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Spot The Bubble: Average New Home Price Soars By Most Ever In One Month To All Time High
Curious why in yesterday's FOMC minutes the following line "a few participants expressed concern that conditions in certain U.S. financial markets were becoming too buoyant" received special attention? Here is the reason: as the chart below shows, according to the census bureau, the average new home sale price just hit a new all time high, rising by a record 15.4% to a record $330,800. In a country in which real disposable consumer income is flat at best and in reality declining, it only makes sense that the average new home price just hit a level not seen since the prior credit-bubble fueled housing peak.
Average new home sale price:
And the sequential change in the average new home sale price:
Obviously both of the above charts are justified by the average real disposable income per capita in the US:
Or maybe not...
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No bubbles here. Move along....
http://nipponmarketblog.wordpress.com/
Buy high, sell low.
Home prices, stock prices, and food prices have never been cheaper.
"Housing is going to the moon! Investment opportunity of a lifetime! Buy now before you're priced out forever!" —every realtor that has ever existed
you will be priced out forever when interest rates return to normal
Au contraire, you'll be able to buy a house with the contents of your checking account.
I think duo was being sarcastic.
The fallacy of thin markets...,
and greatest fools.
The median price chart would be more telling. Multi-million dollar NYC apartment purchases in a thin market can really screw the average.
F*ck this market.
Toll Bros. recently reported some good numbers....they traditionally build for the higher end of the market. So what we have here is the elites being able to buy while the rest are not; therefore, the price reflects what is moving.
This also goes along with Porsche sales, Tesla sales, etc. confirming with some real numbers what we already know here....the U.S. has become a third world country with a few elites doing well and the rest surviving....
Not everyone's gonna get rich off housing all at once. It's gonna take several generations of greater fools.
when Vanilla Ice has a show flipping homes... no bubble here.. move along. these are not the bubbles you are looking for..
10 oz of gold for one 1500 sq ft ranch, coming to a city near you...
oh, so this is an opportunity of a lifetime.
Realtor to sheeple:NEVER A BETTER TIME TO BUY!
NOT SO FAST, SLICK DUDE - fuck off and take you piece of shit home that owns you for a lifetime of headaches and false returns and...
Yep, that's what they never admit on British TV, when the pundits argue "housing affordability has never been better". Uhuh, our bubble never truly burst - the interest rates were just manipulated (even further) down. As you say, when they return to normal, shitloads of borrowers will be in deep, deep shit.
oh, and these new higher prices due to currency devaluation, have a new higher taxation. oh and how is that raise coming?
now, here in the states with these ultra low rates one can not even deduct the interest as it doesn't meet the treshold vs standard deduction.
over fucking rated to the max. it OWNS you!
That kind of advice seems worthy of a 6% commission, where do I sign?
Really is ridiculous...frequently the first time the realtor has seen the house is with you on a walk through and I need them to point out granite counter tops?!!
No ... you need them to point out the 'babbling brook' which might otherwise escape your attention.
i hate RE agents....i avoid them at ALL costs....
Good thing the record prices go with record income gains....Oh wait...is that air sound coming from the the bubble redux?
In my area government employees are still getting nice wage increases. The school district just approved 6% again this year.
Also, my property manager reports many of her section 8 people are buying homes. No wonder;
http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_h...
Even the FHFA house price index grew at an annual rate of 15% as mortgage purchase applications fall. This guy has great charts and data and points to a BUBBLE.
http://confoundedinterest.wordpress.com/2013/05/23/bubble-fhfa-house-prices-rise-15-6-annualized-new-home-sales-rise-2-3-in-april/
only a 30% price increase, but theres no inflation brah
Well, as long as you adjust your weights on the 12-month sliding window that is called "seasonal adjustment", and alter the housing component weight of the CPI, then no, it doesn't have to show up.
These are new homes, and the average price of new homes at that. The great unwashed must buy recycled older homes and those prices aren't going up as much. Build ten new homes, nine of which are ordinary and one is a commissioned palace for a Russian oligarch, corrupt Chinese finance minister or wall street bankster and you get this result. This like the once ever rising stock market are natural outcomes of the ongoing transfer of assets to the elites. This is my guess, analysing the distribution of prices would be needed to confirm.
@Trans:
How precise is Ben's control of every asset class?? He's able to claim "NO INFLATION (2%)", but at the same time he's able to directly target two asset classes that credits his POMO for the manipulation that it is - Housing and Stocks. He's also able to make Gold and Oil dance on the head of a pin, going in whatever direction he needs them to go, to again, strengthen his own credibility as Maestro. He owns the whole system, to the very last penny.
Oh there is ABSOLUTELY inflationary factors - "Controlled and targeted" minute to minute, everyday!
HAHAHAHAHA get ready to use your dollars for warmth in the winter in the fireplace
Bubblicious!
<And not a speck of inflation in sight. Nope, nothing here. Maybe over there. Nope. Nothing over there. Maybe housing. Nope. Nada.>
Do not make a big deal about this. It only means more houses have been built for millionaires and the higher price of those homes scews the average. Right? The lower price homes are not being built because the working class cannot afford to buy a new house, or should I say primarily former working class, now food stamp class. You have to understand the difference between median and mean.
I understand very well the difference between median and mean.
I like my steak median well. :)
But the cow thinks you are mean to say so.
On the udder hand.........
<Please.....make me stop. I'm begging you.> :)
What goes up... must go up
Above the 2% inflation target I would say, or is there nothing actually included in the CPI.
Nothing relevant to human survival like food and energy, clothing, taxes, cable, tuition, etc...
Lol @ cable.
Just an example of rising prices and inflation. Obviously, you don't need to have it, but almost ALL do.
For whatever it's worth I am listening to Schiff's radio show and he is saying that new home prices reflect the cost of construction going up which is basically just another sign of inflation.
Hey, did that beautiful crack den near you ever sell?
LOL yes it did and well above asking. It will be demolished soon and some monster will go up in it's place. I agree with the poster below. This has less to do with the economy and everything to do with musical chairs. If you have 500k would you rather have it in the market, the bank, or a home. Granted everyone on here would like me to add pm's but since most people don't buy them...which would you choose? I'd take real estate. It seems like most people do as well. Funny though when they get their property tax bills as the years go on, they may wish they went another way.
$500k of alcohol. At least that's my plan.
Alcohol, tools, weapons, water, food, medicine. etc.
The hard part will be measuring everything. If we get to where this is going you will be valuing your bottles of alcohol in terms of something other than dollars. Cigarette's or something.
Everyone thinks that is like going back to the stone age. Maybe we were more advanced and this is the stone age.
This guy's got good information based on what he experienced during the war in the Balkans.
http://shtfschool.com/trading/trading-101-for-long-term-survival-scenarios/
but that is the beauty of THIS market....you don't have $500k in the house. currently, with some of renewed craziness going on, 3% down will suffice nicely. so for a $500k property you could slip into it for $15k, making the owner pay the closing.
you have a nice place, save on rent, and if things turn out poorly, you pack your important things and move them to your 'paid off farm', and then walk away from the *ucker.......or that is my plan anyways....
i now consider a mortgage, rent.
hey fonz, from 20 years as broker there is an ol saying that "you buy a payment and the home comes with it".
I would suggest this rapid price increase is fueled primarily by low interest rates and the recent fear that rates will go higher and better buy the fucker now!
Thanks new game. My buddy and I were just discussing exactly that. I don't know enough to draw a conclusion. Interesting to hear.
i sat in models for 17 years and you can just feel the buyers juice flowing when it gets going. it is also that new big time toy rush.
and yea all for the low payment of ...
other factors for sure include the fact that existing is selling again and firs time buyers are moving into first home as payment lower than rent, suffice to say the log jam has freed up...
Some markets have bubblized back. Like in New York, Chicago, etc. Corporations bid against people to buy for flipping to rent.
Don't forget L.A. Check out what $1,200/sq. ft. gets you on the west side.
http://www.redfin.com/CA/West-Hollywood/562-Westbourne-Dr-90048/home/6816965
The description of the L.A. property referenced in that link makes it sound much nicer than the overpriced pillbox that it really is.
Google translation of RE to English:
charming 20s bungalow: Sub-standard wiring, plumbing, forget about storage space.
mature landscaping: overgrown jungle
vaulted ceilings: your electric heaters won't keep the drafts out in the winter.
reclaimed brick flooring: must love cheap 50's decor
detached guest studio (garage conversion): Good luck with finding a parking space
Probate, no court confirmation required: The previous owner, a 90 year old cat lady, was found three weeks after death when neighbors complained about the smell being even worse than normal.
Bless Google for its translation services
Wow! Plus California and LA get to suck more money yearly from you. Ever increasing taxes and fees.
People buying new homes do not have flat wages. Probably .gov employees. Rapidly becoming a 2 class society
When ones pension and healthcare are 100% covered, he can spend all his income. I know a City Groundskeeper who owns (at last count because he is still buying) 15 houses.
I better buy that house I don't need. I feel left out.
must be all those new part time workers
The tax collectors will attempt to use this.
Here is where one should just say: Fuck You Ben Bernanke!
The American sheep have the memory of a fruit fly. It simply amazes me how unbelievably stupid and greedy they are.
more stupidity than greed i asure you........
I remember when I was getting advice at the top of the market in the early 90's that you can never lose in real estate. Rented and didn't get in. Some friends got burned. Everyone jumped back in 2006 too.
No doubt, it's fuckin unreal how stupid people actually are.
The American sheep always consider the high water mark of any asset they own to be the actual fair value. They will see this data and think we are finally back to appropriate price levels in the housing market. Same goes for stocks...I know many people who own AAPL and are waiting patiently for it to get back to the $700 they know it's worth.
Ask a sample of people about their equity portfolios and 99/100 will either tell you how much they made from the bottom or lost from the top...only 1 rare bird will evaluate it from cost.
In Real Estate, like anything else, the key is ROI. And right now, there are some pretty good Cap rate numbers out there, especially considering alternatives.
"The American sheep have the memory of a fruit fly. It simply amazes me how unbelievably stupid and greedy they are."
Which is why I laugh my ass off at anyone who suggests that this mess can be fixed by the American Voter(tm). Stupid is as stupid does. Stupidity got us into this fix and stupidity sure as hell isn't ever getting us out.
Too damned bad I'm too ethical to join the big money making winning side in this, the people shearing these sheep, fleecing these fools.
In SF some neighborhoods are +30% YOY. Almost all sales are cash. Tech and international. With fiat's purchasing power diving around the world, not too surprising people will try anything to hold on, even real estate.
Agree completely.
SF is probably the anomaly due to the ever growing tech bubble (in NYC, it's the financial oligarchs driving real estate prices to the sky) and selling shareholders on almost every IPO. In general, the surge in real estate prices is most likely due to the return of the leverage game. Even some pleb can create an aura of wealth through leverage (big mansion, flashy car, etc.) with very little equity required.
leverage on cash purchase?
I'm assuming that much of the surge in SF real estate prices is due to the huge increase in newly minted tech millioniares. In this specfic market, there is no need for leverage as insiders have monetized the sharp increase in their paper wealth. In NYC, S&P 1650 has had a similar effect on real estate prices, particularly at the high-end. Again, SF & NYC would appear to be anomalies and the "surge" in real estate prices elsewhere in the U.S. is most likely driven by the return of leverage to the equation.
With nukes turning back on in Japan, can't imagine people want to stay there...nor China waiting for the corrapse. West coast RE should stay crazy for at least another 2 years.
Good point. I wonder what percentage of this increase is due to high value properties being bought by future EU, Japan, and China expats.
Yeah, at this point one could look at income property two ways. One as income source and secondly, future inflation hedge. Kinda like a bond, the market value fluctuates, but the cash flow continues.
$4m studio maid's quarters will do that to an average.
good point
Data skew. Blankfein and Dimon each bought ten more mansions after they got their xmas bonus.
My thought, too. Perhaps this just shows only the rich are building/buying new homes.
My thought, too. Perhaps this just shows only the rich are building/buying new homes.
Exclude Hamptons, SF and Manhattan and there was no increase.
My guess is this is just caused by builders (spec) stopping construction on cheap homes, so the average price increases. With hedge funds etc buying foreclosed properties like drunken sailors who would want to be builindg new homes to sell to the working poor???
2.0
What about sales volume in comparison to previous peak? Im sure the volume is much much lower now
"a few participants expressed concern that conditions in certain U.S. financial markets were becoming too buoyant"
This nautical reference warning is required under various sections of Admiralty and Maritime Law. It is considered informed consent to the sheeple. It is code for too much of the iceberg is visible above the water and the US Titanic may see it and avoid hitting it and sinking straight to the bottom.
Just smile and wave boyz, just smile and wave.
Friends of ours are in the contract period to sell to people they know. My first thought was never sell to people you know, especially at the top of a bubble like this. Lawsuit risk. I'm thinking of selling ASAP.
My wife and I was having aconversation about this last night. According to her the only houses moving around here are the extremely high end or the low end"investment" houses which are being purchased with cash. The mid range houses are just sitting.
Same 'round where I am. Lots of flipping and McMansions.
I own a mid range house. If I want to sell it I probably need to sell it asap and just take a hit. Everyone older than me wants to downsize, everyone younger than me can't afford it. Everyone wealthier than me wants something new. My house is quickly heading to illiquid status.
Luckily I live in NY and we have some of the most competent politicians around and they will find a way to rectify this for me.
Luckily I live in NY and we have some of the most competent politicians around and they will find a way to rectify this for me.
Be careful what you wish for...
I'm in the same boat but a little north and east of you. My plan is to sell it when the last kid clears high school. At that point, I am hoping it is worth at least what ever is left on mortgage. My expectations are real low.
After that, I am heading to a shack with some farmable land somewhere south of here.
After that, I am heading to a shack with some farmable land somewhere south of here.
+1000. fucking excellent plan. don't forget the razor wired security fence surrounding the land .dont forget to build watchtowers at stategic positions!
just sold my mid range home this week. still have the cabin up north though. it is for sale too.
soon to be able to be "free to roam about". hey, i'm taking this shit serious! want my equity out b/4 frozen by the greatest up your ass scalping in a five generation time frame...
in socal, everything is moving. everything. but this place is an outlier
Same in Nor Cal. Phoenix is moving as well. This might be it. Getting lots of post cards from Realtors again, depicting their latest sales triumphs.
And all this negative-better-to-just-rent talk might indicate a bottom.
All most of the people know as an inflation hedge is RE.
The amnesty legislation might be a kicker as well, from a demographic standpoint.
Nothing to worry about it is only the mega rich house prices bubbling up from the unlimited free money. It is so Bernanke! When are we off to the Hamptons?
Ok...I found it New Home Sale volume in April 2006 was 1,198,000......April 2013 454,000.
Nice work, thanks.
FLUSA.com,
Again, thanks
It easier to wrap you head around two data points,
Does this mean that our $160,000 home is now magically worth what was in 2007 $260,000? YIPPEE!!!! SOLD!
yes but theres no buyers, unless you consider wall streets latest reallocation into the landlord business, distoring market prices. one thing anyway, local government will be less likely to condemn your house to make room for a new cineplex and shopping mall.
Goldman Sachs Chief Equity Strategist David Kostin on CNBC calling for S&P 1,750 for this year, and 2,100 by 2015.
Calling for 11% then 13% gains in 2014 and 2015.
Contrarian indicator?
I'm about to build a house. Looking for some piece of shit to tear down and build. Within in an urban area. The thought of buying a $450k cookie cutter HOA 5-10 year old house 30 miles from downtown (60 minute commute one way) made me want to puke. I'd rather pay $150k to tear something down, another $20k to an architect, and get what I want.
The used house market in the burbs will get a heavy discount when gas goes above $4-5/gallon.
2 hours a day of commute time has to be worth something...
priceless; 2 x 5 x 52 + insanity and deep wrinkles on forhead> fucken eh man i want that...
Macho, 2 hours a day of commute time has to be worth something...
About a buck a mile transportation costs, depreciation, fuel, maintenance, + what ever your productive time is worth per hour.
+ missing time with your family... having fun or "unwinding"... those 2 hours are huge... it's basically the only time that you get not making someone else rich...
you dont mention how old you are, or what you do, if you might have to relocate at some point. its not nearly as pleasant but the downtown condo is probably your best option, the housing market is overpriced. you could at the same time build your fixer upper in the exburbs and live there on weekends. or find some property and use some modular solutions, steel framing delivered to the site, you just build a shell on top. since most older homes in CA for instance have no insulation, and you need to strip them down to the studs anyway. most of the new stuff has variegated roof designs, scones, etc. and there is chinese drywall and substandard plastic pipe, among other things to warn you off. keep the new design simple and functional, as most of those 70s ranch houses were. with solar, and cell phones you have more latitude with where you can build, lets say you can only afford 100 amp service, no problem. good luck its good to havea job anyway
As JCP and Mitt Romney found out. Being in the middle is not good !
As asked earlier, why in the world does the Fed WANT higher home prices and rent levels (not to mention higher food and energy costs and health insurance and tuition etc.) when wages and salaries are largely stagnant and structural unemployment is high. Do they WANT to see the middle class suffer even MOAR...
What a friend we have in Chairsatan...
It gives the illusion of the "wealth effect" so people will continue to spend and not save.
In other words, complete fucking madness.
this will have a trickle down effect as noted in H.D. earnings and income...
The "wealth effect" may spur spending by those with "wealth". The middle class largely owns little or no equities and don't have the ownership stake in RE that the wealthy do. The middle class will choke on inflation. I doubt that Chairsatan cares as much about them.
Fed class warfare = FUBAR
Also, they need rising RE prices to provide equity for increased property taxes, with which to fund State and Municipal Pensions. Big elephant there that has gone the way of Meridith Whitney lately, but is still lurking.
All part of the Keynesian Claptrap Parade.
They also want higher home prices to make good some bad bank paper.
When gas is $5/gallon people will riot in the streets. When the average middle class family keeps getting more and more priced out of the "American dream" it's happy days are here again.
Fuck you, Bernanke
MH, I get the sentiment, but I don't see riots unless there is no gas. $7 a gallon is accepted in many places in the world today.
Inflation creep. Boiled frogs and such?
Reset coming, soon. It's already in the system. Just waiting for acceleration. Maybe a 50% mortgage payment credit? Maybe a big minimum wage hike? An across the board multi-thousand dollar individual tax credit? Something stupid will kick start it.
Ben's leaving in the nick of time. The next apparatchik takes the fall.
Meat Hammer,
Prices in CA are already over $5/gal. In CT $3.67 and higher. It's all about conditioning. Just look at Europe.They will never raise the prices quickly. Over a couple of months; that's different story. Add a refinery fire and your done.
How many $10+ million homes in the average above, that Mr. "Consumer" is buying?
fuck yeah!!!!
moar real estate!!!
moar stocks!!!
moar!!! moar!!! moar!!!
the insurance people bumped up the rebuilding costs for our home, nearly a third. if the place did burn i would sell the lot, take the insurance money and move to phoenix, because that valuation is way out of line with our neighborhood. the last time things got this crazy was about 2007. then of course there was a real housing market.
New home prices are this high because all the new homes are being built for high paid bankers. It's the Guilded Age all over again.
AWESOME!! Now the shit that people cannot afford is even MORE unaffordable!! Thank you President Kardashian and Chairsatan Bernanke!
Much of the rising costs of new homes can be traced to government regulation. Codes are tightened each year requiring increased costs of labor materials for each new home without any reference to cost benefit. The rising costs of new materials also reflect the dead hand of the government I just finished hearing a news report about how no new cement plant could ever be built in the United States again. The report compared cement plants to refineries, also which cannot be built in the US. No new cement plants equals higher concrete costs. I just finished working on a new custom home where the owner went through hell to get it built. Among other requirements was a specially designed and built driveway since his driveway was longer than 1500 feet. Yet another small example were the grounding clamps called for by code in this home. The electrician showed them to me resting in the palm of his hand. That little handful cost almost $100. He mentioned there were clamps which could do the same job for less than $1 each but the code required the $7 grounding clamps.
New residential construction costs have zoomed past $100 ft2 to $200 ft2. Soon they will reach $300 ft2. We will have the best houses which only the very few can afford. Bye bye construction industry.
Did the BLS make up those numbers. I call bullshit
I have been buying up houses for 20 years and my net worth is through the roof!! The fact that the cost to build is going straight up is music to my ears....
Rock on Housing!!
Explanation? Only rich people are building houses.
You have to be so rich and not reside in LA to buy one of those sucker homes.
The state of california and it's public employees will make sure they deplete whatever money you have.
Best thing is to move out of the tax-mania states and let the public workers feed on themselves.
I believe the word used yesterday was "frothy". Bubble is a little harsh don't you think?
Gee, I wonder what will be the impact on housing of the higher interest rates we're now seeing as the Fed "tapers" its interest rates suppression scheme! It doesn't take an advanced degree in economics to see that we're about to witness another plunge in home prices SOON!
And that will lead to more foreclosures, and more investors being forced to dump recently-acquired residential housing in a real estate version of a margin call!
It only gets worse from here!
I remember when my grandmother's home was worth $110k in the late 80s. Of course my grandfather bought it for something like $22k in the 60s. Nice return right?
Then the ghetto types invaded the neighborhood. She sold the house for $30k in 1993.
So what may be a $330k home today is always just a few years away from being a $70k home when the ghetto needs to expand.
What can be asured almost as much as death, is that the low income population will expand much faster than the wealthy.
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Up in Toronto,
Friend of mine just had his side of the duplex he was renting the basement of, sell for 420K.
He was talking to his neighbour, who bought the other half 3 years ago.
His price?
$280K
Nope, no bubble there, eh!?
•J•
V-V
What the heck are those spikes in the disposable personal income chart? Is that capital gains from massive insider selling before the market crashes?