Driven By Unpredictable Investor Mania
A report from the Business News Network in Canada. “After months, if not years of hand-wringing about Canada’s hot housing markets, BMO is calling it: Toronto’s housing market is in a bubble. ‘Let’s drop the pretence. The Toronto housing market — and the many cities surrounding it — are in a housing bubble,’ BMO Chief Economist Doug Porter wrote in a note to clients. Housing prices in Toronto and the surrounding area have become ‘dangerously detached’ from economic fundamentals and are rising simply on the belief that prices will continue to soar higher, according to Porter.”
“‘Prices in Greater Toronto are now up a fiery 22.6 per cent from a year ago, the fastest increase since the late 1980s—a period pretty much everyone can agree was a true bubble — and a cool 21 percentage points faster than inflation and/or wage growth,’ he wrote.”
“The often-cited mantra that Toronto’s real estate market is being driven largely by a lack of supply is wearing thin, he argues. Housing starts in Toronto and Vancouver recently hit an all-time high of 70,000 units per year and overall Canadian starts are above demographic demand at 200,000 units in the past year, according to BMO.”
“Meanwhile, Toronto condo prices are posting double-digit gains despite plenty of supply, according to Porter. ‘No, the massive price gains are being driven first and foremost by sizzling hot demand, whether from ultra-low interest rates (negative in real terms), robust population growth, or non-resident investor demand,’ he said.”
The Financial Post. “Those booming housing markets may make some homeowners rich and provide a short-term boost to the economy, but a Canadian economist is warning about the long-term impact on the country. David Madani, of Capital Economics, said in a report that while the housing boom supported the economy through the oil shock in 2016, a further deterioration in housing affordability will cost the economy over time.”
“‘The abrupt slowdown in Vancouver’s housing market serves as a warning shot. As things stand now, the performance of the economy this year could hinge on the direction of the much larger overheated Toronto housing market,’ Madani writes. ‘The new foreign buyer tax announced by British Columbia’s government in July doesn’t tell the full story either. We simply think the housing bubble has burst. Housing bubbles are, of course, inherently unstable because they are largely driven by unpredictable investor mania.’”
From MetroNews. “The number of empty homes in Metro Vancouver continues to rise, according to population growth data from the 2016 Census. Between 2011 and 2016, the percentage of homes left vacant or not permanently lived in in the City of Vancouver rose from 7.7 per cent to 8.2 per cent, according to an analyses of Census data by Andy Yan, an urban planner and director of Simon Fraser University’s City Program.”
“During the same period the number of such properties jumped by 15 per cent, from 22,169 to 25,502, in Vancouver. Coal Harbour continues to have a high percentage of empty units, at 22 per cent. But Joyce-Collingwood in East Vancouver has now overtaken Coal Harbour, with 24 per cent of homes unoccupied. Some of those may be land-assembled single family homes awaiting development, Yan said, or units purchased by investors in new condo developments in the neighbourhood.”
From Bloomberg. “Vancouver’s multimillion-dollar homes are increasingly out of reach for Vancouverites. And nothing speaks to the Canadian city’s affordability crisis more than its empty houses. Vacant or temporarily occupied dwellings have more than doubled since 2001 to 66,719 last year as neighborhoods are hollowing out, said Andy Yan, director of Simon Fraser University’s City Program.”
“Vancouver introduced a new tax on empty homes last month aimed at boosting the supply of rentals in a city facing a near-zero vacancy rate. The province also imposed a 15 percent tax on foreign buyers last August after discovering more than C$1 billion ($761 million) of global cash had flowed into local properties over a five-week period. ‘It’s unacceptable for so much housing to be treated as a commodity,’ Vancouver Mayor Gregor Robertson said in a statement.”
The North Shore News. “Sales of single-family homes continued to tumble throughout Metro Vancouver last month, with January sales below long-term averages, according to the Real Estate Board of Greater Vancouver. On the North Shore, those trends were even more pronounced. Only 20 detached homes sold in West Vancouver in January, bringing its sales-to-listings ratio down to 12 per cent. Sales of detached homes between November and January are down 67 per cent over the same time last year.”
“West Vancouver Realtor Allan Angell, who specializes in the high-end luxury market, calls the situation in that market ‘almost tied for the worst of all time.’ Realtor Brent Eilers of Remax Masters Realty in West Vancouver, has examined statistics dating back over the past three decades, and shares that assessment. ‘It’s one of the most significant slowdowns we’ve had,’ he said.”
“Prices are also beginning to fall. The real estate board put the ‘benchmark’ price of a West Vancouver house at $2.9 million in January – down 13 per cent from six months ago. But Eilers said median prices of homes sold are down farther than that and ‘many have had to go through multiple price reductions to get sold.’”
The CTV News. “At the peak of the last oil boom, there were so many people living in the southeastern Saskatchewan city of Estevan that there was nowhere to stay. ‘We had people sleeping in trailers — sleeping in vehicles, if you can believe that,’ recalled Estevan Mayor Roy Ludwig.”
“Then oil prices fell, drilling activity slowed to a crawl and Ludwig figures the community lost about 2,000 people, mostly transient workers. By last fall, Estevan had a vacancy rate of 27.6 per cent, according to the Canada Mortgage and Housing Corporation. It’s much the same situation in Alberta, where big-city vacancy rates were in the single digits five years ago. These days, about 37 per cent of rental houses and condominiums are sitting empty in Calgary, and the comparable rate in Edmonton is about 27 per cent, said Shamon Kureshi, CEO of Calgary-based Hope Street Real Estate Corp.”
“And what to make of those towering vacancy rates? It’s probably got more to do with all the extra housing capacity that was built when the good times were at their peak. ‘There’s been a huge building boom — particularly in Saskatchewan, but in Western Canada in general — and these builders are working on all eight cylinders or all 12 cylinders,’ said Kureshi. ‘But one of the things that’s happening and causing this sort of tidal wave of rental property, is that the new homes and the new condos and the highrises that these builders are constructing, aren’t selling because there’s just no money and no people to take them.’”
Kensington, MD Housing Prices Plunge 23% YoY
http://www.movoto.com/md/20895/market-trends/
Kensington hasn’t fallen a nickel so far-ask Oxide
as the human tornado churns it may
DebtDonkeyDenial won’t help.
Kensington is an inner suburb. It’s within walking distance of a host of office buildings, and is very close to a MARC commuter train station. Even if the human tornado wipes out the outer suburbs, there are still enough employed people to fill the inner suburbs.
Donk, 23% price reductions have the tendency to do that.
HA, bad web links have a tendency to be incorrect.
GIGO
Boots on the ground data my good friend. Boots on the ground data.
Carmichael, CA Rental Rates Crater 10% YoY
https://www.zillow.com/carmichael-ca/home-values/
http://www.zerohedge.com/news/2017-02-15/mortgage-delinquencies-rise-most-7-years-rates-spike
Mortgage Delinquencies Rise Most In 7 Years As Rates Spike
BTFD tomorrow!
huh?
Buy The F***ing Dip. Anytime the stock market drops you buy.
“Those booming housing markets may make some homeowners rich and provide a short-term boost to the economy, but a Canadian economist is warning about the long-term impact on the country.
An observation from central Maryland: I went to Zillow and searched five central Maryland zip codes (listing type: for sale and “potential listings” i.e. distressed) and was astounded at the number of distressed properties. I didn’t cherry pick the zip codes. These were a sample of moderate and higher income unremarkable zip codes within about 20 minutes driving time of each other. The blue links are distressed, the red links are non-distressed. I was astounded. Easily half of the listings are distressed. Maybe 40% distressed in the higher income areas, easily 75-80% distressed in moderate income areas.
Additionally, another data point, the rental market may have slowed down considerably. In my building, since about 2010/2011, there were no vacant units in the building for more than a few weeks. Recently, one vacant unit has been sitting for months. Nothing wrong with it as far as I can tell. Granted it’s all of one data point, but a big difference from the past several years.
Maryland has one of the longest foreclosure processes in the country and one of the most Byzantine. Prices are significantly higher than a few years ago (I looked at “recent” sales going back several years - prices are 100-200K higher than in 2014), could be the lenders are putting the houses on the market now. Or something. It seems people are getting on a foreclosure conveyor belt.
Someone’s making money though.
That surprised me too, neuromance, the number of houses that are in “pre-foreclosure.” Weren’t all those post-2009 loans supposed to be fully amortized, no neg-ams or interest only? That is, everyone knew what their howmuchamonth would be, but now they’e not paying it. This isn’t because of low-money down. Either people lied about their income, or they lost income.
If I were to guess, I would say it’s because a LOT of those houses are rentals or partial rentals. A rental company will buy the house and rent it out to several families. Or, a family will buy a house to live in and rent out the basement (and a bedroom, shhh) to relatives. From what I understand, rental income can be counted when applying for the mortgage, but you only have to show one 12-month lease. So all you need is one of those renters to bag on the rent, or move out after the 12 months, and the owner can’t afford the monthly nut.
A bunch of Howmuchamonth DebtDonkeys.
‘This isn’t because of low-money down’
If they had 20% skin in the game they may behave differently. And there would be fewer of them, which would result in lower prices to begin with.
‘rental income can be counted when applying for the mortgage’
It sure can. Why an illegal alien can have another illegal sign a paper saying he/she will rent a room and that can be counted. As can granny saying she’ll help out. All the drip, drip of easing loan standards, “pedal to the metal” from Mel Watt and people are scratching their head about this increase in defaults?
If they had 20% down, then they probably have enough income that they don’t have to depend on a renter to make the mortgage. But it they had 20%, still depended on a tenant, and lost the tenant and couldn’t find another one, they likely would default anyway.
And yup, plenty of renting goes on around here, especially in the *ahem* immigrant community. For resale, would be more cost-effective for me to put a crappy kitchen in the basement than it would be to put in a pergraniteel main kitchen.
oxide: Weren’t all those post-2009 loans supposed to be fully amortized, no neg-ams or interest only? That is, everyone knew what their howmuchamonth would be, but now they’e not paying it.
Ben’s hammered on this for a while: the mortgage default crisis was primarily a prime, not a subprime event. I googled “number of foreclosures prime versus subprime” and the first three hits discuss this phenomenon. From a Wharton paper (PDF):
“Utilizing new panel micro data on the owners hip sequences of all types of borrowers from 1997-2012 leads to a reinterpretation of the U.S. foreclosure crisis as more of a prime, rather than a subprime, borrower issue. Moreover,traditional mortgage default factors associated with the economic cycle, such as negative equity, completely account for the foreclosure propensity of prime borrowers relative to all-cash owners, and for three-quarters of the analogous subprime gap. Housing traits, race, initial income, and speculators did not play a meaningful role, and initial leverage only accounts for a small variation in outcomes of prime and subprime borrowers.”
An NBER link about that paper has a graph showing the relative sizes of the events: “Between 2009 and 2012, 656,003 more prime than subprime borrowers lost their homes. Twice as many prime borrowers as subprime borrowers lost their homes over the full sample period.”
So - it seems to me we can no longer say this was just bad underwriting driving this phenomenon. Prime loans, before the modern 3% down being defined as “prime”, went bad after the mortgage crisis more so than sketchy loans.
Now, with prime loans being defined as 0 down, de facto no money down, there’s even less skin in the game for buyers. Calling 3/0 down loans prime was probably just a sop to the FIRE sector so they could safely sell their loans to the government with no threat of repercussion. Additionally, it may have been designed to fool buyers regarding the robustness of the market, perhaps.
Ultimately, it seems like there was a lot of speculative demand in the housing market during the first house price runup. And now, with the second mountain peak, the same price increase rate may well have lured in another round of speculators, hoping to make a quick profit.
So the PTB intervened heavily during the first bubble deflation, going so far as to print money to buy mortgages, and pushing interest rates down to zero. Can they engineer another reflation in case of a decline or another inflation? Hard to say - but they’re a gargantuan economic entity filled with very clever people. That’s why the rental-backed-securities caught my eye. One way to boost the housing market would be to increase the cost of the substitute good, renting.
And I’ve hammered on this myself:
Prime and subprime used to be defined only by FICO score, NOT by % down or income. Please note that this is the official definition, and I don’t think it has changed in the banking world. Not officially.
So when did “prime” come to mean 3% down? Did it just morph out of the media? Either way, it’s pretty stupid. For a $300K house, I would rather lend to a $100K income with 0% down (”subprime” I guess) than a “prime” $50K income with 3% down.
Instead, I hammer on full PITI. During the bubble, people didn’t need to pay full PITI; they could get away with paying interest only. But if the loan is fully amortized from the first month, you don’t last long without the income. No matter what you put down.
Don’t forget your favorite part of the equation: Depreciation.
The Wharton report doesn’t even use FICO score, but lender lists.
If you get a loan from a lender on the “subprime” list, then it’s a subprime loan.
If you get a loan from the FHA/VA, it’s an FHA/VA loan.
If you get a loan from anywhere else, it’s “Prime”.
Jeebus. It’s Freddie Mac that’s doing the “hey illegal Jose, come in with your 15 room mates” loan.
Just another chapter in The Book Of Rental Watch Sophistries.
‘after discovering more than C$1 billion ($761 million) of global cash had flowed into local properties over a five-week period’
‘Only 20 detached homes sold in West Vancouver in January, bringing its sales-to-listings ratio down to 12 per cent. Sales of detached homes between November and January are down 67 per cent over the same time last year.’
‘West Vancouver Realtor Allan Angell, who specializes in the high-end luxury market, calls the situation in that market ‘almost tied for the worst of all time.’
‘Prices are also beginning to fall. The real estate board put the ‘benchmark’ price of a West Vancouver house at $2.9 million in January – down 13 per cent from six months ago. But Eilers said median prices of homes sold are down farther than that and ‘many have had to go through multiple price reductions to get sold.’
Canada is in a vice grip. In retrospect it was a curse that they thought the downturn was a US problem and the Chinese QE boom drove commodities up. It gave them a boost and they ran with it thinking they never had a bubble, just like Australia. Now they sit on two of the biggest bubbles on the planet.
Miami, FL Housing Prices Crater 6% YoY
https://www.zillow.com/miami-fl/home-values/
I’m starting a new political party called the ‘millennium party. Our platform is to gut Medicare and pensions, cut social security and especially ss disability, and especially especially ssd benefits for psych dz
We wish to reclaim from baby boomers the stuff they took from us, all the checks they wrote for us to cash. Our first act is to cause a housing crash. How would I do that?
Housing already crashed my friend. Remember…. housing demand is at 20 year lows and falling.
I understand the resentment, especially as young folks often have burdensome student loans and are faced with high rents and high housing costs. It may be cold comfort now, but I think in 5 or 10 years max, things will be *much* more affordable.
You can cut disability for psych but I think you will get a spike in violence (murder, suicide, etc.) if you do.
“Mr. Bradford. Here is a dime.
Take it, call your mother and tell her there is serious doubt about you ever becoming an adult.”
nod to TPC
I think your first step will be to get your fellow millenials to stop voting for the Dems.
Good luck with that.
Some SJW’s grow up and learn that life just isn’t fair after age 30…
^^best truth pill today^^
http://picpaste.com/life_isnt_fair.jpg
millenials will work till death yet vote for bigger gov
I guess few take math courses
Id rather see government pensions rolled back to base pay only, and to get full retirement benefits you must be fully retired no other job….otherwise you get full benies at 65 or 70.
A very big chunk of state budget deficits today are due to pensions exponentially increasing year after year
NY tier 1 were 100% of pay=scary
Once they all die you kiddos are in charge. See if you can leave the country in a better place.
We inherited a mess. We can’t turn this ship around unless we screw the boomers. We are prepared to do that.
If you want to actually solve it, take on the oligarchy. Are you prepared to do that? If not you’re no better than the boomers. Screwing old people will only help temporarily and eventually it will be your turn.
i would love to learn more about this. Do you mean the goldman sachs kinda thing that’s running wall street?
In other news, not all millenials are lazy distracted folks. I’m the oldest millenial (born in 1980). My husband and I make $250k, we both have masters degrees, i own a business with 10 employees and the other day I learned how to address an envelope.
….. and I’m a belly dancer.
My philosophy is that human nature is the same everywhere at all times. If you had been a boomer you would have done with they did and if they were in your shoes they would do what you have done.
But yes…the vampire squid does seem to always be found in the middle of things when money is being made at others expense. But I’m sure there’s more to it than just that company. My point is just that’s where the boomers and everybody else has failed so far. TPTB have succeeded in distracting us and making us fight amongst ourselves. If you want to do better than previous generations did for the next generation focus there.
Carl you’re right. TPTB are really good at turning us on ourselves. We throw darts at those schoolteachers with their fat public unions and stuff. We throw darts at the boomers for not saving. We throw darts at the chinese people for buying up all the houses with their fake money.
If I were to build a political party (and I’m not kidding about that), it’s a lot easier to rally people against something rather than for something. What would we rail against? The fat cat wall street goons? How do you even build a movement against that? The occupy movement tried and failed.
Both the tea party and occupy started with that goal and were successfully derailed into caricatures rejected by the middle. So yeah…you have to do better than either of them did to make it stick. Another opportunity to try again may be coming up soon…
I like you a lot, carl. Wanna be friends?
It’s my real name, I’m easy to find…
Sure you are. Once you’re done playing the latest shoot em up game on your PS4.
PS4? They’re too busy making fishlips on Facebook/Instagram/snapchat/tindr. Not to mention watching “all their favorite shows” on hulu/amazon/netflix. Or drinking craft beer, or eating artisan bread, or using the gym and yoga studio and pool and movie theatre and dog-grooming parlor in the luxury apartments in their vibrant communities. Don’t forget all the protesting that needs to done! And those are the ones who DON’T live in mom’s basement. The ones who do make so little money that they will need Medicare and SS more than anyone else.
Carl Morris said it correctly: some day it will be your turn. You know what the elderly did before Medicare? They suffered in pain because no private company would sell them health insurance. Why do you think the gov had to step in in the first place?
As for SS, don’t believe the lie that if only you could *not* opt out of SS, you could do better than the US gov. It’s unlikely. There was already an effective SS opt-out from 2009-2011, and people either pi**ed the money away, or spent it on the rising cost of gas/bread/college/health insurance. That little 6% paycheck bump went to nothing after only two years… it’s even worse after 30 years. You can’t build a retirement on it.
Donk…. You ought to go to work for the marketers in Manhattan. You’d earn a fortune.
You guys will may end up being just like the generation that preceded them once this “sucker goes down”. And that’s not really a bad thing.
“especially especially ssd benefits for psych dz”
I’m going to claim that changing the millennium’s diapers for 30 years is what made me crazy!
Millennials are giving Boomers a serious run for their money in the “most worthless, self-absorbed generation in human history” category.
Wasn’t one spawned from the other?
rising asset prices will make us all rich. we dont have to work.
Party like it is 2005:
http://event.fortunebuilders.com/class/?Contact0State=ME&utm_term=Portland/Bangor/Augusta&utm_content=V1&utm_source=DTM-Banner&utm_medium=DTM-Yahoo&utm_campaign=DTM-Yahoo&Contact0Area=Portland/Bangor/Augusta&CLICKID=021a09a2-53f4-e611-93f9-a0369f1303c6
Coaching, the generic description that means what again?
http://www.free-real-estate-coaching.com
Yellen sees no bubbles.
http://www.businessinsider.com/snapchat-roadshow-schedule-2017-2
Lily white when you’re doing god’s work.
‘Let’s drop the pretence. The Toronto housing market — and the many cities surrounding it — are in a housing bubble…Prices in Greater Toronto are now up a fiery 22.6 per cent from a year ago, the fastest increase since the late 1980s—a period pretty much everyone can agree was a true bubble — and a cool 21 percentage points faster than inflation and/or wage growth.
How many places in the US have seen this kind of increase?
pre·tense
ˈprēˌtens,prēˈtens/
noun: pretence
1. an attempt to make something that is not the case appear true.
2. a claim, especially a false or ambitious one.
He goes on:
‘The often-cited mantra that Toronto’s real estate market is being driven largely by a lack of supply is wearing thin, he argues. Housing starts in Toronto and Vancouver recently hit an all-time high of 70,000 units per year and overall Canadian starts are above demographic demand at 200,000 units in the past year’
Boston is at a 60 year high in housing construction, San Francisco it’s 72. The word glut is often mentioned with regard to these markets, Miami Beach, Manhattan and others. But I will do searches today and go over page after page of links declaring housing shortages in towns and cities all across the globe. Pretense indeed.
Hearing this in Charlotte as well. Very market dependent regarding supply. In a certain school district months of inventor for houses <$350k is less than 1-2. In another great district but further out from town the supply is 2-4 months. Close in to town the months of inventory goes above 6 months at the $1.25million cutoff, which is absolutely ridiculous. In the great district noted above further out from town, that cutoff is $750k; still ridiculous. Interestingly, above $750k new construction months of inventory is currently 40, yet 3 new “high-end” neighborhoods are building. I’ve never seen so many “custom home builders” and “land developers” in my life crowded within a small area.
‘above $750k new construction months of inventory is currently 40, yet 3 new “high-end” neighborhoods are building’
Don’t read this rental watch, or you will begin to question your ideas of shortage.
New housing start numbers came out today: 1.25MM
Still too few.
Are there too many high-end homes being built in Charlotte?
It’s very possible.
But there are far too few new homes being built that the fat part of the bell curve can afford.
Pretty much every article that notes a slowdown is focusing on the higher end.
More inexpensive housing is NOT languishing.
Why are they building what’s oversupplied and not what’s needed? Because prices are not based on fundamentals and are sending the wrong signals to the market. It’s a bubble. Sure, it’s a screwed up mess that is and will be even more painful before it’s over. But there ain’t no shortage.
Pretty much every article that notes a slowdown is focusing on the higher end.
It starts at the top.
“But there ain’t no shortage.”
There never was. There is more excess, empty and defaulted housing than ever before…. even in an environment of collapsing demand and falling prices.
There was supposedly a shortage in Calgary at one time, and all they built was expensive shacks. Now just two years later it’s 37% vacancies. We’ll get a recession too, because of bad investments.
Why are they building what’s oversupplied and not what’s needed?
Getting depth of market correct is difficult–especially in tight markets (with scarce supply). When the construction cycle began, there was no oversupply of luxury. Scarcity drove rents sky high in places like SF. In response, supply came, but if the last lease signed on a studio was for $4,000, does that mean there is demand for one more at the same price? Probably. How about 10 more? Likely. What about 4,000 more? Hard to know for sure. But if you get enough consultants in the room, they’ll justify it. From start to finish, these projects take years…especially when you include time to get the project permitted.
What is needed is too expensive to build. IMHO, prices will rise until it does justify such development…and then we’ll see starts get back to 1.5MM-1.6MM…THEN you need to watch out for broad oversupply of shelter and a broad market correction.
the last lease signed on a studio was for $4,000…
It is an exercise in fragility. Credit booms are temporary, and the salaries created by them.
Now why is everything being built high-end or luxury? When you have X amount of land available, you maximize your profit on it. The more interior square feet, the more profit for the builder, and the more property taxes for the government.
I’m not saying that it’s right, but there are no more 1500sf homes being built in my parts - they are now 3500sf.
And Agenda 21 dictates that we all live like rats on top of each other, along mass-transit corridors. SFH will be only for the rich.
But builders want volume. They need to buy the land for more than one home, and then effectively sell homes to monetize that land.
If they can get the land, and sell inexpensive homes and sell 5 per month, they will be thrilled…and sell a lot of homes.
The more expensive homes have lower sales pace, but higher margins. When cost of capital matters (as it does for homebuilders), that may not be as good as selling a lot more cheaper homes, faster, at lower margins.
However, when the margin is thin, or negative, builders stay away.
We’re a 100+ year old engineering and construction firm and I’ve been at it 28 years now. I say without a doubt that you don’t know what you’re talking about.
San Francisco County Rental Rates Crater 7% YoY
https://www.zillow.com/san-francisco-county-ca/home-values/
I live 40 min from Vancouver where house prices crashed 18.9% according to the real estate board which is 6 months behind with data. Out here many properties for major development just sold. I hope the bubble blows to bits before they dig up my freaking neighbourhood.
‘the percentage of homes left vacant or not permanently lived in in the City of Vancouver rose from 7.7 per cent to 8.2 per cent…During the same period the number of such properties jumped by 15 per cent, from 22,169 to 25,502, in Vancouver. Coal Harbour continues to have a high percentage of empty units, at 22 per cent. But Joyce-Collingwood in East Vancouver has now overtaken Coal Harbour, with 24 per cent of homes unoccupied.’
‘By last fall, Estevan had a vacancy rate of 27.6 per cent, according to the Canada Mortgage and Housing Corporation. It’s much the same situation in Alberta, where big-city vacancy rates were in the single digits five years ago. These days, about 37 per cent of rental houses and condominiums are sitting empty in Calgary, and the comparable rate in Edmonton is about 27 per cent.’
‘There’s been a huge building boom — particularly in Saskatchewan, but in Western Canada in general — and these builders are working on all eight cylinders or all 12 cylinders,’ said Kureshi. ‘But one of the things that’s happening and causing this sort of tidal wave of rental property, is that the new homes and the new condos and the highrises that these builders are constructing, aren’t selling because there’s just no money and no people to take them.’
Does this sound like a shortage? The biggest expense for a landlord is vacancy. These numbers tell me most landlords in Canada are losing money.
‘It’s much the same situation in Alberta, where big-city vacancy rates were in the single digits five years ago. These days, about 37 per cent of rental houses and condominiums are sitting empty in Calgary, and the comparable rate in Edmonton is about 27 per cent’
Here’s a chance for Mike to learn about recessions. Alberta is in recession. Why? Yes, the price of fuel is down and we can quibble about how that came about. But ultimately there are fewer jobs because the region invested in that industry. It built up offices too, for example, Calgary has a similar vacancy in offices and more on the way. These investments aren’t generating returns: that’s what makes them bad. No returns, no jobs, no tax revenue, no kids going to school, no groceries, more jobs lost. It can seem like a never ending spiral. In some cases that may be the way it turns out: there are ghost towns.
More often in modern times, an economy bottoms and begins to return to activity. How does this happen? Bad investments are purged and returned to generating revenue, positive revenue. This creates jobs. Those employed people buy groceries, have kids, need teachers, more jobs. They pay taxes: the city can hire more people. Instead of so much reliance on fuel industries, new sources of jobs can and are developed. It doesn’t usually go smoothly, but capitalism has a way or finding uses for resources, be it people, skills, land, water, you name it.
But how are these bad investments turned into good? Some of it is time. Re-purposing. These landlords for instance, many will default on their loans. Bank shareholders lose money, maybe even bank closings, more layoffs, we all know the drill. In every bust is the seed of recovery. The defaulted properties most likely are purchased at a discount. New, lower rents are established. This creates a lower cost of living: maybe an industry that couldn’t afford to exist now can. Enterprising people will see this, take a chance, and eventually something will take hold. A combination of things. And even the price of fuels may recover, and some of that will give the region a boost.
Recessions aren’t like an economic flu that central planners can give a vaccine for. They are usually the result of over-optimism (too much boom) and the resulting bad investments.
Looks like apartment developers are belatedly catching on to the fact that there’s a glut of empty “luxury” apartments waiting for credit-worthy tenants.
http://www.scmp.com/business/global-economy/article/2071510/us-home-building-falls-developers-start-fewer-apartments
Love the title of this article…
https://www.connect.media/midtown-site-sells-apartments-planned-someday/
Illegals are supposed to be on strike today.
Can’t say that I’ve noticed a difference.
All the Mexicans I work with showed up today.
They want overtime paychecks, which are tentatively only happening for the next 2 weeks.
Are they all legal or does your boss mooch off taxpayers and hire illegals?
So what happens after that? Back to the olde pot shoppe?
Checks? I thought they were are paid in Benjamins?
CO- you won’t notice unless you leave your house. Try to go get a coffee and a breakfast burrito. If you are in a hotel, good luck getting a clean room.
‘Are they all legal or does your boss mooch off taxpayers and hire illegals?’
Well aren’t you a walking, talking contradiction? BTW I just made a hotel reservation for this weekend. I’ve stayed there hundreds of times over the years, it’s a chain. I’ve never seen anyone who remotely looked like an illegal working there. And I’m pretty sure there will be burritos available.
“Mexicans” includes anybody I work with who refers to themselves as Mexican. This includes people born in Mexico who may or may not be legal, sons of immigrant parents, and some peeps from southern Colorado whose familes go back 2+ centuries to when that land was part of Mexico. Anybody working for my contractor passed E-Verify. I can’t speak for subs or the other trades, but there are alot of people on this site who speak little or no English.
I strongly suspect that those who speak little or no English at all don’t have real green cards.
And it’s not hard to buy SSNs and fake identities either.
Personally hate burritos, but there’s always burritobox.
Never heard of a real man who did not like a fat carnitas burrito.
They can make you a grilled veggie one with tofu, maybe.
FWIW, there is no such thing in Mexico as a “burrito”. In my 12 years in Mexico City I never saw a single one. The first time I did was in the USA.
Actually, there is a single burrito joint in the Polanco district of Mexico City, but the burritos there are vastly superior to the Tex-Mex stable in “Mexican” restaurants here.
Polanco would be an interesting choice for a burrito joint, as it is well known as the enclave of choice for Mexican Jews.
I’ll bet it was a Tex-Mex place.
New Mexico is where old school Mexican-of-Jewish-descent and burritos smothered in green chile intersect. I wonder if that influence made its way back down there?
I’m at the office today. Went out for lunch at 5 Guys. Everything there and at the nearby eateries seemed like business as usual.
CO- you won’t notice unless you leave your house. Try to go get a coffee and a breakfast burrito. If you are in a hotel, good luck getting a clean room.
Yeah, the old “who’s going to clean your toilet” BS. Look, if all the illegals decided to strike permanently, sure, we’d be without burritos and clean hotel rooms … for maybe a month. Then guess what, companies would start hiring citizens and paying minimum wage, and we’d have clean hotel rooms and burritos again. Good lord, America has survived far worse than a shortage of tacos.
And ♥Paul Joseph Watson♥ can clean my toilet anytime. He used to do that, you know. https://www.youtube.com/watch?v=HmYOA_pvZIw
‘Illegals are supposed to be on strike today’
Does this mean they’re not going to use any social services, no free health care, school, food stamps? No calling la policia?
If so, then great, they should strike every day.
They did this in Phoenix a few years ago. Bunch of them got fired for not coming in.
They got hired the next day by someone else.
Too bad this guy wasn’t on strike around here on New Year’s Eve:
http://whnz.iheart.com/articles/tampa-local-news-124415/hit-and-run-suspect-still-on-15567095/
“Soria currently remains at large with the assistance of friends and family who are aware of his involvement in the hit and run crash as well as being wanted for felony driver license charges from Manatee County.”
I wonder if his friends and family are on strike helping him evade the law.
Acts of love.
Last time they pulled this crap in LA back in 2005 I think it was it backfired on them!
People saw the traffic was noticeably lighter.
Nobody died because their lawn wasn’t mowed or their burrito wasn’t available.
People saw swarms of illegals waving foreign flags in our streets on TV across the country sparking a backlash against amnesty.
Please, stay on strike. I dare you.
the msm will claim massive HOLDOUTS
That’s mostly A blm THANG
hIspos WORK
HBB advisory: all US citizens should not show up for work in Mexico tomorrow. What’s that? There are hardly any US citizens working in Mexico?
Never mind.
When is take your illegal to work day?
https://www.forbes.com/pictures/efkk45eihdg/the-dos-and-donts-of-take-your-kids-to-work-day-2/
Denver, CO Housing Demand Plummets 16% YoY
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
http://www.thedenverchannel.com/news/local-news/denver-homicides-hit-10-year-high-due-to-domestic-violence
Everyone knows real estate money is made at the buy.
And now is NOT a good time to buy.
“Everyone knows real estate money is made at the buy.”
Thanks Puggs, some people don’t understand this concept. Real estate isn’t the only area where this is true. A guy I know who worked in the antiques biz years ago used to say “You never make money selling antiques. You make money when you buy them”. I repeated this to some lady in the biz and she gave me a blank look and then got angry and said “That’s one of the stupidest things I’ve ever heard”.
Same could be said of stocks, or any commodity that is purchased for re-sale.
Just another version of: “buy low, sell high.” Not rocket science.
Yeah, guess I should have typed…”everyone SHOULD know money is made at the buy”.
No, you were right the first time. It’s just that many don’t seem to get this simple concept, buying things right.
“And now is NOT a good time to buy.”
I recently had to sit through “diversity training,” (required for gubmt contractors), and I sat near a young lady from the north Seattle area. She recently sold a home bought five years earlier and made easy profits. I mentioned the downside risk, but she never heard a word I said… definitely has tasted the koolaid and is now the female version of Tom Vu.
Multifamily rentals in NYC and San Francisco have peaked. And now, the deluge.
http://wolfstreet.com/2017/02/16/sell-now-multifamily-rentals-san-francisco-new-york-city-most-expensive-markets-in-the-world/
https://www.wsj.com/articles/los-angeles-looks-to-rein-in-real-estate-development-1487264305
And this will help affordability exactly how?
Keller, TX Housing Prices Crater 9% YoY
https://www.zillow.com/keller-tx/home-values/
Illegals like to stay incognito and need every dime, so this “strike” wont work.
They’ve done it before, and everyone yawned then, too. Some commented that they enjoyed the lighter traffic.
What I wants ta see is if they do a massive coast-to-coast demonstration like they did back in 2006. Somehow I doubt it.
I remember that, Palmetto. We all saw the film from Los Angeles, of thousands of illegals holding rallies and waving MEXICAN flags, and the immediate backlash the followed. Funny thing was, the immigrant community held another rally in DC a couple months later. I saw some of them on the subway. They were decked out in as much red, white, and blue that they could find, shirts socks, hankies, flags, etc. I just laughed at them. Did they really think we would be fooled? We knew they were faking it.
LOL! Yeah, if u want to know which of your employees or coworkers is illegal, just look and see if they were on strike today !?
The comments at the Washington Post were decidedly anti-illegal. In fact, they *thanked* the those restaurants for self-identifying as condoning illegal labor. The support list quickly turned into a boycott list.
The MSM is doing everything it can to push the “America can’t function without illegals” narrative.
And they are also writing sob stories about illegals being deported and how they’ll be separated from their US citizen kids. And the Mexican media is in total meltdown.
stocks and homes are a frickn gravy train.
Chinese are loading up on gold as geopolitical and economic risks grow.
https://www.bloomberg.com/news/articles/2017-02-15/rooster-coins-boost-perth-mint-sales-as-haven-asset-demand-soars
Is that why Gold is creeping up?
The flight to quality has begun, at least among the smart money.
Houses Are No Longer ATMs (But They Should Be)
…
‘A third notable feature of the chart is that the current house-price rally (prices are now up about 40 percent from their 2012 trough, according to CoreLogic) has not been accompanied by anything like the same level of equity withdrawal as the previous boom. In fact, withdrawal has remained well south of $50 billion, even as aggregate equity has approached its 2005 peak.’
‘Generally, I am not in favor of borrowing against equity in a house. However, if you can borrow long-term at a fixed rate with no pre-payment penalty, now is a great time. Especially if you are in a situation where you income will go up with price inflation.
Price inflation, over time, will make your payments insignificant. It often (not always) makes sense to go against the crowd, now is such a time. Most aren’t doing it but now is a great time to use your house as an ATM.’
http://www.economicpolicyjournal.com/2017/02/houses-are-no-longer-atms-but-they.html
Please, PLEASE borrow more…we can’t —- you unless we have you over a barrel.
Most aren’t doing it now? Then why are there wall-to-wall aads for re-fis and HELOCs all over the TV? If this is against the crowd, then why waste the money on advertising?
“why waste the money on advertising?”
Because there are lots of people who now have the “equity” to cash-out refi…might as well target them and try to convince them to borrow.
New NY Fed credit report came out today.
https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2016Q4.pdf
Nothing all that new in this report.
Los Angeles, CA Housing Demand Plunges 17% YoY
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
To Palmy, Apt 401 and Ol’Bubba:
To confirm for the HBB cland I did indeed move to Castle Rock last summer - my apologies for being out of touch for so long - getting settled in a new place kinda sucks to be honest.
My home overlooksthe Franktown Valley and that magnificent sunrise every morning!!
Granted I sold out and got a paying job again but given that I am heading to be 60 yrs. in two weeks time - this position will be the last circuit on my rodeo. Already lining up new adventures. First is a week long trek in the Wimenuche on the CT with my daughter this summer. Looking at possibly hiking the Swiss National Trail - maybe half of it at least in a couple of years.
I have to say that even with all the people who have moved to ‘MY state’ in the last 30 years - it ain’t half bad here all things considered.
Closer to life long friends, much better climate, taxes are much lower and there is that unbearable lightness of being at times that I never experienced in Chicago.
Though the transition has been tough at times I ain’t looking back -
matter of fact the folks in gloomy Chitown are comin here to visit more and more.
So….I am back - won’t post as often as I am really busy these days.
Just wanted to check in and say Hey!!
Best to you all!!!
By the way - has Ben posted a road show video of late - loved the ones he put on the site from a couple of years ago.
well RJ, now I suppose you’ll expect to have your old parking spot back. fine but some new guys Norm & Cliff stole the best barstools.
welcome back.
next rounds on you.
Hi, rj! Thanks for the update. Moving and settling in to new surroundings is always an adventure and can have its ups and downs. The important thing is you got out of Chi. Congrats on the job! And thanks for that item you posted the other day. Live long and prosper!
Word up. We moved Daddy Goon there in September 2015.
Castle Rock is a nice place to be without the headache of Denver.
When It Comes To Multifamily, These Are The Top ‘Buy’ And ‘Sell’ Markets
https://www.bisnow.com/national/news/multifamily/california-cities-among-ten-xs-top-buy-and-sell-multifamily-markets-71042
Sell SFO, Buy SACTO
there are some killer deals in s. sac and oak park.
Oh dear. Subprime auto loan delinquencies just spiked to 2009 levels. No one could’ve seen this coming.
http://www.zerohedge.com/news/2017-02-16/auto-bubble-burst-begins-subprime-delinquencies-soar-2009-levels
Kewl I’m looking for a used car
Maybe I’LL take over a 84 month loan
San Jose, CA Housing Prices Crater 6% YoY
https://www.zillow.com/evergreen-san-jose-ca/home-values/
same sh@t , different day.
It sucks being on the losing end of a trade doesnt it?
Cheer up Poet and remember….. Nothing accelerates the economy like falling prices to dramatically lower and more affordable levels. Nothing.
Seattle, WA Housing Prices Crater 15% YoY
http://www.zillow.com/seattle-wa-98105/home-values/
“Speculative euphorias” always end well, don’t they?
http://www.scmp.com/business/companies/article/2071158/rural-lender-three-straight-years-losses-now-most-expensive-bank
Oh dear. Online lender On Deck is running into a little something called price discovery.
http://www.marketwatch.com/story/online-lender-on-deck-tumbles-on-record-loss-2017-02-16?link=MW_latest_news
I’m still thinking about selling my 2012 SE Region IV home purchase.
Since the phonys moved out in 2012 the last DBLL lost $1,750.00 a month in tax free cash flow.
Now they’re on a…
https://www.youtube.com/watch?v=LQ468ibpQ4M
Wisconsin Housing Demand Collapses 40% YoY
http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv
Dear Ben, and landlords here, how far in advance do you generally notify renters re: terms of new lease? Ours is ending June 30.
My mother passed away on Sunday. After almost seven years of caring for her, I feel very sad, a bit adrift and very relieved (that’s the guilty part.) It was very difficult to watch her deteriorate and I started to waiver in my resolve to care for her myself (with the help of in home hospice care) until the end as she wished. Before I could make that decision, she died at home here, in her sleep, which is exactly what we hoped would happen. Nathan Adelson Hospice here in Las Vegas was excellent.
The whole situation took a tremendous toll on our family (our mildly Asperger syndrome daughter was unglued with anxiety, and the hubby was partaking in a little too many drinkies. We’ve lost the income (net $3K a month); my mother’s pension and SS were in effect my pay as a caregiver. We have savings, and there is life insurance, but I have to get a job ASAP. Even at my age, I hope to do better than Walmart greeter; I do have some contacts. By the by, my brother, his and whole other departments got laid off yesterday from The Venetian. (I feel awful for him - how horrible to lose your mother and your job of ten years in three days.) He’s a saver, too, so he’s not broke, and they were generous with severance. How good can things be in Vegas despite the “everything’s coming up roses” garbage they constantly trumpet?
The question is should I contact the LL’s agent or wait until he gets in touch? I haven’t had one lease end normally here except for the first, which was one year and done. I’m inclined to contact the agent now in order to give myself the most time possible to get another rental in case of a large increase. I think our rent ($1,450) is fair for this place.
As estimates are dropping precipitously in this area (89121), once again I’m worried about the house being sold out from under us. I would never pay the price they would want for this white elephant, but I declined to buy our last rental and have watched its estimate and recently sold comps rise $100K in the last two years. I haven’t made one correct financial decision in the last ten years.
So contact him or wait? I would appreciate info regarding when you notify (or anything else regarding renewal.) If Ben allows follow up posts here, great, if not, I understand. I can also be reached at t.boomdea@cox.net .
Thanks,
Tarara (T-Boom).
P.S. If I don’t hear from anyone I may post this again in the morning, as it’s a little late for some and not everyone uses the excellent Joshua Tree extension.
Sorry to hear of your losses. I just buried my father 3 weeks ago. Phoney buried his mom not too far back. It sucks but at the same time it’s a relief. Life goes on with or without me…. and him too.
Just reach out to the LL. You have to deal with him once a month anyways. And how much can the rent possibly change? It could easily go down too. Especially in the current environment.
Thank you and I’m sorry to hear about your father (and I did see that phony’s mother had passed away, too.) What can you do?
We don’t hear from this LL, thank goodness. The invoice arrives, we pay it, that’s it. I’m hoping for the rent to stay the same though lower would be nice, too.
I am sure you are going to get solid advice from the posters on this blog so I am just going to say that I am really sorry for your loss and pretty much in awe of what a great daughter your Mom raised.
Phony, thank you. I don’t feel all that great - right now I’m kind of beating myself up over a few things. I’m like the least medical-type person you could meet. The only profession I definitely knew I didn’t want to be was a nurse, etc. Always made me squeamish. It was my nightmare come true, but (almost always) I did the best I could.
I’ve assured my daughter I’m planning to be hit by a bus later in life ;-).
“My mother passed away on Sunday. After almost seven years of caring for her, I feel very sad, a bit adrift and very relieved (that’s the guilty part.) It was very difficult to watch her deteriorate and I started to waiver in my resolve to care for her myself (with the help of in home hospice care) until the end as she wished. Before I could make that decision, she died at home here, in her sleep, which is exactly what we hoped would happen.”
I’m sorry for your loss, and I commend your resolve to remain stoic.
Thank you. When relatives have long illnesses and finally pass away, whether you realize it or not you’ve already been mourning for a long time - you’re almost cried out when the end comes. My mother selflessly took care of many sick and dying members of our family throughout her life. If no one did it for her, it would have been the greatest injustice.
Tarara,
My respect for you. My sister and I had a similar situation end about a year ago. Years earlier my mom and dad moved back to NY to take care of her mother at her home. Grandmother had a miraculous turnaround and the doctor said he thought Mom had added ten years to Grandma’s life. My mom said “Oh my what have I done?” She hung in there though and we tried for her when the time came. Ended in a nursing home though unfortunately. Good for you avoiding that experience for your mother. The cost to you is obvious.
As for your landlord, the simple thing is to just give him a chance to be honest. Good luck on the job hunt. Whatever you land, it will be easier than the one you’ve just had.
Skye
Thanks, Skye. Sometimes I think she hung in there for me. She knew I’d miss talking to her and that’s true, I feel it already.
This LL seems okay (famous last words). Maybe I’ll take the initiative and get in touch.
Got to work on my resume. God knows what that’s going to look like.
Welcome to Walmart!
Good storm today with high winds, flooding and fallen trees all over the place.