy a house with only $1,000 down.”
Mike Rosen is knowingly leveraging his own country’s taxpayers with debtors who will never be able to repay their obligations… all for a lousy commission. Incredible.
I’ve hiked up there, twice, and both times was too exhausted and dopey from the altitude to appreciate anything. Great photo, though.
Instead they are stuck in Pueblo. Or Pueblows.
Just saw this.
Home is where the heartache is
House prices in Sweden continue to soar, to regulators’ despair
The Economist
Nov 7th 2015
ASK a central banker what regulators should do when rock-bottom rates cause house prices to soar, and the reply will almost always be “macropru”. Raising rates to burst house-price bubbles is a bad idea, the logic runs, since the needs of the broader economy may not square with those of the property market. Instead, “macroprudential” measures, meaning restrictions on mortgage lending and borrowing, are seen as the answer. But this medicine is hard to administer, as Sweden’s housing market vividly illustrates.
Swedish house prices have doubled in the past decade, their rapid ascent only briefly interrupted by the financial crisis (see chart).
The most obvious way to calm things down is to raise rates. But the Riksbank, Sweden’s central bank, tried that in 2010-11, with disastrous results. Unemployment stopped falling and inflation soon withered, stirring fears of deflation. That prompted the Riksbank to reverse course in late 2011 and start cutting rates again.
But for the most part, measures to slow the property boom seem politically unpalatable. “People feel rich today thanks to these crazy prices,” says one member of parliament. “Nobody wants to be the one who breaks the spell.”
http://www.economist.com/news/finance-and-economics/21677671-house-prices-sweden-continue-soar-regulators-despair-home-where
“People feel rich today thanks to these crazy prices,” says one member of parliament. “Nobody wants to be the one who breaks the spell.”
Prices that wouldn’t be crazy if they actually had to be paid instead of contracted to be paid, promised to be paid.
Prices promised to be paid not by all but only by a few, the few who do the buying and the selling, the few who determine if “people feel rich today”.
Strangers. Strangers who are under a spell.
The “spell” is going to be broken by the unfortunate intrusion of fiscal reality.
http://www.bloomberg.com/news/articles/2016-05-05/goldman-cuts-hong-kong-property-seeing-20-drop-in-home-prices
Prices promised to be paid not by all but only by a few, the few who do the buying and the selling, the few who determine if “people feel rich today”.
Again I have to ask, is this not how all markets work? Whether or not there is manipulation or fraud, prices are set by “a few, the few who do the buying and selling”.
If you own a stock, those few buyers and sellers determine how rich you are every minute.
Again I have to ask, is this not how all markets work? Whether or not there is manipulation or fraud, prices are set by “a few, the few who do the buying and selling”.
It’s not “a market.” The unfortunate reality is that the deciders are making funds available to foolish buyers who are unwittingly driving asset prices well beyond rational levels, and the taxpayers will be saddled with the costs when the bubble pops.
the deciders are making funds available to foolish buyers who are unwittingly driving asset prices well beyond rational levels,
Perhaps, but that’s beside the point. Combo seems to have an issue with the fact that buyers and sellers set the price of an asset. I’m pointing out that that’s how markets work: The buyers and sellers, aka “the few”, set the price of an asset, and thus determine your wealth, if you hold that asset.
I think a corollary to Combo’s point is that there are no “buyers” because the price has not been paid today.
Yes, buyers and sellers of a small percentage of widgets will determine the price of all widgets, but those widgets are not going to have 30-year loans.
When did the property market have “needs” that were distinct from the broader economy? A functioning market would provide houses, and rentals, where people can afford to live based on their incomes.
What a pernicious doctrine, created and applied by deeply compromised individuals.
‘measures to slow the property boom seem politically unpalatable. “People feel rich today thanks to these crazy prices,” says one member of parliament. “Nobody wants to be the one who breaks the spell.”
And the Emperor has no clothes!
“People feel rich today thanks to these crazy prices,”
Crazy prices that do not need to be paid but only need to be promised to be paid.
Seems like the Emperor has been prancing around naked for well over a decade already. It gets maddening to watch after a while!
C-SPAN’s Washington Journal live now with the topic of today’s program the state of the middle class in America. The callers calling in keep talking about overpriced housing, unaffordable healthcare, stealth inflation, and stagnant wages.
In essence, the recession never ended.
Welcome to the recoveryless recovery.
Link to follow when they post it later today.
Quote from one of the panelists:
“walking a financial tightrope”
The future belongs to Lucky Ducky
“they have to stop borrowing … their frustrations are boiling over”
Yup.
They just read this excerpt on the air:
“And you certainly wouldn’t know it to talk to me, because the last thing I would ever do—until now—is admit to financial insecurity or, as I think of it, “financial impotence,” because it has many of the characteristics of sexual impotence, not least of which is the desperate need to mask it and pretend everything is going swimmingly. In truth, it may be more embarrassing than sexual impotence. “You are more likely to hear from your buddy that he is on Viagra than that he has credit-card problems,” says Brad Klontz, a financial psychologist who teaches at Creighton University in Omaha, Nebraska.
http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/
Droopy Donk
No further comment…
Keep borrowing to “maintain the standard of living that she has become accustomed to.” Hehe.
So everyone goes deeper in debt to outdo the other? Just when you think things can’t get any shallower America manages to drain just a little more out of the pool.
Its competition - human nature. Guys buy/lease sports cars or huge trucks to impress women into thinking they have resources. Same goes for houses, clothes. Women get fake body parts, use make up to hide their true looks. All is subterfuge!
“Guys buy/lease sports cars or huge trucks to impress women into thinking they have resources.”
The median household income in my corner of the world, Moses Lake, WA, is less than $50k/yr, but you’d never guess it’s that low given the number of $60k four-door pickup trucks running around here. Heck, there’s even BMW SUVs here now.
The callers calling in keep talking about overpriced housing, unaffordable healthcare, stealth inflation, and stagnant wages.
Yet these functional retards can’t pinpoint the true cause of their misfortune: the oligarch capture of our political elites and institutions of governance so they can enage in the unfettered looting of the real economy, while the sheeple sanction these rip-offs with their votes for the crony capitalist status quo.
Globalists gonna globe.
To the Davos/Aspen set, national sovereignty is little more than a nuisance.
To these gold-collar grifters, nationalism is a mortal threat, as are free-thinkers.
I’ve offered here before, but if anyone would like a Ruin Porn (yes, this is an actual phrase) tour of the post-industrial wasteland of Northeast Ohio, I can provide a half-day, full-day, or full-week itinerary for a self-guided driving tour.
Brought to you by globalists.
I’ve received such a tour, northwest Indiana version, from an elderly relative.
There are several awesome websites featuring Detroit’s industrial ruins. One photographer adopted the perspective of an archaeologist, looking through an abandoned school to unearth the textbooks, supplies, etc. used by students decades ago.
Even easier: Do the ruin porn tour via Google Streetview. Experience Detroit’s worst neighborhoods without any chance of getting shot or carjacked. I do it all the time on my lunch hour.
Coming soon to a Democrat-maladministered dystopia near you.
Entropy happens.
Commercial bankruptsies and defaults are starting to soar as the effects of easy unlimited credit thanks to the Fed starting catching up with the real economy.
http://wolfstreet.com/2016/05/05/us-commercial-bankruptcies-chapter-11-liquidations-rise-end-of-credit-cycle-april-abi/
The smart money continues to pile out of the Wall Street-Federal Reserve pump & dump for the 15th week in a row.
http://www.zerohedge.com/news/2016-05-06/everyone-selling-largest-outflow-stock-funds-september-2015
The collapse of freight volumes is the most telling indicator of the underlying economic downturn, despite the “Everything is awesome!” meme pushed by the MSM and its Oligopoly controllers.
http://www.zerohedge.com/news/2016-05-06/large-truck-orders-continue-plunge-down-39-april
Surprise! Baltic Dry Index Plunges Most Since November As Commodity Bubble Bursts
Submitted by Tyler Durden on 05/05/2016 11:40
Who could have seen this coming? Remember a week ago when TV entertainers crowed about the surge in The Baltic Dry Freight Index was a “clear signal” that ‘China is back’ baby and that escape velocity growth was just around the corner as global growth was destined to pick up…
95% of Greek bailout money went to banks - who’d have thunk it.
http://libertyblitzkrieg.com/2016/05/05/german-study-proves-it-95-of-greek-bailout-money-went-to-the-banks/
We must push diversity over excellence. It’s the right thing to do.
http://www.breitbart.com/london/2016/05/05/british-universities-drop-world-rankings-forced-focus-diversity/
More fiction-peddling.
http://www.marketwatch.com/story/us-gains-160000-jobs-in-april-2016-05-06
Yellen’s Keynesian lunacy is accelerating the destruction of the dollar, while gold is up strongly after the (fiction-peddling) jobs report.
http://www.marketwatch.com/story/dollar-tumbles-against-euro-yen-after-weak-jobs-number-2016-05-06?link=MW_latest_news
Mr Market is reacting violently to the jobs number.
The collapse of China’s debt-fueled specualtive and market bubbles are going to be epic. Got popcorn?
http://www.marketwatch.com/story/asian-stocks-head-toward-ninth-straight-week-of-losses-2016-05-05
“Anyone who says the American economy is in decline is peddling fiction.”
– Barak Obama, 2016 SOTU speech
http://www.zerohedge.com/news/2016-05-06/payrolls-miss-huge-april-jobs-rose-only-160k-below-200k-expected-unemployment-rate-5
You can’t post ZeroHedge links here.
SPLC blog monitors prefer you stick with the New York Times.
Ok, I’ll bite. What’s SPLC? I’m not up on my ragemonkey acronyms.
Personal insults and rude language are not necessary.
All you need to do is name who signs their paychecks:
https://en.wikipedia.org/wiki/Southern_Poverty_Law_Center
Google is your friend.
Google is your friend.
Search result for “SPLC” number seven:
http://www.breitbart.com/big-government/2016/02/16/southern-poverty-law-center-manufacturing-hate-for-fun-and-profit/
Emphasis on the word profit.
P.S. globalists gonna globe.
Then google zero hedge russian propaganda.
I posted the Bloomberg expose on ZH the other day.
What more would you like to know about them?
What more would you like to know about them?
What else you got?
IIRC, your post portrayed it as an establishment attack on truthful media. Perhaps I misremember?
“IIRC, your post portrayed it as an establishment attack on truthful media. Perhaps I misremember?”
Well, that’s exactly what it is, so…
exactly what it is, so…
It’s a useful aggregator of bearish financial news, with a clear pro-Kremlin slant to its political and international reporting.
“Ok, I’ll bite”
Probably pull hair, slap and scratch too.
Catfight
From Wikipedia
Catfight (also girl fight) is a term for an altercation between two women, often characterized as involving scratching, slapping, hair-pulling, and shirt-shredding.
Maybe voting for members of oligarch secret societies like Skull & Bones isn’t such a hot idea if you’re a member of the 99%.
http://www.politico.com/blogs/under-the-radar/2016/05/george-w-bush-white-houses-skull-and-bones-files-due-out-222858
Can an 80% year-on-year real estate price gain truly be healthy? I am skeptical! I don’t recall U.S. home prices ever growing this fast, even at the height of the bubble. LA prices increased by 23% a year in the early 2000s, which was historically unprecedented, but nowhere near 65% or 80%.
China’s housing bubble is starting to look a lot like the US before the crash
Elena Holodny
Apr. 29, 2016, 9:31 PM
China’s property market is staging a major turnaround as property prices in tier-1 cities have heated up quickly over the past few months.
For the first quarter, residential prices in Shenzhen are up nearly 80% year-over-year, while those in Shanghai were up by roughly 65%, according to figures cited by Capital Economics analysts.
And the surge in residential property sales throughout 2016 has been driven by the loosening of some purchase restrictions at local levels and rate cuts, which have reduced mortgage costs by a significant amount.
In the short run, this is good for growth. Already China’s GDP breakdown showed an uptick in real-estate-related services in the first quarter, as the analysts at Capital Economics observed.
…
‘Can an 80% year-on-year real estate price gain truly be healthy’
As long as rental watch and jingle are satisfied that the lending is A-OK, yes. No price is too high. House prices can grow to the sky, in any amount of time.
The Obama administration unveiled new legislative proposals to combat international tax evasions, money laundering, and financial crime following last month’s Panama Papers leak;
http://link.washingtonpost.com/click/6665440.129007/aHR0cHM6Ly93d3cud2FzaGluZ3RvbnBvc3QuY29tL25ld3Mvd29uay93cC8yMDE2LzA1LzA1L3Utcy10aWdodGVucy1jaGVja3Mtb24tYW5vbnltb3VzLWNvbXBhbmllcy1mb2xsb3dpbmctcGFuYW1hLXBhcGVycy1yZWxlYXNlLz93cG1tPTEmd3Bpc3JjPW5sX2RhaWx5MjAy/5483d0d93b35d046478bdbf7B40d3fd4c
Data Dave….. Data.
Novato, CA Housing Prices Crater 11% YoY
http://www.zillow.com/novato-ca/home-values/
Of course 80% home price growth isn’t sustainable or healthy.
Nor is 10%.
There are multiple ways you can have home prices exceeding inflation, with the two most prevalent being:
1. Loose credit (rate, availability/lax underwriting); or
2. Constrained supply relative to demand.
In many cases, BOTH contribute to higher than inflation home price growth. And at different times, one contributes more than the other.
Based on the data that I’ve been looking at relative to current underwriting standards, I believe that in the US today, constrained supply is a greater driver of home price growth than loose credit.
I don’t know what the story is in China, but my guess would be credit (they’ve been building like crazy for years).
The problem with lax credit being the driver is that those buyers are put in an unsustainable position–setting you up for a crash when defaults rise, and credit tightens.
Building more can lead to a glut, which can also lead to home prices going down (sometimes a crash, but often a rough grind downward). However, people who bought with proper underwriting at prices too high, can usually afford to stay in their homes through the correction.
‘constrained supply’
From yesterday’s post:
‘Many upper-end renters are now actually seeing price cuts. But some housing experts believe the market could be arriving at a turning point where these discounts begin filtering down to the masses. It’s already beginning to happen in some of the nation’s hottest housing markets, where yesterday’s top-of-the-line buildings are dropping their prices to compete with the fresh, young properties hitting the market, creating a trickle-down effect. Rents have already begun falling in New York City’s Manhattan borough as a slew of newly constructed residential towers have shot up, dotting the skyline. Rents for the cheapest 30% of units fell 2.2% year over year to $2,258 a month, according to the Elliman report.’
‘In wildly expensive San Francisco, rents also appear to be plateauing…Nashville, TN…had about 24,000 new rental units in the pipeline as of the last quarter of 2015…The monthly rents on two-bedroom, two-bathroom units above $1,500 fell nearly 3% to an average of $2,311 over the past six months compared with a year earlier.’
‘Builders’ rush to respond to Denver’s population boom has resulted in a glut of new buildings in the Colorado city’s downtown competing with one another as well older buildings for tenants. ‘We’re building apartments faster than people are moving into them,’ says Cary Bruteig, owner of Apartment Insights. ‘The party is over,’ says Nancy Burke, vice president of government and community affairs at the Colorado Apartment Association. ‘There is oversupply.’
‘New residential high-rises in Boston are also offering sweeteners to fill their floors, say local real estate professionals. And they’re poaching tenants from the city’s stately brownstones, the area’s traditional luxury rentals, by offering doormen, elevators, and parking spaces. As a result, some of the older brownstone units are ‘taking a little longer to rent and we’re having to lower the prices a little bit,’ says Amy Goldberg, a Compass real estate agent in Boston.’
‘In Houston, some newly constructed buildings have had the bad luck to be opening just as the local energy industry is suffering from lower prices at the pump, leading many residents to leave, says local real estate agent Greg Nino of Re/Max Compass. Rents are falling as homeowners rent out their properties—rather than sell at a discount. Nino says he’s seeing suburban prices start to fall 10% to 15%, depending on the neighborhood. ‘We’re saturated with so many properties for rent,’ he says.’
Sounds like supply is on the way. We’re taking the ‘build your way out of a bubble’ route. Sure, lots of people are going to go broke and lose their pensions, but you can’t make omelets without breaking a few eggs.
Ben,
I think RW’s basic point is solid; the problem is that the feedback is broken (think in terms of control systems & feedback).
Think about trying to control temperature in an oven if it takes 30 minutes for the oven coils to turn ON after you request it, and then take 15 minutes to turn OFF after you request it.
IF homebuilders could start building right away in response to prices going up, new supply would come quickly, supply & demand would balance out, prices increases would moderate quickly, and it would reduce the incentive to treat RE as a speculative “investment”.
Instead, in many areas in the US, it takes a long time for projects to get approved, so by the time they start coming along, the mania has been in full swing, and, it seems recently, the market is just about ready to crash again.
P.S. Yes, I do think other factors contribute, such as money laundering, herd mentality, Fannie/Freddie/Bank games trying to keep the bubble going, and, in the SFBA, the app bubble…
‘IF homebuilders could start building right away in response to prices going up, new supply would come quickly, supply & demand would balance out’
First, I am going to tackle this in a weekend post. Second, there’s this:
‘Why Is Home Building Lagging Job Creation? Realtors, Builders Disagree’
‘David Crowe, chief economist of the National Association of Home Builders, counters that builders would churn out more houses if there was sufficient demand to warrant it. “Supply is an issue; that is true,” he said. “But the dominant issue still is demand. That’s the reason builders aren’t building more homes.”
‘The builders association and others say, there needs to be robust demand for starter homes in order for builders to justify developing starter-home communities. Many say that such demand hasn’t yet materialized. “If demand was there, there likely would be more supply,” said Mike Dahl, an analyst who tracks home builders for Credit Suisse AG.’
There’s bits of truth here and there in these positions. The fact is land prices have skyrocketed in the past few years, which I have documented.
‘In 2013, new homes jumped to 54, with an average price of $282,000. Last year, there were 59 housing starts, with an average price of $265,000. So far this year, there have been 46 housing starts, with an average price of $334,000. Jon Modene, a real estate broker at Re/Max Masters in Perrysburg, said most first-time buyers are excluded from the home starts. ‘Now, the average start price is close to $400,000, which is unheard of in this market,’ he said. ‘Before you could do a cheap ranch home for $75 a square foot. You can’t build anything under $130 per square foot now.’
So in around three years prices almost double? How stupid do these gougers think we are? This is Ohio!
Remember when prices took off in 2010/11? What did everyone say? “Oh, prices went down too low, this was an over-correction.” What are they saying now? We don’t hear that now that prices are shooting up near or over the previous peaks. Article after article, these REIC people are predicting “when” we’ll get back to the bubble highs. What were these same people saying in 2009? “Those prices were an illusion, driven by bad loans and fraud.”
It doesn’t matter how you get there; the bubble is in the price. Wages have gone down! What did uncle sam do when the jumbo market blew up in California? Raised the Freddie/Fannie caps! We never got a natural bottom. Bernanke blew through $4 trillion bucks to make this happen, just as the market shot up to the sky. Coincidence?
Simple thought exercise; take away government backing of loans. Crash.
Anyway, they are building, like crazy. It’s just the wrong stuff. Apartments (all luxury BTW) are at 30-40 year highs in construction. McMansions on tiny lots surrounded by vacant land. Check out my youtube videos in the sidebar. They even have time and resources to fill the sky with empty boxes in Manhattan and Miami. Why these are safe deposit boxes! So they have the people, financing and material to do frivolous stuff like that on the most expensive land in the US, but they can’t construct regular apartments and houses. I’m not buying it. They just need to cut the price of the land and build like they did just a few years ago.
I have printed out on my office wall monthly home price data from Freddie Mac for each of the counties in CA going back to the mid-70’s. For each month, I compare the prices to those of the prior year, and put an automatic gradient in to color the cells (red is deeply negative year-on-year price movement, and green is very significantly positive home price movement). From where I sit, I can’t see any of the numbers, but I can see the colors and bands of color.
There are a number things that are striking about the chart:
There was a strong green band of price growth in the late 70’s, followed by a softening, but there was very little red in that correction. This slowdown in price appreciation was mainly due to lots of supply being added in the 80’s, but also very high interest rates.
It is interesting that home prices didn’t really go all that negative year on year during this timeframe.
There was another strong band of green in the late 80’s, which again resulted in lots of building, and resulted in softening again. That downturn was a bit worse than that in the prior decade…in part because the green band included some poor lending practices.
Home prices here did go negative, but generally not less than down 5% in any given year–and that was the worst.
Then we have the run up starting in the late 90’s to the crash, where there is a thick band of red going across the page following a wide green band. This is the aftermath of the recent bubble bursting.
My point is this.
The prior two run up in prices (the two before the debt-fueled madness of 2004-2008) in CA were cooled off IN PART by adding supply, and those reductions in prices were modest–either slightly negative REAL price appreciation–prices going up, but less than inflation, or slightly negative NOMINAL price moves…generally less than 5% reduction in prices per year.
It wasn’t pretty, but it wasn’t the same kind of pain as the recent event. People muddled through.
The kind of reductions in rent (fall by 2%, fall by 3%) that you are talking about will make investments less successful–and maybe even lose some money, but people are not going to be wiped out like they were in the recent crash.
You make it sound like I want to bring on the next crash by adding a million units overnight. I don’t.
But at the same time, I recognize that building 80k units for 350k new population each year won’t help prices fall–regardless of what the credit markets do.
“They just need to cut the price of the land and build like they did just a few years ago.”
The last article you linked was about finished lots, not land.
Here’s the problem:
The cost to bring a piece of raw land to “finished” condition (a lot on which a builder would construct a home), it can easily cost $80-$100k. This includes impact fees, utilities (onsite and offsite), roads, curbs, gutters, drainage, etc.
When prices “doubled” or “tripled” over the past couple of years, in many markets, they doubled or tripled from lot prices that were below replacement cost.
We purchased finished lots for $35k apiece that would cost $100k to replicate today. So prices double to $70k. So what? Prices still aren’t high enough to justify people adding more supply of finished lots.
So, we sell those lots for $70k, and make a nice return on our investment. Once those lots have been used up, what then?
Builders are building expensive houses so they can justify the cost of finishing lots. It’s how they can stay in business.
The articles talk about there being weak demand for starter homes. Of course it’s weak. The minimum cost of a starter home (based in part on the cost of finished lots) is out of reach of the “starter home” buyer.
Some Cities are trying to reduce impact fees temporarily to spur building (Stockton, CA). They recognize that impact fees are choking off supply due to the cost burden.
You mention cutting the price of land. How?
For raw land, my answer is allow more land to be approved for housing. The supply/demand dynamic would push prices of raw land down.
For the cost to finish lots, I don’t know how you lower the costs…reduce impact fees? Good luck with that politically.
No spam my friend. Data.
Union City, CA Housing Prices Crumble 9% YoY As Housing Demand Plummets To 20 Year Low
http://www.zillow.com/union-city-ca/home-values/
With 25 million excess empty and defaulted houses out there and another 35 million just starting to empty as boomers die off, there is no “constrained supply”.
Link please.
Anything for you my friend. Anything for you.
http://www.census.gov/
I think he means this:
http://www.census.gov/housing/hvs/data/histtab8.xlsx
This shows the number of vacant housing units in the US.
I linked the data that goes back to 1965, so you can see the current level of vacancy as it relates to what it was over the past 50 yeras or so.
Also make sure to read this:
http://www.census.gov/housing/hvs/definitions.pdf
So you can see what each category of vacant home means.
Now add in the millions of defaulted houses hung up in foreclosure moratoriums.
“Foreigners who had been banking on their investments in a biomedical research facility and a hotel and rental cottage project in Vermont to get green cards are scrambling to find a backup now that the project’s developers are accused of misusing hundreds of millions of dollars in what investigators called a ‘massive eight-year fraud scheme.’
The article is worth a read. Some great stuff here:
“In spite of all our current passports, and in spite of our middle age, my husband and I decided to live in the US because we believe that meritocracy, justice and general fairness are unique characteristics of this country,” wrote Alcalay, 53. “We sold more or less everything we had in Europe to move here.”
Unlike others in the story, I get the sense these people are sincere and I feel for them. Wang and his cohorts, not so much. I get the sense this EB-5 program is a huge cock-up, with grifters on both sides.
It’s like some of these Indian guys I see around here:
“I ponied up $500,000 to emigrate to the US and all I got was this lousy convenience store/Subway franchise/liquor store.”
The better-off ones have pharmacies and medical practices.
“The EB-5 program offers foreign investors a chance at residency for investments in projects that create jobs.”
Jobs for who? Family members for chain migration? Slave labor in the nail salons?
Uncle Warren, who entered the real estate business big time in recent years, assures us all there is no bubble.
Finance
Warren Buffett
Warren Buffett: There Is No Bubble in Real Estate
by Stephen Gandel
April 30, 2016, 5:03 PM EDT
…
Obama’s favorite oligarch can always count on a bailout if things go south.
So many of our financial thought leaders have the appearance of doting grandparents.
Doesn’t Uncle Warren own UP RR?
http://www.zerohedge.com/news/2016-05-05/haunting-pictures-transportation-recession-freight-rail-traffic-plunges
‘Here’s how Union Pacific is dealing with this issue, via Google Earth, on May 3: 292 engines idled on a siding west of Benson, Arizona, along I-10, for a stretch of nearly 4 miles.’
These are engines, not just rail cars.
BTW, has anyone else noticed these companies run ads about rail transportation? And not just every once in a while, regularly. I’ve wondered, are they trying to get me to buy some space on a rail car?
“…are they trying to get me to buy some space on a rail car?”
How about rail car condos as a solution for the supposed housing shortage?
How about rail car condos as a solution for the supposed housing shortage?
LOL—awesome image, PB!
“See the country from the comfort of your own living room! Low, low rates available!”
Meh, poor. poor unca dubya. Maybe he just overbought when everyone was panicking?
Wasn’t it Zero Hedge that used some fake photographs of cars in parking lots to showing something or other about auto manufacturing?
The photo was real, what was false was what it was said to represent.
I remember this because I was the one that posted the story, taking it at face value, and then had to post a mea culpa.
Maybe this is fake too:
‘Total US rail traffic in April plunged 11.8% from a year ago, the Association of American Railroads reported today. Carloads of bulk commodities such as coal, oil, grains, and chemicals plummeted 16.1% to 944,339 units.’
‘he watched one cable news show after another in his living room. ‘I was watching them continuously to figure out why I was in the situation that I was,’ he says, ‘to try to get some sense it wasn’t necessarily my fault - I just made a good decision at a bad time, or a good decision at a good time that turned bad.’ His home now is worth about half the $126,000 he paid for it.’
Stupidity has consequences. Watching the Oligopoly’s cable shows makes one misinformed, arguably worse than uninformed. Following the investing “advice” of MSM permabulls tasked with herding the sheeple into the Oligopoly’s incorporated neoliberal plantation for fleecing is not conducive to your long-term financial health.
This drooling retard, like 95% of his countrymen, needs to learn to use his head for something other than a hat rack.
The cable shows have an important message: it’s somebody else’s fault.
Right Martin, because it’s simply unpossible that you made a bad decision.
Liberace!
‘I just made a good decision at a bad time, or a good decision at a good time that turned bad’
This has to be a record in something.
That could almost be a “Yogism”.
Denial, it’s not just a r-…oh, forget it.
‘I just made a good decision…or a good decision’
Well, at least the UHS got paid.
That could almost be a “Yogism”
…or Reservoir Dogs. Hehe.
“”There was just no reason,” says Joseph Gyourko, a professor at the University of Pennsylvania’s Wharton School of Business. Shortly after the crash, while at a conference in San Francisco, he rented a car and drove over to see Stockton, a previously obscure place to economists that had by then become infamous as the epicenter of the nation’s foreclosure crisis. “Why you would think prices would be fundamentally higher in the Central Valley,” he says, “never made sense to me.”
Joseph Gyourko, another rear-view mirror economist.
Zowie! It’s Zillow.
I just pulled up my latest Zillow report and Zillow says my Miracle house increased in value by $5,997 over the past 30 days. That’s just a scosh short of $200 a day.
FWIW.
You should have sold your house a year ago and put the proceeds in Bitcoin.
Bitcoin keeps the rain off.
Even the Oligopoly media can no longer conceal the true state of the economy, despite the relentlessly upbeat touts of the media permabulls while their oligarch masters stealthily exit the pump & dump.
http://www.telegraph.co.uk/business/2016/05/05/its-time-to-don-the-tin-hats-britain-the-economy-is-grinding-to/
I love how the Oligopoly media still pretends the Fed’s rate-hike schedule is tied to “data.” Yellen the Felon will NEVER voluntarily raise rates, as she knows that to do so would implode the Fed’s Ponzi markets and asset bubbles, and ZIRP/NIRP is the most efficient means to bilk savers and non-speculators out of their wealth. End of story.
http://www.telegraph.co.uk/business/2016/05/06/disappointing-us-jobs-growth-derails-hopes-of-june-interest-rate/
94 million Americans “not in the work force” but the unemployment rate is 5%? Even using common core math, that doesn’t add up.
http://www.breitbart.com/big-government/2016/05/06/jobs/
You can’t post Breitbart links here either.
Please stick with the Washington Post.
Let’s pretend a Fed rate hike was EVER on the table for June or any other month. Yellen the Felon is itching to announce NIRP/QE4 as the next escalation in the Fed’s swindles against the 99%.
http://www.marketwatch.com/story/fed-hike-off-the-table-for-june-given-step-back-in-job-growth-2016-05-06
‘In a sign that the housing market in Southwest Florida may be cooling, builders pulled permits for 93 single-family homes in Lee County in April. That’s a 32% drop from the same month one year ago when builders pulled 136 permits, according to the Lee County Community Development department.’
‘A study of water usage by think tank Prosper Australia also estimated one-fifth of all investor-owned properties was lying empty. Domain Group chief economist Andrew Wilson says despite increased building approvals, there has been no real surplus of rental stock, suggesting many of the units had not made it to the rental market. ‘I think the prospect that a number of these apartments are sitting empty is quite real’
Well Andy, it is possible there are humans renting these condos that don’t use water. BTW, these are favored by Chinese investors.
Cover your eyes rental watch:
‘the distressed sales share…11 percent. The five metros with the highest distressed sales share in February were Baltimore (19.8), Chicago (19.4), Tampa (19.1), Orlando (19.1) and Las Vegas (14.1).”
‘Prior to the housing crash, the distressed share of total sales averaged about 2 percent,’ CoreLogic Chief Economist Frank Nothaft said.’
It was actually between 1 and 2 percent. That had been the norm for decades, and was the reason house loans had such low interest rates.
So the national distressed rate is 5.5 times higher than normal. And what would it be if Quicken wasn’t running HAMP loan ads 24/7, for years?
“It was actually between 1 and 2 percent. That had been the norm for decades, and was the reason house loans had such low interest rates.”
Given the currently high rate of distress sales, what keeps house loan interest rates so low today?
Oligarch consorts tend to be of the same moral fiber as their “boyfriends.”
http://www.marketwatch.com/story/lawyers-say-redstones-ex-girlfriend-lied-kept-women-he-cared-about-away-2016-05-06
Per Wikipedia:
“He is the majority owner and chairman of the board of the National Amusements theater chain. Through National Amusements, Redstone and his family are majority owners of CBS Corporation and Viacom (itself the parent company of Viacom Media Networks, BET Networks, and the film studio Paramount Pictures). According to Forbes, as of September 2015, he was worth US$5 billion.”
Six oligarchs own almost every media and entertainment outlet in America. Google it.
LOL, they sure can pick ‘em, can’t they? George Soros got knocked around a bit by one of his girlfriends.
http://www.nydailynews.com/news/national/george-soros-ex-girlfriend-berserk-deposition-court-papers-article-1.1606326
Heh. She’s a Latin soap opera actress, but this time the slaps were for real. If you check YouTube there are compilations of “cachetadas” or “bofetadas” [big face slaps] from various telenovelas. This one was from a novela my wife and I were watching at the time:
https://www.youtube.com/watch?v=xTgGFj6xjCQ
Lol, snake. It’s not so different from some scenes from Dallas/Dynasty prime time soap era.
Who shot J.R. again? It’s been so long that I’ve forgotten!
Gold is shining well today.
We were talking about envy the other day:
en·vy
noun: envy; plural noun: envies
1. a feeling of discontented or resentful longing aroused by someone else’s possessions, qualities, or luck.
verb: envy;
1. desire to have a quality, possession, or other desirable attribute belonging to (someone else).
‘Hundreds of new homes are going up around the City of Santa Maria. They include new single family residences and apartments. City council member Jack Boysen says 1,130 new individual housing units are being built in Santa Maria. He says about 40 percent are single family homes and 60 percent are apartment units. He says none of those projects listed are officially designated as low income housing.’
“We want to see a mix,” Boysen said. “We’d like to see some, obviously there’s a great need for low income, but we also need market rate.”
‘Boysen says the low income housing project in the works on Chapel and Depot is not included because permits for that project haven’t been pulled yet. He says there are also talks of adding a small low-income triplex on West Cook Street.’
‘Coastal Community Builders and Williams Homes, among other companies, are building single family homes in Santa Maria starting in the $300,000 range.’
Man, am I jealous. Over a thousand housing units and not one affordable unit. Oh, there’s talk of a triplex!
‘We want to see a mix,’ Boysen said.’
Yeah, but that mix can live somewhere else, right Jack?
“Developers are certainly putting a lot of money into the economy here,” Boysen said.’
Yes siree, I am overwhelmed with envy at a state that ignores the basic needs of the poor and middle-class. That is so focused on “money”, that insists it is wealthy when the Census Bureau says it’s the poorest in the country. How many billionaires live there?
What the low income people will do is what they always do: move to a lower income neighboring community, double up or triple up on roommates, etc. Think of Sedona. Lots of people who work there live in places like Cottonwood.
See the article below. It’s difficult when Mel Watt is financing the destruction of affordable housing. Do you realize they are coming up on over a trillion bucks of this stuff? From the article:
“I’m a single mom of four kids so I work really hard to be able to afford the things that we have,” Onan said. “And where the low is located is, let’s face it, kind of scary.”
Just take your 4 kids and live in a ghetto! It’s sooo progressive. It’s what the poor have always done. Deal with it, the developers have got Mel Watt money!
‘Sorry, lower-income residents, those apartments near the ‘L’ aren’t for you’
‘For those of us without cars, securing an apartment near public transit is pretty much essential. Rent is usually reasonable, and you certainly don’t have to be rich to enjoy the $2.25 “luxuries” of a crowded CTA bus or train. Score! But what if you can’t afford to live near the “L”?’
‘That’s becoming more of an issue in neighborhoods across Chicago. Take Logan Square. For two new high-end apartment buildings under construction on Milwaukee Avenue near the California Blue Line stop, Twin Towers and L, rents range from $1,400 a month for a studio to $3,900 for three bedrooms. Those are some bank-breaking prices if you’re a struggling young adult (me).’
‘Natalie Jose told the Tribune she was evicted from her Logan Square apartment after rent jumped from $735 to $1,095, a 49 percent increase. “The whole reason I moved to the city is because of how great the transportation is and I don’t have a car,” Jose said. “I don’t know how I can afford to stay in Chicago.”
‘So it seems the idea of transit-oriented development—putting high-density retail and residential buildings with limited parking near train stations to promote less dependency on cars—may be sweeter than the actual outcome. Logan Square residents are worried these new apartment developments are aimed primarily at the rich and may be accelerating gentrification, pushing lower-income people farther from transit.’
Selfish Hoarder: “Ben, you communist, the market is doing it’s work!”
Uh, these are government programs we are all paying for that are supposed to promote affordable housing. And it’s being used to enrich super wealthy people and actually reducing the stock of affordable housing. This is going on in every corner of the country.
Lol. Very funny Ben. It is not my quote but I like it.
Let’s go over this: massive government subsidy, presided over by a so-called liberal, extending huge tax credits to crony capitalists, bankers and developers get a cut, and it produces the exact opposite result of the intended program. Milton Friedman and Murray Rothbard would have spotted this right away. As far as I can tell, I’m one of the few people onto this scam.
Yes, I. Certainly agree.
Me, too.
‘MBP Capital snapped up Frances Way Villas in Richardson. The Class-B 200-unit garden style property is a value-add property, director of brokerage and acquisitions Ryan Heddleston tells us. The company (co-founded by Mike Phillips and Cathy Finn) plans to pour up to $2.7M into renovations. Because it is workforce housing designed for families, MBP Capital will add family-oriented amenities such as a splash pad, volleyball court and fitness center.’
‘MBP Capital will also rebrand the community as The Beverly. Earlier this year, the company bought The Gardens on Walnut, a 1964-constructed property in Garland. Class-B properties are hard to find in this market, Ryan says. Because there’s so much demand, they’re able to raise rents above pro forma. Last year, they charged an average of $0.92/SF, and this year it is up to $1.10. MBP Capital expects to close on from four to six properties this year–or about 1,500 units.’
Notice it has “affordable housing” in the URL. But they are jacking up the rents and buying even more. (A splash pad Ma, joy!)
Still, where are they getting all this money?
‘Multifamily housing was the center of attention via a new policy change from the Federal Housing Finance Agency (FHFA) and a new report from the Mortgage Bankers Association (MBA).’
‘The FHFA announced the 2016 multifamily lending caps for Fannie Mae and Freddie Mac has been raised from $31 billion to $35 billion. The changes, which are now in effect, were based on increased estimates of the overall size of the 2016 multifamily finance market.’
“FHFA engaged in a thorough analysis of the multifamily market and determined that, to adjust to the realities of the market and ensure that Fannie Mae and Freddie Mac have the flexibility to continue supporting this important sector, an increase in the lending caps is warranted,” said FHFA Director Mel Watt. “Supporting liquidity in the multifamily housing finance market remains a priority for FHFA and we will also continue to ensure that Fannie Mae and Freddie Mac maintain their strong support for financing of affordable and workforce housing.”
‘David H. Stevens, president and CEO of the MBA, welcomed the move. “Current consensus projections for the size of the 2016 market, including MBA’s own, have increased to approximately $260 billion from earlier projections in the $220 billion range,” Stevens said.’
Hey now, for 2-6 year old kiddies, those splash pads are loads of fun - there is one a block away from me in the city park that I used to take my kids to. Bring towels and extra clothes!
Frances Way Villas in Richardson, TX — 0% recommended by tenants on ApartmentRatings.com
http://www.apartmentratings.com/tx/richardson/frances-way-villas-formerly-habitat-apartments_972690545675081/
Some people claim that the tenants who leave all these nasty reviews on apartment rating sites are just those who owe money, who can’t afford the rent and are broke a$$ losers, are bitter and resentful because they’ve been evicted, are “problem tenants” who are trying to get back at management, or are people from competing properties trying to bring down the competition by pretending to be tenants leaving bad reviews.
But, really? Have you ever seen a restaurant that had 0% positive reviews on any website? Plenty of people have bad experiences in restaurants or are presumably just spiteful people, or “the competition” out to destroy their reputation. But you don’t see overall reviews looking like this.
But no, we’re told, it’s just apartment residents who are spiteful and vindictive liars. Sure.
And if this is a class b property, imagine a class c.
A review:
‘I had to bring my wife and son into this place because, frankly, we had no other choice. The day we moved in, which the office mixed up, our front door was bolted shut because somebody had kicked it in. When I finally was able to get into my new abode, the place was trashed from the subpar maintenance staff (I’ll get to them later) that never cleaned up their mess after doing last minute “repair” work. In other words, they made it just barely habitable. Except that neither of our two toilets had tanks on them, so they had to fix that, as well as the broken door frame, as we were trying to move in.’
It gets worse. Then this:
For every request, we had to ask the office at least 4 times, if not more for some requests. I didnt ask for much, but for 875 a month I expect basic needs to be fulfilled by a slum lo…. i mean, land lord.’
The photo he posted:
‘I had to bring my wife and son into this place because, frankly, we had no other choice’
Since I started doing the qualifying on the rentals I manage, I have a new perspective on the situation. Ultimately, there should be a place for everyone. Yes, that is going to mean D and C housing. Some people can’t or won’t get their act together. Some have problems out of their control, or costs prohibit them from addressing. It’s a complex world out there.
$850/month should provide better. I do a lot more on less than this. I can see all sorts of issues with this apartment, but at the root of it is greed. They are deferring maintenance. Not a scary couple of words right? Deferred maintenance is unhealthy, stupid and dangerous. Deferred maintenance turns into good tenants leaving, bad tenants staying. Vacancies lead to less money and management makes more stupid decisions. It’s really a downward spiral.
Does anyone remember the report I posted that said there was zero B apartments being built? If that is even remotely accurate, we have a failed system. Look at this picture; do these tenants really need a splash pad and 10-15% higher rent?
OTOH, speaking as somebody who helped manage my family’s rental units for a couple of decades, some of these losers can destroy your place 1000x faster than you can repair it.
So there are two sides to that ‘deferred maintenance’ coin.
Remember what happened to public housing in the big cities as soon as it opened? People moved in and started tearing out fixtures and whatnot to sell them (hey, it wasn’t theirs so who cares). Most of those original public housing projects have now been razed. Big success that whole thing was. It was a ‘Great Society’.
Remember what happened to public housing in the big cities as soon as it opened? People moved in and started tearing out fixtures and whatnot to sell them (hey, it wasn’t theirs so who cares). Most of those original public housing projects have now been razed.
link please
Data my friends…. stick with the data.
Bend, OR Housing Prices Crater 13%YoY
http://www.zillow.com/bend-or-97701/home-values/
Ben, I know there are terrible tenants. There is a percentage of the population who are lowlifes, but this is crazy. And I don’t know how it was when you lived in Dallas, but right now most of apartment complexes are managed by large corporations who will not rent to people who have even one little glitch in their past.
I’ve spoken with realtors who explained the situation to me and described people they know who can’t find decent housing because 15 years ago when they were in college they were busted for smoking pot or doing something equally minor.
I bet the complex this guy lives at allows people who can’t get into other housing, and so they know the people there have few options and have to put up with whatever conditions exist. It’s very predatory.
And I guarantee you they will try to raise the rents more than 10-15% once they renovate. I looked in Richardson a couple of years ago, and the rental market was very bifurcated. You could either live in a slum, like this place, or you could pay $1,400 for a studio in some pretentious building. Nothing in the middle.
Where I live now, 30 minutes outside the city (without rush hour traffic) a two bedroom apartment goes for around $1,400. And yesterday on Yelp one of my neighbors posted a photo of her kitchen — very fancy looking with granite countertops and all, but her kitchen sink had fallen down into her cabinets. And she says it’s been happening over and over. Not to mention all the other problems she’s had. And based on what I’ve seen, I believe it. And our complex is only 5 years old!
The pest control guy mentioned to me that a lot of the soil here is loam, and not suitable for building. There are things you can do to stabilize it, but the EPA won’t allow it anymore. But they continue building on it anyway. When I walk outside here, many of the foundations of the buildings have cracks. There are cracks all over our sidewalks and running through our parking lot. And this is causing pipes to burst and other issues.
Anyway, got a little off-track, but it’s just madness what you pay and what you get in return as a tenant. There is so much nonsense and fraud in every aspect of the real estate market and in every stage of building, renovating, and management.
‘a lot of the soil here is loam, and not suitable for building’
When I was a kid, nobody used slabs for houses. It was considered nuts because of the rise and fall of the soil in north Texas with moisture. Now you can’t find anything but slabs.
“Now you can’t find anything but slabs.”
My 3/2 spec rancher rests on a cheap slab poured over pea gravel, and our area is largely caliche, which is an expansive soil. The only good thing about it… no squeaky floors. Every other place I’ve rented had thin cheap plywood flooring on wide spaced joists; had that trampoline feel. Hehe.
A few years back I had a sub who did alot of work in TX and he mentioned the subgrade in TX sucks. I don’t remember the details. Maybe dilating sand or something.
I’m guessing these slabs they’re founding shacks on are 4″ with WWF for reinforcing like a sidewalk? Do they frame directly on the slab or do they use a starter wall using a course of CMU? A single mat 6″ structural slab(say #4 on 12) isn’t a whole lot more crete and reinforcing is fairly cheap.
BTW…. Our concrete sub just hired a new super. He came from the SFR shop built housing biz as a PM. I asked him what he was charging customers. Ready? Drumroll……….. $40/sqft and thats with 10% profit. We’re up to a whopping $45/sqft after $10k worth of concrete.
So its not “the concrete!” either.
This is good info guys. I had no idea about any of this stuff. I just thought buildings in Texas didn’t have basements due to something with the water table.
And yet look at how much they are charging (to buy and to rent) this housing in North Texas that is bound to basically crumble to the ground in a few years.
They claim it’s because the drought has been causing problems, and while I’m sure that doesn’t help the situation, that’s obviously not the root cause.
Basements are instant swimming pools - just add water. Having dealt with their negative side effects all my life, I wonder why people insist on having them. If they wanted a bigger house, why didn’t they build one - above grade?
Cheapest square-footage in the house, that’s why…
Incorrect.
Formed surfaces and flatwork is more costly than framed walls and decking.
“Felipe Vieira, of Brazil, said he decided to invest in Jay Peak to create a more secure life for his small family. He said he made the decision after vacationing in Stowe, Vermont, when his then-8-year-old daughter said she wanted to stay.
He sold a small farm about two hours outside of Rio de Janeiro and an apartment in the city and moved with his family to Stowe.”
No need to even comment.
I get how Stowe, Vermont would seem like a fairy tale, or another planet, to someone from a chaotic part of Latin America. I feel bad for that family, but as always, buyer beware.
Yeah, that’s not the takeaway here.
His story is that he decided to upend his whole life and sell everything he owes and move to a foreign country thousands of miles away because he went on a vacation and his 8 year old wanted to stay.
OK.
And FYI, well-off people live VERY well in Brazil. They are a true oligarch class.
“‘There is a sense that the market just isn’t right, and something is waiting to adjust,’ he said. ‘We will cool our heels.’”
Most of the people I know, like this guy, have a sense that we’re in a real estate bubble.There’s enough collective memory of the 2008 collapse. When the downturn becomes obvious—which is just a few months away—the rush for the doors will tremendous. History repeats but always in a different key.
B-b-b-but Denver is different?
‘It is unbelievably brutal out there. Tempers are flaring. A lot of buyers are giving up and renting,’ said Richard Kelley, who oversees 117 brokers as owner and president of Metro Brokers DTC.”
“Giving up and renting” Like that’s a concession. Consider yourself A LUCKY duck if you’re “stuck” renting!! Let the landlord eat the Gov’t land rent charges (i.e. prop tax)
“You gotta roll with it” — Caitlin Vestal
LOL, those hipsters will be “rolling” through bankruptcy in a few years.
“Comment by phony scandals
2016-05-05 18:07:21
Tom Petty - Free College - YouTube
http://www.youtube.com/watch?v=1lWJXDG2i0A - 273k”
Just finished watching a near 4 hour epic doc on Petty and his Heartbreakers on the Netflix - it is just great - and me being my age - I kinda missed the early days of Petty when he and his crew were making music as I was much more into punk and being in LA at the time - punk was the thing.
I have ALOT of respect now for Petty - the song list at the end of the broadcast all written by Petty, Campbell and others in the Petty years is just jaw dropping. Had no idea of how prolific this guy’s talent has been.
If you have not seen this on the Netflix - sit down with a bucket of popcorn and enjoy.
These are the kind of emails I get all the time
“It is our facility in Dongguan China, where the other division’s production is going to be built”
How do you get on the mailing list? Not joking, I am wondering what BS sites or blogs one has to frequent in order to get targeted for these scams?
Ali-Baba. Just express an interest in buying a lot of this or that widget and you’ll get some very friendly e-mails, including the supplier’s luncheon details.
Funny you should mention that place - I ordered a Zama carburetor for my weedeater ($11.xx - you can’t even get a rebuild kit that cheap so I ordered a couple extra), and it was directly shipped from that city.
“Overall prices for ‘prime’ central London homes increased by just 0.5 per cent in the year to April from 0.8 per cent, according to Knight Frank. This is the lowest rate in six and a half years and means annual growth has been below five per cent for 16 consecutive months.
Annual growth below five percent??!? The _HORROR_!!!
It’s fun to tell people “It’s a great time to buy a house” with a huge grin on your face.
My total monthly housing expenses are less than $1,000 a month.
You can find alot of interesting things to do with all the leftover money.
‘It’s happening — oil and gas defaults are starting to hurt the rest of the credit market’
Janet told these guys to knock off the junk bond thing, but they laughed at her and kept on. Maybe she should have actually done something.
STAHP! Or I’ll yell STAHP again!
‘Worried about anti-European Union sentiment fueling nationalism on the continent, a top official said Thursday that the bloc must “stop the radicals” from gaining power by making citizens feel safe amid the migrant crisis.’
‘EU Council President Tusk joined other leaders in a debate in Rome on the state of the European Union. Nationalists and anti-European sentiment have gained ground in elections in several EU nations. Fears of being overwhelmed by migrants are testing a major EU accomplishment — Schengen “border-free” travel — as several countries erect or plan physical barriers.’
“Today we have to admit that this dream of one European state with one common interest, with one vision…one European nation, this was an illusion,” Tusk said.’
The guy in charge is often the last to know.
Merkel’s oligarch-globalist handlers, terrified at the prospect of the sheeple waking up and voting for nationalist parties that will stand up for sovereign nation-states and peoples against the banksters, are prodding her to belatedly start securing Germany’s borders. It’s a little late now, after one million Middle Eastern and North African asylum seekers have decamped to Germany and set about bringing Fundamental Transformation.
https://www.yahoo.com/news/merkel-warns-return-nationalism-unless-eu-borders-protected-143545881.html?ref=gs
Shocker from old Dead-Eye Dick. I think someone’s been playing crimp and release with his oxygen tubes.
Jessie Benton just got himself a felony conviction.
I feel like I’m taking crazy pills.
https://www.youtube.com/watch?v=ilcRS5eUpwk
Lindsey Graham TKO! POW! Right in the kisser!
Wew lad, wotta day.
New York strip on the Weber tonight in Region IV.
Bought a couple of T-bones today for the weekend. Livin’ the dream here in Region, uh, aw heck, won’t be no Region anything come the fall, thank Jeebus.
Eisenhower re-set, 2.0. It’s a beautiful thing.
Let it all hang out.
https://www.youtube.com/watch?v=XWN65nAkk20
Dude, the advert in front of this vid is for PRUNE JUICE. :rolleyes:
Hey Donk.
I had NY Strip a week ago. Perfection!
The lack of affordable housing played a central role in Londoners vote for the first Muslim mayor of a major western city over the scion of an Establishment financier and oligarch.
https://www.yahoo.com/news/muslim-londoners-jubilant-son-pakistani-immigrant-elected-mayor-225330531.html?nhp=1
More indications and warnings of black swans on the wing.
http://www.telegraph.co.uk/business/2016/05/06/warnings-mount-on-worlds-corporate-debt-china-crisis/
The DNC’s grand alliance of felons and freeloaders is growing in leaps and bounds, but just to be sure our permanet Democrat Supermajority is installed by 2020, we’ll have to import millions more.
http://www.breitbart.com/2016-presidential-race/2016/05/06/report-leftist-groups-registered-two-thousand-virginia-felons-to-vote-in-two-weeks/
Time to roll out the sweeteners. Hehe.
“Sheldon Adelson says he will support Donald Trump”
http://www.nytimes.com/politics/first-draft/2016/05/05/sheldon-adelson-says-he-will-support-donald-trump/?_r=0
This is a good one.
http://davidstockmanscontracorner.com/trumped-why-it-happened-and-what-comes-next-part-1/
Services were disrupted in Greece on Friday as workers walked off the job at the start of a three-day general strike protesting over new bailout austerity measures they say will further reduce incomes.
Several thousand demonstrators gathered in Athens for planned rallies as part of the protests, which show a growing discontent with the left-led coalition government.
On Thursday, unions called the 48-hour strike, which will add to a previously declared strike on Sunday. State-run and many private services, including rubbish collection, public transport, municipal offices and news broadcasts, were suspended.
Ferries to and from the Greek islands will not operate until Tuesday morning. Doctors, dentists and journalists joined the strike, leaving state-run hospitals functioning with emergency staff and all news broadcasts off the air. Lawyers have abstained from court appearances for months.
The strike was timed to coincide with the parliamentary vote Sunday evening of a bill overhauling the pension system, a reform proposed by the government under requirements for Greece’s third international bailout.
The vote will test prime minister Alexis Tsipras, who initially came to power in January 2015 on promises to repeal austerity measures previous governments had imposed as part of requirements to overhaul the economy and qualify for international rescue loans.
Tsipras’ government has a majority of just three seats in the 300-member parliament, and has lost its lead to opposition conservatives in opinion polls amid mounting voter disillusionment.
“Everything the unions are doing now is to justify their existence. Absolutely nothing will change,” Athens resident pensioner Constantine Andreopoulos said. “And those who came to power after 50 years will not risk their seats. They’re not stupid. They will do anything, even sell their souls to the devil.”
Read more: http://www.scotsman.com/news/world/services-in-greece-grind-to-a-halt-in-strike-over-new-austerity-plan-1-4121366#ixzz47xWtCDOX
Follow us: @TheScotsman on Twitter | TheScotsmanNewspaper on Facebook
Sell their souls to the devil, ’twas ever thus.
Bank bosses rarely concede their shareholders may need to lower their expectations.
Yet this is what many of them are now saying.
Not quite as bluntly as that, of course. But it is an underlying message of this week’s major bank profit results, and the wild response from market.
Bank bosses rarely concede their shareholders may need to lower their expectations.
Yet this is what many of them are now saying.
Not quite as bluntly as that, of course. But it is an underlying message of this week’s major bank profit results, and the wild response from market.
Read more: http://www.smh.com.au/business/banking-and-finance/big-four-finally-feel-economic-slowdown-20160505-gonq4l.html#ixzz47xXddv3w
Follow us: @smh on Twitter | sydneymorningherald on Facebook
And winner of the no sh1t Sherlock award are
Genworth Financial, which controls Australia’s biggest lenders’ mortgage insurer, has become “more wary” of the nation’s housing market because of its connection to China’s economy and commodities demand.
“We’ve cut back in writing in Western Australia and Queensland,” Genworth’s chief executive Tom McInerney said in an interview in New York on Wednesday. He cited regulatory actions “and the fact that the Australian economy is more tied in a macro sense to China and commodities.”
The US-based insurance group floated Genworth Mortgage Insurance Australia in a 2014 initial public offering, and still owns more than 50 per cent of the local business. Mortgage insurers cover losses for lenders when homeowners default and foreclosure fails to recoup lenders’ costs.
Read more: http://www.smh.com.au/business/property/genworth-ceo-says-more-wary-of-australia-housing-because-of-china-ties-20160505-gomtkm.html#ixzz47xYU4igO
Follow us: @smh on Twitter | sydneymorningherald on Facebook