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Vacation-Home Sales Hit Record, Proving Rich People Still Rich
Repeat foreclosures may be on the rise and the underwater mortgage may now be a permanent fixture in the US housing market, but you can certainly forgive the 0.01% — for whom none of that is relevant — for not caring because when your net worth exceeds $30 million, the question isn’t “can I pay my mortgage?,” but rather “where should my fifth residence be?” For these buyers, who understand Janet Yellen’s contention that accumulating financial assets is important and who have thus benefited from the fabled “wealth effect,” it’s as good a time as any to buy (another) vacation home, which is why vacation home sales soared nearly 60% last year on top of 30% the year before that. Furthermore, one in five home sales in the US is now a vacation home and as Moody’s told WSJ, there’s no reason why that figure shouldn’t rise going forward — “more or less.”
Via WSJ:
Last year’s estimated tally topped the previous high from 2006 to become the biggest year for vacation-home sales volume since the Realtor association started tracking the market in 2003. Vacation homes accounted for 21% of all sales last year, the highest share since the survey’s inception.
The small sample size of the Realtor group’s survey, which was based on responses by just 1,971 people who bought U.S. homes in 2014, led some economists to posit that the results might be exaggerated. Mark Zandi, chief economist for Moody’s Analytics, suggested that the gains in the report might “overstate the strength” of that market.
Still, Mr. Zandi noted that vacation-home sales account for one-fifth of all home sales and “that should more or less rise over the next five to 10 years” as the income and number of vacation-home buyers increases...
The number of buyers is likely to grow in the years ahead as 76 million-plus baby boomers advance in age and buy vacation homes that eventually will become retirement homes.
Meanwhile, the prospect of rising prices has spurred buyers to act sooner than later. Rates on 30-year, fixed-rate mortgages, which have hovered below 4% since November, are poised to rise later this year as the Federal Reserve increases short-term rates. And median resale prices on all homes, which increased by 7.5% from a year ago to $202,600 in February, are likely to rise further if the overall inventory of homes available for sale remains tight.
Kris Anderson, team leader with Your Premier Team at ReMax Excalibur in Scottsdale, Ariz., said her team of six agents handled 10% more vacation-home transactions last year than in 2013...
Two of her agency’s clients, Steven and Roberta Strader, bought a three-bedroom home in Surprise, Ariz., last month with the intent of spending up to five months a year in it. The couple, both 72 years old, split time between Arizona and Lacey, Wash.
Mr. Strader said the value of an Arizona condo that he and his wife bought in 2005 had risen enough to justify selling it this year and combining those proceeds with some stock-market gains to buy the house in Surprise for $225,000. “We felt that the market was strong enough that we could take some assets to spread around in more than just stocks,” he said.
With the global population of ultra high net worth individuals growing at a 6% annual clip, and with the middle class set to becomes extinct thanks to, among other things, slumping wage growth for everyone other than America’s “supervisors,” we suspect Moody’s may be correct to forecast robust demand for vacation homes going forward, which we suppose is a good thing for the US because as we noted less than a week ago, the US is the most popular country on the planet when it comes to secondary residence purchases by the world’s 0.01 percenters and New York boasts the largest number of ultra high net worth individual-owned residences in the world.
Meanwhile, in Russian oligarch world, economic instability and the prospect of having to pay taxes is becoming too much to bear which is why, as The Telegraph reports, the 111 people who control 20% of Russia's household wealth won't be buying their next vacation home in Russia:
Russia’s richest and most powerful are set to leave in droves, seeking to avoid a tax squeeze and the fallout from the country's economic crisis.
The majority of oligarchs interviewed for a new report on Russian have said that they are likely to leave the country in the next few years. Of the 30 Russian nationals included in a study by Campden Wealth, in partnership with UBS, more than half said that there were likely to move abroad, although not imminently.
Of those living in Russia, more than one in four said they had plans to leave within five years. Participants in the Campden study jointly control $2.5bn (£1.7bn) of personal wealth, and businesses with turnover of $6.5bn last year.
One Russian national interviewed by Campden said: “Russians, if they haven’t done so already, are considering relocation out of Russia. Clearly London is a key jurisdiction of choice.”
New rules introduced at the start of the year have meant that foreign business owned by Russians are now subject to Russian taxes, putting the squeeze on the wealthiest in a country where just 111 individuals control nearly a fifth of all household wealth.
So Russian oligarchs are unhappy with the domestic situation and as Wealth-X and Sotheby's have shown, this is a group that's already predisposed to "invest" in secondary (and tertiary, and on and on) dwellings:
* * *
And so, even as a slumping Brazilian real chokes Miami's luxury condo boom, the market for secondary "vacation" residences and by extension, the money-laundering-via-US-real-estate-purchases trade, may yet remain intact, which we guess is a good thing ... "more or less."
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You mean bug-out/escape the increasingly aware masses villas?
For anyone looking for a deep, hearty belly laugh, check out this sponsored bozo: Doug Haldeman. I was listening to this on the way home through St. Louis and there were several classics:
They mentioned the 20% mortgage interest rates in the 80's (obviously not mentioning the Federal Reserve); also, they said that whole idea of paying down mortgage debt to build equity was such a quaint idea because that was from the Great Depression when banks could call in the loans at any time (like that could never happen again).
He was spouting that you're going to have a monthly payment anyways, so what the hell, get a mortgage! And while you're at it, get a big, long mortgage because you're going to reap half a million from the increase in home values over 20 years. This stuff is so easy!
Get this - this Doug guy mentioned that he got a divorce right when the stock market crashed in 2008 and it was a good thing he didn't have equity in his house or he would have lost a lot more! Oh yeah, and he tried "refuting" that house prices have been rising faster than income because leaving out that 25% of places where incomes have been rising distorts the picture (citing an NAR study, of course).
I swear I couldn't stop laughing the whole time. PLEASE let this be a sign of the top...
http://www.doughaldeman.com/11-great-reasons-to-carry-a-big-long-mortgage/
Eat the rich
Tonights entree is Kerry a la Heinz.
Followed by Koch a la douche.
Sure. In Venezuela, the guy with a case of toilet paper is the new rich. Class warfare never gets old. Socialist politicians and their oligarchs destroy the middle class by redistributing their wealth and making selective laws for their own benefit, all while blaming the rich and promising justice.
When rich people lose, they make a new rule saying they actually won.
Define Rich. Democrats struggle with this definiton. Over 100k per year or 250k per couple is the consensus.
$100k in Cali/NYC/Mass is not rich. In East TX you're doing alright. Oh yeah, what's a vacation?
They will be easy targets for the discerning vigilante.
Rich people buy things. Thanks for the information........
Gee, I'd love to buy a Vacation Basement so I can get away on weekends. No way I can swing a purchase like that right now, however.
Try starting your own reality TV show called 'Basement Swap'.......
i smell global recession/depression ... with the concentration of wealth reportedly in the hands of so few how can transp. industry, recreation / travel industries, auto manufactureres, housing glut, etc... possibly prosper or even hold on. Probably near on half of the customer base of 10 yrs. ago is dead in the water - shoulda just injected that money at the street level and let it percolate upwards, it's all bad ideas, but that mighta kept the music playing longer
Imagine, if you would, the French Revolution, but this time on a world wide scale...
We're already in one.
Check this:
I'm a millenial and I worked at one of the biggest insurance companies for about a year before i took my current job.
I could count on one hand the number of people there under 30, two if it was during the summer and the interns were there. Their corporate park is fucking huge too.
I now work at a finanical services company and they did everything in their power to bone me down on my pay, but I needed the benefits since the last place I worked with was not hiring ANYONE unless they were at VP/AVP level (ie; middle management)
The product line I was supporting wasnt moving because ...people everywhere are getting squeezed and realizing that any day might be their last day on the treadmill.
The economy, if you want to call it that, is nonexistant and if you factor in how many millenials will never buy a house (MOST OF THEM) ..it's gonna be pretty crazy the next decade or so.
Alot of people are going to be up shits creek due to lack of demand.
Dont worry though, our police force is being trained by the best (The Israeli Defense Force) so when you get kicked out of your home because you lost your job and can't pay your mortgage, expect to get rounded up and brought to a FEMA camp where you can be re-programmed or forced into hard labor.
OR
Get shot right in the fucking head, just like the Palestinians do.
~DipshitMiddleClassWhiteKid
I think this is the truth. Counting downsizing as "vacation homes." At least that's most of the real estate movement I"m seeing. Real estate won't get healthy until the millennials do, as in probably never.
Baby boomers have already bought their last vacation home. Pensioners and anyone depending on past gov promises will be the 1st to feel the crunch. Only income producing RE will maintain value and only in specific areas.
"I love rich people" - jerry Maguire...oh, wait.
This is worrying. Bergamo to become Italy's first cashless city.
http://www.pangeatoday.com/bergamo-to-become-italys-first-cashless-city/
I'm going to look into moving out East somewhere. I'm not having this crap coming anywhere near me.
Wrong link first off apologies
They have me sorrounded at UCLA: Brentwood to the west, BelAire to the North, Berverly Hills to the east and Westwood to the south. Rich people everywhere. Rich people everywhere. Help! The kids are loaded too. Maybe they would like to buy some Bitcoin.
"....the 111 people who control 20% of Russia's household wealth won't be buying their next vacation home in Russia."
Wait, wut?
This cannot be! St.Pooty is for ze common Russian komrade! He against da oligarchs, swept dem aside!
Is no obviously transparent fallacy sacred anymore! ;-)
Rather those 111 have figured out that Putin isn't going to be removed by the West's shambolic attempts at economic sabotage, and the sooner they move on and take as much of their ill-gotten gains with them as they can, the better.
The oligarchs are a product of the kleptocratic basket-case that was Yeltsin's Russia, the bad old days to which fifth-columnists like Nemtsov (may he burn in hell) would return Russia in a heartbeat. Putin has spent the last 15 years undoing the damage, and he's far from finished. Because in Putin's Russia, rich fifth-columinsts are routinely sent to prison and have their assets confiscated, the 111 know they're living on borrowed time.
lol. Is this you?
http://www.theguardian.com/world/2015/apr/02/putin-kremlin-inside-russia...
I haven't had a vacation in 20 years. Think i'll go outside. Come back in. Watch the Ten Commandmensts. Wait for Heston to part the Red Sea(favorite part). And wait for Edwaed G. to say "Where's your Moses Now". Happy Easter.
Brentwood, Bel Aire/ Beverly Hills are also surrounded by tens of thousands of lower income and EBT types. Not counting organized gangs in the in cities. All of this in very close proximity to each other. Sooner or later they will be coming to collect from the rich in one form or another. Has happened many times in history.
Sooner or later, even the richest people in the world don't want any more credit...
http://www.globaldeflationnews.com/jaguar-inflation-a-laymans-explanatio...
They may be stupidly rich, but i fucked a policewoman last night. You can keep up with the joneses all day, but you still cant hang with " I fucked the law and I won".
I take my bow and mic drop.......
interesting, and misleading, commingling of billionaire discussion with folks buying a second $225k home.
doesn't pass the smell test. sorry.
Let the rich fuck each other up with homes.
Oh did Moody's also guarantee that there would be wealthy buyers over the next ten years to buy these more expensive properties? Just like they guarantee America's credit rating will be AAA? Moodys knows how to stay on the good side of.gov- or get their pants sued off.
So the richest members of Russia's fifth-column have finally despaired of overthrowing Vladimir Putin and are moving on to countries where their money still puts them above human law? Heavens. You'd think that was a bad thing.
If the report is true, their loss is Russia's gain.
Better be buying where it will be WARM, because the AGW premise is bullshit....cooked up to fool the masses. The Sun is going into a COLD PHASE, first time since the War of 1812 (& let's hope it ends after 40-60 yrs, because often enough, it didn't---hence, a "Little Ice Age")
http://iceagenow.info/2015/01/dramatic-drop-sunspot-activity/
Here's is how some of the uberwealthy spend their money and time.
http://aboardtheworld.com/
I must confess, I like the concept. I suspect this is where more and more of that particular tribe will be riding out the various storms looming on the near horizon.
Marketers refer to the bottom 80% of Americans as the "trash class" since they can no longer afford to buy the stuff that is peddled to them on TV and on the inter-web
Every fifth house a vacation house? That's total nonsense.
What counts as a vacation home? Is it the type of building it is, or is it whether the person has another house already, or their "intent" in buying it?
In eastern CT, you can now get a shack by a lake for under 70k (which is really cheap for a low-crime area of CT). Are the people who discover that they are old and poor and buy and move into one of these tiny dumps (actually I kind of like them; they're cozy) "buying a vacation home"? Or if they still have their suburban house and are trying to unload it and know they'll be needing a permanent place (so this is a second home just for now), does it still count as "buying a vacation home"?
I think some of this is people finding their cheap final location; not really the same as people planning to permanently own two places, one of them for vacation times.
One often wonders whether these people think that they live in a different world or whether they are aware of only their own world.
The paradox of course is that vacation homes and vacated homes are hitting records in recent years at the same time.
I deal with quite a few extremely rich people. Aside from their 10 million dollar homes, three maids, chauffeurs, and 3-4 skiing/yachting vacations a year, they're pretty much just like me. They all made their money honestly, and are down to earth and respectful. I'd rather have my simple life, but they seem to be happy. Money hasn't really done them any harm and they don't seem to have harmed anyone.
I'm sure the author took out all the houses that Blackstone et al bought with free loans from the FED before he wrote this piece of crap.
Funny how they even have an assessment on what is the reason for the purchase of the home yet NAR can't get their manipulated pending home sales right.