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Tactics Brokers Didn’t Need To Use Before The Housing Crash

A report from the Wall Street Journal. “Foreign purchases of U.S. homes have dropped by half over the last two years, a fresh blow to the top end of the market in New York City, Miami and cities in California. Their pullback is leading to price cuts in several coastal cities and causing new condos to sit empty.”

“Real-estate agents said the pain from the foreign pullback is palpable when they try to sell high-end condos in Miami and New York or mansions in southern California and Seattle. ‘Generally speaking, we are in the largest market correction since the Great Recession in New York City,’ said Martin Eiden, a real-estate agent at Compass, who has had to cut prices on listings from Midtown Manhattan to Brooklyn in the last year.”

“‘The foreign buyers have pretty much all but disappeared,’ he added. ‘I’m helping a lot of foreign buyers get their money out of this country as fast as possible.'”

“‘Our foreign buyers have been really driving the luxury market for several decades. Those buyers for various reasons have slowed down their purchasing,’ said Ron Shuffield, president of Berkshire Hathaway HomeServices EWM Realty in south Florida. ‘In many cases, the currency exchange rates are still so unfavorable, they don’t have the buying power they used to have.'”

The Associated Press. “The persistently slow housing market has Debra Goodwin creating cooking videos to try to sell a house. Glenn Phillips finds himself explaining to sellers the reasons why they might have to take a loss on their homes. For many, revenue is flat because of a shortage of homes in the low-to-middle market, while higher-priced homes languish because they’re too expensive for many buyers.”

“Phillips and the agents at his company, Lake Homes Realty, have learned that to sell a high-end property, they may need to be brutally honest with homeowners whose asking price is way above what the market will bring. That’s a tactic brokers didn’t need to use before the housing crash.”

“‘We started over a year ago, when we anticipated a slowdown. We started aggressively training agents to negotiate listing prices,’ says Phillips, whose company is based in Hoover, Alabama, but sells lakefront homes in about half the states.”

“Homebuilders are having similar struggles. Lexington Homes, which has townhouse and single-family developments in the Chicago area, has been building smaller projects, co-owner Jeff Benach says. While in the past a development would have between 150 and 650 homes, now they tend to run between 20 and 50. And homes in some developments sell slower than expected, leading Benach to offer incentives like more expensive fixtures to encourage people to buy.”

“‘I’d love to believe that we will get some momentum back some day, but I think the Chicago housing market will never see even close to the volume that we had before, at least in my lifetime,’ Benach says.”

“Pavel Khaykin, who buys homes in Massachusetts and rents or sells them, has started blogging on topics like foreclosure. ‘If someone in a town in Massachusetts is facing foreclosure, they can land on our website and potentially reach out to us,’ he says. ‘The sellers that are overpricing their homes when they list them are learning that buyers are not rushing immediately anymore to purchase their homes — unless it’s a highly desirable area of the city.'”

From Culturemap Austin in Texas. “As the saying goes, once is chance, twice is coincidence, three times a pattern, and six months a trend … at least when it comes to Austin real estate. On July 17, Austin Board of Realtors released its June and midyear 2019 reports, the latter a compilation of the first six months in Austin and Central Texas real estate, and the numbers indicate the city’s housing bubble may be starting to deflate.”

“Austin’s single-family sales decline/price increase has been happening throughout the first half of 2019, something ABOR says may be indicative of a greater trend. ‘We have seen slight dips in Austin’s home sales before, but because this decrease is over the course of six months, it could be indicative of a larger trend,’ says Kevin P. Scanlan, 2019 ABOR president.”

The Orange County Register in California. “There were 18,736 filings in U.S. Bankruptcy Court’s California Central District in 2019’s first half, up 433 in a year, or 2%. Its the first year-over-year increase since 2011. Only one other district among the nation’s 93 had more filings nationally — the courts serving the Chicago area. But thanks to the local district’s sheer size in population and commerce, Southern California has ranked in the top two districts for bankruptcies since 2008.”

“Let’s just say it could be worse. There were 17 districts nationwide with larger increases — with the eastern district of Texas tops with an 18% jump in filings. The seemingly mild increase in local bankruptcies may be tied to a noteworthy cooling in the region’s economy that has seen job growth cool and real estate and car sales dip. This broad-based slowdown could have walloped businesses and individuals who bet on a never-ending strong upswing.”

This Post Has 135 Comments
  1. Just like that, the New York Times calls it a crash.

    ‘‘The foreign buyers have pretty much all but disappeared,’ he added. ‘I’m helping a lot of foreign buyers get their money out of this country as fast as possible’

    Oh dear…

    ‘Pavel Khaykin, who buys homes in Massachusetts and rents or sells them, has started blogging on topics like foreclosure. ‘If someone in a town in Massachusetts is facing foreclosure, they can land on our website and potentially reach out to us’

    Double dear!

    1. ‘I’m helping a lot of foreign buyers get their money out of this country as fast as possible’

      Who could have possibly predicted this?

        1. Managing. I’m up and down throughout the day. PT has started, and strength of my repaired leg is low. The leg itself is purple from waistband to heel. They’re starting dial back the pain meds a little, but I think I can handle that.

          Been trying to code a little bit here and there, sometimes I actually manage a few lines.

          1. …but do they compile?

            Yes, and its cross platform. But then I don’t allow any template metaprogramming, or 85% of the post C++14 crap that was added for people who spend their days fighting wars over imaginary edge cases and think its a way to compare d**k size. I shoot anyone who includes boost, and dump the bodies into the lake.

          2. the post C++14 crap that was added for people who spend their days fighting wars over imaginary edge cases

            My current project has me working back in C++ after an 8 year vacation in JavaScript. I had forgotten how much extra overhead there is with such a strictly-typed, compiled language. Perhaps I’ve just been away too long…

          3. drumminj

            Javascript is not for me. I’m a low-level, systems sort of guy.

            A few years ago, before I got pulled back into my main career path by the evil empire, I took a job offer at HBO to work on HBO go and HBO now streaming services. I figured it would be a great way to expand my skillsets.

            Almost all of it (HBOgo/HBOnow) is written in javascript, with their own in-house OOP framework. $70k signing bonus, employment contract that paid me ~$250k/yr if I got an average review score. Average work day was 6 1/2 hours with no overtime. Short commute to Denny Triangle. Relaxed management.

            And within a couple months I was dreading getting up in the morning. every. single. day. It was destroying my soul. Granted the overhead of the new agile processes they were trying to implement didn’t help either, but at the core, it just wasn’t for me and the way my brain is wired. Turned in my resignation after a few months and was so glad to get back an old C++ and assembler codebase.

          4. And within a couple months I was dreading getting up in the morning. every. single. day. It was destroying my soul.

            Just because of the codebase? I would think that would be due to management. But then again I like almost any kind of coding except debugging RTOS master/slave stuff on multiple processors attempting to step through code issues in multiple debuggers that only occur in real time and therefore can’t really be stepped through. I honestly hated that because I couldn’t see any good solution so it was like being paid to chop wood with a sledgehammer.

          5. @Carl Morris

            Not just because of the codebase – the new SCRUM process they were implementing was over the top, but code itself – because it was already a sprawling mess running on so many platforms – was an untyped gordian know of asynchronous callbacks.

            I get your frustration – I have more than my share of experience debugging systems when the CPU’s view of memory isn’t correct because some controller is DMA’ing directly into RAM, rendering the debugger useless and everything is timing sensitive down to a few cycles…. fun times indeed.

            One of the 3 offers I have to chose from when I’m ready to jump back in is an FTE gig for hardware company building a reference platform on FreeRTOS. The guy in charge of the team there had worked with me before when I was firmware lead for a project over at the House of Mouse, and is lobbying to bring me in. I’m more likely to take a 2-year remote contract gig for a defense dept sub-supplier due to the higher $$$. It’s always seems to be you either have multiple suitors or none at all in this business.

          6. It’s always seems to be you either have multiple suitors or none at all in this business

            Yeah it’s been feast for a while for me…I’m kind of expecting famine again at some point. The thing that sucks is that I really liked working in Asia based out of China…but they (everyone) really prefer to use a cheap local unless they have no choice. Not that I blame them. But it was such a sweet gig while it lasted.

            Wish I’d gotten in on it on 10 years sooner. Growing up I always thought of overseas work as a hardship tour. So in the army I avoided it. NOW I get why people like to work for the state department.

          7. Doing C# at the moment, and liking it a lot – on the programming side, MS really has their act together (although as I work at a small company, I often don’t spend a lot of time doing my “official” job)

            There’s a reason there’s a book called “JavaScript: The Good Parts”. I think Webassembly will be very popular, because it has the potential to open up web development past JS (see for example MS”s Blazor).

            I’m rather partial to Python – it’s a lot of fun to use, and shipped >100 automated systems with Python as the glue language.

            In the industrial & factory world, we often get stuck with ladder logic or annoying proprietary super crappy languages.

          8. There’s a reason there’s a book called “JavaScript: The Good Parts”. I think Webassembly will be very popular, because it has the potential to open up web development past JS (see for example MS”s Blazor).

            There are ways to provide compile-time type checking on top of JavaScript which eases a lot of the pain, and adds to documentation (knowing a function param is a string instead of an object).

            Many years ago we were using a C#->JS transpiler. Then we moved to another one. Sadly, good C# code doesn’t mean it transpiles to good/efficient JS code.

            Last couple of gigs I’ve used TypeScript and am a big fan. Will be leveraging that in my project here shortly (working on a client-server framework that brings the joy of working across web, Android, iOS, and an embedded linux system. So I get to bounce between Kotlin, Java, C++, and JavaScript. Joy?)

    1. Fun gossip from Vanity Fair:

      “Epstein remained a fixture in elite circles even after he was a registered sex offender. A few years ago, for example, he was a guest at a dinner in Palo Alto hosted by LinkedIn cofounder Reid Hoffman for the MIT neuroscientist Ed Boyden. At the dinner, Elon Musk introduced Epstein to Mark Zuckerberg. (‘Mark met Epstein in passing one time at a dinner honoring scientists that was not organized by Epstein,’ Zuckerberg spokesman Ben LaBolt told me. ‘Mark did not communicate with Epstein again following the dinner.’)”

      “In an email, Elon Musk responded: ‘I don’t recall introducing Epstein to anyone, as I don’t know the guy well enough to do so, Epstein is obviously a creep and Zuckerberg is not a friend of mine. Several years ago, I was at his house in Manhattan for about 30 minutes in the middle of the afternoon with Talulah [Riley], as she was curious about meeting this strange person for a novel she was writing. We did not see anything inappropriate at all, apart from weird art. He tried repeatedly to get me to visit his island. I declined.'”

      1. Epstein’s Mossad handlers seem to have taken a special interest in putting these tech moguls in compromising positions. That explains a thing or two.

        1. +1 That’s why it’s called, “San Quentin Quail.”

          Imagine the monthly payments Epstein could extract from a billionaire? Or how about reverse espionage, e.g., inserting Mossad code into your company’s popular app?

          1. A number of these tech companies were/are backed by the Saudis, specifically Alwaleed bin Talal. That’s an interesting pair of bedfellows.

        2. There’s definitely a pattern of Epstein having insinuated himself among top politicians and corporate moguls. It looks suspiciously like a systemic blackmail operation to create the appearance of them having relying on Epstein’s Lolita Express pimping services.

          Time will tell who actually did.

          1. The guy was a college drop out. Worked for a few years at Bear Stearns and as a high school math teacher. His “investment” firm operating out of VI has no discoverable accounting or clients. His entire fortune is probably derived from human trafficking, blackmail, money laundering, child porn, and snuff films. It’s the Franklin Scandal all over again. Probably with same result as far as justice for the victims goes.

          2. “His entire fortune is probably derived from human trafficking, blackmail, money laundering, child porn, and snuff films.”

            Observer
            It Sure Looks Like Jeffrey Epstein Was a Spy—But Whose?
            By John R. Schindler • 07/10/19 5:29pm
            Jeffrey Epstein
            Billionaire Jeffrey Epstein in Cambridge, Massachusetts on September 8, 2004.
            Rick Friedman/Corbis via Getty Images

            In terms of scandals, the sordid saga of Jeffrey Epstein has it all. Mysterious gaudy fortunes. Jet-setting debauchery. Lots of pretty girls—including very young girls. Sex and more sex, not necessarily legal or consensual. Add a battalion of VIPs, including billionaires, A-list celebrities, royalty and no less than two American presidents.

            The only thing missing was espionage… and it’s not missing anymore.

      2. “At the dinner, Elon Musk introduced Epstein to Mark Zuckerberg.”

        Epstein was apparently the ultimate schmoozer.

      3. “At the dinner, Elon Musk introduced Epstein to Mark Zuckerberg.”

        It’s a big club… 🙂

      1. Tesla just released its safety report today, including fires:

        “From 2012 – 2018, there has been approximately one Tesla vehicle fire for every 170 million miles traveled. By comparison, data from the National Fire Protection Association (NFPA) and U.S. Department of Transportation shows that in the United States there is a vehicle fire for every 19 million miles traveled.”

        “In order to provide an apt comparison to NFPA data, Tesla’s data set includes instances of vehicle fires caused by structure fires, arson, and other things unrelated to the vehicle, which account for about 15% of Tesla vehicle fires over this time period.”

        1. It’s a highly biased comparison unless controls for vehicle age were included, as the average Tesla vehicle age is much younger than for the overall U.S. fleet.

          1. It also says nothing about the fire risk since Tesla went to 3 percent Cobalt batteries.

          2. It’s a highly biased comparison unless controls for vehicle age were included, as the average Tesla vehicle age is much younger than for the overall U.S. fleet.

            The data show that a typical gas car is 9x more likely to be involved in a fire than a Tesla. Maybe this will come down as the fleet ages, though early data show that Model 3s are even less prone to Model S vehicles which have been on the road since 2012.

            The point of actually looking at data is that obviously there are vehicles fires all the time, but highlighting the relatively less frequent EV fires compared to gas cars suggests intellectual dishonest, oil shill, or Tesla short.

          3. “The data show that a typical gas car is 9x more likely to be involved in a fire than a Tesla. Maybe this will come down as the fleet ages,…”

            Or they could have hired a statistician who knew how to properly adjust the study results for vehicle age. But that would have undermined the effort to show that Tesla is superior in every dimension of comparison.

          4. intellectual dishonest, oil shill, or Tesla short

            Winning through insult. I used to work for a guy that had the book “Winning through Intimidation” on his desk, facing the employee in the opposite chair.

          5. I used to work for a guy that had the book “Winning through Intimidation” on his desk, facing the employee in the opposite chair

            I used to keep a copy of “Dealing with people you can’t stand” on my desk.

  2. “For many, revenue is flat because of a shortage of homes in the low-to-middle market, while higher-priced homes languish because they’re too expensive for many buyers.”

    One really easy way to fix both of those problems.

  3. “The persistently slow housing market has Debra Goodwin creating cooking videos to try to sell a house.

    Hey Debra, I’ve already beat you to market with my own video series on the same subject, titled “Get to sawin’ and slashin’, greedheads: how to unload your rapidly depreciating shack in a cratering market.”

  4. On July 17, Austin Board of Realtors released its June and midyear 2019 reports, the latter a compilation of the first six months in Austin and Central Texas real estate, and the numbers indicate the city’s housing bubble may be starting to deflate.”

    The hell you say…and note how the REIC shills are belatedly forced to admit the existence of a housing bubble, after denying it for months or years.

  5. House a few streets over looks like it went under contract after 6 weeks, and a $50k drop. It wasn’t badly priced, and under the area’s median, but my impression from driving by on days they had open houses, and talking to neighbors was that the amount of buyer traffic was “concerning low”

  6. “Real-estate agents said the pain from the foreign pullback is palpable when they try to sell high-end condos in Miami and New York or mansions in southern California and Seattle. ‘

    This pain you speak of…try as I might, I’m just not feeling it. Maybe we renters are impervious to the distress of falling shack prices and AWOL Greater Fools….

    1. With the foreign investors morphing from buyers into sellers, and end-users not especially eager to catch themselves falling knives, there could be a considerable gap down from recent bid-war investor purchase prices to the precautionary, budget-constrained offer prices of end-users, appropriately discounted for future declines.

    2. I’m not a renter and I don’t feel this pain either. The fall in high-end condos and mansions hasn’t really trickled down to $300K shacks yet.

      It is encouraging that foreign investment is falling. While most of the investments were in useless air-boxes, I hope this trend extends to all types of housing. I do not want to be colonized by China one quarter-acre at a time. (It’s bad enough to be colonized by Central America.)

      1. When a bunch of foreign speculator money drives up the price of real estate, so local end users can’t even buy, I think we need to tax that purchase with a penalty before they take the money out of country( don’t call me a racist).

        Just think about how money from foreign lands creates short term demand ,leaving the end user locals without affordable housing.

        A rethink need to be done on the concept of bucks coming from all over the World that distorts local markets.

        Now I know people will say how dare I want to mess with the free rein of global markets. In addition ilegal workers sending money back home to Mexico should have a surcharge put on those funds.

        It’s interesting to note that when a number of ilegals were interviewed they were not interested in getting USA citizenship, but interested in jobs and benefits given.

        Call me protective, but because I live in California, a law was passed the taxpayers have to pay for their health care.

        Globalism with open borders must of been the best brainchild of someone who wanted to destroy this Country .

        1. In addition ilegal workers sending money back home to Mexico should have a surcharge put on those funds.

          I couldn’t agree more. This would be much more effective than a wall.

          1. You can move money out of the country with Bitcoin or a suitcase so it is not a more effective way. I am for both, but the US Chamber and it’s allies would not be fighting a wall so hard if it was not effective. McCain ran for reelection on it and then dropped after reelection due to the PTB. Walls work as long as you do not leave easy to access holes in the wall. Up into Trump, the PTB were eager to show off sections of wall, knowing full well that they had left enough holes to make the construction only a minor inconvenience.

          2. You can move money out of the country with Bitcoin or a suitcase so it is not a more effective way.

            There would be some leakage, but not much if the tax was small. US could also take a more draconian approach towards BitCoin (like China has done).

            I think building a wall around the safety net is more important though (housing, healthcare, etc.). Basically what Ben Carson is doing is the right approach. Mitt Romney was right: make self-deportation the default. Reduce the carrots and you don’t need to do round-ups.

      2. Unfortunately it is going to be easier to get Chinese money out of the country than the illegals.

  7. And on CNBC web site tonight, news of something I have been seeing locally for a while in new construction. News of big reduction in building permits. Shocking what I see locally. I see it because most of my work is in new home developments. Those places look nothing like they did a year ago. Used to be crawling with crews of all types and several streets full of building. Now a few houses under construction and hardly a crew to be seen.

    In one large development where I am active, there is one house under construction and a couple hundred vacant lots. Really, no joke. Still a bit of apartment construction going on, but SFR developments in Sarasota-Manatee area definitely slowing. Appears similar trends occurring elsewhere too.

  8. Of course building and living in supersized homes is immoral and wasteful. D’oh…

    1. The progressives seem to be pushing a “SFH is a vestige of white privilege” meme of late. Of course such privilege requires a special tax by way of penance.

      1. I don’t get upset by SFH, but what I do dislike is SFH-only zoning. I had a 4 hour drive back to home base tonight and queued up the Politico article on Minneapolis and their abolition of SFH-only zoning. I see common by progressive and the libertarians on this issue since private property is private property: do what you want on your own property, but don’t impose your norms on everyone else.

        1. I hear the libertarian argument a lot: why can’t I do what I want with my own property, etc.

          When I bought my house, I signed a contract to abide by the laws and covenants of the local jurisdiction. So, *that’s* why you can’t do what you want with your property, and you already agreed to it. If you don’t like it, you are free to purchase a property in a jurisdiction with fewer laws and covenants.

          I myself am grateful that there are ultra-conservative states still out there, like Wyoming or Texas. At some point in my life I might want to avail myself of those less restrictive local jurisdictions.

          1. What a lot of these people want to do is game the system. Buy up property at low density prices and then change the rules so they can build high density projects. Of course, many will use the “green” arguments to sell the proposal but it is really just greed.

          2. you are free to purchase a property in a jurisdiction with fewer laws and covenants.

            One potential issue there is that the contract changes out from underneath you — new laws get made which now may make something important to you impossible.

            I’m not saying we shouldn’t make new laws, but without certain protections, the concept of “owning” anything becomes a joke.

          3. I’m not saying we shouldn’t make new laws, but without certain protections, the concept of “owning” anything becomes a joke.

            In my view, the pendulum can swing too far in either direction. You have ultra strict local ordinances that dictate only a certain style of house can be built or an additional to a dwelling has to go through numerous planning procedures. On the other hand, you can have someone piling up clunker autos on their front lawn making their property look like trash. There is probably a happy medium somewhere, but rarely do people agree with what it is (e.g. don’t build too high or you’ll block the sun from my heirloom tomato plants!).

      2. 2020 Democrats offer up affordable housing plans amid surging prices
        Pam Fessler
        June 21, 2019
        Democratic presidential candidate Julian Castro speaks during the 2019 California Democratic Party State Convention in San Francisco on June 2. Castro, a former HUD secretary, has laid out a major affordable housing plan.
        Josh Edelson

        Updated at 9:28 a.m. ET If you listen carefully, you’ll hear something unusual on the presidential campaign trail this year. Democratic candidates are talking a lot about the lack of affordable housing, an issue that rarely, if ever, comes up in an election. They’re trying to tap into a growing national concern, as well as a potential voting bloc.

        Several of the candidates have offered extensive plans that they say would address the housing shortage that is affecting millions of low and middle income voters. They’ve proposed everything from refundable tax credits for overburdened renters, to spending billions of dollars on new affordable housing. They’ve also raised the issue as a prime example of racial and income inequality, another focus of the Democratic campaigns.

        “It is not acceptable that, in communities throughout the country, wealthy developers are gentrifying neighborhoods and forcing working families out of the homes and apartments where they have lived their entire lives,” Vermont Sen. Bernie Sanders, an independent who’s running for the Democratic nomination, wrote recently in the Las Vegas Sun.

        And California Sen. Kamala Harris was met with cheers at a gathering of housing advocates in Washington, D.C., earlier this year when she said, “The right to housing should be understood to be a fundamental right, a human right, a civil right.”

        All of this is music to the ears of Diane Yentel, president and CEO of the National Low Income Housing Coalition.

        “We’ve seen candidates talking more about the crisis and the solutions than we have I think in entire presidential campaigns in history,” she says.

        1. It’s great to hear that the Keystone Cops are gearing up to take on the U.S. housing shortage!

          1. Hard to say whether they are cops or robbers. The gang who couldn’t shoot straight is also a fair description. However they might object to that as a homophobic comment. Of course, calling them a cop could offend BLM. It is too difficult being woke I see why it makes them nuts. Or maybe they are nuts to begin with? Do I need to say mentally challenged?

    2. As Seattle cracks down on McMansions, a question lingers: Are huge homes morally wrong?

      Seattle wants more backyard cottages and fewer McMansions. What does the rise and fall of the McMansion say about America, and are smaller homes intrinsically more ethical?
      By Jennifer Graham
      Published: July 7, 2019 10:00 pm
      Associated Press
      The downtown Seattle skyline is shown in this aerial photo, Friday, Feb. 23, 2018. In an effort to create more affordable housing, Seattle is cracking down on McMansions while allowing more backyard cottages. The changes come on the heels of research that shows people aren’t any happier when they live in big homes if another home in the neighborhood is bigger. What does the rise and fall of the McMansion say about America, and are plus-sized homes intrinsically unethical?

      1. Unfortunately, I have met more than a few younger people who have their meters pegged hard to the left, and are not only convinced that huge home.. or really anything that is significantly “more” or different than what they have .. are morally wrong, but also that there is some mentally wrong with people who don’t 100% agree with them (and as a result aren’t quite as valid or deserving as human beings as their enlightened, woke asses are).

          1. I’m spending too much time in this Zero Gravity chair with my leg iced and elevated and a laptop. I shouldn’t be allowed to post under the influence.

          2. rms,

            Fairly normal. I’m being pretty meticulous about sticking to the schedule for eating/drinking/taking meds/exercises/sleeping. The leg is still ghastly purple and it’s going to take a few more weeks for all the loose fluid/blood to get reabsorbed. Every day the trendline slowly improves… much like housing prices. 🙂

          3. Hearing about the purple – I sort of remember that. It will be just a vague memory soon. It’s so nice how you forget. One thing I do know – I’m grateful I don’t have to strategize about where/how long I have to walk anymore. Sometimes I was really sweating it.

          4. I spent many months sleeping in a lazy-boy recliner following a foot surgery. I discovered that elevated legs don’t store fluids that enable humans to be nomadic hunters. I can’t imagine the physiology of weightless life in the International Space Station.

      2. It sux to own a McMansion bought during the heyday of the Housing Bubble that won’t sell for but a fraction of its initial purchase price.

        “Seattle joins other cities, such as Minneapolis and Portland, that are working to provide more affordable options in a housing market in which the large homes that baby boomers built aren’t selling.

        “These days, buyers of all ages eschew the large, ornate houses built (around the early 2000s) in favor of smaller, more-modern looking alternatives, and prefer walkable areas to living miles from retail,” wrote Candace Taylor in The Wall Street Journal.

        This leaves baby boomers who can’t sell their large homes with a choice of problems: They’re stuck with space they don’t need in homes that could be hard to navigate as they age, or they stand to lose money if they sell.”

        1. This leaves baby boomers who can’t sell their large homes with a choice of problems: They’re stuck with space they don’t need in homes that could be hard to navigate as they age, or they stand to lose money if they sell.”

          Let me guess.. the owners of these houses, back when they bought them, were told how they could later sell it for a big payday and fund the rest of their retirement, etc?

          For all the grief you guys gave my about buying my house (which I admit wasn’t that bad), I never once had ‘what I can sell it for later’ or anything like that as a factor in my decision, or a concern.

          It was bought in part because I could see it meeting our needs going forward indefinitely, to the point of being carried out of it on a stretcher and it didn’t have a bunch of space/rooms that we weren’t going to use.

          I suspect that how a lot of today’s buyer are looking at things. A lot of the younger generation(s) have been beaten down collectively by the last 20 years enough that they idolize things like “paid off”, and “can afford on one income” and don’t care if they are keeping up with the Jones. Coming out alive is the end goal now.

          … yup.. the meds are kicking in on old ‘Spiffy and he’s getting pretty lucid.

          1. heheh. Now you’re just flattering me.

            Just took final meds of the day, and let’s see if I can get a whole night’s sleep.

          2. But further expounding on Professor Bear’s post… That got me think back to when I lived in the DFW metroplex.

            That area, since 1985.. and maybe until today (don’t know as I haven’t lived there for 10+ years now) was all about “show”. I remember slogan “You are your car” to describe social status among yuppies in the 80s. And the golf.. and owning a house on a golf course. OMG/WTF The extra status from being on a Golf Course. The area was constantly growing outwards in all directions, meaning shiny new subdivisions going up every year and Texas’s favorite slogan “It’s Bigger in Texas” – all the houses, more or less in the same style, getting bigger and and with more “bragging” features – 3rd car garage, Mud Room, Home Theater Room, Pool, 20+ foot ceilings (IN a place where you run the AC 24/7 more than half the year, let’s cool down a huge volume of unusable space), Wine Cellars .. they didn’t really take off because almost nobody had basements (the limestone just beneath the topsoil meant you practically had to blast out a basement with dynamite), bigger pools, bigger decks, Fireplaces in the bedroom (again, what’s the obsession with fireplaces in a climate like North Texas?). uninsulated attics that are 145+ in the summer. uggh

            If I was still there, looking at the fading brick facades to find a place to buy, I wouldn’t even look at a house on a golf course. I’d skip the more expensive HOAs. All those extra rooms would only register as extra energy bills, and higher tax bills.

            Boomers be in for a surprise that their offspring aren’t thinking like and valuing the exact same things as they did… as if they an entirely different experience to this point…. Shocking. Unbelievable. Oh woe the poor boomers, stuck with their trophy houses. They can always play golf in the 110 degree sin.. wait.. the course closed down years ago.. but the homeowner fees remain.

          3. Exactly, you bought a home to provide and eventually own your own shelter free and clear. That is better than renting forever.

            You didn’t buy it as a speculative investment hoping it will go “to the moon Alice”

          4. The rule of thumb back in the day was to buy the biggest house you could reasonably afford, because back in the days before HGTV, RE greed and cyclical prices you’d get a decent return when you sold, and chances are your family grew a little and that profit eased you into the slightly larger place you genuinely could use. And the “biggest house you could reasonably afford” was never more than about 2,000 square feet.

          5. “…and it didn’t have a bunch of space/rooms that we weren’t going to use.”

            That’s one of my key criteria for domicile choice, and why we are likely to move to a more appropriate space in a couple of years.

          6. “Just took final meds of the day, and let’s see if I can get a whole night’s sleep.”

            Pain meds lead to constipation.

            A coworker was in a nasty motorcycle wreck resulting in traction, titanium pieces, etc., but he said the worst part was being constipated from the pain management. To deal with that was a nurse nicknamed “digger.” 🙂

          7. @chino, @prof bear

            I will say that the classic model of moving up to a bigger house because you had more kids makes sense and shouldn’t be looked down on upon.

            But that 14-room, 4500 sq-ft house I had east of Dallas, TX – which I left an 1800 sq ft 6 room house for – That was me caught up in the ‘showing off that I had made it’ game. Took my licks and learned my lesson in multiple ways with that one. I have no problem admitting it was one of the stupidest decisions I ever made, and I thought so highly of myself at the time for making it. I was stupid.

            @rms

            Pain meds lead to constipation.

            Sometimes pain meds are called for. I mean I have this 10 inch incision that looks like the seam on a football where they inserted power tools – saw, drill, hammer, grinder – inside me and flipped things around backwards. 🙂 For the first time in a longer than I can remember the docs weren’t shy about needing pain relief.

            That said, I’m tracking every pill I take and when, and have already started the ramping down on the pain pills, along with a bunch of other stuff like food, exercise, bowl movements, etc. Movements resumed a few days ago, and it seems like my GI tract is nearly back to normal, though I’m not eating that much.

          8. “It’s Bigger in Texas” – all the houses, more or less in the same style, getting bigger and and with more “bragging” features – 3rd car garage, Mud Room, Home Theater Room, Pool, 20+ foot ceilings

            That reminds me of this study that I came across a few years ago about how little this extra housing “space” is actually used:

            This Study Suggests That You’re Wasting a Ton of Home Space

            “Where we spend the most time in our homes
            With the average American home’s dramatic increase in space, one might assume that we Americans now have the luxury of putting more space to good use, allowing us to enjoy more of our home’s features and bask in the glory of large dining rooms, fancy living and “sitting areas”, separate studies (read: “libraries”) and yet another room for our televisions and time-grabbing entertainment devices – video game consoles, anyone?”

            “But, according to a study published in the Wall Street Journal several years ago, that assumption would be flat wrong. We only tend to use a fraction of our living space.”

            “Like typical living and breathing human beings capable of emotion, we crave social interaction with other humans. The large majority of the time, this family spends their waking hours congregating around areas of food preparation and consumption. The rest, they are plopped down on the couch watching the boob tube or on the computer. We don’t need 2000 square foot homes for that.”

            https://thinksaveretire.com/think-you-need-a-2000-sqft-house-to-be-comfortable-think-again/

          9. This Study Suggests That You’re Wasting a Ton of Home Space

            This summer we’ve got 6 people in a 4br ~2000ft^2 house with a cousin and grandparents here from China. The house is about the perfect size for that. Next week it will be 8 for a few days when my parents visit.

            So as much as my wife likes visitors I like having this much space compared to the apartment we were in before. But the ex was very anti-social and the ~1400 we were in back then was enough except that I couldn’t get far enough way and remain indoors.

            What I would really like is the current rental plus an unfinished walk-out basement under it so I could put my music stuff down there instead of in the living room. A bunch of cables and electronics doesn’t go or fit well with her decorating and Chinese furniture.

          10. What I would really like is the current rental plus an unfinished walk-out basement under it so I could put my music stuff down there instead of in the living room. A bunch of cables and electronics doesn’t go or fit well with her decorating and Chinese furniture.

            Carl, I think what you need is a Casita. If we buy, I think we will look for something with a Casita option. Something that you can have your own personal space and quiet when you need to get away. Something like this:

            https://sullivan-homes.com/property/gsv-503-freeport/

          11. “…so I could put my music stuff down there instead of in the living room.”

            Adequate music space will be a key criterion for our next move.

          12. I think what you need is a Casita.

            So instead of a garage band I could have a Casita band? Sounds like a Jimmy Buffett kind of thing.

          13. I don’t post much but this topic on how big a house is big enough is interesting.

            My wife and I have 3 kids so this comment resonated.

            “I will say that the classic model of moving up to a bigger house because you had more kids makes sense and shouldn’t be looked down on upon.”

            Way back in BC (Before Children) Our first house was less than 1K sq feet (2 bd, 2 ba). It seemed large at the time with the 2 of us. Add 2 kids and it was extremely cramped. Master bedroom + stacked kids in the second bedroom.

            Upsized to a 5 bd 3 ba 4000 sq ft house and had another child ( a master bedroom, and one bedroom for each child). One extra bedroom for guests. We preferred not to stack up the kids but we could have.

            In the meantime, I was offered the opportunity to work from home. Spare bedroom is gone. Guests and 70 year old in-laws sleep (actually we do) on the sofabed. Saved hundreds of dollars per month in commuting costs but I wish we had 6 bedrooms.

            Decided to ditch the $50/month gym membership and converted an extra space into a workout room.

            Decided to have an entertainment area with a large TV and a pool table. I make my own beer so saved on all of those $200 bar tabs. 🙂 This could be a justification…..

            I also needed space for my beermaking and other hobbies.
            My wife has hobbies also, so we are both crammed into a small side room.

            Now that 4000 sq foot house seems kind of small.

            First World Problems that we are fortunate to have.

            How big is big enough when you work from home and have leisure time for hobbies?

            Maybe when the 3 kids grow up and move out, it may seem large again. We may sell but my wife said that she would like the kids to come back to visit for the holidays. If they are married and have 3 kids, we need a house to hold 17! I guess we could AirBnB the neighbors houses.

            It seems that a house can never be big enough but it can seem WAY too small. This is a TRUE First World problem.

            The question remains: How big is big enough?

        1. (For the record, our current abode is about 1,100 square feet. We could use a couple hundred more, given that I was single when I bought it, but we have no plans to go past that at this stage in life)

          1. So is mine in a neighborhood filled with McMansions. It does not make me feel bad at all particularly since the lot sizes were all equal. I enjoy that their house raises the value of my house but I do not have to clean or maintain a large house. A little more yardwork but actually I enjoy it and the hummingbirds love all my Desert Willow trees.

          2. Morally wrong or not, I just think it is really not advisable to have more house than you need. All the extra cleaning, decorating, paying for AC/heating, etc. on spaces that are rarely used is just a recipe for poor quality of life. Unless you are wealthy enough to just hire someone to do all of that and not care about the financial impact, then I wouldn’t want to have a big home.

          3. @OneAgainstMany

            You hit on something rarely acknowledged – the time and effort cost of extra space and stuff, even if unused and the dilution of focus and enjoyment because more stuff and space is competing for your fixed attentions.

          4. You hit on something rarely acknowledged – the time and effort cost of extra space and stuff, even if unused and the dilution of focus and enjoyment because more stuff and space is competing for your fixed attentions.

            True statement. The stuff we own ends up owning us in the end. I do love my new car and I wouldn’t change my decision to purchase at all. But having a “nice” car does incur a time cost in upkeep with regards to cleaning and detailing that I just didn’t have to put forward in my 9-year-old Civic. It’s worth it for me still, but I do acknowledge the marginal increase in time that I have to spend.

          5. It probably came up before, but I can’t recall and you know I am a car (fast wagon) guy. What is your new ride?

          6. What is your new ride?

            I got my Tesla Model 3 long-range rear-wheel back in March. I consider it in my top 3 most enjoyable purchases of my life: #2 was my Garmin Forerunner w/ optical heart rate sensor when they first came out and #3 would be the original Final Fantasy on NES.

  9. Beware of bond market quicksand!

    Markets
    Negative-Yield ‘Quicksand’ Risks Trapping Even the U.S. Bond Market
    By Vivien Lou Chen
    July 17, 2019, 11:02 AM PDT
    Updated on July 17, 2019, 1:44 PM PDT
    – ‘Plain-vanilla recession’ could be trigger: JPMorgan’s Loeys

    The world’s almost $13 trillion pile of negative-yielding bonds is looking like “quicksand” that risks engulfing much of the fixed-income universe, including the U.S., says JPMorgan Chase & Co.’s Jan Loeys.

    The prospect of Treasury yields dropping to zero may seem remote, with the 10-year benchmark now back above 2%, the U.S. jobless rate near a 50-year low and stocks close to record highs. But Loeys, a senior adviser of long-term investment strategy, lays out a scenario in which that could happen.

    1. The world’s central bankers have conjured up a witches’ brew of negative yielding debt in their cauldron:

      “Double, double toil and trouble;
      Fire burn and caldron bubble.
      Fillet of a fenny snake,
      In the caldron boil and bake;
      Eye of newt and toe of frog,
      Wool of bat and tongue of dog,
      Adder’s fork and blind-worm’s sting,
      Lizard’s leg and howlet’s wing,
      For a charm of powerful trouble,
      Like a hell-broth boil and bubble.”

      1. Davos
        July 17, 2019 / 5:25 AM / Updated 16 hours ago
        UBS wealth arm tells clients to shed negative yielding emerging market debt

        LONDON (Reuters) – UBS Global Wealth Management is recommending clients holding negative-yield emerging market debt to sell their exposure as a dovish shift in central banks’ monetary policy pushes the yield on more bonds into negative territory.

        Forty of the more than 3,000 emerging market bonds covered by UBS’s wealth management arm have now zero or negative yields, said Jerome Audran, emerging markets analyst at UBS Global Wealth Management. The negative yielding bonds are denominated in euros and Swiss francs.

        “The outstanding amount of negative yielding bonds is increasing due to the dovish shift in global central banks’ monetary policies,” he said in emailed comments to Reuters.

        “We rate many of them as expensive, as we expect them to post very low to negative returns over the short-to-medium term and underperform similarly-rated EM [emerging market] peers.”

        After the recent dive in the euro zone’s 10-year benchmark German government bond yield, other euro government and corporate debt have been dragged into negative territory, including some emerging market bonds.

      2. Ok I have started to translate that:
        “Toe of frog” equals Macron
        ” Tongue of dog” equals Merkel
        ” Lizard’s leg equals Lagard

    2. Did negative yields whack your bottom line?

      fastFT Bank of New York Mellon Corp
      BNY Mellon results hit by tepid markets and negative yield curve
      Trust bank says it contended with ‘difficult operating environment’ in second quarter
      Peter Wells in New York 18 hours ago

      Bank of New York Mellon continued to battle a “difficult operating environment” in its second quarter, characterised by a negative yield curve, low levels of market volatility and a stronger dollar.

      The tough conditions combined to see revenue and earnings at the world’s biggest custodian bank fall compared with a year ago, although its assets under custody increased.

      “The impact of the level and shape of the yield curve, as well as continued low levels of volatility and muted market activity, negatively impacted our results”, Charlie Scharf, chief executive, said.

  10. Wow, these past two days have been the busiest Airbnb days ever. There is a local MLM company convention in town and so we are getting swarmed with Airbnb guests. Hotel prices are through the roof too. Everything is sold out. I also just had my first two guests from Israel check-in. Nice guys.

    1. “The young man was in fact selling ice cold (root) beer.”

      He’s got a great future ahead of him as a used home seller.

  11. CR8R

    fastFT US economy
    US building permits fall by the most since 2017
    Peter Wells in New York 16 hours ago

    The weakest set of building permits since 2017 underscored an overall weak pack of data for the US housing market in June, doing little to allay broader concerns about the health of the domestic economy.

    Building permits, which track early-stage construction approval, fell 6.1 per cent year-on-year in June to a seasonally adjusted annual rate of 1.22m, according to the US Census Bureau, and came in below market expectations for a slight increase to 1.3m.

    In percentage terms, it was the biggest drop in permits since February 2017, while the annual rate hit its lowest since September of that year.

  12. Technically, if prices are falling faster than before, isn’t it a deceleration?

    The Financial Times
    UK house prices
    London house prices fall at sharpest rate since 2009
    Decline that started in smart central boroughs cuts into nationwide growth
    Hackney borough: Prices in London dropped 4.4 per cent in the year to May 2019 © Bloomberg
    Bethan Staton and Judith Evans in London 16 hours ago

    London home prices fell in May at their sharpest annual rate since 2009 as a slowdown that began in the expensive central boroughs took hold around the capital.

    Prices in London dropped 4.4 per cent in the year to May 2019, an acceleration from the fall of 1.7 per cent for the year to April, according to the Office for National Statistics — the largest annual drop in house prices since August 2009, when they fell 7 per cent.

    The decline in London house prices, combined with slower growth in the south and east of England, has cut into rates of UK house price growth over the past three years. In the UK as a whole, house prices increased 1.2 per cent in the year to May, down from 1.5 per cent in April.

    1. It’s kind of a joke to predict a 10 percent price crash in case of a no-deal Brexit, given that London prices are already falling and off 4.4 percent year-on-year sans Brexit.

      1. No-deal Brexit recession ‘could spark house price crash and decades of flat wages’
        Tom Belger
        Yahoo Finance UK
        July 18, 2019, 1:44 AM PDT
        Brexit supporters outside parliament.
        Photo: Vudi Xhymshiti/AP

        A no-deal Brexit will plunge the country into recession, with a “squeeze” on family budgets as the pound’s falling value pushes up prices, the UK government’s budget watchdog warned on Thursday.

        The value of the pound could fall “sharply” and house prices could nosedive 10%, with the cost of imported goods and government debt spiralling, foreign investment sliding and firms that sell to Europe battered by new trade barriers.

  13. Huawei Plans Extensive Layoffs in the U.S.
    Cuts are expected to affect workers at U.S.-based R&D subsidiary Futurewei Technologies
    By Dan Strumpf
    Updated July 14, 2019 7:49 pm ET

    Huawei Technologies Co. is planning extensive layoffs at its U.S. operations, according to people familiar with the matter, as the Chinese technology giant continues to struggle with its American blacklisting.

    The layoffs are expected to affect workers at Huawei’s U.S.-based research and development subsidiary, Futurewei Technologies, according to these people. The unit employs about 850 people in research labs across the U.S., including in Texas, California and Washington state.

    Huawei declined to comment. The exact number of layoffs couldn’t be determined, but people familiar with the matter said they were expected to be in the hundreds. Some of Huawei’s Chinese employees in the U.S. were being given the option of returning home and staying with the company, another person said.

  14. This should be an interesting sale to watch play out, given a recent dearth of foreign investors on U.S. shores.

    The Financial Times
    North American prime property
    Jackie O’s estate in Martha’s Vineyard goes on the market for $65m
    Red Gate Farm’s price tag is a beacon in a market that lags national growth
    © Laura Moss Photography
    Hugo Cox 3 hours ago

    “The time to repair the roof is when the sun is shining,” said President John F Kennedy in his 1962 State of the Union address. With a price tag of $65m, buyers considering Red Gate Farm in Martha’s Vineyard, one-time estate of Jacqueline Kennedy Onassis, now being sold by her daughter Caroline Kennedy, will hope the maintenance is up to scratch.

    Even by the standards of Martha’s Vineyard, the exclusive island enclave off the coast of Massachusetts, the particulars of the home are compelling. Landscaped by Bunny Mellon, who redesigned the Rose Garden at the Kennedy White House, the estate features more than a mile of private beachfront in its 340 acres. The main house, with five bedrooms and just under 6,500 sq ft of living space, was completed in 1981. In 1979, when Onassis paid $1m for the estate — which is near Aquinnah on the island’s western tip — the only structure was a hunting cabin.

    In the US, connections to famous names can add a hefty premium, but is Red Gate Farm really worth $65m — twice the price of the island’s most expensive sale? Potential buyers should consider the state of the local market — which is complex.

    1. Dumb question:

      Could property improvements, scarcity value of the lot, and Jackie O’s aura possibly sum to a $68 million (6800%) increase in market value?

      1. PS Should also factor in 40 years of consumer price inflation since 1979, which by the CPI is 254%, just a hair’s breadth shy of 6800%.

  15. Or Brexit could mean an economy free from EU regulations and taxes which booms. Just the Brexit vote was suppose to collapse the British economy. The money that Britain gives to the EU is critical for its survival. I think the EU is more endangered

    1. Normally a divorce harms both parties financially, even if quality of life benefits are achieved.

  16. I remember when Boomers bought it was for shelter, a tax write-off, and notion of paying off the loan in 30 years for a free rent retirement plan. Also maybe a slight protection against inflation.

    Because jobs were stable, you could live in a house until the loan was paid off.

    Fast forward to the shelter manias , I think the trigger was faulty lending No doubt Clinton getting rid of Glass-Steagal Act , created the dumb ass lending, but the government aided the faulty lending by backing such bizarre lending policies.

    Now you have the reinflation of the 2008 bubble because no meaningful correction of the lending was done, (like bring back Glass-Steagal Act ),

    Wall Street got their way and they were bailed out, and no doubt expect to be bailed out again.

    And because of all the distortions these policies brought, we now have Communist platforms touted as the solution. (NOT).

    1. “Now you have the reinflation of the 2008 bubble because no meaningful correction of the lending was done, (like bring back Glass-Steagal Act ),…”

      Not to mention Fed intervention to deliberately reflate the bubble…

      1. Yes PB your right.

        Watching this contorted and bizarre situation where talk of viable solutions isn’t even on the table is unnerving.

  17. Do you have way too many investment portfolio beans in the real estate basket, thanks to the leverage miracle of the 30-year mortgage?

    Americans too often don’t understand this simple truth about investing
    By Catey Hill

    Published: July 18, 2019 2:53 p.m. ET
    Share

    Experts say that our long-term investing instincts may be misguided
    iStock
    Investing in real estate is Americans’ preferred long-term investment.

    Americans feel at home in the real estate market.

    When asked their preferred way to invest money they won’t need for more than 10 years, Americans’ No. 1 choice is real estate, according to a survey of more than 1,000 adults from personal finance firm Bankrate.

    Indeed, about one in three Americans now say real estate is their preferred way to invest for the long-term — the highest percentage to date. The stock market is a distant second, with 20% choosing it as their top choice for a long-term investment vehicle.

    “The reason most people feel real estate is the most preferred option is because it is tangible and they understand it,” explains certified financial planner Mitchell C. Hockenbury of 1440 Financial Partners in Kansas City, Mo. And Greg McBride, Bankrate’s chief economist, notes that the tangible nature of real estate “likely makes it seem less prone to loss than the more abstract ownership stake in publicly traded companies held in your ETF.”

    Meanwhile, “buying equities isn’t tangible to most,” adds Hockenbury. And McBride notes that “the short-term drops in the stock market do seem to have an outsized impact on how individual investors view risk, even though that risk diminishes over longer holding periods.”

    The issue, though, is that prioritizing real estate over stocks in your long-term investment strategy could be costly. “Which fares better over long periods of time? The stock market. Hands down. Not gold, not houses, not oil … stocks,” says Hockenbury.

      1. I have to laugh when I hear some grunt talking about borrowing money for an investment. Do they really think the Wall street sharks would leave low-hanging fruit for someone else?

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