How's your housing market? (2 Viewers)

[El Floppo]

http://streeteasy.com/building/550-vanderbilt-brooklyn#sales

Another example of insanity...

This neighborhood is charging post-gentrification pricing, before the neighborhood has gotten there. The website refers to this area as "Brooklyn's Newest Neighborhood" - Well, that is one way to put it. 2 BR in a half decent neighborhhood at $1,600 a SF, are you serious? The Atlantic Yards is still a decade away from being a family friendly, safe walking after dark area... But they want $1.1M for a 1BR.

Some of this #### is shocking... And amazingly there are people paying it. This is the same pricing (if not more) than most places in Brooklyn Heights, Cobble Hill, and Dumbo (and prob the UES, Battery Park, and a few other Manhattan locations). Who would pay more for a ####tier neighborhood.

2 BR - $1.7M, add on another $2k a month in common charges. It is kinda amazing. Something has to give. There is no to very little international money in this neighborhood.

jfc

 

[fantasycurse42]

http://streeteasy.com/building/550-vanderbilt-brooklyn#sales

Another example of insanity...

This neighborhood is charging post-gentrification pricing, before the neighborhood has gotten there. The website refers to this area as "Brooklyn's Newest Neighborhood" - Well, that is one way to put it. 2 BR in a half decent neighborhhood at $1,600 a SF, are you serious? The Atlantic Yards is still a decade away from being a family friendly, safe walking after dark area... But they want $1.1M for a 1BR.

Some of this #### is shocking... And amazingly there are people paying it. This is the same pricing (if not more) than most places in Brooklyn Heights, Cobble Hill, and Dumbo (and prob the UES, Battery Park, and a few other Manhattan locations). Who would pay more for a ####tier neighborhood.

2 BR - $1.7M, add on another $2k a month in common charges. It is kinda amazing. Something has to give. There is no to very little international money in this neighborhood.

jfc

This one takes the cake for me though.

http://streeteasy.com/building/the-boerum

What these listings for these overpriced apartments won't show you is the wonderful view directly across the street, I have supplied here with a street view:

http://i.imgur.com/wh9Kxr4.png

Directly across, you'll notice a friendly view of family court, and diagonally you can see Brooklyn's central detention facility, it's a nice 12 story piece of scenery. My favorite from the listing brochure; "If you listen carefully through your custom soundproof windows, you can hear the pleasant sounds of gangrape late at night."

 

[cstu]

The other issue is the price of renting has skyrocketed and continues climbing. We have a post-college generation that is spending close to 50% of their salary, on rent. How do these people ever save for a house?

This chart shows you how crazy rents are (too damn high).

The share of renters paying more than 30 percent of income for housing, the traditional measure of affordability, rose 12 percentage points over the decade, reaching 50 percent in 2010

Much of the increase was among renters facing severe burdens (paying more than half of income for rent), boosting their share nearly 8 percentage points to 27 percent.

These levels were unimaginable just a decade ago, when the fact that the severely cost-burdened share was nearly 20 percent was already cause for serious concern.

 

[Doctor Detroit]

The other issue is the price of renting has skyrocketed and continues climbing. We have a post-college generation that is spending close to 50% of their salary, on rent. How do these people ever save for a house?

Lots of DC housing is going to these people and the frat/sorority crowd El Floppo mentioned.

They are leasing $600k one bedroom condos in threes and fours, and none of them came from Chinese families who were smuggled to the U.S. in the hull of a ship. Still others are getting these condos by having mommy and daddy as co-signers (or outright buyers), while they take in $65k a year at some lobbyist group and spend every single night of the week getting their eat and drink on in Dupont Circle.

I guess I get it as an investment for the parents as they could feasibly rent the place once Sally Sue hooks herself a hedge fund manager, but there seems to be more of it than I even realized.

 

[GoBirds]

I wonder if there's a market anywhere where it's awful....

Baltimore not doing so hot. Employers can't recruit people to fill professional positions in this city, which hurts the the demand for housing. Coupled with a poor city infrastructure and high taxes means that the demand for housing in the urban core being experienced by other areas isn't happening as much here.

I thought DC and surronding areas were booming. Am I wrong on that? Or is Baltimore the exception?

According to Zillow:

The median home value in Washington is $486,300. Washington home values have gone up 5.9% over the past year and Zillow predicts they will rise 1.5% within the next year. The median rent price in Washington is $2,300, which is higher than the Washington Metromedian of $1,950

.

The median home value in Baltimore is $107,400. Baltimore home values have declined -0.8% over the past year and Zillow predicts they will fall -0.5% within the next year. The median rent price in Baltimore is $1,305, which is lower than the Baltimore Metro median of $1,500.

I find that Baltimore median to be a little hard to believe, but they do have large chunks of the city where you can get a niceish 3 BR row house for well under $100k. Of course, they are in high crime and crappy school neighborhoods.

Nice deal if tear gas and rioting doesn't bother you.

 

[GoBirds]

asked my realtor wife about the local Charlotte market. It's very neighborhood dependent right now. Certain properties (i.e. lakefront) are in the "multiple offers the day of listing" region. Other neighborhoods, (i.e. 5-10 year old construction a few miles outside of town) are slow to stagnant.

Some large areas are becoming unaffordable for first time house buyers (i.e. nothing available for <$250k), mostly because of NYers moving down and, because of the relative cost of housing, have no problem buying for more than the house should go for. At the same time, there are flippers being successful buying up distressed houses in shady neighborhoods for $25k, putting in $50k worth of work, and selling for $120k. My wife has worked with a few folks doing that.

Realtors are having problems with houses selling for more than the appraisal comes in at. This is something I really don't understand. Example: house in a neighborhood averaging $250k goes on market for $280k (assume no extra upgrades or anything to justify the cost difference). New York person sees a 2750 sf house on a wooded lot for $280k and thinks it's a bargain, offers $275k. Seller agrees to price, and then appraisal comes in at...$250k on the basis of 4 other houses in that neighborhood selling for $250k within the past 6 months.

We ran into a low appraisal issue on our home. Thought we had a fair number but appraisal came in $20k low. We wanted the house so we asked to split difference and apply it to closing cost so it recorded at the higher number to help future values in the neighborhood. This was 6 months ago, fortunately last month a similar home 5 houses down sold $60k more.

The appraiser was from 45 minutes away which is ridiculous the banks can't find someone in the local market but in this case I'm not complaining.

 

[xulf]

Yay Ohio! That's what this thread tells me...

 

[Rick James]

Atlanta market is insane for renting and buying. It doesn't make sense.

 

[TripItUp]

The other issue is the price of renting has skyrocketed and continues climbing. We have a post-college generation that is spending close to 50% of their salary, on rent. How do these people ever save for a house?

Overall we are seeing a decreased standard of living...you used to be able to afford a house and a stay at home wife on a single professional income. Those days are gone in most major metropolitan areas.

It'll be interesting to see the societal impact housing costs have overall. Do marriage rates increase due to the power of the dual income??

 

[TripItUp]

My question is this...if you were buying investment rental properties, which market would you target and why?

 

[fantasycurse42]

My question is this...if you were buying investment rental properties, which market would you target and why?

NYC if you can afford... Can't miss with rentals here, even in a recession and a crashing housing market, rents will remain steady here.

 

[Doctor Detroit]

My question is this...if you were buying investment rental properties, which market would you target and why?

Here is a good start

One of the Texas cities is probably most sensible and economical, people keep moving there in droves. No sense buying in overpriced places like NYC, DC, or in the bay area. Too much capital up front and thin margins. You could buy three nice houses in San Antonio for the price of a crappy DC condo.

 

[wilked]

My question is this...if you were buying investment rental properties, which market would you target and why?

NYC if you can afford... Can't miss with rentals here, even in a recession and a crashing housing market, rents will remain steady here.

And if NYC is a little steep you could always try a more affordable market life San Francisco, which still holds a decent amount of appeal

 

[Zegras11]

My question is this...if you were buying investment rental properties, which market would you target and why?

Here is a good start

One of the Texas cities is probably most sensible and economical, people keep moving there in droves. No sense buying in overpriced places like NYC, DC, or in the bay area. Too much capital up front and thin margins. You could buy three nice houses in San Antonio for the price of a crappy DC condo.

This.

Nice to see Boise #8.

I'm getting people making $15/hr into $140K 4bd 2.5 1500 sq ft homes in Nampa and Caldwell, about 20 miles outside of Boise with 1/2% down, 3.75% fixed, and a 620+ score. Payments are $200-300 less than rent for same house.

 

[RedmondLonghorn]

My question is this...if you were buying investment rental properties, which market would you target and why?

I don't know. I know the fundamentals of the Seattle housing market look pretty good, but I continue to worry about what happens when the Fed eventually takes away the near-zero interest subsidy.

My back of the envelope work shows that most single family rental type homes and townhomes in Seattle have a gross rent multiplier in the 12-14 range. That is price divided by annualized rent. I don't know how that compares to other markets.

 

[El Floppo]

My question is this...if you were buying investment rental properties, which market would you target and why?

NYC if you can afford... Can't miss with rentals here, even in a recession and a crashing housing market, rents will remain steady here.

And if NYC is a little steep you could always try a more affordable market life San Francisco, which still holds a decent amount of appeal

Same goes for London

 

[Doctor Detroit]

My question is this...if you were buying investment rental properties, which market would you target and why?

NYC if you can afford... Can't miss with rentals here, even in a recession and a crashing housing market, rents will remain steady here.

And if NYC is a little steep you could always try a more affordable market life San Francisco, which still holds a decent amount of appeal

Same goes for London

Think he was being facetious there.

Could always buy in Geneva, Toyko, or Paris too. Learn a new language, foreign housing laws, and tax code. Everyone wins!

 

[Slapdash]

Bubbly

 

[BassNBrew]

The other issue is the price of renting has skyrocketed and continues climbing. We have a post-college generation that is spending close to 50% of their salary, on rent. How do these people ever save for a house?

Overall we are seeing a decreased standard of living...you used to be able to afford a house and a stay at home wife on a single professional income. Those days are gone in most major metropolitan areas.

It'll be interesting to see the societal impact housing costs have overall. Do marriage rates increase due to the power of the dual income??

I disagree with this. A starter home for me was a 20 yr old home that needed renovation. Had to put 20% down so that's what I could afford and that became a nice home for me and most of my generation. This starter home generation wouldn't be caught dead in something like that. Of course I could afford 20% down because I wasn't dropping a rack a year on a cell phone and another rack and a half on TV.

It's hard to say our standard of living has gone down when we have instant access to any information and more entertainment options than ever before.

 

[SoBeDad]

The Miami area has a very high rate of cash buyers, mainly wealthy people from South America, Europe and the US north east, who prefer condos. Many are buying second or third homes, a few are cleaning money. The market may be slowing down a bit due to the rise of the dollar, but many buyers still see value compared to the cost of buying in Lima, Sao Paulo, London, or NYC. Some are also desperate to get money out of places such as Argentina. In the Miami-Ft. Lauderdale area, Cranespotters tabulates 36 just-completed towers, 115 under construction, 110 planned towers and 107 proposed towers. Most of these condos are $1,000,000+. There isn't much work-force housing being built.

Cash buyers are also buying houses in close-in desirable areas. In my old neighborhood near Miami Beach, neighbors used to include young professionals such as teachers, accountants, etc. They can't afford to buy there anymore - the mortgage, not to mention the taxes (about 2%) and the insurance ($6,000+ on a $300,000 mortgage). I bought my house for $110,000 in 1992, sold it for $360,000 in 2013, and it just sold again for $500,000. Young people are either: (1) spending a high percentage of their income to rent close to the urban core; (2) buying or renting far away in suburbia, which is not cheap either; or (3) renting rooms like in NYC and Boston. Craigslist has over 1,000 rooms to rent in the Miami-Ft. Lauderdale area. I tried to buy in a close-in area undergoing gentrification, but cash investors see the value and act faster.

 

[OC Zed]

I'm not sure about the greater area, but the city of Buffalo has been pretty scorching hot over the first half of 2014. I think there's a big push from millennials (like me) to finally buy rather than rent, coupled with a lot of downsizing adults who want to move into the city. I get the sense that the suburbs are same as they've always been but that the city is the hottest it's been in decades. On one occasion recently, a house sold for 40% above list price. I've seen multiple listings pulled after open houses and re-listed at +25% of list price. A friend of a friend has lost out on 5 different bids to all-cash offers. Insane.

This sounds a lot like Buffalo... always 8 years behind the rest of the country.

It's good for me, as I was able to buy right in the city at a reasonable price. I think a lot of the younger crowd is going to be priced out in a few years.

Just busting balls here... As someone raised in Upstate NY (Rochester suburbs), I'm happy for Buffalo's resurgence.

 

[OC Zed]

All of this talk of home prices and rents exponentially outpacing wage growth... hmmm, I faintly recall hearing this before. I think it had something to do with a 6-7 straights years of cheap money and subsidies from the federal government. And lots of cheerleading from the homebuilding and finance industries. Hmmm... we must have learned something from the past, right?

 

[OC Zed]

In my local market here in coastal Orange County, I've noticed a slowdown in the volume of home sales in the last few months. In addition, there has been a rise in inventory. The bull market, at least locally, has started to slow.

 

[(HULK)]

The other issue is the price of renting has skyrocketed and continues climbing. We have a post-college generation that is spending close to 50% of their salary, on rent. How do these people ever save for a house?

Overall we are seeing a decreased standard of living...you used to be able to afford a house and a stay at home wife on a single professional income. Those days are gone in most major metropolitan areas.

It'll be interesting to see the societal impact housing costs have overall. Do marriage rates increase due to the power of the dual income??

Supply and demand.

Lets say demand for labor has remained relatively constant, growing slightly each year from the point in time where you could afford a house on a single income.

Since then, women entered the workforce en mass. Then, globalization. Meanwhile, automation is continuing to grow and spread rapidly. These factors have increased the supply of labor in dramatic ways. And now it takes 2 incomes to afford a home.

It isn't that the value of the home is out of whack, it is that the value of your work has gone down due to the supply of labor.

 

[El Floppo]

My question is this...if you were buying investment rental properties, which market would you target and why?

NYC if you can afford... Can't miss with rentals here, even in a recession and a crashing housing market, rents will remain steady here.

And if NYC is a little steep you could always try a more affordable market life San Francisco, which still holds a decent amount of appeal

Same goes for London

Think he was being facetious there.

Could always buy in Geneva, Toyko, or Paris too. Learn a new language, foreign housing laws, and tax code. Everyone wins!

I know he was being facetious.

 

[joey]

In my local market here in coastal Orange County, I've noticed a slowdown in the volume of home sales in the last few months. In addition, there has been a rise in inventory. The bull market, at least locally, has started to slow.

Couldn't part of this be the typical slow down as the end of summer approaches and families prepare to send their kids to school?

 

[OC Zed]

In my local market here in coastal Orange County, I've noticed a slowdown in the volume of home sales in the last few months. In addition, there has been a rise in inventory. The bull market, at least locally, has started to slow.

Couldn't part of this be the typical slow down as the end of summer approaches and families prepare to send their kids to school?

Sales are also down on year-over-year figures. Also, I noticed the slow down back in mid-June... the prime part of the summer season.

ETA: Sales are still up year-over-year, but down versus the historical sales figures of this time based on the last 14 years.

http://www.ocregister.com/lansner/sales-678150-year-corelogic.html

I'm still betting August to be down even further though as early reports from the first half of the month talked of a local slowdown. I'm also noticing it in local listings remaining on the market much longer than comparable homes back in the spring.

 

[Doctor Detroit]

My question is this...if you were buying investment rental properties, which market would you target and why?

NYC if you can afford... Can't miss with rentals here, even in a recession and a crashing housing market, rents will remain steady here.

And if NYC is a little steep you could always try a more affordable market life San Francisco, which still holds a decent amount of appeal

Same goes for London

Think he was being facetious there.

Could always buy in Geneva, Toyko, or Paris too. Learn a new language, foreign housing laws, and tax code. Everyone wins!

I know he was being facetious.

Should have known, when someone says something really dumb around here there are multiple smarmy comments. Well played sir.

 

[fantasycurse42]

Yea, buying and renting out property in NYC is "really dumb", my bad

 

[tommyGunZ]

In my local market here in coastal Orange County, I've noticed a slowdown in the volume of home sales in the last few months. In addition, there has been a rise in inventory. The bull market, at least locally, has started to slow.

Couldn't part of this be the typical slow down as the end of summer approaches and families prepare to send their kids to school?

Sales are also down on year-over-year figures. Also, I noticed the slow down back in mid-June... the prime part of the summer season.

ETA: Sales are still up year-over-year, but down versus the historical sales figures of this time based on the last 14 years.

http://www.ocregister.com/lansner/sales-678150-year-corelogic.html

I'm still betting August to be down even further though as early reports from the first half of the month talked of a local slowdown. I'm also noticing it in local listings remaining on the market much longer than comparable homes back in the spring.

What's your personal take Zed? Are we talking slower appreciation over the next few years, or an out right correction?

 

[James Daulton]

In my local market here in coastal Orange County, I've noticed a slowdown in the volume of home sales in the last few months. In addition, there has been a rise in inventory. The bull market, at least locally, has started to slow.

Couldn't part of this be the typical slow down as the end of summer approaches and families prepare to send their kids to school?

Sales are also down on year-over-year figures. Also, I noticed the slow down back in mid-June... the prime part of the summer season.

ETA: Sales are still up year-over-year, but down versus the historical sales figures of this time based on the last 14 years.

http://www.ocregister.com/lansner/sales-678150-year-corelogic.html

I'm still betting August to be down even further though as early reports from the first half of the month talked of a local slowdown. I'm also noticing it in local listings remaining on the market much longer than comparable homes back in the spring.

What's your personal take Zed? Are we talking slower appreciation over the next few years, or an out right correction?

Are mortgages getting looser and looser or are lenders holding applicants to reasonable standards? If the lenders are being responsible, I'd bet that the uptick will last until the cheap borrowing money dries up. This is for places not impacted by foreign investment.

On another subject, what happens when the boomers start dying off in droves? Will there suddenly be a glut of inventory available that will depress prices?

 

[Chadstroma]

Low-Income Housing Goals Set for Fannie Mae and Freddie MacBy DIONNE SEARCEY

AUG. 19, 2015
The federal agency that regulates the mortgage finance companies Fannie Mae and Freddie Mac on Wednesday set final goals for low-income housing for the next two years. The action establishes targets for homes and rental apartments and, for the first time, seeks specific numbers of rental units in small apartment complexes that poor families can afford.

The Federal Housing Finance Agency clarified rules for determining affordability and put in place clearer procedures in establishing housing goals. A 2008 federal law required the agency to set annual housing goals for mortgages bought by Fannie and Freddie, the government-run institutions that back most home loans.

“These goals establish a solid foundation for affordable and sustainable homeownership and rental opportunities in this country,” Melvin L. Watt, the agency’s director, said in a news release.

The housing market is improving, but still lags the boom years before the collapse of the market. Many potential buyers still complain that they have trouble getting mortgages, that inventory of homes on the market is low and that rents are soaring.

The agency’s goals for single-family housing include categories for mortgages for low-income families, very low-income families and families that reside in low-income areas, and for refinancing mortgages. The multifamily goals include separate categories for mortgages on properties with five or more units affordable to low-income families and very low-income families.

The goals include a target of 24 percent of mortgages bought by Freddie or Fannie for homes for low-income borrowers, or those with incomes no greater than 80 percent of an area’s median income. They also include a goal of 6 percent of mortgages for borrowers considered very low income, with incomes no greater than 50 percent of the median income of the area.

For apartment units, the goals are mortgages for 300,000 units a year from 2015 to 2017 for low-income units and 60,000 a year for very low-income units.

The goals for mortgages for small apartment complexes are 48,000 total low-income units for 2015-17, less than half of the 105,000 total units originally proposed. The higher goals risk “crowding out” smaller lenders, the agency said, acknowledging that the final goals are modest but are intended to keep Fannie and Freddie active in this market.

Fannie and Freddie buy loans from private lenders, package them into mortgage-backed securities and provide a credit guarantee to investors to ensure timely payment.

During the housing crisis, the federal government placed Fannie and Freddie in conservatorship, and they received a taxpayer bailout to avoid bankruptcies. They now pay their profits to the Treasury.

In the agency’s documents outlining the new housing goals, it said it had received 144 comment letters from advocacy groups and others on its proposed goals. A “significant number” of those letters questioned whether Fannie and Freddie should still be under conservatorship or were tied to unrelated matters.

“Those comments are beyond the scope of this rule-making,” the agency said.

http://www.nytimes.com/2015/08/20/business/low-income-housing-goals-set-for-fannie-mae-and-freddie-mac.html?_r=0

 

[Chadstroma]

Fed: First rate hike "approaching"Paul Davidson, 1:51 p.m. EDT August 19, 2015
Federal Reserve policymakers said last month they were "approaching" the central bank's first interest rate hike in nearly a decade but needed to see further improvement in the economy and labor market, according to minutes of the Fed's July 28-29 meeting.

Several Fed officials also expressed particular concerns about stubbornly low inflation and the possibility that it may not accelerate even as slack, or excess supply, in the economy diminishes.

The meeting summary provides a no clear signal of when the Fed will raise its benchmark rate for the first time in nearly a decade, though many economists expect it will act at its September 16- 17 meeting.

The minutes portray a Fed eager to raise rates amid steady job growth and a near-normal 5.3% unemployment rate, but hesitant to make a premature move that derails the recovery, especially with inflation still weak.

Most Fed policymakers "judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point," the minutes said.

At the same time, "some" officials said economic reports had not yet provided the central bank the "reasonable confidence" it has been seeking that inflation will drift toward the Fed's annual 2% target over the medium-term.

Also, these policymakers "cited evidence" that the response of inflation to reduced slack in the economy "might be attenuated and expressed concern about risks of further downward pressure on inflation from international developments."

Economic turmoil in the euro zone and China has strengthened the dollar, making imports cheaper for US consumers and keeping inflation below the Fed's target. And the Labor Department reported earlier Wednesday that consumer prices rose 0.1% in July, less than economists expected, though inflation rose more sharply the prior two months.

http://www.usatoday.com/story/money/2015/08/19/fed-meeting-minutes/31990843/

 

[moleculo]

...

On another subject, what happens when the boomers start dying off in droves? Will there suddenly be a glut of inventory available that will depress prices?

this is interesting. My dad lives in Punta Gorda, FL - chock full of retirees. After my mom passed away in Febuary, he's been considering selling his joint and either moving into a condo or a smaller house, mostly because he's tired of the upkeep. Anyways, he's been keeping an eye on the local real estate values, and he's finding a real depression, due to the above.

Basically, when older folks pass away and they leave their house to their kids, none of the kids actually want to live in the house (Punta Gorda is a really, really slow town), and so they just want to off-load it. Lots of really, really nice houses being sold for less than they should. Because of that, this local area hasn't really seen the recovery post-2008 that the rest of the country has.

Anyways, I thought it was interesting.

 

[Buckna]

Oil crash seems to have pumped the brakes here in Houston, might be a good thing. Lots more homes sitting on the market instead of selling on the first day like it was as recently as 6 months ago. There's a new construction house in my neighborhood that's been sitting unsold for months. About 7 lots where they demolished the old house from the 50's that are just sitting empty with no sign they will be built on anytime soon.

Remodels still seem to be selling ok but they are also priced at less than half of what the fat cat, new homes are.

 

[Chadstroma]

...

On another subject, what happens when the boomers start dying off in droves? Will there suddenly be a glut of inventory available that will depress prices?

this is interesting. My dad lives in Punta Gorda, FL - chock full of retirees. After my mom passed away in Febuary, he's been considering selling his joint and either moving into a condo or a smaller house, mostly because he's tired of the upkeep. Anyways, he's been keeping an eye on the local real estate values, and he's finding a real depression, due to the above.

Basically, when older folks pass away and they leave their house to their kids, none of the kids actually want to live in the house (Punta Gorda is a really, really slow town), and so they just want to off-load it. Lots of really, really nice houses being sold for less than they should. Because of that, this local area hasn't really seen the recovery post-2008 that the rest of the country has.

Anyways, I thought it was interesting.

I think this is going to be a specific issue for specific markets.

 

[RedmondLonghorn]

...

On another subject, what happens when the boomers start dying off in droves? Will there suddenly be a glut of inventory available that will depress prices?

this is interesting. My dad lives in Punta Gorda, FL - chock full of retirees. After my mom passed away in Febuary, he's been considering selling his joint and either moving into a condo or a smaller house, mostly because he's tired of the upkeep. Anyways, he's been keeping an eye on the local real estate values, and he's finding a real depression, due to the above.

Basically, when older folks pass away and they leave their house to their kids, none of the kids actually want to live in the house (Punta Gorda is a really, really slow town), and so they just want to off-load it. Lots of really, really nice houses being sold for less than they should. Because of that, this local area hasn't really seen the recovery post-2008 that the rest of the country has.

Anyways, I thought it was interesting.

I am considering buying a second home/eventual retirement home in Florida and I have noticed that in a lot of the places I have visited (away from Miami metro) the housing crisis feels a lot more recent than it does here on the West Coast.

 

[moleculo]

...

On another subject, what happens when the boomers start dying off in droves? Will there suddenly be a glut of inventory available that will depress prices?

this is interesting. My dad lives in Punta Gorda, FL - chock full of retirees. After my mom passed away in Febuary, he's been considering selling his joint and either moving into a condo or a smaller house, mostly because he's tired of the upkeep. Anyways, he's been keeping an eye on the local real estate values, and he's finding a real depression, due to the above.

Basically, when older folks pass away and they leave their house to their kids, none of the kids actually want to live in the house (Punta Gorda is a really, really slow town), and so they just want to off-load it. Lots of really, really nice houses being sold for less than they should. Because of that, this local area hasn't really seen the recovery post-2008 that the rest of the country has.

Anyways, I thought it was interesting.

I think this is going to be a specific issue for specific markets.

oh it absolutely is. I just thought it was interesting, not sure what conclusions to draw from it.

 

[Judge Smails]

Ventura County home sales and prices are continuing their upward trend, according to a report released Tuesday.

The number of homes sold in July —1,106 — was up 20 percent from July of last year, when 919 homes sold, according to research by CoreLogic. The median price crept to $510,000 in the same period, a 4.6 percent increase from the revised June figure of $487,500. The reportincludes new and existing homes and condos.

 

[Judge Smails]

Ventura County, Calif., is the absolute most desirable place to live in America.

I know this because in the late 1990s the federal government devised a measure of the best and worst places to live in America, from the standpoint of scenery and climate. The "natural amenities index" is intended as "a measure of the physical characteristics of a county area that enhance the location as a place to live."

The index combines "six measures of climate, topography, and water area that reflect environmental qualities most people prefer." Those qualities, according to the U.S. Department of Agriculture, include mild, sunny winters, temperate summers, low humidity, topographic variation, and access to a body of water.

These "natural aspects of attractiveness," as the USDA describes them, are intended to be constant and relatively immutable. They're not expected to change much over time, so the USDA hasn't updated its data beyond the initial 1999 scoring. "Natural amenities pertain to the physical rather than the social or economic environment," the USDA writes. Things like plants, animals or the human environment are excluded by definition. "We can measure the basic ingredients, not how these ingredients have been shaped by nature and man." I stumbled on these numbers after reading about a recent study linking natural amenities to religiosity. (U.S. counties with nicer weather and surroundings tend to have less religious residents.)

I've mapped all the counties above according to where they rank on the natural amenities index -- mouse over to check out how desirable (or not) your own county is. You'll see that Sun Belt counties fare pretty well -- especially ones in California and Colorado. In fact, every single one of the 10 highest-ranked counties is located in California. After Ventura County, Humboldt, Santa Barbara, Mendocino and Del Norte counties round out the top five.

By contrast, the Great Lakes region fares poorly, with most of the lowest rankings clustered around the Minnesota/North Dakota border region -- hey there, Fargo! The absolute worst place to live in America is (drumroll please) ... Red Lake County, Minn. (claim to fame: "It is the only landlocked county in the United States that is surrounded by just two neighboring counties," according to the county Web site).

 

[OC Zed]

In my local market here in coastal Orange County, I've noticed a slowdown in the volume of home sales in the last few months. In addition, there has been a rise in inventory. The bull market, at least locally, has started to slow.

Couldn't part of this be the typical slow down as the end of summer approaches and families prepare to send their kids to school?

Sales are also down on year-over-year figures. Also, I noticed the slow down back in mid-June... the prime part of the summer season.

ETA: Sales are still up year-over-year, but down versus the historical sales figures of this time based on the last 14 years.

http://www.ocregister.com/lansner/sales-678150-year-corelogic.html

I'm still betting August to be down even further though as early reports from the first half of the month talked of a local slowdown. I'm also noticing it in local listings remaining on the market much longer than comparable homes back in the spring.

What's your personal take Zed? Are we talking slower appreciation over the next few years, or an out right correction?

Actually, looks like I was right w/respect to coastal OC and some of the pricier inland ZIPs:

http://www.ocregister.com/lansner/year-678339-ago-percent.html

"In the nine Orange County ZIP codes with median selling prices above $1 million, sales totaled 226 homes in July, down 4.2 percent compared to a year ago."

I really don't know where the local market goes from here. The comeback has been almost entirely predicated upon (i) cheap money from the Fed, (ii) the GSEs continuing to subsidize the industry, and (iii) all of the foreign cash buyers (mostly Chinese). The first two factors artificially boosted affordability (initially) and re-energized the real estate and real estate finance sectors which is a huge part of the economy in this area. If the cheap money starts going away and mortgages become more expensive, then that's a big downward pressure on prices. Higher rates will also have a secondary effect on the local economy here, also muffling price gains.

As for factors (ii) and (iii), it doesn't look like the federal government has the balls yet to get out of the housing industry and who knows what's going to happen with China. Then again, there has to be a tipping point with respect to the number of abstentee home owners paying all cash for homes. When the people actually living and working in communities can no longer afford to live there, then you either have a price correction, or you have people eventually leaving the area in droves... which ultimately leads to that price correction.

Does that mean we are going to see the nosedive we saw in 2009-2011? I really don't know. We could see the same number of people underwater again, but at least with more affordable mortgages... which means less defaults, foreclosures, short sales, etc. That's my worst case scenario. Hopefully, prices just level off and the economy limps along without falling back into a recession.

 

[Chadstroma]

Brace for Quantitative Tightening, As China Leads Forex Reserves Purge
Thomson Reuters | Last Updated: August 29, 2015 12:06 (IST)
London: After six years of QE, prepare for QT.

Faith in the power of "quantitative easing" has prompted central banks, led by the US Federal Reserve, to pump trillions of dollars of stimulus into the global financial system to cushion the impact of the 2007-08 market crisis and recession.

This supply of liquidity continues to flow. The European Central Bank has taken the baton from the Fed and is leading the way with its 1 trillion euro ($1.1 trillion) bond-buying programme that will run through September next year. The Bank of Japan is also buying large quantities of bonds.

But a counter flow - call it "quantitative tightening" - is gathering force as China sells foreign exchange reserves to protect its economy and markets from the recent surge of capital out of the country. Other emerging markets are following suit.

Analysts at Citi estimate that global FX reserves have been depleted at an average pace of $59 billion a month in the past year or so, and closer to $100 billion over the last few months. A source at another large global bank said emerging market central banks may have sold up to $200 billion of FX reserves this month alone, of which $100-$150 billion likely came from China.

"The potential for more China outflows is huge," said George Saravelos, currency analyst at Deutsche Bank in London. "The bottom line is that markets may fear QT has much more to go."

China is by far the world's biggest holder of FX reserves, most of which is in dollar-denominated assets like U.S. Treasury bills and bonds. At the end of June it had $3.69 trillion compared with around $150 billion at the turn of the millennium.

But that has fallen steadily from a peak of almost $4 trillion a year ago. Some of that is down to exchange rate fluctuations as the dollar has risen, but an increasingly important driver recently is outright selling.

It's difficult to know with certainty how much and which assets specifically China has sold, because the currency and asset composition of its reserves is not disclosed.

Using International Monetary Fund currency reserves data as a proxy, around two thirds will be in dollars. U.S. Treasury data show that China holds $1.27 trillion of U.S. bills and bonds, but analysts agree it is substantially more than that.

China and emerging markets led the build up in global FX reserves following the 1997 Asian crisis to a peak of $12 trillion last year. This shielded them from the 2007-09 global crisis, and looks like it is once again being deployed.

"China selling long Treasuries ????" Bill Gross, the widely followed bond fund manager at Janus Capital, said on Twitter during Wednesday's selloff in U.S. Treasuries.

The implications of China and others selling off their Treasury holdings are potentially huge.

In isolation, a reserves drop the equivalent to 1 percent of U.S. GDP (around $178 billion) would lead to a rise of 15-35 basis points in the 10-year U.S. Treasury yield, Citi said, citing a range of academic studies.

Yang Zhao, Chief China Economist at Nomura, estimates that the People's Bank of China sold close to $100 billion of FX reserves in July, and again in August.

"Our calculation for capital outflow for July is $90 billion. But during July the exchange rate was unchanged, suggesting the PBOC sold a lot of FX ... close to $100 billion," Yang said in a briefing with journalists last week.

"After a 3 percent depreciation the PBOC tried to defend the renminbi and they started to intervene very aggressively. So I would say in August it would (also) be very close to $100 billion."

Plunging commodity prices and fears over growth prospects, particularly in China, have sparked a rush for the emerging market exits. Figures from CrossBorder Capital, a research and money management firm in London, suggests capital flight from emerging markets in the past year is almost $1 trillion, of which more than $750 billion has come out of China.

This has forced many emerging market central banks to dip into their reserves to manage the fall in their currencies and stop it from turning into an even more savage rout.

But fears of intensifying global "currency wars" have been stoked by China's devaluation of the yuan earlier this month, renewed slides across global EM exchange rates and subsequent devaluations of the Vietnamese dong and Kazakh tenge.

If the 10 year Treasury goes up- mortgage rates will go up.

 

[RedmondLonghorn]

Just locked a 7/1 ARM at 3.5% to refi my old mortgage. Which was a 5/1 interest-only ARM that has been floating for the past four years. Considering how terrible all those exotic mortgages are supposed to be, that thing has been awesome. Unfortunately in 11 months it begins amortizing the principal over the remaining 20 year term, which is a pretty lousy structure. So it is time to do the refi thing.

 

[tommyGunZ]

Just locked a 7/1 ARM at 3.5% to refi my old mortgage. Which was a 5/1 interest-only ARM that has been floating for the past four years. Considering how terrible all those exotic mortgages are supposed to be, that thing has been awesome. Unfortunately in 11 months it begins amortizing the principal over the remaining 20 year term, which is a pretty lousy structure. So it is time to do the refi thing.

No interest in locking in a 3.75% rate over 30? I assume your angle here is having as little $ tied up in RE as possible while pouring all of the savings into equities?

 

[tommyGunZ]

In my local market here in coastal Orange County, I've noticed a slowdown in the volume of home sales in the last few months. In addition, there has been a rise in inventory. The bull market, at least locally, has started to slow.

Couldn't part of this be the typical slow down as the end of summer approaches and families prepare to send their kids to school?

Sales are also down on year-over-year figures. Also, I noticed the slow down back in mid-June... the prime part of the summer season.ETA: Sales are still up year-over-year, but down versus the historical sales figures of this time based on the last 14 years.

http://www.ocregister.com/lansner/sales-678150-year-corelogic.html

I'm still betting August to be down even further though as early reports from the first half of the month talked of a local slowdown. I'm also noticing it in local listings remaining on the market much longer than comparable homes back in the spring.

What's your personal take Zed? Are we talking slower appreciation over the next few years, or an out right correction?

Actually, looks like I was right w/respect to coastal OC and some of the pricier inland ZIPs:

http://www.ocregister.com/lansner/year-678339-ago-percent.html

"In the nine Orange County ZIP codes with median selling prices above $1 million, sales totaled 226 homes in July, down 4.2 percent compared to a year ago."

I really don't know where the local market goes from here. The comeback has been almost entirely predicated upon (i) cheap money from the Fed, (ii) the GSEs continuing to subsidize the industry, and (iii) all of the foreign cash buyers (mostly Chinese). The first two factors artificially boosted affordability (initially) and re-energized the real estate and real estate finance sectors which is a huge part of the economy in this area. If the cheap money starts going away and mortgages become more expensive, then that's a big downward pressure on prices. Higher rates will also have a secondary effect on the local economy here, also muffling price gains.

As for factors (ii) and (iii), it doesn't look like the federal government has the balls yet to get out of the housing industry and who knows what's going to happen with China. Then again, there has to be a tipping point with respect to the number of abstentee home owners paying all cash for homes. When the people actually living and working in communities can no longer afford to live there, then you either have a price correction, or you have people eventually leaving the area in droves... which ultimately leads to that price correction.

Does that mean we are going to see the nosedive we saw in 2009-2011? I really don't know. We could see the same number of people underwater again, but at least with more affordable mortgages... which means less defaults, foreclosures, short sales, etc. That's my worst case scenario. Hopefully, prices just level off and the economy limps along without falling back into a recession.

I think you're right that we could see quite a few people slightly underwater if there is a RE decline. I think you're way off if you think a crash like '09-'11 is even remotely possible.

 

[RedmondLonghorn]

Just locked a 7/1 ARM at 3.5% to refi my old mortgage. Which was a 5/1 interest-only ARM that has been floating for the past four years. Considering how terrible all those exotic mortgages are supposed to be, that thing has been awesome. Unfortunately in 11 months it begins amortizing the principal over the remaining 20 year term, which is a pretty lousy structure. So it is time to do the refi thing.

No interest in locking in a 3.75% rate over 30? I assume your angle here is having as little $ tied up in RE as possible while pouring all of the savings into equities?

Not really. It is really just matching the type of mortgage to our situation.

I am 45. My youngest kid is 10. So there is no way we stay in this big house for much more than the next 8-10 years.

 

[Chadstroma]

Just locked a 7/1 ARM at 3.5% to refi my old mortgage. Which was a 5/1 interest-only ARM that has been floating for the past four years. Considering how terrible all those exotic mortgages are supposed to be, that thing has been awesome. Unfortunately in 11 months it begins amortizing the principal over the remaining 20 year term, which is a pretty lousy structure. So it is time to do the refi thing.

The problem was not the products themselves but rather the misunderstanding of them from uninformed (and frankly people not intellectually capable of understanding them) or customers lied to or told inaccurate/incomplete things to get them into them and the overall overuse of them.

The ARM's and even the more vilified Option ARM are great products for a very select customer. The problem is that they ended up being lucrative and means they paid sales people more and that means people without morals would push people into them that were not good fits.

 

[RedmondLonghorn]

Just locked a 7/1 ARM at 3.5% to refi my old mortgage. Which was a 5/1 interest-only ARM that has been floating for the past four years. Considering how terrible all those exotic mortgages are supposed to be, that thing has been awesome. Unfortunately in 11 months it begins amortizing the principal over the remaining 20 year term, which is a pretty lousy structure. So it is time to do the refi thing.

The problem was not the products themselves but rather the misunderstanding of them from uninformed (and frankly people not intellectually capable of understanding them) or customers lied to or told inaccurate/incomplete things to get them into them and the overall overuse of them.

The ARM's and even the more vilified Option ARM are great products for a very select customer. The problem is that they ended up being lucrative and means they paid sales people more and that means people without morals would push people into them that were not good fits.

I know this. I was just making the point that the products weren't the problem. The fact people who didn't understand them fully were buying them was.

 

[OC Zed]

Just locked a 7/1 ARM at 3.5% to refi my old mortgage. Which was a 5/1 interest-only ARM that has been floating for the past four years. Considering how terrible all those exotic mortgages are supposed to be, that thing has been awesome. Unfortunately in 11 months it begins amortizing the principal over the remaining 20 year term, which is a pretty lousy structure. So it is time to do the refi thing.

The problem was not the products themselves but rather the misunderstanding of them from uninformed (and frankly people not intellectually capable of understanding them) or customers lied to or told inaccurate/incomplete things to get them into them and the overall overuse of them.

The ARM's and even the more vilified Option ARM are great products for a very select customer. The problem is that they ended up being lucrative and means they paid sales people more and that means people without morals would push people into them that were not good fits.

I know this. I was just making the point that the products weren't the problem. The fact people who didn't understand them fully were buying them was.

This statement is likely true. Why this became America's (i.e., taxpayers') problem, I have no ####ing idea.

 

[flapgreen]

Ridiculous.  Glad we bought in 09