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"Flip That House" In These Bubbling Cities
With Case-Shiller breaking records and even the typically less sanguine Bob Shiller noting (looking in the rear-view mirror) that things are not terrible in the housing market, it appears it is time to play 'flip that house' in these exuberant cities. While not as ready to pop as Yuma, AZ, these are the fastest year-over-year gains for the most 'bubbly' cities in 7 years. What could go wrong? Though, we note, you better have lots of cash because the mortgage market has effectively been slammed shut...
What Could Go Wrong?
All looks normal...
Oh and this...
So have that cash ready...
Charts: Bloomberg
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The middle chart is pretty fucking useless.
You have to put on those red colored glasses before you look at it. Then you will see the words "FUCK YOU BERNANKE" hidden in the middle of all those waves.
You meant, of course, the 'They Live' sunglasses, no?
"CONSUME"
I'm all out of gum, fellas.
"who said anything about the landing?"
After they smashed the 10 year T Bill yesterday from 2.67 to 2.48 to lower interest rates, it's back to 2.60. Maybe Ben has finally lost control. About time.
My vinyl copy of Rush "2112" says that when played backwards.
Ah, you just aren't that fond of chartporn, are you? ;-)
Naw I'm fine with chart porn, but people who use 20 thick lines on a chart are douchebags. Line thickness can be set in Excel 2007.
But the overall trend shows. Maybe they could have used fewer lines
Just pretend it's a volatility chart ;-)
Well, it does a decent job of displaying the ever elusive "national real estate market" that may or may not exist.
Hey, I thought it was just fine. It's a perfect representation of a rainbow colored unicorn fart.
The fact that Detroit is on a positive news housing chart gives me pause.
If a house in Detroit goes from $500 to $600, that's a 20% rise.
Is that an inverse chart of perceived future dollar value, maybe? Where else is cash going to go in an inflationary reset? Not bonds, because interest rates will rise. Not stawks 'cause interest rates will rise. Not gold 'cause interest rates will rise, and most folks don't even know how to buy it.
Add 35 million new "citizens" to the mix, along with each bringing in their moms pops and siblings, and where are they going to live? Plus, Section 8 keeps a tidy floor under rents, either way.
Again, all J6P understands about hedging devaluation is RE, and all the gov understands is growth, population leading the charge.
The stuff of great "estates"...
1/3 RE
1/3 PM's
1/3 Collectables.
The above said, I sure wouldn't buy bricks and particle board here at less than 8.5% Cap.
nah, that chart could double as Bernanke's heart rate everytime he sees the 10 year note move up.
Zoom in on it; large cities with lots of government and corporate money.
Price levels coming back to 2004 levels, two years before the top of the bubble.
An entire sociey in regression, literally.
Long poetic justice.
Why are people moving to Big Cities again? Aren't many of them Bankrupt?
The middle chart is pretty fucking useless.
It's a Rush Limbaugh EKG after he's consumed a young boy
Red Flags everywhere you look.
A damn good thing so many are colorblind.
When I think of more dollars to by the very same asset, I can only think of one word: Inflation.
Mortgage apps? Hey, look over HERE!
Can I get that one free on my iPhone?
Hell, you can get a free Obama-phone.
's that come with an EBT App?
Anecdotal data.
A house NOT IN THE TINY TWO COUNTY AREA all the hype stories are located in for California . . . but a house I am watching not in that area, For Sale sign sprouted in front yard Monday of last week. I noticed a showing Wednesday, and one Thursday. None Friday. None Saturday. None yesterday. All after the rate spike. Owner was out sprucing up shrubbery over the weekend. He hasn't accepted an offer. Hasn't rec'd an offer.
Hey, I thought houses were supposed to be selling 100K over asked in 2 hours? What's the story here? House is about 3000 sq ft priced appropriate for its area.
Answer, it's all lies.
Sales for houses that are SINGLE-STOREY are brisk in my area. Big houses with big yards aren't moving. It fits with the general expectation that cash-rich empty-nest seniors with mobility problems want a smaller house, easier to maintain, with no steps or stairs.
The apartment market is terrible. There's a glut of shoeboxes. Several big projects have repriced their listings repeatedly, resulting (laughably) in lawsuits by owners who bought before the market topped.
House Bubble v2.0. Does that interface with the mass lawyer layoff application well?
who let the intern make the power point deck? burn slide 3!
detriot is up 20% ???????????
Average home value has risen from $500 to $600 in a year! s/
0.00 + 20% = 0.00
This is so fucking awesome. Data comes out and reinforces the Bernak's optomistic shitting unicorns. At the same time Dick Fisher sits there with a shotgun aimed at everyone who understandably wants to unload their bonds and god forbid, short the bond market and tells them..."don't you even fuckin think about actin like a real market".
Fonz.......
I may be at the only firm that actually marks to market at EOD.
It's criminal not to.
How these fucks get away with it should be at the front of everyones mind.
It's freaking amazing...and then we settle back into the mode of how to best navigate ourselves through this rigged minefield while a bunch of people sit in the sky boxes above and laugh at us.
O/T but here's a bright spot:
Federal regulators are poised to sue Jon S. Corzine over the collapse of MF Global and the brokerage firm’s misuse of customer money during its final days, a blowup that rattled Wall Street and cast a spotlight on Mr. Corzine, the former New Jersey governor who ran the firm until its bankruptcy in 2011.
The Commodity Futures Trading Commission, the federal agency that regulated MF Global, plans to approve the lawsuit as soon as this week, according to law enforcement officials with knowledge of the case. In a rare move against a Wall Street executive, the agency has informed Mr. Corzine’s lawyers that it aims to file the civil case without offering him the opportunity to settle, setting up a legal battle that could drag on for years.
http://dealbook.nytimes.com/2013/06/24/u-s-civil-charges-against-corzine...
"drag on for years" -- of course.
The CFTC? Is this a joke?
Worst case scenario (for him): 6 months in country-club prison followed by presidential pardon. Back in business.
They locked up Martha Stewart for two years on $100K BS insider trading. Let's see, $1.2B magically hypothecated from client accounts at MF Global into Jamie Dimon's bank JPMorgan. 20 years is the minimum, but I am also cynical enough to know that the squid saves their own lest they all hang.
Civil case. They are suing him, not charging him with anything.
Anything less than jail is unacceptable.
Holder is all over that.
Yup.......Jail....for you two.........thats if if they don't just assign your phone a Hellfire missile on "the big day".
That's HONORABLE to you.
Just as Jo Stalin and Barney Frank.
Of course it's only civil. Racketeering just ain't what it used to be to the well-to-do bought and paid for.
Whom, at CFTC, did he forget to palm grease? Oops!
Bomb shelters were always hard to get a mortgage for anyway, no big deal.
I just got a time share in Vault 101.
I dunno, if you put that 200K toward 40 acres, a house and outbuildings, 10 miles out of a small town, you won't regret it.
You buying? Here you go. I just restained all of the decks, painted the entire interior and all of the fascia. Comes with all of the shit you need to live there(except for guns) including a beer fridge.
http://www.edinarealty.com/Listing/ListingSearch.aspx?c=4&ref=topnav
Nice! We've got a place in the works with our in-laws. Good luck on your sale!
I'm a summer girl, so Missouri is a tad better for me then further North - but my husband would LOVE it!
Thanks. I have all of the supporting documents as well because Linda Green has never been involved with that peice of RE. I am going to re-side that shed too because I haven't spent enough money on the place already.LOL If that property was anywhere near the Twin Cities market it would be sold by now because the RE market here is frothy. Alas, what could go wrong?
From Altucher:
If you search the phrase “stagnant incomes” on the Internet you’ll find a slew of stories about how wages, median pay and income are languishing, and haven’t kept up with inflation for all but the highest paid.
So it should come as no surprise to learn that about three-quarters of Americans are living paycheck to paycheck, according to a new survey by Bankrate.com. The survey also found that about 27% of those polled had no savings at all and 50% had saved less than three-months worth of expenses, or not even half the six months worth that experts recommend.
http://finance.yahoo.com/blogs/daily-ticker/middle-class-getting-fired-o...
There will be no "recovery" until wages improve. Both the chief economists at DB and GS said that last year. Now there's just Speculation and Flipping. As the previous ZH articles notes, there are renters. people realize "ownership" is not the Dream it used to be (if it ever was).
If wages move Ben may not be able to cool off the spiral fast enough.
He won't even attempt to cool it 'till he sees double digits. That's most likely what this frenzy is all about. Creating a run on all those stagnant reserves sitting around not doing their part. Ben must, at all costs, mash the currency. It's his charter.
Throw more velocity, more velocity, more velocity. Ok stop velocity.
What? You're telling me I can pay cash for a house and pay 4k every year "lot rental fees" to the government until the day I die, plus I get to maintain the grounds myself and be responsible for all repairs and headaches that come with it????
OMG, where do I sign up?
Silver - I understand your point of view. Combined, I pay almost $15k per year for the three properties I own / co-own.
Yet, I want local services and infrastructure as much for what they offer me as for the part of my properties' value that they prop up. So since the tax rate isn't going to be zero, let's focus on keeping waste out and getting the essential services well delivered.
Renting is certainly a better option for some. Without those people, I'd have only half the income I do today. :)
Owning a house as a source of income makes perfect sense. In fact, that's the only way it makes sense, in my opinion. I imagine if I was in the rental business myself, I'd still rent my home from someone else. Either that, or pay someone a yearly fee to take care all of the mess I mentioned above, which would be basically the same thing as renting anyway.
Hope you have good Cap on that!
It used to be that when you purchased a house, you owned the house. Nowadays, when you purchase a house, the house owns you.
Have you ever wondered who changed that? And why? It's worth thinking about.
What is the overhang down to? Or are all banks becoming like the Irvine Co?
Getting back up to housing Bubble I levels.
The huge drop in mortgage applications means that these sales are to speculators, not families.
The speculators are bidding up the tangible homes for flipping or renting.
Mis-allocation of resources and capital.
Housing Bubble II.
I live in Queens County NYC. My house doubled in price within a year of my buying it, back in 2001. No, really. I didn't sell, because at that point, the housing also doubled everywhere else and then some, especially where I would want to move, specifically, Bergen County NJ where I was raised. My father admonished me for sitting, but I said to him, what would I be trading up to? I would move laterally, and then pay costs to sell, buy, and move. No sense in trading if you do not gain equity.
So the bubble burst and it started to look like I should sell my house, because prices fell in NYc but not quite too much that I didn't have substantial equity, and buy a newly collapse-discounted house in my old home town. God Bless some of these Boomers I say, some sell for what they can in good faith gift to the next generation. I was looking for bargains and did find them. So, I checked Zillow religiously for about 18 months straight to grasp any seasonality in the market and thus familiarize myself with prices. I found a fixer-upper - I'm handy as the Devil - that I can afford and simultaneously reduce my debt load by 50%. So I said to myself, "myself, prep your house for sale, the market is bottomed". About a month after I gathered my targeted buys to visit and see and review, the houses got snapped up and put up on the market at re-inflated prices by large corporate buyers. Fuck that shit! So I'm back to waiting.
ParkAve, I hear you. I bought my house in the 1980's and it barely budged in price for years...then in 2002 it started shooting up like crazy...didn't really make sense. I sold when it soared about 40% since I could not beleive it. Plus, renting is pretty cheap with much fewer worries and zero property taxes which were eating me alive. New property tax for every lthing --schools, roads, sewers, and on and on---even though the stuff was way over the other side of the county where I would get zero benefit. It ultimately doubled in price and that guy tried to sell but too late..the market and the psychoiloigy in that area already started turning down. It has come down close to where I sold it but not down to the 1980 levels ... yet. Who knows? I may be able to buy it back at 1980 levels ::))
Another thing, two impacts over the life of a 30-year loan are the taxes and the cost of gasoline. Where I live my annual taxes have truly doubled, although from a very low baseline. I knew as a younger man that I had scant confidence in the ability of either myself or the raging economy to afford the lifestyle - and location - of a wealthy man.
Now, where I would want to move, the taxes are easily 4x - 5x greater for the same house by count of bedrooms. This is true east, west, and north of the five boroughs, which are dense and thus tax revenues are concentrated and thus lower on a per property or per sq ft. basis. All that sterile landscaping that surrounds the suburban house - and the vast voids of careening motorcars that they buffer - seems to be very expensive for municipalities to lord over and occasionally snow plough, evidently. Over the life of a 30-year loan, annual taxes alone add up to - wait for it - the cost of another fucking house altogether. THANKS I'll PASS. Add to that, that the price of gasoline is a jittery, quaking mess ... and you do have to drive in those grand suburban voids ... and my cost basis would probably just about put up a ten spot versus my humble 1200 sq ft urban home with tiny back patio in shoehorned garden. I put barely 5k miles per year on my car now, that would be double to triple in the suburbs.
Bottom line, if you don't let the market flow and roll, not crash, downhill, the market will seize instead and go end-over-end. This lesson is not learned by those who would easily finance these large house-buying entities in the HOPE of floating prices. Who, in their right mind, would assent to voluntarily evaporating their equity in such a market?
I don't own a condo but I listen sometime sto the RE show on Saturday morning where they have been pumping houses, condos and commerical property non-stop for the past 5 years.....until....last Saturday.
I almost fell out of my car seat when I heard for the First Time them recommend NOT buying a rental condo since the insurance costs and property taxes far outweight any hope of any return. In fact, several people then called in to complain about their condo units and how they are losing money for those very reasons...i.e., insurance costs and property tax increases.
Interesting to hear your guys mention it.
I'm not sure about extra insurance for condos, but I have heard of an insurance product for rental properties for the renter ... which makes absolutely no sense whatsoever. The risk is to the owner, but only if there is a monthly debt payment to make, that the renter doesn't pay the rent. Thus employment and location are keys to rental property, imho. In any case, with a system rife with distortions, it is a good bet to sit on cash until the market shakes out ... again ...
House insurance for me is not an expensive factor and basically covers the cost to replace the building in the event of, well, I'm not quite sure about that but it's illegal to own without it. I am not insured for any sudden disusefulness of the land itself.
Why not be ambitious and hope for 1930s levels?
http://www.worldcomplex.blogspot.ca/2013/06/the-evolution-of-case-shiller-index.html
Could be some investors in the mix, too? At 8% plus ROI in some properties, it makes sense to some.
No inflation here. Back to the old normal in mark to fantasy.
Where the fuck is MERS?
Must.....flip....moar....houses.....
Too bad nobody can get a moartgage.
Morning all, more news from the 'Peoples Republic Of EUSSR, Britisher Section 10'.
Our 'Elected Idiots' over here have decided that those with the 'Moral Courage' and 'Family First Thinking', to be rewarded handsomely for staying together through thick and thin and deciding the 'Institute Of Marriage' is something worth fighting for, by giving couples a tax-allowance for doing so.
This 'Humungous' ammount totals £150, per couple, per year. Thats right my American friends £1.50 per week each, as an incentive to stay together and reduce your overall tax burden.
Who says Gideon Bean, and Call Me Dave wernt serious about helping folks out?
Its getting more insane by the bloody day over here folks.
~= $300 (USD) !?!?
That's almost half a new iPhone! EVERY YEAR.
Then there are the intangibles associated with staying together. Such a deal, eh?
The wife asked me just last week if I would pay for a boob job for her, make them a bit bigger and friskier like.
I said just rub some toilet paper between them twice a day for a while and they will grow in no time.
She asked why, and asked how that would work.
I said, with a straight face mind, it worked on your arse didnt it??
+1 that's a classic
why do you mix British politics with a side swipe to the EU? (except for your nick)
when it comes to family, marriage and divorce most continentals thinks you Brits are as as insane as the Scandies
if we'd let the EU parliament to make laws on the matter, you'd possibly would think you were thrown back a couple of centuries for how conservative a true full-european consensus would be
Its a piss take Ghordius, I mean no ill harm by it.
Lighten up mate, the anger is not worth it. Me? I love you all, wherever you are from, we just be cogs in the machine being grinded to death by the usurpers above us. And I love taking the piss mate.
:-)
I'm not angered at all, just incapable of remembering how/to use smilies. (hint: I'm really old) my question was more out of curiosity
You're as old as you feel mate, ;-).
My moniker on here is an album from 1996 called funnily enough, Inthemix96, youtube it, its a great album from when yours truly was 18 years young.
I believe a bloke called Pete Tong Remixed it. And all serious now, I dont hate anyone, from anywhere, we are all just doing the do and trying to get by. I do it with choice language and humour, give folks a laugh if you know what I mean. ;-)
Lifes too short friend, enjoy it while you are here to enjoy it. And dont let the bastards get you down.
Best to you and yours fella.
96 :-P......
"You're as old as you feel mate" - I know, but remember we live in times where three female judges just ruled the opposite against a Berlusconi who always felt like 17 ;-) all the best, mate
You gave me a smilie Ghordius. :-)
I did what I done to do it.
We will prevail mate, we are too good for these swines.
Take care.
Listening to it now inthemix96 ... I always figured you for a candy flipper ;)
Hongcha,
You be listen to the very best of dance friend. My daughter was born one year later.
The year the war criminal himself found the seat of power over here the grinning, perma tanned cunt.
The best to you and yours as well friend, enjoy the music.....
:-)
96
It's getting ever faster. Reminds me of the fact, that "period-doubling" leads to chaotic behaviour ...
who knew ... cure for bubble is, ... another bubble.
Now that our house has appreciated $125k (75%) in 3 years for no reason whatsoever, i've finally convinced Mrs. Hammer that it's time to sell, pocket the easiest cash we've ever made, rent a house down the street, and wait for this bubble to pop.
God Bless You Meat Hammer.
And the Mrs. ...Meat......Hammer. Oof!
She's a good woman. She recently coined the phrase "Honey, you love to veg on the Hedge".
MOAR..........bundle............. then flip
Uncle Sam Inc.........knows whats best.
There is no basis for any rise in home prices in various area -- duh? But one of those entities that benefit from these phony prop ups are all of those counties that are failing due to falling tax revenue. This housing data is such interesting fiction - most eveyone loves a good trainwreck so it is hard for us to look away...
Bubble Bernanke and the Fed generated housing bubble #2. Bernanke and the PhDs at the fed are convinced you can print you way to prosperity.
It's been tried in the past. We all know what results.
Well most of the people willing to live in those big cities are statists to begin with... and most of them believe in a recovery and that the government has saved the economy... so of course they are happily paying bubbly houses prices thinking it will go up for eternity...
Fuck em.
good theory, now invert and check if it's not even truer that cities make "statists"
or explain to me how a city can function at all without a certain degree of "statism"
I love bubbles.
Miami Beach has some of the worst condominiums in the world. Some have hundred of thousands of alterations without permits and board authorization. One of the biggest legal nightmares the real estate industry is covering up. They are called hack buildings. What a legal messs.
It's notable that the building permits data turned down significantly in May. The permits data is relatively unfucked with and is a pretty reliable predictor of future economic trouble. I'm guessing that data is going to look pretty bad the next couple of months. Seems to track with how the mortgage REITS (REM) are faring as well, they've had a pretty serious downturn since the start of May. 10yr UST/30yr mort rates confirming/causing.
Noting, of course, that macro fundamentals are a pretty unreliable gauge for broad equity market behavior. As noted here many times, the macro indicators and their rough equity market analogs have diverged very significantly from the broad market, SPX should be no higher than 1400 right now.
Humans are just irredeemable. If we wanted we could have a relatively stable, secure society for generations but people get bored.
So we inflate and deflate asset bubbles and get high off the gambling and pretend we can do this forever. Pretty sad.
FUGGEDDABOUTIT: Nothing is moving in Chicago or the burbs...NOTHING, so as my Uncle Tony RIP would say,
"real estate? FUGGEDDABOUTIT."
Alot of Boomers are living in their retirement. That supply wave will soon start to hit. Look for 1-story rental units in warm areas with good medical facilities.
Such as...???
It's not a "bubble" if they pass amnesty with zirp and statee income, it's easy to drive rents/prices if you can control new housing and new people (immigration).
I have a cousin looking at buying a house in the San Fran area with a price target of 1.5. He's currently renting and is debating whether to buy, but he can't justify making the purchase. He's been outbid twice already by Chinese nationals who buy homes for their middle-age children and pay cash.
Flip That House Script
Scene 5:
Screen Captions:
Purchase Price:
$429,000
Improvements & Carry Costs
$65,000
Listing Price:
$700,000
Potential Profit:
$206,000!!!
[Cut to sellers enjoying wine and cheese.]
Fuck that show. I want to see the real show where the flipped property never makes it to escrow, meanwhile the seller's ARM loan rate keeps on climbing...
Yeah, it's stunning price jumps ... on collapsing volume -- all because the available inventory is tight.
It's already failing, though. The C-S index lags by several months. But we're already seeing the private equity money bugging out. Mortgage apps were falling off well before the recent rise in interest rates, which will kill off what was left of this so-called "recovery."
Tyler, you are wrong on Yuma, AZ.
A) Entry level wages in Yuma pay less than government benefits. WAY less. Employers can't find anyone to fill positions because nobody wants to work when they can sit at home and receive double minimum wage.
B) Vast majority of those collecting unemployment in Yuma are registered there but living in Mexico. They come across the border, collect unemployment (many of them a few times, one under "Maria Guadalupe Fernandez Garcia" and then again under "Guadalupe Maria Garcia Fernandez"). They can receive U.S. cost-of-living based unemployment, and then spend it in Mexico where the money goes pretty far.
C) Buyers of housing in Yuma include (1) government-subsidized recipients and those taking gov't subsidized homepath renovation loans (which don't appear to be ending), and (2) even moreso, wealthy Canadians and Americans from the midwest who are buying second homes for seasonal stay. What is the unemployment rate of Minneapolis, Salt Lake, or Vancouver, B.C. ? Because those are the incomes that are relevent when considering support for Yuma real estate. The population of Yuma triples in the winter. These residents do not work in Yuma, but they own property. These part time residents do not factor into statistics on income or poverty rates either. When half of the city are "non-residents" statistics are incredibly scewed.
D) Is it really a bubble when you can buy a two bedroom for 120K in a middle-class neighborhood?
E) Government expansion in this area is huge. Border control, military, defense, NASA, GM and others are moving into the area from Silicon Valley and other locales, driving up the price of real estate.
F) Unemployment rates also reflect seasonal workers who work in agriculture and declare unemployment in the off-season.
G) Yuma is a cash society. Mexicans deal in cash. Call me a racist, but its the truth. If you can make more than minimum wage in welfare, HUD housing, EBT, free childcare, etc, and work cash on the side, why would you work a legal job for $7 - $8 an hour?
H) Look up the number of defense contractors in Yuma. Hotels are filled with contractors and families that are waiting to find more permanent housing.
I) As retirees find that social security gets them nothing, finding a place where you can live on $24,000 comfortably in the sun provides demand for housing. Grandma and Grandpa and their poodle can sit in the sun and collect social security, get all the healthcare they need from across the border, and live on $2,000 a month without effort. They would spend a few hundred dollars a month just heating their homes back in Minnesota.
Do a little research and you'll find that Yuma is hardly a bubble. If anything it skipped the housing boom of the late 1990's and early 2000's and is trying to catch up. My guess is those who provided this analysis claiming Yuma to be a bubble have not spent much time there.