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"We've Run Out Of Buyers" - Half Of Homes In New York Are Now Losing Value
Late last month, when we reported that Case-Shiller's 20-City home price index missed expectations for the 3rd month in a row in June, bringing the string of flat price appreciation to 5 months, we said that perhaps, just perhaps, another pillar of the 'strong' US economy meme is being kicked out. We also noted that a Fed hike would be just about the last thing the housing market needs.
Well don’t look now but according to a new index created by Allan Weiss (co-founder of the Case-Shiller home price indexes), nearly half of homes in the New York and Washington metropolitan areas are falling in value by at least 2%.
More from Bloomberg:
The values of 45 percent of houses in both the Washington and New York areas slumped by at least 2 percent in June from a year earlier, according to a new index created by Allan Weiss, co-founder of the Case-Shiller home price indexes. In June 2014, only 15 percent of Washington residences dropped in value, while 20 percent fell in New York. Because the index is of only single-family homes, it doesn't include Manhattan. More properties also were in decline in Los Angeles, Chicago, Phoenix and Miami.
A steady rise in U.S. home prices since the bottom of the market combined with weak income growth has made housing less affordable, especially in big cities. Credit remains tight and demand is now being driven primarily by buyers dependent on mortgages, as foreign buyers and investors pull back from the market.
"What happens in any bull asset bubble such as what we've seen is you run out of buyers," said Chris Whalen, senior managing director at Kroll Bond Rating Agency Inc. and an advisor to Weiss. "It's hard to get deals done if the bottom third can't get a mortgage."
So there folks, is your "robust" housing market. A market which was previously dependent on “foreign buyers” (so, money laundering oligarchs, wealthy Chinese avoiding capital controls, Brazilians fleeing political turmoil and riding high on a previously strong BRL, etc.) and which is cratering now that it’s dependent upon demand from “the bottom third” who apparently can’t get a mortgage even with FHFA lowering minimum down payments and FHA cutting premiums.
Of course none of this is helped by the fact that anyone trying to save for a down payment can’t get over the hump due to the inexorable rise in rents, which is itself the product of the 2008 bust which transformed a nation of homeowners into a nation of renters and served to erase two decades of gains in the homeownership rate in the space of just seven years.
So yeah, go ahead and hike rates.
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Eh, no problem. Just rent 'em out on airbnb.
Meanwhile...LA residents spend 50% of their income on rent.
http://www.planbeconomics.com/2015/09/la-residents-now-spend-half-their....
Thats mind blowing.
Looks like Barry's gonna leave just in time.
No more working class jobs.
No more upward mobility.
= no more RE market. Period.
..unless you have access to all the free money you want of course...
isn't fascism great?
I bet we'll see price increases for run down "fixer uppers" in small towns, rural ares, swaps, deserts, avalanche zones, etc as moar people lmust leave shit holes like Eww York
Almost forgot about old rail cars, shipping containers, truck trailers...
Anybody else notice the support line break today?
Anyone?? Anyone??
https://www.youtube.com/watch?v=uhiCFdWeQfA
Anyone "saving" to buy a house should have just bought the fucking dip! -Janet Yellen
fill up your gas tanks and house oil tanks this week.
Who the hell wants to live in NY? Lower prices as people flee (low demand) is natural. Economics works!
~"Who the hell wants to live in NY?"~
Precisely.
Taxpayers Fleeing Democrat-Run States for Republican Onesno one lives in NY
they buy up real estate because they get greater returns than in the market (not forever). If you ever visit look at the residential buildings in manhattan around 8pm. No lights on. Most New Yorkers I know arent in bed at 8pm. And its not like they are all "out."
Endless libtard shitholes like NYC, Chicago, LA and more where the rob the citizens and flood more illegals into America. What a joke.
"Of course none of this is helped by the fact that anyone trying to save for a down payment"
By the time you save for that house, it's doubled in price and inflation has eaten away the rest of your savings.
Nope. The 1% are going to keep the RE market going.
"Perhaps their biggest bet is on the notion that Americans will move from owning homes to renting them. Since 2011, Blackstone has spent close to $10 billion buying nearly 50,000 homes in beaten-down real estate markets, including Arizona, Florida and Nevada.
Through its newly formed company, Invitation Homes, it fixes up homes and rents them to families. The idea is to create a nationwide landlord by providing better service than local alternatives.
Blackstone executives have said that they plan to take Invitation Homes public next year."
A local appraiser told me it is much easier to get construction loans for apartments right now than homes and condo's. Banks are still leery from the 2008 bust. Given that rents are up dramatically, it makes sense to me.
So that $175 million 64th thru 68th floor skyscraper condo in NYC will ease a few percent so I should wait a while before indicating interest, huh?
Good. I'll letcha know. No, don't call me I'll call you. No, I don't give out my e-mail. No you cannot have my mailing address. No, you're not coming home with me. No I won't leave crumbs behind me. Let go my arm. Stop! Go away! Quit following me. No I don't want lunch with you.
Ha ha ha.
Hurry up, China! BOFRE !!!
The higher they are, the harder they fall. These skyscrapers are un-inhabitable past the 10'th floor without hydro.
I asked why the executive floor at the Wells Fargo Building in L.A. was on the 12th floor, and not on the 54th, with the view out to Santa Monica. I was told that in the event of a natural disaster the hook and ladder truck could only extract people up to the 12th floor.
Cloverfield...?
I'm in Houston (no raise capital of america) and they're trying to raise my rent $250 a month on the new lease. Negative ghost rider
It was fat city in H-Town when WTI was 100 bucks a bbl. I wonder who's living in all those condos they're building along West Dallas, and the Washington area? I don't see any signs of slowdown in building either. What I do see is a whole bunch of for sale and for lease signs.
Sure as shit isn't getting any cheaper to build from scratch. Went to the hardware store yesterday and a small common machine screw no bigger than the tip of my pinkie finger was .24 fucking cents!
Should be a penny a piece at most.
Try buying more than one.
http://www.mcmaster.com/#machine-screws/=yskxj8
Oh really? You wanna start with me fuckhead? I'll crack you in the head with my ballbat!
Your foul language and empty threats of violence to a person that offered a helpful suggestion (to save money by buying in bulk), hasn't gone unnoticed by the universe.
The principle of inverse proportionality means that what you give is what you get.
I wish for peace, I hope you have peace.
I, too, want piece.
I want the right piece.
PartofOne - Did you not notice that his moniker is TSAThug. I travel through the TSA airport corridors every month and can confirm that this is how a TSAThug would respond to any objection to their policies no matter how stupid and counter intuitive it is. Their job is intimidation period. If you work for DHS and you are polite, you will be replaced.
I have a lyttle IQ test that I sometimes run. It's lotsa lolz.
The Golden Rule requires that I do to others what I wish done to me. I interjected in regards to TSAThug's response because I thought he was straying from the path of divinity. I would want someone to interject when they feel I am off course.
I am open to change.
I wish you and all, the right peace (or right piece), what ever you desire.
U mad, Bro?
McMaster Carr, best company on the internet
Nice selection of screws there -- but where are the Robertson ones?
Dont even get me going... I buy/refurb/sell motorcycles for a hobby. Not too long ago, a friend was looking at the three big plastic storage bins I have filled with all manner of hardware and hes lik, WTF, hoardmeister? I said to him, apparently you have not been in *any* hardware store lately to buy this stuff!
Have to pay all those taxes and pensions.
Have they thought of selling to Chinese?
I bet the NY number is mostly New Jersey.
Can't buy a house when you don't have a job, and can't keep a house when the taxes are $1000/month and up.
NY & NJ & PA..
Here as some dart throws at the Zillow interactive. Population density in these areas ranges from high to extreme...
-Pick any and go from there.
NJ:
http://www.zillow.com/visuals/negative-equity/#11/40.7649/-74.0108
http://www.zillow.com/visuals/negative-equity/#11/40.8419/-74.0060
http://www.zillow.com/visuals/negative-equity/#9/41.3789/-74.9734
NY:
http://www.zillow.com/visuals/negative-equity/#11/40.6577/-73.9325
http://www.zillow.com/visuals/negative-equity/#11/40.6577/-73.9325
http://www.zillow.com/visuals/negative-equity/#11/40.6577/-73.9325
http://www.zillow.com/visuals/negative-equity/#10/40.6577/-73.9325
Property taxes of $1,000/mo is cheap. In those new neighborhoods outside of Houston prop taxes are over 3.5%!
New schools, etc. My relatives there tell me it's going up again this year.
$5K is dirt cheap in Bergen County NJ.
I know people just outside of Pittsburgh paying $15K+
-The public schools in Fox Chapel must look like Star Fleet Academy...
Paying $1000/mth for property tax on a $350K house near Houston isn't cheap by any means; that's probably close to the mortgage payment itself.
Hopefully those new schools will teach students how to do simple arithmetic properly.
Home prices and rents cannot rise higher than incomes. At some point without income gains the homes can only rise so far. Now, your particular part of the world can prosper and higher incomes might move in but it must balance everywhere at some point.
Sure housing can continue up while incomes fall.
As long as interest rates fall and/or there are subsidies of various kinds.
-Wealth redistribution.
-The economic equivalent to Affirmative Action.
True, but it's a mathematical fine point. People still need down payments and the income to pay. It is a narrow mathematical window of falling interest rates and the ability of prices to rise. Interest rates for home loans have been fairly steady. Conversely, if they rise home prices must fall. We can say the same with property taxes, HOA fees and and utilities which are part of the price of owning.
Having lived in NJ the property taxes were larger than my car payments.
The general principle still applies. Incomes and home prices must generally correlate. Unemployed people cannot buy at any rate.
This is generally true in a world without infinite QE and a money laundering loophole given to the Real Estate industry. If the Sinaloa cartel, wants to lock in profits outside of a falling Mexican Peso they buy US RE with cash no questions asked. They don't need tenants, income verification. They are parking drug money.
Boots, your number of $1000/month works in San Francisco as well. 1% of the sales price at a minimum and more special use taxes and fees, along with parcel taxes for schools added in. If it's a condo, add in the association fees as well. Hell, my first mortgage payment was less per month than the taxes these people have to pay today.
Your forgetting the allowance for fixtures. @ .02 cents per roach and $1.00 per rat you will be fine.
... and there's Never only One Roach!
Let's see 2% of 500,000 is $10,000. You would have to be an idiot to buy in this enviroment.
Oh no! No more Yuan powered bubble. Just Fed powered bubble left.
I'm sure property taxes will be reduced 2% this year? <sarc>
The population of the NE and MW are close to flatlining since '00 vs. huge rises in the W and S over the same period (1% NE / MW growth vs. 7 to 8% S / W). But worse still, the young are leaving and old are staying and just getting older (particularly in the rural areas)...net net, fewer buyers for ever more properties...and old are looking to downsize or liquidate in their golden years. But the number of new homes built both in NE and MW have almost equalled the rise in population of these regions...ooops.
ZIRP policies in place to protect NE and MW from outright price collapses are so inappropriate for fast growing S and W and no wonder SF, PDX, Seattle, etc. are seeing RE bubbles gone wild. It's all made even worse by the fact nearly all new jobs are in the cities depopulating the rural W and S areas to relocate to the cities in the W and S.
HMMM...the things we do to keep zombie banks "undead".
http://econimica.blogspot.com/2015/06/us-population-and-housinga-tale-of-two.html
The 100 mile eastern metropolitan area encompassing NYC & Newark, NJ is the epicenter of the ongoing housing crash and fraud crisis, encompassing well over $1.4 Trillion of delinquent and deeply underwater residential mortgages.
Some zip codes in or around NYC, Newark, etc., have mortgage delinquency rates of 35% -or higher:
http://www.zillow.com/visuals/negative-equity/#11/40.7649/-74.0108
I'm going to have to look at the original sources, it's kinda hard to believe. Thx for the link.
The Banks cannot foreclose without eating massive losses.
The Insurers cannot bear it either.
The Obama Administration sure as hell doesn't want to kick hundreds of thousands of families out onto the streets -and there is no where for them to go. -It will look like a cross between the exodus out of New Orleans before Katrina and the present European Refugee Crisis.
& Congress can't pass another TARP to cover the bill.
FUBAR.
Keeping the defaults off the market from 2008/2009 has allowed some of the hardest hit areas to bubble back up. Funny, law/regulation requires foreclosure action, but no longer in our nation of men. That's a pretty good map from Zillow. I'm travelling all across the rotted plains.
banks either dont have note or asssignment for foreclosure or dont want the loss to be recorded - comes out of their equity - most havent paid a mortgage, property tax, insurance for 5 years
huge amount of savings for all these people living in the properties
Those 'savings' come out of someone else's ass: those who pay their bills.
I know a fellow who hasn't paid a cent to the bank, insurer, or municiplaity since 2008 on his primary residence in CT.
His mortgage was over $3,500 a month and the place was appraised for waaaay over a million when he re-financed in 2006.
He drives new vehicles bought cash.
He has new gear bought with cash.
I can't compete against a guy that has ZERO housing expenses.
He started collecting Social Security last year: he is living high on the hog complete with heath care subsidies.
I bet he votes Democrat, too. Take a baseball bat to his new car at midnight. Then spray paint "Welfare car!"
Was looking at zip code 11717 on Long Island (Brentwood) where that area according to Zillow is in the top 5% of underwater mortgages. I bet this area and others never actually recovered from 2008/2009. Many listings in the low 200's. I didnt' think you could buy an outhouse for those prices on LI. Looks like the toni areas have price appreciation, but the working class neighborhoods not so much..
Brentwood isn't a particularly nice neighborhood, and isn't known for having a good school system.
You apparently don't know anything about Brentwood. Brentwood is equivalent to Chicago, Baltimore, Camden, Trenton, Detroit, etc. Real Estate is very localized down to the zip code. I live about 8 miles from Newark and we are worlds away so to speak.
Let me be clear. Fuck em.
Fuck em ALL and let God sort it out...
So what will happen to Chicago now that the Rahmster is jacking property taxes up 60% or some shit to pay for enlightened progressivism?
Got lube?
Chicagoans will secretly vote Republican just before they head down to the hipster cafe to trash all things conservative during their intellectual, beard-rubbing, circle-jerk.
Woo hoo! Keep on going down...
I don't care about pollution
I'm an air-conditioned gypsy
That's my solution
Watch the police and the tax man miss me
I'm mobile
Is there not a huge divergence between price, and value?
With Section 8 rents paying up to 2200$ a month and Dept. of Homeless Services up to 3600$ a month in NYC there is plenty of money to be made by the Chosen few.
Just lower your lending standards, dummies. It worked just fine 8 yrs ago.
My neighbor who inherited her home from her father increased the home's debt from 350K to 666K then lost control had to sign the 600K home over to her mom who is on welfare collecting medicaid, <not sure how that worked> they've looted the house, lived there for free for a decade or so and abandoned all maintenace the day the old man died. Real world ACV is 500K max in a zirp environment, they're refinancing again, but first they need a new appraisal. LOL
Just ignore the termites, roof, paint, yard.
I'm sure she'll get the loan, funny thing is granny (they one with no income that they transfered the house with negative equity to) is on death's bed trying to exit, damn daughter keeps having her resusitated to keep the care loot and free lodging.
I heard her mom beg to let her die in peace, they keep bringing her back like Freddie Kruger to take on more loans.
Gen Xers are ruthless
GenXers? How bout just straight up solely fucking evil.
I go for straight up solely fucking stupid.
I have a niece who had a baby out of wedlock. The father is willing to stay with her and help support. So far so good. Here's the problem, She makes more money as a waitress then he does when he can find work. It gets worse. My brother offered to pay for an abortion. What led to her decision to keep the baby was welfare assistance.
Yet another reason why dogs are FAR superior to having kids...
And this is indicative of what?
Over 4000 living on street. Now Deblowjob, be a good progressive and let them live in those no longer occupied homes.
2008-2015 bailout what did we buy?
Trillions more bad debt, and trillions more municipal bond debt.
We bought $45 billion a month in MBS which has financed the building spree I have witnessed since 2009. Supposedly the FRBNY has kept this $1 trillion+ on their balance sheet???? So what does that mean exactly?
I guess the FRBNY is getting the PI payments? They have Blackrock managing that? What ever happened to Maiden Lane I, II, and III????? Where do these securities go when the FRBNY "puts them on their balance sheet"?
Talk about black box.
Does NANEX have a chart?
Who gives a fuck about real estate in NY. That is where all of the HFT/algo/wall street cunts live. It could fall into the ocean at precisely the same moment that California does, and *who cares*?
Learn to swim.
Learn to swim.
Learn to swim.
Learn to swim.
Learn to swim.
in my town in NJ they are building like crazy...still. its insane, then again, the town council and mayor were getting contributions from land developers for the last number of years
Pretty soon Las Vegas will stretch all the way to Arizona and California borders. There is no end to building boom while at the same time the central LV is dying.. They can't find enough construction workers..go figure?
Fuck Jersey too, and their anti gun laws.
I don't even know what this figure means, if these are "going down 2%" are others going up 6%? Which ones? Why? But really, the whole thing is within the margin of error. Real estate numbers, especially regional, are very noisy.
"nearly half of homes in the New York and Washington metropolitan areas are falling in value by at least 2%"
The value isn't really changing, but rather the price is. There's a difference.
The bankster fallacy - drive down wages and the economy will thrive...except it doesn't because it ends up with no one having any spending money.
They have done the same thing so many times in the past but because they cover their historical tracks even they don't know how often they've done it.
I am in the middle of this myself. Prepping my condo for either rent or sale and feel like we are in a bubble.
I would take the numbers with a grain of salt. In a lot of areas I suspect the owners and even builders threw out some stratospheric numbers to test the market and some of the pullback is just returning to sanity. I have had my eye on some properties for months and Zillow gives you the price history. Some have drop 30% from the initial listing, not because the market it bad but because they tried a 100% markup from when it was last sold in 2011. If you find some that sold in 2007-8 you will see they are now only back to even.
Hard to say how things will pan out but one thing is for damned sure...if we do not at some point quit choking the crap out of the economy with stupidity like Obamacare and more regs there will be another large bust. If we give the economy some air we could see steady gains in all the things we like starting with incomes.
The Glass House is half Full.... Bullish
Oligarchs money anyway...
If starting over, I'd live in my van for 2 decades and retire in comfort. Maybe even get a bigger van.
If starting over, I'd kick in the door of the most palatial McMasion I could find, forge a lease, get utilities hooked in my name, put keyed entrance locks on all bedrooms and rent rooms w/ utilities included. I would then bury the money. Why pay mortgage insurance when you can squat?
This is no surprise after witnessing the biggest buildout of "future" slums I have ever seen. The FRBNY had to buy $45 billion in MBS every month for more than a year, QE 2, so it is no wonder that with flat population growth these units would drag on future (todays) inventory.
All that BS about the economy repaired is total horseshit. The only thing juicing this economy is endless war and the war of attrition meted out to the average American worker.
Many more billionaires must be created to soak up the Manhattan's available condos.
USA real estate bubble is another massive bubble waiting to explode, and explode it will! And when it does explode, things there are going to be in a mess. Forget about worrying about the rich foreign investors that are buying up properties for money laundering purposes. No deekras (dears), things for the common Americano are going to get even bleaker.