From HousingWire:
Experts: Unaffordable rents here to stay
Unaffordable rents are making it hard for people to save for down payments, and they aren’t likely to ease up for at least two years, according to the latest Zillow Home Price Expectations Survey sponsored by Zillow and conducted quarterly by Pulsenomics.
More than half (52%) of the respondents with an opinion on this issue said the market will correct the nation’s soaring rents over time, and no government intervention is required. About one-third (35%) of respondents said rising rents are not a problem.
“Solving the rental affordability crisis in this country will require a lot of innovative thinking and hard work, and that has to start at the local level, not the federal level,” said Zillow Chief Economist Dr. Stan Humphries. “Housing markets in general and rental dynamics in particular are uniquely local and demand local, market-driven policies. Uncle Sam can certainly do a lot, but I worry we’ve become too accustomed to automatically seeking federal assistance for housing issues big and small, instead of trusting markets to correct themselves and without waiting to see the impact of decisions made at a local level. Broader federal efforts aimed at increasing real wages and job opportunities will go a long way toward helping renters, but real, lasting solutions to rising rents need to be found locally.”
From Curbed NY:
New York City Rents Continue Their Terrifying Ascent in 2015
At the end of last year, Miller had estimated rents would level off at a “high plateau,” because the same drivers that keep rents up are still in place: tight credit, which keeps would-be buyers in the rental market, and an improving economy. “Yet prices continued to move higher in the new year,” Miller said, “and there isn’t much relief in sight for tenants in 2015.” A few key points: Queens’ median rent nearly reached Brooklyn’s (gentrification much?); in Brooklyn, the median rental price has showed year-over-year increases for 18 of the past 20 months; and Manhattan boasts is sullenly offering up its fourth-highest median rent since 2008.
Let’s look at Manhattan first. The median rental price rose 5.9 percent to $3,299, while the average rental price increased 4.6 percent to $3,974. (Median figures are a better measure in general, because that calculation strives to reduce the effect of outliers that are really, really pricey or really, really cheap.) We’ve now seen a year-over-year median rent hike for the 11th consecutive month. Sadly, according to Miller, the strongest price growth is seen in the entry-tier market, with the weakest in the luxury market. Meaning that it’s not just the flush-with-cash folks paying $20K/month for a palatial pad who are going to feel the effects of this increase. When regular folks’ leases are up and rents return to the negotiating table, they’ll see.
In Brooklyn, the median rental price jumped 2.5 percent to $2,901, while the average rent increased 4.5 percent to $3,201. As noted above, Brooklyn rents have basically been on an almost-nonstop upward streak for almost two years now, and the gap between Brooklyn and Manhattan median rents is now a piddly $398.
In Queens, which is admittedly a more volatile market, median rents have climbed so high that they’ve almost reached Brooklyn’s, which is pretty absurd. (Then again, recall that the Elliman Report doesn’t take into account every neighborhood in Queens, just the northwest ones where prices are higher.) Median rents skyrocketed a whopping 30.7 percent to $2,905, while the average price rose 22.3 percent to $2,929. Confirmed: there are tons of new developments, with 42 percent of new rentals in January 2015 occurring in new buildings.
From DS News:
Increasing Rent Costs Present a Challenge to Aspiring Homeowners
Fast-rising rents have made it difficult for many Americans to save up a down payment for a home purchase—and experts say that problem is unlikely to go away any time soon.
Late last year, real estate firm Zillow reported that renters living in the United States paid a cumulative $441 billion in rents throughout 2014, a nearly 5 percent annual increase spurred by rising numbers of renters and climbing prices. Last month, the company said that its own Rent Index increased 3.3 percent year-over-year, accelerating from 2013 even as home price growth slows down.
Results from a more recent survey conducted by Zillow and Pulsenomics suggest that rent prices will continue to be a problem for the aspiring homeowner for years to come.
Out of more than 100 real estate experts surveyed, 51 percent said they expect rental affordability won’t improve for at least another two years, Zillow reported Friday. Another 33 percent were a little more optimistic, calling for a deceleration in rental price increases sometime in the next one to two years.
Only five percent said they expect affordability conditions to improve for renters within the next year.
Despite the challenge that rising rents presents to homeownership throughout the country, more than half—52 percent of respondents—said the market should be allowed to correct the problem on its own, without government intervention.
From Business Insider:
DAVID ROSENBERG: 12 reasons to love the US housing market
Several economic indicators of the housing market’s health are stronger than their historical levels.
Of note is the year-over-year growth in American households, which is at the highest in nearly a decade.
But via Gluskin Scheff’s David Rosenberg, there are a dozen reasons to remain confident in the US housing recovery:
1. The bond rally has pushed down mortgage rates to 3.6% from 4.3% a year ago.
2. The Credit Managers’ Index of lending professionals climbed to 55.1 in January from 54.9, indicating that mortgage guidelines have eased.
3. Mortgage credit across banks has climbed 4% at an annual rate over the past four weeks.
4. Employment in the 25-34 age group increased 2.6% in the last 12 months — the fastest pace in 15 years.
5. Among first-time homebuyers, the employment rate is at a six-year high at 76.6%.
6. In the past year, net household formation has grown 10 times to 2 million. That’s the highest level since July 2005.
7. It now takes less time to sell a house — the median time between building completion and sale is three months, versus the historical norm of five months.
8. Home inventories are also below historical levels. There is a “razor-tight 4.4 months’ supply of existing homes on the market for sale.”
9. The University of Michigan home buying plan index has held a 12-month high in the past two months.
10. Residential construction as a share of GDP is at 3.3% in this economic cycle. That’s lower than the 5% average and the lows of previous recessions.
11. Single-family building permits surged to near-seven-year highs at the end of 2014, up 8% on a year-over-year basis.
12. Data from the National Association of Home Builders showed that home shopper traffic in the past three months is on par with the strongest level in 2005.
Home inventories are also below historical levels. There is a “razor-tight 4.4 months’ supply of existing homes on the market for sale.”
In our area, they can’t sell. They’re underwater and paddling hard to keep from going under. Almost everything I see is on the brink, in a short sale or in pre-foreclosure. The other’s are making payments and will come to the table with a check or barely break even if they attempt a move.
So what you are saying is the only people who are selling right now are in some sort of distress. Non-distressed home owners simply not interested in selling?
Non-distressed home owners simply not interested in selling?
I’m a non-distressed home owner and I’m interested in selling except all I’m finding are… distressed home
ownersoccupiers. The number of non-distressed home owners willing to sell are reduced to a smattering of estate sales not cleaned or upgraded since 1965 and are coordinated by the kids who insist on using 2006 comps as a baseline.The market is irretrievably broken. Once the Phony/Fraudy/FHA grinder gets revved up again, it will be box cars. Then, it will all end in tears. Come back in 50-100 years.
Housing is dead money for the rest of our lifetimes, maybe even the lifetimes of our kids.
#6 – “The number of non-distressed home owners willing to sell are reduced to a smattering of estate sales not cleaned or upgraded since 1965 and are coordinated by the kids who insist on using 2006 comps as a baseline.”
Another one of these just went on the market here. I’m predicting it’ll go just like the others I’ve seen the last few years:
1. Kids price it at a 2005-2007 Zillow estimate.
2. It sits and they have to pay the property taxes.
3. They lower the price, a few people look but all offers are refused.
4. They change realtors (maybe several times).
5. Still sits.
6. Kids start squabbling.
7. Lowball fast close cash offer is taken.
If they priced it realistically it would have sold in a reasonable amount of time but the kids are NEVER realistic or reasonable just greedy and wind up making far less than they could have.
On the other hand once in a while there’s a good estate deal to be had. Example:
A relative of mine inherited a three family (possibly four) recently. With a little work it could be a goldmine of a rental property. Instead she just wants to dump it. Wish I had the money…
NJT [9],
Of course, rinse and repeat. Three different offers I made when my house was technically sold about two years ago closed within 2% to 3%. They didn’t even counter and chances are, I might have bought for even more than what they closed for if they simply checked their arrogance and stup1dity. Any offer I make from now on is best and final with a 48 hour (generous) turn-around. After 48 hours without a response, burn my number.
From recent conversations.
Obamacare drew significant funding from healthy 20 and 30 somethings who usually self-insured until they were married or had kids.
But..but..it was sooo cool to vote for him……
http://www.foxnews.com/us/2015/02/14/cornell-student-body-furious-over-school-health-care-opt-out-fees/
No sense playing monday morning quarterback, but in retrospect, 2011 and 2012 were great years for inventory compared to now.
…2011 and 2012 were great years for inventory compared to now.
No denying that. It’s a f.ucking horr0r show now. It just confirms what we already know; there are a sea of sad muppets hanging by their little muppet fingernails.
So in-laws told me they want to downsize and move here to be closer to their grandchildren. However they say they are going to rent their house instead of selling it, they have been living in their current house for 20 years, it was a custom home built for them. Get this they only want to rent it even if they have to kick in money to make up the difference between the rent and mortgage taxes etc.
Sigh the price they want to sell for is the peak 2006 bubble price, they reason it will come back, they all think the bubble pricing is coming back. I have heard this from many people co-workers, family, friends etc.
The stars are lining up too, cheap gas, low mortgage rates, 3% down etc which also only means the politicians are going to bring back the bubble. History rhymes we may even be due for an even larger real estate bubble twice as big as the last one.
Let the good times roll.
https://www.youtube.com/watch?v=7BDBzgHXf64
So many underwater or delusional sellers out there it’s almost unbelievable.
I can understand the underwater folks hopeful/wishful pricing but those with clear title asking bubble price and refusing to negotiate at all…
Example: Abut a year ago I was really interested in an updated Craftsman style 3 bd.
Great location, corner lot, nice garage, needed nothing. 2006 Price. Tried to negotiate but the old bag wouldn’t budge a penny! His remark: “Joe down the block got X for his back in 2006, mine is better…”.
It’s still sitting. Guess he’ll die in it. Oh well, got a great deal from a realistic old lady that would rather spend her last years where its warm all the time and people wait on her.
Juice (14)-
The next housing bubble/burst will be like the electric jolt that brought Frankenstein to life. All that follows will be like that movie, too.
When it all goes in the crapper again, it’s game over for Western Civilization.
All markets are full of idiots who resist legit price discovery. Hell, a certain percentage of idiots is required for a market to thrive.
In RE skool, they teach that RE is different, because everyone wins in a transaction.
Balderdash. Zero-sum game. Always a winner and loser. Two men enter, one man leaves.
A market dominated by idiots is not a thriving market, btw.
Meat,
A market dominated by idiots is not a thriving market, btw.
Isn’t this the new normal?
“…2011 and 2012 were great years for inventory compared to now.”
And a sea of bitter potential buyers exist today, who should have bought 3 or 4 years ago.
For what it’s worth, I was speaking with a level headed friend of mine who lives in GR also and he claims that tons of homeowners in the Ridge are in debt up to their eyeballs. Of course, he lives in a multi, so he might just be jealous.
So why is there so little inventory and closing of the bid/ask spreads?
I’m not seeing the ‘muppet fingernail hanger’ phenomenon predominant in my area.
Mostly anecdotal, but here are some thoughts:
Coming out of the decline many people are settled. They purchased homes they wanted and would be content to own longer term. They’ve refinanced into historic low rates. They’ve seen some bump up in value since purchase. Basically, they have put on a LT position they are happy with and shoved it to the back of their portfolio.
The desire for trophy homes has fallen off a cliff. These are struggling in my area, I posted one the other day by a top local builder that closed off 33% from last purchase ($2.4 to $1.6). Without the constant grabbing to upgrade there are fewer sales further down the ladder, less inventory, and less liquidity (closing of the bid/ask).
The number of homes under the ‘need to sell’ scenario has declined. We’re through the financial crisis, stock market is near new records, employment continues to tick up. Low interest rates have helped some. Many of the sellers in the market are there because they want to be, not because they need to be.
If you don’t need to sell and you are comfortable with an asset then, yes, a buyer is going need to hit the full ask to shake it loose. That goes for all asset classes, not just real estate.
@NSA_PAO:
Every move they make, every step they take. We’ll be watching our foreign adversaries. #HappyValentinesDay from the #NSA #vday2015
As the saying goes: ‘All real estate is local’. You can’t compare what’s happening in Bergen County to Belvidere.
Sure, there are ‘bright spots’ but generally the market is a flat grey sea stretching out to the horizon…
Leftwing says: “The number of homes under the ‘need to sell’ scenario has declined. We’re through the financial crisis, stock market is near new records, employment continues to tick up. Low interest rates have helped some. Many of the sellers in the market are there because they want to be, not because they need to be”
Total horse-sh!t. The qualified buyers like myself have the same appreciation in other asset classes. I love the bull equity market, I love low-rates. But that doesn’t mean that the house sold in 2006 is worthy 5% annualized over the peak price now. If I have to rent and enjoy my investment savings, so be it. I will be happy to purchase my first home as my retirement home.
To expand on the above, it is like saying that since oil and tech stocks have appreciated, then obviously you should pay me the peak price for my muni bonds, or classic car, or collector coins. Housing is a consumable good, be it purchase or rent. Why do sellers attempt to assign a 1:1 correlation to the value of their house with the best performing asset class in the market? The answer is pride – they view their home as a special place filled with memories and value that can’t be determined via a simple appraisal and market comps. This is because it has easily been the single largest investment they have made in their life. As such, admitting it was a bad choice is admitting they made a bad investment. Hubris rules their mind and they refuse to be honest with themselves. So by all means – enjoy your million dollar 1965 ranch on a .25 acre lot in Haughtyville. You will die with it or come realize that the market is smarter than you. Your choice.
Don’t see the disagreement homeboken.
Think we are saying the same thing. There is a seller. There is a buyer. They need to bridge the spread. If it doesn’t work for one party, walk. That is part of the process of the market finding the settling price.
I just don’t get the foot stomping anger when that happens.
oops. We were saying the same thing in 24.
25, off the ranch a little bit with the anger crowd…….
I don’t understand why any buyer is playing in the rigged game that is RE in Bergen, Essex right now. Nothing exists but shit deals and sucker bets, and everyone knows it.
Sip a fruity drink, enjoy your current home, and wait for the Gottendammerung.
Shell out 700K for a dilapidated piece of crap, then shell out 30K more a year/kid for Kimberley (since the local HS is a blue ribbon shitpile)?
Yeah, that’s the ticket.
I’d rather do 25 years, Mandela-style, on Robben Island.
Remember that link posted earlier this week by someone for that Chatham house for $500k?
Where I come from (whole milk, white toast territory, median home price $140k) that is Section 8 housing.
No one said markets are rational. Bunch of blue ribbon airheads with 4% commitments in hand pump values. Buyers decide to take a break, prices revert.
It is today, here. In front of you is the ask. In or out? This is the only question, and it is straightforward and unemotional.
I don’t understand why any buyer is playing in the rigged game that is RE in Bergen, Essex right now. Nothing exists but shit deals and sucker bets, and everyone knows it.
We know it but the fat f.uck who bit off more than he can stuff in his gullet apparently doesn’t know it. But geezus, you are right about the sh1t deals and s.ucker bets.
There was one house, a 5bd split, that just went under contract a few days ago. It was a short sale and they were holding on to a high 500s price tag for at least a year and a half. It just went into AR in the low 400s. I was inquiring about it and was a few days too late. There’s you new bench mark for Park Ridge.
The other bench mark is the ranch in the Sicomac area of Wyckoff where some flipper paid 310K for the place at auction and is asking upper 600s. I hope the m’fer gets hit by a bus. Now, when the discussion of comps comes up for that area, the 310K price tag gets tossed in with some attitude.
I’ll say this again: the number of folks who are truly financially fuct is off the charts. Did someone mention that the market is at new highs? Sure it is, but when you don’t have a pot to p1ss in while you’re sitting in the house you can’t afford, does it matter?
Low interest rates have helped some.
What good is a low interest rate when you can’t refinance because the appraisal came in way less than what you owe.
Part of also what can be seizing markets up, forced residency because you can’t move.
I’m not the enemy guys.
I’m just watching too many people tie themselves up in knots of frustration with pages of analysis over why a seller’s price is ‘wrong’. Including analysis of how and why the seller got to that price (huh?).
Who cares? He could have f**ted the digits in the morning shower for all it matters. The asking price is the asking price. Are you in or out, and the unknown future will determine if it was a good bet or not.
2002, yes; 2007, no; 2010 yes; today, who the f**k knows.
Short sellers holding out for a price have shit-for-brains agents advising them. Absolutely no reason to hold out in a situation where the seller walks away with nada. All you need to do in a short sale is get it done and be able to prove to the bank that you got as much as you could.
Back in the day, I told all short sale clients that I set the price, terms, etc for the deal. I told them to start packing, as they were going to have a contract in 30 days. Any sort of whining, wheedling or pushback, I just got up and walked out.
Dammit, that was like shooting fish in a barrel.
Gary, you don’t seem to understand that people are entitled to be idiots. It’s just way too early in the game for you to be able to take advantage of their dumb moves.
Left (34)-
If the house sells, the asking price was right. All peripheral parties who may have believed to the contrary are wrong. Decrying asking prices as “wrong” after the fact of the sale is a game played by the paralysis-by-analysis crowd.
Even in a market full of buyers jacked up with cheap money and other juicy incentives, a sale is still a sale. Don’t like the game? Don’t play. If you’re right, either the whole game changes or the market collapses.
The nightmare scenario right now, IMO, is that a guy like Gary finally manages to work a deal…30 days before Amerikan society collapses.
In a country where blatantly fraudulent mortgage & insurance entities such as Phony/Fraudy/FHA are being retooled in order to wreak certain havoc again, societal collapse has to be one of the possible outcomes in play.
Fourth Turning, baby…and it’s just getting started!
Japan = best case scenario
Argentina = likely scenario
Oblivion = possible scenario
37. Right there with you clot.
And, my experience, the paralysis by analysis crowd have the uncanny timing of picking the top of the market.
All the charting makes them the last to capitulate.
And for the record I feel the real estate on any ‘rational’ measure is overvalued, especially locally. But the ridiculously low rates scare me, as does the prospect that the only way this country can get out of the fiscal mess it has created (at least nominally) is to inflate the hell out of everything eventually.
In which case being long somewhat desirable real estate with a large amount of fixed rate low interest debt is not the worst position.
So my play is to extract my equity by selling the house, downsize to the condo I was discussing a week or so ago (CF positive strongly if I ever decide to rent it), and with the net proceeds go long a highly levered house in a desirable (rising value) market that works as a ‘vacation’ house now, potentially a ‘retirement’ house later on, and an inflation hedge.
Any potential buyer coming in with 22 spreadsheets to show me why my ask is ‘wrong’ is so far off base it doesn’t matter, because my motivations (ie pricing) don’t entail one spreadsheet.
Somebody has to be the dope who top-ticks the whole doomsday machine.
BTW, I speak as someone who has done this. Only redemption I got was riding SRS all the way from $10 to $290. It still didn’t cover my mistake entirely.
Best part of the 2008 collapse for me was booking a table at a near-empty Le Bernardin and having the fun of blowing a big wad of $$$ on beluga, Selosse, Bereche, several whole fish and six desserts for my wife and I…while being waited on by virtually the entire staff.
Still, it only took the edge off the 150K bath I took on my shitburg of a house for a little while.
The nightmare scenario right now, IMO, is that a guy like Gary finally manages to work a deal…30 days before Amerikan society collapses.
This… is a virtual guarantee. Let it be known people!
Haha. Miss the stock talk. I’ve been active BAC options recently.
Tried to put a DITM call spread on a little while back. Humps opened the spread up on the in the money long position to 91 x 113.
Passed on the trade as I didn’t fell like giving the first 25% of profit to the broker.
Guess I could have done a historical regression of spreads and sent it to the broker, along with analysis from Graham on the responsibilities of market makers and a good solid rage about how the SEC has gamed the market by letting this happen and how everyone lifting the offer are sheeple. But I didn’t think it would change the offer.
Folks just made a sale of their home. The price wave came back up to very nice levels in their neck of the woods (FL) and they’ll make some cash to fund a second retirement. So to speak.
Funny how you get real price recovery in markets that are allowed to fully collapse.
Clot, you have any experience in sheriff’s sales, foreclosures or quit claims?
left (49)-
My experience in those areas is why I drink heavily.
Did a drive around Monmouth today. Several bank owned properties now seem listed. Prices reduced to compete with other homes for sale. Some of these homes have been vacant for years.
I would love to trade up for sure….low rates folks.
(46)
LW,
That’s because the majority here benefit from an irrationally rising stock market (myself included)… that’s why nobody goes on and on about its clear overvalued prices.
Here’s Anon’s ideological pedigree in raising the minimum wage (it’s even in Twitter format so he can read it — little hope he’ll understand):
https://twitter.com/JonahNRO/status/566622954197643264/photo/1
#50 [Clot]
“My experience in those areas is why I drink heavily.”
Advice given to ‘Flounder’ in the movie ‘Animal House’.
(not going to say anything else).
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