A Growing Sense The End Is Out There
The Dallas Morning News reports from Texas. “Apartment rents in North Texas have never been so high. Rents are up almost 6 percent from a year ago and have risen almost 30 percent in the last five years. Even the boom in apartment building hasn’t taken the bite out of the annual increases. Almost 50,000 new rental units are being built in the Dallas-Fort Worth area. But most of those units are aimed at the upper end of the market. Middle tier D-FW apartments have the lowest vacancy rates, about 4 percent. And rents in these units, which average $959 a month, are about 7 percent higher than in mid-2015. One reason occupancy levels are so high in these properties is that developers are knocking down older apartments all over D-FW to replace them with newer, more expensive units. ‘Class A rent growth is the slowest because of all the new supply that’s coming to market,’ said Greg Willett of Richardson-based apartment analyst MPF Research.”
The Longview News Journal. “The continuing downturn in the oil industry has put a damper on home building in Longview this year, with activity not keeping pace with sizable increases in home sales in the same period. Why no developers took out permits for apartment complexes is a subject of speculation. ‘I think we are kind of oversaturated in the market for higher-end (apartments),’ said Karen Holt, housing navigator for the aging and disability center operated by Community HealthCore. ‘I think that is why you are seeing a downturn in the permits.’”
From News Channel 10. “Texas home sales and prices may be the only thing rising as fast as the summer temperatures. It’s no different in Amarillo. Realtors are busying and the amount of time the average homes stays up for sale is decreasing. ‘It’s been a record setting year in Amarillo,’ said Kent Meyers with the Amarillo Association of Realtors. ‘We have sold more houses in the first two quarters in 2016 than ever in history that we’ve kept record.’”
“But one small set back is houses in our area are more expensive. ‘Median prices are just a little bit above $200,000. The prices continues to move up just slightly,’ said Meyer. ‘That’s basically due to the lack of inventory in Amarillo and that’s a problem we’ve had, we just simply don’t have enough houses to meet the demand on new homes and existing homes.’”
“According to Meyer, homeowners will barely feel the impact of the pricey homes. ‘Our interest rates remain incredibly good,’ said Meyer. ‘When you buy a house, that’s an investment, probably the biggest investment that any family ever makes.’”
From News West 9. “The Texas Quarterly Housing Report shows that the state is experiencing gains in home sales and prices. But in the Permian Basin, that’s not the case. The Midland median home price is down 3.5 percent from last year. Although there are more active listings now than there were a year ago, the number of closed sales is down 4.2 percent. This means houses are staying on the market, and not selling. And those same numbers are down for Odessa.”
“Texas Association of Realtors Regional Vice President Warren Ivey said it’s no coincidence this is happening at the same time the oil industry is trending downward. ‘You bet,’ said Ivey. ‘Because our employee base is based mainly in the oil industry, when the price of oil goes down, people get laid off. There’s not as many buyers ready to buy a house at that point and therefore, prices of the homes come down.’”
“The active listings is up more than 73 percent and the housing inventory is sitting at 5.3 percent. However, Ivey said it’s not something to worry about because it’s not a huge slide in the market, especially compared to where the rest of the state sits. ‘The median sales price in Midland for a home is $237,000 and we are down from last year,’ said Ivey. ‘The state of Texas, across the state, the median sales price is lower than that and they’re up. So that goes to tell you, in the past couple of years, we’ve had great sales prices on our homes.’”
“Ivey said that if you’re looking to sell, you won’t get as much as last year, but that shouldn’t stop you from testing the market.”
The Midland Reporter Telegram. “At 2016’s midpoint, the Midland-Odessa regional economy continues the contraction fueled by the sharp drop in oil prices and oilfield activity. But there is a growing sense ‘the end is out there,’ said Karr Ingham, the Amarillo economist who prepares the Midland-Odessa Regional Economic Index for the Midland Development Corp.”
“Ingham reported that the June index is down 12.2 percent from year-ago levels and, nearly a year and a half into the economic slowdown, has fallen by nearly 16 percent on the heels of a five-year, 70 percent economic expansion. Midland and Odessa continued to shed jobs amid the downturn, with Ingham estimating total payroll employment in the two cities has fallen by an estimated 14,300 jobs since peaking in November 2014. Unemployment in the second quarter is up 33.6 percent over the second quarter of last year and so far this year is 39.3 percent above the first six months of 2015.”
“In Midland, the second quarter home sales price averaged $274,083, down 2.1 percent from $279,871 last year. The year-to-date sales price averaged $272,278, down a mere 0.9 percent from $274,773. ‘On balance, the economy looks like it’s expected to look like in response to the dramatic circumstances surrounding oil prices,’ Ingham said. ‘It’s responded as expected and appropriately.’”
Santa Barbara County, CA Housing Prices Plunge 6% YoY On Cratering Housing Demand
http://www.zillow.com/santa-barbara-county-ca/home-values/
‘One reason occupancy levels are so high in these properties is that developers are knocking down older apartments all over D-FW to replace them with newer, more expensive units’
It’s all over the country and has been for years. And the media will ooh and ahh, rents are going up! Well yeah, if you tear down/renovate the affordable apartments away, and the only thing you build is luxury, what choice do people have? It’s a national disgrace.
Here’s a story about a development near me. Developer got some nice concessions and progress has been minimal until recently. A handful of apartments were bulldozed to male way for this. Granted they were pretty terrible apts, but those people had to move somewhere….
http://www.dallasobserver.com/news/at-lake-highlands-town-center-37-million-in-public-investment-gets-basically-squat-8244842
‘The public investment has been incredibly large — $37 million including the DART station, plus the harder-to-quantify benefits of a taxpayer-backed mortgage, the promotional and maintenance work taken over by the improvement district.’
‘The public investment seems particularly dubious when one considers how it’s contributed to Dallas’ affordable housing crunch. As crappy as the 1,400 old apartments were, they provided the working poor with a place to live. Haven, by contrast, is home to 40-ish units that qualify as affordable thanks to the requirement that 20 percent of units in TIF-funded projects be made affordable. And as Blaydes pointed out in 2012 in an attempt to calm a particularly boisterous Advocate comment section, “affordable” doesn’t mean “poor.”
“[P]lease keep in mind that there is a major difference between affordable housing and low income housing,” he wrote. “Affordable means priced at an amount that a person making 80 percent of the median income of the area can afford. Low income housing is where the Section [8] and other HUD programs come into play. Settle down LH, our town center is underway.”
‘Using public money to deliberately clear out poor people? Subsidizing the construction of something newer and ritzier in their place? They used to call that slum clearance. In Dallas, it’s just called progress.’
‘Affordable means priced at an amount that a person making 80 percent of the median income of the area can afford’
I don’t know if this place gets low income tax credits, but let me explain how this is rigged. They take a percentage of everybody; including doctors and lawyers, come up with a median and use that as the measuring stick. It should be obvious that before you start handing out tax credits to millionaires, you should be measuring the median of renters in an area.
A ‘taxpayer-backed mortgage’, oodles of goodies and hand outs, public transportation and you end up with 11 foot ceilings and granite counter-tops in place of what had been low income housing. We’re spending a vast amount of money doing this nationwide.
‘total payroll employment in the two cities has fallen by an estimated 14,300 jobs since peaking in November 2014. Unemployment in the second quarter is up 33.6 percent over the second quarter of last year and so far this year is 39.3 percent above the first six months of 2015′
My contact says it’s a bloodbath in Midland. Lots of jingle mail. I’m still trying to get away and visit later this month to see for myself.
Boots on the ground say strategic defaults are ramping up.
You can’t blame them for putting a brave west Texas face on it. When the horses are gone, the only thing you can do is circle the wagons. These people have known boom and bust since they first walked out on the plains.
‘That’s basically due to the lack of inventory in Amarillo and that’s a problem we’ve had, we just simply don’t have enough houses to meet the demand on new homes and existing homes’
Yeah boy Kent, you guys are right up against a wall on land in Amarillo.
“A Growing Sense The End Is Out There”
The end is near. Repaint, ye home debtors!
LOL
“Almost 50,000 new rental units are being built in the Dallas-Fort Worth area. But most of those units are aimed at the upper end of the market.”
How come affordable housing programs have overstimulated luxury apartment construction? Major program design clusterfork?
“chic”
Defined as something you and Bruce Jenner want to be.
It’s trickle down.
Trickle of what?
…errrrr…. fluids?
“However, Ivey said it’s not something to worry about because it’s not a huge slide in the market, especially compared to where the rest of the state sits.”
For how long and by how much did prices slide in the 1980s?
Into the 90’s. One thing to remember is the oil price drop was twice as fast this time.
August 1, 2016
From Park Cities People in Texas. “The first half of 2016 saw a dramatic increase in the number of houses on the market. The number of active listings in the Park Cities increased 81 percent between December and June. The increase was even more striking in Preston Hollow, where active listings nearly doubled over the same time period.”
“According to Briggs Freeman Sotheby’s International Realty agent Tom Hughes, the usual increase in spring home sales started later than normal this year. ‘Usually when you have a big run like we had in 2014 and 2015, sellers see opportunities for higher prices,’ said Hughes. ‘When too many decide to list at the same time, it sometimes causes a glut of inventory.’”
http://thehousingbubbleblog.com/?p=9713
And heres the crux of it…. sellers can’t stay solvent and compete with new housing inventory going onto the market.
Again….. paying multiples of construction cost($50-$55/sqft for lot, labor, materials and profit) for a used up depreciating asset like a house is a decision that can only be remedied by walking away from the mortgage.
Las Vegas, NV Housing Prices Crater 8% YoY As Housing Correction Widens
http://www.zillow.com/las-vegas-nv/home-values/
On February 17, 1950, CFR member James Warburg (banker, and architect of the Federal Reserve System) stated before a Senate Foreign Relations Committee, “We shall have one world government whether or not you like it, by conquest or consent.”
Say what?
https://en.wikipedia.org/wiki/James_Warburg - 73k -
‘Nassim Taleb, the man who popularized the “black swan” theory, recently did a Q&A with Yahoo Finance.’
‘We asked Taleb about tail-risk hedging and what folks get wrong about “black swans.” We also asked him for the biggest risk out there right now.’
“The fact that the world, as a result of quantitative easing, has seen an asset inflation that benefited the uber-rich, and that nothing has been cured. One cannot cure debt with debt, by transferring from private to public sectors. The markets will ultimately crash again, although this time it will hurt a lot more people,” he said.’
We shall go on to the end. We shall print, we shall drop money on the seas and oceans, we shall stimulus with growing confidence and growing strength in the air, we shall drop cash from Helicopters on our island, whatever the cost may be. We shall QE on the beaches, we shall provide liquidity on the landing grounds, we shall increase the money supply in the fields and in the streets, we shall buy bonds upto the hills; we shall never surrender.
–Yellon
I like it
I dont want to offend anyone tonight but I am enjoying a 2.50 beer at home tonight. I know your use to bud light but if u spend a little more good things will come your way.
“Never has been so much owed by so many to soooo few.”
Winston
Rockledge, FL Housing Prices Plunge 8% YoY On Ballooning Housing Inventory
http://www.zillow.com/rockledge-fl/home-values/
‘Realtor and Northwest Austin resident Jonathan Stilley, who is a member of the Austin Board of Realtors board of directors, recalled a recent instance of listing a client’s home on a Friday and having 74 potential buyers attend the weekend open house. The home received multiple offers by Sunday, sold for well over asking price and closed in 12 days to a cash buyer, he said.’
“[The housing market] has really taken off in the past couple of years,” he said. “… It’s this perfect storm of what’s perceived as still affordable, nice amenities and short supply. We’ll see this maintained for a while unless something happens.”
‘Sellers are also feeling the housing market crunch when trying to buy another home in Austin, Stilley said. “Don’t think it’s going to be three or four months until you’re moving,” he said. “Your home could sell the day it hits the market. You have to start preparing if you’re going to stay in Austin.”
‘Shavonne Martin, Williamson County Board of Realtors board president, said houses for sale in the $300,000 range typically sell the quickest and receive an average of five to seven offers, and some homes can go off the market in a matter of days. She also said competition for a house can drive its price up from $10,000-$30,000.’
“This definitely isn’t a looky-loo market. You have to be serious and motivated [to buy],” Martin said. “If you see a home, you cannot sleep on it—you have to be prepared to make a decision [that day].”
‘Stilley said active homebuyers need to be prepared regarding their financial situation before making an offer. He said a buyer’s financial standing could make or break an offer. “You may lose three or four houses,” he said. “It’s OK; don’t get discouraged. We’re in it every day, but for other people sometimes you need that education. You need to feel what it’s like to lose [out on a house].”
‘You need to feel what it’s like to lose’
“If you see a home, you cannot sleep on it—you have to be prepared to make a decision [that day].”
—-Shavonne Martin, Williamson County Board of Realtors board president
Really? It must be just me that has the problem.
And here she is….. invoking ‘unwavering ethics’.
https://lh3.googleusercontent.com/-Qa-4VBF3TDs/AAAAAAAAAAI/AAAAAAAAAAA/X0pzD80MjPM/photo.jpg
What kind of house will the Mohamed’s buy if they get a settlement?
Disingenuous little kid. Ahmad’s alarm clock looks like a bomb to me.
stocks and homes have been quite the meal ticket lately.
So long as the Fed keeps threatening to tighten, then pulls away the football just as markets are about to kick it, this should continue.
Interesting talk with the manager of my apartment complex a few days ago.
Got my lease renewal notice. Rent is going up another $30/month. Asked why they are increasing rents, when they have a 20-25% vacancy rate, and a lot more move outs than move ins.
(You know, “free markets/supply and demand, etc.)
Nope, thats not how lease rates are determined. Rates are decided by equivalent rents, in that they look at what everybody else is charging in the local market, no matter what the vacancy rate/buyers at that price. So, when one or two locals start to get greedy, they all raise their rates to match.
My rent has gone up $100 in three years. I suppose I should be grateful
“Rates are decided by equivalent rents,”
Another mythological narrative.