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We’ve Had A Lot Of Downward Pressure On Pricing, Mostly Because We’ve Had An Oversaturated Market

It’s Friday desk clearing time for this blogger. “An Upper East Side townhouse that was once home to the late fashion designer Oleg Cassini is now facing foreclosure. The case comes as authorities orchestrate a fire sale of Cassini’s assets. Earlier this week, Doyle Auctions announced a sale of the fashion designer’s estate. The auction will include 700 lots of luxury cars, artwork, memorabilia and furniture taken from Cassini’s Gramercy Park and Long Island homes. Meanwhile, a public auction of the Gramercy Park property earlier this week failed to attract any bidders.”

“Five years ago, a New York developer bought a plot of land in Midtown Atlanta, declaring its intentions to build the tallest residential tower in the Southeast, with prices and finishes more in line with Midtown Manhattan. But many real estate brokers and experts who Bisnow spoke to have doubts that it will ever get built. ‘Opus, which we call ‘Nopus,’ said Jeffrey Taylor Johnson, the founder of Above Atlanta Brokers, among the top condo brokerage firms in Atlanta. ‘It’s a joke.'”

“Robert Murray, chief economist at Dodge Data and Analytics said starts of single-family and multifamily homes have peaked in Texas and across the U.S. He said there are growing concerns of overbuilding of luxury, high-rise residential buildings in markets around the country. ‘Over the last year, single-family housing construction seems to have been stalled, probably due to affordability concerns,’ he said. ‘The first time homebuyers have not entered the market to the same extent we have seen in prior cyclical upturns.'”

“‘Home sellers are realizing home price growth has slowed from its hot streak of a year ago. They realize they will still receive a substantial gain, but it is unlikely they will get the same high price they might have received a year ago,’ said Alan Barbic, president of the Silicon Valley Association of Realtors. Compared to a year ago, the median home prices were down in five of nine counties in the Bay Area, with Alameda declining the most at 6.4 percent from a year ago.”

“One factor keeping prices in check: Many Bay Area residents have simply given up on trying to buy where homes are the costliest in the country. ‘We’ve exhausted demand. Homes are simply out of reach for a large enough share of people who want to buy,’ said Issi Romem, chief economist at Trulia.”

“Film producer George Furla finally sold his 6,391-square-foot, full-floor penthouse at the top of the Fordham building on the Near North Side, although his $3.84 million selling price was less than half the $8.5 million that he had sought for it as recently as 2016. Furla purchased the 50th-floor unit as raw space in 2005 for $3.15 million. He didn’t move in, however, and had the penthouse on the market for more than six years as raw space before deciding to spend the money to finish the space. The condo has a $6,882-a-month assessment.”

“St. Albert’s housing market picked up a bit last month despite sales being lower than they were in May 2018. ‘The new listings to market have come down year over year,’ said broker James Mabey. ‘Over the last couple of years we’ve had a lot of downward pressure on pricing, mostly because we’ve had an oversaturated market in terms of inventory. We just had far too much inventory than what can be absorbed by the marketplace.'”

“Following pressure from CPRE Bedfordshire, Bedford Borough Council has released figures that suggest they’ve made plans to build over 1000 homes that aren’t needed. The update includes indication of a surplus of 1002 homes, which is equivalent to a village the size of Sharnbrook or Oakley.”

“Perhaps the most notable part of the latest Goodbody report on housing is its conclusion that the stock of unsold properties are firmly on the rise. There have been plenty of reports from the industry of developments not selling out, but Goodbody crunched the numbers and found that in the four quarters to the first three months of this year, there were 2,500 more units built than sold nationwide. Most of this occurred in Dublin, where new supply was 6,905 and purchases were 5,093.”

“It is obvious looking at average incomes and house prices that prices, in Dublin in particular, are moving above affordable levels for many, even in many instances for dual-income couples. Nonetheless it is still striking that so many are left unsold.”

“The secondary market of high-rise residential properties in Kuala Lumpur and Selangor was muted in 1Q2019, says Savills Malaysia director of research Amy Wong. However, the primary market fared slightly better as it was driven by the Home Ownership Campaign (HOC) 2019. ‘With discounts of 10% to 26%, the HOC will have some impact on the secondary market. In general, the six-month campaign will help developers sell off their unsold properties,’ she says.”

“Fifty-four apartments in the South Village development at Kirrawee are being sold to an investment company for about 30 per cent below peak sale prices. The prospectus was upbeat about a revival in the housing market.”

“‘The residential market in Sydney peaked in July 2017 and is currently 22 months into the down cycle,’ the document said. ‘The longest period of time it took any previous downward cycle to reach the bottom was 28 months. Sydney residential property prices are now down 14.5 per cent from their peak the largest previous decline was 11.6 per cent between 1988 and 1991. Unlike previous housing price downturns that were heavily influenced by high interest rates, the recent downturn is heavily influenced by the ability of prospective owners to obtain financing.'”

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This Post Has 109 Comments

  1. ‘Compared to a year ago, the median home prices were down in five of nine counties in the Bay Area’

    Eat yer crowz Thornberg!

  2. ‘An Upper East Side townhouse that was once home to the late fashion designer Oleg Cassini is now facing foreclosure… a public auction of the Gramercy Park property earlier this week failed to attract any bidders’

    Are we there yet?

  3. ‘Opus, which we call ‘Nopus…It’s a joke’

    This article reveals some developer fraud, deceptive practices by UHS, etc.

  4. ‘He said there are growing concerns of overbuilding of luxury, high-rise residential buildings in markets around the country’

    Noe Bob, are you saying another urban living myth has come and gone?

    ‘Over the last year, single-family housing construction seems to have been stalled, probably due to affordability concerns’

    Well that and the ponzi schemes.

  5. ‘Unlike previous housing price downturns that were heavily influenced by high interest rates, the recent downturn is heavily influenced by the ability of prospective owners to obtain financing’

    As we’re seeing all over the globe, want cheaper shacks? Just cut the lending gravy.

    1. “As we’re seeing all over the globe, want cheaper shacks? Just cut the lending gravy.”

      But … but… but equity wealth! The economy!

      1. Price equals value, and value equals wealth, and wealth is something that can be cashed out and spent. A consumer-based economy depends on wealth being cashed out and spent.

        THEREFORE prospective owners NEED to get the financing so as to keep this stupid game going, hence I predict that they will.

        1. Luckily for all of us the people who most need the game to continue are also the ones that can make sure financing is available no matter what. Otherwise something bad might happen.

          1. Yes, and I think something bad is happening in China hence Bitcoin at almost $10,000 as the money flows out. Of course, in the short term that could support housing prices outside of China and other assets. However there is no question that a true collapse of China would be deflationary. China will print lots of money prior to that happening.

          2. a true collapse of China would be deflationary

            Two years ago Adan would have choked you to death for stringing those words together.

        2. But, debt saturation. “Consumer” is tapped out. Look at private sector debt levels. End of cycle. Game over, at least until helicopter $.

          1. Helicopter money began under Obama
            It has slowed under Trump but as long as we still have monetized debt earning interest which then can still be spent it continues. It made the deficits appear much smaller under Obama. It still reduces to a lesser degree Trump’s deficits. Any slow down will increase monetization by the Fed which is just a more sophisticated version of dropping money out of a helicopter

          2. Are we at QE5 now? Did the $27 billion going to farmers count as anything? All this fighting over forcing rates lower speaks on the true condition of the consumer.

          4. “This is far and away the strongest global economy I’ve seen in my business lifetime.” — Treasury Secretary Henry Paulson, July 12, 2007

          5. Any slow down will increase monetization by the Fed which is just a more sophisticated version of dropping money out of a helicopter

            But the Fed isn’t just dropping the money willy-nilly are they? They are shooting the money to an elite cadre designed to benefit from this policy.

          6. “I remember getting a surprise check from Bush.”

            That’s how the bailout(s) should have happened…send everyone a $100k check. No means testing, everyone! Use it to retire your debt(s) or “take the family shopping” a la Dubya.

          7. Andrew Yang, dem candidate running for pres, proposes $1k check from the government to each US citizen. Every month.

            ““The most direct and concrete way for the government to improve your life is to send you a check for $1,000 every month and let you spend it in whatever manner will benefit you the most,” Yang writes on his campaign website.”

            “The government has “plenty of resources, they’re just not being distributed to enough people right now,” he says.”

            It is true that we have government redistribution today. It goes from the bottom to the 1%.

          8. A very effective way to lift up the lower rungs is through tax policy and essentially giving money from the wealthy to the poor. Hey, it’s a piss-poor idea in my opinion, but so is this “no banker left behind” bullsheet we’re dealing with.

          9. The definition of helicopter money (HM) is broad, and can include many forms of central bank stimulus, but in the narrow definition, money is distributed directly to the public, as if from a helicopter flying overhead. We haven’t had this, yet, but I wouldn’t put it past them.

            I mentioned HM because CBs have tried just about everything else, and have still failed spectacularly because of the simultaneous growth of debt, which has the opposite effect and slows growth. Just like QE, ZIRP, NIRP, etc., HM is from the bizzaro world of central bank fantasy economics. Unfortunately, they keep practicing on the real economy, with predictably disastrous results. Monetary malpractice.

            https://www.investopedia.com/articles/personal-finance/082216/what-difference-between-helicopter-money-and-qe.asp

            “Contrary to the concept of using helicopter money, central banks use quantitative easing to increase the money supply and lower interest rates by purchasing government or other financial securities from the market to spark economic growth. Unlike with helicopter money, which involves the distribution of printed money to the public, central banks use quantitative easing to create money and then purchase assets using the printed money. QE does not have a direct impact on the public, while helicopter money is made directly available to consumers to increase consumer spending.”

          10. “We haven’t had this, yet, but I wouldn’t put it past them.”

            Didn’t Dubya send you a check?

  6. Large Investors are grabbing everything per wsj and nyt articles – it’s comoditized now for the foreseeable future …sad… Across the street from where I rent – a house was grabbed that never went on market for 650 and turned around after a little work for 1.5. homes are now above last housing peak. This house is sitting empty so far. This will ruin the US. Middle and upper middle will cease to exist and it’s a caste system now. We had the down payment for that house if it was priced at the last downturn – homes were going for around 900 after the air let out…

    1. 2020 Democrats Offer Up Affordable Housing Plans Amid Surging Prices
      Pam Fessler
      21 June 2019
      NPR

      “Yentel thinks it’s a reflection of the severity of the problem. Rents around the country have been rising faster than wages and almost half of all renters now have to spend more than 30% of their incomes on housing. About 11 million of those households spend more than 50% of their incomes on rent. Low-income families feel the most pain, but the problem has also started to creep up into the middle class.”

      “Perhaps of more interest to candidates, 75% of all voters this year say they would be more likely to vote for someone who has a plan to make housing more affordable, which may explain why candidates are lining up to offer plans.”

      “”People are experiencing an affordable housing crisis whether they’re Republican or Democrat, whether they live in a red community or a blue community, and whether they’re middle class or they’re working poor, whether they’re white or black,” says Julian Castro, who was the secretary of Housing and Urban Development under President Barack Obama and announced his housing plan this week. He says it would not only address the lack of affordable housing, but would effectively eliminate homelessness in eight years.”

      2. You can’t have “affordable housing” during a land price bubble. You just can’t. The two are mutually exclusive. I wish people would learn math.

      3. Barring some unforeseen development, my money is on Trump to win the 2020 election. Which of the bumbling Democrats could offer a serious challenge?

        1. I know she’s not popular here, but IMO only Warren could actually compete in the center on substance (and to me it’s interesting that the only D with what I see as a reasonable grasp on reality is a former R). But she would have to get really tough and go toe to toe with him in the gutter to get past the Pocahontas thing. A good insult comic type could tear him up pretty good. Doubt she has it in her.

          So yeah, my money is on Trump too.

          1. DJT will win if we are not in a recession and if we are not at war, probably. But I think Warren would be a phenomenal president.

          2. DJT doesn’t compete on substance, he owns a bully pulpit from which to set the political agenda, and he amplt demonstrated his ability to set the political agenda even before he owned a bully pulpit. Whether Elizabeth Warren can compete in the center on substance seems highly irrelevant.

          3. Whether Elizabeth Warren can compete in the center on substance seems highly irrelevant.

            Maybe. What I was trying to say was that if she can go toe to toe with him in the gutter, then her substance should become very relevant. It’s not like the majority loves Trump. He’s just shameless enough to bypass the SJW shaming process and does a decent job representing the anti-globalists.

    2. “…homes were going for around 900 after the air let out…”

      Anyone who is employed and works a 40-yr/wk for some company can’t afford a $900k house…well, maybe the interest for a couple of years. Hehe, faux wealth!

  7. America’s 25 least affordable housing markets: California home to 17 of them
    Michael B. Sauter
    21 June 2019
    USA Today

    “Housing affordability in the United States is getting worse, with some experts even calling it a crisis. According to a new housing report, median home prices in the first quarter of 2019 were not affordable for average wage earners in over 70% of the nation’s largest counties.”

    “The income needed to buy a house is calculated by assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio.”

    https://www.usatoday.com/story/money/2019/06/20/americas-25-least-affordable-housing-markets/39579711/

  8. ‘We’ve exhausted demand. Homes are simply out of reach for a large enough share of people who want to buy,’ said Issi Romem, chief economist at Trulia.”

    Nonsense, every Senior Expert and Analyst will tell you there is SO MUCH pent up demand for $500,000 starter homes!

    1. “…‘We’ve exhausted demand. said Issi Romem, chief economist at Trulia….”

      Of course, not one of these highly paid experts could of seen it coming.

    2. ‘We’ve exhausted demand. Homes are simply out of reach for a large enough share of people who want to buy,’ said Issi Romem, chief economist at Trulia.”

      Heckuva job, Obama, Bernanke, Yellen and Co., heckuva job.

      1. It’s been this way since the beginning.

        Heckuva job, Washington, Hamilton and Jefferson and Co., heckuva job.

  10. The beating is their initiation into the FB gang. It is even more difficult to get out of the gang

  11. Yes Carl I think it is. As far as your earlier comment I do not think the Bush rebate was helicopter money because it was borrowed not printed money. Clearly it was debt but I think that kind of debt is different from the federal reserve buying debt with money out of thin air and then returning most of the interest on the debt to the government to be spent again. That is monetizing debt which is what I consider much closer to printing money and dropping it out of a helicopter to be spent.

          1. “Amherst’s typical customers are couples in their early forties with one or two kids and household incomes around $60,000. They’re paying an average rent of $1,450 a month.”

            That’s 29% of gross income, or roughly 37% of take-home pay. They’re living on the edge after the mini-van and student loan payments, not mentioning the dental and medical co-pays. Yeah, their life sucks. You just know it’s a dead-bedroom or starfish sex. Within twenty-years the kids are ready for college, so they borrow for that too. The American dream…own it!

    2. BOJ has tried for decades to create inflation but they haven’t been able to do it. Maybe the Fed will be successful?

      @AbqDan, The Fed’s balance sheet is 40% MBS, so it’s kind of like they are monetizing housing rather than the debt. They are explicitly bailing out the distorted structure of production in the housing segment. The question will be whether they can succeed in doing what Japan did not with falling asset prices (and real estate prices) for decades. It seems like inflation vs. deflation has been the debate since 2007.

      The economy is doing so well Quantitative Tightening will end in September. I wonder if that will give some juice to stocks?

      Pre-Great Recession, the Fed’s balance sheet relative to GDP was 6%. At it’s peak it was 25%, and it is now down 20% since GDP has grown as QT has tightened. But Powell says he wants to keep it at 17% going forward, or 3X pre-crises levels. Would this be the “Powell Permanently High Plateau”?

      1. “…monetizing housing rather than the debt.”

        Good insight.

        And how, exactly, does this asset price fixing exercise fit the scope of their mandate?

        It seems like one unacknowledged consequence has been a massive misallocation of housing market wealth into luxury properties whose primary purpose is to capture as much of the housing monetization wealth transfer as possible. Housing is no longer just a place to live in, but rather a means to capture helicopter drops of Yellen bux.

        1. And how, exactly, does this asset price fixing exercise fit the scope of their mandate?

          Price stability and full employment? Well, you could make the argument that they are trying to stabilize prices, but the counter-argument is that they are in reality they are inflating and propping them up at levels to levels unwarranted historically and affordable by almost any valid metric (price vs. wages).

          The real insidious nature of their action in my mind is a form of generational warfare. If you look at the distribution of who owns housing, it skews older. It’s similar to what Prop 13 is: different treatment for different people based solely on age. The younger generation is getting their head repeatedly dunked in the toilet while the Fed is safeguarding the assets of the wealthy.

          And now the hedge funds and Wall Street are in on the game and they are invading the space and have been buying up the housing stock in anticipation that this generational inequity will continue.

          1. The real insidious nature of their action in my mind is a form of generational warfare.

            I think you’re right. Which means I think we’ll see a lot more AOC types in response from the younger generation unless and until they finally earn or inherit enough assets to have something to conserve. And if not they’ll eventually burn the place down…I’m not sure Wall Street and the hedge funds have planned for that. Do they ever?

          2. hich means I think we’ll see a lot more AOC types in response from the younger generation unless and until they finally earn or inherit enough assets to have something to conserve.

            I hope so. I like AOC. Don’t agree with everything she says, but she makes a lot of good sense in many areas. Capitalism only works if every strata of the population has a shot of accumulating capital. If all of the capital is redistributed up to the 1%, well that ain’t capitalism, and it certainly isn’t working.

            With regards to age, the entire voting thing has to be revamped. We need everyone over 18 to vote. Make it a mandatory civic duty. Make voting day a national holiday. Get online, secure, voting in place. We don’t need to burn Wall Street down though, a land value tax and a progressive property tax along with a financial transaction tax would be much more effective.

      2. “BOJ has tried for decades to create inflation but they haven’t been able to do it.”

        Having a multi-decadal, full-blown collapse of their asset price bubble, beginning around 1990, got in the way of the inflation creation efforts. Luckily this could never happen here in ‘Merica.

        1. “…steel production declined, construction was sluggish, automobile sales went down, and consumers were building up high debts because of easy credit.”

          Hmmm…

          2. Economic Data
            U.S. Housing Starts Declined in May
            May’s 0.9% drop is new sign of weakness in the housing market; residential building permits rose.
            By Harriet Torry
            Updated June 18, 2019 10:08 am ET

            WASHINGTON—A gauge of U.S. home building declined in May, a fresh sign of weakness in the housing market.
            …

          4. US Consumer Debt is Hitting Alarming Levels
            FINSUM, June 21, 2019, 10:21:21 AM EDT
            (New York)

            For many years after the Crisis, the main theme around consumer debt was the idea that Americans were deleveraging. However, steadily, consumer debt has risen back to alarming levels. In the first quarter of this year, consumer debt hit $14 tn, surpassing the $13 tn of leverage pre-Crisis. Student debt has been a major area of credit expansion. Even when comparing debt to the population, the debt per person is a little higher than in 2008.
            …

          5. “Powell Permanently High Plateau”?

            …Yale economist Irving Fisher was jubilant. “Stock prices have reached what looks like a permanently high plateau,” he rejoiced in the pages of the New York Times. That dry pronunciation would go on to be one of his most frequently quoted predictions — but only because history would record his declaration as one of the wrongest market readings of all time.

            At the time he said it, in early October, he had good reason to believe he was right. On Sept. 3, 1929, the Dow Jones Industrial Average swelled to a record high of 381.17, reaching the end of an eight-year growth period during which its value ballooned by a factor of six. …

        2. “While American cities prospered, the overproduction of agricultural produce created widespread financial despair among American farmers throughout the decade. This would later be blamed as one of the key factors that led to the 1929 stock market crash. ”

          Land O’Lakes CEO: Farmers Are in Crisis—and America Isn’t Paying Attention
          By Beth Ford June 11, 2019

          Imagine, if you can, a computer virus that cut the productivity of Apple, Google, and Facebook in half. Or try to imagine Wall Street’s investment bankers seeing a season’s worth of deals washed away. Such calamities would dominate our nation’s news and drive swift political action. Yet that is precisely what America’s farmers face right now. And, as a country, we aren’t paying nearly enough attention.

          Farmers are generally too proud and humble to speak out, but the truth is we are living through an extremely difficult period of market turmoil and natural disasters. Due largely to sustained low commodity prices, average farm income in 2017 was $43,000, while the median farm income for 2018 was negative $1,500. In 2018, Chapter 12 bankruptcies in the farm states across the Midwest that are responsible for nearly half of all sales of U.S farm products rose to the highest level in a decade.
          …

          1. Powell Permanently High Plateau”

            I love that you did get my Irving Fisher reference. Many people don’t, but most on the HBB do. I don’t know if Powell can create a permanently high plateau as far as the stock market is concerned. My comment was in reference to the ending of the Fed’s balance sheet unwind that was announced. The Fed is basically signalling that it is going to stay around $3.5T to $4T indefinitely, or 17% of GDP. This is 3x what it was pre-2008 levels, in other words “a permanently high plateau” of a different sort.

          2. “The Fed is basically signalling that it is going to stay around $3.5T to $4T indefinitely, or 17% of GDP.”

            I doubt that will work for them. Like addicts who need ever-larger heroin injections to achieve the same high, the liquidity-drunk day traders who rely on the Powell Put to maintain their gambling addictions will need ever-larger liquidity injections to the Fed’s punchbowl to stay in the game.

            Side note: “…it is going to stay around $3.5T to $4T indefinitely, or 17% of GDP.”

            Can’t do both unless GDP is frozen in time…

    3. That is monetizing debt which is what I consider much closer to printing money and dropping it out of a helicopter to be spent.

      Dropping it into a funnel over the mouths of a select few. The rest of us get to pay the interest and have our savings & wages diluted. It is more like Hoover Vacuum money.

        1. Hooverville:

          “A “Hooverville” was a shanty town built during the Great Depression by the homeless in the United States of America. They were named after Herbert Hoover, who was President of the United States of America during the onset of the Depression and was widely blamed for it. The term was coined by Charles Michelson, publicity chief of the Democratic National Committee.[1] There were hundreds of Hoovervilles across the country during the 1930s and hundreds of thousands of people lived in these slums.[2]”

          -Wikipedia

  12. Gold trades briefly over 1400$. Current ask at $1401.47. Can this be sustained or will the paper traders smash it back into submission?

    1. TBD, however I think many of the shorts are pretty nervous right now. Paper shorting of gold is the mirror imagine of speculating on houses. One manipulation has created the housing bubble and the other has pushed gold artificially low. The banks have played a role in both and I think if the PTB lose control of either they will lose control of both manipulations. This is not a new opinion I have said it off and on for ten years

    2. Gold? Pffffft. Bitcoin just breached $10,000, and is still on a tear at $10,150. Welcome to the end of the world, folks, this money-printing by the central banks has finally gone full cartoon. Stay tuned, as they’re primed for more rate cuts and QE. Grandma doesn’t get cat or dog food this time, wet cardboard with catsup will have to suffice until she qualifies for a low-income assisted living facility with minimum wage MS 13 members fondling her.

  13. Wow, I just noticed a flood of “zoned for vacation/nightly rental” properties show up on Zillow in So. Utah. I have good numbers showing that revenues for these “2nd homes that pay for themselves” is not panning out.

  14. Wow Seattle n Lost Wages are over 100-% yoy inventory growth w Nashville close behind.
    Locally speaking aren’t you in a recession w that mount of unsold sht?

    1. Good advice. I would take it one step further though: don’t drive a car if at all possible. AAA says the average American spends $9000/year. Even a crappy car can be expensive with unanticipated expenses. My niece just bought a crappy car for $1k and within 2 months in needed $4k worth of repairs.

    3. Depends. I’m sure I look like a FB of the auto world.

      I’ve had a few ‘nicer; cars, but I always buy them used. Never paid over 40% of new, but I tend to keep them a long time and well maintained. 189K miles, 267K miles, 321k miles for my previous 3 daily drivers, but my latest (an ’06 530xiT bought in 2012 for $20.5k) only just broke 100k a couple months ago. Will probably keep it until 2025 as I’m only putting 5K miles a year on it. Parts availability starts getting weird around the 20 year mark. Much harder to do any maintenance myself than it used to be (pre ODB-II cars).

      I did make an exception a while back, but that was for a weekend / car club / track / fun car (not sold in north america, had to import)

      1. I’ve always believed that people should “spend their money, don’t waste it.” But what constitutes waste is subjective. What you derive value or pleasure from can vary widely from person to person.

        Having said that, I agree with the last sentence of the article:

        “You should have $1 million before you buy a new Beamer or a Benz.”

        Rather than look at absolute terms of what an auto costs, one should look at it in terms of one’s own income and net worth. I think any vehicle that is more than 5% of one’s net worth is too much. That’s my personal mantra.

        1. “You should have $1 million before you buy a new Beamer or a Benz.”

          Probably a good idea. The depreciation is breathtaking. When I bought my half priced 2008 335xi in 2011 I thought most of the deprecation was behind it. But it continued toward zero quite rapidly compared to other cars I’ve had.

          1. From one bimmer head to another – History has not been kind to the N54 turbo engine – while glorious when it works, not all the bugs were sorted out and it’s reputation as a maintenance hog/danger on par with any BMW S engine (//M car engine for those wondering) is well earned. It was unprecedented but earned that they replaced it with the N55 after just 3 years. The threat of HPFP failures and other catastrophic “oops” bills whacked the resale value of all the cars with that engine.

            That actually was a big factor in my going with the N52 engine – the last of the naturally aspirated straight 6’s – It’s well sorted out and been pretty cheep to maintain for me. I needed AWD after moving out west from Texas, and didn’t need the extra power (almost nowhere to use it around here). HP-wise my last 3 cars, all 5er wagons, went 340hp->282hp->255hp. opposite direction of the car industry.

            With the mass switch to turbo-charging thanks to fuel economy regs, I’ve been skeptical of what that’s meant for long-term durability. All the automakers are concerned about is it lasting one day past the warranty.

          2. “With the mass switch to turbo-charging thanks to fuel economy regs, I’ve been skeptical of what that’s meant for long-term durability.”

            I can’t stand these mushy feeling CVT transmissions, and they don’t last like the previous generation automatics with defined gear ratios.

          3. Since we are talking about cars (and engines), this is all foreign stuff to me. I had a good conversation with a total cowboy from Montana at the supercharging station today. Very interesting to hear him talk about how he is installing solar over his entire house and getting a battery array so he can live completely off-grid. Not the stereotypical Tesla driver for sure. He was a redneck through and through with a construction/manual labor background, but somehow a green redneck.

          4. Sadly, I prefer my cars German. My first car in high school was a hand-me-down 1976 BMW 2002 with a dual Weber carburetor desperately in need of new paint and new upholstery; it was fun and had the best visibility of any car I’ve ever driven. The first car I bought was a used 2001 BMZ Z3; it’s still in the garage. We outgrew my 2008 Audi A3 with DSG transmission. We also inherited a 2004 MINI Cooper S MC40 with John Cooper Works.

          5. @rms – understood and not surprising – the switch to CVT is also driven by the need to squeek out another couple MPG and meet regulations.

            @OneAgainstMany – not surprising at all. Not all cowboys from Montana are stereotypical – in fact, I’ve found that there are far fewer people who choose the country (as opposed to the city) life as matching the ‘redneck’ stereotype of a dumb hick than most people would guess – that doesn’t mean there aren’t any, cause there are plenty of Jim Bobs out there – but we can credit our education system and values (what’s left of them anyway) along with our ability to disseminate information. A kid on a remote ranch has never had it easier to keep up with the latest developments in particle physics if they want to.

            To want to have some degree of not having to rely on the grid is actually pretty smart, and plays to his interests. I looked into getting Solar panels on my house – turns out it’s too north facing for the community solar project to consider (and damn – there’s some nice tax credits that’ll be gone in a couple years). People more remote will be more concerned because in the event of an outage, they’ll be among the last to be restored.

            @Redpilled Redhead I think it was my third car, and the first bought with my own money, was a ’78 320i that had a 5-speed swapped in. Learned a LOT tinkering with it and doing repairs on it. Had a lot of fun with BMWs over the years, but I think I’m liable to move on – current models have lost the driver focus that I enjoyed so much.

            Remember my discussing having a too big house in Texas? Here were the cars I owned just before moving into it.. https://imgur.com/FlyTLAH You might detect a theme… https://imgur.com/a/LQRfd https://imgur.com/hhOxvw3

          6. You might detect a theme…

            “A customer can have a car painted any color he wants as long as it’s black.” – Henry Ford

          7. He was a redneck through and through with a construction/manual labor background, but somehow a green redneck.

            He’s probably similar to a lot of Wyoming people. I don’t think they are “green” by any city person’s definition except maybe for the grass fed free range red meat they eat (I’m not talking beef). But they love to not be dependent on the power company. They’re kind of survivalists automatically in that environment.

          8. With the mass switch to turbo-charging thanks to fuel economy regs, I’ve been skeptical of what that’s meant for long-term durability.

            I’m a turbo hotrodder from way back, my first car was a 1985 Mustang SVO. I initially was skeptical about turbo longevity due to the horror stories that mostly came from the early 80s Chrysler designs. But now I’m not scared of turbos at all. It was the first stab at direct injection that caused the bad N54 reputation. And rightly so, my whole fuel system except the tank and lines has all been replaced at least once.

          10. Ah, the tragedy of first-world problems…

            I prefer my cars cheap-ish but capable of being modified to be faster than the fastest production cars. This has gotten significantly more difficult lately due to the bubble…the fast cars are REALLY fast now. Also first world problems I suppose :-). The 335xi was a good candidate when I bought it but now raw horsepower isn’t enough, you also need a really good really strong AWD drivetrain. So the Audi RS3 has now become a much better candidate for a super fast under-the-radar economy-looking car. Barely modified ones are hitting 10 second 1/4 mile times and highly modified ones are already in the 8s. All with very few transmission/clutch/axles/differentials issues. It just works.

          11. the tragedy of first-world problems

            Admittedly a luxury now that our “representatives” have imported third-world problems.

    4. I’d be rich any day now…except that I own four crappy cars (wife and kids need wheels, too…).

  16. More REALTOR lies published today:

    “The housing market may have reached a natural peak, but conditions are still tight after years of pent-up demand. At the current pace of sales, it would take 4.3 months to exhaust available supply, still well below the 6-month threshold that’s traditionally been considered a marker of a balanced market, even though inventory increased during the month. Properties stayed on the market for an average of 26 days in May, up a bit from 24 days in April but still a sign of a strong seller’s market.”

    https://www.marketwatch.com/story/existing-home-sales-rebound-in-may-2019-06-21

    Years of pent-up demand? LOLZ

    1. There is years of pent-up demand. There’s just never going to be any supply for it ever produced again.

  18. We just had far too much inventory than what can be absorbed by the marketplace.’”

    Wrong, James. The glut of inventory is overpriced.

    Better tell your greedhead clients it’s time to get serious about sawin’ and slashin’ unless they want to chase the market down to bloodbath levels.

  21. “Auctions announced a sale of the fashion designer’s estate. The auction will include 700 lots of luxury cars, artwork, memorabilia and furniture taken from Cassini’s Gramercy Park and Long Island homes. Meanwhile, a public auction of the Gramercy Park property earlier this week failed to attract any bidders.”

    They’re going to have to lower the reservation price on his horde of used crap that nobody wants in order to sell it.

  22. “He said there are growing concerns of overbuilding of luxury, high-rise residential buildings in markets around the country.”

    For how many years now have we been chewing on the overbuilding of luxury airboxes in destination cities, not merely in the U.S., but worldwide? Now that some MSM-favored expert has published his views on the matter, it is real.

    1. The Financial Times
      US interest rates
      Bond rally sends 10-year Treasury yield below 2%
      US Federal Reserve joins ranks of central banks indicating looser monetary policy to come
      Joe Rennison and Robin Wigglesworth in New York June 20, 2019

      The benchmark 10-year US Treasury yield sank below 2 per cent for the first time since 2016 on Thursday, a day after the Federal Reserve paved the way for interest rate cuts next month.

      The bond market has rallied throughout 2019, as investors have grown increasingly concerned over the health of the global economy and bet that central banks would have to step in to prop up financial markets.
      …

  24. Markets
    Get Ready for 1% Bond Yields
    Inflation is the key to fixed-income assets, and there isn’t any now or expected to be in the future.
    By A. Gary Shilling
    June 18, 2019, 2:00 AM PDT
    The lack of inflation is helping to support bond prices.
    Photographer: Mario Tama/Getty Images North America
    A. Gary Shilling is president of A. Gary Shilling & Co., a New Jersey consultancy, and author of “The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation.” Some portfolios he manages invest in currencies and commodities.

    The yield on the benchmark 10-year U.S. Treasury note was rising toward 3.20% in early October when a survey by Bloomberg News showed that none of the more than 50 economists predicted it would fall below 2.40% by now. The median estimate was 3.33%, a big miss given the current 2.10% yield. Longtime readers of my Bloomberg Opinion columns know my target is 1% over time, and I am more confident than ever in that forecast.
    …

  25. Bay area zip code: 95129
    Number of houses for sale: 44
    Number of houses for sale with price reductions in last 30 days: 14
    Number with price reduced more than 30 days ago and still not sold: 7

    I remember in March 2018, the number of houses for sale was just 4….

    1. Lots of ways to read those numbers, and most people/MSM are going to avoid looking at the dark side of what they imply.

    1. A bit of French Canadian culture:

      Cabane a Sucre (sugar shack):

      “A sugar shack (French: cabane à sucre), also known as sap house, sugar house, sugar shanty or sugar cabin is a semi-commercial establishment, primarily found in Eastern Canada and northern New England. Like the name implies, sugar shacks are small cabins or groups of cabins where sap collected from sugar maple trees is boiled into maple syrup. It is often found on the same territory as the sugar bush, which is intended for cultivation and production of maple syrup by way of craftsmanship (as opposed to global mass production factories built for that purpose in the 20th century).”

      Also tire d’erable (Maple taffy):

      “Maple taffy (sometimes maple toffee in English-speaking Canada, tire d’érable in French-speaking Canada; also sugar on snow or candy on the snow in the United States) is a sugar candy made by boiling maple sap past the point where it would form maple syrup, but not so long that it becomes maple butter or maple sugar. It is part of traditional culture in Québec, Eastern Ontario, New Brunswick and northern New England. In these regions, it is poured onto the snow, then lifted either with a small wooden stick, such as a popsicle stick, or a metal dinner fork.”

      From Wikipedia

      Tire is delicious. And those Cabane a Sucre festivals in winter will put any pancake house in the US to shame. It will probably also give you type 2 diabetes, so watch out!

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