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We’ve Got Plenty Of Vacant Land

A report from Globe St. “Economic sentiment is shifting. This year, more and more real estate professionals are predicting a recession in the next 12 months, either in late 2019 or early 2020. Christopher Thornberg of Beacon Economics, however, says that there is no recession in sight. While home sales have slowed and there are affordability challenges in some markets, the housing market isn’t unstable—it is under supplied.”

“Housing slowed a bit, but where is the imbalance? The credit markets are clean and there is no excess supply,’ adds Thornberg. ‘If anything, markets are still tight, and interest rates have dropped again.'”

“‘The Federal Reserve has restrained bank lending so much that you are starting to see the proliferation of non-bank lending,’ says Thornberg. ‘The lending market outside of the traditional financial sector is expanding, and that scares me because those are not regulated sectors. Bad things happen in parts of the financial market that aren’t well regulated. We saw that in 1998 through 2000 and we saw that clearly in 2004 to 2007. I don’t think it is threatening the current expansion, but I am starting to see inklings of excess.'”

The Calaveras Enterprise in California. “The 2019-2027 Calaveras County General Plan housing element update is up for public review, according to a Planning Department press release. ‘We’ve got plenty of vacant land – the problem is that no one is building in the county,’ Planning Director Peter Maurer told the Enterprise. ‘The cost of construction (generally) exceeds rent or sales value of what can be made for affordable housing projects.'”

“The update also indicated that nearly 50 percent of Calaveras households are paying more than 30 percent of their income on rent or mortgages. Nearly 40 percent (10,180 units) of the county’s housing stock is vacant – a substantially higher rate than the state’s 8 percent.”

From Palmetto Business Daily in South Carolina. “The number of vacant homes in the zip code 29928 zip code area was 5,227 in the third quarter of 2018, a 299-unit increase over what it was a year ago, according to real estate numbers reported by ATTOM Data Solutions.”

“The zip code, located in Hilton Head, had the fifth highest home vacancy rate among the thousands of U.S. zip codes with 1,000 or more single-family homes and condos in the analysis. The rate stood at 26.38 percent in the third quarter, up from 25.88 percent in the third quarter of 2017.”

From Westport Now in Connecticut. “Bigger may not always be better, especially in a Westport home buyer’s eye. There are now 316 homes that are actively on the market, which has increased by 9 percent over last year at this time. These properties have been listed for an average of 116 days, with a cumulative market time of 222 days. The average list price is down approximately $60,000 from a year ago to $2,050,826 and the median price is at $1,552,500, which is also down $102,000 from this same time last year.”

“A five-bedroom contemporary home at 13a Dogwood Green went under pending status after a cumulative market time of 1,584 days. The 4,955-square foot home was originally listed at $2,685,000 and went under deposit at a final asking price of $1,600,000.”

“The one sale that was reported during the last week was at 7 Riverfield Drive, which is a 2,816-square foot colonial with four bedrooms in the Coleytown area, and it has been on and off the market since April 2014. The price began at $1,429,000, and had 12 price adjustments prior to its last list price of $1,049,000. It ultimately closed at 92.95 percent of that price, or $975,000.”

The Tampa Bay Times in Florida. “By most accounts, Tampa Bay’s foreclosure ended in 2015. New foreclosure filings had plunged, and lawyers who once represented struggling homeowners began looking for other sources of business. Yet reminders of those crisis years between 2009 and 2015 can be found in listings for ‘bank-owned’ houses. Nearly 300 are currently for sale in the four-county bay area, most for under $300,000.”

“Agent Peter Chicouris, who specializes in bank-owned properties, says he has seen a recent uptick in lenders taking back homes because the prices at foreclosure sales are getting too high for investors. ‘For a while, there were many private investors and companies that purchased through the foreclosure site,’ he said, referring to the Pinellas County clerk of court’s online foreclosure sales. ‘Now there aren’t a lot — they feel the market is due for a correction soon and they are getting cautious and don’t want to get overly invested.'”

The New Jersey Spotlight. “According to state officials, there are 20,000 active foreclosure cases currently making their way through the courts. New Jersey, which has struggled with a high foreclosure rate since the Great Recession, continues to lead the nation in foreclosures.”

“‘Most New Jerseyans can point to a property in their neighborhood that hasn’t seen an owner or tenant for years on end,’ said Assemblyman John Armato.”  

This Post Has 28 Comments
  1. ‘The Federal Reserve has restrained bank lending so much that you are starting to see the proliferation of non-bank lending’

    This has only been going on for 5 years.

    ‘the prices at foreclosure sales are getting too high for investors. ‘For a while, there were many private investors and companies that purchased through the foreclosure site…Now there aren’t a lot — they feel the market is due for a correction soon and they are getting cautious and don’t want to get overly invested’

    This past week the TBT reported months of bankruptcy increases, now more foreclosures that aren’t selling. Are we there yet?

    1. . I don’t think it is threatening the current expansion, but I am starting to see inklings of excess.’”

      I am starting to see inklings of “whoops! I need to cover my a$$!”.

  2. ‘The update also indicated that nearly 50 percent of Calaveras households are paying more than 30 percent of their income on rent or mortgages. Nearly 40 percent (10,180 units) of the county’s housing stock is vacant’

    That’s some shortage.

    1. This is the rigged system that’s so despicable. They colluded to artificially restrict inventory to drive up prices. It worked. They now know they can do it without being held accountable.

      A lot of these banks have been holding the same houses for close to 10 years. When and how is this artificial supply restriction ever going to change? Until it does, we will not see anything remotely representing price discovery or a free market.

      1. “This is the rigged system that’s so despicable. They colluded to artificially restrict inventory to drive up prices. It worked. They now know they can do it without being held accountable.“

        +1

        I read through this one and thought the same thing. Foreclosures are currently priced at or above “market” value which makes no sense for an FB to bother with. Foreclosures have too much risk and downside potential so why would anyone bother going down that road? The faucet is currently trickling with the banks holding onto a mass of the shadow inventory and we have read why this is. once that faucet is turned on all the way it may pose some potential opportunities but for now, no thanks!

      2. “When and how is this artificial supply restriction ever going to change?”

        We need national leaders willing to revive the Sherman Antitrust Act. Maybe Bernie Sanders?

      3. Price discovery is for people who have to go to the grocery store and buy their own food. As far as the assets that back the debt held by banks, there isn’t going to be any price discovery.

      1. They are vacant. Seasonal is speculators. It’s cheaper to stay in a resort than to keep a second shack. They’ll head to the exits at first sign of crater, just like Santa Clara and Seattle.

  3. Christopher Thornberg of Beacon Economics, however, says that there is no recession in sight.

    That must be why delinquency rates on auto loans and credit cards are starting to soar.

    1. The tax laws are such that these corporations can write off all the losses, which is part of the reason why all this subprime garbage is available in the first place. Just a tweak to the tax laws to punish them for bad loans would be enough to destroy the proliferation of reckless loans and drive down demand and default rates.

  4. The price began at $1,429,000, and had 12 price adjustments prior to its last list price of $1,049,000. It ultimately closed at 92.95 percent of that price, or $975,000.”

    Oh dear. Some Boomer Greedhead will need a cuddle from their emotional support poodle.

  5. Wolf Richter succinctly sums up the fraud of the “new economy” created by the Fed’s deranged money-printing and artificially suppressed interest rates since 2008. Lyft exemplifies what a con these Ponzi markets have become, with valuations completely divorced from any underlying fundamentals.

    https://wolfstreet.com/2019/03/29/lyft-shares-plunge-10-in-4-hours-from-pop-to-close/

    There is no telling how this crazy stock will do in a world where making money is uncouth for these companies, and where burning investors’ cash year after year in huge quantities is a perfectly noble business model even for companies that have been around for years and have thousands of employees and billions in revenues.

    And these cash-burn business models are rewarded with ludicrously huge valuations that have been surgically removed from all reality. Each of these companies comes up with its own home-made metrics that it tells fawning analysts to watch, to distract from irrelevant details such as “net losses.” And as long as these home-made metrics show an upward trend, regardless of how much money the company loses, it is a raging success in the eyes of those analysts. Historically, this works until it suddenly doesn’t.

      1. As long as the world is awash in Yellen bux seeking a toetag home, IPOs for money-losing companies can go straight to the moon.

  6. I just spent three weeks in the SF Bay Area, and another week in the Seattle Tacoma and Bellingham area with my daughter and son during their Spring break. I saw way more FOR SALE signs especially down in California this last trip. But no cut in frivolous spending yet as the restaurants all had waiting lines in the lobby or out front. Seems like everyone in San Jose driving a new car too.

  7. Denver reddit discusses leaving Denver, some excerpts:

    “I sincerely try not to judge others, but the citizens of Denver are typically an odd assortment of people seemingly suffering from hypoxia. I’m not sure what it is…the altitude, the culture (or lack therof,) the unusual limbo much of the city seems to be in, or the lack of socialization that doesn’t involve indoor rock climbing or a beer tasting, but the vast majority of people I meet seem slow and very isolated in whatever clique they adhere to. People tend to go to bed very early, have little energy, aren’t outwardly funny or intense, are obsessed with the image of being engaged in fitness-related activities but aren’t overtly athletic, and extremely culinarily unsophisticated. I run circles around people in conversations and do not understand why. It has been a strange, humbling experience. I’m very athletic and, yet, I feel very isolated when I expose myself as someone who works out all the time but doesn’t spend entire weekend going for a walk in the woods. Then I get lectured about the keto diet when I’ve dabbled in and out of ketosis since high school. If you do not actively participate and unambiguously defend the four activities the public engages in: IPAs, climbing, skiing, and hiking, you’re shit out of luck. I thought Denver would be much more oriented with wandering psychonauts than Salesforce administrators who think they’re that guy from Into the Wild on the weekends.”

    “That said over the past 6-8 years the scene we hang in has almost ground to a halt. Any culture or grunge or soul that existed is hanging on for dear life. Anyone working in the service industry is being worked to the bone just to afford minimal basics. Anyone working in careers that aren’t tech are not being paid enough and slip farther behind each year. Everyone is tired. Everyone has found themselves working harder in a city and mountain environment that continues to become more and more unapproachable by anyone except moneyed white yuppies. And you’re absolutely right, there’s a very gray, very one dimensional collective consciousness in this city that is hard to pin down. It’s as hollow as an Instagram post.”

    “I have been here for 17 years. This week was the first time i thought about moving out. Denver has changed a lot in 17 years. Most of those changes are not for the better. One thing the massive increase in housing prices do is ensure people have difficulty moving up. I have been looking at getting a bigger place with one extra bedroom and the prices are just shocking. For a city with no ocean attached to it, it becomes tough to justify these exorbitant prices. I could go on, but it is becoming less attractive to live here by every passing day.”

    https://old.reddit.com/r/Denver/comments/b6nse0/people_planning_on_moving_out_of_denver_what_are/

    1. I run circles around people in conversations and do not understand why. It has been a strange, humbling experience. I’m very athletic and, yet, I feel very isolated when I expose myself as someone who works out all the time but doesn’t spend entire weekend going for a walk in the woods.

      I don’t think that word means what you think it means.

  8. “Housing slowed a bit, but where is the imbalance? The credit markets are clean and there is no excess supply,’ adds Thornberg. ‘If anything, markets are still tight, and interest rates have dropped again.’”

    “‘The Federal Reserve has restrained bank lending so much that you are starting to see the proliferation of non-bank lending,’ says Thornberg. ‘The lending market outside of the traditional financial sector is expanding, and that scares me because those are not regulated sectors. Bad things happen in parts of the financial market that aren’t well regulated. We saw that in 1998 through 2000 and we saw that clearly in 2004 to 2007. I don’t think it is threatening the current expansion, but I am starting to see inklings of excess.’”

    Is it me or just Chris doesn’t seem so confident like before. Like he’s giving himself a way out. Like nonbanks have been gaining market share since 2014 with their “nonprime” loans lol and now he’s just noting it….

    1. “See, I told you the non-bank lenders were going to cause this problem…”

      LOL. Thanks, Captain Obvious.

  9. It seems Mr thornberg is getting lots of free publicity via “against the grain” views. Obviously advertising economist services for those who want eternal optimism communicated. Sad thing is, it might just work. The promotion game is all about getting publicity and possessing apparent credentials. Nature of his future opinions and statements as paid consultant is obvious.

    1. Thornberg made a name for himself by telling the truth at UCLA. Now we have no idea who is paying him to say what. But based on the way his tea leaves reading has become so bad this time around, I think we have a pretty good idea.

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