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The Risk Of Mortgage Prison

It’s Friday desk clearing time for this blogger. “‘California has some of the highest taxes — the highest [priced] housing in the country,’ said Jonathan Miller, CEO of Miller Samuel. ‘So what you’re seeing first is… a slowdown in sales activity. Markets like the Hamptons, Manhattan, and most of the metro area have seen sales decline on a year-over-year basis for anywhere between four and six consecutive quarters. Pricing, you know, comes after that.'”

“‘Recent trends in Connecticut have seen far too many homes for sale; that glut of housing depressed the median sale price,’ said Cassidy Norton, a spokeswoman with The Warren Group. The median year-to-date sale price for single-family homes in Fairfield County fell by $25,000 or 5.7 percent to $415,000.”

“In the city of Boston, condo sales were down 10.1 percent through April, and the median price was off 3.2 percent, down from $640,000 to $619,500. That’s despite some more positive signs for the local condo market, like a 12.5 percent bump in new listings year to date. ‘Sellers and agents alike are starting to get nervous, but overall I think it will ultimately lead to more transactions,’ said Josh Stephens, vice president at Berkshire Hathaway HomeServices Warren Residential.”

“In a sign that not even stunning, and secluded, celebrity homes are immune to the softening in the luxury market, the price of Bruce Willis’ Bedford Corners estate has been reduced, from $9,500,000 to $8,695,000 according to the multiple listing service. It originally went on the market for $12,950,000. Willis and his wife Emma Hemming purchased the two-parcel estate in 2014 for $12 million.”

“Real-estate experts estimate that there are about 50 ultra high-end spec houses under construction in the area, from Beverly Hills to Bel-Air and Brentwood. Now, there are simply too many, and not enough buyers to go around. ‘It’s created its own monster,’ says Stephen Shapiro of Westside Estate Agency. ‘We have an enormous oversupply of these white boxes. There’s years of inventory out there.'”

“Buyers know they have the upper hand. ‘People are making lowball offers,’ says Mr. Shapiro. ‘They’re not being shy.'”

“Marin home prices sagged 6.5% in April amid flat sales. ‘Housing inventory has definitely increased and it is not the seller’s market of last year,’ said Marin real estate professional Kathy Schlegel. ‘Buyers have much more from which to choose and we are seeing homes sitting on the market longer, and more price reductions than in 2018.

“Luxury real estate sales are slowing in a number of markets across North America and abroad. From the Hamptons in New York to Vancouver to London, sales are down and inventory is up. This 10,000-square foot mansion in the Chicago suburbs was originally listed for $9.5 million in March 2013; six years later, it sold for $2.97 million.”

“A 10,000-square-foot West Vancouver property sold recently for C$8 million (US$5.93 million), way down from its asking price of C$16.88 million. And in London, an American hedge fund manager paid £95 million (US$119.61 million) for a 20,000-square foot property near Buckingham Palace—down from its initial ask of £145 million.”

“This palatial home in West Vancouver was listed for $16.8 million in 2016 and sold in spring 2019 for $8 million. On the same block, a seven-bedroom mansion was purchased by an investment group in 2015 for $11.98 million. It was listed in summer 2018 for $12.88 million but failed to sell, and relisted in April this year for $9.5 million. The home sold 10 days later – at $5.5 million. Not such a great investment, after all.”

“Ylva Hedén Westerdahl, head of forecasting at the National Institute of Economic Research, said Swedes should not think today’s good times will continue forever. Another big worry is whether the large numbers of newly built houses shortly to come onto the market will be sold. ‘The question is how they are going to be sold,’ Westerdahl said. ‘Overproduction means that housing investments and prices could fall even more.'”

“Six per cent of Auckland sales were for a loss in the quarter, up from 5.2 per cent at the end of last year. Corelogic senior research analyst Kelvin Davidson said it was not surprising when values had been flat in Auckland for a couple of years and were falling in some parts of the city. The west coast of the South Island had the highest proportion of loss-making deals. There, 34.6 per cent of the Grey District’s transactions and 27.9 of Buller’s were for a loss.”

“‘Many investors are now facing losses in their property values. We see it in markets across Sydney, Melbourne, units in Brisbane, Cairns, regional hubs and Canberra units to name a few,’ said Property commentator Anna Porter. ‘If we look at Wollongong for example, the units in Mangerton contracted by 43.9 per cent. The mining city of Kalgoorlie has been hit hard in recent years, and according to my report, the nearby town of Kambalda has seen house prices fall up to 35 per cent.'”

“A growing number of Australians are at risk of being crushed beneath the rate of their mortgages, and now the areas most at risk have been pinpointed. ‘During the last boom a lot of people overstretched themselves to get into a rising housing market, particularly in Sydney and Melbourne, and many did so with small deposits,’ said Sally Tindall, director of research at RateCity.com.au.”

“‘The falling property market isn’t helping. If people overstretched themselves or used a small deposit, your house being worth less could trap them in what we call ‘mortgage prison’. They can’t refinance their loans,’ she said.”

“Ms Tindall said the risk of mortgage prison, where households are stuck in their existing arrangements despite lower rate alternatives being on offer, will become more common. ‘The longer the market continues to fall, the more people it will trap,’ she said.”

This Post Has 185 Comments
    1. Diana O’Lick used the words “Catch a falling knife” yesterday on CNBC, so yes. We are there.

      And those were April’s numbers, not November’s or January’s.

    2. The housing market in the Sacramento foothills is pretty solid for middle class housing. I listed a house on Zillow a couple of weeks ago. I received a good offer yesterday.

      It sold for $685,000 in 2006, I paid ReCon Trust $380,000 in late 2007 (caught a falling knife, as that model sold for $285,000 in 2012). Selling today for $540,000. I’ll net $500,000 after selling costs.

      It’s a beautiful house with premium features (view, big lot, 3-car garage, etc). It’s funny how all those features were flotsam and jetsam in the downturn, but add to sale value today.

      1. Serious questions:

        What were your carrying costs along the way, and what was your final basis?

        1. If it’s Jingle Mail, and just can’t remember how to spell his own handle, he never could do maths.

        2. It had cash flow from day 1 of $250/month, about $500/month after a 3.5% refi in 2012. My basis is about $412,000. Depreciation was $60,000, so I have to pay 25% recapture tax. I’ll have about $75,000 in capital gain taxes at 20%. The loan paid down significantly in 10-years at 3.5% interest, so that was helpful ($50,000 plus). I have not done a complete ROI analysis but I will soon.

          1. ROI analysis

            We learned years ago that you don’t know how to do the math (maths). It was <1% when we looked at the details then, and looks no better now.

  1. Inventory:
    Current One Month ago City
    ______ _____________ ____
    338 306 Bellevue
    273 237 Kirkland
    201 159 Redmond
    407 386 Portland
    99 81 Mercer Island
    Slowly but surely, inventory is growing…
    Inventory is still historically tight(low); Just not as tight as last year. Market wont be balanced until the summer of 2020.

    1. The housing bubble 2.0 will bottom when median income can afford the median house prices…. it was getting there from 2006 to 2012 until the FED and government blew a bigger housing bubble.

      #LearnToCode Soon

      1. “Afford” is more related to monthly payment than house price. If rates are low and anybody can get a loan then prices aren’t going to suddenly crash unless financing options evaporate. High DTI will eventually manifest in foreclosures and lower home prices due to increasing supply. We have a different kind of bubble than AUS where interest only was a thing recently.

        The last rodeo foreclosures created a recession, this time I suspect a recession will create foreclosures. End result is the same.

        1. We’ll get to test your “low rates buffer the market” real soon, as rates daily plumb new depths.

    2. Doesn’t tell the whole story – Watching some of the neighborhoods on Mercer Island, the higher price / overpriced stuff is lingering like a dead chipmunk under the porch, while the lower priced / well-priced homes seem to be moving quickly still.

      i.e. we’re getting a bunch of wishing prices or sellers who owe too much/are delusional stacking up. 2 years ago, their stuff stood a good chance of moving quickly at any price. Last year the velocity slowed but no one seemed to be calling it out – stuff still sold.. usually. This year… 4+ months on the market (before being taken off to be relisted) is a thing.

    3. I was thinking about buying a water view condo in downtown San Diego (until we discovered what a dump it is downtown.)

      2017 = 225 listings
      2018 = 332 listings
      2019 = 436 listinggs

      Clearly SD condo lustings are growing. I wonder what DOM are there?

      1. “until we discovered what a dump it is downtown”

        It’s a shame.

        Have you checked out La Jolla, Del Mar, or Carmel Valley? If we could afford to live in any of these places, and wanted to live in a condo, these are where I would look.

        1. My old house in San Diego (Point Loma) is now well over $1.2M and I can’t convey to you what a crapshack it was.

          1. I didn’t know know you lived there.

            I have a work colleague who lives there. Her hubby works for a big name commercial developer. I gave him my full view of the bubble situation circa 2006, but he wrote me off as a crank who didn’t believe in San Diego’s One True Faith of endless housing price appreciation and homeowner self-enrichment. He went all-in with borrowing to increase the size and desirability of the structure on their property, just before the onset of the Great Recession. Soon enough he was out of a job and they had to relocate to cheaper digs, something we never subsequently discussed.

  2. ‘This palatial home in West Vancouver was listed for $16.8 million in 2016 and sold in spring 2019 for $8 million. On the same block, a seven-bedroom mansion was purchased by an investment group in 2015 for $11.98 million. It was listed in summer 2018 for $12.88 million but failed to sell, and relisted in April this year for $9.5 million. The home sold 10 days later – at $5.5 million’

    Hey Vancouver Sun, remember when you said the bottom was in fall of 2016?

    ‘Many investors are now facing losses in their property values. We see it in markets across Sydney, Melbourne, units in Brisbane, Cairns, regional hubs and Canberra units to name a few,’ said Property commentator Anna Porter. ‘If we look at Wollongong for example, the units in Mangerton contracted by 43.9 per cent. The mining city of Kalgoorlie has been hit hard in recent years, and according to my report, the nearby town of Kambalda has seen house prices fall up to 35 per cent’

    Hey The Australian, remember last week when you said the bottom was in?

  3. “People are making lowball offers,’ says Mr. Shapiro. ‘They’re not being shy.’”

    What happened to the love letters? Who is gonna feed the squirrels?

    1. “…Who is gonna feed the squirrels?…”

      Looks like the squirrels are going to have to join the gig economy.

      Speaking of squirrels, whatever happened to Suzanne “You can do this” Realtor?

      Probably driving for Uber now.

      Speaking of Suzanne, our favorite minister of propaganda, Lawrence Yun, sure has been quiet lately. Haven’t seen any of his entertaining ‘permanently high plateau’ , ‘Real Estate only goes up’, ‘Your going to be priced out forever’, ‘the bottom is in’ communiques lately.

      Maybe a new gig as a writer for late night comedy TV?

      1. Speaking of “Suzanne”, a friend of mine just upgraded to a bigger house in a better school district. I told him to wait until the fall time and get a better deal, but he unleashed on me how much houses were going for and how I was an idiot for renting. After a few conversations he admitted that his wife really wanted the house they put an offer In on and stormed out on a Saturday morning, leaving my friend to call the realtor. Apparently the roof was old and he wanted to ask for money towards the roof but she didn’t. He conceded and reupped the offer without roof money.

        Wifey wants, wifey gets. This was outside of Allentown PA. I think Billy Joel wrote a song about that

        1. I have been losing a great deal of respect for two of my friends whom are newly minted FB’s. Both of them act as though they wanted the home and have fooled themselves into thinking it was a good decision to buy now. The truth comes out in words here and there about how the wife needed her “nest egg” or “forever” home. Ive talked about it before on here how these knife catcher friends of mine are now loan owners of 4-10x the DTI. Hope it works out for them but in hindsight its not like i didn’t warn them… my wife also sends me listings from time to time which i always respond back telling her the shack isnt worth 1/2 what they are asking. Recently i started taking screenshots of the Zildo projected estimates and sending those back asking her why i would want to buy a home if Zildo projects it to decline. fun times!

          1. In the case if my friend, he is trying to justify. Acts like he is the alpha in the relationship when she is. When I mentioned the “Wait until fall” on his social media page he flipped out. Like I said, he’s just justifying the FB status to his wife. Or she is to him.

          2. “God ain’t made a man that could stand up to the power that lays between a woman’s thighs. You see, the hold that little cooter has on a man’s life is unbreakable. It can bring a strong man to his knees.” —Prentice Ritter, about why he lives on the range.

        2. Well we’re living here in Allentown
          And they’re closing all the factories down
          Out in Bethlehem they’re killing time
          Filling out forms
          Standing in line…

          …So the graduations hang on the wall
          But they never really helped us at all
          No they never taught us what was real
          Iron and coal
          And chromium steel

          And we’re waiting here in Allentown
          But they’ve taken all the coal from the ground
          And the union people crawled away…
          ——————

          In other words, NO JOBS in a place like Allentown. And that was in the 80s. Did Allentown undergo some renaissance since then? I doubt it.

        3. Seriously people it goes both ways, try to get with the times. Husbands are also liable to be FB insistent, mine is and gets abusive about how I’m stopping him from getting what he wants which apparently is overpaying for a House. It’s not my place to analyze this it’s his and he glazes over when I try to show him why and how it’s not a good idea.

          1. Husbands are also liable to be FB insistent, mine is

            My husband is insisting that we buy in the next six months because he’s taking a hit in management fees as some of his owners are selling their rental properties. His rationale is that our 2018 tax returns will be stronger than our 2019 tax returns. He also refuses to move into a house I inherited even though I’ve mitigated almost all of his arguments against it, including keeping our son in his current school district. Any suggestions for talking him off the ledge are greatly appreciated!

            Irrespective of who moves into the house I’ve inherited, it’s got to get clean out and that’s a very daunting task. It would really help to have our own home where I could choose which furniture to move from the inherited home and our rental home, otherwise it’s a $350/mo storage unit. Our son needs a yard, and yes, he needs a yard. We’ve basically been living in a one-story 2400sf apartment on 1.3 acres the last six years. A large outdoor trampoline and pool, not the two exercise trampolines in our family room and living room, would go a long way to improving the quality of all our lives.

            I’m also interviewing with a local law firm since my biotech startup has no chance of getting funding in the current financial environment. That process could take months but has the potential of flipping the switch on our lifestyle.

            tl; dr It sucks being an adult.

          2. rationale

            Like txchick57, we also have “found” money having lost my MIL, FIL, grandmother and mother in a span of 3.5 years. Fun times.

          3. Sorry Redpilled, marital disagreements on financial issues are no picnic. But looking at the bright side, it sounds like you’re facing a First World problem of how best to allocate wealth rather than the much more challenging one of obtaining it. And since you already own a place, you have some degree of protection against housing price volatility, whether upside or downside, as changes in prices of places where you might consider relocating are likely to posotively correlate with changes in the price of the home you live in today.

            However, I advise caution when trying to work through this with your husband. The only two marriages among eight between my wife’s and my siblings (including ours) followed a period where the couples in question had acquired a substantial net worths, which they proceeded to funnel down the real estate investing rat hole just before the onset of the Great Recession. Marital discord and divorce followed within a couple of years of their peak portfolio allocation to overpriced real estate. For some reason, a pathological desire to allocate much more household wealth into housing just before the onset of a crash is a fairly common affliction.

          4. “…not the two exercise trampolines in our family room and living room…”

            Yikes, that sounds mentally exhausting.

          5. “…it’s got to get cleaned out and that’s a very daunting task.”

            I’ve been there recently, as it fell on my sisters and me to get my parents’ home cleaned out and ready to sell after my folks were unable to complete the task due to age-related infirmities. It was no fun on one level, but honest, rewarding work that had to get done on another. It very satisfying to dispose of the last garbage bag full of old, useless junk on the way to finishing the job.

            I’m pretty sure Ben has enjoyed this kind of work on many occasions, in worse settings than my parents’ generally well-organized home.

            But if you don’t have the time or inclination, I’m pretty sure you could find firms in your area that specialize in this kind of service. Or get your husband to step up and lead the project, if he’s so anxious to move.

          6. Meant to say “the only two marriages among eight that ended in divorce“…

          7. get your husband to step up and lead the project

            Another point of contention. He wants me to get rid of everything and thinks it’s as simple as donating to AmVets. Up until last month, I had a partially built harpsichord in a shipping crate that I’d never seen. A lot of other items similarly have value but not much of an after-market. I was about ready to move to the inherited house last year with or without him. A hemorrhagic cyst reminded me what a good husband he is. He’s also a very good father.

          8. it sounds like you’re facing a First World problem of how best to allocate wealth rather than the much more challenging one of obtaining it

            Globalism, pregnancy discrimination (at the hands of a female attorney no less) and autism have wreaked havoc on my career and earning potentially, particularly at a time when health care costs are spiraling out of control.

            Again, it suck to be an adult.

  4. Bay Area housing slump: Home sales drop, prices turn flat

    https://www.mercurynews.com/2019/05/30/bay-area-housing-slump-home-sales-drop-prices-turn-flat/

    “This isn’t really surprising,” said Kevin Swartz, a real estate agent with Sereno Group. “This is what I’m seeing on the local level, which is Sunnyvale and the surrounding cities. Last year, prices went up so high and the buyers took a step back because it just wasn’t affordable.”

    Plenty of buyers attended open houses in the final few months of 2018, but the tire kicking wasn’t followed up by purchase bids, Swartz observed.

    “There was a price correction,” Swartz said. “It is not a competitive market right now, so buyers are wondering if prices will continue to go down.”

    1. It has to be really obvious [before] the Mercury News will publish a negative article like that one.

  5. North Korea is executing failed negotiators. China might not be there right now but plenty of Chinese realize that China can return to such hardline communism and is executing people for what we would consider non-violent, economic, crimes. Canada depended on the Chinese money from people who demanded to be kept anonymous. It is not just paying the taxes which is keeping Chinese from buying, just the gathering of data which China then can obtain is scaring the hell out of them

        1. Honestly, it seems like foreign owned properties would be an easy target for the tax man, especially when lawmakers eventually decide to get serious about the budget deficits.

  6. Of course China’s slowing economy also is reducing the foreign buyers in those previously hot markets:
    https://www.reuters.com/article/us-china-economy-pmi-manufacturing-offic-idUSKCN1T104W
    When Trump drops the hammer and tariffs the final $300 billion or so exports I do not see how China’s economy can withstand the pressure. Trump is giving US companies time to make alternative supply chains. After all like any war you want to maximize the enemy’s pain and minimize your own pain.

    1. the hammer and tariffs

      I was listening to a farmer talking about soybeans. Says the Chinese market is likely gone for now. They were taking 40+million tons of the stuff. I think there isn’t anywhere else in the world they can easily get that much. Brazil is the other large over producer and they don’t even have that quantity. Should be interesting.

      1. Don’t need to import million$.of.ton$ of $oymeal, iffin’ you’re culling 300 million$+ pork that have the flu.

    2. After all like any war you want to maximize the enemy’s pain and minimize your own pain ??

      LOL. Who can take more pain. My bet would be China.

      1. Chinese State Media Cautions U.S. As Trade War Heats Up: ‘Don’t Say We Didn’t Warn You’
        Dominique Mosbergen
        Dominique Mosbergen
        HuffPostMay 30, 2019, 7:33 AM PDT

      2. The Globalists will feel pain, US Main Street will actually benefit. Do you think the Chinese are going to stop using soybeans? Brazil will ship them to them at a higher cost. We will supply the rest of Asia with soybeans that use to go to China. Chinese will pay far more in tariffs than we need to make our farmers whole. Meanwhile, jobs like furniture manufacturing are already coming back to the US.

        1. Rich farmers, not mom-and-pop farms, will collect most of Trump’s tariff bailout
          By Michael Hiltzik
          May 31, 2019 | 1:05 PM
          Rich farmers, not mom-and-pop farms, will collect most of Trump’s tariff bailout
          Not your average family farmer: Sen. Chuck Grassley (R-Iowa), owner of a soybean farm, will apply for government subsidies for farmers hurt by Trump’s trade war, which he supports.
          (Mark Wilson / Getty Images)

          The lone valiant farmer struggling to eke an existence from his hardscrabble farm — that’s the image President Trump wants you to think about when contemplating the $28 billion in bailouts he’s spending to cover farm losses from his trade war.

          Think again. The vast majority of the dollars flowing to the agriculture industry via the bailouts is likely to go to farms with annual revenues of several million dollars. Most of them are major beneficiaries of federal crop support programs that steer billions in subsidies and low-priced crop insurance — including insurance that already covers some of their losses in the trade war.

          1. Thus, the converse is true, most of the pain will go to big AG since it produces most of the crops. Nevertheless, relieving any pain on main street with Chinese money still makes sense.

          2. If all those “family farmers” went out of business, what difference would it make for the national food supply & economy? Compare that to the cost of the support they are getting from the gubmint.

          3. ‘If all those “family farmers” went out of business, what difference would it make for the national food supply & economy?’

            Less food available at higher prices…

  7. “In a sign that not even stunning, and secluded, celebrity homes are immune to the softening in the luxury market, the price of Bruce Willis’ Bedford Corners estate has been reduced, from $9,500,000 to $8,695,000 according to the multiple listing service. It originally went on the market for $12,950,000. Willis and his wife Emma Hemming purchased the two-parcel estate in 2014 for $12 million.”

    At least it was cheaper than renting….

    1. “…purchased the two-parcel estate in 2014 for $12 million….”

      “…reduced, from $9,500,000 to $8,695,000..”

      Just Wow, a potential (and probably ultimately even more) loss of $3,305,000

      Think about that, that’s more money than probably 80% of wage earners in the USA make in their entire lifetime.

  8. “In a sign that not even stunning, and secluded, celebrity homes are immune to the softening in the luxury market, the price of Bruce Willis’ Bedford Corners estate has been reduced,…”

    Jeff Bridges has listed his Montecito home for sale at $7,900,000. (See Santa Barbara Residential Real Estate News — May, 2019.)

    The Bridges purchased the home in 2014 for $6,850,000 and renovated it in 2016. The home and carriage house were damaged during the January, 2018 Montecito debris flow. The home is located immediately below (downhill from) the southeast corner of Oprah Winfrey’s residence. The entire eastern portion of Oprah’s property was inundated with mud and debris during the flow, but her house was not damaged. (She slept through the entire event.)

    Barb
    Administratrix, Santa Barbara Bubble (sbBubble.com)

    1. (She slept through the entire event.)

      Makes you wonder if she uses the good stuff to sleep. Like Michael Jackson and Prince.

  9. The last bubble pop in around 2007 was because
    shelter prices went to what they should of been 20 years into the future, in my opinion

    There was no reason for this reinflation of a housing bubble. Wages didn’t warrent this rise.
    Also, if you buy in a low mortgage rate market you got to think what you could sell for in the future if mortgage rates go to 10% for instance.

    Real estate investment is so out of whack from the good old days in terms of risk. Nothing makes sense.

    1. Great comment about thinking ahead to someone having to buy at 10%. I guess low rates are terrific if you plan to never sell.

      1. Nonsense. Ask a grandma baby boomer newly minted Real Estate Expert and Analyst how to buy with 3 percent down!

        If you were her grandkids she’d say you should buy this* place!

        *Any property applies

      1. Today the oil market cares about falling Chinese demand, soon it will worry about falling supply due to falling production caused by a reduced rig count.

          1. Falling rig counts shrinks production, you need to look at both supply and demand. Also, with fracking it is a little more complicated, it is not how many wells are drilled it is how many wells are drilled and then fracked. The oil companies have been working off their drilled but not fracked wells. Thus, lower drilling has not yet translated into lower production. Outside the Permian, which are not the highest producers, the number of wells awaiting fracking has plummeted. We will soon see either an increase of drilling just to keep production stable or we will see a drop off of production that most people have not seen coming.

          2. “Falling rig counts shrinks production, you need to look at both supply and demand.”

            This can happen with a leftward shift in the demand curve, sans any shift in the supply curve. Take yourself an introductory college microeconomics course if you want to understand how this works.

        1. Crude oil prices tumble to 3-month low
          Published May 31, 2019 Dow Jones Newswires
          Oil prices slumped to a three-month low Friday

          Front-month Brent crude futures, the international benchmark, traded down 2.6% at $63.60, having earlier dipped to their lowest level since mid-February. U.S. benchmark WTI dropped 2.4% to $55.25, its cheapest price since early March.

          1. BTW, many of those rigs may soon be supplying natural gas to India:
            http://overdrive.in/news-cars-auto/features/future-proof-your-vehicle-with-s-cng/

            Sending NG to India is much more expensive than using it in the US. Creating LNG and moving it about triple the cost of NG. However, even taking that into account CNG cars have much lower fuel costs than diesel or gasoline. Now that the CNG cars are being mass produced the costs of the cars are falling fast. We could have switched to CNG vehicles in this country but Obama being the zealot he was, did not promote that industry but prompted electric cars. Tens of millions of CNG cars would have reduced real pollution far more than one million electric cars. Probably by a factor of ten or more, and that is a reasonable estimate on how many CNG vehicles would not be on the road with his support. The only downside is that a CNG car produces about 30% less co2 than a gasoline vehicles so we would have greatly reduced the amount of that beneficial gas in the atmosphere.

          2. tens of millions of CNG cars would have reduced real pollution far more than one million electric cars.

            Well, yeah. But tens of millions of electric vehicles will produce far less pollution than tens of millions of CNG cars.

            Don’t get me wrong, I think CNG is a great stepping stone on the way towards decarbonization. It is much cleaner than gas and way cleaner than diesel. I strongly considered buying a CNG Honda from a local dealership that specializes in buying clean fuel vehicles (PHEV, EV, Hybrid, and CNG). They are cleanfuelsutah. But eventually I just sprung for the model 3 and have been very happy with my purchase for the past 3 months.

            What will reduce emissions perhaps the most is the mass conversion of buses to electric because they use so much diesel fuel and they run almost continuously. This is happening at a far more rapid pace than EV adoption. But current batteries in buses are kind of like 1st generation Leafs; they are just mediocre. Teslas battery efficiency are amazing and V3 charging makes 0-80% refill take about 15 minutes. Game over for gas at that point.

          3. We’re a long way from $80/bbl, a level never obtained since your failed prediction back when we were all much younger than today. And there’s lots more downside potential from here, as we’re just in the opening salvos of the trade war.

  10. The agent said they were surprised the market had not improved even with large inventory increase.

    What a dumb ass.

    1. Sounds like someone actually believed what his boss told the reporter a few months ago.

  11. I was looking at a place in Santa Cruz. 1.6M. Property tax: 20K. In Dallas TX – 500K house – property tax over 10K, What taxes? The place in Santa Cruz would sell for 900K or more here.

    1. Just FYI if your seriously looking in the Santa Cruz market:

      You will pay more taxes / utilities in city limits in Santa Cruz which adds up quick. If you look outside areas like Aptos, Soquel, Scott’s Valley you would avoid much of that along with much of the crime and other political issues we have.

  12. I would argue with any of you that Dallas and Austin TX are a much bigger ripoff than California. Here you have ridiculously high prices PLUS ridiculously high property taxes. You’d have to be insane to be buying here now.

    1. I would completely agree with you. The house I bought outside of Dallas for $299k over 15 years ago – the property taxes, after homestead “exemption” – were over a third higher than what I pay here in King County today. The energy bills (electric, gas) back then were 3x+ what I pay here right now.

      Looking online, it looks there must have been a state-wide reworking of the property tax formulas or something in the last decade – they’re still high, but not the same percentage of assessed value.

    2. You should consider all taxation when evaluating your move. TX has high property tax, but no income tax. I don’t know the difference in sales taxes, but CA will soak you on income tax.

      1. “…but CA will soak you on income tax…”

        …and then give it away to newly-arrived homeless.

        1. @ 275 mph on a $peering Cal.Train , the shelterle$$ wouldn’t even come into focu$, just disembark Merced.

  13. I wish I knew how to approach this place. It’s been on the market over 4 months. No price drops so far. I don’t know that market at all and I’ll be damned if I trust any realtor.

    1. “I wish I knew how to approach this place”

      approach it with a lowball offer of 30-50% off

      1. I tried a 7% off offer on a place higher than that in San Clemente. Got laughed at. I don’t think they’re getting the message in these beach towns.

        1. Then you approach it with patience and let the bag holder come down to less of a “dream” price

        2. Also, you would be wise to get a STR in an area you are wanting to live. It sounds like you have the finances and option to do so. Many people don’t have that luxury. fwiw: you may or may not ending up wanting to live in the areas you have been mentioning. Culture shock and regret could set in along with the value of your home. I’m not trying to deter you from what your doing but offer a rational option to position you with more options than transplanting yourself into concrete.

    2. It’s been on the market over 4 months. No price drops so far.

      Holding out for wishing price. Not a serious seller. Move on.

    1. How long until makeshift ‘loft additions’ are built on the tops of the RVs around there?

      1. Yes, they can rent them out as an additional income generator via ABB or others. The next big thing!

  14. ‘Sellers and agents alike are starting to get nervous, but overall I think it will ultimately lead to more transactions,’ said Josh Stephens, vice president at Berkshire Hathaway HomeServices Warren Residential.”

    For transactions, Josh, you need buyers. Unless sellers start doing some serious sawin’ and slashin’, those overpriced shacks are going to sit unsold and those nervous agents are going to get mighty tired of ramen noodles and food bank handouts.

    1. Danville CA Housing Prices Crater 15% YOY As Public Trust In Housing Industry Plummet

      As Financial Professionals GTFO

  15. “Buyers know they have the upper hand. ‘People are making lowball offers,’ says Mr. Shapiro. ‘They’re not being shy.’”

    I’ll be lowballing these lowballing knife catchers, when the time is right. And I won’t be shy about it, either.

    1. Almost 40% of American adults wouldn’t be able to cover a $400 emergency with cash, savings or a credit-card charge that they could quickly pay off, a Federal Reserve survey finds.

  16. Remember when the President requested the Fed to reduce interest rates, around the 2018 holiday season?

    Just a few months later, the markets are convinced that the Fed is going to willingly oblige.

    1. The Financial Times
      US interest rates
      Markets believe Donald Trump will get his rate cuts now
      Expectations have collapsed as new fronts open up in US trade war
      Donald Trump is fighting what he has described as a ‘colossal surge’ of migrants heading north from Central America © Reuters
      Robin Wigglesworth and Peter Wells in New York
      5 hours ago

      While Donald Trump has been demanding the Federal Reserve cut interest rates, the US central bank has insisted it will continue to act independent of politics. Wall Street now expects the president will get his wish by another means: by harming the US economy to such an extent that the Fed will be forced to move.

      As the US trade wars have escalated — from the breakdown of talks with China in early May, to Mr Trump’s threat to impose tariffs on Mexico at the end of the month — traders have shredded their previous expectations for rates.

      The plan to impose escalating tariffs on Mexican goods unless the country agrees to help curb migration from Central America to the US caught investors by surprise and led several prominent forecasters to reappraise their outlook for monetary policy on Friday.

      “If the administration follows through on the proposed actions, we believe the adverse growth implications would prompt Fed easing,” Michael Feroli, chief US economist at JPMorgan, said in a note to clients that pencilled in Fed rate cuts in September and December.

      “Even if a deal is quickly reached with Mexico, which seems plausible, the damage to business confidence could be lasting, with consequences that might still require a Fed response,” Mr Feroli warned.

      James Sweeney, Credit Suisse’s chief economist, predicted that a cut could come as early as July. “This is no time for panic, but it might be time for some insurance,” he said.

      The reaction in markets was swift and significant. The two-year Treasury yield — one of the measures of the US government bond market most sensitive to interest rates — tumbled 14 basis points to 1.92 per cent on Friday, its third-biggest one-day decline of the past decade.

      That move capped a 34bp drop over the course of May, the largest monthly decline for the two-year yield since November 2008 at the depths of the financial crisis.

    2. Trump correctly pointed out that the September rate increase was a mistake and the Fed should not compound it with another rate increase. In hindsight many on the Fed actually are admitting that the Fed tighten too much too quickly. Trump showed true leadership and analytical abilities.

  17. Yellen bux are seeking toe tag megamansions in the L.A. hills…and the builders are partying like it’s 2006!

    The Wall Street Journal
    L.A. Developers Have a Big Problem: Too Many New Megamansions
    Builders and brokers are throwing blowout bashes and testing an array of marketing stunts amid the area’s spec home bubble
    A rendering of a Bel-Air spec home designed to look like an elaborate Spanish villa. It is asking $100 million. Moso Studio
    By Katherine Clarke
    Updated May 30, 2019 5:27 p.m. ET

    Heavy duty vehicles line both sides of many of the winding two-way streets in the Hollywood Hills, making them treacherous single-lane thoroughfares. Construction workers wave stop signs as trucks laden with glass and steel back slowly out of driveways. Empty parcels of land all over Los Angeles’s poshest neighborhoods are being transformed into lavish mansions with price tags in the tens, or even hundreds, of millions.

  18. Is 700 years alot?

    Business
    German bond yields plumb 700-year lows as deflation stalks eurozone
    Bonds Germany deflation
    German bond yields are touching the lowest levels in history, which is ominous
    Credit: business recorder
    Make it Good with CLIF Bar
    We’re making good for the world and for your body.
    Ambrose Evans-Pritchard
    30 May 2019 • 8:28pm

    German bond yields have plunged to historic lows and inflation expectations are collapsing across the eurozone, prompting fears of a gathering recessionary storm.

    The benchmark 10-year bund yield dropped to minus 0.18pc on Thursday and is testing the all-time lows seen during the brief rush to safety after the Brexit referendum. Spanish and Portuguese yields have dropped to record lows.

    A closely watched gauge of inflation expectations – five-year/five-year swap contracts – have collapsed this year and raise concerns that the European Central Bank is losing control. It is signalling a slide into a deflationary quagmire.

  19. The public outside the hotel are kept at a distance by police barriers, and gaps in the security screen where cameras might be pointed are hastily covered

    Tech billionaires Eric Schmidt and Peter Thiel among the first people to show their faces at secretive Bilderberg summit in Switzerland as 130 high-powered guests discuss Russia, cyber threats and Brexit

    By HANNAH BORNO FOR MAILONLINE
    PUBLISHED: 08:31 EDT, 31 May 2019 |

    Turkish billionaire Ömer Koç, the chairman of Turkey’s largest industrial holding company, goes for stroll in sunny Montreux, flanked by two bodyguards

    Toting a soft leather satchel, the billionaire CEO of Microsoft, Satya Nadella, arrives at his first Bilderberg meeting

    Head of French arms company Thales, Patrice Caine, is given a warm welcome to the Montreux Palace Hotel. The stylish Monsieur Caine is also a director of global beauty brand L’Oréal

    Bilderberg group steering committee member Mathias Döpfner, CEO of German media giant Axel Springer, and board member of Netflix and Warner music relaxes outside the hotel before the meeting

    Bård Vegar Solhjell, the CEO of the World Wildlife Fund, heads out for a jog before the elite talks sporting a red running top with grey detailing

    They join 130 influential men and women from 23 countries who are gathering for a heavily guarded meeting under strict secrecy rules. Bankers, Prime Ministers, CEOs and defence experts are discussing a wide range of topics including Russia, cyber threats and Brexit.

    Anti-Brexit Labour peer Lord Andrew Adonis is pictured on the phone as he goes for a stroll in the grounds of the Montreux Palace Hotel

    Marie-Josée Kravis (pictured arriving at the Bilderberg meeting today) sits on the board of luxury goods conglomerate LMVH and is on the international advisory board of the Federal Reserve Bank of New York. She is the second wife of the Wall Street billionaire, Henry Kravis

    The head of Banco Santander and director of Coca-Cola, the influential businesswoman Ana Botín heads out for a pre-Bilderberg stroll

    David Petraeus, the former director of the CIA and now a Wall Street financier at KKR, is pictured outside the venue today

    https://www.dailymail.co.uk/news/article-7090931/Tech-billionaires-Eric-Schmidt-Peter-Thiel-seen-secretive-Bilderberg-summit.html

    1. They look like they know what everyone on this blog will be commenting on next year.

      More than a hundred dignitaries from 23 countries are attending conference
      Bankers, Prime Ministers and CEOs will discuss topics under strict secrecy
      Talking points include Russia, Brexit and the weaponisation of social media
      Mike Pompeo was not on the guestlist but arrived today with Jared Kushner

    1. That’s the flip side of plummeting sovereign bond yields.

      One thing is for certain: Treasurys and stocks have decoupled, which is a substantial break with the high degree of positive correlation in the price movement of the two asset classes over most of the past decade of low-rates driven expansion.

    1. As did I. That was a fantastic time to buy, and was my first recession as an adult. As Rothschild said, “buy when there is blood in the streets.” That was the time. Looks like another good buying opportunity is upcoming.

      1. “Looks like another good buying opportunity is upcoming.”

        I’m going to dip into my retirement savings for necessities as soon as the elites start calling for another floor under asset prices. If I chicken-out and wait my savings will only buy less going forward. It’s the war on savers!

      2. As Rothschild said, “buy when there is blood in the streets.”

        Particularly convenient when you have a hand in causing the blood in the streets.

    1. “Mikhitarian said there are long-term hopes, with younger generations creating a new wave of potential buyers and increased demand supporting higher prices.”

      Wish in one hand, and **** in the other, Sarah.

    2. The bullsh!t is flowing pretty thick for now.

      “In April, national home values dropped a tenth of a percent from those in March, according to data from real estate information company Zillow. That’s not much, and zigzagging patterns in economic performance are hardly unusual. Except, it’s the first such downward motion in seven years, says senior economist Sarah Mikhitarian.”

      1. There was a time in this country when it was good that the price of something went down, because it meant that economies of scale in a free market made things affordable to more people.

        Now we cheer for the prices of everything to rise ever higher, and pray that everyone’s income can keep up with the rising tide that only lifts a select few boats.

    1. No, the surge in home improvement spending is because people are staying put. I don’t think that Pulte Homes or your average home flipper is shopping there.

      And why would anyone make a significant investment in their home for the purpose of selling it if prices have already peaked? You aren’t going to get it back at closing.

      1. Nobody in California wants to move and give up the low Proposition 13 property tax basis they established decades ago, so they stay in place much longer than would otherwise make sense in light of life cycle and geographic considerations. Proposition 13 is the enemy of California household mobility and housing market liquidity.

    1. Jim the Realtor

      I used to follow his blog regularly. He mostly covers North County Coastal San Diego. He, his wife and daughter are all in the biz. That video was slimey.

      1. Yeah he also frequents wolf street with his real estate cheerleading. I wouldn’t be surprised if he has posted here under other handles such as: John, Dave, jingle Male, doomed, I’m sure some HBBers could list many more.

    2. SocalJim isn’t exactly dull, he’s just playing the game. Here’s his honesty peaking-out from behind the curtain.

      SocalJim
      May 22, 2019 at 1:45 pm

      My base case makes sense. The debt levels are so extreme that a bout of deflation would blow up the financial system. That is a fact. So, the central banks will do what ever it takes to avoid deflation. That is why real estate makes sense. Decades ago, debt levels were much lower and some deflation could be tolerated. No more. In 2007, a bout of deflation nearly blew up the system. Since then, the debt levels have increased. So, in my opinion you have to invest with the assumption that the central banks will do what ever QE is necessary to avoid deflation. That is why I am a real estate bull. Of course there is a chance that the central banks are not able to rig the system to avoid deflation. Fact is if deflation happens, we are all screwed. Major screwed. Everyone. The currency will be destroyed. Everything. In my opinion, the trade war may help the world avoid the deflation chance since China exporting deflation may be a thing of the past so I am less worried about deflation. Make no mistake .. if deflation hits, I am wiped out. So are most others.

      1. if deflation happens…The currency will be destroyed

        Well look at that.

        I got my eggs spread around. I have a small real estate holding. If it goes up or down doesn’t matter much now. No claims on it other than mine except for that pesky $100/mo tax bill.

        I have enough USD to buy the necessities for many years, so deflation won’t ruin me. I have enough silver to buy the necessities as well, so massive inflation won’t ruin me. Enough gold to completely change things up if there is a melt down and small town life no longer suits. Enough supplies for my art/craft & etc. Not rich, just don’t need much.

        Jim, I think you are likely going to go bust.

      2. “So, the central banks will do what ever it takes to avoid deflation.”

        Like Japan did, circa 1990?

        “Of course there is a chance that the central banks are not able to rig the system to avoid deflation.”

        Like Japan was unable to do, from 1990 through 2010 and beyond?

      3. “…if deflation hits, I am wiped out. So are most others.”

        Sounds like he is inadequately diversified, like most others.

  20. Has the higher education bubble popped?

    Why fewer students are enrolling in college
    By Jillian Berman
    Published: June 1, 2019 11:21 a.m. ET
    The number of 18- to 24-year-olds attending college is dropping even more precipitously
    Getty Images

    The population of high-school graduates from which colleges can pull students is shrinking.

    Most of the headlines surrounding higher education would have you believe that students are competing for a limited number of spots at our nation’s colleges. But a new report adds to a growing body of evidence that in many cases, colleges are actually in search of students.

    The number of students enrolled in college in the spring dropped 1.7% from last year, continuing a spate of declines over the past several years, according to a report released Thursday by the National Student Clearinghouse, which tracks college enrollment and degrees.

    1. Remember the canary in the coal mine: Toys R Us Closing. Imagine what college admissions will look like 18 years from now…

      1. “Remember the canary in the coal mine: Toys R Us Closing.”

        My “moment” was Mervyn’s closing. IIRC, they went down after the 2008 financial crisis when the Sixpack family could no longer afford the basics.

      2. canary in the coal mine: Toys R Us Closing

        What kind of bird would it be if TRU failed during a baby boom? It did by the way.

        1. Where are you getting your data? US births per woman are at an all-time low at about 1.72 births per woman, not even above replacement rate.

          1. “I already showed this to you a few days ago. Thought you just ignored it.”

            I must have missed it. Send me again. It doesn’t jive with almost every reputable data source I’ve seen. The only population growth we are getting is from immigrants these days who have above-average fertility rates. But I would love to see data that shows contrary. If it is good, I would change my mind.

      3. Imagine what college admissions will look like 18 years from now

        Likely unchanged if we continue to educate foreign nationals and undocumented immigrants with greater priority than children of tax-paying citizens.

        1. Can’t see that happening forever. The number of universities expanding abroad is huge. I expect that the strong universities will expand their global reach and push into foreign markets. Notable universities such as NYU, Northwestern, Cornell, Carnegie Mellon, Georgetown, Texas A&M, etc. have already expanded. Lots of expansion in China, Korea, and Qatar/Dubai.

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