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It Got Super Super-Hot And Went Into Crazy Town

A report from the Orange County Register in California. “Lake Forest will get 144 new townhomes with prices starting under $600,000. Silveroak is Landsea Homes’s latest addition to its 543-home IronRidge community in Portola Hills. Landsea says pricing will start from the high-$500,000s, ‘a very attractive price-point for the region,’ said Tom Baine, president of the company’s Southern California division.”

“Silveroak comes to market as Orange County house hunters are shying away from new homes. In May, builders countywide sold just 262 residences — down 42% in a year. The lofty median selling price of $944,000 — down 4.3% in 12 months — suggests Silveroak may draw budget-conscious buyers. Regionally, builders aren’t having much more luck. Six-county sales of 1,705 new homes were off 18% in a year. The median of $534,000 was down 8.3% in a year.”

From The Tribune in California. “Stacy George, a real estate agent at Platinum Properties in Paso Robles, is selling a $355,000 home on Fourth Street, not far from the city’s downtown area. George said it’s perfect for first-time buyers who want to break into the housing market. ‘This is a great property for someone that is buying for the first time, and a couple of years — two, three years — it positions them well in their equity to move to another home,’ she said.”

“Here are four additional houses that may be worth a look if you’re shopping in the $300,000 to $400,000 price range. $379,000 in Oceano. Size: 957 square feet with three bedrooms, two bathrooms. Year built: 1961. It’s been on the market for 59 days, and the price was recently reduced by $20,000.”

From Community Impact in Texas. “Homes in McKinney are taking longer to sell than they did 18 months ago, according to local Realtors. Julie Williams with Texas Property Sisters said homes are not taking much longer to sell, but the market is getting back to what it should be. ‘It’s like a market correction where things get so insane that there has to be a correction,’ she said.”

The Review Journal in Nevada. “Las Vegas’ housing market heated up last year with soaring prices and fast-selling homes. It was such a frenzy that house flipper Brian Bair, CEO of Offerpad figured the market went to ‘crazy town,’ so he racked up more deals elsewhere. Q: Maybe we can start with the basics about Offerpad’s activity in Las Vegas.”

“A: We’re probably transacting less than about 100 a month, buying and selling. It’s one of our smallest markets, but one of the reasons is at the end of last year, it got super super-hot and went into crazy town with some of the numbers that people were willing to pay for homes. With our model, we have to be very sensitive to that. We definitely didn’t get as aggressive in Vegas as others did. Overall I think we made the right decision because then it slowed down pretty quickly.”

From Crain’s Chicago Business in Illinois. “It may not offer you much comfort if you’re trying to sell your house, but Chicago’s weak housing market—a phenomenon reported in great detail by my colleague Dennis Rodkin—may actually be providing a bit of boon to the metropolitan area’s competitive status. Sort of like turning a lemon into lemonade, weak housing prices offer a potential boost to Chicago in competing against other metropolitan centers around the globe. That, anyhow, is the bottom line of a new study by Demographia.”

“What the study specifically does is look at home prices—which in Chicago are growing slowly and in many areas still are below where they were before the sub-prime crash—and then compare them to household incomes, which are doing much better here. That gives an affordability index: how much house someone with a roughly average income can buy.”

From Queens News in New York. “RealtyHop recently released their interactive map that tracks price drops in New York City neighborhoods throughout the month of June. According to their findings, the Queens neighborhood that had the highest drop in median drop this month was the Queensbridge-Ravenswood-Long Island City area with a 10.6 percent decrease, with the price drops averaging at a $133,475 decrease.”

“The second highest median price drop was found in East Elmhurst, which experienced an 7.24 percent decrease, with price drops averaging $60,000. Right behind East Elmhurst was the Hammels-Arverne-Edgemere area with a 6.64 percent decrease and price drops averaging at a $69,000 decrease.”

“Jamaica came in at number four, with a 6.56 percent median price decrease, with price drops averaging at a $21,000 decrease. At number five, the Breezy Point-Belle Harbor-Rockaway Park-Broad Channel area had a 6.12 percent median price decrease, with price drops averaging at a $20,000 decrease.”

The Tampa Bay Times in Florida. “As the real estate market began to recover from the 2008 crash, a company started by a Chinese investor named Bo Wu snapped up dozens of houses, duplexes and vacant lots throughout the Tampa Bay area. The company still owns most of the properties. It also owes nearly $100,000 in taxes on them. Wu’s company is among the more than 32,000 owners in Pinellas and Hillsborough Counties that failed to pay their 2018 property taxes by the April 1 deadline.”

“Wu could not be reached for comment. Nor could Dr. James St. Louis, who is late on $156,260 in property taxes for his six-bedroom, six-bath mansion overlooking Clearwater Harbor in Belleair. St. Louis, founder of the now-defunct Laser Spine Institute, is under contract to sell the house, which has been on the market for several years and is currently listed at $7.9 million.”

“Several multi-million dollar mansions in Hillsborough also have delinquent taxes, records show. The Richmond, Va.-based trust that owns a huge waterfront house in Tampa’s Beach Park owes nearly $70,000, among the highest delinquent amounts in the county. The biggest delinquency, though, is on the Bridges, a Riverview assisted living facility — $169,557. (Its owner, an Indiana-based limited liability company, did not return a call for comment.)”

The Times of London. “Purplebricks is to shut its loss-making American business amid a change of strategy after the sacking of its founder. The online estate agency, which said yesterday that full-year operating losses had almost doubled to £52.3 million. It is the second time recently that Purplebricks has withdrawn from a problem market. Two months ago it said that it was withdrawing from Australia — at the same time as it announced the departure of Michael Bruce, 46, its co-founder and chief executive. He had clashed with Paul Pindar, 60, the chairman, over the failure of the company’s overseas expansion.”

“The company said that its losses had been driven by £52.9 million of operating costs in Australia and the United States. Cash at the end of April, its year-end, was £62.8 million, down from £152.8 million the year before. It will close its Los Angeles-based US business, which began trading in 2017 and employs about 40 people, at the end of the year.”

“Vic Darvey, 46, the former chief operating officer who replaced Mr Bruce as chief executive, said that the company had entered the American market at the wrong time, as the housing market was slowing.”

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This Post Has 63 Comments

      1. The BS is just stunning. The California place for about 400k is supposedly great 1st home? Also supposedly be a great equity builder so the 1st timer came move up in a couple years? Translation: I need commissions bad right now.

        Same for the Chicago story of a great buy under the logic that appreciation has been slower than other areas.

        Not that I wish for a housing bust, but at least the BS will take a break when that happens. Or will it? Actually probably not. Only the word-art will change but at least will have a different smell. Have to view it like a vaudeville comedy act.

        1. Lake Forest will get 144 new townhomes with prices starting under $600,000. Who buys these home? Seriously what demographic are these people and what sort of job do these buyers have?

      2. “Regionally, builders aren’t having much more luck. Six-county sales of 1,705 new homes were off 18% in a year. The median of $534,000 was down 8.3% in a year.”

        Do the six counties include San Diego?

        By my math*, that 8.3% represents a drop of $48,334, from $582,334 to $534,000. That seems like enough to send a lot of recent buyers underwater. How many buyers these days put down $48,000?

        * $534,000×0.083/(1-0.083) = $48,334

    3. Landsea says pricing will start from the high-$500,000s, ‘a very attractive price-point for the region,’ said Tom….Silveroak may draw budget-conscious buyers….

      https://landseahomes.com/news/introducing-silveroak

      ~3500$/month mortgage, taxes, condo fees for a 1300 sq ft 2 br condo after plunking down 120k in cash? Attractive for whom?

      More luxury condo madness from developers high on QE crack.

  2. ‘It’s like a market correction where things get so insane that there has to be a correction’

    Eeee-bola McKinney!

  3. ‘the highest drop in median drop this month was the Queensbridge-Ravenswood-Long Island City area with a 10.6 percent decrease, with the price drops averaging at a $133,475 decrease’

    Well, it was cheaper than renting.

    1. Even in the cheaper locales, where a house is a paltry $300k (gulp), a $30k loss of value is huge.

    2. We could cover four years of rent for $133K, and have money left over. Catching a falling knife in residential real estate investing is a painful lesson in the downside of high risk financial gambling.

    4. Long Island, Queens and Brooklyn housing prices have been falling at a pretty good clip for 3 years now.

      The losses are ah’ stackin’ up.

      1. That was fantastic. Give ’em hell, Ann! The perfect exemplar of the fed-up ordinary Brits who are utterly sick and tired of being shafted by the banksters and globalists.

      3. It’s too bad comments were disabled. The globalists and central bankers need to be rounded up, ’round the globe, and imprisoned at the very least.

  7. I live in California. We had a 6.4 earthquake in Ridgecrest that was widely felt even in L.A. County.

    2. I was sitting on a rock on top of Cucamonga Peak, in the San Gabriel mountains, of all places. And I felt it.

  8. Been watching the news on that. My wife didn’t feel it in San Diego. (I’m out of town…)

    1. Best comment on Zero Hedge:

      “Oh Great and Mighty King Neptune, Sovereign of all the Seas, please accept our large and admittedly worthless sacrifice to your Omnipotence.”

    1. Investors should sit on the fence amid trade war uncertainty, asset manager warns
      By Callum Keown
      Published: July 5, 2019 1:38 a.m. ET

      Investors should sit on the fence and build balanced portfolios while the outcome of the U.S. China trade war remains in the balance, JP Morgan Asset Management has warned.

      Wall Street closed at record highs on Wednesday ahead of the Fourth of July holiday following a trade war truce between the U.S. and China at the weekend.

      Growing expectations that the Federal Reserve will cut interest rates this year also helped all three major benchmarks to set record closes.

      But JP Morgan has told clients to build up a balanced portfolio as the outcome of the trade dispute between the world’s two largest economies remains up in the air.

      China Commerce Ministry spokesman Gao Feng confirmed the two nations had restarted negotiations on Thursday but warned existing U.S. tariffs would have to be scrapped for a deal to be struck, signaling the potential hurdles in the talks ahead.
      …

  15. “Stock futures fall after strong jobs report dampens hope of a Fed rate cut”

    I get why that’s rational, but damn if it’s not a bad sign.

    1. I miss the old days when the market went up because publicly-held companies were successful creating and selling products consumers wanted and could afford.

    2. Trump has waved his magic wand. He had done what Obama said was impossible. Obama despite politically hitting the economic cycle at a good point, recession and job losses starting under your predecessor, only averaged 109000. He said and the MSM said with the aging population that was the best which could be done. Trump’s economy is helping to save Social Security.

    1. You just hit on what is probably going to keep the economy out of recession prior to the election, lots of home equity. However if the Fed can put the economy in the recession without creating a global recession it will to protect globalism.

      1. If the economy avoids recession before the election, it will be due to Trump’s economic policies. Whenever the next recession begins, either before or after the election, will be due to the Fed not following Trump’s suggestions.

          1. They’ve got these weird pop up ventilators at the back edge of stoves available now that suck air across the stove and then ventilate down through the floor. That’s what I’ve started seeing at open houses in California anyway.

    2. With Trump in the office you really are a glass half full kind of guy. If that inverted yield recession you have been posting about ever happens the Fed will have more ammunition left.

      1. I think you are right. They are likely to shock Wall Street by not loosening rates in the near term by as much as currently anticipated, leaving ammo to fight the next recession whenever it occurs.

  20. Obama averaged 109,000 per month over his eight years and the economy was slowing in 2016 contributing to Clinton’s loss. We have had plenty of 200,000 per month numbers under Trump. This despite his hitting the economic cycle at the wrong time. We were told by the MSM we had full employment under Obama. We were told Trump’s election alone would cause a recession. We were told his tax cuts would cause a one year sugar high followed by a recession. We were told engaging in a trade war with China last year would cause a recession. Just maybe not allowing our wealth flow out of the country to promote globalism is working?

    1. You do realize that economic policy operates with long and variable lags (or do you not know this)?

      1. I do but it does not change anything I wrote. Trump has promoted the economy by undoing just about everything Obama did or at least going in an opposite direction

        1. Obama had eight years to prove his economic policies and all we had is the slowest Post WWII recovery on record and adding nine trillion in debt. That was plenty of time to account for lags. What Trump is doing is exactly what I advocated during those eight long years. It is not like my views changed under Trump, I had those economic views prior to knowing that Trump had them. Additionally, I did say that Sarah Palin would be a better president than Obama precisely because she was not a Globalists. I said that it was better to have a person of average or just above average intelligence who was working for America than someone who graduated from an elite school who was working against the interests of America with globalism.

    2. I have always said that jobs float all boats. The reason why the majority middle class worker bee prospered in USA from 1945 to say 1980 was that Corporate America hadn’t played the exit the USA , globalism,/ outsourcing card yet.

      USA Corporations basically betrayed us and the politicans let them do it. We got cheaply made stuff in return while our manufacturing base was guted.

      Major tariffs should of been charged these USA Corporations , as if they were foreign countries. Now they have to be bribed to even operate in USA by low taxes, as if they are doing us a favor. Any penalty tax they can come up with is more fitting to combat their globalism greed.

      Wall Street was kept in it’s place by laws like Glass-Steagall. Again, the politicans eliminated it in 1997, so now we have casino Nation and to big to bail entities who are monopolies.

      Bring back Glass – Steagal, which was a law that served USA well for 70 years that was enacted after the 1929 stock market crash.

      Reverse Supreme Court decision that Corporations can campaign contribute, as if they were a individual.

      There are other things that can be done like getting rid of the FED, but certainly breaking up the to big to fail banks into smaller banks I’d in order. Really, any price fixing monopolies should be broken up , as was done in 1901 by a President with a spine. I could go on and on but a return to prior policies will save America, if we’re not to late.

      1. Major tariffs should of been charged these USA Corporations , as if they were foreign countries.

        Amen. I would also add to that US corporations that pay little to no tax. I would tax them like crazy. It’s criminal the effective tax rate of some of these companies. Not a fair playing field at all.

  22. “Purplebricks is to shut its loss-making American business amid a change of strategy after the sacking of its founder. The online estate agency, which said yesterday that full-year operating losses had almost doubled to £52.3 million.

    Cue Meat Loaf: “More Than You Deserve.”

    https://www.youtube.com/watch?v=tL4jJ0_5p1Q

    1. In addition to what I said above, I believe the USA has to be mindful of clean environment, clean energy to the degree possible, and smart consumerism, (such as smaller houses, etc.).
      Just wanted to add this.

      Better made stuff that actually last longer might be better for the environment than cheap China made shit.

      1. “Better made stuff that actually last longer might be better for the environment than cheap China made shit.”

        +1 Made in Germany!

        1. I just love that Germans are sweating bullets now that BMW sales are down since Tesla has arrived. And now they are selling Teslas on their home turf.

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