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It’s Below Cost And Below Investment, It’s Time To Move It

A report from KOLD in Arizona. “The stock market dropped more than a 1,000 points amid worries about the novel coronavirus — concerns over the outbreak may impact the housing market, too. Tucson real estate broker Karl Kretzel said fear over the virus, now called COVID-19, can make people skeptical of purchasing a home. Kretzel said now is the time for sellers to put their properties on the market because current standards allows them to price high. ‘If you have an unwanted property, this is clearly the time to sell,’ he said.”

“Some sellers wait for the market to peak before selling their home, but Kretzel disagrees with this approach. He said, during the Great Recession, people made this mistake and an external factor such as COVID-19 can have a similar effect. Buyers may find better deals if they hold off on purchasing a home. ‘If you’re a buyer I think it’s a good idea to wait it out,’ Kretzel said. ‘Whether it be the coronavirus or something else, I feel in six months to a year, you’re going to see the market soften.'”

“The coronavirus and its accompanying travel restrictions have caused fewer Chinese investors to buy property in the U.S., he said.”

The Orange County Register in California. “The stock market can have a mind of its own. But when it drops sharply, it’s usually not good news for California’s economy. I plugged into my trusty spreadsheet three decades worth of S&P results, statewide job data and Southern California real estate figures back to 1990 to see what happened to hiring patterns and home pricing a year after large stock drops.”

“Traders, more often than you think, react logically to economic swings, both good and bad. And uncertainty, like the unknown impact of a global virus, can further depress share prices. Many major employers are part of publicly owned companies with management that often has to react to stock swings. These corporations can become financially conservative when investors are antsy. And if those reactions mean fewer hires, if not layoffs, then there are fewer house hunters. And those remaining shoppers won’t readily pay up for real estate.”

“I found the 25 worst months for the S&P 500 starting in 1990. Then I looked at how California jobs and Southern California housing fared one year after these significant stock drops. As measured by the S&P index, these 25 months averaged a 8.5% drop — with the biggest decline, 16.8%, coming amid the financial meltdown of October 2008. And these steep dips signaled broader trouble ahead.”

“In the year after these 25 horrible months for stocks, California employers cut jobs by an average 1.2%. In the same periods, Southern California home appreciation was nearly halved, shrinking on average by 5.4 percentage points to 5.8%. How bubbly? On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … FOUR BUBBLES!”

“The grand ‘bubble or not’ question is often driven by ‘What will make it burst?’ This week we witnessed how a whiff of a possible global pandemic quickly turned investor sentiment into a stock market disaster. And you also can see how far those Wall Street fears can spread — often to the California job market and Southern California real estate. History is a guide, not a guarantee. But it certainly hints at rough times ahead.”

From The Oregonian. “Now that the Portland-area housing market has cooled, home buyers feel they have more power than in the past to negotiate on price, repairs or closing costs. Sellers still have a slight advantage because of low inventory, but when offers aren’t rolling in, the asking price usually drops. Here are 10 Oregon homes for sale with deep discounts.”

“15954 S.E. Lafayette Hwy. in Dayton is for sale at $1,499,000, a reduction of $126,000 since being listed Sept. 5, 2019 for $1,625,000. 2811 Beacon Hill Dr. in West Linn is for sale at $1,195,000, a reduction of $155,000 since being listed July 10, 2019 for $1,350,000. 1994 South Side Road in Sutherlin is for sale at $140,000, a reduction of $35,000 since being listed Nov. 15, 2019 for $175,000.”

“The single-level farmhouse, built in 1947 on 5.38 flat acres, has two bedrooms, one bathroom and 944 square feet of living space. ‘Home is livable, but needs a lot of work. Or tear it down and build your dream home,’ says listing agent Michele Cooper.”

The Chicago Tribune in Illinois. “30,214-square-foot, Middle Eastern-influenced mansion in Burr Ridge, once listed for $25 million, took a $1 million price cut Thursday, setting it at its lowest asking price yet, at $5 million. Once known as Villa Taj and then known as the Palace Royale, the mansion was listed for $25 million and then reduced to $13 million before it suffered massive flooding from the bursting of a water pipe. It eventually was foreclosed on and sold at a sheriff’s sale for $3.1 million to Arvin Lourdenadin, who cleaned it up and relisted it for $10.95 million in 2016.”

“Despite a price cut to $7 million in November 2018 and to $6 million in July, Lourdenadin still didn’t see an offer he liked. So he has it back on the market for $5 million. ‘It’s below cost and below (his) investment,’ listing agent Lisa Petrik of Jameson Sotheby’s said of Lourdenadin. ‘It’s time to move it. Someone needs to come get a deal.'”

“The mansion is among the most high-profile homes in the Chicago area that have struggled to find buyers over the past decade.”

From Tap Into Springfield on New Jersey. “Seeking to limit the potential for ‘neighborhood decline’ and unattractive nuisance, the town is anticipated to establish a registry of vacant and abandoned properties. The town council introduced a regulation that would require the owners of vacant or abandoned properties register those properties with the town clerk within 90 days of the property becoming vacant or within 30 days of purchasing the property. The regulation stipulates fines for failure to register and additional fines for failure to properly maintain a vacant property.”

“Council members approved introducing the measure 8-0. Councilman David Contract offered his support, citing a problem with vacant and abandoned properties in the Third Ward. ‘It also depresses the look and the [property] values in the neighborhood when you’ve got grass that is 3 feet tall and houses that are falling apart,’ Contract said.”

“Councilwoman Linda Habgood noted the public health issue. ‘There definitely have been complaints about houses that have been vacated for years at a time, and there are rodents,’ Habgood said.”

“Town Administrator Jim Gildea said the immediate intent in Westfield is to create the vacant property list. In many cases, abandoned properties are referred to as ‘zombie homes.’ The ‘zombie’ nomenclature, however, is not being used by local officials in Westfield, Gildea said. ‘We’re not using that term,’ he said.”

From Community News in New Jersey. “Atlantic Realty has no plans to build houses on the Howard Hughes tract. That’s what the developer, who purchased 658-acre property last year, is telling West Windsor Township officials. Mayor Hemant Marathe said that he met with officials from Atlantic after the sale to discuss their intention for the property. ‘We had a very open and positive meeting with them,’ Marathe said. ‘They know that we are not looking for any new housing, because I believe we have too much to begin with, and that will put too much strain on the schools.'”

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This Post Has 74 Comments

    1. The zombie home two blocks from me is zombie no more. This is the house that some flipper bought way under market value, fixed up the inside with Minimalist Millenial Gray, and tried to sell for a big profit. The house went contingent, but then disappeared from the market, not for sale or for rent or sold. I walked by it yesterday; there were curtains in the windows and two Tacoma-ish trux in the driveway. My guess is they are renting it out to someone’s buddy.

  3. ‘1994 South Side Road in Sutherlin is for sale at $140,000, a reduction of $35,000 since being listed Nov. 15, 2019 for $175,000…‘Home is livable, but needs a lot of work’

    Michele here is a lion.

    ‘Or tear it down and build your dream home’

    Most of the shacks in this article are dumps.

    2. I dunno, I would say the home is “livable” if you come from a s-hole country. Here’s a pic of an … addition (?) … off the back of the house:
      https://www.zillow.com/homes/1994-south-side-road,-sutherlin,-OR_rb/61067492_zpid/?mmlb=g,15

      No wonder the price was dropped. How much would it cost just to demo and haul all that stuff away, including the vehicles? $50K? More? That said, the piece of land itself looks pretty nice, albeit the parcel is long and skinny. You’d need a tractor and an ATV.

      And somebody please save the poor dog.

      1. You’d need a tractor and an ATV

        It’s flat.

        The house looks like it’s all built one room at a time.

        1. I agree, it’s flat, and would appeal to a hobby homesteader. But because the property is very long, any equipment, or plants, or chickens, or soil, or harvest, or whatever, need to be hauled over a thousand feet. I suppose you could just plant near the house and let the back half grow to forest, but then you’d be hauling firewood. It’s not impossible, but IMO only the only folks foolish enough to try it would be idealistic millenials with hippie parents and FIRE-y stars in their eyes.

          In fact that’s what the house looks like: a commune that eventually failed.

          1. need to be hauled over a thousand feet

            It’s a pasture. Hauling chickens? Ah, grass fed chickens!

  4. “‘If you’re a buyer I think it’s a good idea to wait it out,’ Kretzel said. ‘Whether it be the coronavirus or something else, I feel in six months to a year, you’re going to see the market soften.’”

    Hurry up and sell now, before COVID-19 kills off all your potential buyers!

    1. Hurry up and sell now, before COVID-19 kills off all your potential buyers!

      It’s all good, the flu kills more people. Just ask Jeff and the gang. Nothing to see here.

    3. Karl Kretzel: “Now is the time for sellers to put their properties on the market.”
      Karl Kretzel: “If you’re a buyer I think it’s a good idea to wait it out.”

    1. Meanwhile, some researchers are suggesting that the virus has likely been spreading within the state’s population for up to six weeks.

      Uh-oh.

      1. Two of the big Asian grocery stores in my San Diego neighborhood are almost completely cleaned out of large bags of white rice. One of the two places usually has about 20 pallets of 20 lbs bags piled 4 feet high. Nothing left except brown rice and a the last few bags of unpopular brands of white rice. Shelves of dry noodles starting to empty. My buddy said this week end there was a run on nonperishable food at Costco near his house. Foot traffic was abysmal in those Asian markets for weeks but yesterday and today hordes of people are descending on them and buying storable items by the cart load. Almost every shopping cart in the store had at least one 20 lb bag of rice in it. The cashier at the asian market said it started this morning when they opened the doors. I took pictures of the empty pallets and shelves but I don’t think they can be posted here. Food panic is now not tomorrow.

        1. Food panic is now not tomorrow.

          I’m pretty sure I have friends in San Diego who have no clue about what we’re seeing and reporting here. I’m also pretty sure they would think I was nuts for suggesting that they stock up. There are also large swaths of the country where risk of exposure is low.

          1. I was surprised to see it myself especially since business dropped off so precipitously in those Asian markets. But this weekend somehow panic was in the air and people swarmed in to stock pile groceries. There was one old white guy buying big bags of rice I talked to. He said he had just come from the other Asian grocery store and was adding to his horde. Strange how the collective consciousness can shift so suddenly.

    2. “I believe we’re facing an already substantial outbreak in Washington State that was not detected until now due to narrow case definition requiring direct travel to China,” Bedford wrote. He was referring to a previous federal requirement that called for health workers to only test individuals who had traveled to China, where the virus emerged.

      2. Marketwatch has a *relatviely* good article on the death rate. The death rate in Wuhan is 2-4%, while outside Wuhan the rate is 0.7-2%. Pre-existing conditions also bring up the average: 10.5% for people with cardiovascular disease, 7.3% for diabetes, 6.3% for chronic respiratory disease, 6% for hypertension, and 5.6% for cancer. The death rate for men is 2.8% while for women it’s 1.7%. But half of Chinese men smoke, while only 2% of women smoke.

        https://www.marketwatch.com/story/coronavirus-fatality-rates-vary-wildly-depending-on-age-gender-and-medical-history-some-patients-fare-much-worse-than-others-2020-02-26?mod=home-page

        Make of that what you will. Also, most of China breathes in bad air. Iran only smokes at 12.5% but I imagine the atmosphere isn’t great there either. I don’t know about South Korea or Italy’s atmosphere, but both countries have a 20%+ smoking rate, higher for men.

    1. The Financial Times
      Coronavirus
      Brutality of China’s virus ‘enforcers’ revives painful memories
      Overzealous approach aimed at halting outbreak recalls savagery of Cultural Revolution
      A barricaded residential area in Wuhan, Hubei province, central China. The coronavirus began in the city and has infected more than 80,000 Chinese people.
      A barricaded residential area in Wuhan, Hubei province, central China. The coronavirus began in the city and has infected more than 80,000 Chinese people. © AP
      Christian Shepherd and Yuan Yang in Beijing
      55 minutes ago

      For many, the violent conclusion to a family game of mah-jong summed up everything that is wrong with the local enforcers who are spearheading China’s efforts to contain the deadly coronavirus outbreak.

      In the incident from Hubei province captured on video, a gang led by a camouflaged man wearing a red armband stride aggressively into a village home and roughs up one of the inhabitants, before pulling the mah-jong table outside and kicking it to pieces.

      Given China’s history of government enforcement, it could be viewed as a relatively minor scuffle. But the overzealous brutality of the small-time officials touched a nerve by evoking painful memories of the state-backed savagery of the 1960s and 1970s. Then, China’s leader Mao Zedong gave his support to millions of students who stormed into private homes, beating people up and smashing property in the name of communism.

      “That lot in red armbands act like bandits,” one internet user commented on the video. “Stopping the coronavirus is not the Cultural Revolution.”

      The enforcers responsible were among the large numbers of volunteers and local officials who have willingly placed themselves on the frontline of President Xi Jinping’s “people’s war” against the virus. Many Chinese have taken to referring to these local enforcers as “red guards”, the name for the Mao-era students, because of their armbands and gang-like thuggery.

      “Although the Cultural Revolution has been over for more than 40 years, you can still see the bruises it has left on Chinese society,” said David Zhang, a lawyer at Beijing Mo Shaoping law firm. “Contempt for the law, violations of basic human rights and dignity — these things still exist today.”
      …

      1. the Cultural Revolution has been over for more than 40 years,

        Over? What do you mean? Obviously not over like dead or asleep or not being opposed at all. Some tell us it’s an unstoppable groundswell here in the US.

  7. When’s the last time China quarantine 500 million people for the flu? When’s the last time the entire world started closing borders and limiting plane flights due to the flu? Jeff?

    1. Never.

      And even AlbuquerqueDan would acknowledge a Case Fatality Rate of at least 2%, twenty times higher than the seasonal flu.

      English translation: If you catch, you are at least 20 times moro likely to die than if you catch the ordinary flu.

  9. “This week we witnessed how a whiff of a possible global pandemic quickly turned investor sentiment into a stock market disaster.”

    Stock market disaster? The right to perpetual new highs all out of proportion to earnings, dividends, GDP growth, etc. has been violated, I guess.

    1. “Seriously people – STOP BUYING MASKS!” Surgeon General Jerome Adams tweeted. “They are NOT effective in preventing general public from catching #Coronavirus, but if healthcare providers can’t get them to care for sick patients, it puts them and our communities at risk!”

      Just how stupid is the above statement?

      1. “Just how stupid is the above statement?”

        Yours? Pretty stupid.

        The No. 1 way to prevent coronavirus isn’t wearing a face mask

        Wearing a mask is more for people already showing symptoms of coronavirus and their caregivers than for people trying to prevent it

        The Centers for Disease Control and Prevention said it “does not recommend that people who are well wear a facemask to protect themselves from respiratory diseases, including COVID-19,” referring to the disease caused by the new coronavirus. Rather, experts caution that putting on a face mask without proper fitting and training could actually increase your risk.

        “If it’s not fitted right, you’re going to fumble with it,” explained Health and Human Services Secretary Alex Azar before a House Appropriations subcommittee on Wednesday. “You’re going to be touching your face, which is the No. 1 way you’re going to get disease, is unclean hands touching your face.”

        On the other hand, if you are already coughing and showing symptoms of possible coronavirus illness, that’s when wearing a mask could be helpful for protecting those around you.

        https://www.cbsnews.com/news/coronavirus-prevention-face-mask-not-helpful-wash-hands/

        1. “You’re going to be touching your face, which is the No. 1 way you’re going to get disease, is unclean hands touching your face.”

          Paper money, which is really a fine fabric that a virus can easily cling to is one of the best randomized transport vectors available.

          1. Paper money, which is really a fine fabric that a virus can easily cling to is one of the best randomized transport vectors available

            So you’re saying the virus was introduced to move us to a cashless society, where all transactions can be tracked??!! 🙂

            What you say above makes sense, but I still prefer to pay cash — no reason to allow someone to know every time I buy coffee, or a middle man take a cut of every transaction in my life!

          2. “What you say above makes sense…”

            I was just tossing that out there since we’ve covered everything else several times over.

          3. The federal reserve banks around the country that count currency, remove torn and worn bills from circulation also run the bills through a germicidal UV light. The anthrax scare produced lots of U.S. Post Office studies, which are probably applicable to today’s medical crisis.

          6. Every time I buy groceries or gas I’m touching scanners, scales, touchscreens, keypads, etc.

            As for staying anonymous, Target scanned my driver’s license to buy cold medicine. They didn’t just look at it to check the birth date. They *scanned* it. I asked the cashier: who did he just sell my data to, and he walked away. What a great way to earn a loyal customer.

        1. I think so, too. It was incredibly stupid. Unfortunately people like Jeff are stuck on stupid.

      3. Masks do NOT prevent a person from catching the virus. They prevent a person from SPREADING the virus. Doctors wear surgical masks in the OR so that they don’t spit on their patients guts. Same exact story here, masks prevent patients from spraying virus into the air.

        Doctors and nurses WILL catch this virus from their patients, and if they don’t have masks they will give it to everyone who goes to the hospital. Another thing doctors and nurses do to protect themselves is to throw a mask on anyone presenting with respiratory symptoms.

    1. “This is far and away the strongest global economy I’ve seen in my business lifetime.” — United States Treasury Secretary Henry Paulson, July 12, 2007

      1. I’ll never forget Hank’s haggard look, feeble chuckle and Cheshire cat grin after having spent the weekend looking for a $1-Trillion dollar blameless Wall street bailout.

        1. Was that the weekend he got on his knees in front of Nancy Pelosi? Or am I remembering something else?

  13. Given that the 2nd person in the US just died from the coronavirus, can we expect a prolonged absence from ABDan?

      1. I think the point was that perhaps he would be ashamed of his dumb arguments that only Chinese people over in China would die of it.

  15. With stimulus and promises of mo stimulus on the way, why does Mr Market care about the Chinese production downturn?

    The Financial Times
    Coronavirus latest: China factory downturn drags markets lower

        1. That chart does suggest a possible disturbance in the Force may have recently occurred.

      3. No, the DOW is up because traders are anticipating a rate cut. How much you want to bet that they want just one more baby bounce to sell out of everything?

  16. This is a re-post for Dr. HeadlessBankers who evidently went to China and returned with different findings than Dr. Bruce Aylward who led a team of scientists that just got back from China.

    “Right. But the flu has a fatality rate of .14%. This virus has a fatality rate of anywhere between 2% and 4%, which means it is up to 28x more deadly. What part of that are you missing?”

    The part that’s not there. 0.7%.

    But please, feel free to continue running in circles while flapping your arms and screaming.

    By LAURAN NEERGAARD AP Medical Writer
    February 26, 2020, 2:19 AM

    “You could have bad outcomes with this initially until you really get the hang of how to manage” it, Dr. Bruce Aylward, the World Health Organization envoy who led a team of scientists just back from China, warned Tuesday.

    WHAT DO WE KNOW ABOUT THE DEATH RATE?

    In the central China city of Wuhan, where the new coronavirus first exploded, 2% to 4% of patients have died, according to WHO. But in the rest of hard-hit China, the death rate was strikingly lower, 0.7%.

    https://abcnews.go.com/Health/wireStory/deadly-coronavirus-early-69224705

    1. B”ut please, feel free to continue running in circles while flapping your arms and screaming.”

      🤣🤣🤣

    3. You’re cherry-picking, Jeff. You’re ignoring the largest cluster of cases in the world. By using small sample sizes, one can arrive at any number they want to. For example, in King County, Washington, the death rate is 20%.

  17. The Financial Times
    Charts that Matter Commodities
    Shipping costs provide clues on damage wrought by coronavirus
    Baltic Dry index shows two-thirds drop in vessel leasing rates since start of December
    Anna Gross in London 10 minutes ago

    Investors around the world have been on the hunt for fresh insights into the possible long-term effects of the coronavirus outbreak.

    That has meant that one indicator has come back into fashion: the Baltic Dry index, a measure of shipping costs for a wide range of bulk commodities such as coal, iron ore and grain. The index shows that rates for leasing the largest “Capesize” vessels have dropped about two-thirds since the start of December, and are significantly below the average level of the past 20 years. That suggests a sharp contraction in demand in China, the world’s biggest consumer of iron ore and other industrial commodities.

    But the real value of the BDI may not be in what it tells us about the impact of the epidemic so far, but rather what it says about potential developments in coming weeks.

    Masanari Takada, a macro strategist at Tokyo-based Nomura, points out that the BDI has a tendency to work its way downward through the first half of February — knocked by the effects of China’s Lunar New Year holiday period — but then bottoms out in the middle of the month.

    Indeed, since reaching lows of 411 in early February this year, its lowest level since April 2016, the BDI — a composite of rates for four sizes of ship — has gained about 29 per cent.

    In the past few years, the index had been lifted by economic stimulus measures introduced by China at the end of February, Mr Takada explained. It remains to be seen if this year’s supercharged set of measures, including cuts to benchmark lending rates and waivers on bad loans, can boost output this year.

    “If [the BDI] doesn’t recover this year, it will indicate a much more severe effect than usual on the global supply chain,” he said.
    …

  18. Lower rates are going to stop that virus in its tracks!

    Business News
    March 1, 2020 / 3:53 PM / Updated 2 hours ago
    Asian stock markets reverse losses on global policy stimulus hopes
    Tom Westbrook, Swati Pandey

    SINGAPORE (Reuters) – Asian shares steadied from early losses on Monday as investors placed their hopes on a coordinated global monetary policy response to weather the damaging economic impact of the coronavirus epidemic.
    A visitor wearing protective face mask, following an outbreak of the coronavirus, walks past in front of a stock quotation board outside a brokerage in Tokyo, Japan March 2, 2020. REUTERS/Issei Kato

    Pandemic fears pushed markets off a precipice last week, wiping more than $5 trillion from global share value as stocks cratered to their steepest slump in more than a decade.

    The sheer scale of losses prompted financial markets to price in policy responses from the U.S. Federal Reserve to the Bank of Japan and the Reserve Bank of Australia.

    Futures now imply a full 50 basis point cut by the Fed in March while Australian markets are pricing in a quarter-point cut at the RBA’s Tuesday meeting.

    Also helping calm market nerves, Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank would take necessary steps to stabilise financial markets.
    …

  19. None of above stories above cite the consumer’s high debt-to-income ratio, which leave the economy fragile to external events like 9/11 or the latest medical crisis.

    1. A few weeks ago I predicted that the inevitable recession would resemble 2000 more than 2008. Now it looks like the recession will resemble 9/11, when people simply stayed home, watched TV, and refused to spend. That’s going to hit low-income service-sector people who can’t put $400 together.

      And this time there’s no bubble to blow up, since everything is in a bubble already.

      1. A few weeks ago I predicted…

        That and 10 cents will get you a cup of coffee.

        Adjust timeless saying for inflation as needed.

  20. When the Kansas/Spanish flu 1917 – 1919, was traveling around the globe, all the 50+ million deaths happened only whilst the weather stayed in “flu.mode” right?

    1. Once a virus is established on both sides of the Equator, it is always flu season somewhere.

    1. Symantec’s endpoint client, which uses a certificate pair, seems to still be functional. Fingers crossed!

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