As a civilian, a foreclosure is when you're tossed out of "your" house. All these notices and stuff, they're useful as early warning of problems, but the foreclosure in itself is the loss of the property.
It would help if data providers agreed on definitions, or at least were explicit about what they are counting.
RealtyTrac is explicit. Its detractors just object that big numbers are scary numbers. The article explains that they count every interim event thus the NOD, preforeclosure and forclosure, etc. can show the same house several times. That makes as much sense as anything as long as it is documented.
Let's say for the sake of argument that a condo developer builds a high rise with 40 units and sells 18 units but for the life of him cannot unload the remaining 22.
He can't repay his construction loan and the bank forecloses.
Does this count as 22 foreclosures one each for each unsold unit?
No one gets evicted and since it is new construction the units may not even be 100% complete. Add to the fact that once the word spreads that the building is going into foreclosure, the unoccupied units might get stripped bare by thieves.
I bet this type of thing will become much more common and won't even get counted at all. The property will go straight on the bank's books for it to try to unload.
I can't tell you how many there are at any one moment, but I can tell you how to figure out how many there will be:
Take the total number of homes sold in 04,05, and 06.
Subtract the total number of people who bought a house they could afford (using 3x income) AND that they would actualy LIVE in. (Hint: it's rhymes with Hero).
At least, now with the Internet, the post-mortem from this credit debacle will be documented in detail. The best I am hoping for is that the shills take their appropriate place in history as a lesson to all of the would be shills out there. Of course, the doomsters will probably come up short, but sometimes ya got to make it exciting to move the mean prediction.
An enlightening information calculus, so to speak.
And don't forget to celebrate the heroes that died for your right to freedom of speech -- the freedom to communicate information and collectively improve our understanding.
"The less nice way to put it is that RealtyTrac is "ridiculous and irresponsible," which is what Colorado Division of Housing Director Kathi Williams said to the Rocky Mountain News this month."
'Hello Kettle? This is the Pot calling, you're black.'
Good thing we get such accurate numbers on things like: monthly new house sales (what do you mean a cancellation isn't still a sale), inflation, house price declines, etc... Are there really any honest numbers being reported out there?
I like seeing the NOD's and other preforeclosure filings. It's a measure of how stressed the market is, even if they sell out before foreclosure.
From The Housing Bubble Blog, this article tells it like it is:
Sean and Mary Dean live in Wesley Chapels Lexington Oaks golf course community. Their 2,550-square-foot stucco house isnt ugly. But their financial situation is.
Mary Dean complains theyre two months behind on their $1,750 monthly payment. By early June the bank has threatened to get tough. Sean Dean was laid off from his job. They have a For Sale sign out front, but no ones biting in the tepid market.
The HomeVestors team gives the house a once-over. Right-hand-man Ryan Rickard conferences with the Deans at the dining table. He tells the couple hell get them the best price he can, reminds them hes a no-hassle cash buyer.
After the 10-minute pitch, the team is back in the Expedition rocking down the highway to Tampa. Whats the deal? Carcary asks. If it was up to her, shed sign the contract right now, Rickard says. When I told them about the 80 other houses for sale in the neighborhood, they about spazzed.
Oops. Regarding the above, the couple was offered $165,000 on a house that will probably sell at a price of about $230,000 - $260,000. When it does, it will drive down comps for the rest of those 80 would-be sellers!
Once things move to a certain point, the price declines escalate rapidly. These prices correlate well with hard money lending - the amount of credit offered is about similar. This is Florida, but in another 8 months or so, it will be similar in quite a few places in CA.
Foreclosures are not the only number that matters by a long shot.
"The workers will recieve about 70% of their regular pay..."
That means their supply pipeline is filling up and we can next expect to see an unexpected rise in mfg inventory. That means lower transportation ton-miles... stop me when the word I'm thinking of comes to mind.
there has never been any doubt in my mind what is coming next, recession, and a very long difficult period to follow, sub-par growth and low total returns.
Most need to be hit in the head with a two-by-four before they understand the underlying fundamentals are simply horrific.
It seems most believe that the current cycle is perpetual, dman rude awakening they have coming.
And, the funny thing is the last recession was such a short time ago. What short memories we have.
My belief is that this will be much more prolonged and very difficult for many.
If the US begins to manifest recession symptoms, the Chinese will strengthen the Yuan. They understand that their prosperity is dependent on the US consumer. With a weaker dollar, US products will have increased external demand. US corporations, which have been gathering huge amounts of cash on their balance sheets, will begin expand again. The deficit will drop. Income tax collection will rise. It'll be morning in America - again.
Of course, the doomsters will probably come up short, but sometimes ya got to make it exciting to move the mean prediction.
The effects of the Great Depression appear to have been documented fairly; it's only the cause(s) that appear to be subject to ongoing political & economic revisionism.
there has never been any doubt in my mind what is coming next, recession, and a very long difficult period to follow
Were this only a monster housing bubble, I would agree. Since it's actually a global debt bubble of historic proportions, I full expect a depression.
With a weaker dollar... It'll be morning in America - again.
Uh, Curious... haven't you been paying attention? The dollar's already fallen through the floor yet exactly the opposite effects have resulted.
BTW, ECRI econ-meisters are talking about no chance of recession due to recent "stronger housing activity." WLI "growth rate" is at 3-year high. Amazing.
Robert Cote has it exactly right on RealtyTrac. There is nothing secret about their numbers, they tell you straight up what they're telling you.
RealtyTrac seems to have the biggest geographic base which is why I find them the most reliable of the foreclosure reporters. There's nothing wrong with their data and they're not trying to pull the wool over anybody's eyes.
Curious has this (knot) all figured out in less than half a dozen lines, so tis not the horrible rat's nest it appears.
No.
It is soon to B morning again. For you night owls I suppose this is a warning, but for the rest of us, more probably only a dim flashlight in the dark.
So reassuring for the only somewhat curious, no? Hit me over the head with this baseball bat so I can reach the same mental state and sample the Nirvana.
["They (China) understand that their prosperity is dependent on the US consumer."]
Distinguish the role of transnational corporations in "They" and recognize the global shift underway which sees the Euro/China trade larger (and increasing) than the US/China trade. Wake up to the role that the fx you cite as the Morning rescue is the current problem --facilitated by those very transnationals whose profits depend on an over-valued dollar.
Not only the deficit will drop as the US imports less following the sagging US consumer, currently 3/4 of GDP, no? And those income taxes largely dependent on recent but now zero or negative capital gains from bloated housing prices are already impacting municipal budgets...no? The heist of tax cuts in the past have allowed those sources of tax revenue to flee the country for greener pastures...check China FDI and see if it ain't so.
Time for a fresh set of batteries in that flashlight, Curious.
ForeclosureRadar.com has the most accurate data on the CA market. They cover only CA.
I spent an entire morning comparing my subscription to foreclosure.com to ForeclosureRadar.com.
I cancelled RealtyTrac.com, because they do not eliminate NODs that are brought current. They overstate foreclosures.
As a housing analyst, I need accuracy. That's why I take with a grain of salt the MBA purchase application index, Case-Shiller index, OFHEO index, the median, new home sales, $/sq ft, etc. The data is completely messed up.
I am surprised that curious did not include that businesses would pick up the slack from a deteriorating consumer.
While the consumer is busy de-coupling from their home, the world is aligned at the hip with the US and de-coupling on the world front is about as likely as GE becoming an LBO target.
You are not helping yourself by placing too much information in an unclear way.
What do you want to say ?
can you find one number to show what you want to say ?
giving people long list of numbers does not help . Giving people two superimposed graphs with conflicting trends up down up and down up down) does not help.
People stopped wanting to rent because they felt the need to buy.
Perhaps it will reverse.
People will stop wanting to buy because they feel the need to rent.
If people need something, it's price tends to go up.
From October, 2005...
Home Ownership Costs and Core Inflation Since 1983, home prices and inflation have mostly gone their separate ways. At times there has been a distinct inverse relationship between the two, as can clearly be seen during the housing boom and bust of the late 1980s. During this time, initially home prices rose as inflation fell. Then, when that housing boom went bust in 1990-1991, inflation ticked up noticeably.
This is significant and, no doubt, driven by the same dynamic that has been evident in recent years - as home prices rise, homeownership rises and demand for rental housing wanes, therefore depressing rental prices and ultimately putting downward pressure on the CPI. When housing cools, this process works in reverse - higher demand for rental housing, and upward pressure on the CPI.
We baked-in some inflation in my opinion. Now it's payback time, well, maybe. About the only thing truly clear to me is that if housing prices fall, rents won't fall nearly as much. If nothing else, they simply didn't rise much during the boom.
Here's some commentary from November, 2006.
Issue Matrix for BoJ and the Fed Now that house prices are soft, families are reluctant to buy homes, with the result that rental housing is more expensive. Ironically, as house prices fall, the owner equivalent rent component is surging. In September, owner equivalent rent was up by 4.0% year on year, compared with 2.1% for all items and 2.9% for all items less food and energy.
Many of the CPI bashers felt the housing inflation was missing from the CPI, since it did not capture the price increases of the housing boom. I'm willing to give slightly more credit to the government (pun intended). I think it was either justified to be missing (unsustainable housing boom) and/or merely delayed (if the housing boom is sustainable). Probably a bit of both.
I think the government is justified to use rental prices in the CPI for this very reason. Imagine if the CPI was tied to the Nasdaq as the dotcom bubble imploded. We'd be screaming bloody murder as it popped. 75% deflation? Here's your Social Security check suckers!
In other words, since rental prices are more stable than housing prices I don't have a problem with the way the CPI is calculated in this instance.
For the owner occupied properties to begin depressing the rental market the owners have to wrap the head around the fact that their owner occupied properties are now indeed valueless/worth much less unless rented. Thats quite a mind warp. At the moment in many areas prices are not majorly down and are even up (yeah you dont want to believe it but it seems true). So it takes a while for the process to unfold.
Housing recessions always happen in slow motion - whatever some headline figures might indicate.
"but there are more empty homes so rent should go down."
The problem in my area anyway is that the owners' monthly payments are so high they can't afford to rent their places out for less. Either they stand idle waiting for the right price, or they become the banks' property. When your monthly payment on a house is $1700, you can't really rent the place out for $1200. Even if you have to lose it. It's better than hemorrhaging to death.
Also, about RealtyTrac, I have noticed in my area the foreclosure info from months back just doesn't drop off the system, even after the places have long been sold off. The info is out of date. I look at the national total #s in foreclosure.com just to watch trends - around 193,000 at this moment, and I just keep an eye on swings one way or the other. There needs to be standardization of foreclosure statistics if we want accurate info.
risk capital,
So is the next shoe a rise in refined fuel inventories? At least these things happen at speeds we can follow unlike housing that just teeters as the supports rot out underneath.
"May 29 (Bloomberg) -- New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington.
Monthly construction starts would need to jump by 21 percent to reach Seiders's benchmark for full recovery, which is 1.85 million. There were 1.53 million in April, the Commerce Department said. At the height of the five-year housing boom in January 2006, construction began on 2.29 million homes.
We've fallen way below trend because we soared way above trend during boom times,'' Seiders said in an interview.The upswing will be relatively slow, unlike earlier cycles.''
We're still being hit pretty hard by the subprime-related mortgage market problem,'' Seiders said.One of the biggest unknowns right now is how serious the change on the mortgages side will be on home sales.'
Most would-be landlords that can't sell also face negative cashflows if they choose to rent. In CA, rents are about 4% of the home's value (a 25 "p/e" or 4% rental yield). That rent does not cover mortgage interest payments, association fees, maintenance, property taxes, etc.
Rents have to rise to bring rental yields back into line, or prices fall, or, most likely, both. The end of a cycle usually sees rents providing a decent return over treasuries, and I suspect this one will be no different. Were rents to stagnate, this would imply a 40% decline in CA home prices.
I got stuck being a landlord on a condo in D.C. after the 80's condo bubble (my wife bought it before we were married). It was negative cashflow but luckily we could hang on. The peak-to-trough decline in the condo value was 33%, but we still raised the rent every year we had the condo.
RealtyTrac and DataQuick differences - thats what happens when you let the computer do all the work for you. Do they have comparable numbers through the whole cycle... back before '90? or are we measuring NODs and foreclosures against a spectacular 2005 ("0") where it was just easier to sell than to default. Maybe these outfits should hire trained statisticians and real estate analysts to supplement the journalists, etc. That knowledge doesn't already come burned into the P5 chip, dude.
Yal and Stag Mark - Rent component rising - read in Financial Sense a week or 2 ago that rapid housing appreciation lowered our effective rent cost in the CPI housing component and that the slowdown in appreciation will make it rise. Mathmatically makes sense but is really going to suck for many.
I have rented 5 apartments (3 with roommates, 2 alone).
I have rented 0 single family homes.
When I was a renter, I was looking for the smallest place I could live in comfortably. It would not have mattered how many vacant homes were available. Unless the price was drastically reduced, I had no interest in them. There were better places I could put my money (like saving up for an actual house or simply having more disposable income).
When I was a home buyer, I was looking for a larger place than I could live in comfortably. That way I wouldn't have to move someday just because I outgrew my house. Further, I saw my home as an investment (which should at least keep up with inflation long-term). In hindsight, 1997 was a good year to buy apparently.
I'd say most of my friends fell into this same mindset. Can't speak for everyone though.
I did have one friend who was an exception. He rented a single family house with some friends. It can be cost effective to rent a house if you have a LOT of friends. Then again, those were the college days.
If home vacancies rise, I might expect the rents of single family homes to fall, but not necessarily the rents of apartment complexes (where I would guess most people choose to rent).
UK bubble (funny)
YouTube - HOUSE PRICE CRASH
As a civilian, a foreclosure is when you're tossed out of "your" house. All these notices and stuff, they're useful as early warning of problems, but the foreclosure in itself is the loss of the property.
It would help if data providers agreed on definitions, or at least were explicit about what they are counting.
RealtyTrac is explicit. Its detractors just object that big numbers are scary numbers. The article explains that they count every interim event thus the NOD, preforeclosure and forclosure, etc. can show the same house several times. That makes as much sense as anything as long as it is documented.
Let's say for the sake of argument that a condo developer builds a high rise with 40 units and sells 18 units but for the life of him cannot unload the remaining 22.
He can't repay his construction loan and the bank forecloses.
Does this count as 22 foreclosures one each for each unsold unit?
No one gets evicted and since it is new construction the units may not even be 100% complete. Add to the fact that once the word spreads that the building is going into foreclosure, the unoccupied units might get stripped bare by thieves.
I bet this type of thing will become much more common and won't even get counted at all. The property will go straight on the bank's books for it to try to unload.
I can't tell you how many there are at any one moment, but I can tell you how to figure out how many there will be:
Take the total number of homes sold in 04,05, and 06.
Subtract the total number of people who bought a house they could afford (using 3x income) AND that they would actualy LIVE in. (Hint: it's rhymes with Hero).
There you have the total forclosure numbers.
"No one is measuring the truth," said Mark Zandi
Some people are at least trying though.
At least, now with the Internet, the post-mortem from this credit debacle will be documented in detail. The best I am hoping for is that the shills take their appropriate place in history as a lesson to all of the would be shills out there. Of course, the doomsters will probably come up short, but sometimes ya got to make it exciting to move the mean prediction.
An enlightening information calculus, so to speak.
And don't forget to celebrate the heroes that died for your right to freedom of speech -- the freedom to communicate information and collectively improve our understanding.
"The less nice way to put it is that RealtyTrac is "ridiculous and irresponsible," which is what Colorado Division of Housing Director Kathi Williams said to the Rocky Mountain News this month."
'Hello Kettle? This is the Pot calling, you're black.'
Good thing we get such accurate numbers on things like: monthly new house sales (what do you mean a cancellation isn't still a sale), inflation, house price declines, etc... Are there really any honest numbers being reported out there?
o spillover-
courier-journal.com | Louisville | The Courier-Journal
I like seeing the NOD's and other preforeclosure filings. It's a measure of how stressed the market is, even if they sell out before foreclosure.
From The Housing Bubble Blog, this article tells it like it is:
Sean and Mary Dean live in Wesley Chapels Lexington Oaks golf course community. Their 2,550-square-foot stucco house isnt ugly. But their financial situation is.
Mary Dean complains theyre two months behind on their $1,750 monthly payment. By early June the bank has threatened to get tough. Sean Dean was laid off from his job. They have a For Sale sign out front, but no ones biting in the tepid market.
The HomeVestors team gives the house a once-over. Right-hand-man Ryan Rickard conferences with the Deans at the dining table. He tells the couple hell get them the best price he can, reminds them hes a no-hassle cash buyer.
After the 10-minute pitch, the team is back in the Expedition rocking down the highway to Tampa. Whats the deal? Carcary asks. If it was up to her, shed sign the contract right now, Rickard says. When I told them about the 80 other houses for sale in the neighborhood, they about spazzed.
Oops. Regarding the above, the couple was offered $165,000 on a house that will probably sell at a price of about $230,000 - $260,000. When it does, it will drive down comps for the rest of those 80 would-be sellers!
Once things move to a certain point, the price declines escalate rapidly. These prices correlate well with hard money lending - the amount of credit offered is about similar. This is Florida, but in another 8 months or so, it will be similar in quite a few places in CA.
Foreclosures are not the only number that matters by a long shot.
risk capital,
"The workers will recieve about 70% of their regular pay..."
That means their supply pipeline is filling up and we can next expect to see an unexpected rise in mfg inventory. That means lower transportation ton-miles... stop me when the word I'm thinking of comes to mind.
Nice trick. No numbers - no bubble.
This site provides current REOs for Wells Fargo
PASREO - Real Estate Owned Properties
On 2/1/2007 in CA 960 REOs
Today in CA 2080 REOs.
On 2/1/2007 in FL 260 REOs
Today in FL 620 REOs.
Data on CFC REOs:
8,593 REO's listed for sale Total Asking Price: $1,666,778,050 - Countrywide Foreclosures (REO) Blog
Robert,
there has never been any doubt in my mind what is coming next, recession, and a very long difficult period to follow, sub-par growth and low total returns.
Most need to be hit in the head with a two-by-four before they understand the underlying fundamentals are simply horrific.
It seems most believe that the current cycle is perpetual, dman rude awakening they have coming.
And, the funny thing is the last recession was such a short time ago. What short memories we have.
My belief is that this will be much more prolonged and very difficult for many.
If the US begins to manifest recession symptoms, the Chinese will strengthen the Yuan. They understand that their prosperity is dependent on the US consumer. With a weaker dollar, US products will have increased external demand. US corporations, which have been gathering huge amounts of cash on their balance sheets, will begin expand again. The deficit will drop. Income tax collection will rise. It'll be morning in America - again.
The latest housing data suggest that the housing recession is not bottoming out
Nouriel Roubini | May 28, 2007
RGE - Nouriel Roubini's Global EconoMonitor
Of course, the doomsters will probably come up short, but sometimes ya got to make it exciting to move the mean prediction.
The effects of the Great Depression appear to have been documented fairly; it's only the cause(s) that appear to be subject to ongoing political & economic revisionism.
there has never been any doubt in my mind what is coming next, recession, and a very long difficult period to follow
Were this only a monster housing bubble, I would agree. Since it's actually a global debt bubble of historic proportions, I full expect a depression.
With a weaker dollar... It'll be morning in America - again.
Uh, Curious... haven't you been paying attention? The dollar's already fallen through the floor yet exactly the opposite effects have resulted.
Inflation
The Big Picture
"The latest housing data suggest that the housing recession is not bottoming out "
Here is a look at California--
The California Housing Report: Details In the Data Show A Broad-based Price Decline:
August 12,2006
BTW, ECRI econ-meisters are talking about no chance of recession due to recent "stronger housing activity." WLI "growth rate" is at 3-year high. Amazing.
Jas
Robert Cote has it exactly right on RealtyTrac. There is nothing secret about their numbers, they tell you straight up what they're telling you.
RealtyTrac seems to have the biggest geographic base which is why I find them the most reliable of the foreclosure reporters. There's nothing wrong with their data and they're not trying to pull the wool over anybody's eyes.
Curious has this (knot) all figured out in less than half a dozen lines, so tis not the horrible rat's nest it appears.
No.
It is soon to B morning again. For you night owls I suppose this is a warning, but for the rest of us, more probably only a dim flashlight in the dark.
So reassuring for the only somewhat curious, no? Hit me over the head with this baseball bat so I can reach the same mental state and sample the Nirvana.
["They (China) understand that their prosperity is dependent on the US consumer."]
Distinguish the role of transnational corporations in "They" and recognize the global shift underway which sees the Euro/China trade larger (and increasing) than the US/China trade. Wake up to the role that the fx you cite as the Morning rescue is the current problem --facilitated by those very transnationals whose profits depend on an over-valued dollar.
Not only the deficit will drop as the US imports less following the sagging US consumer, currently 3/4 of GDP, no? And those income taxes largely dependent on recent but now zero or negative capital gains from bloated housing prices are already impacting municipal budgets...no? The heist of tax cuts in the past have allowed those sources of tax revenue to flee the country for greener pastures...check China FDI and see if it ain't so.
Time for a fresh set of batteries in that flashlight, Curious.
Tanta-
they're blaming each other again-
Credit Suisse Sued Over Losses on Subprime-Loan Bonds (Update3) - Bloomberg.com
ForeclosureRadar.com has the most accurate data on the CA market. They cover only CA.
I spent an entire morning comparing my subscription to foreclosure.com to ForeclosureRadar.com.
I cancelled RealtyTrac.com, because they do not eliminate NODs that are brought current. They overstate foreclosures.
As a housing analyst, I need accuracy. That's why I take with a grain of salt the MBA purchase application index, Case-Shiller index, OFHEO index, the median, new home sales, $/sq ft, etc. The data is completely messed up.
calmo-
I am surprised that curious did not include that businesses would pick up the slack from a deteriorating consumer.
While the consumer is busy de-coupling from their home, the world is aligned at the hip with the US and de-coupling on the world front is about as likely as GE becoming an LBO target.
There once were some homes foreclosed
As the mortgage payments rose
The least prime did fail
To put checks in the mail
But how many more? Who knows!
I have stopped understanding at all.
why would anyone buy this when prices have just started to fall and so many homes are empty :
Tishman, Lehman May Acquire Archstone for $12 Billion (Update4) - Bloomberg.com
why would rents go higher ?
I am at a loss to understand.
Jas,
I have made this comment before and I'll make it again.
August 12,2006
You are not helping yourself by placing too much information in an unclear way.
What do you want to say ?
can you find one number to show what you want to say ?
giving people long list of numbers does not help . Giving people two superimposed graphs with conflicting trends up down up and down up down) does not help.
why would rents go higher ?
People stopped wanting to rent because they felt the need to buy.
Perhaps it will reverse.
People will stop wanting to buy because they feel the need to rent.
If people need something, it's price tends to go up.
From October, 2005...
Home Ownership Costs and Core Inflation
Since 1983, home prices and inflation have mostly gone their separate ways. At times there has been a distinct inverse relationship between the two, as can clearly be seen during the housing boom and bust of the late 1980s. During this time, initially home prices rose as inflation fell. Then, when that housing boom went bust in 1990-1991, inflation ticked up noticeably.
This is significant and, no doubt, driven by the same dynamic that has been evident in recent years - as home prices rise, homeownership rises and demand for rental housing wanes, therefore depressing rental prices and ultimately putting downward pressure on the CPI. When housing cools, this process works in reverse - higher demand for rental housing, and upward pressure on the CPI.
We baked-in some inflation in my opinion. Now it's payback time, well, maybe. About the only thing truly clear to me is that if housing prices fall, rents won't fall nearly as much. If nothing else, they simply didn't rise much during the boom.
Here's some commentary from November, 2006.
Issue Matrix for BoJ and the Fed
Now that house prices are soft, families are reluctant to buy homes, with the result that rental housing is more expensive. Ironically, as house prices fall, the owner equivalent rent component is surging. In September, owner equivalent rent was up by 4.0% year on year, compared with 2.1% for all items and 2.9% for all items less food and energy.
Many of the CPI bashers felt the housing inflation was missing from the CPI, since it did not capture the price increases of the housing boom. I'm willing to give slightly more credit to the government (pun intended). I think it was either justified to be missing (unsustainable housing boom) and/or merely delayed (if the housing boom is sustainable). Probably a bit of both.
I think the government is justified to use rental prices in the CPI for this very reason. Imagine if the CPI was tied to the Nasdaq as the dotcom bubble imploded. We'd be screaming bloody murder as it popped. 75% deflation? Here's your Social Security check suckers!
In other words, since rental prices are more stable than housing prices I don't have a problem with the way the CPI is calculated in this instance.
Hey, just my 2 cents worth.
but there are more empty homes so rent should go down.
in any case this is unrealetd:
China Is at Risk of Asset Bubble, Hong Kong Central Bank Warns - WSJ.com
Yal
There is nothing mysterious about rents now rising.
Subprime took away tremendous demand for rental units
YouTube - William "Bill" Bronchick - How to take Advantage of the Subprime Meltdown
Yal
For the owner occupied properties to begin depressing the rental market the owners have to wrap the head around the fact that their owner occupied properties are now indeed valueless/worth much less unless rented. Thats quite a mind warp. At the moment in many areas prices are not majorly down and are even up (yeah you dont want to believe it but it seems true). So it takes a while for the process to unfold.
Housing recessions always happen in slow motion - whatever some headline figures might indicate.
tonnage declines-
http://www.truckline.com/NR/exeres/682A9991-69BF-4D3E-9B7F-6475466984D9.htm
"but there are more empty homes so rent should go down."
The problem in my area anyway is that the owners' monthly payments are so high they can't afford to rent their places out for less. Either they stand idle waiting for the right price, or they become the banks' property. When your monthly payment on a house is $1700, you can't really rent the place out for $1200. Even if you have to lose it. It's better than hemorrhaging to death.
Also, about RealtyTrac, I have noticed in my area the foreclosure info from months back just doesn't drop off the system, even after the places have long been sold off. The info is out of date. I look at the national total #s in foreclosure.com just to watch trends - around 193,000 at this moment, and I just keep an eye on swings one way or the other. There needs to be standardization of foreclosure statistics if we want accurate info.
risk capital,
So is the next shoe a rise in refined fuel inventories? At least these things happen at speeds we can follow unlike housing that just teeters as the supports rot out underneath.
Seiders is off the Kool Aide:
U.S. Home Construction Bust May Last Until 2011 (Update1) - Bloomberg.com
"May 29 (Bloomberg) -- New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington.
Monthly construction starts would need to jump by 21 percent to reach Seiders's benchmark for full recovery, which is 1.85 million. There were 1.53 million in April, the Commerce Department said. At the height of the five-year housing boom in January 2006, construction began on 2.29 million homes.
We've fallen way below trend because we soared way above trend during boom times,'' Seiders said in an interview.The upswing will be relatively slow, unlike earlier cycles.''
We're still being hit pretty hard by the subprime-related mortgage market problem,'' Seiders said.One of the biggest unknowns right now is how serious the change on the mortgages side will be on home sales.'
Yal,
Most would-be landlords that can't sell also face negative cashflows if they choose to rent. In CA, rents are about 4% of the home's value (a 25 "p/e" or 4% rental yield). That rent does not cover mortgage interest payments, association fees, maintenance, property taxes, etc.
Rents have to rise to bring rental yields back into line, or prices fall, or, most likely, both. The end of a cycle usually sees rents providing a decent return over treasuries, and I suspect this one will be no different. Were rents to stagnate, this would imply a 40% decline in CA home prices.
I got stuck being a landlord on a condo in D.C. after the 80's condo bubble (my wife bought it before we were married). It was negative cashflow but luckily we could hang on. The peak-to-trough decline in the condo value was 33%, but we still raised the rent every year we had the condo.
David,
Rents do not go up just because land-lords wants them to go up.
It is a supply and demand. There is ample supply. Is the demand fior rend suddenly so much bigger ?
many would be renters got a subprime loan and are struggling to pay it but still have not defaulted.
In some areas, deed restrictions and local laws, limit or prohibit renting.
That will depress the supply for renting .
Realty Times - May Roundup
RealtyTrac and DataQuick differences - thats what happens when you let the computer do all the work for you. Do they have comparable numbers through the whole cycle... back before '90? or are we measuring NODs and foreclosures against a spectacular 2005 ("0") where it was just easier to sell than to default. Maybe these outfits should hire trained statisticians and real estate analysts to supplement the journalists, etc. That knowledge doesn't already come burned into the P5 chip, dude.
Yal and Stag Mark - Rent component rising - read in Financial Sense a week or 2 ago that rapid housing appreciation lowered our effective rent cost in the CPI housing component and that the slowdown in appreciation will make it rise. Mathmatically makes sense but is really going to suck for many.
S&P/Case-Shiller Home Prices Fell 1.4% in March, Index Shows
U.S. Home Prices Drop for the First Time in 16 Years (Update2) - Bloomberg.com
CR: U.S. Home Prices Drop for the First Time in 16 Years (Update2) - Bloomberg.com
FirstFed dleinquencies (so i am told) are 18% higher than a month ago.
it may be in here: Expired
We better hope so. If it gets to the point that they can do w/o us we are REALLY scroomed.
Yal,
For what it is worth, in my life...
I have rented 5 apartments (3 with roommates, 2 alone).
I have rented 0 single family homes.
When I was a renter, I was looking for the smallest place I could live in comfortably. It would not have mattered how many vacant homes were available. Unless the price was drastically reduced, I had no interest in them. There were better places I could put my money (like saving up for an actual house or simply having more disposable income).
When I was a home buyer, I was looking for a larger place than I could live in comfortably. That way I wouldn't have to move someday just because I outgrew my house. Further, I saw my home as an investment (which should at least keep up with inflation long-term). In hindsight, 1997 was a good year to buy apparently.
I'd say most of my friends fell into this same mindset. Can't speak for everyone though.
I did have one friend who was an exception. He rented a single family house with some friends. It can be cost effective to rent a house if you have a LOT of friends. Then again, those were the college days.
If home vacancies rise, I might expect the rents of single family homes to fall, but not necessarily the rents of apartment complexes (where I would guess most people choose to rent).