A Sense Of A Bubble
A report from the Chicago Tribune in Illinois. “The massive apartment construction boom in downtown Chicago is starting to show signs of saturation, and rents will likely start to decline by fall, Appraisal Research Counselors reported Tuesday. Rents fell about 14.7 percent during the fourth quarter to $2.89 a square foot for the top-quality, or Class A, apartments and to $2.52 for the Class B apartments that are considered to be the next rung down. So far developers have been reluctant to lower rents for new apartments even though the number of empty units has increased slightly, but ‘record supply and occupancy have tamped rents down a little,’ said Ron DeVries, vice present of Appraisal Research.
“DeVries said 2018 could represent a peak in Chicago’s apartment market, however. The supply of rental units ‘will exceed demand and keep rents in check,’ he said. By the first quarter of 2018, DeVries expects ‘a lot of angst in the market’ as there is a sense of ‘a bubble.’”
“As the opportunity to fill new rentals declines, developers will consider whether it will be best to build more rentals or condominiums. That analysis already is occurring, although few developers have been able to find ways to make new condo construction profitable enough because of skyrocketing construction costs, taxes, limited available land and lenders often requiring developers to pre-sell many units — frequently 50 percent — before being willing to provide construction loans, according to the report. ‘When the easy money stopped, condo construction went away,’ said Steve Fifield, chief executive of Fifield Cos.”
From Richmond Biz Sense in Virginia. “After nine months and no presales, a high-end condo tower envisioned for the end of Tobacco Row has been scrapped. Developers David Johannas, Jerry Peters and Howard Kellman have pulled the plug on One Shiplock, an 11-story, 15-unit building planned at 2723 E. Cary St. The project, which was valued at $10 million, did not secure one buyer since floor plans hit the market last June. The highest-priced units were listed at $1.55 million.”
“Peters, a veteran Richmond developer, said they were surprised by the lack of interest. The project had received a special-use permit from the city and had the support of the Shockoe Bottom and Church Hill neighborhood associations. ‘It’s really surprising to us, and very disappointing, obviously,’ Peters said. ‘There’s just no market that materialized.’”
The Real Deal on Florida. “Home buyers in Miami have the upper hand, and now a new report from Zillow backs that up. Miami ranked as the second best buyer’s market in the country behind Baltimore, according to the report. Sellers are longing for the days of bidding wars in Miami, where 11.5 percent of listings now have a price cut. South Florida homes also spent about 108 days on the market before selling.”
“Last year, Zillow released a report that nearly half of Miami’s home shoppers were looking outside the city for a new house, citing affordable concerns. Recent studies show a growing divide between stagnant salaries and rising home prices in South Florida. After Baltimore and Miami, Philadelphia, Chicago and Houston were also top markets for home buyers.”
The Philadelphia Inquirer in Pennsylvania. “Throughout most of last year, it seemed as if Philadelphia’s median home-sale price could move in one direction only: up. After three consecutive quarters of consistent — and record-breaking — growth in 2016, however, Philadelphia’s housing market finally cooled off a bit in the fourth quarter. For the first time in a year, the median sale price for single-family homes — that is, excluding condo sales — within the city limits declined in the October-through-December period, dropping 6 percent to $140,000, from $149,000 in third-quarter 2016.”
“Combined with a dramatic decline in the number of home sales — only 3,835 homes changed hands from independent owner to independent owner (so-called arm’s length transactions) in the fourth quarter, a 28 percent plunge from the previous quarter — the pause in price appreciation reflected by his index could indicate that buyers have begun to say no, said Kevin Gillen, senior research fellow at Drexel University’s Lindy Institute for Urban Innovation.”
“For the city, the double-digit jump in home appreciation in the last year underscores just how complex changes in the real estate market can be. On one hand, the significant growth in value indicates the increasing attractiveness of Philadelphia as a place to work and live, Gillen said. But at the same time, that same rapid growth also introduces concerns of affordability in the poorest big city in America. ‘This is falling especially hard on young, first-time home buyers. … The spread between city house prices and city incomes is currently close to an all-time high,’ he said.”
From KXAN in Texas. “As the housing market continues to flourish in Central Texas, the number of families willing to spend hundreds of thousands of dollars to custom-build their dream home is rising. Joel and Tracey Lackovich had been saving for years to build their dream home for their growing family of six. What was supposed to become their dream quickly became the couple’s personal nightmare of an experience when they signed a contract with Bella Vita Custom Homes, LLC to build their home in the private, gated community of Spanish Oaks in Lakeway. As KXAN started looking into the couple’s story, it became apparent that their experience wasn’t an isolated incident.”
“It wasn’t until the couple was sued by a subcontractor, alongside Bella Vita Custom Homes as defendants, for failing to make payments for services provided on their home, that the Lackovichs’ say they realized the extent of the issue. The Lackovichs’ say the company was taking their money, but failed to pay their subcontractors.”
“‘Things that we’ve paid for—that we paid Bella Vita to pay—they never paid,’ the couple said. ‘We gave Bella Vita $300,000 and we didn’t have $300,000 worth of work done.’”
“Lisa Brankin’s story is one of an investor. ‘When it started we were really excited because it seemed like such a win-win,’ Brankin explained of her Spanish Oaks home. ‘They were supposed to build us a house at ‘their cost’ and then we signed a profit agreement with them that basically said they would build us a house at a set price and once the house was finished, we would split any profits 50/50.’”
“Brankin says that’s not how it ended. ‘Now, we have a house that’s sitting, not quite totally framed, and we’re looking at having to undo a bunch of things to fix it because it’s been sitting in the weather for five or six months.’ While Brankin has not filed suit against Bella Vita, she says it’s with good reason. ‘It not only keeps costing money with attorneys, [and] our house isn’t finished. So now we have to pre-qualify for another loan. We have to get another $330,000 to finish the house.’”
‘For the city, the double-digit jump in home appreciation in the last year underscores just how complex changes in the real estate market can be. On one hand, the significant growth in value indicates the increasing attractiveness of Philadelphia as a place to work and live, Gillen said. But at the same time, that same rapid growth also introduces concerns of affordability in the poorest big city in America.’
There’s a graph of house prices in this report. Right back up to the old highs and bam!
They also talk about how “insane” the market was earlier in 2016. Now why don’t these posters who say prices can never go too high if Uncle Mel is running things, explain how all they need are some good loan officers and cool-aid?
From the last link:
‘Bella Vita Custom Homes has since closed up shop in the Austin area. They did not answer the door at their last-listed addresses in town. KXAN tried to contact the executives and their attorney, who would only tell us the Clems’ would not grant our request for an interview.’
‘On Jan. 18, 2017, Mike and Andy Clem were forced to speak, by law. On this date, the Clems’ were forced to answer questions before creditors and the U.S. Trustee’s Office at the first meeting of creditors in Bella Vita Custom Homes’ bankruptcy case at the federal courthouse in Dallas.’
‘While cameras were not allowed inside the courthouse, KXAN was at the meeting. Through a public information open records request, KXAN obtained an audio recording of the bankruptcy meeting.’
‘When addressing creditors, CEO Andy Clem said the overhead costs were too great. “The project managers, the interior designers, [and] the architects we employed, their expenses were too high and they spread across all the jobs. So, they started going negative,” said Clem. “On top of that, we had a severe period of price increases from our subs [subcontractors]. So a lot of our jobs were way over budget.”
Sounds like this Clem dude works without contracts and budgets.
Big mistake.
The report says the lenders were handing out money but apparently didn’t see if anything was done. Sounds kinda fraud-y. There’s someone around here who says there is no fraud in the shack biz anymore.
Bella Vita is now doing work as Intelligent Home Design in Dallas. See this post and comment from former employee for more details.
http://candysdirt.com/2017/02/16/dallas-based-homebuilder-goes-belly-branching-austin/
The owners of Bella Vita are currently doing home building under a new name, Intelligent Home Design in Dallas (already taking on jobs, just not advertising yet). Same leadership, different name. They bounced payroll to the staff & vendors on numerous occasions and then stopped paying employees altogether…I find it interesting the CEO managed to pay himself and his father such a large salary.
‘Lisa Brankin’s story is one of an investor. ‘When it started we were really excited because it seemed like such a win-win,’ Brankin explained of her Spanish Oaks home. ‘They were supposed to build us a house at ‘their cost’ and then we signed a profit agreement with them that basically said they would build us a house at a set price and once the house was finished, we would split any profits 50/50.’
‘Brankin says that’s not how it ended. ‘Now, we have a house that’s sitting, not quite totally framed, and we’re looking at having to undo a bunch of things to fix it because it’s been sitting in the weather for five or six months.’ While Brankin has not filed suit against Bella Vita, she says it’s with good reason. ‘It not only keeps costing money with attorneys, [and] our house isn’t finished. So now we have to pre-qualify for another loan. We have to get another $330,000 to finish the house.’
I have been the “GC” on several of my own major house builds and projects.
It is not that hard. Sometimes a little frustrating but that is life.
1. Read and do your homework. Have a PLAN in place. It is worth the $ to hire good folks to have good plans.
2. Don’t pay the subs (or have a well defined schedule of payments) until the job is done and is done right.
3. Read your township permit laws.
4. Work with subs with EXCELLENT reputations. They WILL cost more over the short term. Over the long term, they will be the lowest cost.
5. Inspect ALL work EVERYDAY. It is an easy internet search to understand what is good work and what is crap work. And sometimes hard decisions need to made quickly and by YOU. Because it is your house and you are going to live there…
Seems elaborate for a shack remodel.
I did the same thing when I added on to my house 25 years ago. As you said, you have to check everything they do every day.
This is something I’ve been giving a lot of thought to recently. When did lying, cheating people, grifting, etc. become expected, admired, even. Not to mention protected by law, to a great extent. Why do we diss and make fun of people for trusting others? Why are people who prey on others often considered winners? When did all this become the norm? When did the law become a tool of the criminally minded?
Sometimes here on the HBB we make fun of others who have been caught in a scam. “You should have known better” we say. “A
fool and his money”, we exclaim. (I’m as guilty of this as anyone.) Why is that? Why do we not develop a desire to rip the predator a new one?
My theory is that “the law” has sanctioned this sort of behavior over time. In light of that, there’s something to be said for more direct discipline or penalties on predators. Would it would be totally bad for such to be constrained by fear of bodily harm? At least an asset seizure, with no exceptions for deceptive corporate law. Because “the law” doesn’t seem to be much of a deterrent.
Of course, it’s not “civilized”. Well, is it “civilized” to deal with others in a predatory manner, to break people financially?
I dunno, just throwing it out there.
lost moral compass
Yeah, but to the point where it’s expected and sanctioned, where it seems to be the rule rather than the exception.
We ought to be able to trust each other, rather than mis-trusting. And the predators seem to get a bang out of misleading and then talking smack out of those they misled or defrauded. Like that jerk from MIT who promoted first
Romneycare and then Obamacare, I forget his name, the one who crapped all over the citizens “stupidity of the American voter”. He gloried in it.
Shouldn’t his head actually, literally be on a pike as a warning?
–> “Yeah, but to the point where it’s expected and sanctioned, where it seems to be the rule rather than the exception.”
Once upon a time, the Fed called such things, “a moral hazard”.
This is what happens with free money.
You can’t possibly just be waking up to the age old battle for the souls of men.
This is a pretty good point. There comes a point where ‘talking it out’ or going through the proper channels is not the right thing to do. You know what we’ll-reasoned argument resonates with everyone? Violence.
Not that I’m promoting violence. But, keeping your mouth shut and instead knocking a few heads together is surprisingly effective sometimes.
I maintain that morality declines in the face of tougher economic conditions. You could trace it to the 70s probably and when inflation hit due to oil and we went off the gold standard. To compete in a fairly resource constrained environment, people will cut corners at first, then progress to out right fraud. This is reflected in all the asset bubbles we see and their increasing frequency. Globalization is an attempt by the ruling class to expand their control of resources in order to maintain their power.
A good example is the defacto “soft” slavery this country has with illegals and h1b’s. If you have a business that can use that labor, you have to use it at some point if you want to stay viable, otherwise your competition will crush you. Think about that, you have to be amoral/immoral just to survive.
“Looking back, the Lackovichs’ say they did everything they knew to protect themselves and their investment, but say they still felt the impact.”
I’ve been involved in a number of critical infrastructure projects as a civil engineer, and I can assure the feckless that “performance bonds” are how this problem above is avoided.
Performance surety is a requirement for public money projects in most states.
Lisa Brankin’s story is one of an investor
Maybe we should all chip in and buy her a jumbo tube of Astroglide the take some of the sting off of that Joshua tree.
Contrarian view… Frank’s extra-hot sauce.
Lakeway is an interesting enclave located on Lake Travis outside Austin, TX. Lots of old ranches and Mediterranean gaudiness, but built well and showcase Texas (rustic woods and limestone everywhere). Compared to other markets in the US, prices are pretty good for the lakefront lifestyle.
These ugly new crapshacks are poorly built because the GCs don’t understand how to mix new technology with crappy labor.
1. Crap labor + Zip / TrusJoist / Advantech / BIBS / Good floorplan with well-engineered layout == Great house that will last forever, built at a reasonable price
2. Crap labor + 3/32 exterior sheathing also used for subfloor / 2*8 floor joists 24″ on center (not minimal value framing which is superior 24″ on center building) / R13 craptastic insulation with terrible air leakage numbers of 8 ach50. == Overpriced POS that falls apart in a few years; think Pulte or KB homes.
3. Good labor + new technology and materials above == Fantastic house that will last forever, looks great, but costs a lot. Will depreciate horribly since no one wants to pay for good structure, just dumb shit like quartz counters and shiplap siding in every room.
4. Good labor + crap materials == average house quality that looks ok at a reasonable-ish
Or 2x @16 OC with two plys of plywood for platform, whichever is cheaper. I’ll wager it’s cheaper and stronger too. Same with ply and Tyvek. If I only had Tyvek or batt insulation, I’d install Tyvek hands down. Nothing stops air movement like a sheet of glorified poly.
‘ ‘We gave Bella Vita $300,000 ‘
That was their first mistake…..
Xactly!
Ashland, OR Housing Prices Crater 10% YoY
http://www.zillow.com/ashland-or/home-values/
Ben - this might be of interest to HBB regulars…..
http://www.orlandosentinel.com/news/lake/os-lk-lauren-ritchie-sullivan-ranch-lawyer-20170201-story.html
Great story, thanks.
Where’s rj now?
He said he was moving to Castle Rock, CO last year.
Now that was entertaining. This is not the first time that I’ve read that a lawsuit against a homebuilder led to adverse social consequences for the plaintiff. And good on Ms. MacKenzie for persevering:
“Her suit against the developer sparked pettiness such as ‘No trespassing’ signs on the lawns of neighbors on both sides of her duplex. MacKenzie said several women in her subdivision told her she wasn’t a ‘real lawyer’ and didn’t know what she was doing because she had practiced for only a few years after her graduation from law school at the University of San Diego in 1982. They said she didn’t respect their husbands, who were dealing with Centex and were perfectly satisfied with the way things were going.
‘They hate me now,’ she said. ‘And they were best friends.’
…
At the end of the litigation, Law remarked in open court that the matter was ‘a little over Mrs. MacKenzie’s head to be candid,’ and he ruled against her, forcing MacKenzie to take the matter to the 5th District Court of Appeal in Daytona Beach.
Perhaps that panel of three appellate judges thought the matter was a little over Law’s head. They overturned the critical piece of Law’s ruling on Dec. 22.”
“Lenin was right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes
Keynes was a piker. Easy credit is much more effective.
Maybe the buyers didn’t take your seriously as this project had yet to pour one cubic yard of concrete or move any dirt…
Seriously - let’s say this project sold a few units. That money would be GONE. But they “owners” did get to see some nice floor plans.
—
From Richmond Biz Sense in Virginia. “After nine months and no presales, a high-end condo tower envisioned for the end of Tobacco Row has been scrapped. Developers David Johannas, Jerry Peters and Howard Kellman have pulled the plug on One Shiplock, an 11-story, 15-unit building planned at 2723 E. Cary St. The project, which was valued at $10 million, did not secure one buyer since floor plans hit the market last June.
Really, these developers are plain stupid — or more likely blinded by greed and Yellenbux. $1.5 million in Richmond, no takers, and they pretend they don’t know why?
They know full well why.
For comparison, this is what $1.5 million will buy you in the suburbs of Richmond — zebra fetish hopefully not included.
http://www.zillow.com/homedetails/5-Lancaster-Ln-Henrico-VA-23229/2099321975_zpid/
For another comparison, this is what $1.5 million buys you in lower Manhattan:
http://www.zillow.com/homedetails/300-E-4th-St-APT-1D-New-York-NY-10009/72511513_zpid/
From one of the linked articles: “The 15 condos range in size from 2,300 square feet on the lower levels to upwards of 4,000 square feet for the upper-floor penthouses. Prices range from $600,000 to $1.5 million… Each mid-level floor will house two condos, with the top three floors reserved for penthouses.”
A quick calc says that the developer could have built 60+ studio condos for $150K each. Even then I’m not sure they would have sold.
Undeniable Evidence: “The College Education System Is On The Fast Track To Destruction… An Obvious Sign Of Economic Crisis Waiting To Happen”
i still predict 1/3 will close by the end of this decade maybe more…..
http://www.shtfplan.com/headline-news/undeniable-evidence-the-college-education-system-is-on-the-fast-track-to-destruction-an-obvious-sign-of-economic-crisis-waiting-to-happen_02142017
$1.3 trillion of outstanding student loan debt … there is no “pent-up demand” for $500,000 starter homes, LOLZ.
How did we get here?
Government (taxpayers) guaranteeing student loans to make things fair and affordable (how did that turn out????)
Government not allowing student debt to be discharged in bankruptcy like ALL OTHER DEBT.
Heard of a recent study that linked 60% of the increase in college tuition to increased availability of debt.
Limited study, but certainly what I would expect.
Home prices would also be lower if debt was less available.
Let’s start with the parents.
“No, Johnny. You can’t take out a loan to go to an out of state college you cannot afford. But look at this in state school that offers just as good of an edukashun. And it looks like they have an awesome work study program too, so you can help pay for school while you study.”
In-state private schools are at $65,000+
Many in-state state schools are approaching $40,000 (Like Penn State)
All for the same reasons.
Government making things “fair”
Government making things “affordable”
Government buying votes
Do you see a pattern?
There are so many work arounds. Anybody with a pulse and applies a little due diligence does not pay in state (not private) school retail.
The old “the system is totally corrupt but we have some work-arounds” argument…
The creed of third world banana republics.
Many in-state state schools are approaching $40,000 (Like Penn State)
Per year? My kids did it for about $5K per year. They did have a $2000/yr scholarship.
Many in-state state schools are approaching $40,000 (Like Penn State)
It’s interesting that some would blame the federal governments, not the states for this. It’s all part of the big business agenda.
No corruption Holmes. Just think for yourself and you can save a ton of money. Sheesh.
ok, stop me if you’ve heard this one:
aNYCdj & an NYCchk walk into a bar . . .
i haven’t laughed so hard…..thanks!!!!!!!!!!!!!!!!!!!!!!
glad you enjoyed it!
I do my best work in the a.m. w/Folgers & Co.
and the chk says “Did you know you were followed?”
“Can you give me a ride to Groton? There’s a sub waiting to take me home.”
Agree completely. Not only do we not have enough jobs requiring a college degree, it’s an open question whether we’re going to have enough jobs, period. I cannot see either higher education or health care continuing in anything resembling their current form.
‘Sellers are longing for the days of bidding wars in Miami’
This report requires a subscription:
‘The ‘new normal‘? Bidding wars dry up as Bay Area housing market cools’
‘The Bay Area’s frenzied housing market is cooling, making intense bidding wars a thing of the past and spurring calls for sellers to dial back their expectations, several real estate industry sources told the San Francisco Business Times this week.’
There should never be a frenzy for shacks. There should never be intense bidding wars for shacks. That is a bubble.
Does the author even live in Philly???
There are MASSIVE amounts of cheap housing in north and west Philly.
Abandoned and falling apart. Street after street…
BUT CHEAP to buy. In high crime areas wit terrible schools. And the mayor (D) just massively raised property taxes. And Philly has the highest wage taxes in America.
Under democrat rules for the 60 years, Philly has lost HALF of its population. The people left but the houses couldn’t.
Not everyone gets to live on Rittenhouse Square…
—
But at the same time, that same rapid growth also introduces concerns of affordability in the poorest big city in America. ‘This is falling especially hard on young, first-time home buyers. … The spread between city house prices and city incomes is currently close to an all-time high,’ he said.”
Sounds just like Detroit! Detroit city proper has the second-highest property tax rate in the nation. Also Democratic (and largely African-American) run.
Headline:
House Flippers get Flopped
Doesn’t anyone audit or check where their money is going? I am always amazing at the amount of homework people will do to buy a car or an HDTV - but investing $330,000 of their life’s savings? Nada…
–
“Lisa Brankin’s story is one of an investor. ‘When it started we were really excited because it seemed like such a win-win,’ Brankin explained of her Spanish Oaks home. ‘They were supposed to build us a house at ‘their cost’ and then we signed a profit agreement with them that basically said they would build us a house at a set price and once the house was finished, we would split any profits 50/50.’”
‘it seemed like such a win-win’
And a no brainer. Still, one might have wondered, why is this nice builder gonna split this moolah with me when he could have just kept it all?
Only 3 more HBB posts until post number 10,000.
To paraphrase Paul Simon, “still bubbly after all these years”
Always Be Closing…
When I’m on the riding mower, ABC stands for “Always Be Cutting”
riding mower: wow. what memories!
as a kid in small town central Texas (go Warhorses) you were considered RICH if you owned a riding mower.
When our retired grandfather bought one my brother & I happily volunteered to cut the lawn.
daily.
When I’m on the riding mower, ABC stands for “Always Be Cutting”
Stanley Johnson had a riding mower, IIRC.
True pleasure comes when one gets a zero-turn.
Yes, but I don’t mow enough to justify buying one. My uncle is a caretaker for a cemetery on a hill. His John Deere zero turn costs north of $15K!
How do you find that number out? Ben posted this a few years ago, but I can’t remember. I have to be close to 2,500.
He means Ben’s posts…what we are all commenting on. If you look at the top of your browser you should see this:
Notice the 9997. Almost to 10k topics started by Ben on this version of the blog.
save
Ben’s bandwidth
only report up markets
…………………..
answer 0
Speaking of saving Ben’s bandwidth, wouldn’t you just love to see some of the email he gets from some of the pissed-off posters? I’m assuming some folks get a tad cheezed when their posts don’t go through or when they lose posting privileges. I think it happens because he once made mention of a poster from Cali who was furious about being cut off, I forget the ID, though. As I recall the guy felt he had a right to be a jerk and was demanding to be allowed to post.
And then there was the guy from Florida, Diogenes I think, who first dissed Ben and then said he was going to post something about the FED. Bam! Gone in 60 seconds. Never got a chance to post his FED info. I don’t get people who do stuff like that, diss the host and then assume they’re gonna keep posting.
So, uh, if you’re ever of a mind, Ben, feel free to show us a teensy sample of some purple prose, without identifying the email addy or poster ID.
What happened to that Amy Moak woman? I miss her. It was like an open house came to me every morning!
Looks like Amy Hoak got “separated” from Marketwatch a couple months ago. Her Twitter feed says “I’m a freelance real estate and personal finance writer. Formerly of @marketwatch. Chicago, Ill.”
Here’s her final column:
http://www.marketwatch.com/story/tearing-down-an-old-house-to-build-a-big-new-one-could-alienate-your-neighbors-and-worse-2016-12-15
Thanks Donk.
Thank you! She always seemed a few bandwidths short of a website.
That sure is a fugly behemoth of a house.
Well, I’m in Cali but don’t know how & have never sent any private E-mails to Ben. I figure since I post on the blog, I’ll keep it all on the blog.
Always wondered what happened to Diogenes. And AZGal.
I miss AZ Slim, who lived in Tucson and liked cycling. Where did she go?
And we have to be coming up on 10 years since OlyGal passed away.
yep, that’s the correct name: “AZslim”…thanks
she was a real sweetheart.
smart & funny.
miss her.
I cant believe it i found an old bookmark for her……
http://philadelphia.cbslocal.com/2012/04/27/3-on-your-side-elderly-still-renting-home-phones/
then https://twitter.com/martharetallick
‘‘When the easy money stopped, condo construction went away’
Whaa?
‘The supply of rental units ‘will exceed demand and keep rents in check,’ he said. By the first quarter of 2018, DeVries expects ‘a lot of angst in the market’ as there is a sense of ‘a bubble.’
But Ron, there’s a shortage? And what are these fancy words like angst? Do you mean people might, that building owners could…lose money? Anyway, you are an appraiser, you didn’t think these air boxes were worth too much, did you?
Always Be Closing…
and
No one could have predicted this…
and rents will likely start to decline by fall, Appraisal Research Counselors reported Tuesday. Rents fell about 14.7 percent during the fourth quarter
apparently rents already fell
wow this is dumb
An emerging trend? Or a blip? Certainly something to keep an eye on…
http://www.cnbc.com/2017/02/15/mortgage-delinquencies-among-some-homeowners-just-spiked-spelling-trouble.html
“The seasonally adjusted FHA delinquency rate increased to 9.02 percent in the fourth quarter from 8.3 percent in the third quarter, MBA data show. The jump, which followed the lowest delinquency rate since 1997, was driven by loans made since 2014 and early-stage delinquencies, those just 30 days past due.”
“FHA delinquencies are still relatively low overall, and the cause of the spike is impossible to know for sure without more data. It could be an outlier, or it could be the result of lenders lowering FICO credit scores for recent borrowers. While FHA’s minimum credit score is 580, lenders put their own overlays, or safeguards, on loans following the epic housing crash fueled by subprime lending. Average credit scores for new FHA loans were around 700 in 2010-2011. They have since fallen to around 675 in 2016.”
Just to put the 8.3% and 9.02% delinquency rates into perspective.
In the bad old days when banks made mortgages and had to eat their bad loans…(and when housing was mostly affordable)
A 2% delinquency rate raised eyebrows. A 3% rate had bank auditors crawling around the bank. A 4% rate had people fired.
My understanding is that there are generally 3 buckets of delinquency:
1. Delinquency (one missed payment)
2. Serious Delinquency (90+ days behind)
3. Foreclosure
The sum total of these three across all mortgages nationwide is typically approximately 5%, with more than half of the 5% falling into the category of just missing one payment. I generally think of “normal” as 0.5%-1% foreclosure, about 1% serious delinquency, and 3% to 3.5% as missing just one payment.
Two things surprised me about the numbers in this article:
1. That the FHA delinquency rate was anywhere close to 9%; and
2. That the 8.3% delinquency rate previously was the lowest since 1997…whaaaaa?!?!?
Puts into perspective the decision by Trump to NOT reduce the mortgage insurance payment required by these borrowers. If a low delinquency rate for the FHA loan program is 8%, we should be tightening further for these borrowers, not loosening standards.
“Just to put the 8.3% and 9.02% delinquency rates into perspective.”
If you put 20% down and 10-yrs of on-time payment history the lender WILL work with you during a job loss or rough patch.
It’s these peeps who borrowed the 3% down on a $500k spec rancher and have an F350 diesel 4×4 and a mid-sized SUV in the driveway.
Fha loans have always had DQ much higher than conventional and have been around for decades. The 2-3 percent are for Fannie Freddie Conventional loans. The Government drives the FHA market or no one would be making most of those loans. No one sticks an Fha loan on their balance sheet unless they screwed it up or have to buy it back.
Check SBA loans
Your paying
‘driven by loans made since 2014 and early-stage delinquencies’
I’ve been finding reports of increasing defaults on recent loans lately. And I didn’t even have a data company tell me. Of course, if you find evidence of a bubble, the defaults will follow.
San Clemente, CA Rental Rates Crater 11% YoY
http://www.zillow.com/san-clemente-ca/home-values/
“How Richard Longworth Predicted 20 Years Ago That Globalization Would Cause a Social Crisis”
This is a link to a book review. The book, “Global Squeeze: The Coming Crisis for First-World Nations” was written in 1998. The review, written by Aaron M. Renn, is a semi-long read and I found it interesting. I believe some of the regular posters here will also find it a worthwhile read.
From the review:
“…Longworth predicted most of the dynamics that would play out in the next two decades, culminating (so far) with Trump’s election. He predicted massive job displacement from China’s entry into the global trading system, describes how developing world countries would move up the value chain, predicts the erosion of middle-class standards of living, the rise of the gig economy, and the deterioration in race relations. He puts his finger on the nationalism vs. globalism debate and anticipated populist revolt. He didn’t predict everything, but he nailed an awful lot of it.”
Here’s the link:
http://www.newgeography.com/content/005536-how-richard-longworth-predicted-20-years-ago-that-globalization-would-cause-a-social-crisis
I wonder how he predicts it will end…
In misery, ruin and bankruptcy?
In war?
With vast areas of fiat being wiped out?
“I wonder how he predicts it will end…”
A famous author said, “slowly at first then suddenly.”
You are either quoting Hemingway on going bankrupt or me getting drunk on election day…
A famous author said, “slowly at first then suddenly.”
“…Hemingway…”
Queue, one cheese flavored biscuit treat.
Reposting this from yesterday’s thread:
Here’s a bubble data point:
http://www.denverpost.com/2017/02/13/montbello-suburban-housing-market/
“Montbello (a Denver suburb) is nation’s hottest suburban housing market”
“Over the past three years, that area has averaged a 20.6 percent annual rate of home price appreciation.”
Montebello is an armpit and was the foreclosure epicenter in Denver when the previous bubble burst. And yet it has appreciated an average 20% a year for the past three years.
It doesn’t much matter what the price is considering collapsing demand. Use the 10 year old Chevy truck lesson.
Denver, CO Housing Demand Craters 41% YoY
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
Denver is so overrated.
I think the millennials from the mid-west think Denver is great, even though they have neve been there except on vacation in July. They know they cant afford CA or Seattle.
The winters in Denver are mild by midwestern standards. The high today is forecast at 63F. I have heard people from places like Wisconsin say, without batting an eyelash, that they moved here for the weather.
“The winters in Denver are mild by midwestern standards.”
And Northwestern standards. I’ve run into many people on trips who’ve moved there for it’s “days of sunshine.”
Denver is so overrated.
But what about the kick ball leagues and the legal (for now) weed shops?
“Denver is so overrated.”
You can’t do this in Denver.
http://picpaste.com/fresh_air.jpg
“Over the past three years, that area has averaged a 20.6 percent annual rate of home price appreciation.”
Nothing wrong here… upscale home buyers expect their home to pay for a luxury vacation every year and fund the kids 529 plan.
Montebello is Denver’s ‘hood. I don’t associate “upscale” with Montebello. That would Cheery Creek or Highlands Ranch.
Highlands ranch is just frontload mcmansions crushed on postage stamp lots around the corner from worthless exterior retail.
I never said they were worth the price, just that’s where Denver’s upper middle class lives. And those kind of people DON’T want a large yard.
“Bonita Springs Realtor Charged With Defrauding Would-Be Tenants From Midwest”
http://www.naplesnews.com/story/news/crime/2017/02/13/realtor-charged-defrauding-would–tenants/97846070/
this is for jeff:
“In fact, if you have a house in the $2.5-$3.5 range in Riverside/Old Greenwich, preferably pre-war and in need of some work, either list it, please, or drop me a line.”
https://www.christopherfountain.com/blog/2017/2/14/improved-price-but-improved-market-too#disqus_thread
Thanks
Seattle, WA Housing Prices Crater 15% YoY
http://www.zillow.com/seattle-wa-98105/home-values/
I see they’re still hiding “median sale” prices.
Fabricated data from Chinese provinces? I am shocked, shocked!
http://www.bloombergquint.com/markets/2017/02/12/china-s-zombie-province-shows-what-s-wrong-with-its-bond-market
Seattle, WA Housing Demand Plummets 19% YoY As Housing Inventory Balloons To Staggering Levels
http://files.zillowstatic.com/research/public/City/City_MedianPctOfPriceReduction_AllHomes.csv
Lies as usual, HA. Inventory is at record low levels in the Seattle area.
Stop trolling with lies.
Given how house prices havesupposedly been cratering for the past 16 years or so, you’d think they would be free by now.