Do The Underwriters Know Something That We Don’t?
Two reports from the Denver Post in Colorado. “High plateau — it’s a phrase starting to pop up a lot more in descriptions of metro Denver’s housing market. But the leveling off could require an adjustment in thinking and strategy in a market accustomed to sharp increases in home prices. And someone who buys in 2017 might find themselves sitting on zero appreciation come 2021. ‘If we get anything under 5 percent in appreciation, sellers will lose their mind and think the market is collapsing,’ said Anthony Rael, chairman of the Denver Real Estate Market Trends Committee at the Denver Metro Association of Realtors.”
“June saw a huge 24.4 percent jump in the inventory of homes for sale versus May, an increase about six times the historical average between the two months. And while the overall inventory was still a historically low 6,769, agents note that a change is in the air, even if it hasn’t yet shown up in rates of appreciation, which are still running in the double-digits. Redfin broker Michelle Ackerman said the big jump in inventory should have translated into more showings this month, but that isn’t happening. Sellers are getting fewer offers than just a few months ago and fewer buyers are touring homes.”
“In something she hasn’t seen in two decades, Ackerman said bank underwriters are getting much more cautious, asking for more time to review appraisals and in some cases challenging them. ‘That has triggered conservativeness on the part of buyers,’ she said. ‘Do the underwriters know something that we don’t?’”
“One group will have a disproportionate influence on the housing market in the years ahead: retirees who are rich in home equity but short on savings. If they perceive the market is about to roll over, they may put their properties up for sale sooner rather than later. ‘Sales are being fueled by ‘move-down’ buyers,’ said Mark Boud, chief economist at Real Estate Economics. ‘That is the only way they can take advantage of their equity.’”
“But the bottom won’t drop out as long as developers and builders continue to put out too little supply. With land and labor constrained, builders have focused on the highest profit margin opportunities — luxury apartments and higher-end homes. That leaves those segments of the market more vulnerable to any softening.”
“Metro Denver’s average apartment rent reached a record high of $1,371 in the second quarter, according to a quarterly survey from the University of Denver’s Daniels College of Business, Colorado Economic and Management Associates, and the Apartment Association of Metro Denver. Newer units, which demand higher rent, pulled the average above the median of $1,324 DU associate professor of real estate Ron Throupe said.”
“Vacancies rose last year as developers put a large number of apartments on the market. They continue to build, adding 2,442 new units in the second quarter, but renters absorbed 4,189 units, causing the vacancy rate to fall. As the market has tightened, prices have gone up: Throupe found rents increased by $56 in the second quarter. The first-quarter figure of $1,315 had been a high at the time.”
“Rents are also rising because developers have focused on adding ‘luxury’ apartments in places like downtown Denver and central Boulder. As those become a larger part of the mix, they push up the average rent. But landlords, in an effort to lure new tenants, are also offering more concessions. The ‘economic vacancy’ rate, which accounts for discounts like a month or two of free rent, is at 14.3 percent, up from 13 percent in the first quarter.”
The Gazette. “Colorado Springs’ resale housing market remains red hot, but not problem free. The pace of buying and selling in the just-concluded first half of 2016 signals this could be a second straight record-setting year for single-family home sales in the Pikes Peak region. Many sellers of lower-priced homes put their properties on the market and field multiple offers that exceed their asking prices - sometimes within days or even hours.”
“But bidding wars, delays in getting appraisals, a tight supply of homes in the $300,000-and-under range and an oversupply of half-million-dollar-and-up properties are among problems that have led to head-banging frustrations for buyers, sellers and even their real estate agents. Despite the demand for lower-priced homes, the higher-end market - $500,000 and up - remains slow, said Tiffany Lachnidt, a real estate agent with Re/Max Properties.”
“Sellers of those properties are increasingly frustrated because they keep reading the market is so strong, she said. ‘Not every segment of the market is flying off the shelf,’ Lachnidt said. ‘Over certain price points, we jump from having six months of inventory to 38 months of inventory…We talk sometimes to sellers in those price points that are incredibly frustrated because they can’t understand why they’re not flying off the market. It’s because nobody’s talking about it.’”
“Owners of more affordable homes sometimes can’t understand why their properties aren’t selling, Lachnidt said. In spite of the demand for lower-priced homes, properties still must be priced to reflect the market; a home that’s too high by just 3 percent to 4 percent won’t get the offers it should, she said. Homes also must be in good condition, and marketing them for online viewing and in-home walk-throughs is key, Lachnidt said.”
“‘Sellers and agents can’t get lazy,’ she said. ‘You still have to have staging, you still have to be priced right and you still have to have good marketing. Otherwise, you’re still not going to sell in any market.’”
‘In something she hasn’t seen in two decades, Ackerman said bank underwriters are getting much more cautious’
Two decades since the loan peddlers have used caution?
‘Not every segment of the market is flying off the shelf,’ Lachnidt said. ‘Over certain price points, we jump from having six months of inventory to 38 months of inventory…We talk sometimes to sellers in those price points that are incredibly frustrated because they can’t understand why they’re not flying off the market’
That’s the second time we’ve seen not “flying off the shelf” used in the past few days.
It’s special in Colorado.
It’s different here. My realtor said so.
Suzanne’s research confirms you should buy now or be priced out forever…no matter what those HBB naysayers say.
https://www.youtube.com/watch?v=hPIxrzmatq0
‘If we get anything under 5 percent in appreciation, sellers will lose their mind and think the market is collapsing,’ said Anthony Rael, chairman of the Denver Real Estate Market Trends Committee at the Denver Metro Association of Realtors
The lunch bunch is pretty much convinced that 5% appreciation is the new normal.
It seems this whole debt based scheme only works if prices go up.
Prices are so high u basically have to go beg for a loan to buy a car or house.
Then you pay 10 years on a house and basically haven’t paid peanuts on the principal.
I think I liked it better when there was a limit on how much cash and credit could be created.
This is pretty much the definition of speculating.
Here is the exact conversation I heard from a Marine’s wife the other night on their recently purchased $550,000 house in Temecula: “We were renting so we are so glad we got this house, it was the fifth one we put an offer on in the last 3 months”
I do not think this dude was an officer, they have a very young kid and I don’t think she works.
Real Estate is religion here (Orange County, San Diego County).
It does make sense if you are buying low or if you are dam sure there is a greater fool to sell in two years so you can pocket that $300,000 tax free gain LOL.
“Real Estate is religion here (Orange County, San Diego County).”
So true. Daring to question the financial brilliance of anyone who suggests that real estate investment is the rainbow with a pot of gold at the end of it will result in getting you labeled a crank at best, or even getting called out as a heritic and burned at the stake.
“…Marine’s wife the other night on their recently purchased $550,000 house in Temecula: …”
Housing Bubble shoeshine boy moment #9,764?
At least according to Zillow, $550,000 buys an awful lot of house in Temecula, e.g. 5-6 bedroom semi-mansions. You can get a decent 3/2 for $200K less. I guess the military gets a real break.
lol@donk
Colorado
If memory serves (and sometimes it doesn’t, I blame it on that last trip to the shroom fields 29 years ago) your house was worth about $300k a number of years back after the crash of Bubble One.
If you don’t mind me asking, what is it worth today?
I have no idea of what it’s truly “worth”, but the house next door sold last year for 450K and another house on the street (much smaller) just went on the market, with an asking price of 390K. Another house on the street (where the terminally ill owner snuffed himself) is on the market for 450K.
Percentage wise, that’s about the same increase as Jupiter Fl. since about 2010.
The wild card is Yellen the Felon and her printing press. The more QE, the most the dollar is debased and purchasing power declines. So in nominal dollars housing might go up, but in real terms it will likely stagnate or drop along with the productive economy (as opposed to the Wall Street casino).
In 2 decades? Lenders were cautious from 2009 to to 2012
Denver has to be the #1 most vs market in the country
The media constantly spreads conflicting stories
When the jumbo market collapsed a few years ago, the federal government raised the GSE loan caps considerably.
The first article mentions two groups had previously called for Denver to stop going up only to be proven wrong. At the end of last summer the Denver UHS said sellers were chasing the market down. Observing these markets is inexact. You can get completely different views. All the headlines said rents are at a record. Then you see this:
‘Rents are also rising because developers have focused on adding ‘luxury’ apartments in places like downtown Denver and central Boulder. As those become a larger part of the mix, they push up the average rent. But landlords, in an effort to lure new tenants, are also offering more concessions. The ‘economic vacancy’ rate, which accounts for discounts like a month or two of free rent, is at 14.3 percent, up from 13 percent in the first quarter.’
If they don’t get these units filled, somebody isn’t going to retire.
‘an oversupply of half-million-dollar-and-up properties…’Over certain price points, we jump from having six months of inventory to 38 months of inventory’
I was up there a little less than a year ago and they weren’t building much that wasn’t this expensive. In the video I made you could see people were trying to flip houses still under construction.
How much more money will be printed to hand out grants for folks who overpaid for homes this time around? what excuse will be created to make them the victims ?
They are still handing out cash to folks who were duped on the west coast in the last bubble.
Seems to me the real problem is no one ever takes the losses for overpaying.
All this funny money is encouraging reckless behavior.
The Aspen Daily News in Colorado. “It’s the only plausible explanation. How can something so expensive be worth it? Just because people will pay the exorbitant prices doesn’t mean there’s tangible value. The ‘market’ is after all an inanimate object. The only reason I can come up with for the glut of high priced property is that real estate in Aspen is for suckers. It’s also fair to say that in general, Aspen is a huge rip-off.”
“The biggest challenge of being a real estate agent in Aspen is probably trying to keep a straight face while telling the customer the asking price.”
http://thehousingbubbleblog.com/?p=9691
The Aspen Daily News in Colorado. “In his Aspen Snowmass Market Report real estate analysis for the first half of 2016, Sotheby’s broker associate Andrew Ernemann referred to Snowmass Village as the upper valley market’s ‘unexpected bright spot.’ However, he said Aspen’s slowdown could potentially impact its neighbor this year. It’s the tippy-top of Pitkin County’s real estate market that has taken a huge hit this year. In 2015 there were 30 residential properties sold for $10 million or more. This year that segment is off by more than 60 percent, according to Tim Estin, who published his most recent market analysis on July 8. And he said the trend is by no means unique to this market.”
“‘The luxury sales declines correspond with what one hears about other high end real estate markets around the country,’ Estin wrote. ‘Sales are either off considerably or have stopped — foreign buyers have dried up, uncertainty prevails and there is an abundance of high priced inventory.’ Ernemann concurred that, ‘Many of the world’s luxury real estate markets have experienced a drop in sales activity and/or prices in 2016.’”
http://thehousingbubbleblog.com/?p=9687
The wealthy love the high prices. To some, the higher the better. It’s for bragging rights, and keeps the riff-raff out.
Test drove a RAV4 this morning. It is the hybrid version. It is nice but I felt it is still too big. Toyota will remarket the Scion iM in 2017 so that there will be a Toyota iM as well as Scion iM. I like the sportiness of it more than the SUV, plus it is about $12,000 less expensive and gets better gas mileage than the hybrid RAV4. It just does not seem to have as much space for my road bike as my current hatchback, which is a Toyota.
u cant afford it buddy
Your point?
My current set of wheels is costing me $2,000 per year in fixes. Labor for oil leak itself was $969 on Thursday.
I like buying brand new. Squeezing 13 years out of a Toyota is good. I got ten years out of my previous Toyota. If I go sporty and keep a iM 13 years, I will be a 70 year old driving a sporty car.
And this has what to do with housing?
Lots to do
He’s gonna live in his car.
Seriously Bill, with your computer skills can’t you work some kind of at home consulting gig where you could buy an RV and do a modified oil city plan living in whatever beautiful locale you choose?
Well I can and still be an employee at my current company. I have to be allowed to though. I know two employees at my company who work from home. One lives in a small town in Oregon and the other in a small town in Ohio.
My druthers? I’d be in Scottsdale because of the greenbelt bike trail.
My boss is a friend of mine. He just has to allow me to. I do good work and I have found bugs in the product line with my java script tests, but they drag their feet on keeping me busy. They seem happy enough so far. It makes me keep looking over my shoulder. But I have a side project that is very math-intensive. It’s cryptographic equations and I have a spec for them, I just have to implement some that are missing in the code.
Is a bike trail is the only thing pointing you to Scottsdale? There are probably thousands of bike trails like that all over the country, and hundreds of small towns where you can get around mostly by bike.
Yeah but I feel more free in Arizona than Caifornia.
What about Wyoming, or Utah, or NM, or even Texas? Plenty freedom in the West… and South too, if you can handle a few raindrops.
Lastly, the rationalization for buying into this overvalued market is probably one of the most ridiculous ones we have ever heard (similar to the “new era” myth of the late 1990s). It goes by the acronym “TINA”, meaning “there is no alternative”. Whoever has come up with this notion has the imagination of a plasmodial slime mold. There are always alternatives.
http://davidstockmanscontracorner.com/a-fully-automated-stock-market-peaking-at-internals-and-blowoffs/
“And someone who buys in 2017 might find themselves sitting on zero appreciation come 2021.”
What MSM writers seem to chronically miss is how declining depreciation results in real estate investors shifting from the demand to the supply side of the market. The end result of this transition is price collapse, as was seen in the 2008-09 episode, and is soon to be repeated.
A banty rooster president Trump would push gold toward $1850.
So would a president Hillary.
http://www.kitco.com/news/2016-07-22/Trump-Could-Push-Gold-Prices-500-Higher-ABN-Amro.html
Merkel’s Marauders strike again.
http://www.breitbart.com/london/2016/07/24/explosion-germany-kills-least-one-authorities-blame-device/
Notorious B.I.G. — Ready To Die (1994):
https://www.youtube.com/watch?v=f2RdaHh0U-s
This was Brooklyn, before all the rich white people bought it.
Where did all the poor people in Brooklyn go?
Wu Tang Clan — Enter The 36 Chambers (1993):
https://www.youtube.com/watch?v=jOLuW2w5kgg
Staten Island, Brooklyn, and Queens.
Go to 43:08 on this one…
Or better yet, to 52:15
Some of us lived this, at all the parties and in the clubs, back in the day…
‘One group will have a disproportionate influence on the housing market in the years ahead: retirees who are rich in home equity but short on savings. If they perceive the market is about to roll over, they may put their properties up for sale sooner rather than later’
‘retirees who are…short on savings’
“Welcome to Wal-Mart”
Please listen to at least 20 seconds of the NBC Olympics Theme Song before reading this story.
NBC Olympics Theme Song
https://www.youtube.com/watch?v=q9gL33ze4RE - 168k -
Australian athletes won’t move into Olympic Village, say it’s ‘unlivable’
By Katie Dowd Published 11:19 am, Sunday, July 24, 2016
The beleaguered Rio Olympics took another hit Sunday when the Australian Olympic Committee announced its athletes would not be moving into the Olympic Village due to ‘unlivable’ conditions.
“From what we’ve seen,” said a spokesman from the AOC, “you wouldn’t put people in there yet.”
Reps from the AOC have been putting the rooms through “stress tests” to see if the newly built facilities could handle an influx of tenants. It’s clear they couldn’t.
“We decided to do a “stress test” where taps and toilets were simultaneously turned on in apartments on several floors to see if the system could cope once the athletes are in-house,”AOC chef de mission Kitty Chiller told the Sydney Morning Herald. “The system failed. Water came down walls, there was a strong smell of gas in some apartments and there was “shorting” in the electrical wiring. ”
In addition, blocked toilets, leaking pipes (some in areas with electrical wiring), a lack of light fixtures in stairwells and “dirty floors in need of a massive clean” have been identified as problems.
It’s the latest in a long string of issues in Rio. The Olympic Village plans caused a stir months ago when organizers announced athletes would have to pay for air conditioning. Due to the blowback, AC was added to all rooms.
The venues have been similarly plagued. Scientists found the waters where sailors will be competing are filled with human sewage, and a dismembered body washed up on the popular beach that will soon host beach volleyball events.
The Olympics start in 12 days.