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The Adjustment In Pricing Has Started

A report from the Wall Street Journal. “The next time you buy a house, your lender might deploy a drone and a computer algorithm to size up the property instead of a tape-measure-toting human appraiser. Federal regulators are moving to allow a majority of U.S. homes to be bought and sold without the involvement of licensed appraisers, by increasing from $250,000 to $400,000 the value of homes exempt from a human evaluation.”

“Regulators say the immediate effect of loosening appraisal requirements would be limited because most home loans in that price range are bought by mortgage giants, Fannie Mae and Freddie Mac, or guaranteed by other federal agencies. Those typically require valuations by licensed human appraisers regardless of home value, though Fannie has begun to eliminate appraisal requirements for some refinancing loans.”

“Moody’s Investors Service has been among those that have warned that eliminating appraisers from deals heightens risks for investors. Alternatives such as broker price opinions—which are a type of perfunctory evaluation performed by real-estate agents and even outsourced to office workers in India who use online data—or computer-driven automated valuation models ‘would weaken the credit quality of new residential-mortgage-backed securities,’ Moody’s has said.”

From The Oregonian. “Buying a home seized by the lender is more complicated than a traditional residential real estate transaction. Negotiations and contracts are different, the owner is most likely out of state and the title search is limited, resulting in a special warranty deed.”

“In this week’s real estate gallery, we look at some of the 80 homes categorized by the Multiple Listing Service as REO (real estate owned by banks or other lenders), from chic to shabby, condos to Craftsman houses.
Brooklyn neighborhood: 3932 S.E. 16th Ave. is listed at $387,900. ‘Huge price reduction,’ say listing agents Valerie Hunter and Damien Pogue.”

“Alameda neighborhood: 3117 N.E. 33rd Ave. is listed at $407,100. ‘Buyers responsible to rectify the permits liens on the property and dues diligence regarding all lien issues, contact county for details. There are repair or demo liens to be taken care of after closing. Home priced with these liens taken into consideration,’ says listing agent Leslie Edwards. West Linn: 6130 Caufield St. is listed at $599,900. ‘Bank owned beauty with its own forest,’ says listing agent Don McCredie.”

“Northwest Heights: 3927 N.W. Devoto Lane is listed at $944,800. ‘REO Occupied – the seller does not represent or guarantee occupancy status. No viewings of this property. Please do not disturb the occupant. ‘As is’ cash only sale with no contingencies or inspections. Buyer will be responsible for obtaining possession of the property upon closing. Property is lender-owned, is being sold as is, and seller makes no representations or warranties,’ says listing agent Leslie Edwards.”

The San Francisco Chronicle in California. “San Francisco is still the most competitive housing market in the country, but even here the bidding frenzy seems to have died down, according to recent Redfin data. Only 35 percent of offers written by Redfin agents for SF buyers faced a bidding war in July 2019, compared with a staggering 72 percent just one year earlier.”

“Second-place San Diego saw only 21.3 percent of Redfin buyers in competition, followed by Boston in third place (16.4 percent), then LA (16 percent), Philadelphia (14.3 percent) and Denver (14 percent). San Jose came in just behind Denver at 13.3 percent. These figures are all down significantly from one year ago, and in many of the most expensive markets the bidding war rate was down to less than half of what it was one year earlier.”

“Nationwide, the picture for buyers was even rosier. Only 11.2 percent of offers submitted by Redfin agents for their buyers were in competition, down from 45 percent in 2018 and the lowest figure since 2011.”

The Village News in California. “Fallbrook’s overall price average is down just under 3%. Sounds like a winning situation for buyers. Sellers, on the other hand, have already seen price decreases over the past year. Thirty-eight percent of all homes sold in California over the past 12 months, had a price reduction, before receiving an accepted offer.”

“If you’re a homeowner and are planning on selling, now is the time. If you think you have the luxury of waiting it out, remember 2008. If the economists are correct, and if we have additional price adjustments, we are potentially looking at a drop-in price and an increase in interest rates.”

“The housing market peak was in the second quarter of 2018. The adjustment in pricing has started. By lowering the interest rate, Federal Reserve is attempting to prop the economy up.”

From Domain News on New York. “A luxury apartment overlooking New York City’s Central Park has returned to the market with an eye-watering discount. The huge, 522-square metre, two-storey unit was most recently listed in 2012 with a $US95 million ($140.66 million) asking price but failed to sell after its brief stint on the market. It has just been listed for sale again at a much more modest $US49 million.”

“That makes the discount for the Ritz-Carlton penthouse about the $US46 million ($68 million) mark, more than anyone has paid for an apartment in Australia.”

This Post Has 58 Comments
  1. ‘Bank owned beauty with its own forest’

    Oh dear…

    Weren’t we told by some ass-hat recently that FB’s can always “just sell”? BTW, some of these foreclosed shacks were just renovated – flippers! And note that no one snapped them up at auction. They made it all the way to the MLS.

      1. Exactly and the ones who bought at the peak and are attempting to sell will be suffering every extra day there shack sits on the market and loses value. Local observations up here in Santa Cruz are reduced rents and nearly all homes 15+ days on market with reductions. The amount of listings has easily quadrupled from this time last year. Realtors having open houses every day of the week. Big changes in a short amount of time.

      2. It’s a different kind of flip…buy crappy house, fix it up….then sell to either Chinese money laundry man, or an “investment pool” funded by your local Central Bank.

      3. Same thing in my nabe. There’s not much inventory, but most of it is flips. Problem is, I live in a (relatively) low-cost neighborhood. It’s no good if $50K in reno only gets you $50K in price premium. There’s a reason flip shows only work in bubble markets. In normal markets, the juice isn’t worth the squeeze. Even the flip shows gave up selling these houses for a profit, and instead just rent them out.

    1. They CAN always sell, provided they lower the price to market value AND are willing to bring cash to the closing table to repay any shortfall.

  2. ‘Only 35 percent of offers written by Redfin agents for SF buyers faced a bidding war in July 2019, compared with a staggering 72 percent just one year earlier’

    ‘These figures are all down significantly from one year ago, and in many of the most expensive markets the bidding war rate was down to less than half of what it was one year earlier’

    But, redfin said to the moon Alice? And since they now flip shacks and lie more often than not, I’m sure these internal “bidding war” numbers can be completely trusted.

  3. ‘Sellers, on the other hand, have already seen price decreases over the past year. Thirty-eight percent of all homes sold in California over the past 12 months, had a price reduction, before receiving an accepted offer’

    You mean other than the ones relisted with a sawin’ and a slashin’.

  4. ‘Federal regulators are moving to allow a majority of U.S. homes to be bought and sold without the involvement of licensed appraisers…Fannie has begun to eliminate appraisal requirements for some refinancing loans’

    Yep, lending is rock solid…

    1. “Fannie has begun to eliminate appraisal requirements for some refinancing loans.”

      Keepin’ da game goin’.

      1. When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.

        — Chuck Prince, shortly before the music stopped.

      1. I’m sure they’ve got plenty more tricks up their sleeve. They are all-in on maintaining high housing prices. They will do anything they can to prevent a price crash. Anything at all.

  5. he huge, 522-square metre, two-storey unit was most recently listed in 2012 with a $US95 million ($140.66 million) asking price but failed to sell after its brief stint on the market. It has just been listed for sale again at a much more modest $US49 million.”

    Even accounting for Yellen Bux artificial price inflation, that there is some serious sawin’ and slashing’.

  6. Obama is stupid to be buying ocean front property in Martha’s Vineyard. Here’s why …

    “Climate change evacuation planning needs to start now, scientists urge – Science News – ABC News”

    “From Bangladesh to the Philippines and the low-lying islands of the South Pacific, the impacts of climate change for many people around the world are going to get much worse, very soon.

    “Key points
    Preparing now can prevent last-minute disorderly evacuation from climate impacts
    Building in areas that will be hit by climate disasters in future needs to stop
    Millions are expected to be displaced by the end of the century
    Some people will become stateless, and will need to find homes in new countries, while others will need to relocate within their own borders.

    “Researchers writing in Science today argue that it’s time to begin preparing the retreat of people living in regions that will become uninhabitable due to climate change.

    “By preparing now we can manage retreat in as equitable a way possible, and minimise paternalism and disruption to culture, according to author AR Siders from the Disaster Research Centre at the University of Delaware.

    “‘People need to think about it right now,’ Dr Siders said.

    “‘We’ve already seen examples of when hazards happen, it is unorganised and it causes more harm than it needs to.”

    Average global sea level will rise by up to 77 centimetres by the end of the century if warming is kept to 1.5 degrees Celsius, according to IPCC predictions.

    “If warming reaches 2C, that is likely to be around 10 centimetres higher, displacing around 10 million more people worldwide.

    “According to the IPCC, we’re on track to hit 1.5C of warming between 2030 and 2052 at our current rate.

    “Extreme weather events, saltwater incursion and bushfires are also expected to displace people in the near future.”

    Oh, my!

    https://www.abc.net.au/news/science/2019-08-23/climate-retreat-planning-science/11435382

    1. Hmm…it’s almost like Obama really doesn’t believe the global warming alarmism propagated by his own administration. Or the scam “carbon credit” scheme pushed by Algore as he jets around the world in his private aircraft.

      One rule for me, another for thee….

    2. “Average global sea level will rise by up to 77 centimetres by the end of the century if warming is kept to 1.5 degrees Celsius, according to IPCC predictions.”

      77 centimeters? That’s, uh, only 0.77 meters.

      “If warming reaches 2C, that is likely to be around 10 centimetres higher, displacing around 10 million more people worldwide.”

      Wow! That would make it …

      (doin’ some math here)

      … 87 centimeters or 0.87 meters.

      These current alarmists have no imaginations. Here, try this one on for size …

      “Sea-Levels, Rising Up To 23 Feet, Could Sink More Than 1,400 US Cities By 2100: Study”
      https://www.ibtimes.com/sea-levels-rising-23-feet-could-sink-more-1400-us-cities-2100-study-1365801

      1. (snip)

        “If global carbon emissions continue to increase at the current rate, it could lead to an increase in sea levels of up to 23 feet by the end of this century, submerging more than 1,400 cities and towns in the U.S., including Miami, Virginia Beach, Sacramento and Jacksonville, a new study said.

        “According to the study, published Monday in the Proceedings of the National Academy of Sciences, the amount of carbon pollution on the planet so far has “locked in” or assured a rise in sea levels of more than 4 feet from today’s levels, which is enough to sink more than half of the population in 316 coastal cities in the lower 48 states in the U.S.”

        “locked in”. = We are screwed.

        “By the end of this century, if global climate emissions continue to increase, that may lock in 23 feet of sea level rise, and threaten 1,429 municipalities that would be mostly submerged at high tide,” writes Benjamin Strauss, the study’s author, on Climate Central.

        “Even if we could just stop global emissions tomorrow on a dime, Fort Lauderdale, Miami Gardens, Hoboken, New Jersey will be under sea level,” Strauss was quoted by The Guardian as saying. “Hundreds of American cities are already locked into watery futures and we are growing that group very rapidly. We are l7ocking in hundreds more as we continue to emit carbon into the atmosphere.”

        Whatever.

          1. Al Gore bought an ocean-view villa in Montecito, CA in 2010. I’m not sure if he still owns it. It’s my understanding that he owns a number of homes.

    3. Oscama is probably buying it with the bribe money he got from the big banksters that he did not prosecute. So, he doesn’t care what happens.

      1. Jamie Dimon was one of the, if not the top, visitors to the White House over the course of the Obama administration. Obama was a liar of the highest order. He actually ran on a platform of not helping bankers when that’s exactly what he did.

    4. “Extreme weather events, saltwater incursion and bushfires are also expected to displace people in the near future.”

      Yes and snow was something of the past kids in the Northeastern U.S. would only hear about from their parents until the mild winter/harsh winter cycle that I have witnessed since the 60s came back around to harsh and people in Boston had use furniture to save parking spots they had shoveled out of the drifting snow time and again.

      Then all of a sudden the scientist’s article about his no more snow prediction was scrubbed from the internet.

        1. The article or study I was talking about was from a NASA scientist and I have been unable to find it for a few years now.

    5. Since the NOAA updated their temperature monitoring grid in 2005 they have not been able to detect any significant increase in US temperatures. In a large scale 1989 study reviewed in the NYT climate scientists were unable to find conclusive evidence of global warming in the previous century. I am not aware of any raw data set ever collected that showed a statistically significant increase in global temperatures and all data sets that demonstrate increasing temperatures rely on modeling of variables unaccounted for in the raw data. Regardless, sea levels having been changing for a very long time. Previous civilizations millennia old are now submerged beneath the sea. Not expecting to change anyone’s mind on the climate change issue. But one thing I can attest to is that there is a lot more skepticism in the scientific community on the subject than the public is being led to believe.

      1. “Previous civilizations millennia old are now submerged beneath the sea.”

        If it makes you sleep any better, in Juno Beach Fl. the Atlantic Ocean is right where it was in 1984 (checked yesterday on the way home) and last November and in this video, Long Island Sound is right where it was in the 60s when I was a kid and the late 70s for the cookout / keg parties.

        cookout keg party area at 0:30

        https://www.youtube.com/watch?v=d9rV8qKGBBg

    6. “Obama is stupid to be buying ocean front property in Martha’s Vineyard. Here’s why …”

      If one keep digging in the fed’s bottomless toolbox there’s probably a “former president relocation program.”

    1. Markets
      Japan Lines Up to Join Germany in All-Negative Yield Curve Club
      By Stephen Spratt
      August 22, 2019, 5:15 PM PDT
      Updated on August 22, 2019, 11:38 PM PDT
      – Foreign buyers and positive roll down boost demand for JGBs
      – BOJ tweak to 10-year yield target could push yields even lower

      Japan’s sovereign debt market is in danger of joining Germany with negative bond yields across all maturities.

      Yields in the Asian nation are already negative all the way out to debt maturing in 15 years, and buyers from home and abroad have been snapping up longer-tenor Japanese government bonds, adding to the downward pressure.

    1. I remember a Sci Fi Novel in the 80s – Niven, Pournelle, and Flynn – where the premise was that both camps were right – global cooling and global warming – and both processes where actually active and cancelling each other out. The environmentalist party gains power, fights global warming, and whoops! a new Ice Age happens. Hijinks ensue.

    2. Knoxville still has the Sun Sphere, a tower with a golden sphere on top. It was erected in 1982 for the World’s Fair, to symbolically chase away the coming ice age.

      Thing looks like a disco ball on the stick.

    3. “Climate experts believe the next ice age is on its way.”
      – Leonard Nimoy, 1978

      “The World Is Going To End In 12 Years If We Don’t Address Climate Change”
      – Ocasio-Cortez, 2019

  7. For some reason, an article will resurface in current searches from years ago:

    Creative mortgages contributed to rise in region’s foreclosures

    The Virginian-Pilot
    Apr 15, 2007

    ‘A growing number of Hampton Roads homeowners are finding themselves in Rinaldi’s situation. During January and February, 181 of the region’s homeowners were in some stage of foreclosure, almost double the 100 for the comparable two months in 2006, according to RealtyTrac.’

    ‘One that did significant business in Hampton Roads, New Century Financial of Irvine, Calif., sought protection from its creditors in bankruptcy court earlier this month. “I’ve seen a lot of peaks and valleys in the mortgage business, and I was very surprised to see so many people close their doors so quickly,” said Keith Robinson, vice president and manager of alternative banking at TowneBank Mortgage in Virginia Beach.’

    ‘The shrinking number of subprime lenders could make it more difficult for some prospective home buyers to find a mortgage. Borrowers seeking to refinance a subprime adjustable-rate mortgage also could have problems.’

    ‘Nationwide, more than a million ARMs made between 2004 and 2006 will end up in foreclosure during the next six years because of the reset to a higher interest rate, First American CoreLogic Inc., a Santa Ana, Calif., company that provides risk-management and fraud-protection services to the real estate industry, said in a report last month. Christopher L. Cagan, CoreLogic’s research director and author of the report, predicted that losses from these foreclosures will amount to $112 billion.’

    ‘For an industry that lends $2 trillion a year, “this will clearly not break the mortgage industry,” Cagan said.’

    https://www.pilotonline.com/business/article_8cd5c92d-27a9-5b5f-a1e8-cebc10fae504.html

    1. It’s interesting that the media hasn’t used the term “clown car” once that I’ve seen. In 2016 we saw that used multiple times, every day to describe the people running. And there are/were 9 more people in the race than the Republicans had back then.

      1. Clowns would be unfairly maligned by any comparison to the 2020 Democratic presidential contenders.

    1. “This is going to be a much shorter recession than the last one,” predicts realtor.com® Senior Economist George Ratiu. “I don’t think the next recession will be a repeat of 2008. … The housing market is in a better position.”

      The taxpayers are directly setup to take the fall this time. A TARP bailout will not be needed.

  8. “There’s a theory advanced by climatologists that the last two years of battering by winter means that an ice age is returning to the Earth with glaciers down to the Mason-Dixon line and freezing temperatures south of that.”

    – Rhodes Scholar and ‘Murrow Boy’ Howard K. Smith, 1978

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