Presenting: The Housing Bubble 2.0

Tyler Durden's picture




 

It was just seven short years ago that the prices at the epicenter of the housing bubble, Los Angeles, CA rose by 50% every six months as the nation experienced its first parabolic move higher in home prices courtesy of Alan Greenspan's disastrous policies: a time when everyone knew intuitively the housing market was in an epic bubble, yet which nobody wanted to pop because there was just too much fun to be had chasing the bouncing ball, not to mention money. Well, courtesy of the real-time real estate pricing trackers at Altos Research, we now know that the very worst of the housing bubble is not only back, but it is at levels not seen since the days when a house in the Inland Empire was only a faint glimmer of the prototype for BitCoin.

Exhibit A:

The red line is the 7 day rolling average of median LA house prices per Altos (more data here). It is up 50% since the beginning of the year. One can only stand back and stare.

Still not convinced? After all those West Coast folks are known for being a little trigger happy when it comes to "flipping that house." Which is why, from the heartland of the East Coast, we present...

Exhibit B:

 

The Gretsch building, an old guitar factory turned condo building in Williamsburg, just had a crazy week: Crain’s reports that three units sold in all-cash transactions, each one setting new highs on a per-square-foot basis. The units in questions were two adjacent two-bedrooms on the ninth floor, selling for $1.4 million and $1.5 million, and a larger two-bedroom on the 10th floor selling at $2.5 million — all at an average of $1,150 per square foot. “It needs to be cash, it needs to be over ask, and (the listing) will never see the light of day,” the broker had told all the buyers. According to Crain’s, Williamsburg condos are currently averaging $794 per square foot, with high-end condos like Northside Piers bringing in closer to $1,050 per foot. The broker who handled the Gretsch sales at 60 Broadway can’t seem to believe it herself: “It’s unbelievable what’s going on out there,” she told Crain’s. Our question is, can the high sales we’ve been seeing lately be a bubble based on low mortgage rates if the buyers are paying record-setting prices with all cash? 3 Condos Sold in Williamsburg at Record Prices [Crain's]

Great job Bernanke & Co. You have succeeded at rolling up the housing, credit, bond, tech and equity bubbles all into one.

Watching the glorious unwind of all this unprecedented academic-created stupidity will be worth the hyperinflated price of admission alone.

h/t @Gloeschi

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Mon, 04/29/2013 - 22:31 | 3512382 tmosley
tmosley's picture

The shit circles the drain faster and faster just before it disappears.

Mon, 04/29/2013 - 22:37 | 3512422 WayBehind
WayBehind's picture

It will go up and up and up and up ... yeah right

Mon, 04/29/2013 - 22:44 | 3512432 Cult_of_Reason
Cult_of_Reason's picture

BERNANKE: "Well, I don't buy your premise... We've never had a decline in house prices..."

https://www.youtube.com/watch?v=9QpD64GUoXw

Mon, 04/29/2013 - 22:48 | 3512460 flacon
flacon's picture

All "properties" (interesting word) belong to the corporation known as the UNITED STATES OF AMERICA, a for-profit corporation operating out of Washington DC. 

Mon, 04/29/2013 - 22:56 | 3512481 NoDebt
NoDebt's picture

We're doing it again. 

AGAIN.

I heard a commercial on the radio just today about "flipping" properties for 60, 80, even 100K over purchase price.  Buy our system!  We know how to make you money!

Holy shit.  AGAIN??

Mon, 04/29/2013 - 23:01 | 3512498 quintago
quintago's picture

I just talked to a guy today that is putting an offer in for $2.5M for a property that was last sold in 2010 for $967K. Nothing has changed with the property save maybe landscaping.

Mon, 04/29/2013 - 23:12 | 3512534 markmotive
markmotive's picture

Months of housing supply is back to 2005 levels.

http://www.planbeconomics.com/2013/04/chart-months-of-housing-supply-bac...

Tue, 04/30/2013 - 04:41 | 3513053 Troll Magnet
Troll Magnet's picture

Well, here's the dilemma many Los Angelenos face. In my neighborhood, a 2bd/2ba apartment rents anywhere from $2,700-5,500. So if you're looking at these prices, you're more than likely to think, "Maybe I should just buy..."

Tue, 04/30/2013 - 06:26 | 3513105 malikai
malikai's picture

I wonder just how much of this new housing "bubble" is domestic private purchases vs. buy2rent and foreigners jumping from fires at home to fires afar.

Tue, 04/30/2013 - 08:06 | 3513198 new game
new game's picture

great opportunity to exit the matrix. that is being debt free by selling any mortgaged properties.

this is your second chance. double top dude!

 

Tue, 04/30/2013 - 09:26 | 3513200 new game
new game's picture

ECHO BUBBLE!!!!!!!!!!!!!!!!!!!!!!! BITCHEEZ!

Tue, 04/30/2013 - 08:55 | 3513311 smlbizman
smlbizman's picture

how in the fuck did robert(norm macdonald) shiller become the knower of all things real estate....along with that fucking clown face jeremy siegel form wort an...i worked with a guy from the wort...thought he was it and so much more....the sweater over the shoulders...what a dick.....after that clown siegel i would tell people i went to a community college instead of the wort....

Tue, 04/30/2013 - 09:33 | 3513434 new game
new game's picture

somebody had to rise to the role of real estate know it all...

certainly not NAR manipulators/lobbyist bullshit of realtor fakedom.

good time to buy, everyday, all day, 24/7 365 forever...

rates never been lower.

prices never been better.

bend over while i get paid 3 percent for being dumb, lazy and in your best interest.

fuck realtors and the fucking horse the think they are riding on...

Tue, 04/30/2013 - 11:24 | 3513961 Turin Turambar
Turin Turambar's picture

Good question malikai.  I've sold multiple rental income properties to groups out of Europe over the last 2 years.  My guess is that they are trying to convert fiat to hard assets and get out of Europe while the getting is good.  Couple that with the shadow inventory that is being held off the market in order to artificially reduce supply, and you have a recipe for increasing prices.  This is especially noticeable in Florida where I live.

 

I've been sitting on the sidelines for the better part of the last 18 months and have certainly missed making some money in this run-up, but I prefer to play it safe and pick up properties on the cheap after this new bubble implodes.  How much longer can this go on?  I'm surprised it has made it this long. 

Tue, 04/30/2013 - 08:07 | 3513206 I am a Man I am...
I am a Man I am Forty's picture

This is the problem, all the slack is out of the market, it is in Raleigh, NC anyway.  Decent house in decent location are going for more than asking with several offers on the table in a day.

Mon, 04/29/2013 - 23:16 | 3512545 HulkHogan
HulkHogan's picture

Good for him. He can sell it in 2019 for $10 million.

 

Mon, 04/29/2013 - 23:56 | 3512671 Skateboarder
Skateboarder's picture

In 2019, jillions are the new millions, and squillions are the new trillions. As we go up, up, and awayyy.

Tue, 04/30/2013 - 01:05 | 3512826 Mugatu
Mugatu's picture

While this is no doubt another Fed induced bubble/nightmare, has anyone asked themselves if part of this behavior is a reflection that people do not find their little pieces of paper to be a good store of their savings anymore?  At some point, even the average Schmo realizes that the paper he owns is defaced more and more each month with dilution.

Tue, 04/30/2013 - 01:24 | 3512864 Poetic injustice
Poetic injustice's picture

Average schmoe now works 3 part time jobs for minimal wage and does not even look at properties.

Tue, 04/30/2013 - 03:42 | 3513020 Harbanger
Harbanger's picture

True.  High unemployment is why they won't be able to re-inflate the housing bubble. There will be some shifting of properties by existing owners but few new buyers.

Tue, 04/30/2013 - 04:45 | 3513056 Troll Magnet
Troll Magnet's picture

According to every realtor I know here in LA, there is a severe shortage of inventory and a shitload of potential buyers from all over the world.

Tue, 04/30/2013 - 07:51 | 3513185 mayhem_korner
mayhem_korner's picture

 

 

That's just the banks withholding foreclosures from the market to prop up prices and turn some of their bright-red toxic assets green.  Offloading $40B/month to Ben's disposal doesn't hurt either.  And the MSM gets a gift-wrapped story of how housing and financials are booming.  The illusion of the wealth effect seems to keep working...

I give this whole thing 18 months, max, before the masses are once again sifting through the rubble.

Tue, 04/30/2013 - 08:15 | 3513213 new game
new game's picture

exactly-round two of wealth transfer-they want it all.

your job for shit pay, your home(less a few payaments), your fucking soul...

they dont give one flying fuck about you...

Tue, 04/30/2013 - 09:29 | 3513436 Kayman
Kayman's picture

Can't wait for Round 2, when they re-incarnate Hank Paulson. "We gots ta have $7 trillion for my friends or we plug the kid !"

Tue, 04/30/2013 - 09:38 | 3513470 new game
new game's picture

round three>go back to first comment with 100 percent up votes.

then cycle complete as the crap is out of sight...

then call roto ben the shit remover and team treasuries to buy it back and keep the cycle going for next pipe cleanout.

Tue, 04/30/2013 - 04:48 | 3513057 Troll Magnet
Troll Magnet's picture

As a homeowner, it's good to see the prices moving up even if it's a bubble since my family and I've been thinking about selling and then renting until we can move the fuck out of this goddamned state of CaliWHOREnia.

Tue, 04/30/2013 - 05:29 | 3513070 OldPhart
OldPhart's picture

As a fellow CaliWhornian, I have to agree.  Good luck on the move and resist the urge to Californicate the area you move into.  Adapt to the local customs.

Me. I'm sorta stuck in this shithole state with a nearly paid off house, family, actual job, and rapidly approaching senility with accompanying old age.  I figure, if I live, that in another ten years I'll be so out of it that I couldn't care less about being made into Soylent Green...might even look forward to it.

Tue, 04/30/2013 - 08:53 | 3513312 donsluck
donsluck's picture

You two may hate California, until you move away for a year. You'll be back. They don't call it the golden state for nuttin.

Tue, 04/30/2013 - 09:21 | 3513406 caShOnlY
caShOnlY's picture

They don't call it the golden state for nuttin.

15 million illegals can't be wrong!!

Tue, 04/30/2013 - 13:46 | 3514622 OldPhart
OldPhart's picture

Don't hate the State or the weather.

Have a blood-lust hatred for the whorehouse in Sacramento and the millions of parasites that flock to the sanctuary state.

These fucktoids are even talking about making illegals sit on juries.

Tue, 04/30/2013 - 22:39 | 3516442 Freddie
Freddie's picture

They do not call Callie-Porn-ne-ah the golden shower state for nuttin.

Tue, 04/30/2013 - 08:26 | 3513248 azzhatter
azzhatter's picture

this is the top 20% buyers. The bottom 80% is buying tents at Cabelas

Tue, 04/30/2013 - 07:47 | 3513179 orez65
orez65's picture

The average "wealthy schmoe" in the US has a lot of cash for example the "baby boomers".

If it is cash that is driving the recent real estate bubble then it is an exchange of dollars for hard assets.

The next step will be exchanging dollars for ANY hard asset.

I've experienced this behavior, many years ago, in Latin America.

Tue, 04/30/2013 - 07:54 | 3513188 mayhem_korner
mayhem_korner's picture

 

 

That's just the demand side.  On the supply side, you've got the backlog of foreclosures that the banks just "haven't gotten to yet" as they purposely stall to keep the real price from prevailing.

Funny that for most goods, withholding supply to drive up prices would be considered bad as well as an anti-trust violation.

Mon, 04/29/2013 - 23:08 | 3512512 disabledvet
disabledvet's picture

it could be worse...it could be Hong Kong. i mean "that be some serious pooty boyz and girlz." to paraphrase the movie Apocalypse Now "one day this bubble is gonna end." enjoy it Cali...you deserve it. the rest of this country sucks ass. this is what the American dream is all about...if you've been able to cash out and move up...and cash out and move up...and cash out and move up...just keep it going. i stare at a hundred acres every day and think "is there anyone out there anymore?" hellllooooo. hellllllooo....http://www.youtube.com/watch?v=umyl-wWRkJ4

Tue, 04/30/2013 - 00:44 | 3512786 jonjon831983
jonjon831983's picture

Just dust off n plug in the ol tape deck.  It don't get old.

Tue, 04/30/2013 - 11:27 | 3513984 Turin Turambar
Turin Turambar's picture

8-track right?

Tue, 04/30/2013 - 01:10 | 3512838 bigyimmy007
bigyimmy007's picture

People just never learn from history.

They just move on, forget, and hope it never happens again.

Tue, 04/30/2013 - 01:31 | 3512883 Parrotile
Parrotile's picture

If they've forgotten what for many was the most publicised and Politially kicked "Market Crash for Mr and Mrs Average" in ery recent years, then there's something very wrong with the US Attention Span, let alone Collective Memory!.

At least in Australia they haven't had a severe bust - yet (but with the severe (12 billion AU$) shortfall in Mining Taxation revenue, necessitating "thinking the unthinkable" by our spineless Politicos of all flavours, even lind Freddie can see the train's a comin'!)

Tue, 04/30/2013 - 02:31 | 3512968 Doña K
Doña K's picture

It's all foreign money, as the Cyprus incident, the tightening of the tax havens. Money has to go somewhere and it goes in RE and physical PM's.

Tue, 04/30/2013 - 13:13 | 3514512 andyupnorth
andyupnorth's picture

A wise man once said:

"Until proven otherwise, we're all retards"

Francois Perusse

Tue, 04/30/2013 - 08:44 | 3513283 TeMpTeK
TeMpTeK's picture

Yes we can....Harlem shake in .......3........2.........1.....

Mon, 04/29/2013 - 23:11 | 3512525 Abitdodgie
Abitdodgie's picture

Unless you have a Land Pattent , then its not Federal.

Mon, 04/29/2013 - 23:14 | 3512549 Abitdodgie
Abitdodgie's picture

 

Here is the current list of the stars who are bugging out:

 

adam brody

america ferrera

amy smart

anna nicole smith(yes she’s gone already but the estate)

ARNOLD SCHWARNEGGER

ashlee simpson

ASTON KUTCHER

avril lavigne

BARRY MANILOW

bert lahr

beth grant

CANDY SPELLING

CHARLIE SHEEN

charlize theron

cher

dennis quaid

dick clark(estate)

the rock dwayne jonson

ELLEN DE GENERATE

elvis presley(estate)

frankie muniz

HARRISON FORD

heath ledger(estate)

heidi klum

hilary duff

hillary swank

howie mandel

JENNIFER ANDERSON

JENNIFER LOVE HEWITT

JIM CAREY

kd lang

kara dioguardi

kate walsh

katherine heigl

KATY PERRY

kelsey grammer

lauren conrad

LEONARDO DI CAPRIO

MARK WAHLBERG

mathew perry

MEG RYAN

megan mullully

MEL GIBSON

NEIL PATRICK HARRIS

nick lachey

P.DIDDY

penelope cruz

pierce brosnan

pink

reese witherspoon

RHIANNA

robin williams

sally feilds

SCARLETT JOHANSSON

SHARON STONE

SYVESTER STALLONE

tori spelling

USHER

wayne brady

zsa zsa gabor(estate)

 

This is just a partial list, still not including movie directors, producers, and the millions of “movie industry” people in LA.

What do they know?

Where are they going?

I have never seen a massive exodus like this….

I’m a bit uneasy about this situation.

 So if they are all leaving , then will this trigger the housing collaps

Mon, 04/29/2013 - 23:27 | 3512581 Fish Gone Bad
Fish Gone Bad's picture

BARRY MANILOW shops at Vons in Palm Desert.

Mon, 04/29/2013 - 23:27 | 3512590 LetThemEatRand
LetThemEatRand's picture

Oh, Mandy.

Mon, 04/29/2013 - 23:49 | 3512643 Raymond K Hessel
Raymond K Hessel's picture

From where to where?  

Tue, 04/30/2013 - 00:08 | 3512701 LetThemEatRand
LetThemEatRand's picture

From the Copa to the Cabana, of course.

Tue, 04/30/2013 - 09:29 | 3513413 NoDebt
NoDebt's picture

No.  They are getting AWAY FROM TAXES.  Their home values have recovered so it's a good time to cash out and head to a lower tax state.

When even uber-liberal Bill Maher is complaining about the tax rates in the utopian liberal parradise he himself supported and helped bring into being, you know it's bad.

Personally, I'd love to see California tell Bill Maher he's not allowed to leave.  Sit his ass in a chair and just keep making him PAY AND PAY AND PAY.  We'll make a conservative out of that little bitch in no time!

Tue, 04/30/2013 - 09:27 | 3513425 smlbizman
smlbizman's picture

but but ...robert downey junior is ringing the opening bell......so you know everything is good

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