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The Bifurcated Housing Bubble; From "Why Didn't I Buy?" To "This Is Crazy"

Tyler Durden's picture





 

Never was 'location, location, location' more important than in the current housing 'recovery'. From the Bay Area to Pittsburgh and from Denver to Oklahoma, the divergence in price movements is incredible. As the WSJ reports, while headlines gloat of several cities enjoying full-scale rebounds, these cities are largely exceptions with prices in many part of the US still well below the peak. In some 1,500 cities, values are still at least 25% lower than their previous highs. For the 'bubble' zip-sodes, "what you've got is something other than a sensible market-deciding price. You've got it goosed by the terms of finance, which are extraordinary," warns one realist realtor, "prices shouldn't be up this high, this quickly. It's a big, flapping yellow flag saying we're back in territory that we should not be in."

Massive divergence in price gains and losses from the 2008 peak...

 

Via WSJ,

Home prices have zipped back into record territory in a handful of American cities, a milestone that comes seven years after the housing bust ravaged the market and the broader economy.

 

Values are up more than 13% from their 2007 high in Oklahoma City and by more than 6% in the Denver metro area. Prices are back to all-time highs in 10 of the nation's 50 largest metropolitan areas

 

...

 

Home prices in some parts of the country that did experience a bust have benefited from low supplies of homes for sale and historically low interest rates that have boosted prices—and sparked concerns that prices could again be overvalued.

 

...

 

But in those areas that did experience a downturn, he added, "I'm surprised that we are back to peak levels so quickly."

 

...

 

Nearly 10% of municipalities have seen prices reach new highs this year when compared with their previous peak, and prices are within 5% of their previous highs in 300 more.

 

These cities are largely exceptions, and prices in many parts of the U.S. are still well below their peak. In some 1,500 cities, values are still at least 25% lower than their previous highs.

 

...

 

The Zillow data also reveal the extreme variation—even within a particular metropolitan area—of the housing boom, bust and recovery. Prices are up 40% from their prior highs in Palo Alto, Calif., which is just 50 miles from San Pablo, a working-class suburb north of Oakland. Values there are still 54% below their peak.

 

...

 

Some well-off communities in coastal California, Boston and Washington, D.C., which saw modest price declines during the bust, are rebounding quickly and reaching new highs because of supply shortages and better-than-average job growth.

 

...

 

Some economists worry that home buyers along the coasts could again be looking at homes as investments rather than as places to live.

 

To the extent that gains aren't supported by rising rents or incomes, "you start to go, 'Geez, did people get a little too excited?' "

 

...

 

"They say, 'This is crazy. This can't continue,'" she said. "The rest are like, 'Why didn't I buy in 2010 or 2011?' "

 

...

 

 

"What you've got is something other than a sensible market-deciding price. You've got it goosed by the terms of finance, which are extraordinary," said Robert Albertson, chief strategist at Sandler O'Neill + Partners, an investment-banking firm in New York. "Prices shouldn't be up this high, this quickly. It's a big, flapping yellow flag saying we're back in territory that we should not be in."

 


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Mon, 12/30/2013 - 19:32 | Link to Comment you can't fix stupid
you can't fix stupid's picture

white flight?

Mon, 12/30/2013 - 20:19 | Link to Comment aVileRat
aVileRat's picture

nah

Price caps and municipal tax havens. Ask the eloquent Marissa Mayer on what sort of honey deal she got to buy a whole city block which led to a 28% bump in housing prices week over week.

Expect this go to full retard 2014 when those "undervalued" home zones start to shift to a pro-bubble policy of tax breaks.

 

Mon, 12/30/2013 - 20:32 | Link to Comment lordbyroniv
lordbyroniv's picture

My cunt sister in law bought in 2006 and stopped paying her mortgage in 2008.  Still....NO FORECLOSURE !!!

I will NEVER buy real estate EVER because why would I buy property when my cunt sister in law has now gotten 6 YEARS....Free living...

 

NO RENT...NO MORTGAGE PAYMENT....

 

And Bank of America who holds the note has proven to me...they have no nuts.

 

Buy THAT dream???  FUCK NO!!!!!!!!!!!!

GET OUT OF THE SYSTEM !!!

 

Its coming............bitchez !!!!!!!!

 

[soon please dear god....because I cant take much more of this pretend economy]

 

http://www.youtube.com/watch?v=-0SmXVrLlZ4

Mon, 12/30/2013 - 20:56 | Link to Comment NickVegas
NickVegas's picture

You Sir, are the cunt, the dupe, the mark. Your enlightened sister in law took the fight straight at the evil, and kicked their asses fair and square. What I see is a bitter loser, afraid to take chances in the new paradigm. I feel for your frustration for being cursed wiith a weak mind, and a limp spine.

Tue, 12/31/2013 - 06:36 | Link to Comment Miles Ahead
Miles Ahead's picture

Whew, brutal. But spot on.  But he/she can take comfort in the fact that there are 17 other miserable souls that feel his pain also.  What was Sis-in-law supposed to do?  Send BOA some money?  lol...

You are spot on: new paradigm, enlightened, the evil, cursed, weak, and limp.  My goodness.

Tue, 12/31/2013 - 13:46 | Link to Comment Blankenstein
Blankenstein's picture

You mean kicked the honest citizens' and the taxpayers' asses.  YOU are the loser.  If you think this hurts the banks, you are truly an idiot.

Tue, 12/31/2013 - 18:46 | Link to Comment lordbyroniv
lordbyroniv's picture

 

 

Im the cunt?  Lol.  Whatever asshole.

Listen you little bitch....

When bad behavior is rewarded....and good behaviour is punished....

dont come crying to me when the world melts upside down and you end up in a fetal position.

And....if u think u r immune from an incentives peverse world [which you seem to believe is a good thing]........

talk to me in 10 years.

 

LATER BITCH !!!

 

 

 

 

Mon, 12/30/2013 - 22:01 | Link to Comment optimator
optimator's picture

So the bank would rather not take a loss and even pays the property tax?  The banksters are pretty suref that the Bernk will get those prices up sooner or later.

Tue, 12/31/2013 - 01:42 | Link to Comment Falling Down
Falling Down's picture

As mentioned before here by some folks, we have millions of homes on the sidelines in this country. Saw it first-hand in Columbia, SC, where we lived for a few years before escaping that hell-hole. Post-war houses were going for retard money back in '07, ranches with no updates and even had the old two-prong outlets, and needed repairs, a roof, HVAC, etc., were going for $200K. Not as bad as Atlanta, but bad enough that we got the fuck out of there after the poop storm hit.

 

Flash forward to 2010, we're getting ready to leave, and out of curiosity I perused the local real estate classifieds. Right in our litle 'hood, what had been $190-$220KK houses were now in the $120K-$140K range, if that, and several right on our street were vacant.

 

How could it be the houses were vacant for many months, or even years? The fucking banks (Chase, BoA, Wachovia (now Wells), etc.) were keeping the houses technically out of the market, while still listin them as "For Sale". These places were dumps, some idiots who'd bought into the market and then were foreclosed on had squatted in them, etc.What's up with those houses, now? Either A) Just now hitting the market, or B) Still off the market, as in nobody wants the place, not een the bank. It was so bad re: handing out loans like candy, 18 and 19 year old with no credit were getting houses roughly around '05 and into '06.

 

We paid for this shit, folks, all of us who pay federal taxes, and we'll be paying for it for decades.

 

The banks got in cahoots with the realtors, and set up shell companies to list the properties, but not sell them. I'm sure this happened in many, many metros. Yet the Fed and other bad actors will fuel this charade for years to come.

 

 

 

 

 

 

 

 

 

Mon, 12/30/2013 - 23:55 | Link to Comment A Nanny Moose
A Nanny Moose's picture

I will drink to this. I've got R/E fucktards trying to push me into buying R/E....again....at all time highs. FFS

Tue, 12/31/2013 - 01:04 | Link to Comment Freddie
Freddie's picture

I bet Christmas and Thanskgiving was "interesting."

This bizarre because I bet there are millions in the same boat. I don't know that many people but someone I know, knows a guy who has been pulling the same scam since probably 2006. 

Met a bright guy who was pitching his company's product.  He did all the paperwork, chain of title stuff/Linda Green and the bank totally backed off - maybe forever.  I did not buy the service he was selling.

I would bet millions of people living in nice homes for free and the economy is still in a depression.

Tue, 12/31/2013 - 08:35 | Link to Comment j0nx
j0nx's picture

You see I find these accounts to be bullshit because here in my neck of the woods outside DC the banks will take your shit in 3-6 months if you aren't paying your note each time, every time, no matter WHO the bank is. Banks don't fuck around anymore seizing homes like they did in 2008-2010. Our realtor contacts have all verified this.

Tue, 12/31/2013 - 10:00 | Link to Comment migra
migra's picture

In California you can live in a house for 3 or 4 years without making a payment. Its no joke.

Tue, 12/31/2013 - 13:37 | Link to Comment glenlloyd
glenlloyd's picture

They will only take back houses they know can be sold at a premium. If the property value is less than what it can be taken and resold for they won't touch it.

The banks know where the bubble zips are and where it's safe to take back a house without having to write down the mortgage or mess around with the RMBS.

Mon, 12/30/2013 - 20:46 | Link to Comment zerozulu
zerozulu's picture

Its rising with inflation.

Mon, 12/30/2013 - 19:36 | Link to Comment ZH Snob
ZH Snob's picture

ouch.

Mon, 12/30/2013 - 19:51 | Link to Comment Deathrips
Deathrips's picture

Affordabilitys a bitch...what happens when price con-trolls (negative or positive) replace free markets?

 

A fat steamer flys into the fan....again.

 

I need a drink...fuck these assholes.

 

FUCK YOU BERNANKE, OL YELLER, DIMON, GS, TBTF, TPTB and my idiot fuck liberal neighbor.

While im at it FUCK my conservative buddy that swears its Oba..what ever his name is.

/Rant off/

 

They are taking away independence from you, creating state dependence. Learn to take care of yourself while you can.

 

 

RIPS

 

 

Mon, 12/30/2013 - 19:55 | Link to Comment nope-1004
nope-1004's picture

In a credit based ponzi system where the only way to increase sales is to lower lending standards (bringing future sales forward), price is paramount because the only thing that matters is the underwritten collateral.  Once price falls / craters / corrects, insolvency becomes bankruptcy for the lenders.  Simple as that.  In a credit based system, collateral is everything - and the market price of said collateral HAS TO remain high or increase, otherwise why should I pay back the loan?

It's a FED manufactured housing bubble 2.0.  And guess how it will end?

 

Mon, 12/30/2013 - 20:05 | Link to Comment negative rates
negative rates's picture

Badly I presume.

Mon, 12/30/2013 - 20:09 | Link to Comment drooley
drooley's picture

..with another bailout from the peasants.

Mon, 12/30/2013 - 23:48 | Link to Comment NihilistZero
NihilistZero's picture

 

So given your theory Nope-1004, there is only one option, BTFD :-)

 From one bubble to the next, round and round we go.

 

 

 

Tue, 12/31/2013 - 01:45 | Link to Comment Falling Down
Falling Down's picture

+1

 

Mon, 12/30/2013 - 19:40 | Link to Comment Real Estate Banksta
Real Estate Banksta's picture

Rich getting richer and driving up housing in the rich areas.

Mon, 12/30/2013 - 19:42 | Link to Comment illmatic
illmatic's picture

Bubbles are everywhere, and yet central bankers refuse to acknowledge them. Check out this post: http://shitcentralbankerssay.com/?p=666

Mon, 12/30/2013 - 19:51 | Link to Comment scraping_by
scraping_by's picture

I've always suspected this hedge fund driven bubble was done on automatic. Business rule that chooses out areas by zip code (standard local grouping) and puts in automatic bids on Homepath or to the local agent.

The point is, of course, exchange traded securities built on the mortgages. Instead of people naive enough to trust a loan officer's assurance this was the same housing help their parents and grandparents got, we have clear-eyed renters who sign ironclad leases. Lots of people around with upper middle class incomes. More every day.

And even if that doesn't work out, house prices always go nowhere but up, right?

What could go wrong?

Mon, 12/30/2013 - 19:51 | Link to Comment I am Jobe
I am Jobe's picture

The Dream The Dream, the Hope. Fuck 

Mon, 12/30/2013 - 19:55 | Link to Comment MSO
MSO's picture

Once again, our politicians auction off the power and perqs of government to the highest bidder and we dumba$$ voter scream and yell at the rich, the banks and the crony capitalists.

It's the politicians, stupid.

Mon, 12/30/2013 - 20:05 | Link to Comment ebworthen
ebworthen's picture

Housing Bubble Part II.

New actors and extras - same studio, director, producer, and crew.

Mon, 12/30/2013 - 20:14 | Link to Comment Seasmoke
Seasmoke's picture

The Weinsteins.

Mon, 12/30/2013 - 20:07 | Link to Comment DOGGONE
Mon, 12/30/2013 - 20:19 | Link to Comment WarPony
WarPony's picture

Houston, we don't have a problem - west side.  It's boom town and the amount of new commercial, apartment and small business construction is off the chain. This bubble has solid legs and it's not letting up. Real estate purchased at the crash price (2010-11) is up 50% and isn't looking back.  Foreigners, foreign and domestic, have shown that this is where the growth (oil) is as the influx has been incredibly extreme. Might not last, but it's definitely bullish, for now and into the foreseeable future, discounting Armageddon or a zombie apocalypse yet we're armed to the teeth as well.

Mon, 12/30/2013 - 20:38 | Link to Comment falconflight
falconflight's picture

DFW Metroplex, Austin, and San Antonio are all fairing pretty well.  Much of Texas escaped the bust, it was more of a gentle glide down.

Tue, 12/31/2013 - 01:08 | Link to Comment Freddie
Freddie's picture

Oil, nat gas, tech and people with money fleeing Cailfornia and drug cartel money.  Lots of drug cartel money.  Probably like Miami in the early 1980s.   This is what is behind the push for open borders.

Mon, 12/30/2013 - 21:33 | Link to Comment jcaz
jcaz's picture

"...This bubble has solid legs..."

And......  There's your top.....

Mon, 12/30/2013 - 21:49 | Link to Comment Mongoose
Mongoose's picture

Coworker of mine lives SW (Richmond area) most of the neighboors on his street are "fereigners". And yes H-town is doing well.  Like it or hate it, it has become quite "international" in the last 30 or so years. You still see a few more Stetsons than Sikh turbans but you do see Sikh turbans. Makes me laugh that it still has the red neck/roughneck image to a large degree among the low info crowd from north of I-10. 

Mon, 12/30/2013 - 20:31 | Link to Comment Clowns on Acid
Clowns on Acid's picture

QE ^ is sooooo cool.....

Mon, 12/30/2013 - 20:36 | Link to Comment falconflight
falconflight's picture

Considering all of the economic data related to employment, i.e. labor participation rate, working age pop. ratio, full time versus part time job creation, U6, ect., we all know already just how thin and brittle is the housing market.  For all those people competing w/ the investors/cash only crowds in SF and other locales, personally, jmo, you're stupid proles who learned nothing since 2008-2009, and if you lose your asses in the collapse, you'll rant and rave about being cheated and cry out for gov't largess.  I have no sympathy for you When it happens again.

Tue, 12/31/2013 - 01:53 | Link to Comment Falling Down
Falling Down's picture

+1

 

The hoarders of capital, backed up by Uncle Ben (and now Yellen), will make it so.

 

They're not stupid, the right optics on the evening news and in the MSM will bring about more bailouts.

Mon, 12/30/2013 - 21:05 | Link to Comment 22winmag
22winmag's picture

Smells like white people (and some brown people with money) fleeing to better parts.

Mon, 12/30/2013 - 21:32 | Link to Comment adr
adr's picture

Recieved an offer on my house, $100k. $35k less than the supposed bottom price I paid in 2009 and a whopping $75k less than the last bubble valuation in 2006.

Middle class white neighborhood with no section 8, 92% white 6% asian and school rank 8. Town was named one of the best 100 places to live in America.

There is no recovery for the white middle class.

Mon, 12/30/2013 - 22:33 | Link to Comment Law97
Law97's picture

Absolutely.  I own several rental properties in several very nice solid white middle class areas.  A couple I've owned since the mid 90's.  Property values have dropped to what they were 15 years ago and, while stabilized in the last year or so, are showing no signs of coming back.  Still 40% below 2006/2007 peaks. 

On the other hand, I have a number of close friends and family who own homes in top 1% areas and have seen their property values positively soar in the last 3 years.  A good friend of mine in particular has flipped 3 homes in the $2-3 million range in the Dallas area and has made between $300K to $500K each time with the holding period only 4-6 months.  Dallas is a great example.  The very best area, Highland Park, has seen 50% appreciation since the bottom in 2009/2010, and thye middle class areas are still dropping. 

Residential real estate is a microcosm of what we are seeing all around us in the economy:  anything to do with the middle class is dropping in value, including businesses that serve the middle class (JC Penny, Olive Garden, etc.).  And anything serving the top 1% is doing like gangbusters (Tiffany's, Aspen real estate, 1970 Chysler Barracuda's, Picasso's). 

Inflation for anything the top 1% wants or has and deflation for everybody else. 

Mon, 12/30/2013 - 22:35 | Link to Comment El Vaquero
El Vaquero's picture

 

Inflation for anything the top 1% wants or has and deflation for everybody else. 

 

LOL, the diminishing returns of QE.

 

I would say the deflation for everybody else does not extend to necessities though. 

Tue, 12/31/2013 - 08:14 | Link to Comment Ayr Rand
Ayr Rand's picture

Obama. Destroyer of the middle class. That is why he was elected.

 

Mon, 12/30/2013 - 21:47 | Link to Comment Pines
Pines's picture

A bit of anecdotal information based on my personal situation.  I'm currently living in a house as the caretaker while the owner, a close friend of mine, completes his graduate degree in New Mexico.  He bought the house in 2008 for the tidy sum of $9,900.  The previous owner paid $83,500 in 2004.  Current value of the house on Zillow is around $43,000.

 

The roller-coaster ride is far from over.

Mon, 12/30/2013 - 22:01 | Link to Comment Clowns on Acid
Clowns on Acid's picture

How is Detroit these days..?

Mon, 12/30/2013 - 22:04 | Link to Comment Pines
Pines's picture

Good question, and interesting that you ask.  I'm in the same state.

Tue, 12/31/2013 - 00:47 | Link to Comment el Gallinazo
el Gallinazo's picture

Bill Gates walks into a restaurant and suddenly the average (mean) net worth of everyone in the building is over a billion dollars.  I am a big fan of the median average.  Mean averages for these sorts of statistics hide how the middle class is getting fucked.

Tue, 12/31/2013 - 05:00 | Link to Comment Magnum
Magnum's picture

I bought a foreclosure in 2008, albeit way too early because prices came down further, but for nearly 6 years tenants have paid down the mortgage $300 per month, and I've enjoyed nice tax breaks.  All-in-all I've earned about 8% per year on a $120k cash investment. I  looked at recent sales in the area--back up to bubble level.  Very nice.

This might be an investment I do ok on.  

What about all the guys in 2011/12 who emptied their accounts of "fiat" about loaded up the truck on gold & silver?  I know one and he's not talking to me...

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