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The Compelling Drive To Buy Buy Buy Has Disappeared

A report from the Wall Street Journal on Florida. “After being kidnapped seven years ago, Juerg Degenmann decided to move his family from Venezuela to Miami for increased security. He and his wife paid $1.85 million in 2013 for a waterfront townhome in Sunny Isles Beach. He was unpleasantly surprised when he put the unit on the market for $1.9 million a year ago, and got no offers. Now he’s reduced the price to $1.495 million; it still hasn’t sold. ‘I will never get the money I paid for it,’ he said. ‘The situation in Miami is tough.'”

“‘There’s just an abundance of inventory,’ said Alexandra Peters, Mr. Degenmann’s agent. ‘There’s so much frustration. It’s hard to move properties.'”

“Gustavo Mendonça is from Brazil and moved to Miami in 2011. He bought six condos in Miami as investments, but now has only two, one of which he’s struggling to sell: a Sunny Isles Beach condo he bought in 2015 for $690,000. It’s listed for $639,000.”

“‘The compelling drive to buy buy buy has disappeared,’ said real-estate agent Mark Zilbert. ‘It used to be I could list anything and I’d have five to 10 showings a week. In some cases, I’m getting one showing a month.'”

The Denver Post in Colorado. “Not that long ago, cities like San Jose, Seattle and San Francisco were enjoying some of the biggest price gains and strongest interest from buyers. Denver also used to be a regular on the list of hottest real estate markets put out by Realtor.com.”

“But San Jose home prices are now falling year-over-year and Seattle, San Francisco and Los Angeles are likely to join it, said Skylar Olsen, director of economic research with Zillow Group. Price gains are slowing in metro Denver, and a growing share of residents here are looking to relocate.”

“The United States has 45 million more people and 20 million more households than it did in 2000. But home sales are lower than they were two decades ago and there is a deficit of about 5 million to 6 million housing units, estimates Lawrence Yun, chief economist with the National Association of Realtors. ‘Something is not right,’ said Yun, who spoke on a midyear economic forecast panel at NAREE.”

The Mercury News in California. “Santa Clara County Assessor Larry Stone is upbeat about the economy, but he also imparted words of caution to members of the Silicon Valley Association of Realtors at a district Realtor meeting this month. ‘It has been nine years since the Great Recession and since then we have experienced a period of great prosperity. However the economy has cycles, and we are overdue for a recession,’ said Stone.”

“The Assessor said there are indications the housing market has started to cool. The median price reached $1.3 million at the end of the third quarter and has since dropped 15 percent to $1.1 million. Home sales are down 14 percent from a year ago; permits are down 11 percent. Apartments and home sellers are making concessions.”



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This Post Has 96 Comments

  2. ‘The median price reached $1.3 million at the end of the third quarter and has since dropped 15 percent to $1.1 million. Home sales are down 14 percent from a year ago; permits are down 11 percent. Apartments and home sellers are making concessions’

    Eat yer crowz Thornberg!

    1. The reality is he’s eating caviar, paid for by his masters who instructed him to disseminate their lies. Like virtually every economist and journalist out there.

      If it was up to me I’d let them be the beta test passengers in the Boeing 737 max, along with Boeing management.

  3. ‘Not that long ago, cities like San Jose, Seattle and San Francisco were enjoying some of the biggest price gains and strongest interest from buyers. Denver also used to be a regular on the list of hottest real estate markets put out by Realtor.com’

    ‘But San Jose home prices are now falling year-over-year and Seattle, San Francisco and Los Angeles are likely to join it, said Skylar Olsen, director of economic research with Zillow Group. Price gains are slowing in metro Denver, and a growing share of residents here are looking to relocate’

    This is unpossible. How could so many hottest of the hot roll over at the exact same time? It’s almost like there was a larger economic force involved.

    1. The fed and the treasury need open another “window” so that the FHA can start a rebate program that would allow buyers to use it for down payments with enough left over for some new furniture or a swimming pool. Lets show the world what a recovery looks like, now!

    2. Is this the same $kylar ol$en that told us last month the slowdown is temporary and “muh demographics” will make it heat right back up to the moon Alice?

    3. I have no drive to buy buy buy in Denver.

      I am looking to buy property in the next 1-3 years, but not in Denver. Been renting here 9+ years, and I’m ready to leave.

  4. ‘I will never get the money I paid for it’

    Well, it was cheaper than renting…

    ‘There’s just an abundance of inventory…There’s so much frustration. It’s hard to move properties’

    Wa happened to my shortage Miami?

    ‘The compelling drive to buy buy buy has disappeared’

    The WSJ put out a report on the mania without using the word bubble!

  5. ‘It has been nine years since the Great Recession and since then we have experienced a period of great prosperity. However the economy has cycles, and we are overdue for a recession,’ said Stone.”

    We had the slowest recovery since WWII. We did have an asset boom based on Yellen bux but only in the last year did we have a meaningful rise in wages. He just cannot see the disconnect between soaring house prices and stagnant wages.

    1. since then we have experienced a period of great prosperity

      I wouldn’t call it that. But I suppose we’ve reached the point where almost everyone in the mainstream thinks bubbles ARE prosperity. I’m amazed at how well that training program has worked so quickly after burning them before. Should have let nature take its course in 2009. They would be a lot smarter now.

      1. “Should have let nature take its course in 2009. They would be a lot smarter now.”

        Yes, but the reason that the PTB did not is the reason you cannot separate housing from politics. The Globalists by early 2008 had really convinced most of this country that globalism created prosperity for both developing and developed countries. In developed allowing your manufacturing base to move to developing countries meant cheaper prices and the people in developed countries would make more money in the FIRE sector. Of course building and selling more than two million homes a year in this country, with all the related realtors, bankers etc. was not sustainable but the globalist wanted to keep the bubbles going at least until the march to global government could reach a point where it could not be reversed. Thus, the policies of W and Obama did not attempt to save the good paying manufacturing jobs, they were designed to stimulate demand which benefited the developing world almost as the US. Thus, under W we had rebates, under Obama cash for clunkers, $8000 to buy a home ( I receive that one) and the worse of all the monetization of debt the policy of Mugabe but given the name QE and many other policies to encourage demand but nothing to keep manufacturing in the US. All the time this was going on, I was posting on this board that we need supply side stimulus and not demand side stimulus. This is exactly what Trump is doing. What are the globalists’ democrats suggesting, college loan forgiveness, reparations and minimum income. See the pattern, stimulate worldwide demand at the expense of this country’s future. Of course, most of the Republicans in congress are globalists. It is only their voters which are not. The democrats should be arguing that the Trump tax bill be made more supply side, that more of the tax benefits go to encourage plant and equipment and less money goes to just reducing taxes without encouraging investment which end up as dividends and takeovers. Instead they want to repeal any efforts to make this country competitive with overseas manufacturers.

        1. “Of course building and selling more than two million homes a year in this country, with all the related realtors, bankers etc. was not sustainable but the globalist wanted to keep the bubbles going at least until the march to global government could reach a point where it could not be reversed.”

          Where did the planning for this grand globalist takeover occur? Was it at the Bilderberg Conference?

          1. You can keep ignoring the obvious and waiting for the NYT to have a story confirming it. The Trump voters have figured it out. For others, I guess they can keep wondering why Obama could not get a recovery going despite running deficits running an average of 1.1 trillion a year and the Fed creating three trillions dollar in Yellen bucks.

  7. “Santa Clara County Assessor Larry Stone is upbeat about the economy, but he also imparted words of caution to members of the Silicon Valley Association of Realtors at a district Realtor meeting this month.”

    Greetings to HBB readers from the Hyatt Regency Santa Clara. Looking out the window, there is no visible evidence of falling shoes.

    “The Assessor said there are indications the housing market has started to cool.
    The median price reached $1.3 million at the end of the third quarter and has since dropped 15 percent to $1.1 million.”

    Pretty short haircut, given the backdrop of a booming economy. Makes you wonder how far it will fall in case current economic strength does not prove to be everlasting.

    1. Greetings travelin’ Professor, there’s a lovely Cal-Train Depot in $anta Clara.

    2. I$ 80% + a $ignificant # Professor?

      (Do you think machine$ wake-up alarm is $et for
      12pm Pacific?)

      MARKETS
      80% of the $tock market is now on autopilot
      CNBC | Yun Li |PUBLISHED SAT, JUN 29 2019

      It’s no secret that machines are taking up a bigger and bigger share of investing, but the extent of their influence is approaching shocking proportions. It is as high as 80%, according to one major investing firm
      DoubleLine Capital CEO Jeffrey Gundlach has taken a shot at passive investing, saying it is causing widespread problems in global stock markets. He called it a “herding behavior.”

      “I’m not at all a fan of passive investing. In fact, I think passive investing … has reached mania status as we went into the peak of the global stock market,” Gundlach said in December.

      While algorithmic models have gained popularity on Wall Street, low-cost passive vehicles keep raking in assets from Main Street. Passive funds have attracted $39 billion of inflows so far this year, whereas active funds lost a whopping $90 billion in 2019, according to J.P. Morgan.

      1. It’s all good until the 80% collectively decide to dump all of their HODLings en masse.

        1. Paraphrasing N.N. Taleb: Ignore the size of the theater and focus on the size of the exit doors.

    1. There are some areas in my city that remind me of that. They are supposedly the nice areas, but I see quite a few large mansions when I run through those neighborhoods that are in disrepair.

    1. They’ve also devalued the RMB vis-a-vis the US Dollar by roughly 8% in the last year.

      No mention of that in MSM. Instead, we get to hear how American consumers will pay all of the tariffs, not change consumption behavior at all, and Chinese firms keep their current revenues, profits, and sales.

      1. In that light a Santa Clara property that also declined 8% is even in RMB terms. Much harder to get $$ out of China these days

      2. “They’ve also devalued the RMB vis-a-vis the US Dollar by roughly 8% in the last year.”

        The movement of the supply chain to other countries particularly Vietnam is freaking the Chinese out and they will resist it at all costs. While Vietnam and China are both communist countries, they are also historical enemies. China does not want a strong Vietnam in its backyard which might seek to assert its rights to resources in the South China sea. Remember China last try to invade Vietnam in 1979 and got its butt kicked. After that defeat, China decided that it had to be more like Taiwan and Hong Kong since economically and technologically it was being left behind.

          1. Exactly. It is great to have a president that is willing to go for China’s jugular.

    2. These tax cuts went into effect before the tariffs were ever applied. Considering the timing and the relatively small amount of goods China purchases from the US, it stretches the imagination to think that these tax cuts could be construed as a measure to offset tariffs on US goods.

      1. Tariffs on China were imposed prior to the tax cuts as was the devaluation of the currency, Trump has countered China’s efforts to offset the tariffs by raising the tariff rates.

      2. Reread your post besides being wrong on the timing of tariffs. I think you missed the point. China is not primarily trying to offset the impact of tariffs imposed by it on US goods, it is trying to allow Chinese firms to lower its prices so they can continue to sell to the US despite the US imposed tariffs. Contrary to the MSM and the experts the MSM prefers to quote, tariffs by the US are being paid in reality by China and not US consumers. This is the reason there is low inflation in the US despite the tariffs. China’s manufacturers are being crushed by the tariffs Hence the new data from China, the headline is pure spin, the important point is manufacturing is still contracting:
        https://www.shine.cn/biz/economy/1906307603/

    1. ‘According to Baoshang’s most recent regulatory filing, the smallish lender based in Inner-Mongolia, made a $600 million profit in 2017. It had assets of around $90 billion, non-performing loans were modest — under 2 per cent — and its capital buffers would fit comfortably with the global demands of a Tier1 bank. Then it collapsed.’

      ‘That set off a series of events rarely, if ever, seen in Chinese banking. Regulators seized Baoshang, the first action of its type since 1998. That may have shaken the foundations of Chinese banking, but of far greater significance was the collapse caused by China’s first recorded interbank default.’

      1. China’s regulators, as ever-vigilant and determined to safeguard the integrity of the financial system as our own, say Baoshang’s demise was caused by a misappropriation of funds. They assure us, however, that this was an isolated incident that in no way reflects an underlying unsoundness in the Chinese financial system.

        I feel so much better now.

        https://www.scmp.com/news/china/money-wealth/article/3012806/baoshang-bank-takeover-connected-misappropriation-funds-was

        1. So long as it was an isolated incident, as was Bear Stearns in the U.S., there is nothing to fear except fear itself.

      3. In China, coming punishment$ will cause “head$.to.roll”

        In the U$A, such rascally fella$ get promoted @ another firm$ headquarter$.

    2. Um…China’s central bank already responded. From the article:

      “The central bank (PBoC) immediately pumped around 600 billion yuan ($125 billion) into the system and halted a run on the banks by guaranteeing 100 per cent of all retail deposits.”

      Let’s see how good that PBoC “guarantee” turns out to be.

      1. I think the seller is praying for a hurricane, if an insurance company was stupid enough to insure it for that price. It would be interesting to know if the house has hurricane insurance and the amount of insurance.

      1. It’s a joke. People who like guns and gold usually also don’t trust the government. A “boating accident” is an easy way to say that you are no longer in possession of something that you actually are in possession of. It’s impossible to verify if nobody can find the item in question. So you will probably get away with owning the thing that you are not supposed to own. At least until you try to use it.

          1. My philosophy: don’t ask, don’t tell and do not post it on FB

            Given some the wild stories here, I wasn’t sure what to think.

  17. “The United States has 45 million more people and 20 million more households than it did in 2000. But home sales are lower than they were two decades ago and there is a deficit of about 5 million to 6 million housing units,
    estimates Lawrence Yun, chief economist with the National Association of Realtors. ‘Something is not right,’ said Yun, who spoke on a midyear economic forecast panel at NAREE.”
    – Let me fix that: ‘there is a deficit of about 5 million to 6 million [affordable] housing units…’
    – Lawrence, NAR chief economist: ‘Something is not right’. This from the ‘chief economist’. Thanks for sharing that insightful gem. If I want more detail, I’ll ask a five year old.
    – The economic “recovery” since 2009 has been driven largely by “out of thin air $”, artificial stimulus from the Fed (aka ‘Yellen bucks’), and now mostly by jawboning from the Fed (continued centrally-planned, command economy via micromanagement and not free markets) + DJT (trying to keep it going until after 2020 election). This has led to malinvestment, massive distortions in asset prices, lagging investment (think stock buybacks vs. cap. ex.), and enormous growth of debt. This was a faux recovery.
    – Wages have been stagnant (nominal) or falling (real) for decades.
    – Now again reaching debt saturation, where all players are maxed out on credit (credit cycle ends).
    – Demand pulled forward, for a time. Guess what comes next? The economic expansion can be extended, but not prevented.

    “Santa Clara County Assessor Larry Stone: ‘It has been nine years since the Great Recession and since then we have experienced a period of great prosperity. However the economy has cycles, and we are overdue for a recession,’ said Stone.”

    Finally:

    Housing is now turning down; has been since at least mid-2018. Housing is a leading indicator for the U.S. economy as a whole, and is now the largest component of GDP:

    https://global-macro-monitor.com/2019/06/05/americas-path-to-a-fire-economy/
    America’s Path To A FIRE [finance, insurance, and real estate] Economy
    Posted on June 5, 2019 by macromon

    Economy Jumps The Shark
    The U.S. economy jumped the shark in 1990 when FIRE overtook the manufacturing sector in terms of its contribution to GDP. More stunning is that real estate is now the largest industry sector of the U.S. economy in terms of value added output, now surpassing manufacturing by 0.8 percent of GDP.

    An Economy Of Flippers
    Who would have thought in 1947 that output of the country’s manufacturing sector would decline from one-quarter of the gross domestic product to close to 11 percent and would be surpassed by the output of a bunch of real estate agents and house flippers? Nothing against real estate agents, by the way, and Flipper was my favorite television show as a kid.

    “Real estate is now the largest industry as a percentage of GDP.

    Greater Sensitivity To Interest Rates And More Leverage
    No wonder why the economy and markets are so addicted to and can’t live without low-interest rates. The danger is, however, the real estate sector is a highly leveraged industry. Real estate deflation the one the Fed fears most.”

    ‘Something is not right’ – Voted most obtuse statement by a standing economist (so far) in 2019…

      1. I think he meant to say the “economic correction” or something along those lines.

  18. Oops! (Hey, it’s early and I haven’t had my coffee yet!) correction: “The economic expansion can be extended, but [the cycle can’t be] prevented.”

    1. 10 entry level ‘cheap devs’ from India cannot provide the same quality or timeliness when delivering software compared to one good mid to senior dev.

      This is not to say the good devs do not come from India, but merely to point out that the incentives are very different for the offshore shops which is more a ‘get it done’ attitude vs quality and maintainability. Or they are completely clueless when it comes tosoftware QA principles, practices, etc. because they are very inexperienced. The good ones move to the US.

    2. I saw that news. I hope Boeing takes a huge hit for this. And I suspect this is going to trigger some digging for other airlines too. Does Airbus outsource to India?

    3. The coders from HCL were typically designing to specifications set by Boeing. Still, “it was controversial because it was far less efficient than Boeing engineers just writing the code,” Rabin said. Frequently, he recalled, “it took many rounds going back and forth because the code was not done correctly.”

      So, a little different than gaming code? LMFAO!

    1. 18 U.S. Code 241:

      “If two or more persons conspire to injure, oppress, threaten, or
      intimidate any person in any State, Territory, Commonwealth, Possession, or District in the free exercise or enjoyment of any right or privilege secured to him by the Constitution or laws of the United States, or because of his having so exercised the same; or

      If two or more persons go in disguise on the highway, or on the premises
      of another, with intent to prevent or hinder his free exercise or
      enjoyment of any right or privilege so secured

      They shall be fined under this title or imprisoned not more than ten
      years, or both”…. (Unless said crimes occur in a progressive-run municipalities where George Soros has successfully installed his minions as DAs, police chiefs, and judges, in which case the “Nazis” shall be charged with attacking the heroic antifa members’ fists with their faces).

    3. Money quote: “Andy Ngo is an elfin, soft-spoken man. He also happens to be the gay son of Vietnamese immigrants—salient details, given Antifa’s absurd slogans about smashing the heteronormative white supremacist patriarchy.”

      1. I am having a harder time watching the “men” who watched that POS attack that woman and do nothing than the attack of the POS itself.

  21. Just go back to the 20’s in USA when they first started pushing credit to buy shit, including stocks.

    The easy money from stock and the buy on credit products resulted in the 1929 crash and following Great Depression.

    Don’t mess with real estate because it’s a basic need, but they have. The 2006 bubble was in part due to people trying to compensate for stagant wages as it took off and became a frenzy combined with faulty lending.

    Wages don’t support almost all prices In every sector, including health care

    . Leading up to great stock market crash of 1929 people thought they were going to get rich as the cheerleaders touted a new prosperty for the American people by fake stock prices bought on margin.
    There always reaches the point when they run out of greater fools. Real estate should tract with wages because after all shelter is a basic need.

    The reinflation of a housing bubble sucks. We got to get out of this casino Nation and back to prices tracking with wages as it should be , and did when capitalism was more operative in the USA, minus the faulty lending also.

    You got to go back to policies that were in place in USA when the majority had a fair shake, rather than Socialism being the answer.

  22. Who could ever say that Globalism, removal of the Glass-Stegal Act and free trade agreements didn’t screw the middle class majority in USA.

    Prior to the politicans selling us out ,Wall Street was limited as well as Corporate America. We got the gutting of our manufacturing base with jobs in favor of cheaply made goods from foreign countries. We got Wall Street creating false casino markets based on greed.

    Policies in USA prior to Bill Clinton were a better balance of power for starters. Why can’t we go back to the past?

    1. ” . ..the gutting of our manufacturing base with jobs in favor of cheaply made goods from foreign countries. ”

      Used to bee, ya find cars in that were only made in the USA. Reckon somehow Americans lost there abilitie$ to expre$$ “free will” & Motherland Patrioti$m.

      (Well, @least pickup truck$ are still standing the te$t of time, kinda “$pendy” now. Go American Mega.truck$$$!)

      1. I don’t see any other choice but to revert back to the policies that made USA strong to begin with. No matter how painful this will be , it will be better than the alternatives.

        1. No matter how painful this will be , it will be better than the alternatives.

          For us, yes. But those in power would rather take their chances with the alternatives. Because for them reversion to best practices is certain to be a step down in power and status…if they can manage to keep their heads. So how do we get past that? I think 2008/9 was our last chance to do what you are suggesting.

          1. I think 2008/9 was our last chance

            No way. It was a door open but we didn’t go through. It was too early for real heroes. There has to be a hitting bottom before real reform is appealing.

          2. I think 2008/9 was our last chance

            No way. It was a door open but we didn’t go through. It was too early for real heroes. There has to be a hitting bottom before real reform is appealing.

            I like what you’re thinking. But it seems to me that they are doing their best to make it so that we can’t do real reform without destroying everything. Sort of a PTB dead-man’s-switch.

      2. I know some EVs that are made in America and happen to be the most American-made vehicle we produce.

    2. Exactly, but the blame starts with the first Bush, however the Democrats prior to Clinton were pro-tariffs and for limits on immigration so Clinton removed all opposition to multi-national corporations globalism. It is amazing how the parties have changed. But then Cesar Chavez was against illegal immigration because he understood how it depressed farm workers’ wages. I guess he was a racist.

        1. The “first Bush” started the talk about a “New World Order”. It wasn’t totally clear what he meant by that. The agenda 21 crowd had some plan but I always thought they were fronts for the Communist party.

      2. But then Cesar Chavez was against illegal immigration because he understood how it depressed farm workers’ wages”

        Not many know that story

    3. Why can’t we go back to the past?

      What if that’s impossible and we’ve been on a 1-way trip since 1913?

      2. impossible

        Cheer up Carl! There is a storm coming. It isn’t the end of the world. Try to not be fragile.

        1. I had more hope after the 2008 crash. But, it’s still possible for correction.

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