I’ve been looking for a new home for the better part of the last 1,000 years. To make a long story short, I am easily swayed from buying. The catalyst to dissuade me is always different. A few weeks ago, I was chagrined by the local liquor laws in PA, which made me change my mind on a home there. About a year ago, I was greatly disgusted by the paint on the local High School, near a house I was interested in buying. One thing is abundantly clear to me: over the past 5 years, EVERYONE has been “grape raped” on their real estate investments.
I know so many people who are down 1-2 mill on their fucking houses. To me, that is utter insanity. If something like that happened to me, I’d burn my fucking house down and blame it on the fucking firemen. Then, I’d sue them for pain and suffering, plus damages on my charbroiled house, laughing all the way to the bank—jank. I know people who were up 100% on their shit boxes, only to be sitting down 20% now.
What’s my point?
Well, for one, how the fuck can this country mount a sustainable rally with the greatest asset of the American people being so far underwater? What are we a bunch of retarded apes with Coach bags? Secondly, are the banks really serious about not fessing up to the fact that they are FUCKING BANKRUPT? I mean, really, come on already; those fuckers are Archie Bunker style poor and everyone knows it. I couldn’t give two fucks and a gay zebra about the spread. This might be a little dated for many of you, but the banks are the fucking losers in all of this, on a very grandiose scale. NOTHING HAS CHANGED. REAL ESTATE PRICES ARE NOT REBOUNDING.
Please enter the deflationary vortex. Thanks for playing.
Pardon my rant. I just felt like having a truthful moment, in between my late night Red Bull-Coffee-Red Bull-Coffee routine.
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Mindless drivel.
That’s what I told your Mother after she proposed to me.
Fly baby, when you gonna come over and ride my big ass into the sunset again?
LMAO
The 30-year mortgage with no pre-payment penalty is nice, but isn’t really a market-driven contract. it’s a government mandated thing-a-ma-bob. I’ve got mine, so I can only complain so much
Now is the time to be building a house. Everything is cheap and a steal versus 3 year ago comparions. Thats my gameplan. Bought land last April when the home builders were on their knees now I build for high quality/low cost. Low interest rates.
Five years from now will be sitting pretty
Just my two cents.
I live in the developed world where there is no fucking land. If I want a new house, I need to knock down someones home, then hire the mafia to build me a new one.
For the same price you could probably build your own tropical resort (palm trees included) in the Midwest.
bullish is right fly,i have a handyman biz here in chi town,fuck,only here you, yes you can even be monty hall. name your own price. Pa. was born there , you can have it. and biziness all the way around sucks.i should be at 6 days a week,i dont know who the fuck is bullshitting who,everyone i know that pulled down 75k+ a yr still can get half of that now. honey do handyman only does grade A work………fuck,now if i can only get some.
Might I suggest some oil soaked beach front property in the gulf with a clause to collect from BP?
there are a few builders that can’t rub two nickels together never mind rebuilding the turbofans on the lear
yep. I am moving in the reasonably near future and decided, after a lifetime of holding out on home ownership, to buy a place.
Building a new one OR new unlived in houses owned by builders itching to unload them were the cheapest bets in the market I looked in hands down. “Used” houses were more expensive in terms of $$$/(sq foot * quality). Alot of tailwinds to building now including builders interested in work and doing it reasonably -vs- 5 years ago when builders were making mega mark-ups on everything. Drywall is cheap, lumber is cheap, labor is cheap, lots are even sometimes cheap, its all cheap.
And that cheapness (of labor and materials) is a headwind for the prices of existing homes. Much as the monstrous demand for building materials caused by Katrina was a TAILWIND for the house-price-bubble, driving prices of those things up up up like crazy.
And the interest rates are … almost worth having even if you don’t need a loan.
The housing market never hard bottomed the way the stock market did. Houses are maybe reasonably priced (I read somewhere its the lowest house price/income in like 40 years) but they aren’t XL for $2.90 or ASH for $6.50, GE for $6 capitulation cheap.
In addition to banks and the gub’ment helping to cushion the landing, speculators FLOODED into that market fairly early. There wasn’t ever a “screw it we are all doomed, houses are completely worthless” moment here. You can get flown into Vegas on a private jet to go house shopping provided you can demonstrate net worth. People from the middle of nowhere (where I live, where there is land available everywhere) own houses in arizona and vegas and cali and florida as speculative investments.
And that is something to be mildly bearish about with respect to stocks. The hard capitulation bottom is almost certainly going to be replaced by at best a long slog of sideways prices and depressed/gloomy market conditions OR at worst by a meaningful double dip.
But, done properly, I think building right now, frankly, is a reasonable proposition. For all the reasons listed above.
We’re international now, don’t you know? It’s not what American consumers can buy; it’s what their international corporations can buy, internationally. The guts of many of those international corporations is cheap overseas labor.
You are a pig.
i totally agree with this post
Secondly, are the banks really serious about not fessing up to the fact that they are FUCKING BANKRUPT. Those fuckers are Archie Bunker style poor.
Indeed.
Not to mention the Toxic paper, assets {sic} turned liabilities residing in Level III ‘off-shore’ shells a la Enronesque, yet to be brought on balance.
FASB157 Anyone??
Good Evening, Sirs!
I know what you mean.
I pay close attention to housing around here, housing is just about at a dead stand still. I’ve seen 3 houses built this year, just 3. I fully believe the housing market will be at a crawl for years and years.
SRS or DRV.
Housing could easily be down another 30%-50% even from current levels in 2 years or so, time will tell.
Dr. Fly. You MUST leave those soiled lands. It is time. Move to the rolling meadows near me…The only thing you’ll be sorry about are your property taxes…
Scott
I am now looking around rye
We started looking there, Larchmont, Dobs Ferry, etc. Traffic blows. Very happy in NJ
Yeah, let’s pay more NY taxes. Woo hoo, being outside of NY City, it’ll be like a cut!
GTFO.
________
nothing has changed and after more than 1 yr and all of a sudden you’re bearish?
the world does not revolve around the US
well they say Canadian banks are fine
Fly: I am a veteran of 25 years in the commercial real estate industry, the last 16 years in the capital intermediary space. NOONE I know, in any sub-field in the industry is doing anything, making any money at all…. most are nearing the end of their ropes…. developers, brokers, owners, equity sources…. this cannot go on without a major correction. But when? Feels like it is setting up for the finale. I am tempted to short the world and go on vacation for 6 months….. how can that lose? ( I know. I know,,,,, just sayin’)
That dirt talk is for real… Commercial real estate appraisals out of the midwest are coming in lower and lower, because “they have no comps” aka NOTHING IS SELLING… Especially dirt. Workout departments all over are loaded with R/E. At what prices is that “shit” gonna sell? Cause we need some real comps.
Personally, im not a buyer, not yet
That dirt talk is for real… Commercial real estate appraisals out of the midwest are coming in lower and lower, because “they have no comps” aka NOTHING IS SELLING… Especially dirt. Workout departments all over are loaded with R/E. At what prices is that “shit” gonna sell? Cause we need some real comps.
Personally, im not a buyer, not yet
fly… would you please do another episode with your robe and cocktail… regarding the sad state of affairs the entire world is in?
I was bearish before it was fashionable pal. Check my archives.
I simply go with the flow. I expect the next flow to be bloody.
Totally agree…just one of the many reasons why it is so hard for me to learn to hedge long…I hate being on their Time Schedule. BTW West Coast is so much nicer.
when it’s not on fire….. ha ha
The rant was tremendous Mr. Fly. I wish there are many more to come.
Pacific Northwest is beautiful and not as expensive as California. West of Seattle are old growth forests, mountains, ocean. Rural stuff though. Not big cities. Moderate climate, just a bit cool but very little snow. But you must live with very little sun.
Shhhh. Don’t tell people to come up here. Especially those gawd awful Californikators.
The banks have gone for a long time not admitting they are bankrupt, while the market rallied. One does have to wonder how long it can last. But perhaps the banks can stay insolvent longer than the market can become rational, or whatever that saying is, LOL. A lot of bs lasts for a long time, until it doesn’t. How one times these things is a mystery to me.
Hong Kong’s housing bubble burst in 1997 and it took them the better part of 10 years to climb out of it, and that’s WITH China’s boom.
So yeah, it’s going to take a while.
aapl and UUP say to me, “SPY it is time to die”
My Newest Article….APPLE for the Teacher http://ibankcoin.com/king_of_the_pg/
I have not posted before but this post is just f’n hilarious. Seriously – you gotta love the fly
Where in PA are you looking?
How timely. I went for a walk with the wife this evening, and was entertained by the home values provided by the Zillow phone app. Still lots more room to fall here in SV.
Wake up bearshitters!
This will continue!
__________
There should be more of this, perhaps more foreboding. Do it retro from the back of an 80s style limousine. Roll by their building, lower the tinted back window an inch and drop letters out onto the sidewalk in front of corporate headquarters, preferably into a dirty puddle. “You’re getting fucking austerity. Cordially, Management.”
Bring back the corporate raiders and tell these pension massaging union public servant assholes to fuck off. Maybe you could be a catalyst Jake. Do it in time for WS2 too.
Yes, good point. 83 banks closed by the FDIC year to date — tune in this Friday for an updated count. With the recent decline in the VIX, I have been buying puts on banks.
Instead, i should move to where the water is contaminated by natural gas wells and the people wear funny hats and call eachother “partner”?
No thanks jake
Did jake just post a link to the pasta takeover,
I am viewing from iphone app? If so, really jake,
Pasta?
Really?
TONS OF CASH ON THE BALANCE SHEETS of both Fortune 1000 and most PE players.
WAKE UP BEARSHITTERS!
_________
Actually I have a solution to this problem and I am not trying to be funny. Here goes. There is a large population of skilled foreigners, not the kind who drives the cab and mows the lawn, but the kind who make a median salary of atleast 100K who are waiting to get their permanent residencies or citizenships. I know many who are eager to buy a house and complete their american dream. The only thing between them and that house is a 9 to 5 immigration office that is probably getting paid by his taxes. They have the least number of criminal records, are extremely hard working and have a large amount of dispensable income that is now being consumed by international banks, stupid safe boxes and gay saving bank accounts.
So say if the government comes up with some kind of an expedited plan to get them on board, based on number of legal immigrants per year, at any given time there should be a pool of 3-5 million skilled workers who could be given expedited green card or citizenship. Lets be conservative and take only 25% of the bottom range of the above number. So 1 million of these people buy a home. Assuming a median home price of 150K-200K, this translates to about 150 – 200 Billion dollars of initial “real money” infusion into housing market and not just created by artificial government pumping or over inflated leverage! Not to mention the obvious further boost all the secondary markets like construction, home improvement, new communities and several other related micro economies.
Can you imagine what would that do to our economy?
Why the heck would we be willing to do that? Homes are needed where people make money. And it’s not the US & A in this case.
House prices have inflated much more rapidly than wages over the last 20 years.
The premise – Buy this house with almost no down payment, borrow against the appreciated value and buy a boat or car, heck even another house. This fucker will pay for itself in 5 or 10 years.
It worked out great for those who got in and out at the right time.
It was just another asset class bubble.
Let housing prices crash and burn so we can go back to what worked for a long time, 20% down payment, fixed rate mortgages. No exotic debt instruments, just local banks lending money to qualified borrowers.
Tying up most of your assets in one thing is stupid. A lot of people are learning that the hard way.
Thoughts-
1. If possible, find something with intrinsic, fundamental value- nice view, waterfront, hill top, etc.
Don’t buy hype.
2. If you buy from a developer, consider if you are on the ass end of profit, and markup. That is, the developer has taken most of the upside; you are buying retail, fully cut and watered down, so to speak. No offense to anyone intended, but I advise against buying in developments with a sign at the entrance, unless it is a high end guarded and gated enclave. Find an established, older neighborhood with one-of houses built by different builders. If this does not exist in your area, OK, but developed neighborhoods are full retail, in my opinion.
3. While an older home could have poor energy efficiency and hazardous material risk, odds are it is better built than any new home. I’ve watched some homes being built, many are junk. But it depends- in my neighborhood a developer slapped up a home in about 2 weeks and sold it at a full price to some people I think were suckers. A block away on the water, two homes were built by “smart money” owners and construction was meticulous and took several months. These two homes are quality and look like they have been there for 50 years and will be family treasures for another 50 years.
In short- don’t buy a poorly built new home. Find an older gem that works for you.
4. In my area near Annapolis MD, asking prices are elevated above 2000 levels. Homes at current market price are moving, homes at high ask prices are just sitting there, some for hundreds of days.
I am often “in the navy” myself.
fly,
do you get WSJ on your iPad or do you stick with the print version? I get the print version and am wondering if switching is worth it.
After living in manhattan for the last 10 years and refusing to buy, Ive been in the Philly burbs for the last two WHERE i am definitely not going to buy. I really really really want to buy a house, but you can not imagine the type of ABSOLUTE SHITHOLE you get here for $500k – $1MM …. i just won’t do it. I will fucking rent till i die if i have to.
By the way…I make a lot of money. I mean, i don’t know where i fall percentage wise, but lets say I’m topping out in the top tax bracket. With that in mind, I cannot find a decent fucking place i can afford. Every time i go shopping for houses, all i can think is WHO THE FUCK is buying these $700k shitholes and how the fuck can they afford it? I really, really don’t get it, but i think it might be like one giant rotten barn with the entire bottom about to fall it.
All I can figure is that everyone america is overstretched to the absolute breaking point. There is no other explanation as to housing prices can be so high here…there is no way there are the incomes to support it.
700 large will buy you a 6000 sq.ft. home in NC on 1-3 acres. Raleigh, Greensboro, Charlotte areas.
I could be worse: What would prices be if renters no longer subsidized richer home buyers (home interest deduction)? What if Fannie and Freddie weren’t subsidizing demand? What if the FED and cooperating Asians weren’t helping to keep interest rates crazy low?
Thank God we live in a country where minimum wage grunts subsidize over-sized, street-facing, inefficient, 3-car garaged, 5 bedroom colonials.
Hammy
I used to get print. Ipad version is 10x better. Updates all day long
My house is up 20% YoY… Canada FTW
Let me know if you want to move to Central Florida. You can buy my house. Three acres (horses allowed for Fly, Jr; bears and deer, included), solar heated pool, plenty of various citrus trees, separate central air w/ cable hookup office building in the woods, 20 minutes to downtown, 5 minutes to office park containing some corporate headquarters such as Ruth Chris, and six golf courses with tennis courts within about ten minutes.
We can work out a good price I am sure.
With an office in the woods behind the house, you can spend the day floating around in the pool and your clients will think you are in some big office building.
Existing home sales numbers at 10 est.
Bought my second home in 1989 and within 3 years it lost 50% of its value – look what happened to the stock market during that time period – straight up. It took me 10 years to get back to the price I paid for that house.
It will take until 2016 until house prices get back to the prices they were at during the bubble, but they will get there. Even now there is not even one house for sale in my development of 17 homes, whereas in the early 1990s 40% of the homes would have been for sale. Just sayin…
Big difference though …I too bought a house back then …paid a nice honest 8 point something percent in interest. This bubble is still being help along by lax money.
Good point…I got my first mortgage just under 10% – I think it was a 1-yr ARM – and felt very lucky to be under 10%…only my parents had a mortgage under 4% and I couldn’t believe it – fixed mortgage rates will get there again.
I partly agree. If things stay the same we will see home prices move lower. Have you ever tried working on a pop corn ceiling? The more you try and fix it, the more it falls apart. I don’t know what the answer but were still lucky we even still have a market.
You can scrape all that popcorn shit off there. Get a wide drywall knife going on there and you can get under it and peel it off. Then get some drywall guy to plaster on a brocade ceiling. Check the popcorn for asbestos before you do it yourself.
The gubbermint is gonna half 2 keep home prices at this level, or we all crash.
put your helmet on then…
FAZ and DRV +
hey fly,dude you got da coin, try the northshore of chi town,you’ll fit in with da rest of da jitbags your used to :p