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This Time Really Is Different

A report from Realtor.com. “The postcrash price growth might actually be higher than most thought. Home prices shot up a cumulative 50% over the past decade, from June 2009 through May 2019, according to CoreLogic. Wages also rose over the past decade, but not nearly that much.”

“‘We have years of home price growth leaving borrowers with record levels of home equity,’ says Molly Boesel, principal economist at CoreLogic. ‘So if they’re in a situation where they can’t pay their mortgage, they would just sell. So they won’t wind up in default.'”

“In the wake of the crisis, lending standards have been tightened. Only the strongest candidates in good financial shape can get a loan. And there isn’t nearly enough new construction to satiate demand. ‘Everyone likes to say this time is different. But this time really is different,’ says Chief Economist Danielle Hale of realtor.com®.”

From the Home Buying Institute. “Three or four years ago, home prices were rising in most cities across the U.S. But things have changed since then. For a number of reasons, prices in many housing markets across the country are starting to level off. And in some areas, they are actually declining.”

“Look at Denver; Seattle; San Jose; and Portland, Oregon for example. These were some of the hottest housing markets in the country just a few years ago. Today, buying a home in one of these cities might actually be a bad idea. That’s because home prices have actually declined in these markets. And some forecasts suggest they’ll continue to drop through the end of 2019 and into 2020.”

“A few years ago, the Seattle real estate market was a hot spot for investors. Overseas investors, in particular, were snatching up properties left and right. But that was then, and this is now. In 2019, you don’t see very many real estate investors in the Seattle area. Savvy investors anticipated the major home-price gains mentioned above, and they also saw a downturn coming.”

“For a while there, it looked like home prices in the Portland housing market would just flatten out for a while — and maybe turn north again. But now it’s official. They’ve actually dropped.”

“Inventory growth does a couple of things. It takes some of the urgency out of the home-buying process, and gives buyers a chance to ‘catch their breath.’ It eases competition. It tends to result in slower home sales, price cuts, and other signs of market shift. This is what we are seeing in a lot of the formerly red-hot housing markets, like Seattle, San Jose, Denver and Portland.”

From WSLS in Virginia. “The sudden closure of a Roanoke-based homebuilding company last week still has clients and customers scrambling for answers. David James Homes shut down last week after owner Merle Heckman sent an email to employees citing ‘bad business decisions.'”

“Nick Akers says he lost about $80,000 after David James Homes stopped construction on his new Huddleston home. He says subcontractors have come after him for money because David James Homes had not paid them. ‘They’re wanting lots of money, and they’re talking about putting liens against the house, and it’s just a bad situation,’ Akers said.”

From WINK News in Florida. “Neighbors in Charlotte County believe some big lizards are taking over a rundown home near them. ‘There’s a big hole in there,’ neighbor Henry Overhoff said. ‘And you can just see them on a nice day that they’re poking their heads out, walking around to the top of the roof.'”

“The home in question has been vacant since 2010 and is now in foreclosure. Neighbors worry decomposing iguanas are in the house, and they want to see something done. Unfortunately for neighbors, it could be months or years before the property’s foreclosure is complete.”

From NBC Los Angeles in California. “Oakley residents are in an uproar after several late-night parties with hundreds of teens have stormed a normally quiet neighborhood. Police appear unable to keep it from happening.”

“The home is in foreclosure and the owner said she is in the process of moving out. It could be weeks or months before she is called into court to answer code enforcement violations. ‘It’s just unbelievable, it’s unbelievable,’ neighbor Howard Blumenfeld said. ‘It makes me feel unsafe to live in this beautiful neighborhood.'”

The Orange County Register in California. “183,100 foreigners bought homes nationwide in the 12 months ended in March, down 31% from 266,800 in the previous year. My trusty spreadsheet says 22,000 foreigners bought homes in California in the 12 months ended in March. That’s down 41% from 37,000 in the previous 12 months.”

“Non-U.S. buyers acquired 15,000 fewer California homes in the past year. That translate to 30% of the 50,000 statewide drop for all home purchase. That’s impactful, especially in housing niches foreign-buyers often prefer: newer, pricier homes in many of the state’s ethnically diverse communities.”

“Hey, California homebuying overall went from ‘must do’ to ‘meh’ in the past year. House hunters from other nations just pulled back a tad more aggressively. California was the top destination for buyers from China, Hong Kong and Taiwan — claiming 34% of all Chinese purchases nationwide. But that’s a big slice of a shrinking pie: Deals nationwide from these Asian nations last fell fell 51% to 19,900.”

“That drop put Canada in a tie with the Chinese trio for the top number of U.S. buyers. And California got only 3% of those deals from our neighbors to the north — ranking the state fifth nationwide. All Canadian deals in the U.S. fell 27% to 19,900.”

“What these stats do tell us is which key house hunter is missing in today’s slow-selling market. What logic says is that nobody should count on foreigners returning any year soon.”

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This Post Has 65 Comments

  1. ‘The home in question has been vacant since 2010 and is now in foreclosure’

    Zombie shacks are a REIC statistic, shadow inventory is a conspiracy theory.

    1. very interesting –

      I wonder how freddie/fanny are pricing these houses on the balance sheet. I am sure – similar to the neighbours – and not 20% lower to account for fixing up, selling and closing costs (including realtor and attorney costs)

      1. Is it not still ‘mark to fantasy’ if the asset is not sold? Mark to market rules were supposed to apply but were suspended shortly after the 08 crash if memory serves via FASB.

  2. ‘So if they’re in a situation where they can’t pay their mortgage, they would just sell’

    Click!

    ‘Oakley residents are in an uproar after several late-night parties with hundreds of teens…The home is in foreclosure and the owner said she is in the process of moving out’

    Sell, just sell!

  3. ‘The sudden closure of a Roanoke-based homebuilding company last week still has clients and customers scrambling for answers. David James Homes shut down last week after owner Merle Heckman sent an email to employees citing ‘bad business decisions’

    Wa? But shortage?

    ‘Nick Akers says he lost about $80,000 after David James Homes stopped construction on his new Huddleston home. He says subcontractors have come after him for money because David James Homes had not paid them. ‘They’re wanting lots of money, and they’re talking about putting liens against the house, and it’s just a bad situation’

    They’ve already put liens against the shack Nick. Rest easy, it was cheaper than renting.

  6. Yeah, they rose 50%, but only after how much did they fall between 2006 and 2009 before that?

    Jesus.

    2. Even that is deceptive. For instance in affluent Reno we recently learned they are up 140% in a few years. Boston flew past 100% many years ago.

  7. ‘Everyone likes to say this time is different. But this time really is different,’ says Chief Economist Danielle Hale of realtor.com

    LOL!

  8. “My trusty spreadsheet says 22,000 foreigners bought homes in California in the 12 months ended in March. That’s down 41% from 37,000 in the previous 12 months.”

    So the reports of what all the realtors call mythical “foreign investors” are beginning to become more and more prevalent as NEW news. Money laundering through cryptocurrency has still yet to be shown but i suspect it will surface at some point. I recall seeing many homes on the market last year with “crypto payments accepted”, i havent seen those for some time. can only get worser from here.

    1. ” … can only get worser from here. ”

      Mr. Ben Jones: ” … it just gets wor$er & wor$er … ”

      (Once the Federal Re$erve lower$ inter$t rate$ to ZERO (-1.9%) … All$.Well.That.end$.Well!)

  10. How can people look at the same data – and come to drastically different analysis and conclusion.

    There is a lot of speculation — masked as investments.
    Have you guys seen the price of classic cars?

    ———————————–
    The two-year flipping rate hit an all-time high of 11.4% in the first quarter of last year, according to the report. That’s compared with 4.9% in the third quarter of 2010.

    But unlike in the last downturn, overbuilding, subprime mortgages, and easy credit are mostly a thing of the past. Last time lenders made mortgages to underqualified—and often uninformed—borrowers.

    In the wake of the crisis, lending standards have been tightened. Only the strongest candidates in good financial shape can get a loan. And there isn’t nearly enough new construction to satiate demand.

    “Everyone likes to say this time is different. But this time really is different,” says Hale. “Regardless of how the economy performs, the housing market looks like it’s on good footing. There’s a large group of young people at the age where they’re going to be buying houses. And at least so far, jobs are plentiful and that bodes well for people’s ability to buy going forward.”

    1. But what if those young people decide to walk away instead of falling on knife?

      There are other places to put money instead of a house…

      1. If they were prepared to walk away I do not think we would see such pandering by the Democrats running for President. Their positions show that the millennials want 0 down mortgages and student loan forgiveness so they can buy a house. I sure they have a stack of polls showing this before they took their positions

        1. I would like someone to buy me a house, too. Do aging dads with millennial kidz qualify?

          1. Would it be prudent to encourage your college student children to maximize their student debt loads and bank the proceeds in Roth IRAs, just in case a future elected official declares a blanket student debt jubilee?

          2. “Would it be prudent to encourage your college student children to maximize their student debt loads and bank the proceeds in Roth IRAs, just in case a future elected official declares a blanket student debt jubilee?”

            Bzzzzzztt ROTH IRA contributions are related to EARNED income, not borrowed money proceeds.

            Frum da net:

            “2018 Roth IRA Contribution Limits and Income Limits. The maximum amount workers can contribute to a Roth IRA for 2018 is $5,500 if they’re younger than age 50. Workers age 50 and older can add an extra $1,000 per year in ‘catch-up’ contributions. The $6,500 maximum contribution amount is the same as 2017.”

          3. My kids work. Suppose they saved the max allowed out of their earned income to Roth, and used student loan money for college expenses. Then shared in the mass debt discharge when the jubilee happens. Would that possibly work?

          4. I think PB meant for his children to maximize their student debt loads in anticipation of a student debt jubilee while he puts the money that would otherwise pay for their education into Roth IRAs.

          5. Screw the Roth IRA. Max out the loans, open up a margin account and put it all in TSLA, NFLX, UBER and ZG. Sitting in class is optional but I would def join a frat and hit up the parties. Think big!

          6. Geez, Eye flipped a coin in 1992: x5 $hares of Berk.A @ $5000 or 20 acres in the Sequoia’s

            Geez, well ya can’t camp on x5 shares for 30 years … I

            What’$ x5 $hares worth these days anywho?

      2. “There are other places to put money instead of a house…”

        +1 There’s men going their own way, MGTOW. If you can’t afford to start a family then you don’t need a house, furniture, mini-van, etc., so go see the world instead.

        1. go see the world instead.

          I’ve had lots of guys coming through my Airbnbs doing this. Some really cool ex-military guys lately. They know how to travel.

  13. Loving the headlines of this breaking news of foreign retraction that is hitting the MSM (anyone on the HBB has known this for years)

    “Foreign buyers flee the U.S. housing market, led by Chinese and British”

    The specuvestors are going to stain themselves.

    #brownpantsareforrealtors

        1. Maybe an inside job/fraud? Can’t have any legitimate competition with legit $$ meddling in the plan.

    2. “I can’t find any information about this property on the MLS. Any ideas why it would show up in Zillow and not the MLS?”

      Sounds like a hip pocket listing?

  16. “Home prices shot up a cumulative 50% over the past decade, from June 2009 through May 2019, according to CoreLogic.”

    Fyi, it only takes a 33% price decline to cancel out a 50% price increase.

  19. Politics
    Bond Markets Once Felled Governments. Now Negative Yields Rule
    By Nikos Chrysoloras
    and Lyubov Pronina
    July 17, 2019, 9:00 PM PDT
    Updated on July 18, 2019, 3:55 AM PDT
    – Governments don’t feel market pressure to put houses in order
    – Risks increasingly migrate from countries to asset owners

    It was November 2011 and Silvio Berlusconi’s back was to the wall.

    Italy’s 10-year bond yields were spiking above 7% and the prime minister was stalling. Summoned to a room on the sidelines of the Group of 20 summit in the French Mediterranean resort of Cannes, Berlusconi was confronted by Angela Merkel and Nicolas Sarkozy. They demanded to know what he was going to do to convince markets and halt the contagion — but received little reassurance.
    …

    1. The more I read up on negative yield bonds, the less I understand the whole concept.

      Can a bond have a negative yield?
      By Matt Lee
      Updated Jun 25, 2019

      The return that a bond provides investors is measured by its yield, which is quoted as a percentage. Current yield is a commonly quoted yield calculation used to evaluate the return on a bond for a one-year period. It only accounts for the interest, or coupon payments, that the bond returns to investors. This yield is calculated as the bond’s coupon rate divided by its current market price, but doesn’t account for any capital gains or losses incurred when the bond is sold. If the bond isn’t sold within the year, this yield calculation will provide the bondholder with an accurate assessment of his or her return.

      A bond’s current yield can only be negative using this basic evaluation, if investors were receiving negative interest payments, or if the bond somehow had a market value below $0 – both of which are relatively rare events. Other yield calculations take into account different factors and can be used to better evaluate the returns investors may receive, given different events.
      …

      1. “The more I read up on negative yield bonds, the less I understand the whole concept.”

        There is hope for you yet. If you believed you understood the wonders offered up by investing your hard-earned money in a negative yield bond then you are most likely an idiot. But if you are in a position of investing SOMEBODY ELSE’S MONEY in such a bond AND WILL COLLECT A HEFTY FEE FOR DOING SO then perhaps you are a closet genius.

      2. The more I read up on negative yield bonds, the less I understand the whole concept.

        Speaking of negative yield bonds and creditors, I caught this very interesting prediction from Ray Dalio:

        “I believe that monetizations of debt and currency depreciations will eventually pick up, which will reduce the value of money and real returns for creditors and test how far creditors will let central banks go in providing negative real returns before moving into other assets.”

        1. “…test how far creditors will let central banks go in providing negative real returns before moving into other assets.”

          Nominally negative yields on bonds denominated in systemically devaluing fiat money seems to already go quite far in providing negative real returns.

          1. If the only other assets available are mania-priced risk assets, those negative yielding sovereign bonds may well prove to be the healthiest horses in the glue factory.

          2. “If the only other assets available are mania-priced risk assets, those negative yielding sovereign bonds may well prove to be the healthiest horses in the glue factory.”

            TINA = there is no alternative.

            My father just sold off one of his businesses for several million. The buyer was a wealthy young New York guy from a very wealthy family. During the course of their discussion he made it clear that he felt that there were really no good buys on assets available and that the best play at the moment was to get into operating businesses with the potential for growth. He may very well be right in the “everything bubble”.

  20. “In the wake of the crisis, lending standards have been tightened. Only the strongest candidates in good financial shape can get a loan. And there isn’t nearly enough new construction to satiate demand. ‘Everyone likes to say this time is different. But this time really is different,’ says Chief Economist Danielle Hale of realtor.com®.”

    Literally a lie in every sentence. The REIC shills are outdoing themselves.

    2. “Literally a lie in every sentence.”

      +1 Pinocchio was a moral paragon compared to a RE Economist.

  21. “‘We have years of home price growth leaving borrowers with record levels of home equity,’ says Molly Boesel, principal economist at CoreLogic. ‘So if they’re in a situation where they can’t pay their mortgage, they would just sell. So they won’t wind up in default.’”

    You keep telling yourself that, Molly.

    1. “move fast and break things.”

      Some politicians come to mind who seem to live by that motto. And once in office, politicians generally seem to live above the laws which regulate the little people they govern.

      1. You mean a crises should not go to waste gang? Who created a law with taxes that even the Democrats are repealing?

  23. Today, buying a home in one of these cities might actually be a bad idea. That’s because home prices have actually declined in these markets.

    Wrong, Home Buying Institute hacks. Buying a shack in those cities is a terrible idea not because shack prices have declined, but because of how much further they are going to crater.

      1. tl;dr: “…I went into labor (light cramping, bright red blood) at 20 weeks. That is, 15 weeks before my son was supposed to exist outside of my body. —snip— We went home to wait, and our son was born and died in our bed a few nights later.” —Caitlin Vestal

        1. From the other one:

          “In the end, none of those stories informed my decision. Lots of them, like the ones in which people were told a rescue cerclage wasn’t a good idea but demanded one anyway, still irked me, even in my desperation. I was as frustrated by these people and their willingness to pass off anecdotes as fact as I was by the doctors without answers for me. I couldn’t put my trust in stories that ended by wishing me baby dust.”

          That last insight seems particularly relevant here where we have lots of anecdotes. Her stories are excruciatingly relevant and familiar to what my wife went through. Also familiar is the phenomenon of people reaching for information from anywhere, regardless of how credible it is:

          “There’s a whole world of unsubstantiated information at pregnant people’s fingertips, should we be looking for it.”

          This statement could apply to almost any topic on the internet.

    1. When the only ones that are making money are the fee churners , than maybe it’s time to keep your money under the matress .

      Maybe it’s time to keep your money under the matress if you think that you won’t be a winner in the give-a-way programs asserted by the presidential hopefuls.

      Maybe matress stuffing is warranted when your judged by the color of your skin, rather than the content of your character.

      1. I’m of the wrong race, age, and gender identity to qualify for any of the Democratic party candidate giveaways. Luckily I have my white male privileges to fall back on…

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