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News Of Falling Prices Only Serves To Convince More Buyers To Wait And See

It’s Friday desk clearing time for this blogger. “What do these latest developments in Jamaica and Flushing mean for the rest of Queens? ‘What we’re seeing is a shift in the market. We’re starting to see inventory building up, days on market increasing, pricing is good,’ said Donna Rubertone, manager of Daniel Gale Sotheby’s International Realty’s Bayside-Flushing office. ‘In the last year we’ve seen a shift from a sellers market to a buyers market. Buyers are more particular about pricing. They don’t want to over-buy.'”

“For several years, Atlanta has been considered a seller’s market with potential buyers sometimes bidding against each other. But late last year, the power started tilting slowly back toward buyers – and that shift has continued. ‘The market is beginning to look more balanced for both buyers and sellers,’ said broker Torrence Ford. ‘Sellers can still expect to sell in 21 days or less if their home is priced right and buyers are still able to get concessions from sellers.'”

“The median sales price for single-family homes in Boulder County dropped 3.1% to $610,000 last month from $629,500 in May 2018. The longer a home or a condo stays on the market, there’s a strong likelihood of a reduction in the asking price, he said Neil Kearney, owner of Kearney Realty in Boulder.”

“‘We are not seeing gains or losses. We are seeing a stagnation,’ said Kelly Moye, former president of the Boulder Area Realtor Association.”

“The Westport real estate market is experiencing what we call a bit of an ‘off year.’ The average list price is down approximately $33,000 from a year ago to $2,033,771 and the median price is at $1,450,000, which is also just under $200,000 from this same time last year. In the last 30 days, just over 40% of our entire inventory has taken a reduction. It’s time to dismiss the thought that a reduction in price points to desperation; it indicates an acknowledgment of the current market.”

“Pop star Gwen Stefani slashed the price of her multi-house megamansion again, this time by $4 million, for a total of $10 million less than its original listing price in 2017. Now, she is asking $24.99 million for her quirky home in Beverly Hills, California.”

“Homebuying in Newport Beach, Laguna Beach and Costa Mesa fell 20.3% in what was Orange County slowest nine months of sales since 2012. For nine consecutive months through April, CoreLogic housing stats show countywide sales failing to top the year-ago period. Builders sold 3,114 residences vs. 4,013 a year earlier, a decline of 22.4% in 12 months.”

“The slowdown in residential real estate across England and Wales is persisting, with properties lingering longer on the market in June, according to a report. ‘When a significant proportion of potential buyers begin to believe that prices will be lower in the future, a standoff is created: purchases are delayed, transaction volumes plummet and vendors become increasingly frustrated,’ said Doug Shephard, director at Home.co.uk. ‘Typically, some will break ranks and lower their asking prices, and there begins the price correction. News of falling prices only serves to convince more buyers to wait and see.'”

“Simon Rubinsohn, Chief Economist of RICS, confirmed that ‘although the growth of the Portuguese economy has gained new momentum in the first months of 2019, the housing market seems to be losing momentum. Since consumer confidence levels remain relatively strong, this loss of momentum suggests the influence of other factors, such as the financial capacity for access to housing.'”

“The real estate sector in the country is currently going through a tough phase. The number of stuck housing projects has gone up since April 2019 and hundreds of developers are behind bars or are out on bail for not delivering homes on time, according to a recent report.”

“Shobit Agarwal, CEO of Anarock Capital pointed out that all the projects were not stuck because of capital shortage. ‘If the project is doing well and it is only the capital which is required I think there are solutions to it. The problem comes when the projects are unviable, may be because selling price has gone down, sales have gone down or there are legal issues related to approvals,’ he opined.”

“The retired Albertan owners sold the unit because of the new empty homes taxes, listing agent Ian Watt says. They had used it for 11 years as a vacation home, but were looking at about $26,000 in extra taxes. ‘Albertans are leaving because they can’t afford the empty homes tax. They figure, ‘Why not stay in a hotel?’ Mr. Watt says.”

“When Honolulu Mayor Kirk Caldwell proposed a 1% tax on vacant residential properties to encourage owners to rent them out, the city was estimating a housing vacancy rate of 3% to 5% for Oahu. But data from the U.S. Census Bureau suggest an even bigger share of Oahu’s residences — more like 10% — are vacant.”

“The census’ most recent American Community Survey, covering 2013 to 2017, estimates Oahu had approximately 346,000 housing units, and just under 35,000 were vacant. And many more condo units have been built since then. Hawaii’s property taxes are among the nation’s lowest, said Gavin Thornton, executive director of the Hawaii Appleseed Center for Law & Economic Justice, which creates an incentive for people to buy Honolulu real estate as an investment – even if the properties sit vacant most of the time.”

“‘It doesn’t make sense, given the housing crisis we have, to allow this inefficiency to exist in the housing market,’ Thornton said. ‘I think the only people who are going to have a problem with this are the people who want to see housing prices go up,” he said of the proposed tax.”

“God did not descend upon Los Angeles and evict tens of thousands of poor people from their homes because He/She/It/They had some grand design for Los Angeles. Garcetti’s Manhattanization Mania did that. Today, we learn that the city of Los Angeles has 110,000 vacant apartments.”

“Two points: This is not new news. — April 21, 2016, Zwartz Talk, Help Los Angeles Now!!! 2) It is impossible to have a housing shortage and 110,000 vacant apartments! One hundred and ten thousand apartments can house over 220,000 people. When we have six times more apartment space than we have homeless people, we do not need to build a single new unit.” 

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This Post Has 162 Comments

  1. ‘Today, we learn that the city of Los Angeles has 110,000 vacant apartments…Two points: This is not new news. — April 21, 2016, Zwartz Talk, Help Los Angeles Now!!!’

    I mentioned this the other day. We’ve known for years that there was a huge oversupply. Yet we have to suffer this shortage crap day in and out. And now population is falling (big surprise) and there are thousands of airboxes under construction.

    1. but shortage! I’m thinking instead of programs to provide needles and food we should have programs to direct the homeless into these empty shacks and claim squatter rights.

      1. What’s really needed are programs to round up progressives and ship them to Venezuela to experience the joys of socialism first-hand.

    3. The “American Community Survey” referenced in the Hawaii story isn’t constitutional and despite the advice in the article below one can tell the surveyor standing in your doorway, as I did, to “shove it” without any fear of a fine in the thousands of dollars or any sort of imprisonment.
      https://www.nbc12.com/story/20543810/legit-or-scam-american-community-survey/

      Mother-in-law put her condo, that she has lived in for decades, up for sale a couple of weeks ago (Chicago burbs). Got an offer on the first showing for close to full asking price. She wants full price (above the comps) so the buyers find another one that’s cheaper in the same complex. Two days later another couple offer full price and she accepts. A week later that offer falls thru for some reason.

      The next weekend somebody else shows up and my MIL gets another offer at full price. This one seems to be holding and it will close in two weeks.

      Needless to say my original advice to sell below the comp(s) “because the market isn’t healthy” has been wildly derided and laughed about by my Mid-West relatives.

    4. “…city of Los Angeles has 110,000 vacant apartments…”

      (110,000 * 2) potential occupants is really a stunning statistic. That’s more that the total population of many towns.

      1. A hidden ghost city in plain sight.

        My town ( the County Seat) has a population below 5,000.

        My county has less than 25,000.

        1. What is it, something like 50 million vacant apartments and houses in China? That would house almost 1/3 of the United States.

          2. That is true. That would imply about 12.5 – 15 years to absorb the new supply at current population growth rates in China (50 million * 2-2.5 / .05% population growth rate).

        1. Interesting that they are 2 years behind on the reporting this… shortage!!! Buy now before there gone FOREVER or at least until they build more or release the zombie homes the banks are holding onto

  3. ‘They had used it for 11 years as a vacation home, but were looking at about $26,000 in extra taxes. ‘Albertans are leaving because they can’t afford the empty homes tax. They figure, ‘Why not stay in a hotel?’

    Indeed. This irrational behavior exposes the motivation as speculation, like the Hawaii condos. And it applies to all secondary housing purchases. A huge chunk of so-called demand is simply gambling. Did you know in the US you can get a government backed loan to buy a shack you don’t live in?

    1. its 2 things

      1. gambling on appreciation – and counting on making $s
      2. ego – being able to say that you have a vacation home in Hawaii, or the bahamas or the south of france. It is amazing how many upper middle class folks are bought into this hype

      1. “….2. ego – being able to say that you have a vacation home in Hawaii, or the bahamas or the south of france. …”

        So true.

        How many times at BBQ’s and social gatherings have I heard that one.

        But here is a fun factoid.. No one cares about your vacation home, villa, or ranch. Such talk can actually create problems. Wait until people you hardly know want to “borrow” it for a weekend.

  4. ‘The median sales price for single-family homes in Boulder County dropped 3.1% to $610,000 last month from $629,500 in May 2018’

    One of these things is not like the other!

    ‘We are not seeing gains or losses. We are seeing a stagnation’

    1. ‘We are not seeing gains or losses. We are seeing a stagnation’

      Welcome to the wacky world of DingbatRealtors, DebtDonkeys and HousingHens.

    2. In a mix market, price drops are inconceivable; hence, they must be called something else.

  5. ‘The average list price is down approximately $33,000 from a year ago to $2,033,771 and the median price is at $1,450,000, which is also just under $200,000 from this same time last year’

    This is just the past year. Prices in Connecticut have been sinking like a turd in a well for several years.

  6. “The Westport real estate market is experiencing what we call a bit of an ‘off year.’ The average list price is down approximately $33,000 from a year ago to $2,033,771 and the median price is at $1,450,000, which is also just under $200,000 from this same time last year. ”

    It’s a mix problem, thats all! END OF STORY

          1. From fiscal 2017 to 2018, it reported a net loss of $268 million, narrowing from a net loss of $338 million.

            another uber/lyft business model company. a sure win -doomed the realtor

        2. in Seattle there are more dogs that have a city license that children that attend school.

          They are going to make a killing

          2. more dogs that have a city license that children that attend school

            A lot cheaper and shorter life spans. I honestly don’t understand how people can afford to have more than two kids these days.

          3. “I honestly don’t understand how people can afford to have more than two kids these days.”

            I doubt that a rational discussion about the cost of starting a family ever happens among those with a family. After the first child it’s much easier to discuss how many, but that first one is a unilateral decision, IMHO.

          4. Come 2025, a million+ children from central america will be under going their indoctrination in those schools. Not to worry.

  8. “Pop star Gwen Stefani slashed the price of her multi-house megamansion again, this time by $4 million, for a total of $10 million less than its original listing price in 2017. Now, she is asking $24.99 million for her quirky home in Beverly Hills, California. ”

    “Ms. Stefani, 49, bought the 15,018-square-foot property in 2006 with ex-husband, rocker Gavin Rossdale, for $13.25 million. ”

    Don’t give the house away Greedhead!

    1. I wouldn’t pay $2M for that “quirky” POS. Pool too small, too much crazy-tile on the walls (referee kitchen, really?), view of the ugliest hill ever (complete with cell tower). Yikes.

    2. Why do these LA mansions always have a tennis court? Seems like a lot square footage going to waste, a la Hawaii condos.

    1. “Think about this; think about how stupid the average person is, and then realize that half of ’em are stupider than that.”

      -George Carlin

    1. Zillow sez buying is more advantageous than renting after 2.9 years. How can this be possible given that inventory is piling up, the market is cool, price reductions are increasing, and buyers are balking?

      Seems unlikely that you’d break even in under 3 years under those conditions.

      1. When I was growing up, I remember 5-7 years as the break-even point. But that was in the days when it was assumed that most of your equity gains would be earned, not unearned. And as far as house prices always going up, I remember my parents just breaking even twice.

  11. “Hawaii’s property taxes are among the nation’s lowest, said Gavin Thornton, executive director of the Hawaii Appleseed Center for Law & Economic Justice, which creates an incentive for people to buy Honolulu real estate as an investment – even if the properties sit vacant most of the time.”

    Property taxes need to be raised as part of bubble popping efforts. Make it a progressive property tax or something that ramps up rapidly on properties that are 3x the median value. Call it a mansion tax, whatever. This would function as a wealth tax and would have a tremendous value.

    And while we’re at it, let’s resurrect a phenomenal idea of a land tax. Regarding a land value tax, Adam Smith said “nothing [could] be more reasonable”. Milton Friedman said it was “least bad tax”. Far better than taxing income.

    2. This would function as a wealth tax and would have a tremendous value.

      The housing bubble was not caused by lack of “tremendous” taxes. Problem Solving requires correctly identifying a cause and treating that.

      1. Agree. The cause of the bubble is multifactorial. But one thing we see in China (biggest bubble of all) is that housing is accumulated because there is almost no property taxes. The carrying cost is so and so it is easier for these things to sit empty. Incentives matter, even for bubbles. Raise property taxes and you’ll nudge people out of a mania. It’s been working in Canada.

      2. “Not caused by a lack of… correctly identifying a cause”

        I love some of your comments, Blue, like this one. With succinctness and clarity, you often cut right through a wishy-washy argument to the heart of an issue.

  12. Our resident socialist just posted this:

    OneAgainstMany

    “Capitalism doesn’t work with medical system.”

    ‘If Cosmetic Surgery Has a Working Market, Why Can’t Medical Care?
    Here’s a clue: it’s about third-party payers’

    ‘For the three most popular procedures in 2016 (botox, laser hair removal, and chemical peel – all nonsurgical cosmetic procedures), the nominal price for each has actually fallen since 1998 by large double-digit percentage declines of -11.3%, -21.7% and -34.8% respectively.’

    ‘The prices for those procedures have fallen in price since 1998 measured in current dollars, even before making any adjustments for inflation. Note also that the demand for those three procedures has increased dramatically, especially botox procedures (29-time increase since 1998) and laser hair removal (9.5-time increase).’

    ‘The main economic lesson here is that the greater the degree of market competition, price transparency and out-of-pocket payments, the more contained prices are, in health care or any other sector of the economy. Another important economic lesson is that the greater the degree of government intervention, opaque prices and third-party payments, the less contained prices are, in health care or any other sector of the economy. Some important lessons to consider as we attempt to reform national health care… once again.’

    https://fee.org/articles/if-cosmetic-surgery-has-a-working-market-why-can-t-medical-care/

    BTW, socialism sux.

    1. Don’t blame this one on Obama. Opaque pricing and third-party payments were around long before government intervention.

      1. Why did you bring up Obama when the topic was socialism vrs. capitalism? Are you trying to imply that Obama was a socialist?

    2. + 1. Prices would drop like a rock If we got some free market capitalism In pricing verses price fixing medical industry cartel monopolies.

      1. I do blame Obama for furthering a price fixing medical industry cartel Monopoly . Charing people pursuant to how much money they make verses what demand or insurance risk factors are is a joke. Making young people pay for services they don’t want or need was the wet dream of the medical cartel.

      1. “Mark Weisbrot, an economist and a co-director of the Center for Economic and Policy Research, a think tank in Washington, said the gas shortages were an intentional result of the U.S. sanctions under President Donald Trump.”

        Jesus Christ.

    4. There’s also much more of a free market in dentistry and orthodontics for the same reason.

    5. I wonder if there is any difference between elective (non-necessary) cosmetic surgery acute conditions like heart attack, stroke, cancer, pandemics, etc.

      1. Medical services is just another product. Where it get touchie is that product can be life saving at times. That’s why people are so scared to rebel against gouging from that sector.

      2. if there is any difference

        Emergency room stuff isn’t where the major expenses are. People can choose where to go after the emergency room for the major stuff. Here, you would have to go to at least Rochester for anything major after the ER anyway.

          1. Medical intervention should not be allowed to interfere with natural selection in cases such as this.

          2. On seeing the price tag and before reading the story, the first thought that crossed my mind was ‘monopoly ‘:

            “Part of the reason the bill is large for most snake bite victims is because there is only one manufacturer and limited supply of the antivenom.”

            That’s a tough market in which to foster competition, as the number of idiots who pose for rattlesnake selfies is too small to generate much product demand.

          3. In our ER we always have plenty of anti-venom. I had to treat a couple of patients from rattlesnake bites a couple of years ago. One was a readmit. It’s pretty surreal to see the effects of the venom on the tissue.

          4. natural selection

            LOL! Or as I like to say “clarification of the gene pool.”

      3. Skyrocketing rates of Type 2 diabetes shows that the U.S. medical/pharmaceutical/lifestyle system is an abysmal failure. More than 100 million Americans are living with diabetes or pre-diabetes. But I am sure the industry profits quite hand$omely from this chronic disorder.

        1. Type 2 diabetes is more of a processed food and added sugar problem than a medical problem. Add in culture that is antagonistic to walking/biking/running and where you move from one box to another in a vehicle and you have the perfect recipe for type 2 diabetes. Low sleep, endless screen time, genetic predisposition all contribute.

        1. Here is a different take:

          “The fact is that people need insurance for the highest costs they face. They may be able to pay for Lasik, a nonessential, nonemergency procedure for which consumers have plenty of time to shop around. But the biggest-ticket items — cancer care, cardiac surgery, organ transplants — are beyond the reach of all but the richest, and not so easy to shop around for when they’re needed.”

          Excerpt from “Why An Open Market Won’t Repair American Health Care” at NYT.

          3. Than I would like to know why for many years of my life a more free market system of medical care kept the prices down. In the USA.

            I lived it and I remember it well. On top of everything else you got better care than I see going on today.

            I think i remember that they had some government run clinics for the poor or some form of government assistance for the needy. They did have a welfare state sector but it didn’t outnumber the majority middle to upper class.

            But interesting enough we had a majority middle class , therefore the needy were in lessor numbers.

            Look, we didn’t have people dying on the streets, or thousands of homeless people parking on sidewalks. We didn’t have houses setting vacant, or home prices being beyond affordable to the low to upper middle class.

            We had nobel concepts like ” The war on proverty” here in the USA.

            Do you think lenders would let dumb ass borrowers pay 20% more for a house in one year. Lenders were not into risking funds so they would either make the dumb borrower come up with more down payment or reduce the risk on what might be fraud or speculation on a piece of real estate if it rose that fast in one year. Course those were the days when lenders felt obligated to not lose depositers funds before Casino Nation /Globalism was operative.

          4. ‘Do you think lenders would let dumb ass borrowers pay 20% more for a house in one year’

            The vast majority of US shack loans are government backed. And if they default, they’ll give them another one! Probably with no appraisal or income requirements. Compare that to a car loan. If you defaulted on a car loan, would the lender give you another one with even better terms? Heck no. I know a person who defaulted three times since 2006. One time after a year, unca sugar wrote off the years missed payments!

          5. @IByHousing Wizard

            “Than I would like to know why for many years of my life a more free market system of medical care kept the prices down. In the USA.”

            Ask yourself this question: Assume you have a heart attack. Would you rather 1960s prices and technology, or 2010s prices and technology?

            The ways we intervene medically nowadays did not exist in the past. Prices were cheaper because less was possible.

          6. Technology makes things cheaper, not more expensive.

            How much does Tylenol cost in a hospital?
            Reader’s Digest offered examples of other overpriced hospital items: single Tylenol pill: $15, which can add up to $345 for an average patient stay. a box of tissues (sometimes listed as a “mucus recovery system”): $8. nonsterile gloves, one pair: $53, or $5,141 for an average patient stay. Oct 12, 2016

            Why does aspirin cost so much in the hospital?
            For starters, most emergency room prices are inflated based on the rates at which insurance companies will reimburse the hospital on a patient’s behalf. That’s why a single aspirin can cost $30 per pill in the E.R., which is more than six times the price for a bottle of them at the drug store. Jun 27, 2013

            How much does a hospital charge for an IV bag?
            Hospital bills for IV therapy vary wildly: $787 for an adult, $393 for a child at one hospital, and $546 for the saline, plus $127 for administering it, at another. Aug 25, 2013

            A Band-Aid Can Cost $629 In America And Other Facts – Digg
            digg.com/2016/expensive-band-aid-us-healthcare

            May 20, 2016 – The hospital then bills Malcolm $629. Now, to be fair, the Band-Aid did not cost $629, that adhesive strip of sterile gauze only accounted for $7. A large majority of that bill, which Malcolm’s insurance company managed to knock down to $440.30, is from the Hospital’s “service fee.”
            The curious case of the $629 ER bill —and one expensive Band-Aid
            https://www.pri.org/stories/…10…/curious-case-629-er-bill-and-one-expensive-band-ai…

            Oct 16, 2017 – The doctor cleaned up the cut, put a Band-Aid on it, and sent them home. … According to Kliff, hospital executives argue that this is the cost of …
            The case of the $629 Band-Aid — and what it reveals about American …
            https://www.vox.com/2016/5/13/…/emergency-facility-fees-american-health-care

            May 13, 2016 – “So I wrote the hospital a letter, expecting them to say, yeah, that’s a bit … First, he points out that the Band-Aid didn’t cost $629; it was actually …
            A Band-Aid, a $629 ER bill, and a hard truth about American health …
            https://www.vox.com/the-impact/2017/…/band-aid-er-bill-truth-american-health-care

            Oct 17, 2017 – Why are American health care prices so incredibly high? … that the hospital was charging $629 for a five-minute visit and a Band-Aid.

            Do I want a 2019 band-aid? Tech!

          7. @Ben Jones

            Doesn’t change the fact that some types of medical interventions possible in 2019 did not even exist in 1960.

            Take surgery. Some types of surgery you can have done today were impossible or highly risky in the past. That means more training to specialize (time + money) and more complex equipment (higher fixed costs).

            With that said, I agree that utilization of technology is the best way to lower costs. But the industry is heavily regulated and lobbied by professionals, so any movements towards more capital utilization and less labor will be met with outright hostility.

          8. “I would like to know why for many years of my life”

            What years were those? As in dates?

          9. Hospitals are the most expensive form of care. There are so many reasons for this. Last year I had a patient who was in his 70s and was from Sweden (socialized medicine). He was a tourist and was the easiest patient I ever had. Every time I went in to get vitals he had already done them (I still had to redo them). The amount of interaction from physical therapy, occupational therapy, dietitians, physicians, nurses, case managers, social workers, medical billing, chaplain, etc. creates so much work.

            The myriad reasons for why the US medical system is expensive is extremely complex and better suited for another blog. But a huge amount of waste is in the billing/administrative/insurance industry. If you went to a Medicare for all system you’d have better outcomes at lower costs.

    6. Where I live the non-profit (heh heh) hospitals don’t even pay property tax to the county on their facilities.

      1. All the advances in medical care should of lowered the costs even more, in my opinion.
        They kick you out of the hospital far sooner than they use to for instance.
        I think they actually had less medical deaths in the period I’m talking about than the malpractice and big pharma deaths they report today.

        They can do some operations easier , but that should of reduced the costs with less down time in the hospital.
        But, in answer to your question, I think I would of stood a better chance of staying alive during the timespan I’m talking about , than modern day.

        1. Please don’t misunderstand that I’m not grateful for some of the life saving measures of Medical services. It’s just that Medical is a price fixing monopoly these days.

    7. ‘The main economic le$$on here is that the greater the degree of market competition, price tran$parency and out-of-pocket payment$, the more contained price$ are, in health care or any other $ector of the economy.

      Narci$$istic Cosmetic Apple’$ are knot Life $aving orange$ …

      ‘For the three most popular procedure$ in 2016 (botox, laser hair removal, and chemical peel – all nons$urgical cosmetic procedures), the nominal price for each has actually fallen since 1998 by large double-digit percentage decline$.

      What Mega.Industrial.Medical.Complex … equipment & device$ & $support $taff are needed?

      Botox, hair removal, chemical peel

      Versus

      Open heart $urgery, kidney dialysis, brain tumor removal

      Major Medical Device$, like $helter.$hack Hou$ing, … Only & alway$ goe$ up$ … & up$ … & up$

      Look out yer window, that new x5 $tory building with $olar panel$, that’s the parking $tructure for: Thee New Ho$pital!

      Where’$ the Mega.Indu$trial.Medical.Complex getting the fund$ to build such facilitie$ & @ what % intere$t rate are they charged for such “long term” expenditure$?

      Poor inquiring minds are left in debt & wondering.

      1. the greater the degree of market competition, price tran$parency and out-of-pocket payment$, the more contained price$ are, in health care

        This!

      2. Ben Jones,

        I forgot to mention as you did the government backed loan . Government interference is no doubt a big factor.

        1. The GSE’s used to be 25% of the market, then half and not too long ago, over 90%. I’m not sure about now. The whole time prices shot up except for the crash. Does anyone doubt these entities do everything they can to push prices up? And they exist to provide “affordable” housing. Just one example I used last decade was, Phoenix and Flagstaff. Loan limits in Flagstaff were $100k higher than Phoenix, and magically, prices were $100k higher. Shazam! And it’s the same all over the country. Prices drift up to these limits, they get raised and up they go again. This is why you’ll find California like prices in Alaska and Hawaii. Similar loan limits.

          1. Any thoughts on why the Republicans in power are happy to let the GSEs continue to run the U.S. housing market like the central committee of a communistic government, instead of restoring private market forces to restore balance between prices and means to pay them?

        2. Any thoughts on why the Republicans in power are happy to let the GSEs continue to run the U.S. housing market like the central committee of a communistic government, instead of restoring private market forces to restore balance between prices and means to pay them?

          Because they are no better than the Ds, they just serve a different constituency that happens to really like manipulated housing prices?

  13. Amazon effect at work in Arlington VA. You won’t find this anywhere else.

    ——————–
    Arlington home values to rise 17.2%; inventory has ‘fallen off a cliff’
    By Jeff Clabaugh | June 13, 2019 4:30 am

    The Northern Virginia Association of Realtors has revised its forecast for home price appreciation in Arlington County this year to 17.2%.

    The arrival of Amazon’s HQ2 prompted the revision.

    “This is a market response to the Amazon HQ2 announcement with investors competing with residents for a shrinking number of homes for sale,” said Terry Clower with the Northern Virginia Association of Realtors on the market forecast.

    “The price gains we foresee do not reflect an overall bubble in housing prices, but rather reflect the specific circumstances of our current market,” Clower said.
    ———————-

    https://wtop.com/real-estate/2019/06/arlington-home-values-to-rise-17-2-this-year-inventory-has-fallen-off-a-cliff/

  15. ‘What we’re seeing is a shift in the market.

    Since these “shifts” are exclusively downward, why can’t these REIC shills just acknowledge that what they’re seeing is a cratering housing market?

  16. “Pop star Gwen Stefani slashed the price of her multi-house megamansion again, this time by $4 million, for a total of $10 million less than its original listing price in 2017. Now, she is asking $24.99 million for her quirky home in Beverly Hills, California.”

    Gwen Stefanie and her parents have been known to vacation here in Santa Barbara. Movie stars and other celebrities consider this area a refuge of sorts. I can’t imagine our area’s real-estate brokers and agents name-dropping just to sell homes. (Or can I?) And I certainly hope it never comes to this:

    I’ve Seen the Future, and It’s Fabulous!

    Have a great weekend,

    Barb
    Santa Barbara Bubble
    sbBubble.com

    1. “One evening not long ago, this site’s administratrix caught sci-fi classics Blade Runner and $oylent Green …”

      apropo$ (adj.):
      of an appropriate or pertinent nature

  17. “They figure, ‘Why not stay in a hotel?’ ”

    That would have been more cost effective all along. Unless, of course, you assume housing prices/values will increase double-digits forever. Equity, baby!

  18. “A huge chunk of so-called demand is simply gambling. Did you know in the US you can get a government backed loan to buy a shack you don’t live in?”

    The Fed, GSEs, Gov’t. pull out all the stops to re-create the “wealth effect” after the GFC. Well, they succeeded in spades. Tons of cheap credit, artificially low rates, and other forms of liquidity were thrown at the market. With essentially the same playbook as the last two bubbles, plus QE and other exotic, unprecedented alphabet soup policies. Did they really expect a different outcome?

    “Insanity: doing the same thing over and over again and expecting different results.” – Albert Einstein (misattributed) – Narcotics Anonymous

    Using the cattle prod of ZIRP, savers were essentially forced into much more speculative (risky) investments. Savers and pensioners (and pensions) were screwed, and mostly still are, since safe time deposit accounts are barely paying 2%, while credit card interest rates are typically north of 15%. This is called “the wealth effect”, but for whom? A key principle of investing is “risk-adjusted returns”. Speculation isn’t investing. Speculation = gambling.

    “An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” – Benjamin Graham

    Confronted with the challenge to distil the secret of sound investment into three words, we venture the motto, Margin of Safety. – Benjamin Graham

    “The individual investor should act consistently as an investor and not as a speculator.” – Benjamin Graham

    “The essence of investment management is the management of risks, not the management of returns.” – Benjamin Graham

    The housing market has been turned on it’s ear. Thousands of properties sitting vacant at ridiculous prices while demand for affordable housing is high. The Fed is a cabal of unelected and unaccountable members of the banking cartel in charge of the Nation’s currency and monetary policies, with allegiance to the private banks and elites; not the citizens. If anyone disagrees, just look at the huge disparity in wealth and income, and the gutting of the middle class. This is courtesy of the Fed. And yet they claim “no inflation”, but don’t count housing, healthcare, education costs in their “2% inflation” model. And yet, here we are.

    The bottom line is that as long as a central bank (= central planning) is in charge of the economy, we can expect adverse outcomes. Just look at any other centrally-planned, command economy to verify this.

    “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand” – Milton Friedman, Nobel Laureate Economist

    https://www.ft.com/content/46c4b186-8308-11e9-b592-5fe435b57a3b
    Federal Reserve
    Fed candidate slams bank’s ‘Soviet’ power over markets
    Trump pick Judy Shelton questions if Fed should set interest rates
    James Politi in Washington May 31, 2019

    “How can a dozen, slightly less than a dozen, people meeting eight times a year, decide what the cost of capital should be versus some kind of organically, market supply determined rate? The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?” Ms Shelton said.

    “If the success of capitalism depends on someone being smart enough to know what the rate should be on everything . . . we’re doomed. We might as well resurrect Gosplan,” she said, referring to the state committee that ran the Soviet Union’s planned economy.

    1. Red pill,

      Great post. We have become Casino Nation instead of a market that responds to actual needs.

      1. +1000000

        Jeebus, the world doesn’t revolve around her decision to stay or go. But try telling her that.

  20. Owners of Utah rare coin shop plead not guilty to alleged $200 million silver trading scam
    Dennis Romboy
    KSL
    Jun 14th, 2019

    “SALT LAKE CITY — The owners of a well-known Utah rare coin business accused of running a $200 million silver trading scam pleaded not guilty in federal court Thursday.”

    “A federal grand jury returned a six-count indictment last month against Gaylen Dean Rust, 59, his wife, Denise Gunderson Rust, 59, both of Layton, and their son, Joshua Daniel Rust, 37, of Draper, in connection with an alleged Ponzi scheme.”

    “The government claims the company defrauded at least 500 investors nationwide of at least $200 million since 2008. The Rusts are accused of tricking people into believing they were pooling their money to buy and sell silver, but the funds were allegedly used to pay other investors.”

    1. Just goes to show that you don’t need cryptocurrency to run a scam. Just dupe your fellow worshipers into putting money in to gold and silver.

      1. I’ve been dealing with my local coin shop for years with no issues. The “pooling your money” concept should’ve been a huge red flag, as most people who buy or sell precious metals are fiercely individualistic and intend to stay that way, notwithstanding the globalists’ attempts to herd us onto their incorporated neoliberal plantation.

      2. Got a letter in the mail from an electricity mine scam. Let them handle your electric bill and they’ll hook you up with cheaper solar power. Problem is they just jack your bill up, according to a quick search.

  21. Talking to a friend of mine yesterday, his sister and her husband are flippers – buy a place, live in it a few years, “fixing” it up all the while, then sell for $$. Not sure what state they’re in, but I’m guessing east coast. Now they seem to be stuck with one that wont move and they are eager to bail because the property taxes are big $$$ and are killing them. In effect they want someone who is dumber but has more money than them to bail them out. Hope they get it good and hard!

    One thing about Hawaii property taxes, your taxes are a function of what the properties around you are paying, so you can have a shack thats been in the family for generations and if a Zuckerpig moves in next door for a 100 million dollars, your property taxes will go up accordingly under the assumption yours is worth similar. Thats why there are almost no locals who own near the beach anymore, its mostly very wealthy mainlanders who use them as vacation rentals. The few remaining local owners do the same thing – the job market is too weak and pays too little but that beach shack can get maybe a grand a night in rent. Its also why you have to be careful if you buy in Hawaii not to live someplace thats really nice with open parcels nearby – you could be taxed out of your property virtually overnight. Lot of my friends have stories of spending holidays at their grandparents shack on some mind blowing beach, only to lament the loss of that property as the area is now all mansions owned by people who rarely visit.

    1. I’ve been to Hawai’i just a handful of times. My sister lived there and graduated from the University of Hawai’i about 6 years ago. The article Ben posted above seems to indicate that Hawai’i has some of the lowest property taxes in the US. Is this not the case? Maybe they are low in percentage terms, but large in absolute terms once the value gets pushed up by the mansions from mainlanders and foreigners.

      1. If you take an average across the state the prop taxes might be low but you have to factor in that there are thousands of homes that have catchment water and septic/cess pool, with no county maintained roads to the property – just a dirt road. Some are even solar only. Some don’t have electricity at all! Truly off grid.

        The other group that doesn’t pay much is the agricultural designated properties. Many are small farms, but there are also many rich people who bought “gentlemens” farms where they’re allowed to build a residence and 1 farm structure (barn/equipment garage) and still qualify as ag with super low property taxes. I heard one guy was growing grass – maybe turf for golf courses, I don’t know – on his property. Its why you see people all over the state that will have a cow, sheep or goat on their property – in order to keep that ag designation. You pay less than a 1/4 of what you would if you didn’t have that.

        >50% of the politicians come from big land owning families and are there to protect the families interests. Any new business opportunity gets funneled to them – green mandates to go to renewables – they lease their land for solar farms, grow trees for biodiesel, etc. Its still a plantation.

        1. Good insight, thanks for the boots on the ground. Interesting work-around regarding the sheep or goat on the property to reduce property taxes. Loopholes will be loopholes I suppose.

  22. “The owner$ of a well-known Utah rare coin busine$$ accused of running a $200 million $ilver trading $cam”

    “Render unto Cae$ar the things that are Caesar’$, and unto God the things that are God’s” (Ἀπόδοτε οὖν τὰ Καίσαρος Καίσαρι καὶ τὰ τοῦ Θεοῦ τῷ Θεῷ)

    There might be some question$ awaitin’ @ the $ilvery Pearly gates of Heaven …

    1. ‘Throughout the year, there has been a substantial increase in investors purchasing homes at foreclosure auctions, Blomquist said. “These are typically folks who are going to flip homes,” he said. “And they are counting on the market to bounce back.”

      Wa? Foreclosures?

    2. So much for asking the over priced inflated zildo estimate, but on those greedbag goggles bag holder. One year forecast even shows more decline. People like this deserve nothing

      1. Haha . . . didn’t even look at the Zestimate or the one-year forecast! How much do you think those 2018 “updates” cost? The updates look pretty dated, IMO.

    1. That’s a beautiful home, but I’d be afraid to raise children in such a setting for fear of “placing the bar too high.” There’s nothing to be ashamed of being middle-class.

    2. High end is tanking, the last one you posted right at the SALT deduction price, will be CR8R in time but to many “my neighbor sold there’s for x dollars last year” greedbag speculators still trying to play the game. Can’t wait for all these greedy turds and realturds to get what they deserve (nothing)

      1. Agreed! Poway is a tale of two markets at this point: >$1M is taking a hit; <$1M hasn't budged.

        1. It’s not really two markets, as buyers who might have been willing to pay over $1 million when prices were rapidly increasing can hedge by joining the under $1 million demand pool when the market is cooling and price appreciation is decelerating. I saw this in the Bay Area after the tech stock crash…the top end collapsed while the low end kept appreciating, for a while, as high end buyers decided to slum it rather than get caught with very expensive falling knives bought at a market top.

          1. Do the price drops seen at >$1M eventually cascade to <$1M or is there just a compression around $1M?

          2. decided to slum it

            My husband threw this home out yesterday: https://www.zillow.com/homes/12827-Elmfield-Ln,-Poway,-CA-92064_rb/

            It’s smaller than the rental we currently live in but has a useable yard and a community pool. The house and lot are also smaller than the Encinitas house we could move into if I can get transportation assistance to keep my son in his current PUSD school placement. I’m confident that I can get an interdistrict transfer; I’ve already spoken to representatives from both districts.

            I’d prefer this house if it were priced to its recent direct comp at $875K: https://www.zillow.com/homes/16107-Summer-Sage-Rd,-Poway,-CA-92064_rb/

            Hmm, listing removed yesterday.

          4. “I’d prefer this house if it were priced to its recent direct comp at $875K”

            Your husband is more of a man than I am. 🙂

          6. Your husband

            Seems pretty irrational to me and my close friends. The monthly mortgage, property taxes, insurance and utilities on the Encinitas house are equivalent to our current monthly rent, which doesn’t include our hefty water and electric bills. I’m really trying to understand his hesitation. I’ve mitigated almost every argument he has against moving there. What am I missing?

          7. I was a fairly successful engineer, never missed a single revolving debt payment in my entire life, currently debt free, own a house, and I am struggling to get two kids through college on the “pay as you go” plan. I couldn’t (wouldn’t) begin to comprehend a buying a home at $875k even if I had the cash. I suppose living through the 70’s recessions, fuel shortages, inflation, etc., scarred me for life. Older and wiser, I completely understand the inference of stories like, “The Emperor’s New Clothes.” Anyway, good thing California is a walk-away state.

          8. I couldn’t (wouldn’t) begin to comprehend a buying a home at $875k even if I had the cash.

            The unspoken expectation is that I’ll be the one paying for the mortgage and reentering the workforce. As I’ve mentioned before, globalism, pregnancy discrimination and autism threw a few monkey wrenches in my career.

  27. They are definitely price-fixing and it starts at the source: med schools intentionally restrict the supply of doctors to drive up their wages. I read somewhere that the number of MD degrees conferred per year in this country hasn’t substantially increased in 50 years or so. I believe that the boards that accredit new schools are run by doctors, who have an incentive to restrict supply. The foxes are running the chicken coop.

    1. Being an MD in the US right now is almost unbearable with the terrible implementation of most electronic medical record systems. The system is at a breaking point and burnout is rampant.

  28. Idaho house prices are so high that this Wall Street firm warns of ‘sharp slowdown’

    BY JOHN SOWELL| JSOWELL@IDAHOSTATESMAN.COM
    3 hrs. ago

    While Ada and Canyon county home prices keep setting records, a credit rating service warns that Idaho home prices are among the most overvalued in the nation.

    Fitch Ratings estimates that home prices in Idaho are overvalued by 20% to 24%. That ties the Gem State with Nevada for the highest overvalued prices in the nation.

    “The combination of above-average home price growth and below-average income growth causes us to be concerned that home price growth isn’t sustainable and is now increasingly vulnerable to a sharp slowdown or price correction,” study author Grant Bailey said in an email to the Idaho Statesman.

    The Wall Street analytical firm weighed five metrics in determining the most overvalued housing markets in the nation: change in home prices, change in rental prices, nominal income growth, population growth and unemployment.

    Last year, home prices jumped 16.3% in the Boise area, far higher than the 3.7 increase in incomes, the Associated Press reported.
    Despite a low unemployment rate that has hovered between 2.7% and 2.9% over the past year, “real income growth has been slacking,” Bailey said.

    Real income, which measures buying power, grew 1.7% nationally between the first quarter of 2018 to the first quarter of 2019, but just 0.5 percent in Idaho, Fitch Ratings said.

    Idaho’s home prices have been overvalued for several years, Fitch Ratings said. They were overvalued by 10% percent to 14% in the first quarter of 2017 and 15% to 19% in the first quarter of 2018.

    Mike Turner, an agent with Front Street Brokers in Boise, disagrees with the assertion that Boise’s market is overvalued. He said the market is being dictated by high demand and low supply.

    “Is it overvalued?” he asked. “I look at places like Seattle and Portland, where I see a lot more frenzied activity. Those areas make me way more nervous.”

    Demand is so great that if the economy melted, it would have little immediate effect on local home prices, he said.

    “It would likely still take a year or two for home prices to significantly change, because there’s so little inventory,” Turner said. “There’s so much pent-up demand.”

    Fitch’s analysis says Portland home prices are overvalued by 10% to 14%, while the Seattle market is “sustainable,” after having been rated as overvalued by 5% to 9% during the first quarters of 2017 and 2018.

    Seven of the nation’s biggest metropolitan areas had prices that Fitch determined were overvalued in the first quarter. Prices in Phoenix and Dallas-Fort Worth were 10% to 14% too high. Denver, Atlanta and Tampa were high by 5% to 9%.

    Fitch estimated that home prices in about a fifth of the nation’s metropolitan areas are more than 10% overvalued. Nearly half of those counties are in California, Texas and Florida.

    1. “Fitch Ratings estimates that home prices in Idaho are overvalued by 20% to 24%.”

      Considering that they haven’t had such an extreme bubble in towns like Jerome, Mountain Home, Rexburg, Lewiston, Pocatello, etc., Boise is responsible for the vast majority of that overvaluation. Taking Boise by itself, I would guess its median prices are overvalued by 55-60%.

    2. Someone please explain to me why in these articles that realtors, brokers and agents always show up and get asked about whether or not the prices are too high. How does anyone think they’re going to answer?

      Was there a follow up question to the UHS that included the price appreciation versus income growth numbers, and what evidence he had to support how much longer he thought the can could get kicked down the road?

      1. Agree – rarely, if ever, do they ask how prices will continue to the moon given local wages cannot support the prices. So, it has to be something else…

        Since I am boots in Boise, I can tell you there is a sentiment that the out of state migration from CA, WA, and OR will not stop and that the population is going to continue to grow – as those urban areas become unlivable for many reasons, people are gonna leave. Out of state money (equity and remote worker salaries) and developers/investors have distorted the market.

        We are living in crazy times, no doubt.

        1. I can tell you there is a sentiment that the out of state migration from CA, WA, and OR will not stop and that the population is going to continue to grow – as those urban areas become unlivable for many reasons, people are gonna leave.

          Newsom and Scott Weiner can’t pass any mandate to build affordable housing in CA. Too many entrenched interests, so until things change in CA and they actually build affordable, I would expect to see more outflow. This is the case of things can’t go on forever, but also “the market can remain irrational longer than you can remain solvent.”

        2. Since I am boots in Boise, I can tell you there is a sentiment that the out of state migration from CA, WA, and OR will not stop and that the population is going to continue to grow – as those urban areas become unlivable for many reasons, people are gonna leave.

          I grew up in Wyoming. Rocky Mountain types are very biased toward any narrative that includes the idea that they live in God’s country and everybody else wishes they could live there. They seldom understand the real reasons that money flows toward them or away from them at any given time.

          1. But Wyoming is God’s country I believe. Truly a gorgeous state. But now it’s the billionaires kicking out the millionaires in Jackson. Our family has property in Victor, ID, so we love Wyoming.

    1. LOL. Speculators bought land where no one wants to live. Brilliant.

      All of the money is headed into high-density housing in cities now.

  33. Who stole the Trump recession? After the consumer sales report Friday, the estimate of growth from the Atlanta Fed for the second quarter has increased to 2.1%. which means for the first six months of this year about 2.6%. Obama despite hitting the cyclical cycles just about perfectly averaged 1.9% during his reign and his last year averaged 1.6%. Could it be that not allowing countries to take advantage of us with unfair trade practices is good for us despite what Soros and the Koch brothers say:
    https://www.cbsnews.com/news/u-s-economic-growth-slowed-in-2016-to-1-9/

  34. Also I just want to mention when government first started to interfere with health care. This was in the early 70’s with the enactment of Medicare.

    Basically the private insurance wanted to dump seniors or charge a arm and leg because they were more likely to make a health claim. This was in spite of the fact that they had been paying in for years when they were less likely to make a expensive claim.

    Instead of the government making a law against dumping people after they paid in for years, government said they would supplement seniors by Medicare.

    This was a windfall for medical insurance companies because the government would cover the higher risk for insurance payouts with seniors.
    How sweet is was for insurance companies to be relieved of paying claims that would of reduced their profit margins.
    It was no different than say a life insurance company collecting for 30 years, than dumping you when your likely to die.

    So now we got big government insuring bigger profit margins for insurance companies by Medicare.

    When you examine a lot of government interference in the private sector it’s to supplement profits for big industry standard the expense of the taxpayer..

    Further, when they peddle socialized medicine they never talk about lowering the price of the medical monopoly.
    They just talk about the absurd price that government will pay for people’s right to health care.

  35. Even with the medicaid and medicare fraud perpetrated by bad doctors and billing schemes, they control costs and keep health care expenses in check far better than private insurance. Look it up. You need strong regulation in healthcare to make it work. The difference between US and other advanced countries that have far lower costs is the role of government. They don’t let obscene profits from the healthcare medical industrial complex gauge people when their life is in the balance.

    I’ll never forget one of my first rotations in a pediatric clinic. The old family doctor was extremely skilled. There were 5 low-level employees just sitting in the office at desks. They weren’t techs/aides/nurses or anything like that. They were simply there to coordinate billing claims with insurance. Insurance creates a huge layer of bloat.

  36. Look, I agree with you that if you go to any emergency room they have 10 people working on paperwork and far less actually working on patients.

    You no doubt work in the medical field. Medicare does restrict some costs , but your telling me with life and death matters the corrupted system doesn’t gouge on these sort of emergencies?

    Look, you sound like a person who really cares about people. But ,the fact remains that in financially corrupted industries the on hands workers like yourself as well as the consumer suffers.

    1. I’ve shared my background with readers of HBB. I am a IT/operations guy who retrained as an RN after I did pretty well in my previous field. I have another side gig right now that has been interesting for the past 8 months.

      your telling me with life and death matters the corrupted system doesn’t gouge on these sort of emergencies?

      One man’s waste is another man’s paycheck. The costs are baked into our system. There is no one magic pill or panacea that will reduce US medical costs. There are so many things that contribute to the high cost and unaffordability that a true discussion wouldn’t be feasible on this housing blog. Elizabeth Rosenthal’s book “An American Sickness: How Healthcare Became Big Business and How You Can Take It Back” does a very good job of summing it up. The NYT has a good review of the book.

      The path towards healthcare reform will be incremental. I view the Affordable Care Act as a step in the right direction, but the elimination of the individual mandate makes it unworkable. Probably the next step is to allow individuals to buy into Medicare/Medicaid.

      As an aside, a major flaw in the Affordable Care Act is age rating. What is age rating? The ACA established 3:1 limit on age rating of health insurance premiums, meaning that older adults (ages 50-64 who are not yet eligible for Medicare) who purchase coverage on their own cannot be charged more than three times the amount a younger person is charged for the same health plan.

      While this seems good in theory because it limits older American’s healthcare costs, the vast majority of patient costs are from this group and they are not paying the true cost of their medical care. This means that younger healthier Americans have to foot more of the older Americans expensive health care and it hits them with large premiums because they are subsidizing older Americans care. The end effect is that this creates an incentive for younger Americans (who we need to be in any workable insurance pool) to opt out of buying health insurance.

      1. I think the cost structure was crashing even before the mandate was taken away.
        I believe the Governor of California wants to bring back the mandate in California so he can give free healthcare to ilegals.
        Interesting that he’s saying that illegal seniors won’t be part of this program. I’m sure this will cause a lot of young people to want to flee California.

        I just don’t think they will lower costs if the government takes over health care. Some sector of the population will get stuck with the absurd price tab and than it will be the government collecting for the medical monopoly absent the private insurance companies.

        1. I believe the Governor of California wants to bring back the mandate in California so he can give free healthcare to illegals.

          Extending medical benefits to illegal immigrants would be one of the worst decisions CA could make. It would be far more prudent to “build a wall” around the welfare state than to build a wall at the border. As an aside, Ben Carson is absolutely right about limiting public housing benefits to Americans only.

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