The Hottest Markets Are Seeing The Biggest Decreases
A report from The Real Deal on New York. “Extell Development’s One57 has taken another hit. A 6,240-square-foot sponsor unit at the luxe condominium tower sold for $45.8 million, or roughly $7,343 per square foot, according to property records filed with the city Monday. That’s $12.7 million below the last asking price of $58.5 million. The apartment first hit the market in March 2015 for $58.5 million. Anna Zarro, Extell’s director of residential sales and leasing, said in a statement that the unit had gone through ‘five price amendments since it was originally offered for sale in 2011.’ ‘Additionally,’ Zarro added, ‘a previous purchaser forfeited a deposit on this unit which allowed us to take an even deeper discount than the 10-15 percent that we are currently extending on other upper floor units in the building. It was an excellent deal for both parties.’”
The Philadelphia Inquirer in Pennsylvania. “Philadelphia is making an appearance on rental firm Abodo’s list of decreasing rental rates for the first time this month. Between November and December, prices fell by about 4 percent, according to the firm. Rents in Philly may be down 4 percent, but that’s still nothing compared with Miami, where an 11 percent dip still puts the average one-bedroom rental at $1,569.”
The Seattle Times in Washington. “After four years of trudging through brutal rent increases, the Seattle area may finally be ready to see some relief on the horizon. There are strong signs that the price surge in the local rental market peaked in the summer and fall of 2016 and is now in the very beginning stages of a slowdown, according to a report released Monday by Apartment Insights Washington, a leading local rental market surveyor. Rents have even begun to dip compared to a few months ago, with the hottest Seattle and Eastside markets seeing the biggest drop.”
“And looking deeper, there are new, encouraging signs that 2017 will be brighter for renters. The vacancy rate — the biggest predictor for future rents — soared in the fourth quarter at its fastest pace since the beginning of the housing collapse in 2008, the last time local rents dropped significantly. The percentage of empty apartments in King and Snohomish counties rose twice as fast as normal for this time of year, as thousands of new units opened.”
“Another big sign of an apartment market turning is when landlords start offering perks like free rent for a month or no deposit to move in, often a precursor to rent cuts. The survey found 20 percent of landlords of large buildings in King and Snohomish counties are offering incentives to renters, up from 12 percent earlier this year.”
“The hottest markets — typically the first to be impacted during a slowdown — are seeing the biggest rent decreases: Compared to a quarter ago, rents are down 3.5 percent in the University District, 3.1 percent in Queen Anne/Magnolia and 2.8 percent in downtown Seattle. And on the Eastside, the pricey West Bellevue area saw rents dip 3.8 percent, while rents are down 3.5 percent in Kirkland and 3 percent in Redmond.”
“Still, the rosier outlook doesn’t mean rents are suddenly about to start plummeting. ‘Certainly it’s not going to be anything like after 2008,’ said Tom Cain, who leads the survey and has studied the local apartment market for decades. ‘This is going to be rent growth leveling off and slowing a bit.’”
The Houston Chronicle in Texas. “Average rent prices for single-family homes in Katy’s Cinco Ranch subdivision have fallen this year and in November reached their lowest mark in at least two years, according to the Multiple Listing Service provided by Aaron Layman Properties, a local real estate brokerage firm. ‘We have a situation where we are overbuilt in the single-family sector,’ said Aaron Layman, who heads the firm. ‘That’s going to put pressure on landlords. There’s more (housing) options available than before.’”
“Average home rent prices in Cinco Ranch are down 20 percent since the oil crisis started in 2014, Layman said. MLS data provided by his firm shows the subdivision’s average rent just below $2,000 per month, with the average having been about $2,650 in January and roughly $2,500 at the start of 2014.”
‘Uber’s Loss Exceeds $800 Million in Third Quarter on $1.7 Billion in Net Revenue’
‘The company is said to have lost at least $2 billion last year and is on track to pile up a loss of at least $3 billion this year. Those are rough figures that may underestimate how much money Uber is losing and don’t include interest, taxes or stock-based compensation.’
‘Lyft, Uber’s largest U.S. competitor, has promised investors that it will keep its losses below $150 million a quarter.’
‘Lyft, Uber’s largest U.S. competitor, has promised investors that it will keep its losses below $150 million a quarter.’
They’re promising investors they’ll limit losses. Let that sink in. Not “We’re gonna make you folks a buttload of money!”
What would be a good name for “investors” that have sunk money into companies like this? Poofters? As in the money goes “poof”! Upinsmokesters?
Poofter is slang for homo in Australia, and if you look at the VC types and the “developers” that fund and create this madness, it makes sense. Hopefully the Magnificent Bastard will revoke their dual citizenships and send them back to their ((homeland)) along with the federal reserve, the biggest financiers of fraud there is.
I am just grateful we won’t have to see any more Obamacare ads with Pajama Boy in a onesie:
http://nation.foxnews.com/2013/12/19/pajama-boy-makes-obama-laughingstock-online
Now THAT was truly painful.
‘The point of the ad is to promote Obamacare among young adults. “Wear pajamas. Drink hot chocolate. Talk about getting health insurance,” says the ad copy.’
http://4.bp.blogspot.com/-TZ6zfI_cmSg/UrSrLt0H9iI/AAAAAAAAaCA/w7SXX4DwEAM/s1600/pajama+boy+1.jpg
Somebody stop me!
http://sickhorses.com/wp-content/uploads/2013/12/Pajama-Boy-vs-G.I.-Joe.png
http://soopermexican.com/wp-content/uploads/2014/11/rachel-maddow-obamacare-pajamas.jpg
OK, that’s it, I promise. For more, just enter “Pajama Boy” into google and do an image search.
Pajama Boy is the most highly evolved form of the male species according to the Democrats. Gender fluid, the opposite of the manly ideal, and content to set around drinking hot chocolate and collecting entitlement checks.
Pajama Boy is the most highly evolved form of the male species according to the Democrats. Gender fluid, the opposite of the traditional manly ideal, and content to set around drinking hot chocolate and collecting entitlement checks, while sharing his feelings.
“…and content to set around drinking hot chocolate and collecting entitlement checks, while sharing his feelings.”
+1 Learning to live off of others… the new liberty.
They’ll make it up in volume. That’s the tried and true method of all the old .com stocks back in 2000.
So the Electoral College finally goes all in on Trump and even kicks a few away from Clinton. So far not a word from neo-liberals on Facebook or Twitter. Its as if a huge silence has engulfed the left. Where to now? Do we finally get some peace and quiet? Or does the revolution start on January 20th?
Oh, no, we couldn’t get THAT lucky:
http://www.realclearpolitics.com/video/2016/12/19/woman_snaps_after_ohio_certifies_electoral_college_votes_for_trump_this_is_my_america.html
MoveOn.org Executive Director Anna Galland said Monday evening that protests like this one were “a marker for what’s to come.”
MoveOn is funded by Soros.
The revolution starts when the Republicans turn out not to be the “worker’s party” Donald Trump promised the workers.
Where they will turn, if the Democrats continue not to provide an option, I don’t know.
“Republicans turn out not to be the “worker’s party” Donald Trump promised the workers.”
No one thinks the Republicans are the workers’ party, and Trump never promised they would be. He is an Independent who ran on a Republican ticket. They’re up next to try and take a piece of him.
Lots of blue-collar voters think Trump is the blue-collar candidate.They are about to get very angry when they see what Trump actually does.
‘Trump packs trade team with veterans of steel wars with China’
“Bob Lighthizer is very smart, very strategic and totally fearless,” said a Washington attorney who has worked with him for three decades and asked not to be named because Trump’s USTR selection process was still under way. “If he’s in charge you can expect him to use every tool available to create leverage to get China and anyone else to stop the cheating. He is no fan of the WTO.”
‘Lighthizer told a congressional panel in 2010 that the WTO’s dispute resolution system was ineffective and that the United States “should consider aggressive interpretations of WTO provisions that might help us deal with Chinese mercantilism.”
‘Such tactics could include imposing temporary import quotas and surcharges and factoring in the effect of currency manipulation into U.S. anti-dumping duties, he said.’
‘Ross, who advised Trump’s presidential campaign on economic issues, has signaled he will use access to the lucrative U.S. consumer market as leverage to negotiate better trade terms. The United States is China’s biggest export market.’
“Lots of blue-collar voters think Trump is the blue-collar candidate.”
Yes. Trump. Not so much “the Republicans”.
“They are about to get very angry when they see what Trump actually does.”
Oh, you mean like those Carrier workers who get to keep their jobs? Or the guy who just got a job with US Steel after being underemployed for an extended period of time?
Will Trump live up to his infrastructure promises?”
————-
From the day he formally entered the presidential race to the moment he declared victory, Trump pledged to rebuild the nation’s aging and inadequate infrastructure. He cited decaying bridges, potholed roads and airports like New York’s LaGuardia that he said reminded him of the “third world.”
Trump or his campaign also mentioned schools, hospitals, pipelines, water treatment plants and the electrical grid as part of a job-creation strategy that would make the U.S. “second to none.” It was a rare area in which House Minority Leader Nancy Pelosi and other Democrats hoped for common ground with the president-elect. The possibility of a major infrastructure spending plan is one of several factors that have fueled the recent run-up in stock prices.
But lately lobbyists have begun to fear that there won’t be an infrastructure proposal at all, or at least not the grand plan they’d been led to expect.
Senate Majority Leader Mitch McConnell tried to tamp down expectations last week, telling reporters he wants to avoid “a $1 trillion stimulus.” And Reince Priebus, who will be Trump’s chief of staff, said in a radio interview that the new administration will focus in its first nine months with other issues like health care and rewriting tax laws. He sidestepped questions about the infrastructure plan.
In a post-election interview with The New York Times, Trump himself seemed to back away, saying infrastructure won’t be a “core” part of the first few years of his administration. But he said there will still be “a very large-scale infrastructure bill.”
He acknowledged that he didn’t realize during the campaign that New Deal-style proposals to put people to work building infrastructure might conflict with his party’s small-government philosophy.
“That’s not a very Republican thing — I didn’t even know that, frankly,” he said.
http://bigstory.ap.org/article/42810cc7616d44028f91259711a117ba
—————-
I’m blue collar. And I voted Trump.
General Motors: GM announced Monday that it will lay off 1,300 workers at a Detroit plant. The workers make the Chevy Volt, in addition to the Chevy Impala and Buick LaCrosse.
Those job cuts are in addition to 2,000 other GM (GM) employees who will lose their jobs within a month.
Boeing: Layoffs are nothing new for Boeing in 2016 — the company has already fired thousands as demand for jumbo jets slumps. But Boeing (BA) told employees Monday it will continue to cut jobs at its commercial airplane unit in 2017, citing fierce competition with rival Airbus and a drop in new orders.
Airbus also told its labor unions in November that it was cutting around 1,200 jobs.
GoPro: The action camera company announced plans last month to lay off 200 workers. That comes after it laid off more than 100 employees in January. Many of the latest job cuts come as GoPro (GPRO, Tech30) plans to shut down its entertainment unit. That group was responsible for featuring videos shot on GoPro’s action cameras.
Xerox: The company is splitting in two before the end of the year, and company President Jeff Jacobson says layoffs are coming — even though the point of the split was to stem the company’s sales slide.
He declined to say how many will be let go, but the 39,000 employees at Xerox’s (XRX) legacy copier business are most likely to be impacted.
Caterpillar: After laying off 10,000 employees last fall, Caterpillar (CAT) said last week that it will issue another round of pink slips.
The construction giant didn’t say how many jobs will be cut, but it said it will try to place as many as possible in new jobs at the company. A post-recession rebound has proved difficult for Caterpillar. Its forecast for the coming year is pretty dour.
The Limited: The clothing store told all 248 employees at its Ohio home office that their jobs are in jeopardy. Earlier this month, the company said on an earnings call that it is looking for cash to keep the company alive, and it might have to shutter stores.
Gosh, palmy. What’s Trump gonna do? Fly to all those companies and save all those jobs?
well they are NOT moving to mehiko or vietnam..
let the companies bring back overseas earnings at a zero tax rate as long as all the money is spent on American works and creating American jobs….no stock buyback or buying other companies no spending on bonuses unless everyone from the janitor and secretary to the ceo, gets the same percentage increase……..no more h1bs
Quote from The Terminator:
“It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop… ever, until you are dead.”
The worst thing the Democrats could possibly do to me personally would be to run daily ads with Screech’s picture that say “Do you miss me yet?”
Screech has surrogates, like that lady in the Wisconsin elector video.
Trump supporters have been subject to much verbal abuse and physical violence as well.
Heckova job, Yellen. So much free Fed funny-money “stimulus” sloshing around that stocks of such bubble stocks continue going up even as the companies are reporting huge losses quarter after quarter.
Nobody could have seen THAT coming:
http://www.zerohedge.com/news/2016-12-20/turkish-pro-government-media-blames-us-cia-assassination-russian-ambassador
Revenge does not require a conspiracy.
“Don’t forget Aleppo, don’t forget Syria!”
California is still overpriced. San Diego real estate prices keep going up and are not dropping yet even with the increase in mortgage rates.
It’s like turning the wheel on the Titanic. Momentum carries things forward on a certain path for a while until the ship starts to respond to the wheel.
And once there is true price discovery with the tech companies…
In 2009-2012 or so, homes were bought up by flippers, hedgies, and foreigners. That is, non-consumer buyers who didn’t have to care about interest rates. I assume that if prices start dropping again, these non-consumers will step in and start buying again, regardless of interest rates.
Right now they’re dumping them.
Loaded to the gills with debt on rapidly depreciating assets.
We have our own fake news reporter on HBB, courtesy of The Enrager.
“I assume that if prices start dropping again, these non-consumers will step in and start buying again, regardless of interest rates.”
Around here they haven’t stopped buying yet.
You might want to take another look at that. Seattle demand cratered 15% yoy…… and falling fast.
You better take another look because prices are down and falling MoM QoQ in San Diego.
The median home value in San Diego is $547,900. San Diego home values have gone up 5.9% over the past year and Zillow predicts they will rise 1.8% within the next year. The median list price per square foot in San Diego is $406.
Yet the median home price fell.
So much for value my friend. So much for value.
How many times do you have to be schooled on this?
‘Rents in Philly may be down 4 percent, but that’s still nothing compared with Miami, where an 11 percent dip still puts the average one-bedroom rental at $1,569′
The graphic at this link has Seattle down 9%, Dallas down 7%. Oakland, Minneapolis, etc. All of these markets have thousands of apartments and condos on the way, in some cases tens of thousands.
“All of these markets have thousands of apartments and condos on the way, in some cases tens of thousands.”
Planned, or under construction, or both? And even if under construction, couldn’t those projects grind to a halt?
They already have. There’s 3 stalled towers in Miami Beach IIRC, one stopped at 13 stories. Multiple failed projects in Manhattan including foreclosures. Boston just had a 600 luxury unit plan scrapped.
Sometimes what they do is stall. It takes years to build in some cases so they think, we’ll move along at 20% of the pace and by the time we finish we’ll be rich!
How much $ is in a 600 unit place just in zoning graft payments etc?
For a SFR it’s <$1000.
Falling rental rates. Falling prices. This is all very good news knowing that nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels.
Deflation, baby!
From my current apartment building here in Seattle I can see at least 6 cranes putting the finishing touches on what must be about 2000 units. And that’s just along one main boulevard here.
Isn’t South Lake Union built out yet?
If Amazon knocked down those ridiculous bio-domes they could jam another couple thousand units or offices into that space.
They should have put those domes on the roofs of their existing buildings - the land there is just too valuable to waste.
No, not by a long shot. Facebook’s and Google’s new buildings have yet to go up, and there’s at least 4 or 5 older low-slung warehouses that will be razed soon.
How Will Homebuyers Swallow these Mortgage Rates?
by Wolf Richter • Dec 19, 2016 • 69 Comments
http://wolfstreet.com/2016/12/19/many-homebuyers-say-they-will-not-buy-if-mortgage-rates-rise/
If rates rise they won’t buy. What if, as a result of a rate rise, prices fall? They will, of course, all else held equal.
Either way, housing demand is at 20 year lows…. and falling.
http://www.dailykos.com/stories/2016/12/20/1612945/-Abbreviated-pundit-roundup-Reforming-the-Electoral-College-Trump-s-horrible-OMB-pick-and-more
AKALib
Dec 20
A Historic Number of Electors Defected, and Most Were Supposed to Vote for Clinton — http://www.nytimes.com/...
State Pledged to Voted for
Hawaii Clinton Bernie Sanders
Texas Trump Ron Paul
Texas Trump John Kasich
Washington Clinton Colin L. Powell
Washington Clinton Colin L. Powell
Washington Clinton Colin L. Powell
Washington Clinton Faith Spotted Eagle
What’s up with the Colin Powell thing? That made me laugh.
Faith Spotted Eagle 2020!
the most embarrassing thing for the ‘crats had to be they never saw or suspected it was coming. that’s because there was no planned or paid effort to take her votes, like there was against trump. it was just a spontaneous, grassroots thing that jumped up and bit them in the arse. they just wasted further time and money to make fools of themselves. today they are just silently staring in disbelief. gobsmacked.
today they are just silently staring in disbelief. gobsmacked.
A god that failed will do that every time.
“Faith Spotted Eagle 2020!”
Well ok, as long as Pocahontas isn’t VP.
The theory with Powell was a hypothetical bargain. “You don’t get Trump, we don’t get Clinton, we’ll pick someone else, but to the right of Clinton.”
They already didn’t have Clinton, so it’s wasn’t the basis for a bargain. Magical thinking maybe.
They were trying to convince Republicans to abandon Trump for someone else, if they agreed to abandon Clinton.
Sort of like “We’ll give up our loser if you give up your winner”? Brilliant strategy. It would be funny if it wasn’t so pathetic.
LI Mike Ga6thDem
Dec 20 · 07:19:10 AM
I supported Bernie in the primary, and supported HRC in the general. Worked my behind off for her.
DisNoir36 Ga6thDem
Dec 20 · 06:28:27 AM
Yeah it’s all bad for Bernie. Quickly taking the place ‘good news for McCain’ as the lamest statement.
Maybe if Hillary wasn’t such a shit candidate she wouldn’t have had electors defecting.
ktoz DisNoir36
Dec 20 · 06:34:53 AM
“Hillary was a shit candidate” is definitely in the running for lamest DKos cliche.
Ga6thDem DisNoir36
Dec 20 · 07:55:43 AM
Yes, it’s always her fault never about the personal responsiblity of the electors to do what they were supposed to do.
Kascade Kat PsychoSavannah
Dec 20 · 06:38:38 AM
That’s because they were trying to stop Trump by presenting a compromise candidate.
The biggest loser here was Trump — even as he won the overall EC vote.
He goes down in history as the guy with a record number of defections TO STOP HIM.
hayden Kascade Kat
Dec 20 · 06:43:15 AM
Only two of Trump’s electors defected. Five of Clinton’s did.
Worst losers ever.
Sorry, that’s loosers.
Loosest. Like a slot machine! Ka-ching. Winner, winner, chicken dinner.
I posted regularly on the Daily Kos for more than 10 years, but during Obama’s second term I stopped because it didn’t like what it became. The site stopped being a place for ideas and thoughtful community discussion and more a place for the same kind of enforced ideological conformity for which it previously had mocked the political right. And the worst thing is, that conformity often had nothing in common with what customarily were thought of as liberal ideals. What’s the point of a progressive blog if people can’t freely criticize neoliberalism or neo-conservatism? When the site founder characterizes the Fourth Amendment as a white privilege concern, that’s not just jumping the shark, it’s jumping the shark and being launched into space.
The site also became rather obviously the internet propaganda arm of the Clinton-Obama wing of the Democratic Party, full of predictable and curiously-timed content. I visit several of the left-wing and other sites on the Washington Post blacklist and for years they have run rings around most of what the Daily Kos has to say.
Dave Rubin had a good AMA on The Donald subreddit yesterday. He spoke about this exact subject, describing himself as a classic liberal who has little to nothing in common with what he calls intolerant “progressives”, and finds he has more in common with libertarians. It was an interesting discussion.
Mighty
Are you related to the lady who speaks from 3:14 - 4:20?
“racist working class who hates what Obama stands for”
“I think it was racists, racism that allowed Donald Trump to win”
(The beginning is also good for a laugh)
Clinton supporters: Racism, Russia why we lost
Published on Dec 19, 2016
https://www.youtube.com/watch?v=GjykZsueDYY
:24
“The deep sense of sadness and loss gave way to a tremendous, tremendous anger. As we realized from all the news that’s coming out, this election was stolen from the American people by Russia!”
Pure comedy gold. The first woman talks about crying for days.
“Pure comedy gold. The first woman talks about crying for days.”
someone should drop a truckload of kleenix boxes on her doorstep.
Those would get stolen by a package thief.
3:50 Q: Do you think it was racists that allowed Trump to win? A: I think it was racism that allowed Trump to win.
Racism doesn’t explain all the voters who *stayed home* for Hillary. And they can’t blame that on voter suppression, there were too many stay-at-homes. And of course, the votes for Stein and Johnson can’t be blamed on voter suppression at all.
“And of course, the votes for Stein and Johnson can’t be blamed on voter suppression at all.”
Not to mention Faith Spotted Eagle.
2020 press conference:
Q: President-elect Spotted Eagle, what’s your first priority after inauguration?
A: As long as the wind blows and the rivers flow, men should be able to use whichever bathroom they want.
Buffett Spotted Profits
From Phopedia
(/ˈbʌfᵻt/; born August 30, 1930 (Omaha: Rich Man Won[1] )
Buffett Spotted Profits should have received some votes for his hand in blocking the development of the Keystone XL pipeline so his railroad could carry the oil.
Faith Spotted Eagle
From Wikipedia
(Dakota: Tukan Inajin Win[1] (Tȟuŋkáŋ Inážiŋ Win, “Standing Stone [Woman]“); born 1948 in Lake Andes, South Dakota)[2][3] is a member of the Yankton Sioux Nation who helped block development of the Keystone XL pipeline and the Dakota Access Pipeline.[4]
The best thing is, the Democrats are incapable of doing an honest assessment of why they lost this election. Instead of the glaringly obvious reason - they put up a thoroughly discredited, arrogant, out-of-touch, entitled candidate who epitomized the corrupt, crony capitalist status quo - they lash out at Putin, raycis white males, the FBI, etc. In other words, they are doomed to keep repeating the same mistakes election after election. Luuuzzzarrrssss….. (Makes “L” sign in front of forehead).
This is called the “throw everything against the wall and see what sticks” excuse or defense or whatever.
It wuz Russia, the FBI, Jim Comey, racists, angry white men, undereducated peepul, homophobes, Islamophobes, misogynists, even (gasp) Obama.
Here was the reason: suckophobia
“racist working class who hates what Obama stands for”
“I think it was racists, racism that allowed Donald Trump to win”
More racists
Lot’s more racist
More racists than you have ever seen before
If you like racists
White working racists
You must like Donald Trump more
https://www.youtube.com/watch?v=dGXl311mM3A
You forgot about a racist cartoon frog with a Mexican name, Pepe.
Nothing struck fear into that pea sized heart (which is bigger than her brain apparently) of Hillary than some dank memes featuring a cartoon frog. Feels good man.
You just know that all those twenty-something Alt-Right trolls exulted when Crooked Hillary jumped the shark and attacked a cartoon frog. That was maybe the most surreal moment of her entire disastrous campaign that appealed to no one other than future cat ladies and the votes-for-entitlements crowd - and even the latter had no real enthusiasm for her.
“dank memes”
Lord love ya, junior. And a Merry Christmas to you and yours.
Here’s my favorite Pepe:
https://www.youtube.com/watch?v=A1EqkwHd1zI
They have it all figured out.
Move out = White flight = Racism
Move in = Gentrification = Racism
See color = Racist
Don’t see color = Ignoring racism = Racist
Don’t partake in culture = Non-inclusive = Racism
Engages in culture = Appropriation = Racism
I am really tired of being called a racist.
especially if you go against ohbahma’s trashing of MLK legacy and want content of character to apply to bahlack people…..oh boy do they get angry and intolerant
Anecdotes of single loans aside, here is a broad look at household credit:
http://www.corelogic.com/about-us/news/corelogic-introduces-housing-credit-index-to-track-mortgage-credit-risk-trends.aspx
The highlights:
“Credit Score: The average credit score for homebuyers increased 5 points year over year between Q3 2015 and Q3 2016, rising from 734 to 739. In Q3 2016, the share of homebuyers with credit scores under 640 had dropped by more than three-quarters compared with 2001.
Debt-to-Income: The average DTI for homebuyers fell slightly between Q3 2015 and Q3 2016, falling from 35.7 percent to 35.4 percent. In Q3 2016, the share of homebuyers with DTIs greater than or equal to 43 percent was about the same compared with 2001.
Loan-to-Value: The LTV for homebuyers decreased about 1 percentage point between Q3 2015 and Q3 2016, declining from 86.8 percent to 85.6 percent. In Q3 2016, the share of homebuyers with an LTV greater than or equal to 95 percent had increased by more than one-fourth compared with 2001.”
This is NOT all rosy. While overall, LTVs are slightly falling, there are more people borrowing 95%+ to buy a home than in 2001…that’s not good.
At the same time, however, DTI is not Payment to Income, so a similar DTI now compared to 2001 (when rates were higher) is a bit more conservative.
The most interesting chart though is in their actual report (which is available to the public, for free).
They set Q3 2001 credit risk at 100 (overall credit risk of new loan market). The peak was about 125 in 2006. Today, we are at 48.
The factors that go into their metric are:
Credit Score
Loan to Value
Debt to Income
Documentation Type (30-year fixed, option ARM, full doc, no doc, etc.)
Occupancy Status (owner occupied vs. other)
Condo/Co-op share
HOWEVER, the two factors that are contributing pretty much entirely to the low number are Low and No Doc Share of loans, and Credit Scores less than 640. If those two metrics were average, the number would probably be closer to 100.
Worthless.
The methodology needs clarification. They don’t explain weighting applied to each of the 6 variables. Weighting should be done based on modeling indicative of variables more highly associated with risk of default (condo is unlikely as predictive of default as DTI). They don’t explain why they started with year 2001 (oldest data, fits model the best, etc). And they don’t explain how they “…adjust[ed] the servicing data to assure that it reflects primary market shares” across all years and states.
Taking together, a single metric across the entire country is rather stupid. All real estate is local. Further, the question is not which states have the highest and lowest indices. I want to know borrower quality within their predefined tranches of conventional, government, jumbo, subprime in individual counties and zip codes. Trending types of loans made in certain markets may indicate risk disparities, leading to subsequent investment opportunities.
The biggest flaw with this dataset for analyzing RE bubbles is the exclusion of purchases made without loans. REITs and other investors swooped in when prices were low and will likely dump properties when a peak is suspected. From a price correction standpoint, these guys will dump quickly rather than ride out a correction because it was never about being in the rental business, just the RE appreciation business. As such, we need to know what percentage of home purchases within a market are completed using financing vs cash to fully understand those markets at highest risk of correction.
I agree with their sentiment that overall buyer quality is increasing because poor quality buyers cannot buy a house, and higher quality buyers are not buying as quickly as in previous years (because of fear of a bubble, priced out of market due to downpayment requirements, etc.)
The complete report:
http://www.corelogic.com/research/housing-credit-index/housing-credit-index-report-for-q3-2016.pdf
They don’t specifically state how they weight each category, but they do show each category relative to the benchmark year of 2001/2002. Everything is approximately at par except <640 credit scores, and low/no doc loans.
I personally think that you are wrong about the non-leveraged REIT buyers. The largest entity that bought homes for rent is now going public (perhaps it IS about a rental business for them). I was involved in one such investment (that was NOT about long-term holding, but was about short term cash flow, and then exit), and the exit takes a long time. As a larger entity seller, you need to take more care than as a large entity buyer. You don’t want to get sued by a little guy who says you sold them a pile of crap–so you make sure that the home is generally in good shape.
And that takes time–our time to exit will be much longer than our time to purchase…you can’t just sell homes like you would stock–with the click of a mouse. Additionally, the total number of homes owned by these entities is still a drop in the bucket as compared to the 5MM homes sold each year.
Ultimately, I think this kind of metric is helpful in one main way:
The last bubble was really a credit bubble that manifested itself more visibly in the housing bubble. This caused nearly all global markets to bubble, and when the crash happened, nearly all global markets crashed. There was not much differentiation due to location.
Currently, you can debate what is causing high home prices (low rates, low inventory, etc.), but what seems apparent from metrics like this one is that high home prices are NOT due to no/low doc loans and people with terrible credit being lent money.
And that will make the “other side” of this run-up in home prices look different than the last one…I suspect it will be much more specific to location than the last crash.
I think Ben posted some thoughts on large institutional investors not understanding how rentals of single family homes doesn’t scale the same way multifams does, so I believe many of those investors will dump their properties when the going gets tough. The one about to go public is cashing out, which was also talked about in the past few weeks on this blog. I know just because homes hit the market doesn’t mean they’ll sell, but the sheer volume of homes is reminiscent of the coming onslaught of apartments in many areas, which will destroy prices.
Agree that subprime borrowers grabbing 2-3 rental homes and decreasing available inventory is not driving the exhorbitant pricing above pre-2007 numbers. It’s the REITs chasing yield. Once that game is over, it’ll be a race for the exits. As Blue Skye so succinctly stated below, bagholders will happily and quickly walk away from mortgages when they wake up underwater. If anything, high credit rating folks might feel entitled to it since they witnessed banks get bailed out when the shitty, subprime borrowers walked. A glut of cheap apartments may actually entice bagholders to walk away.
I think Ben posted some thoughts on large institutional investors not understanding how rentals of single family homes doesn’t scale the same way multifams does,
I don’t think this is actually right. I’ve seen people do the math both ways (multi vs. single), and the costs are comparable. There are some costs inherent in a multi-family project that are not included in single-family, and vice-versa (on-site management, common area costs, utility costs, etc.).
I know a person who used to be the CFO for one of the big players, and despite leaving that company, he is still in the business (he really likes the business). If anyone would have knowledge of the emperor having no clothes, it would be him.
Also, in the Blackstone IPO, Blackstone is not pulling out cash (they are not “cashing out”). According to the report I saw, they are using the $1.5B that they are raising via the IPO to pay down debt.
Also, all their 50,000 homes already exist and are available for occupancy. Whether they own them privately, or publicly will have no bearing on the supply/demand dynamics of renters/buyers who want to live in the homes.
Prices and rents will mainly be effected by supply/demand in a market, which is primarily influenced by new development (ie. the onslaught of new apartments under construction), not a large home rental company choosing to sell homes that used to be rented.
Appreciate your input. We’re clearly viewing the same coin from different sides, yielding different conclusions.
Paying down debt used to fund the buying spree reduces cost basis of the buying spree. Therefore, if they need to get out they can accept a lower price without taking as big a hit. Also, the main reason for the Blackstone IPO is to heavily reduce risk of losses (offload to shareholders) while pulling out as much money as possible. They’re an investment firm acting like a VC without the middleman; they want to realize their returns now. Otherwise, they’d be talking about investing the proceeds from the IPO in growth of their single-fam-housing-for-rent empire.
The difference is 1 firm owns those 50k homes in multiple markets and thus, can make the decision pretty quickly to offload said homes if the bottom line suggests that as a prudent investment pathway. No one else can simultaneously move a housing market like these REITs. Again, they don’t have to sell anything to kill the price, just list. Similar, but on a smaller scale, to central banks needing to unwind their balance sheets.
Paying down debt used to fund the buying spree reduces cost basis of the buying spree. Therefore, if they need to get out they can accept a lower price without taking as big a hit.
Sorry, this makes no sense what-so-ever. The equity they raise needs to be paid back too. The cost basis goes up due to the cost of taking the company public. They might be able to get away with selling for a lower price to get out whole, if the value of their equity is determined by public markets to be enough greater than their cash equity investment (debt would need to be paid back first, equity would be pro-rata).
They are probably going to be able to lower their cost of capital with less debt on the balance sheet, and a liquid, public market for raising more equity capital, thus increasing cash flow, which will increase the value of the stock they retain.
I suspect the real reason for going public is as a precursor to them exiting. Once they are public, the stock they own is liquid and easily transferrable to their investors. So, like a VC fund, once the company is public, they have an easy way to value their interest, and at a point in time they determine, they can distribute shares or cash to their investors, based on the publicly determined value of their investment.
The Managers can take their carried interest as cash, or stock, and minimize the tax hit as compared to selling each home (which would result in a much larger tax bill).
Roughly 5MM homes are sold each year on the secondary market. 50,000 homes being dumped on the market would add 1% to that total. Even if they wanted to do so (which I don’t think they will), and even if, despite only being 1% add to the market, it impacted the market, they would not shoot themselves in the foot by listing too many at once…after all, with a lower debt load, they can probably trickle them onto the market at a pace that won’t hurt them.
Additionally, since the vast majority of the homes are leased, selling one requires that you kick a tenant out…they wouldn’t be adding one unit of inventory without adding a unit of demand in the market. They contribute to a game of musical chairs.
It’s not like dumping 50k new homes on the market.
“From a price correction standpoint, these guys will dump quickly rather than ride out a correction because it was never about being in the rental business, just the RE appreciation business.”
A consequence of the fed’s low interest rate environment.
All based on the assumption that house prices will never go down significantly. Defaults will be the result of the price people paid for housing in the bubble, not their credit rating.
Mr. President Donald J. Trump. A Sophisticated Statesman with a squad of sexy strumpets.
Hear, hear
http://www.investing.com/rates-bonds/germany-30-year-bond-yield
1-Year Return - 27.65%
https://ycharts.com/indicators/japan_30_year_government_bond_interest_rate
Change From One Year Ago: -46.79%
Oooph….. The reckoning that was on the horizon is now upon us. It’s just the beginning my friends. It’s just the beginning. Liquidate the junk including houses(if you can find a buyer at any price), get out of debt and hang onto every dollar you’ve got. You’ll be glad you did.
For the DebtDonkeys and degenerate gamblers and MT Pockitz, you’re chit out of luck.
English:
welcome to walmart
Japanese:
ウォルマートへようこそ
U~orumāto e yōkoso
Signs in Engrish.
http://www.engrish.com/category/signs/
‘there are new, encouraging signs that 2017 will be brighter for renters. The vacancy rate — the biggest predictor for future rents — soared in the fourth quarter at its fastest pace since the beginning of the housing collapse in 2008, the last time local rents dropped significantly. The percentage of empty apartments in King and Snohomish counties rose twice as fast as normal for this time of year, as thousands of new units opened.’
‘Another big sign of an apartment market turning is when landlords start offering perks like free rent for a month or no deposit to move in, often a precursor to rent cuts.’
https://seattle.craigslist.org/search/apa
1 to 100 of 2500
https://seattle.craigslist.org/search/apa?query=free+rent&availabilityMode=0
1 to 100 of 2500
posted: 25 days ago updated: a day ago
‘$1120 / 1br - 580ft2 - October’s rent FREE!! Beautifully remodeled apartment (Mid-Beacon Hill)’
‘October’s rent FREE!! Beautifully remodeled apartment, just minutes from downtown Seattle. - Spacious one bedroom apartments Newly remodeled include Washer & Dryer, all new stainless steel appliances, plank flooring throughout, and a awesome courtyard. Our convenient location is perfect for all your needs. Grocery stores, banking, dining and public services are a short distance away.With quick access to I-5 and Downtown Seattle. Don’t forget to check out the community garden, just across the street!’
https://seattle.craigslist.org/see/apa/5891583977.html
Yeah, well, the thing is, I feel I’m entitled to TWO months free rent, and I’m thinking fair market value is more like $900 a month, which is my offer as a credit-worthy, reliable renter. And no, I’m not inclined to offer you any more than that, and yes, I’m quite okay with waiting for prices to drop further.
My cousin just posted on Facebook a complaint that her landlord is raising their rent for the 3rd time this year, and she is considering taking on roommates, etc.
Watch this space. Apparently in the 70’s, this is a dynamic that emerged, and allowed rents to rise despite stagnant incomes.
However, it may not be so easy for landlords with a ton of new competition being built.
Maybe your “cousin” ought to sign a lease.
Where is this occurring my friend?
Friend? Wow, I’m honored.
PNW (Portland). And you can take the quotes off of cousin.
674 sq ft for $2150.
Yeah, see, now that’s not going to work. Concessions coming on that one.
Especially in that neighborhood!
William Banzai over at ZH is promoting Obama’s Christmas album:
http://www.zerohedge.com/news/2016-12-20/merry-dronemass
Some of the songs:
Yule Be Droned for Christmas
Mutti Got Runned Over by a Reindeer
Angry White Christmas
Isis is Coming to Town
Silent Right
LMAO
Love it
A Billionaire’s Plan to House the Homeless in Shipping Containers
https://www.bloomberg.com/news/articles/2016-12-20/a-billionaire-backed-plan-to-use-shipping-containers-to-house-the-homeless
“The history of the project dates back to 2005, when the city acquired the empty lot with an eye to building affordable housing. Funding for that project fell through, and the property sat vacant. In October, the Sobrato wrote a letter to Santa Clara Mayor Lisa Gillmor laying out the novel proposal.
Under the plan, the developer asked for a 57-year lease at the cost of $1 a year. In return, the Sobrato Organization, based in Cupertino, would build and own the apartments, then lease them back to Santa Clara County, which would hire property management and homeless service providers. The project, called Innovation Place, could open as soon as 2018, with half the units rented to homeless and half offered to renters earning between 50 and 80 percent of the area’s median income.”
OK, lemme see if I can figure this one out. He’s asking the county to give him the land for free for 57 years. He’ll build and own the apartments, then the county pays off the loan by leasing the apartments from the guy. The county goes into the property management and homeless services business.
What am I missing here? Where’s somedewd? Can you splain this to me, I’m not the sharpest tool in the shed. Seems to me like this is a good deal for the guy, for the tenants, but not so much the county.
“with half the units rented to homeless and half offered to renters earning between 50 and 80 percent of the area’s median income.”
Not all homeless are mentally ill. Some are just down on their luck. But there is a certain segment of the homeless who will have some challenges that the paying renters might have issues with. OTOH, if you got paying renters who were in social services and know how to deal with these issues, I guess it might work.
“Not all homeless are mentally ill. Some are just down on their luck.”
I’m curious what percentage are neither but simply just don’t want to be kept by the man, who reject becoming part of mainstream society, and who would even reject some sort of work structure like this. Of course, maybe that’s how it starts out then morphs into drug use and the onset of mental health issues.
There are a lot of them who are homeless because of that exact reason - they don’t want to work, much less for the man.
In their own minds, being jobless/homeless allows them to come, go, and do as they please.
And the liberal enablers can’t seem to throw enough money at them. I am dumbfounded that Seattle is now providing free micro-homes (AKA garden sheds) for them in the camps.
There are definitely a lot of mental health issues, not to mention the terminally-addicted, in the mix as well. Being institutionalized would be best for many of these people, but we don’t roll that way any longer.
Before the FedGov started running Social Security, counties ran poor farms, where poor, old and disabled could live a minimalist but safe life and do what work they were able. We still had one of these when I lived in Butler County PA. It was a real working farm. I believe every county had one in the early 20th century.
Thanks, Blue. I did not know that.
I enjoyed going up there to watch the yearly Horse Plowing competition. Not quite like a Maine Hoss Pull, but entertaining.
States controlled welfare
Drugs were legal
People had 2 parents
The 20s
Mike doesn’t like it
Moneymaking scheme for the developer. Basically produces section 8 housing, doesn’t have to be the landlord, and guaranteed income stream. No maintenance. No rent collection. No risk. And his ask will likely payoff the construction investment in no time. Just another taxpayer subsidized scam.
I’d be in favor of the county producing the low-income/no-income housing by utilizing homeless labor to redo abandoned warehouses. Get some habitat for humanity crews together, push on suppliers that get rich off the government teet for low material prices, and have the tenants maintain the place. Skin in the game leads to improved maintenance. Possibly add garden and other areas for tenants to produce, similar to what Blue Skye states above.
There’s a simpler solution. With construction costs at $50/sq ft (lot, labor, materials and profit), either rent for half the monthly cost of current prices and buyer later for 75% less or just sit back and let the wheels come off this thing. They’re already wobbling.
Construction costs could be under $10 sqft with homeless labor, volunteer supers/H4H crews and free land/abandoned warehouses. Gives homeless an actual indoor living space, feeling of respect as a real person again, address for job applications, and reduces urban blight/trash can carts rolling around. There isn’t a homeless army using my city as a toilet, so this is more of a thought experiment for me.
Truth be told, I’d rather watch the wheels come off and see true price correction. Underbrush routinely needs to be burned out to produce stronger growth going forward.
“Moneymaking scheme for the developer.”
That’s exactly what I thought. Thanks for your input.
whats up with Calpers ? 7.5% a year not working out ?
Seemed like a reasonable projection to me….
if only they invested in gold!
Oh dear. The “absorption rate” for new apartments is starting to resemble that of Hillary’s Depends.
http://www.marketwatch.com/story/more-signs-the-apartment-boom-may-be-fizzling-2016-12-20
Hey Krugman, I’ll take “gold bugs” over Keynesian fraudsters any day.
http://www.zerohedge.com/news/2016-12-20/krugman
Paul Krugman and his fellow Keynesian lunatics would consider Aleppo’s devastation to be bullish for the Syrian economy.
https://www.youtube.com/watch?v=FH6xRh6K7-4
Billionaire oligarchs need never fear actual consequences for their crimes and swindles.
https://www.bloomberg.com/news/articles/2016-12-19/billionaire-steinmetz-said-to-be-detained-on-bribery-suspicion
Some Boomers are entering retirement still trying to shirk their student loans, only to discover Uncle Sam is garnishing their SS checks. The sooner this Most Worthless Generation shuffles off this mortal coil, the better for us all.
http://www.marketwatch.com/story/the-government-is-reducing-social-security-checks-to-recover-unpaid-student-debt-2016-12-20
Hey, take it easy. We’re not all deadbeats.
Imagine the carnage in the housing market once investors refuse to buy US debt at the ludicriously low yields being offered by the Fed.
http://www.zerohedge.com/news/2016-12-20/mark-hanson-explains-why-1-mortgage-rate-surge-changes-everything
Clinton sleaze and corruption: the gift that keeps on giving.
http://www.ksla.com/story/34094204/court-unseals-search-warrant-for-hillary-clintons-emails
How bout them falling housing prices….
Poway, CA Housing Prices Crater 7% YoY
http://www.zillow.com/poway-ca/home-values/
Price premiums and prices for physical precious metals are going to be a barometer of the loss of public trust and confidence in fiat currencies and Keynesian central bankers.
http://www.zerohedge.com/news/2016-12-20/yuan-collapse-sends-china-physical-gold-premium-soaring-3-year-highs
The dollar is not collapsing just now. We are leaving decades of Dollar Inflation and massive credit expansion. Default and Deflation are the next chapters in the story. The Great Pumping may have delayed it, not propelled us into another big inflation. Keep some of your dollars handy to buy assets at much lower prices than you can imagine. Just a suggestion.
U.S. equities touched record highs on Tuesday and the dollar rose to its highest level in 14 years as markets shrugged off risk aversion and continued the rally that has elevated Wall Street since Election Day.
Um…yeah…about that “recovery”…not feeling it in flyover country, and our Democrat municipal patronage and graft rackets have been the parasites that killed off their urban hosts.
http://www.businessinsider.com/even-after-recovery-the-housing-bust-appears-bigger-than-the-boom-2016-12
Now hiring signs all over the place. 4.7% unemployment. Record DOW and the USA is great!
Are we getting bids on the wall yet?
DOE overhaul on the plate. It’s beginning already.
“A new congressional investigation has determined that the Obama administration fired a top scientist and intimidated staff at the Department of Energy in order to further its climate change agenda, according to a new report that alleges the administration ordered top officials to obstruct Congress in order to forward this agenda”
http://freebeacon.com/politics/congress-obama-admin-fired-top-scientist-advance-climate-change-plans/
A 50% rif to start
We will not have our permanent Democrat supermajority and a mobocracy for the collectivist kleptocrats until we can end the electoral college. Therefore the MSM is…drum roll…leading the charge for mobocracy.
http://thehill.com/homenews/campaign/311145-ny-times-calls-for-end-to-electoral-college
More candlelight vigils and solidarity rallies are what’s needed here….
https://www.theguardian.com/world/2016/dec/20/angela-merkel-supporters-fears-berlin-attack
crushing_housing_losses