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The World Is Changing, It’s The End Of The Boom

A report from Axios. “The real estate market should be experiencing a boom — but it’s not. In fact, the U.S. housing market has been stagnant for the last 3 years and is beginning to turn lower, data shows. Anyone who bought residential property in the last 40 years, even at the height of a bubble, has been able to count on rising home values. But those days may be over: Real estate prices have far outpaced incomes and lost their correlation to them.”

“For typical homeowners, ‘wealth will not increase as fast as it did in previous years, as on average the growth in property prices is close to an end,’ Maciej Skoczek, real estate analyst at UBS Global Wealth Management, tells Axios. ‘Those who buy a city apartment at current high valuations are likely to have to adjust to a lengthy lean period.'”

“There is a serious lack of qualified and/or interested buyers. And even with ultra-low mortgage rates, prices are not falling enough to bring in new customers. Not enough affordable single-family homes are being constructed, and builders are focusing their efforts on large, expensive projects, Robert Dietz, chief economist for the National Association of Home Builders, argues.”

“The combination of inflated prices and overburdened Americans has translated to fewer home sales today than in the year 2000, Lawrence Yun, chief economist at the National Association of Realtors, notes. ‘We take a survey of consumers and ask the question, ‘Is it a good time to buy?’ The number of people who say it’s a good time has overall been turning down.'”

“The bottom line: The world is changing. It’s ‘the end of the boom,’ Skoczek says.”

From Mansion Global on New York. “The slowdown has particularly hit downtown, including SoHo and Tribeca, as the vast majority of luxury deals have taken place uptown since the new transfer taxes went into effect, according to data Compass Real Estate compiled for Mansion Global. Luxury deals plummeted from 640 in the 14-week period before the new taxes to just 242 since July 1.”

“‘There was the Tribeca rush,’ said Michael J. Franco, an agent with Compass. ‘But from personal experience, Tribeca has stalled.'”

“‘Buyers are just so price sensitive right now,’ said listing agent Lisa Chajet of Warburg Realty. ‘It makes sense that Billionaire’s Row and Tribeca are not selling because they are all new developments priced above $5 million—and that market has died.'”

From Mansion Global on Florida. “We caught up with Ryan Shear, managing partner of Property Markets Group, to discuss who’s still buying Florida. RS: Everybody’s down on real estate in general, because we’re potentially headed for recession. And Miami developers don’t have their head in the sand, condo prices are down, and absorption is down.”

“MG: What’s the biggest surprise in the luxury real estate market now? RS: When you look at what drives luxury markets, the dollar being so high is a problem. The world is kind of on fire at the moment. There’s less disposable income everywhere, and America has become more expensive. After 2008, real estate was really cheap, but now the dollar is so high, and it makes it difficult for foreign buyers. Places like San Francisco, New York and Miami, which are global cities, and are driven by foreign buyers, are feeling the strains.”

From Patch California. “Three officers of a mortgage company have been arrested on a 121-count felony indictment for allegedly operating a mortgage fraud scheme that mostly targeted seniors and resulted in losses of more than $7 million, state Attorney General Xavier Becerra announced Friday.”

“The victims, many of whom were elderly and in financial distress, sought mortgage relief services from Grand View Financial LLC in counties stretching from Mendocino and Placer counties south to San Diego County. Eighteen of the 121 counts emanate in Contra Costa County, 11 in Alameda County, and nine each in San Francisco and Solano counties. Other counts relate to cases in San Mateo, San Joaquin, Placer, El Dorado, and Sacramento counties.”

“The company launched a mortgage and foreclosure assistance program that advertised assistance to desperate homeowners facing foreclosure. Becerra asserts the three defendants promised consumers that if they transferred their house and paid money to Grand View Financial, the company would eliminate the mortgage lien and deed the home back to the homeowner, clear of any liens. During this time, the defendants allegedly filed false court proceedings, false documents with the county recorders’ offices, and false bankruptcies.”

The Grand Forks Herald in North Dakota. “Seller’s market, meet buyer’s market — or at least, something a lot more like it. It comes after years of a much warmer market, say local Realtors, as well as long-held city hopes that housing in the area would become more affordable.”

“‘I think most people that are in the industry anticipated a slowdown,’ Mike Opp, a broker with Oxford Realty, said of the current market, especially following hotter home buying in the 2010s. ‘Some to varying extremes, I guess.'”

“‘Worst-case scenario, as it shows, a house could list today and be on the market for five months,’ said JodiDanzl, president of the Grand Forks Area Association of Realtors. ‘That’s kind of the norm.'”

“‘I’m still a little bit unsure what the goals of our City Council should be with relation to housing in our community. I’m sure people who are buying homes today are thankful the city implemented some of its policies, because I do believe the city is directly responsible for some of its lagging home prices,’ Grand Forks City Council President Dana Sande said. ‘So if you’re a buyer, you’re happy. If you’re selling your home, you’re not happy.'”

“‘There are a lot more homes on the market right now. People are still buying, but it definitely is a buyers’ market right now. That’s kind of where we’re at,’ said Ashley Cota, a realtor with Coldwell Banker Forks Real Estate.”

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This Post Has 71 Comments

  1. Where’s the poster who says, “oh ‘they’ won’t let prices fall!”

    It’s sinking like a turd in a well.

    1. Doesn’t it seem likely for the Fed to enter the market with price support measures if things start to get out of hand, as they did in the post-2009 period?

      Albeit expectations for a hair-of-the-dog are most likely already priced in.

      1. QE forever or no?

        The Financial Times
        Europe quantitative easing
        Investors start to ponder ‘QE infinity’ from the ECB
        Amid weak growth and inflation, fund managers contemplate the limits of bond-buying
        Tommy Stubbington yesterday

        As the European Central Bank limbers up to restart its debt-buying programme, one question looms large for investors: how long can the purchases continue before the bank runs out of bonds to buy?

        The ECB is due to start acquiring €20bn of bonds a month in November, just a few days after this Thursday’s policy meeting — Mario Draghi’s last as president, before handing over to Christine Lagarde. Analysts estimate that the quantitative easing programme can run until the end of next year before bumping up against the central bank’s self-imposed limits, under which it can own no more than a third of any eurozone country’s bond market.

        But things could quickly get tricky for Mr Draghi’s successor. If the current downturn intensifies and the central bank wants to increase its stimulus, the thorny question of raising this limit would have to be tackled much sooner.

        For investors who have bet heavily on a bond-buying programme that stretches as far as the eye can see, any doubts about the future of QE are uncomfortable.

        “This is the fundamental question that will frame the first months of Lagarde’s tenure,” said Richard Barwell, head of macro research at BNP Paribas Asset Management. “Are there quasi-legal constraints that will stop them buying, or is this QE infinity?”
        …

        1. Are there people who think it’s a bad idea for the central banks and a few friends to own everything? Or are they just worried that at some point there could be a backlash?

    2. “They” had a pretty good run so far. How many young adults overpaid for older generation’s housing, and will now see their home equity (if they have any) collapse out from under them?

      1. I don’t think it will happen. I wouldn’t mind if it did though, because I would stand to benefit from the fall. The boomers make the laws, and they aren’t about to take away any housing support.

      2. collapse out from under them?

        I think that the sooner reality sets in the better off they will be. The excess can be washed out by default and new beginnings can begin to be worked on. The worst thing for the younger generation would be to overpay on a mortgage for the most productive decades of their lives.

      3. Virtually all of them have next to nothing in “equity,” such as it is, so that is not a problem. I wouldn’t worry about that demographic. It’s the lenders who are fooked.

  2. ‘So if you’re a buyer, you’re happy. If you’re selling your home, you’re not happy…There are a lot more homes on the market right now. People are still buying, but it definitely is a buyers’ market right now. That’s kind of where we’re at’

    Wa? But it’s only luxury that’s down, the ankle biters say!

    1. Speaking of ankle biters:

      ‘The company launched a mortgage and foreclosure assistance program that advertised assistance to desperate homeowners facing foreclosure’

      Desperate, in California? And there’s no fraud, we were repeated told:

      ‘During this time, the defendants allegedly filed false court proceedings, false documents with the county recorders’ offices, and false bankruptcies’

      Somebody was a lion.

      1. There’s a whole bunch of sumbadis here on the blog. They’re kinda quiet lately.

        Regardless of that the perps involved in the transactions that pimped the “bidding war” nonsense over the last 3 years have a big problem. A very big problem.

      2. “three defendants promised consumers that if they transferred their house and paid money to Grand View Financial, the company would eliminate the mortgage lien and deed the home back to the homeowner, clear of any liens.”

        Anyone stupid enough to fall for this has no business buying a house.

  3. ‘The real estate market should be experiencing a boom — but it’s not. In fact, the U.S. housing market has been stagnant for the last 3 years and is beginning to turn lower’

    That’s right: the REIC has been lying for years.

    ‘Anyone who bought residential property in the last 40 years, even at the height of a bubble, has been able to count on rising home values. But those days may be over: Real estate prices have far outpaced incomes and lost their correlation to them’

    Uh, lost correlation to incomes? And the central bank didn’t know this? It’s only been repeated by UHS and economists for year after year. The bubble popped years ago.

    https://www.latimes.com/business/story/2019-08-29/u-s-pending-home-sales-drop-the-most-since-early-2018

  5. “…The world is changing. It’s ‘the end of the boom,’ Skoczek says…”

    It never ever fails to amaze me how supposed REIC “experts” like Maciej Skoczek and Lawrence Yun are always a day late and a dollar short.

    Just wait until all these wanna-be multi-millionaires discover just how expensive it is to maintain a $2mm++ monster.

    Gonna be tough to HELOC their way out of a five figure property tax bill or new roof or insurance or HOA dues or plumber.

    Given the poor construction quality of some units (here in the OC), the maintenance nightmare is going to start sooner rather than later.

      1. Sure they can. And whoever has the biggest printing press is the wealthiest country on the planet, right?

        You can’t print wealth. You can make a big mess, but you can’t print wealth.

        1. “Yes, Printing Money Can Create Wealth”

          “One of the recurring themes I’ve seen in commentary on the Federal Reserve’s latest round of “quantitative easing” is the idea that “goods and services are scarce, and so printing more money doesn’t really create any more wealth.” This has a certain common-sensical ring to it, but it’s completely wrong.

          “To see why, all you have to do is compare an economy mediated by money to a barter economy. In principle, economic actors in a barter economy could have all the same resources and talents as economic actors in a neighboring money-based economy. But the inefficiencies of exchange via barter—the difficulty of finding people who have what you want and who are also willing to take what you have in exchange—means that the money-based economy will, in practice, be far wealthier.”

          Bla, bla, bla.

          https://www.forbes.com/sites/timothylee/2012/09/21/yes-printing-money-can-create-wealth/#27a2eb2a1da2

          1. From Wiki …

            The Overton window is an approach to identifying which ideas define the domain of acceptability for a democracy’s possible government policies. Politicians can only act within the acceptable range. Shifting the Overton Window involves proponents of policies outside the window persuading the public to move and/or expand it. Proponents of current policies, or similar ones, within the window seek to convince people that policies outside it should be deemed unacceptable. According to Lehman, who coined the term, “The most common misconception is that lawmakers themselves are in the business of shifting the Overton window. That is absolutely false. Lawmakers are actually in the business of detecting where the window is, and then moving to be in accordance with it.”[6]

            According to Lehman, the concept is just a description of how ideas work, not advocacy of extreme policy proposals. In an interview with the New York Times, he said, “It just explains how ideas come in and out of fashion, the same way that gravity explains why something falls to the earth. I can use gravity to drop an anvil on your head, but that would be wrong. I could also use gravity to throw you a life preserver; that would be good.”[7] But since its introduction into political discourse, others have used the concept of shifting the window to promote ideas outside it, with the intention of making less fringe ideas acceptable by comparison.[8] The “door-in-the-face” technique of persuasion is similar.

          2. a barter economy

            The problem with a barter economy is not its inefficiency, it’s that it doesn’t require any bankers.

        2. Logic and reason are selectively excluded from the allowable parameters of debate (the Overton window). So, even though Zimbabwe has conclusively proved that printing money does not lead to prosperity, it is not to be discussed (lest one be labeled a conspiracy theorist and get on one of those “watch lists”).
          The next breakdown of the system which have a narrow set of proposed solutions. Letting the market work, using creative destruction, will not be part of the debate. Allowing interest rates to rise to levels that efficiently allocate capital to productive uses will not be discussed.
          Instead, it will be what kind of money printing will be best. MMT or “QE for the people” or more giveaways to the banks and other large corporations. If the people get feisty, I suspect MMT but I don’t think they will. I think the kool aid will be drunk, the pablum eaten and the status quo will live on for the next few years or longer

          1. And you cannot borrow it into existence.

            However, you can borrow money to fund endeavors which create wealth.

          2. you can

            Yes you can, but you’re not wealthy until you’ve done the work and made a profit and paid back the money you borrowed. I think today’s more common business model is to borrow the money, lose it and take what you’ve looted in the process.

  6. ‘It makes sense that Billionaire’s Row and Tribeca are not selling because they are all new developments priced above $5 million—and that market has died’

    Back when all the RE “experts” were saying, “it’s a safe deposit box in the sky”, I was saying it would end this way.

    ‘When you look at what drives luxury markets, the dollar being so high is a problem. The world is kind of on fire at the moment. There’s less disposable income everywhere, and America has become more expensive. After 2008, real estate was really cheap, but now the dollar is so high, and it makes it difficult for foreign buyers. Places like San Francisco, New York and Miami, which are global cities, and are driven by foreign buyers, are feeling the strains’

    If your market is replying on people who don’t live there, you are fooked. Cuz these foreign buyers or vacation buyers or whatever are just speculating. It’s cheaper to stay in a hotel or resort and a lot less trouble. I’ve been saying this for well over a decade too.

  7. Geeze, with a title like that this morning, you know what we were all expecting.

    Do I have to get it started myself? *sighs* ok, then.

    ah 1.. 2.. 3.. 4..

    That’s great, it starts with cut mortgage rates
    Squirrels, HELOCs and Liar Loans
    and Ben Jones is not afraid.

    East coast hurricane, listen to the flippers churn,
    World serves the Chinese needs,
    Don’t serve your community’s needs

    Speed it up a notch, down payment, insurance, closing,
    The properly ladder starts to clatter,
    Prices dear, look down from record heights

    Wire the proceeds, play appraisal games,
    And a government for hire, lack of oversight
    Left the country in hurry,
    with the regulators breathing down their neck
    city by city, MSM reporters baffled, waffled, Suzanne researched this
    Looks at those low rates, all fine then.

    Ut oh, foreclosure, shadow inventory, big whoops,
    but it’ll do. save yourself, serve yourself,
    World serves the elite’s needs, listen your community bleed

    Tell me with a straight face that you saw it coming, right
    You liquidated, leveraged, hedge funded and bonded
    Feeling pretty psyched,

    It’s the end of the Boom as we know it,
    It’s the end of the Boom as we know it,
    It’s the end of the Boom as we know it, and Ben feels fine…

        2. Now who is going play what instrument when we record it? 😛

          There is an Easter egg in Teslas for self driving. You tap autopilot stalk 4 times while already in autopilot and it plays Christopher Walken’s ditty from SNL (e.g. “I need more cowbell”).

          I’ve been playing this on the way to drop off son to preschool. The other night he told my wife that he doesn’t want to play the piano, he wants to play the cowbell.

      1. “It’s the end of the Boom as we know it,”

        Just give it time

        And when the broken-hearted people
        Living in the world agree
        There will be an answer
        Bubble 3

        For though they may be parted there is
        Still a chance that they will see
        There will be an answer
        Bubble 3

        Bubble 3, bubble 3, bubble 3 , bubble 3
        Yeah, there will be an answer
        Bubble 3

    1. It’s a shame the kind-hearted liberal racists are losing money.

      Brooklyn — the Capital of Liberal Hypocrisy

      By REIHAN SALAM
      September 24, 2015 8:00 AM

      Shopping district in Dumbo, Brooklyn. (File photo: Spencer Platt/Getty)
      Progressive parents fight integration in their children’s public schools.
      Ilive in a small slice of Brooklyn wedged between Brooklyn Heights, one of New York’s most prosperous neighborhoods, Dumbo, a relatively new neighborhood that is essentially a forest of condominiums catering to financiers, techies, and “creative professionals,” and Farragut Houses, a sprawling public-housing complex that borders the Brooklyn Navy Yard. Though you won’t find gated communities in this part of Brooklyn, you will find buildings with doormen, which is of course a quite similar phenomenon. The retail establishments catering to affluent professionals don’t formally exclude poor residents, but their high prices do the work of explaining who is welcome and who is not. Very rich people and very poor people live side by side in this part of Brooklyn, yet their lives rarely intersect.

      https://www.nationalreview.com/2015/09/in-brooklyn-public-schools-progressives-opposing-integration-reihan-salam/

  10. Di$playing dimini$hing $elf-confidence is always a sure $ign of po$itive outcome$ … (Wall $treet graffiti $crawled in un$een backalley)

    MARKET$
    Goldman warn$ that buyback$ are ‘plummeting,’ ending a big $ource of buying power for the market$

    MarketWatch | By Pippa Stevens | Oct 21 2019

    All $pending is $lowing

    The slowdown in buybacks is part of a larger trend of $pending cut$, Goldman found, as trade uncertainty and stalling global growth weigh on the market.

    Total cash spending fell by 4% year over year in the first half of the year, according to the firm. It anticipates cash spending for the entire year will decline by 6%, making it the sharpest yearly decline since 2009

    “Companies spend less cash when policy uncertainty is high. During August, global economic policy uncertainty registered the highest level in at least 20 years. Historically, growth in aggregate S&P 500 cash spending has been weaker during periods of high policy uncertainty. The combination of an ongoing trade conflict and next year’s US presidential election will likely result in lingering uncertainty,”

      2. In theory the last $10B was covered by GM stock. Problem is, the stock price dropped and it’s currently worth less than $10B

  11. I think everything has peaked. Cash is the only place to be right now. Sure, you may miss out on something in the near term, but the medium term is going to be really ugly, in my opinion.

    1. The fear I have is that when [(some asset/place I’ve put my cash to try and get a better return)] crashes, it’ll happen in a flash and the news will be delayed just enough that no matter how vigilant and paranoid, an ordinary person like me will not be able to exit without taking a massive loss. Cash may not have the upside potential, but it doesn’t have the downside risk either, and turbulence seems to be the natures of the times.

        1. > Those words do not rhyme with speculation.

          That might explain why I have $110k in cash accounts over at Bank of America right now. Need more safety cushion.

    2. So long as the stock market is going up, why worry? Just buy stocks, and wait for wealth gains.

    3. That’s all well and good, but the market is up 20% this year. That means it needs to come down at least 18% just to be back to even. If you wait years and years for a 50% haircut, you will get it, but only missing out on 200% of gains.

  12. America, always creating $olution$! … ($haring Revolution Rev2.34: Elder$ learn new analog trick$ from digital Millennial’$)

    REAL E$TATE
    Backyard bungalow$ are becoming big busine$$ for homeowner$ and builder$
    CNBC | Diane Olick | Oct 21 2019

    “We lived in it for 10 months while we renovated our main house, and we loved it,” said Lisa. “I definitely can see us hanging out there, retiring, and traveling, and then renting the main hou$e.”

    Washington, D.C. also recently relaxed building codes on ADU’s allowing the Puchallas to build a second floor on the one-bedroom, one-bathroom home.I

    KEY POINT$
    $econd home$, formally called auxiliary dwelling units (ADU’$), are cropping up in back and side yards across America, acting as either rental units or additional space for aging parents and still-nested adult children.

    Growth in the sector has been fueled by changes to local and state zoning rules. Some municipalities are struggling with a lack of affordable housing and see these additional units as one remedy.

    “Our focus is basically to expand the market and really drive the number of ADU installations across the Bay Area and California up dramatically, “said Steve Vallejos, CEO of Prefab ADU.

      1. I’m kind of surprised that they don’t have prebuilt versions of these on display in the parking lot at Lowes and Home Depot, next to the fancy schmancy sheds.

        My new project is something like this. We are developing lots modular, factory built homes and an accessory dwelling unit. So basically two dwellings on one lot. Can’t share much more, but we’re in major talks to expand this project and partner with one of the largest home builders in my state.

    2. “And there’s trillions of dollars in equity in these backyard bungalows that homeowners aren’t tapping!”

  14. https://www.marketplace.org/2019/10/11/housing-costs-force-californians-live-their-parents/

    Housing costs force young Californians to live with their parents
    American Public Media
    Marketplace
    Matt Levin
    10/22/2019

    “According to an analysis of U.S. Census Bureau data, roughly 37% of Californians between 18 and 34 live with their parents.”

    “In this expensive part of Orange County, 55% of 18 to 34-year olds live with a parent, one of the highest rates in the state.”

    “But in an expensive state like California, moving out of your parents’ house does not mean your love life will improve.”

    “Ian Baker works two jobs in Orange County, one at them at a bowling alley. He’s 29. He’s hasn’t gone on a single date since moving out of his mother’s place last year.”

    ““Living with my parents, it actually wasn’t that hard to try and meet girls and whatnot,” said Baker. “Honestly, it became harder when I moved out. Just because of the fact that in order to move out I had to start working two jobs.””

    1. When I was between 18 to 34 mom would’ve cried if she saw the kind of hotties I was entertaining; nothing even close to my sisters. 🙂

  15. “For typical homeowners, ‘wealth will not increase as fast as it did in previous years, as on average the growth in property prices is close to an end,’ Maciej Skoczek, real estate analyst at UBS Global Wealth Management, tells Axios.

    The illusory “wealth” is measured in Yellen Bux, and reflects the debauchery of the currency as a result of the Fed’s deranged money printing since 2008. When the financial reckoning day can no longer be deferred by the Keynesian fraudsters at the Fed, trillions of fake “wealth” is going to melt away like FB tears in the rain.

  16. “The bottom line: The world is changing. It’s ‘the end of the boom,’ Skoczek says.”

    And the Great Reset is slouching forward, despite the Fed’s frantic efforts to hold it at bay with QE-to-Infinity.

    2. “KBRA also noted that the boomer generation will be 55 and older by the end of 2019, squarely placing it in the market for age-restricted housing.”

      And so many of ’em are broke ash losers.

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