Utter insanity is turning south.
In Palo Alto, a small town of about 67,000 souls, including Facebook CEO Mark Zuckerberg, about an hour south of San Francisco, in the middle of Silicon Valley, and part of the 9 million people in the vast Bay Area, the median home value in July, according to Zillow, fell to $2.486 million.
That’s still up 103% from July 2011. These are not palaces. Median price means 50% cost more, 50% cost less. These are modest homes, in theory where the median household can settle down. Drop to $1 million, and you get the “million dollar shack.” Continue reading »
One month ago, we said that “it is not looking good for the US housing market”, when in the latest red flag for the US luxury real estate market, we reported that sales in the Hamptons plunged by half and home prices fell sharply in the second quarter in the ultra-wealthy enclave, New York’s favorite weekend haunt for the 1%-ers.
Reuters blamed this on “stock market jitters earlier in the year” which damped the appetite to buy, however one can also blame the halt of offshore money laundering, a slowing global economy, the collapse of the petrodollar, and the drastic drop in Wall Street bonuses. In short: a sudden loss of confidence that a greater fool may emerge just around the corner, which in turn has frozen buyer interest.
A beachfront residence is seen in East Hampton, New York, March 16, 2016.
We concluded this is just the beginning, and sure enough, several weeks later a similar collapse in the luxury housing segment was reported in a different part of the country. As the Denver Post reported recently, high-end sales that fuel Aspen’s $2 billion-a-year real estate market are evaporating, pushing Pitkin County’s sales volume down more than 42 percent to $546.45 million for the first half of the year from $939.91 million in the same period of 2015. Continue reading »
The failures of government intervention in the economy have made headlines yet again. Recent stress tests by the Federal Housing Finance Agency found something sinister brewing under the surface at notorious mortgage giants Fannie Mae and Freddie Mac. The results show that these puppet companies could need up to a $126 billion bailout if the economy continues to deteriorate.
That’s right — the two companies that were taken over by the government and that sucked $187 billion from the treasury could be entitled to more taxpayer money. The toxic home loans bought during the last crisis coupled with a lack of liquidity have suddenly become serious risk factors. The so-called “recovery” that has been trumpeted for years by countless politicians and economists is falling apart in plain view. The media will do just about anything to assure the public that this is all isolated and overblown, but the canary in the coal mine has just dropped dead. Continue reading »
The percentage of Americans that own a home has fallen to the lowest level ever recorded. During the second quarter of 2016, the non-seasonally adjusted homeownership rate fell to just 62.9 percent, which was exactly where it was at when the U.S. Census began publishing this measurement back in 1965. This is not what a “recovery” looks like. All throughout the Obama years, the percentage of Americans that own a home has gotten smaller and smaller and smaller. The reason for this, of course, is that the middle class in America is dying. Last year, we learned that middle class Americans now make up a minority of the population for the first time ever. In order to have a high rate of homeownership, you need a thriving middle class, and you can’t have a thriving middle class without good paying middle class jobs. This is why I write about the evisceration of the middle class so extensively, because the U.S. economy is systematically being hollowed out and most Americans don’t understand what is happening. Continue reading »
The mind-numbing Case-Shiller regional charts below are presented without too much comment. As MHanson.com’s Mark Hanson adds,the visual says it all.
Q: If 2006/07 was the peak of the largest housing bubble in history with affordability never better vis a’ vis exotic loans; easy availability of credit; unemployment in the 4%’s; the total workforce at record highs; and growing wages, then what do you call “now” with house prices at or above 2006 levels; worse affordability; tighter credit; higher unemployment; a weakening total workforce; and shrinking wages?
A: Whatever you call it, it’s a greater thing than the Bubble 1.0 peak.
1) Funny (and Demented) Seattle area Realtor anecdote regarding the potential for another housing Bubble: “House prices can’t be in a bubble because they are only 10% greater than the 2006 peak, meaning growth of only 1% per year since 2006. And 1% per year is not the Bubble type gains we saw back in the mid-2000’s”. Continue reading »
Real Vision TV’s Grant Williams offers a true look into what is known as an absurd debt level and unimaginable central bank manipulation. Less than a week ago we highlighted Grant’s comments on commodities. Although the information contained in the video below is nothing new to Zero Hedge, we do enjoy the way the information is presented. Set aside some time to listen as Grant tells a story about debt and the current investment landscape.
Grant sees people “with more power than you can possibly imagine” as the ones responsible for experimental economics that led the world down a path of self destruction.
“I don’t think there is any argument about whether or not the central bankers of the world should have done something in 2008. The question is ‘should they still be doing it 8 years later‘?”
We recommend viewing the entire clip
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“When a country embarks on deficit financing (Obamanomics) and inflationism (Quantitative easing) you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
– Ron Paul
“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.”
– Ron Paul
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
– Alan Greenspan
“Capital must protect itself in every way… Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principle men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd.”
– J. P. Morgan
“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the FED. They are not government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers.”
– Louis McFadden
“It was not accidental [the 1929 stock-market “crash”]. It was a carefully contrived occurrence. … The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all.”
– Louis McFadden
“What good fortune for governments that the people do not think.”
– Adolf Hitler
Tags: Bank of England, Banking, Bonds, Collapse, Debt, Economy, EU, Europe, Fed, Federal Reserve, Global News, Government, Housing, Housing Bubble, Housing market, IMF, Politics, Quantitative Easing, Real Estate, U.K., U.S.
In April we pointed out that due to an already abundant supply of condos on the market, luxury real estate developer Extell Development Co couldn’t sell luxury condo’s at its One57 tower, in the heart of New York’s premier ultra luxury destination.
Extell decided that instead of leasing luxury apartments, it would sell the units as higher end apartments in order to fill vacancies and generate cash. As a reminder, Bill Ackman paid $91.5 million for a condo in One57 in April of 2015 just “for fun” in hopes of flipping the unit at some point. Continue reading »
Those expecting a strong Spring start to housing (and you know who you are), were miles off their forecast.
Both starts and permits were down steep percentages, both below the bottom ranges of economists’ estimates. Continue reading »
Over the past several months we have repeatedly noted a recurring peculiarity of the Vancouver housing bubble: there are numerous multi-million dollar mansions, which rot, abandoned, their owners having long ago disappeared.
Two months ago, we first postulated the hypothetical timeline that starts with the purchase of a Vancouver mansion Continue reading »
The Bauhouse Group has filed bankruptcy for BH Sutton Mezz LLC, their entity that was to build out a 78 floor luxury condominium tower at Sutton Place, located on Manhattan’s Upper East Side. The bankruptcy comes on the heels of foreclosure efforts by Gamma Real Estate, who alleges that Bauhouse has defaulted on a loan of roughly $147 million.
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Another major city is experiencing a pullback in demand for its property – once again as a direct result of Government action to dampen the impact of foreign investment. In London, as Bloomberg reports, demand has slumped so badly that developers are offering discounts of up to 20% for their newly constructed homes. And just as the case was in Manhattan, it’s a result of the UK putting in a speed bump. The UK recently increased taxes on those deemed to be purchasing a second home, specifically designed to slow the pace of overseas investment.
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While real estate is all about “location, location, location,” it appears there are sometimes more prescient factors that any prospective buyer should pay attention to. Amid yet another government-fueled housing bubble, it seems in their haste to fulfil a rapacious demand for property in which to gamble their hard-grafted assets, Chinese construction companies have cut a few corners. As the following stunning video shows, a “newly constructed apartment” crumbles before the owners’ eyes as the ‘concrete’ walls turn to sand…
LiveLeak exposes, in the following video, just how poor the standards can be of so-called “new” properties. LiveLeak footage shows two men in a supposedly “new apartment building” in China where the concrete walls crumble like sand.
China is currently in the midst of a huge property bubble…
With new and pending sales tumbling and lumber prices down, yesterday’s drop in homebuilders sentiment – from 10 year highs! – appears justified entirely now as Housing Starts collapsed 11% in October to the weakest level since March. This is the biggest miss (and MoM drop) since Feb. Multi-family unit starts plunged 25.5% MoM as single-family dropped just 2.5%. Starts in The West and South plunged as The Midwest saw a 30.8% collapse in housing completions. Building Permits rose 4.1% after tumbling 4.8% in September but SAAR remains notably below the Q2 cycle peak levels (1.337mm) at around 1.15mm homes (with multi-family permits rising 6.8% MoM).…
According to the broker, it’s the cheapest home on the market in San Francisco, and it’s an unlivable shack.
As Fortune reports, it is a worn-down, decomposing wooden shack that was built in 1906, and the interior is unlivable in its current condition. The San Francisco house is also selling for $350,000.
According to Zillow, $350,000 would comfortably fetch a 1,500-square-foot, three-bedroom home in many smaller cities in the U.S., including Cincinnati, Ohio.
Realtor Alexander Han, would definitely advise against moving in too soon.
“The house still needs a lot of work. I would not recommend anyone moving right in. The bathroom is not functioning. The kitchen needs a bit more work. The flooring has a couple of places that are little bit weaker, and needs to be reinforced.”
– Existing Home Sales Extrapolation Surges To Highest Since Feb 2007 (ZeroHedge, Aug 20, 2015):
By the miracle of NAR extrapolation and seasonal adjustment, the SAAR Existing Home Sales data just printed 5.59mm units – the highest since Feb 2007. Sales were dominated by increases in The West and The South with The Northeast falling. We have two questions for NAR – where are the buyers coming from… and how long is this sustainable?
What’s wrong with this picture?
Some other data from the NAR: median prices. Continue reading »
– In These 13 US Cities, Rents Are Skyrocketing (ZeroHedge, July 26, 2015):
Seven years ago, the American homeownership “dream” was shattered when a housing bubble built on a decisively shaky foundation burst in spectacular fashion, bringing Wall Street and Main Street to their knees.
In the blink of an eye, the seemingly inexorable rise in the American homeownership rate abruptly reversed course, and by 2014, two decades of gains had disappeared and the ashes of Bill Clinton’s National Homeownership Strategy lay smoldering in the aftermath of the greatest financial collapse since the Great Depression.
In short, decades of speculative excess driven by imprudence, greed, and financial engineering and financed by the world’s demand for GSE debt had come crashing down and in relatively short order, a nation of homeowners was transformed into a nation of renters.
It wasn’t difficult to predict what would happen next. Continue reading »
– Why The Record Drop In Chinese House Prices Suggests Beijing Is Already In A Recession (ZeroHedge, April 18, 2015):
If one compares the history of the Chinese and US housing bubbles, one observes that it was when US housing had dropped by about 6% following their all time highs in November 2005, that the US entered a recession. This is precisely where China is now: a 6.1% drop following the all time high peak in January of 2014. If the last US recession is any indication, the Chinese economy is now contracting! So much for hopes of 7% GDP growth this year.
From the article:
As the FT reports, “sales of homes worth more than £2m have dropped by 80 per cent in the past year.”… “It is like the 1970s again, when waves of wealthy people left Britain and it was a disaster.”
– UK Housing Bubble Bursts: Sales Of Luxury Homes Crash By 80%; “Waves Of Wealthy People Are Leaving” (ZeroHedge, April 12, 2015):
About a year ago, when the Chinese housing bubble had just begun to burst (as a reminder Chinese house prices are now crashing at a faster pace than in the US after Lehman) and forcing the real estate bubble blowers to consider a different venue, namely the stock market, another housing bubble several thousand miles away was in full blown escape velocity mode – that of the UK. In fact, as we showed in the following table from last June, the appreciation in UK home prices had surpassed that of China as recently as 10 months ago. Continue reading »
– America’s Poor Spend 60% Of Their Income On Food & Housing Proving CPI Is Meaningless (ZeroHedge, April 6, 2015):
Governments and the mainstream media are fond of reporting inflation figures that strip out things no one ever uses like food and energy. As anyone who follows these things knows, leaving out “volatile” categories that track meaningless price movements in the things people eat and the commodities humans burn to sustain themselves is key when it comes to accurately tracking inflation which is why we can’t exactly sympathize with the following, that seems to indicate that even though everyone with a PhD in economics knows that endless money printing does not lead to inflation, people who aren’t rich are somehow managing to spend a greater percentage of their income on food and housing.
– The Canadian Housing Bubble Has Begun To Burst (ZeroHedge, March 24, 2015):
Energy accounts for 10% of Canadian GDP and around 25% of exports and the swift fall in oil prices is having a profound effect in the nation’s oil producing regions where home sales are collapsing by as much as 65%.
– Crash Landing: China Home Prices Plunge At Fastest Pace On Record, Surpass Post-Lehman Collapse (ZeroHedge, March 18, 2015):
Less than three weeks ago, when the PBOC proceeded with its latest “surprise” rate cut, we showed a chart that should scare everyone who is hoping that China will avoid a hard-landing would prefer would never have been revealed: the annual collapse in Chinese home prices is now so sharp and so widespread, that it has surpassed the housing collapse in the aftermath of the Lehman collapse.” Overnight things went from bad to worse, when China’s National Bureau of Statistics reported that contrary to hopes for a modest rebound, China’s average new home prices fell at the fastest pace on record in February from a year earlier.…