Buyers’ Tightening Purse Strings
The Gazette Extra reports from Wisconsin. “‘Seller’s market’ describes what’s happening better than about anything else right now,’ said Julie Raese, a Realtor for Century 21 Affiliated in Janesville. And median home prices here rose from $115,000 to nearly $140,000 from April 2015 to April 2016, according to the snapshot data. That’s a 20 percent jump. Raese said title companies and closers are conducting 11 to 13 closings a day on average, compared to three or four years ago, when a title company would have considered two or three closings a busy day. ‘It’s been frustrating for some to find the right fit of price and house,’ Raese said. ‘And it’s changing fast enough in the past months that even appraisers can’t keep up with the (upward) price shifts. They’re going off comparable sales from just months ago, and they’re not matching up anymore. That’s a challenge.’”
The Kent Reporter in Washington. “Just as expected, the month of May had an uptick in new listings (12,272), but just as many buyers (12,275) made offers on homes during the month to keep inventory depleted, according to the latest figures from Northwest Multiple Listing Service that covers 23 counties in the state. ‘The May housing market was not just hot, it was frenzy hot,’ said J. Lennox Scott, CEO of John L. Scott Real Estate. By his analysis, 80 percent of the homes coming on the market in King and Snohomish counties are selling within the first 30 days. ‘Many sell within the first week,’ Scott said. ‘A healthy/normal market would have 30 percent selling in the first 30 days.’”
“‘There’s good news for luxury homebuyers,’ Scott said. It’s prime time to showcase such properties, he explains, and ‘this is the season when more luxury inventory hits the market. The good selection in King County is easing the pressure for homebuyers in the luxury ($1 million and above) market. A search of the MLS database shows there are more than 900 listings in King County with asking prices of $1 million or more.’”
The Winston Salem Journal in North Carolina. “Home-sale prices in the Winston-Salem area increased during April, but the growth pace continues to slow, according to a CoreLogic report. By comparison, according to the latest report from the Winston-Salem Regional Association of Realtors, the average sales price was $168,107 in November, down from $173,871 in November 2014. The association’s figures are based on numbers from the Triad Multiple Listing Service and includes selected housing markets outside Forsyth with higher-priced houses.”
“In a separate housing report, RealtyTrac said in April that the Winston-Salem MSA housing market is one of the nation’s best for buyers in terms of pricing, but not so much for sellers. The national real-estate research firm ranked the Winston-Salem area second in the nation during March for the gap between the price that sellers paid for their home and what they received in selling it. The average seller took a 10 percent loss, which trailed only the Rockford, Ill., MSA at 11 percent. The Wilmington MSA ranked fifth at a 5 percent loss.”
The Houston Chronicle in Texas. “Houston is likely becoming a renter’s market as new luxury apartments high continue to come on line while job and population growth are slower than when the ground was broken on tens of thousands of units. A midyear report seems to validate concerns forecast by economists earlier this year that Houston’s apartment market was overbuilt. Developers are expected to deliver 21,000 apartment units this year and 4,000 next year, skewed toward the high end. Concessions of up to three months free rent are already being offered. Other concessions include gift cards, Apple watches, flat-screen televisions, seven-day cruises and move-in allowances.”
“Class A apartments, representing the upper end of the market, have a 79.5 percent occupancy rate. The number of properties that have been in operation for 13 months or more have a 91 percent occupancy rate, but those open 13 months of less have a 23.2 percent rate. ‘The stark truth is that Houston doesn’t need any more Class A apartment communities, not until the market absorbs 45,000 vacant Class A units on the ground and in the pipeline,’ the GHP report states. ‘Apartment owners and developers are more likely to see crude oil hit $70 a barrel before Houston returns to a landlord’s market.’”
The Real Deal on New Jersey. “By one measure, New Jersey’s residential market is robust, as rising sales are putting a dent in inventory. Yet the price tags on some luxury homes are giving buyers pause — and spurring competition among brokerages for those home-seekers who can afford the hefty sums. ‘We feel the $2 million properties aren’t moving as fast,’ said Soha Fontaine, the broker/owner of a new RE/MAX luxury residential property office in Hoboken. The city has 40 homes listed for $2 million or above, which she believes to be a record.”
“Fontaine has observed buyers’ tightening purse strings. She recently sold a $2 million Hoboken townhouse to a couple relocating from North Carolina for a corporate job who were absolutely adamant about not going over that price point despite being able to afford much more.”
The New York Post. “When it comes to selling luxury condos these days, it seems that less is more. A sprawling triplex penthouse at One Brooklyn Bridge Park — an 11,000-square-foot expanse whose original $32 million asking price gave it the title for the priciest condominium ever listed in Brooklyn — has not only just undergone a price chop, but also a reduction in its palatial size. Originally cobbled together from nine units spanning the 10th, 11th and 12th floors of the waterfront Brooklyn Heights building, this pad now comes as an 8,333-square-foot duplex asking $23.88 million, The Post has learned.”
“The trend toward size and price cuts is playing out across the city. Of course, it’s impossible to forget the $118 million three-penthouse combination at 10 West St. in Battery Park City that ‘Million Dollar Listing New York’ star Ryan Serhant listed two years ago. At the time, the uncombined 15,434-square-foot offering was the priciest and the largest of its kind across the entire city. But about a year later, the manse saw both a price and size reduction when one of three initial sellers got cold feet; it also got a broker switch. Now, the two-unit assemblage, which spans some 11,000 square feet, is on the market for $75 million.”
“Developer Ian Schrager — who had envisioned an $80 million penthouse at his Herzog & de Meuron-designed 160 Leroy — decided to divide the digs into two smaller units with more appropriate prices. One of them, dubbed penthouse south, measures 4,849 square feet and is available for $29.5 million. Meanwhile, penthouse north runs 7,750 square feet and asks a much higher $48.5 million.”
“‘We thought it would be better for the marketplace; it’s what people were asking for,” Vector Group CEO Howard Lorber — whose subsidiary, New Valley, is a co-investor in 160 Leroy — told trade publication The Real Deal at the time. ‘Buyers said, ‘We love the top floor, but we don’t want to spend $80 million’ . . . so we figured we’d give them what they want.’”
‘Sick of your house in the Hills but too busy to fly long distances? With deep enough pockets, here’s an option: buy another property in the same city. Take Compass’ Andrew Rhoda and his husband, J. Ben Bourgeois, for instance. The couple owns a Spanish-style three-bedroom in the Hollywood Hills, but they also enjoy a DTLA loft with 17-foot ceilings in walking distance to restaurants and galleries. They purchased the apartment for $395,000.’
‘Buying property for the purpose of staycation isn’t unique to L.A. In New York, the Journal featured a couple living in Midtown who bought an apartment in TriBeCa as a weekend getaway. And in Miami, another couple opted for a bungalow on a nearby island rather than a beach town like Naples.’
‘Real-estate agents say the trend is largely a result of busy professionals whose work requires them to remain close. Not to mention, have a second is convenient for out-of-town guests and reducing time spent in traffic. It could also be a good investment.’
This is entirely as ridiculous as that Tribeca article. Would anyone rent an apartment across the city to “vacation” in?
This is just gross speculation.
It could also be a good investment.
Yeah, but it won’t be.
‘This is entirely as ridiculous as that Tribeca article. Would anyone rent an apartment across the city to “vacation” in?’
Perhaps if the city had no hotel industry whatsoever?
They’re doing exactly what they’ve always done…. Reporting exceptions to create deception.
If it makes money, it’s an investment. If if doesn’t, it’s a tax write off. There’s always the ARM/MID game to play. It’s a private staycation home. But especially, it’s a party home.
Second houses aren’t deductible.
And the MID doesn’t cover yearly losses to depreciation.
Second houses aren’t a tax write off either.
Why do people glorify tax write off’s?
Ideally, I’d never have a write off in my life. If I never had losses, I’d be happy to pay taxes on all those profits.
FYI - IRC § 163 allows taxpayers to deduct interest on a personal residence and one other home. There are some qualifications for the second home, but generally, it is deductible. Same with prop taxes, deductible for the primary residence plus one other property.
I think I read somewhere Realtors spend more on lobbying than any other industry, and it certainly shows in the tax code.
One of my co-workers is getting excited about investing etc. and was telling me about an investing house. The investment company had this “great” feature (according to co-worker) which would automatically compile any stock losses into a single report so you could declare it on your taxes. Uh, if this is the feature that the company brags about, you got the WRONG investment house.
you need more than $6500 in losses to use them.
Only business owners get to enjoy the game of write offs. Phones, cars, travel, new PC’s……
Some interesting tax management that I’ve heard of is for one of the “roboadvisors”. They use correlation math to do some interesting tax loss harvesting.
Let’s say there are two ETFs that are both similar (similar fees, similar holdings, etc.), but not identical…they might have a correlation of .99. Let’s say that either fits into your portfolio for US Large Cap stocks.
Now, if you happen to be at the end of the year, and there is a paper loss for US Large Caps, they’ll automatically sell it, and buy it’s close cousin (so you aren’t trying to market time…you are still exposed to the market).
Voila…tax loss harvesting.
Benjamin Graham was doing this in the 1940’s. Everyone knows this.
It’s called “pairs trading”. There are many such strategies. You don’t need ETF’s. Just a equivalent basket with substantial correlation over the very short-term (= Dec-Jan.)
I stand corrected. All second house owners I’ve known paid cash.
I stand corrected. All second house owners I’ve known paid cash.
Ben, you don’t do sarcasm often enough.
SMOKIN’!!!
I foreclosed on a bunch of second houses in Flagstaff. Usually very pissed off judging by what they did to the houses. Left their neighbors/HOA to twist too. But hey, they got the tax treatment.
I’m going to split from here you, Ben.
If you’re going to be libertarian, then it’s not their job to care about neighbors/HOA.
Self interest drives capitalism (even this parody thereof.)
We used to have ‘Lifestyles of the Rich and Famous’ to watch and then go about our mundane lives. Now we have 24/7/365 of how every 15-minute famous person is spending money, gobs of it, on luxury and vanity and hedonism.
“Now we have 24/7/365 of how every 15-minute famous person is spending money, gobs of it, on luxury and vanity and hedonism.”
+1 Yup, feeling inferior… ditto at the high-ceiling church. Hehe.
With the traffic in LA, it might make sense to have THREE properties: one in the hills, one downtown, and one at the beach. There’s just no more quick ride home here anymore.
reducing time spent in traffic
time = money. 20 hrs a week in traffic for what?
“…one downtown,…”
aka the pied-à-terre for diddling the office hottie.
I have a friend in Toreance who owns a house there with his wife as well as a mountain cabin in Idlewild, high up on the western slope of San Jacinto. It’s probably just 60 miles away. Ey love it and spend most weekends, even winters, up in the cabin.
Torrance
They need the mtn air to keep their lungs from shutting down.
id rather have one nice place then two nasty ones.
“cabin in Idlewild”
That’s much different than having two homes in different parts of the same city.
‘Active adults seeking a luxury home in Middlesex County can find special reduced prices at Villagio, a Tuscan-style village in Monmouth Junction. The remaining homes in the Villa section will be offered at up to $90,000 below list price until the end of June.’
‘Originally priced from $694,900, the homes begin at $555,000.’
Good lord. Those houses look like what would happen if the Chinese decided to build replicata Tuscan villages alongside their replicas of the Eiffel Tower and the Sphinx. Heck, throw in a fake Colosseum while you’re at it. Wouldn’t these folks rather spend their $550K on traveling to Tuscany?
They don’t have $550K, darling!
An obvious fact to anyone except the deluded borrowing class.
‘If you’re looking to buy a house for under $300,000 in Bellingham, good luck. Low inventory, rising prices and a lack of lots to build new homes have almost eliminated that price tier in the city. It’s not just a Bellingham problem. Zillow recently came out with a study showing tight inventory in April across the U.S. is leading to home price appreciation that is rising faster than many anticipated.’
‘This evaporation in the number of homes available for sale under $300,000 is extraordinary because of how fast it has happened, said Gragg Miller of Coldwell Banker Bain. One factor in play is the lack of construction for new homes inside the city limits. Bellingham has reached a point where a buildable lot is hard to find. Homebuilders that do find an empty lot pay quite a price for it, he said, upwards of $150,000 to $200,000. A contractor can’t make money building a home on that kind of lot by selling it for under $300,000.’
‘To Miller, who has been in the real estate business for more than 40 years, the current market has become abnormal, but not in the way it did 10 years ago when speculation and easy access to loans led to a real estate bubble that eventually burst. In a normal market the more home values rise, buyers would drop out as they get priced out. However, Seattle’s home values are even more extreme and in today’s world of telecommuting the number of buyers may not slow down, he said.’
‘In a normal market the more home values rise, buyers would drop out’
Yeah Gragg, it’s called supply and demand. Yellen didn’t notice this either, for years.
‘builders that do find an empty lot pay quite a price for it, he said, upwards of $150,000 to $200,000. A contractor can’t make money building a home on that kind of lot by selling it for under $300,000′
I can show this over and over to rental watch and he’ll post some 5 paragraph denial. It’s the land. The bubble is in the price of the land. It’s why there are no starter houses being built. It’s why there nothing but luxury; condos, houses, apartments. Land prices have doubled or tripled in just a few years all over the country.
It’s the land. The bubble is in the price of the land ??
But its not just the raw dirt…Along with the dirt is the entitlement process and infrastructure cost…Can’t speak for locations outside my area but its extremely expensive here…On my last SFR, I was in $100k before I put a shovel in the ground…
$100k on what?
Probably permitting, utilities, fees etc.
$240K stormwater detention vault, for example. That’s for a four-lot short-plat behind me.
I wasn’t aware detention vaults were standard equipment on a house.
Strange it is that I buyout large pre-cast shapes from Oldcastle $10k.
Nice guessing though.
You live in flyover country. Your prices don’t work in any urban area which has Agenda 21 growth management rules.
A few years ago someone divvied up an acre lot near me into four .25 acre lots and priced them at $110k to $130k each. I told my wife they’d never sell at that price. They all sold within a year at or near asking price.
Link?
I’ll be short then.
A lot only trades for $150k-$200k is if the builder thinks they can build a house on it and sell for a profit.
The home value drives a builder’s willingness/ability to pay high land prices.
Meanwhile everyday thousands across the country buy a $1500 lot and $500 in plans and hand them to a contractor and builds 2000sq ft of house for $55/sq ft.
But these dozens of article I keep finding say different.
The media is not always right. Remember all the media articles about the “permanently high plateau” of high home prices in 2005-2007? Articles proclaiming no bubble. You posted hundreds of such articles then…it didn’t make them right.
My statements come from 19 years of experience looking at residential development business plans, speaking with market participants, and seeing builders going through the exercise of underwriting transactions (doing their residual land calculations).
Does scarcity of land contribute to higher prices? Sure…more builders chasing fewer lots definitely drives the prices higher, but it drives prices higher because 1) builders will accept lower profit margins to build in markets with supply constraints and 2) more builders bidding on fewer lots makes it more likely that one of those builders will target a higher priced home.
If you have 5 builders chasing a single parcel of land, with one of the 5 specializing in higher priced homes, and the others specializing in inexpensive homes, the 1 builder will be able to afford to pay the most for that lot. They will outbid the others…every time.
HOWEVER, if the market is not conducive to the more expensive homes, he will not bid on the land. No one is going to build $2MM homes in the heart of Compton.
What comes first is a builder wanting to build and sell a certain type of home in the market in which the land is located. Second comes what they are willing to pay for the land.
It is not the other way around.
Last week it was “it’s the labor!” lolz.
‘Cash rents have been “persistently high,” despite the recent agriculture sector slowdown, according to Brent Gloy, visiting Purdue University ag economist who also writes for the blog “Agricultural Economic Insights.” Even so, there’s ample evidence that they are now trending lower.’
‘A February 2016 poll of Indiana farmers suggests an 8% cash rent decline this year, for example. Creighton University’s Rural Mainstreet Index (RMI) reported a similar dip in its April report, down 7% from 2015. “If realized, a decline of that magnitude would be one of the largest since the 1980s,” Gloy notes.’
‘Looking at historical cash rent values for Indiana farmland, Gloy points out that since 1988, cash rents have only declined three times, and each decline was less than 2%. Between 2005 and 2015, cash rents zoomed ahead 86%, from $126 per acre to $229 per acre.’
‘Cash rents have been known to fall just as swiftly, Gloy says of the same Indiana data. From 1981 to 1987, Hoosier State cash rents fell 32%. Will cash rents continue to fall? Gloy argues that unless revenues improve substantially, odds are cash rents will continue to come under great pressure.’
Hoosier Creightor
I had to look up “cash rent.”
Cash rent is basically, rent. Some guy rents some land from a landowner, farms it, and keeps all the profits (or losses) to himself. The landowner is hands-off.
Crop-share is when “The landowner is giving the acre, the farmer is giving the labor and equipment, and the two share in the profits or losses.”
https://corncorps.com/2014/11/06/farming-for-dummies-cash-rent-vs-crop-share/
And there’s the farm land bubble we’ve discussed here a few times. Recall the hedge funds, etc, bidding up this land like crazy?
‘Between 2005 and 2015, cash rents zoomed ahead 86%, from $126 per acre to $229 per acre’
Crops are a commodity too. Commodity boom, meets farm land bubble.
Crops are a commodity too. Commodity boom, meets farm land bubble ??
And what happens when commodity prices crash ?? Me thinks farmer can longer pay the 86% increase to $229. per acre…
‘The dry weather meant more combines on the roads as the Kansas wheat harvest kicked off Tuesday, but a big wheat harvest worldwide is affecting Kansas prices. Leroy Wolke started cutting his wheat Tuesday, but a good harvest could turn bad for him. “We’ll have an average crop or a little better, but the price stinks,” said Wolke.’
‘Estimates from Kansas State University and the USDA put the profits from a bushel of wheat at about 40 cents. That means farmers like Wolke can expect 16 to 20 dollars of profit per acre; a razor-thin margin. Getting the best price for wheat is something Troy Presley, a grain merchandiser for Comark Grain Marketing, deals with everyday. “The profit comes in efficiency - more bushels per acre, and that’s going to be the game,” said Presley.’
‘Part of the problem is that there is a global glut of wheat worldwide. “From the world outlook, yes, the United States is having a difficult time competing in the world market with our price,” Presley explained.’
“there is a global glut”
There is a global glut of everything. The world is swimming in a sea of massive excess inventory of housing, oil, steel, textiles, autos, finished products and productive capacity.
Nail salons, don’t forget nail salons.
I remember the hedge funds bidding oil sky high as well.
And then the hedge funds took a major trimming!
Hedge-Fund Star Kyle Bass Slips on Oil
Collapse in energy prices hits Bass’s Hayman Capital Management; firm’s main fund is down about 7% this year
…
‘Has CRE Reached an Inflection Point? Yardi Matrix’s Associate Director of Research Paul Fiorilla explores comparisons between today’s market and that in 2007.’
‘In 2007, the catastrophic downturn that hit the commercial real estate market came almost like a bolt from out of the blue after several years of euphoric activity. Few saw the bear market coming, and those who expressed concern in advance certainly didn’t predict the depth of the downturn.’
‘The real estate market has since seen several years of steady—some might say heady—growth, highlighted by an influx of capital and record property prices. Market players, though, seem eager not to get caught unawares by the next recession, and the discussion in industry forums has turned to whether the bubble is about to burst. One warning sign is that the Moody’s/Real Capital Analytics Commercial Property Price Index (CPPI) dropped in February, its first negative month since the recovery began in January 2010. Other market analysts are saying that real estate is in the “ninth inning” of the cycle.’
‘Is it time to head for the exits? Concerns are not unwarranted, as there are many similarities between today’s market and that in 2007. The economy has expanded in the seven years since the last recession ended in the second quarter of 2009, one of the longer periods of growth in the post-war period. Signs that investors are nervous about the future include capital markets volatility and widening bond spreads, which also happened in the lead-up to the global financial crisis.’
‘Multifamily rents have grown 20.3 percent since 2011, which is unsustainable, given that wage growth is roughly 2 percent per year. Affordability is a burgeoning crisis, especially in high-cost metros. According to Harvard University’s Joint Center for Housing Studies, the percentage of U.S. renter households that pay more than 30 percent of their income on rent grew to 49 percent in 2015 from 41 percent in 2001. At some point, something has to give, and it is a virtual certainty that rent growth has to slow.’
‘Property yields, or capitalization rates, have reached record lows and asset values are at record highs, just as they were in 2007. Transaction volume is once again peaking, at $492.4 billion in 2015, the most since $573.4 billion in 2007, according to Real Capital Analytics Inc. Sales volumes rose 236 percent between 2010 and 2015, which is not quite as much as the 440 percent growth between 2002 and 2007 but aggressive nonetheless.’
‘Debt is flowing easily, and the total amount of commercial mortgages outstanding is at a record $2.8 trillion, well above the $2.5 trillion at the 2007 peak, according to the Mortgage Bankers Association.’
‘Multifamily is also experiencing a wave of supply growth, which is set to top 300,000 new units nationally in 2016.’
‘If there is one area of commercial real estate that can be considered frothy, it is property values, which are at or near all-time highs in most segments. With low interest rates and steady fundamental drivers, commercial property provided an attractive alternative to stock-and-bond investments in the wake of the recession. The resulting “wall of capital” increased competition for assets and led prices to rise sharply. The CPPI is up 95 percent since the trough in January 2010 and is 17 percent higher than the peak in 2007, according to RCA, and cap rates are at all-time lows in most property sectors.’
‘The CPPI had its first negative return in February, falling by 0.3 percent month-over-month, and many feel that the market is due for a correction.’
‘The level of growth in the economy may be weaker than expected or desired, but there has been little or no irrational exuberance to be corrected…So while it appears that the rapid expansion in commercial real estate could be exhausted and the market is likely to see a pause in the run of pricing and deal flow, it’s also hard to see what would cause the kind of deep meltdown we experienced in the last cycle.’
‘To be sure, the market is dependent on the economy, and that could turn quickly. Recent recessions have been caused by exogenous shocks unrelated to U.S. real estate, and they wouldn’t be shocks if the market could see them coming. Any decline in prices would be painful for some corners of the market, particularly those that are paying record prices per pound. That said, given leverage is more moderate and development is largely limited to markets with strong demand, a downturn in the near future is likely to be more shallow than some others in recent memory.’
Ya know, obviously to all of us here, we know this market is just utter nonsense. I wish the MSM would simply report the fact that the US wages/income hasn’t risen in over a decade and a lot of places have lost more jobs than the bar tending industry is adding. Yet here we are, reaching new highs, “sellers markets”, etc. When some of the articles on this blog talk about Lincoln, NE or Kansas City markets rising 5-10%, it’s just a head scratcher.
On another note, Ben did you read the article about homes in CT where they are virtually worthless because the concrete slabs are cracking and the insurance companies won’t pay out? It was a material quality issue from a specific quarry. Makes you wonder how many homes built in the last couple of decades are utter trash given the flimsy kitchen cabinets, cheap laminates, pergo floors, and 3-5 month slap together build times.
Which simply means housing prices have a long way to fall.
Look at yesterday’s entry for the Connecticut crumblin’ concrete conundrum.
“I wish the MSM would simply report the fact that the US wages/income hasn’t risen in over a decade and a lot of places have lost more jobs than the bar tending industry is adding.”
Bahahahahahaha … dream on. The MSM gets a lot of its advertising revenue from the RE game and there is no way they will ever want to kill the goose.
+10
Never gonna happen. Never ever.
Link to article please?
Link …
http://www.zerohedge.com/news/2016-06-07/when-your-biggest-investment-now-worthless-its-devastating-homes-connecticut-are-lit
Only buy/invest in homes built prior 2009. Use cash and makes sure you buy it at 1992 prices. Then and only then you might come out even! LOL!
Oops, I meant “Homes built prior to 1999″
“The city has 40 homes listed for $2 million or above, which she believes to be a record.”
In Hoboken????? God help us all.
‘In Hoboken????? God help us all.’
http://www.nytimes.com/1992/03/20/nyregion/workers-mourn-maxwell-house-s-last-drop.html
“But about a year later, the manse saw both a price and size reduction when one of three initial sellers got cold feet; it also got a broker switch. Now, the two-unit assemblage, which spans some 11,000 square feet, is on the market for $75 million.”
I wonder how many people in the world can qualify for the loan on, or pony up the cash for $75,000,000? A couple of hundred? Maybe a few thousand?
Didn’t the Playboy mansion just enter contract for $200 million by the neighbor? Absurdity
Larry Ellison owns several mansions, one is a Palm Springs mansion with its own private golf course. Plus he owns the island of Lanai, in Hawaii, for which he paid $400M.
But, yeah, not too many people with pockets that deep.
I think he also owns three houses on the Beach in Malibu plus a Japanese style estate in Woodside…No telling how many properties he has..The guy is worth 33-Bil;
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=0ahUKEwixwMzH5pjNAhUW8WMKHcoyAzkQtwIILjAF&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3Dhr9txeQ8cwQ&usg=AFQjCNG-ywvEwT-Qvsf20aizV_JjdARMxg&sig2=bYFbyobn5rGwLJ4CcJ6hSQ&bvm=bv.124088155,d.cGc
And no one likes Oracle, do they?
I wonder what percentage of their income is from the government.
“Raese said title companies and closers are conducting 11 to 13 closings a day on average, compared to three or four years ago, when a title company would have considered two or three closings a busy day.”
Lots of dotted debt-slave lines being signed, always a good thing …
“‘It’s been frustrating for some to find the right fit of price and house,’ Raese said. ‘And it’s changing fast enough in the past months that even appraisers can’t keep up with the (upward) price shifts. They’re going off comparable sales from just months ago, and they’re not matching up anymore. That’s a challenge.’”
Bahahahahaha … no, that’s a bubble!
Love you Janet. Kissy kissy.
My Banker says zero interest rates are coming.
he has CD’s at .05% in case you’re interested and some really high expense mutual funds 1.25% plus rear loaded on short term bonds which about half are BBB lord Abbott some funky name can’t remember
Probably sweet home equity loans also I didn’t ask
ECB buying company bonds- did this happen even under FDR ?
surreal
“The European Central Bank (ECB) has formally started its corporate sector purchase program (CSPP), a move announced by President Mario Draghi in March. The program, along with other measures such as ultra-cheap long-term loans and government bond-buying, aims to kickstart the euro zone economy and lift inflation to the bank’s target of 2 percent.
“As part of its plan, the ECB will buy euro-denominated investment grade bonds issued by companies in the euro area. The bank has already started buying five-year utility bonds in the secondary market, according to Reuters.
“Some of the companies that are most eligible for bonds since they are non-financial and have the highest investment grade include EDF energy, AbInBev, Telefonica, Volkswagen, T-Mobile and Enel. Sectors that are most likely to benefit from this program include utilities, consumer goods and telecoms, according to analysts.
“‘The way we think about CSPPs is it is a step sideways not a step forward. It is a policy damage limitation because last year the credit market wasn’t healthy under this absurdly low interest rate environment,’ Barnaby Martin, Managing Director of European Credit Strategy at BofA Merrill Lynch told CNBC. He added that the success of this policy will be seen in various stages and there is a huge reputational risk since the details of the bonds will be published regularly.”
The ECB is in the interesting position of being able to save the very same companies it is investing in by conjuring up money if need be hence the risk to the ECB is very low AND the risk would be very low to an enterprising outsider who would like to ride some coat tails and buy up some of these bonds for his own portfolio.
This “interesting position” that the ECB finds itself in could be used as a nifty marketing tool for an enterprising person who wants to use SOMEBODY ELSE’S MONEY to take advantage of this interesting position.
Sell the idea that the investment is “risk free” and you are there.
‘Developers are expected to deliver 21,000 apartment units this year and 4,000 next year, skewed toward the high end.‘The stark truth is that Houston doesn’t need any more Class A apartment communities, not until the market absorbs 45,000 vacant Class A units on the ground and in the pipeline’
20,000 vacant Class A units today?
‘Class A apartments, representing the upper end of the market, have a 79.5 percent occupancy rate. The number of properties that have been in operation for 13 months or more have a 91 percent occupancy rate, but those open 13 months of less have a 23.2 percent rate.’
Some of these guys will be broke in a year.
“Some of these guys will be broke in a year.”
Or underwater. For real.
I wonder what outrage will go down when the bailout of property companies is sold to the public. Hopefully a notch or two higher than the Police lethality protests. “America must band together to save this critical industry which rapes the taxpayer in rental charges, I mean provides shelter over their sleepy heads.”
If there is a bail-out, it won’t be the developers. A foreclosed apartment is how rents are really reduced. The problem is going to be the mutual funds, pension funds and life insurance companies that lent them the money.
“The problem is going to be the mutual funds, pension funds and life insurance companies that lent them the money.”
The same money that fueled the insanity.
And…it’s gone!
https://www.youtube.com/watch?v=-DT7bX-B1Mg
“The problem is going to be the mutual funds, pension funds and life insurance companies that lent them the money.”
+1 That’s the Puerto Rico problem too.
Some of these guys will be broke in a year ??
They are likely in the mold of The Donald…All the upside but none of the downside…
‘The stars have aligned economically for the multi-family market and only have one way to go, which is down. Builders and property managers are saying multi-family housing (MFH) is overbuilt. My own eyes believe this to be true as well.’
‘Post Properties, Inc. has potential 30% downside in the next 12-18 months.’
‘Multi-family housing has been on a tear over the last 5-6 years. As the mortgage business collapsed during the financial crisis of 2008-2009, investment poured into building apartments for all the pour souls who would no longer be able to get a mortgage. I believe the time has come to look for situation where the run has extended too far. There will be pain to come from the overbuilding of multi-family housing and property managers, lenders, developers and builders will take the brunt of the fallout. I’m not predicting a mortgage collapse like we saw in 2008, but there are a number of 30%+ downside opportunities to take advantage of in this market. I believe one of those opportunities in Post Properties, Inc. (NYSE:PPS).’
‘Post Properties, Inc. and its subsidiaries develop, own and manage upscale multi-family apartment communities in selected markets in the United States. At March 31, 2016, the Company had interests in 24,162 apartment units in 61 communities, including 1,471 apartment units in four communities held in unconsolidated entities and 2,630 apartment units in seven communities currently under development and in lease-up.’
‘Approximately 30% of the Company’s units are in Atlanta. Dallas, Greater Washington, D.C. and Tampa make up another 45% of the Company’s total units.’
‘Houston, where I recently visited, is infamous for its sprawl. The city itself covers 600 square miles, and its suburbs keep expanding in almost all directions. Yet here’s something else Houston should probably be known for: apartment buildings. Apartments make up a higher percentage of housing units here than in almost any other big U.S. city.’
‘Dallas is also high on that list. In both cities, the apartment construction continues.’
‘Developers in the Dallas and Houston metropolitan areas have been building more multi-unit dwellings in recent years than their counterparts in any other metropolitan area except New York.’
I think Houston is also famous for its hot and humid weather, where you hurry from air conditioned structure to air conditioned car to the next air conditioned structure.
San Francisco is famous for it’s street crime where you run from structure to structure while dead-bolting the door behind you.
… Each mov a sprint through white trash ghetto
but those open 13 months of less have a 23.2 percent rate.’
To quote George Takei: Ohhhh Myyyyy!
Miami’s resi market isn’t busting, but tough times are ahead: Integra Realty Resources
Tightening development pipeline could be saving grace for Miami
June 07, 2016 04:30PM
By Sean Stewart-Muniz
Lately, one question has permeated the minds of many in Miami’s real estate community: Is another bust on its way?
http://therealdeal.com/miami/2016/06/07/miamis-resi-market-isnt-busting-but-tough-times-are-ahead-integra-realty-resources/
How about this part of that article: “Stephen Owens, president of Swire Properties, which hosted the event, took the stage to give his take on the market’s condition.
Owens, who’s been through seven real estate cycles through his development career in Miami, said that this isn’t the first time Latin American currencies have devalued against the dollar.
“At the end of the day, there are other markets out there,” he said. “It’s still a very good value here.”
He also challenged recent media reports like the notorious Wall Street Journal article that connected a huge condo pipeline to a “looming” market bust in Miami.
“Us developers will announce anything,” Owens joked. “The difference is between what we announce and what we [actually] build.”
On top of that, he said the market slowdown is actually a good thing for Miami.
“This pause in the market is the most healthy thing that could’ve happened to us,” he said. “It’s a more healthy market than I’ve seen in Miami in a long time.”
http://therealdeal.com/miami/2016/06/07/miamis-resi-market-isnt-busting-but-tough-times-are-ahead-integra-realty-resources/
Fund managers fear central banks will create next ‘Lehman’ moment
By Sara Sjolin
Published: June 8, 2016 9:42 a.m. ET
Negative rates inspire jitters
Are central bankers unconsciously creating the next financial crisis?
BERLIN (MarketWatch)—Negative interest rates, ultracheap loans and aggressive quantitative easing—central banks are doing everything they can to prevent another financial crisis, but their unconventional measures are instead creating a massive risk to the global economy, top money managers say.
Gathering for the international FundForum in Berlin this week, more than 1,300 fund managers spent three days discussing the current investment outlook and the central banks’ monetary “experiment” emerged as a major concern for the industry.
“I think it’s fair to say it is an experiment because it hasn’t been done at this magnitude of negative interest rates. So many sovereigns have negative interest rates,” said Alexander Ineichen, founder of Ineichen Research and Management.
“In 2008 we had a Lehman moment and central banks stepped in, which was nice. But a lot of the structural issues have not been resolved. A lot of the leverage just went from the private sector to the public sector. My guess is that the next big risk, the next ‘Lehman moment’ is the sovereign. It’s because the problems are now there. The risks are structural,” he said.
…
Mr. Banker. Saw this and thought of you.
http://www.nsnews.com/news/vancouver-parents-buy-property-for-young-children-to-secure-a-future-foothold-1.2272339
Something makes me think that these “Vancouver parents” and their “children” don’t even live in Vancouver.
There has been a lot of talk of Chinese money being laundered in Vancouver housing. There are no statistics to support or refute this however there is information about speculators. Talk now is about applying capital gains on house sales in Canada. There is no capital gains tax at present. Others are floating a 10% down payment minimum on purchases. I think the best method would be to do nothing and let the market balance itself. House buying has gone from the mania to the frenzy stage. FOMO is the dominant emotion. Debt levels are at historic highs. Interest rates at historic lows, with no changes on the horizon. There are even bidding wars where I live, a semi-rural backwater miles from the GTA. I personally don’t really care anymore. Everyone seems to be an expert on housing now. It’s different here, so they say.
http://wtop.com/money/2016/06/home-prices-up-less-than-a-percent-in-dc-market/
“WASHINGTON — Home price appreciation in the Washington market continues to slow, with the latest report showing median prices up less than 1 percent from a year ago.
CoreLogic Inc.’s April data found the median price in the Washington metro was up 0.8 percent from April 2015. Compare that to an annual gain of 10.6 percent in Denver, and 6.4 percent in San Francisco.
Nationwide, the average annual gain in April was 6.2 percent.”
“It was the weather. When in doubt, blame the weather”
-Lawrence Yun
Donk,
Indices rarely capture whats happening like boots-on-the ground data does.
Columbia Heights(Washington DC) Housing Prices Crater 21% YoY
http://www.zillow.com/columbia-heights-washington-dc/home-values/
Brexit Contagion Is Spreading Across the EU, Pew Study Finds
Ian Wishart
June 7, 2016 — 3:00 PM PDT
Close Brexit Polls to Keep Sterling Volatile, Says Foley
Support for bloc has fallen sharply amid refugee crisis
Survey signals fear that U.K. departure would hurt EU further
Opposition to the European Union is growing across the bloc, suggesting that anti-EU sentiment extends much further than traditionally skeptical Britain.
As the U.K. gears up for a referendum on whether to remain in the club of nations it joined in 1973, a survey of more than 10,000 people across Europe showed that voters from Italy and Poland to Greece and Sweden have lost faith in the EU. People in France — one of the six founding countries — now see the bloc less favorably even than those in the U.K., as the euro-area debt crisis and refugee influx take their toll.
…
The key question is not whether ordinary citizens of member nations have lost faith in the EU. Who cares what they think or want? The key question is whether bankers and their political lackeys have lost faith.
The key question is not whether ordinary citizens of member nations have lost faith in the EU.
It matters currently in the UK. Things are not as bad as you think.
Well, the latest rumor is that Parliament actively will subvert the will of the voters if Brexit wins.
Not as bad as I think? They’re likely worse. Just in the last year, Greek politicians implemented austerity that was rejected in a referendum, and Portugal formed a government of parties that received a minority of popular votes.
http://www.bbc.com/news/world-europe-33492387
http://www.telegraph.co.uk/finance/economics/11949701/AEP-Eurozone-crosses-Rubicon-as-Portugals-anti-euro-Left-banned-from-power.html
Don’t get too excited about rumors. I would wait for the results in Britain. It’s only a couple of weeks.
I didn’t have time to read all of the Portugal story. How much outrage you should have should probably depend on your understanding of the Potuguese constitution, which I imagine must be close to zero.
Of course, if something like that happened here in America, plenty of people would say that it’s no problem, because we’re supposed to a republic, not a democracy, or something like that.
Irrelevant
“Leveraged Loan” Backed Asset Stripping Resurges”
by Wolf Richter • June 7, 2016
“Credit bubble reflates. PE firms back at it. Investors go blind.”
Stupid as well. Blind and stupid, and perhaps deaf.
“’Leveraged loans’ that banks extend to junk-rated over-leveraged companies are too risky to keep on their books. They sell them to institutional investors. Or they slice and dice them and repackage them into Collateralized Loan Obligations (CLOs) and sell those to institutional investors. Leveraged loans trade like securities. But the SEC, which regulates securities, considers them loans and doesn’t regulate them. No one regulates them.
(snip)
“As so often, there’s a private-equity angle to it. Companies owned by PE firms borrow money from the bank in order to pay a “special dividend.” It’s a favorite form of asset stripping. This way, if the company goes bankrupt (we’ll get to an example in a moment), the PE firm and other owners got a big chunk of profit out beforehand.
“Dividend-backing loans are particularly risky because the proceeds are not invested in productive activities that would generate cash flow and allow the company to service the loan. The money just disappears, the debt stays.
“These dividend deals are the litmus test for a hot credit market. They die when reason begins to ripple through the credit market, when lenders tighten the screws and look askance at deals that hollow out an issuer’s balance sheet.
“But they thrive when investors and banks go on a frenetic search for yield, when balance-sheet risks that had been clearly visible a moment ago suddenly dissolve into ambient air, when, in other words, investors have such an appetite for loan paper that they will eat anything.
“This is now happening once again.”
There’s more; link to follow …
Link …
http://wolfstreet.com/2016/06/07/leveraged-loan-asset-stripping-pe-firms-revives-credit-bubble-reflates/
The sheeple are starting to wake up to how badly they’re being swindled by the Oligopoly status quo.
http://www.marketwatch.com/story/housing-crisis-has-led-to-breakdown-of-the-social-order-author-says-2016-06-08?link=MW_latest_news
And in the middle of the article is this link:
http://www.marketwatch.com/story/has-there-ever-been-a-better-time-to-be-a-home-buyer-2016-06-08
I heard the Mike Rosen ad for American Financing again yesterday, in which he says that renting an apartment will cost you $4,500, for $1,500 for first, last, and deposit. And that American Financing offers loans with as little as $1,000 down, for a “savings” of $3,500. And continues to add that you can skip the first payment for a total “savings” of $5,000.
How is this even allowed to be aired on the radio?
S&P PE approaching 25 and VIX at 13
time to buy ?
how about sm cap growth
Wow! Hill vs Trump. we are doomed to repeat history of wars and deficit spending.
I am hoping Rand Paul and Bernie form a 3rd party.
lol@lola
Dream on.
Like I said before, vacate the vote. It should start making more sense to you HBBers now than 3 months ago right?
The late George Carlin’s Youtube video “George Carlin does not vote” should make sense now right?
Who doesn’t love attorneys?
Federal taxpayers are on the hook for nearly $20,000 just to settle each refugee and asylum seeker, who are then immediately eligible for cash welfare, food stamps, housing and medical aid, according to a new report on the “refugee industry.”
The report provided federal budget figures showing that the government spends $19,884 on each refugee the U.S. takes in.
And that number is set to jump if President Obama gets his way and brings in an additional 10,000 Syrian refugees in this year.
The report from the Negative Population Growth Inc. said that the U.S. is currently accepting about 95,000 refugees and asylees. That is in addition to the over 500,000 legal and illegal immigrants coming to the U.S.
I wonder how that compares to the cost when Reagan gave amnesty to 3 mill in 1982?
if you don’t give them welfare, it’s no problem
visit el schoolio
If you don’t hire them or rent to them, no problem.
Harry S Dent @HarryDentjr 6h6 hours ago
$250 Million Condo in Manhattan? This listing is likely a sign the real estate bubble is ready to pop! http://j.mp/1TVlEyZ
Goldman Sachs issues major warning of a 20% sell off in the Stand and Poor Index.
There’s more….
Goldman Turns Downright Gloomy, Warns Market “Despair” Is Coming, Prepare For A Major Drawdown
Tyler Durden’s picture
by Tyler Durden - Jun 8, 2016 12:41 PM
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One month after Goldman strategists downgraded equities to neutral on growth and valuation concerns, the firm has turned up the heat on the bearish case with a report by Christian Mueller-Glissmann in which he says that equity drawdown risk “appears elevated” with S&P 500 trading near record high, valuations stretched, lackluster economic growth and yield investors being “forced up the risk curve to equities.”
As Goldman notes, “one large drawdown can quickly erase returns that were accumulated over several years.” It adds that “since the 1950s most equity markets had several large drawdowns of more than 20%, which have taken several years to recover from. For example in the 1970s the FTSE All-Share had an 80% drawdown in real terms and the DAX declined 69% during the Tech Bubble. One of the largest equity drawdowns across markets was during the GFC, when most global equity markets lost around half their value. And not to forget, the TOPIX has still not recovered from the large drawdowns of the late1980s/early 1990s.”
The firm also points out that large drawdowns are not only relatively frequent, but becoming more global in nature.
http://www.zerohedge.com/news/2016-06-08/goldman-turns-downright-gloomy-warns-market-despair-coming-prepare-major-drawdown
“Goldman Sachs issues major warning of a 20% sell off in the Stand and Poor Index.”
Yeah whatever. We have low interest rates in place from now to kingdom come. What could possibly spark a stock market selloff with so much stimulus underway?
Below are two fun exercises involving So Florida and San Francisco real estate. Simply pick which headline belongs to peak Bubble 1.0 circa-2006 and which belongs to this era.
http://mhanson.com/4-19-hanson-housing-bubble-pop-quiz/
Tell them what they won Johnny:
http://www.bloomberg.com/news/articles/2016-04-18/private-jets-are-the-newest-amenity-in-luxury-condo-sales
Lots of historical value here:
STOCKMAN’S RANTS AND WRITES
Housing Bubble 2.0: Here’s Why
by David Stockman • March 11, 2014
http://davidstockmanscontracorner.com/housing-bubble-2-0-heres-why/
Miami Beach, FL Affordability Improves As Housing Prices Crater 9% YoY
http://www.zillow.com/miami-beach-fl/home-values/
Thank You Bernie for proving that political candidates can make it big without selling out! Thanks for putting the people first.
https://www.thelayoff.com/last-25.php
https://finance.yahoo.com/news/mark-cuban-trump-cash-problem-154618572.html
A Cuban gets on Trump.
Stupidity should hurt.
http://www.zerohedge.com/news/2016-06-08/goldman-crushes-democrats-dreams-shows-obamacare-has-cost-few-hundred-thousand-jobs
America lite:
http://www.greaterfool.ca
Bill, what is your prognostication for the market this fall? It is an election year and I am picturing a rhyme to go along with 2000 and 2008.