April 24, 2014

Bits Bucket for April 24, 2014

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April 23, 2014

A Feeding Frenzy, Then Everything Sort Of Stopped

The Orange County Register reports from California. “OK, now I’m a bit worried. The local homebuying slump extended itself into the start of the traditional house-shopping season – and Southern Californians certainly can’t blame ‘bad winter weather’ for the sluggishness. DataQuick reported that it was the slowest-selling March in six years, but there’s also more to be nervous about: While March’s sales count is up 26 percent from February, that’s limited oomph for the unofficial opening of the prime house-hunting period. February-to-March sales have averaged a 36 percent increase since 1988.”

“March sales were off 14 percent in a year, the sixth consecutive year-over-year drop. The five previous six-month dips were tied to the two most recent housing debacles. March 2006: The longest sales drop in 11 years was an early red flag that bad stuff was about to happen. Southern California homebuying would fall on a year-over-year basis for 15 more months – including an annualized drop of 32 percent by March 2007. Intriguingly, prices would rise 5 percent in the year after March 2006, only to tumble by 24 percent in the following 12 months.”

The Associated Press. “DataQuick said Sales in a six-county region of Southern California tumbled 14.3 percent from a year earlier, while sales in the nine-county San Francisco Bay Area slid 12.9 percent. Selma Hepp, senior economist at the California Association of Realtors, pinned weaker sales on declining interest from investors and lack of affordability after huge price increases during the first half of last year sidelined potential buyers.”

“‘There’s sort of a waiting game,’ she said. ‘Prices were going up so fast, there was such a feeding frenzy until June or July. Then everything sort of stopped.’”

The Daily News. “The number of homes for sale soared 50 percent in the San Fernando Valley during March, but sales remained soft as prices crested the half-million-dollar mark. At the end of March, there were 1,520 previously owned houses and condos listed for sale, up from 1,015 a year earlier, said Southland Regional Association of Realtors.”

“‘It stands to reason that the market would slow down now that the bargains and deeply discounted prices are gone,’ association CEO Jim Link said. ‘I’m optimistic, but I truly believe we’re in a holding pattern, waiting for buyers to accept that they cannot get bargain-basement prices and for sellers to understand there is a clear limit on their asking prices.’”

The Desert Sun. “Housing affordability in California is a major concern, said economist Leslie Appleton-Young , who analyzes housing data for the California Association of Realtors. She pointed to a chart showing that 28 percent of the state market was first-time buyers. ‘This is the chart that’s the biggest issue going forward,’ Appleton-Young said. ‘We still need to have first-time home-buyers be 50 percent of the market. You need to get people on that ownership ladder.’”

“In January, the FHA loan limit in Riverside County dropped 29 percent from $500,000 to $355,350. The drop shuts out buyers who had wanted to purchase a more expensive primary home. For many first-time buyers, FHA loans are their only option.”

“But sellers and their agents who were too optimistic over the winter have had to chop their asking prices. It’s a trend across the major metro areas of California, the economist said. During a recent visit to Manhattan Beach, Appleton-Young noticed six listings with new price reductions. ‘Price adjustments have helped a lot’ to sell luxury homes sitting on the market, said Sherry Owens, an Indian Wells real estate agent.”

The Los Angeles Times. “New California foreclosure starts rose in the first quarter, although they remain at pre-bust levels. Default notices — the first step in the state’s foreclosure process — jumped 6% from the previous quarter to 19,215, research firm DataQuick said Tuesday. New foreclosure filings rose 3.5% from the first quarter of 2013.”

“DataQuick analyst John Karevoll said the rise from the fourth quarter, the lowest level since 2005, probably came from lenders working through their delinquent loan pipelines and not from more financial distress. ‘They may well be just working their way through a backlog, stacks of paper piled high on desks,’ he said.”

“The year-over-year increase was the first such rise since the last three months of 2009. However, the increase came solely from a significant surge in January, as notices of default jumped 64% from a year earlier.”

Bits Bucket for April 23, 2014

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April 22, 2014

The Reality Behind Bikini-Clad Models

The South China Morning Post reports on Hong Kong. “Home sales in the secondary market registered strong growth during the Easter holiday as more owners joined the price-cutting strategy employed by developers to spark buying interest. ‘It was driven by more owners willing to offer discounts after developers’ aggressive market launches at competitive prices to entice buyers,’ said Sammy Po Siu-ming, chief executive of the residential department at Midland.”

“The agency said a three-bedroom, 702-square-foot unit at Yuan Kung Mansion in Taikoo Shing changed hands for HK$8.75 million, below the asking price of HK$8.9 million.”

The International Business Times on China. “Every month, the agents at a small real estate office in Ningbo, China — a booming coastal city south of Shanghai — gather to discuss their so-called ‘trouble projects,’ meaning developments needing an extra push to fill vacancies. In the southwestern city of Kunming, some developers now advertise ‘buy one floor, get two floors free’ deals at an apartment complex called Helen International. The apartments are located in the Chenggong area of the city, known for being one of China’s many grossly overbuilt ‘ghost cities.’”

“In the northern Chinese city of Dongying, in Shandong province, one developer has been employing bikini-clad foreign models, a rarity in China, to lure buyers. The scantily dressed women sat atop shiny luxury cars parked in front of big promotional billboards showing projected images of what the development would eventually look like — an impressive space, complete with pristine pools, and other state-of-the-art facilities. The reality behind the models was less enthralling: two towering half-finished concrete skeletons.”

The Sydney Morning Herald. “China’s new-home price increases eased across the country last month amid tighter credit that led to developer discounts. Developers including Agile Property Holdings and Wharf Holdings cut prices in some eastern cities this year as market sentiment weakened on tight liquidity. China’s broadest measure of new credit fell 19 per cent in March from a year earlier and money supply grew at the slowest pace on record, central bank data showed.”

“‘Mortgage availability is really constrained,’ Michael Klibaner, greater China research head at Jones Lang LaSalle said. ”Right now, the buyers are still willing, they’re just constrained because they can’t get the debt. If sentiments start deteriorating, that’s a much bigger problem.’”

From Bloomberg. “In front of construction-site billboards depicting Tiffany and Louis Vuitton shops, Liu Cuiying squats on the bank of the Han river, washing orange bedsheets. Liu lives in a run-down house in the village of Luying on the outskirts of the city of Laohekou in central China. She says her land was bought by the local government as part of a plan to expand the city to more than twice its size, but she hasn’t been relocated to a new home. In other villages nearby, farmers say the government promised to buy their houses and then didn’t have the money to pay.”

“They are caught between a local government that wants to extend China’s three-decade investment spree and President Xi Jinping’s determination to rein in lending and real-estate development that caused debt to soar. ‘What do I have? I have nothing!’ she says repeatedly as she beats the sheets on the bank with a wooden bat. ‘My land is gone. What are we going to do?’”

From NTD TV. “Chinese writer Gordon Chang commented that the world’s largest retailer Walmart will close it’s Zhaohui store in Hangzhou on April 23. This is part of Walmart’s plan to cut unprofitable stores. At the end of last year, due to excessive construction, the average occupancy rate for A class office buildings in Hangzhou was only 30%. Residential prices fell because of weak occupancy rates.”

“Mr Li, Shanghai real estate agent: ‘The second hand housing prices can be discussed with a little loose house price. This is not like 13 years ago, where the landlord offered the fixed price. Last year, housing prices were actually falling without inflation if it is not increasing. The price should fall in three-wire or four-tier cities.’”

“Mr Wu, Foshan City Realtor: ‘Basically the prices are falling. More speculation and more people borrowing money make the prices deviate from market prices, and to produce bubbles. Every year’s increasing tax is earned by the government, and the government simply do business without capital. China’s economy is now supported by real estate, so if the real estate collapses, then the economy will collapse also.’”

The New York Times. “In thousands of pages of corporate documents describing these ventures, the name that never appears is his own: Zhou Yongkang, the formidable Chinese Communist Party leader who served as China’s top security official and the de facto boss of its oil industry. But President Xi Jinping has targeted Zhou in an extraordinary corruption inquiry, a first for a Chinese party leader of Zhou’s rank, and put his family’s extensive business interests in the cross hairs.”

“The case has the potential to alter the political compact of China’s boom years. For many elite clans, like Zhou’s, acquiring stakes in lucrative enterprises that did business in the realm that the family patriarch supervised was not effectively banned—and sometimes not even well disguised. Zhan Minli lives in an Orange County, Calif., retirement community. Short and silver haired, she opened the door to her house after reading written questions passed under her door about the companies she owned in China.”

“Zhan said the holdings in her name were actually controlled by Zhou Yongkang’s son, Zhou Bin, who is married to her daughter, Huang Wan. She said it was customary in China to put assets in the name of one’s parents, and suggested that her son-in-law used her name because his own mother had died in a traffic accident. Zhan said she and her husband were longtime US passport holders despite Chinese documents that said they had retained Chinese citizenship.”

“Property records show they have lived in the US for nearly three decades, moving from Maryland to New Jersey and finally to Southern California, where their house has an estimated value of more than $700,000, according to the online real estate database Zillow. Zhan’s home in Beijing looks to have been much more expensive. In 2010, a company document listed her residence in a luxury development in northeastern Beijing where units can sell for more than $11 million.”

“Her official business address was listed several miles away inside a dusty compound at the end of a dirt road. The building appears long abandoned, but for the red light on a surveillance camera peering from above the front entrance and the ferocious barking of a dog. Several firms in deals with CNPC are registered at the address under Zhan’s name and that of a business partner, identified by the Chinese business magazine Caixin as a college friend of and proxy for Zhou’s son.”.

“The companies have invested in gas projects on Hainan Island and in Hebei province outside Beijing as well as in a housing development outside the capital. Zhan denied any wrongdoing or having much knowledge of these investments. ‘I’ve never seen the oil field we owned,’ she said. ‘I don’t know how money laundering works.’”

Bits Bucket for April 22, 2014

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April 21, 2014

Caught Up In The Easy Money

The Tampa Bay Times reports from Florida. “Seven of the largest investors buying homes here have in two years spent more than $1 billion, amassing 6,800 houses in an unprecedented land grab, a Tampa Bay Times analysis has found. Now, for investors, comes the hard part. They must fix up, rent out and maintain thousands of widespread homes, all the while pulling in tenants and convincing their financial backers this untested business is worth the risk. At the start, some investors went on a leasing spree, renting to ‘anybody who was able to gather a security deposit,’ analyst said David Guarino, a senior research analyst with John Burns Real Estate Consulting.”

“But the plan backfired, with many renters falling behind on their payments. Between October and January, the payments from a highly watched set of Invitation Homes rents fell 7 percent, data from Morningstar show. ‘You have a guy in a huge tower in New York buying homes in Tampa, but they don’t understand the local market,’ said Guarino. ‘They got in thinking it’d be easy, and they’d make a lot of money … but they’re starting to understand it’s not as easy as they thought.’”

“Investors landed here at a time when the average household’s spending on rent is near its highest point in the last three decades, Zillow data show. But even at that baseline, market watchers said, investors have set rents surprisingly high. Peter Murphy, president of Home Encounter, a Tampa property management firm, said investors showed ’some big gaps between projection and reality’ on what renters here could afford.”

“Holding that hard line has crimped the number of homes investors have been able to rent. ‘They’ve been very non-negotiable,’ said Jack McCabe, a Deerfield Beach housing consultant. ‘They’d rather let a home sit empty than taking a lesser amount of rent. Some thought they could raise their rents 10 percent a year, and that just isn’t going to happen. People just can’t afford that … when their income is flat or declining, which is what we have in Florida right now.’”

Click Orlando. “Realtor Ericka Lankford says more homeowners are opting to list their home because of the rise in prices. For buyers there is more out there to choose from. For example, February of last year a little over 7,000 homes were available. February 2014 more than 10,000 homes are on the market. ‘The median price for a home has gone up to $158,000 that’s 18 percent more than last year,’ she said.”

The Sun Sentinel. “Three in 10 Palm Beach County homeowners with a mortgage – nearly 119,000 people — owe at least 25 percent more than the properties are worth, first quarter figures from RealtyTrac show. Broward County has a similar profile, with 30 percent, or more than 153,600 people, seriously underwater. Most underwater borrowers bought or refinanced from 2004 to 2006 and saw their values tumble during the market meltdown.”

“Even with values increasing, these owners can’t sell unless they bring money to the closing table. ‘It’s horrible — your whole life is on hold,’ said David Dabby, a South Florida housing consultant.”

The Herald Tribune. “From the start of the year through the end of March, 69,971 homeowners in the Sarasota-Bradenton-North Port area owed 25 percent more on their loans than the value of the properties used to secure them, RealtyTrac Inc. shows. Those borrowers represent 28 percent of all properties with a mortgage during the first quarter of 2014.”

“Though the region’s median price for a single-family home has swelled from $137,500 in February 2011 to $200,000 this year, housing values have failed to keep pace. Realtors say that is because the rapid price hikes were the result of fewer discounted foreclosures and short sales rather than properties actually appreciating by that much. Those distressed sales are no longer pushing prices to the same degree. The result is an unusually high number of homeowners who are forced to wait out the housing rebound before they can sell.”

“‘There are a lot of people who’re upside down, but they can still afford their mortgages, so they can’t get out,’ said Marcus Vanzant, owner of Marcus & Co. Realty in Manatee County. ‘The days of buying a house and seeing your equity rise like the stock market is long gone. I still see it all of the time. People are taking big losses in order to be able to sell.’”

My Sun Coast. “About one in four Suncoast homeowners still find themselves underwater. ‘It doesn’t surprise me at all. The way everyone’s been buying houses around here and then all of a sudden everything goes downhill,’ said Homeowner Bill Friedman. He says he’s exhausted all his options, and sees foreclosure as inevitable. ‘We had to remortgage. We had to refinance a couple times because of the recession and everything else…losing jobs.’”

From WFLX. “The days that Bob Domanick and his neighbors can sit at their condo pool in Boynton Beach may be numbered. Each one may be forced to sell their units back to the company that owns the property. If a company owns 90 percent of the condo units on a property, it can purchase the remaining units for fair market value. The problem for these residents is that fair market value is a far cry from what they paid for their homes in 2006. ‘A lot of us are underwater, which means we owe more than they’re willing to give us, and that puts us in a tough position,’ said Domanick.”

From CBS 12 News. “A CBS 12 Waste Watch investigation has uncovered how a South Florida city lost hundreds of thousands of tax dollars handing out mortgages. According to documents from the Boynton Beach Community Redevelopment Agency, almost a third of the homes in the city’s homeowner assistance program went into foreclosure. That money is tax revenue from the city, county and state. ‘You try to make things good for people and give them a hand. Once in a while, it doesn’t work,’ Boynton Beach Mayor Jerry Taylor said.”

“Vivian Brooks, executive director of the Boynton Beach community redevelopment agency, says the city filed judgments against the people in an attempted to collect some of the funds. The program has been discontinued.”

The News Journal. “Former mortgage broker Christopher Mencis — one of the four main individuals indicted by a federal grand jury in a mortgage fraud operation that federal agents said cheated banks out of millions between 2006 and 2012 — testified on behalf of the government Friday. He blamed accused ringleader Jim Sotolongo for bringing him all the business that later materialized into fraudulent mortgage loan applications to banks. ‘I got caught up in the easy money,’ Mencis testified.”

“But Mencis’ testimony was contradicted by another government witness who said he was defrauded by the ring, a Pennsylvania carnival worker named George Goetz. Goetz’s sister used to work for Sotolongo and Garrett in the early 2000s. Goetz’s name and signature appeared on a mortgage loan application for a $1.2 million riverfront house on Coral Way in Port Orange, investigators said. As in many of the mortgage loan applications prepared by Mencis, Goetz’s application stated that Goetz earned $35,000 a month.”

“‘I didn’t even have a savings account at that time,’ Goetz testified after Mencis left the witness stand. ‘I earned more like $60,000 a year.’”

Bits Bucket for April 21, 2014

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April 20, 2014

The Repetition Of Past Behaviour

Readers suggested a topic on the current markets. “How will the (already started) decline play out this time? Jingle believes in some ungraphable pattern like a parabolic plateau, but things aren’t quite the same as last time. This crash seems more like squeezing out the investors and flippers and starting back with the decline on the regular owners that should have proceeded further 2 yrs ago. Not as many foreclosures, not the increasing unemployment?”

“I’d be happy to see 2011 prices in my area again, but this time with houses you could actually buy rather than ones being held in reserve for some real estate investor group. Oxide thinks if this happens then the investors will come back.”

One said, “More interest rate cuts ? Oh wait they can’t go any lower..”

A reply, “Have you ever tried to suspend any one or more of the Thermodynamic Laws? It can be done but the energy required to do so cannot be sustained indefinitely.”

To which was said, “Actually no you’re never suspending the laws of thermodynamics. The law says you need extra energy, you put in the energy, law is followed. Now, if you are equating ‘energy’ with ‘Yellenbux,’ yeah, I agree. It can’t be sustained indefinitely. But for me it doesn’t have to be sustained indefinitely. It only has to be sustained long enough where buying beats renting for the same duration.”

The Dallas Morning News in Texas. “More than one in 10 houses that are put on the market in the Dallas area have a buyer within three days of the sign going up, according to Redfin. And almost 40 percent of Dallas-area houses sell within two weeks, the Internet real estate marketing company reports. In Austin, more than 20 percent of houses are under contract to sell within the first three days of listing. The fastest selling market is Denver, where more than 27 percent of houses sell with 72 hours of hitting the market.”

“This spring’s Dallas home market is even more frantic that last year, agents say. ‘It’s insane,’ said Scott Schueler with Keller Williams Realty. ‘Sellers price it at the top end of the comparable sales and still get multiple offers, beyond anyone’s expectations.’”

KTAR in Arizona. “A real estate expert says it’s costing less to buy a home here. ‘The median single family sales price is $195,000. This is the lowest since August of last year,’ said Dean Wegner. ‘In fact, home prices have slowly been going down every month this year.’ But that’s not a bad thing. ‘Last year we saw double digit appreciation, and that’s unsustainable,’ Wegner said.”

“Wegner says if the real estate market stays where it is now for the next two to seven years, everyone would be quite happy with the real estate market in Phoenix. Wegner said he believes that if prices are ‘anything more than this, you’re going to see appreciation. Anything going further down from here, you’re going to see upside down, you’re going to see short sales again, and you’re going to see foreclosures.’”

The Register Guard in Oregon. “Foreclosure filings climbed 78 percent, to 139, in Lane County in the first quarter of this year compared to the same time in 2013, according to RealtyTrac. John Helmick, CEO of Eugene-based Gorilla Capital, is not surprised by the jump. He predicted in January that Oregon would be one of the few states with more foreclosure starts in 2014 than in 2013. The reason: A change in state law that went into effect last summer requires lenders and homeowners to go through mediation before a home can be foreclosed on.’

“That change didn’t avoid foreclosure for many distressed homeowners, Helmick said. Those people were so far behind on payments, on houses worth less than they paid, that foreclosure was inevitable, he said. What it did was create a backlog of homes inevitably headed for foreclosure, he said, many of them ‘zombie’ homes that were in bad shape, abandoned and left to deteriorate further. A few years ago, about half of the houses his company bought were abandoned, vacant homes, he said; today, about 82 percent are.”

“These houses can compete for buyers, he said, but he doesn’t think the number of homes his company will put up for sale at any one time will have a major effect on the market. Home sales are affected by a number of factors — ‘how well the economy is doing, employment, mortgage rates,’ he said. Gorilla’s homes may have a small effect on the market, Helmick said, ‘but a change in interest rates would have more.’”

The Irish Times. “A couple of weeks ago, I wrote a column about the fact that nothing has changed in Ireland politically. Because I’ve been thinking about where we’re at, right now, 2014, more and more. The issue now is not only the opportunity to change things for the better actually gone, but that the government is relentless in erasing the past, walking around like the lads from Men In Black waving their memory wand neuralyzers in our faces.”

“I occasionally throw an eye on what houses are going for in Dublin. One interesting property struck me the other day, which could act as a parable for the property market right now in the capital. A two-bedroom cottage in Stoneybatter that sold for just under €110k last summer went sale agreed after the asking price was set at €250k recently. There you have it folks, it’s those memory wands again.”

“Now it’s not like our property bubble burst generations ago, thus excusing the repetition of past behaviour. In terms of the wider context of history, our monumental property screw ups didn’t happen ‘just yesterday,’ they happened five minutes ago. Of course there is a supply problem in Dublin. But one of the reasons for that issue of supply is the countless people who are in negative equity. There’s little movement in the market because people are stuck. Stuck in places they don’t want to live in. Stuck with houses and apartments they don’t want.”

“A property bubble is not just being created, it’s already there. And now people want to buy again. Despite the property mistakes made five minutes ago, those who kept their heads down and didn’t fork over money during the first property boom are out looking for properties, and day in day out, the asking prices are creeping up, ten, twenty, thirty, forty, fifty, sixty grand. I’d say estate agents are in a tizzy. They probably don’t even know what to price most properties at in the city. Can we not see that this is THE EXACT SAME THING that happened previously? It’s a micro version of it, but it’s the exact same.”

Bits Bucket for April 20, 2014

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April 19, 2014

Bits Bucket for April 19, 2014

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April 18, 2014

History Repeats, First As Tragedy And Then As Farce

It’s Friday desk clearing time for this blogger. “Katrine and Stephen Campbell were up against stiff competition from 10 other bidders for the Reading home they wanted to buy. So, instead of making a specific offer, they promised to top whatever turned out to be the high bid by an additional $5,000. The increasingly popular tactic, known as an escalation clause, worked. The Campbells bought the four-bedroom house late last year for $597,000 — or $18,000 above the original list price, including the extra $5,000. ‘We must have looked at 50 places before making a bid on a house,’ said Katrine Campbell. ‘We made only one offer — and we got it.’”

“‘It sounds a little risky to me,’ said Peter Ruffini, president of the Massachusetts Association of Realtors. ‘It sounds sort of like issuing a blank check to sellers.’”

“A pattern of low inventory and rising prices has taken hold in the San Francisco Bay Area and Southern California real estate markets, DataQuick reported. A still-shaky economy and job uncertainty are preventing many homeowners from selling and moving up, said Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA. Others are holding on to homes in the hope that prices will continue to appreciate as they did in last decade’s housing boom, the economist said. ‘Whether those bets will come through or not remains an open question,’ he said.”

“Ilkley MP Kris Hopkins has clashed with a fellow minister after welcoming the latest hike in house prices. The Housing Minister raised eyebrows after suggesting rising property prices were a ‘good thing,’ telling an interviewer: ‘I bought a house and I expect the value to rise.’”

“But Vince Cable, the Liberal Democrat Business Secretary, warned that home ownership was now ‘unaffordable’ to people on middle incomes. Mr Cable said: ‘A family on an average income is nowhere near able to afford a house at the average price.’ In the mid-1990s, the average house price was three times average earnings, Mr Cable added – but that ratio now stood at about 5.5.”

“Prime Minister John Key has agreed with Housing Minister Nick Smith that Auckland home owners should expect flatter house price inflation for some time as the house price to income multiple measure of affordability improves from a multiple of around seven now to the Government’s new target of around four. Key rejected the idea that the improvement in affordability could come through a fall in prices.”

“To get that multiple back to four would imply house prices remaining flat in Auckland for 19 years with average annual wages growth of 3%, as is currently the case. Or it would imply house prices dropping 43% for the multiple to be rectified, or a combination of both. ‘It’s unlikely there’ll be falling prices. In my view what you’re likely to see is a flattening out of those increases. The Government’s view is a modest increase in house prices makes sense. Rapidly escalating prices are not good for anyone,’ Key told his weekly post-cabinet news conference.”

“China’s latest message about the property market is simple and aimed at the man on the street: The home you’ve bought isn’t a one-way bet. Deal with it. That message has been pumped out through China’s state broadcaster as part of Beijing’s efforts to curb people’s enthusiasm for homes as an investment tool. One segment featured a woman in Shenmu county, who told CCTV that she earned more than 100,000 yuan from flipping two apartments in 2009 and 2010. Times are harder now, though, and she’s working as a taxi driver while struggling to pay her 3,463 yuan monthly mortgage for an apartment she bought 2011.”

“Originally she’d hoped to flip it at a higher price, but a credit crunch and oversupply of apartments has pinpricked her dream. CCTV said she hasn’t been able to pay for the past four months. ‘(The bank) sends me a text message every day,’ she said.”

“One resident in Changzhou who recently purchased her first apartment but has seen prices of neighboring units tumble nearly 20% told China Real Time. Ms. Wu was among those protesting outside of a showroom displaying models of property for sale in Changzhou last month. ‘There seems to be no way to get my money back. What can I do? I just blame it on my bad luck,’ she said.”

“For the second month in a row, the median single-family home sales price was down in February, according to Arizona State University’s W.P. Carey School of Business. However, according to the report’s author, Michael Orr, there is no reason to panic. ‘This is not a crash or anything like that,’ Orr said. ‘It’s a mild change, so people don’t need to panic. It’s more of a gentle easing off of the buying pressure that was unusually strong.’”

“Sales reports suggest that Loudoun County is coming out of a sluggish market that began with the government shutdown last year and chilled with cold weather throughout the first quarter of 2014. The conditions created an unusually high inventory. ‘We had a few really tough months, because of the weather. Inventory tripled in three weeks,’ said Beckwith Bolle, principal broker at Carter Braxton Preferred Properties in Leesburg.”

“RealtyTrac’s update on foreclosure numbers across the country show foreclosure auctions in Delaware rose 49 percent in the first few months of the year. Matthew Heckles, director of policy and planning at the Delaware State Housing Authority, says a spike is not exactly a surprise. He points out that authorities knew there was a backlog of foreclosures. ‘You know the water is in the sink, but if you’re under the drain none of it is getting through until you unplug the sink,’ said Heckles. ‘Because of the default rate staying constant and the foreclosure filings dropping in 2012, we knew there was a backlog. And eventually they would hit the streets and hit the courts.’”

“Orlando Regional Realtor Association Chairman Zola Szerences, said bank-owned home sales are expected to rise because of an uptick in foreclosure auctions during recent months. ‘In March, the number of foreclosures available for purchase was 125 percent more than in March 2013,’ he said. ‘For buyers who have struggled to find a suitable home within Orlando’s tight inventory and who have been worn down by competition and bidding wars, foreclosures represent a new avenue of opportunity.’”

“Janet Yellen, the new head of the Federal Reserve, gave her first big speech on monetary policy, and, in some ways, a fine address it was. But what was most striking to me was that she didn’t even discuss the financial markets and the overriding need to avoid another damaging speculative bubble. Indeed, Yellen didn’t use the B-word at all. Given that her immediate predecessors, Alan Greenspan and Ben Bernanke, will be remembered for, among other things, their roles in inflating the bubbles in the stock market and the housing market, that was a pretty remarkable omission.”

“Instead, she couched her remarks in terms of the old-fashioned inflation-unemployment trade-off, which is precisely the conceptual framework that encouraged Greenspan and Bernanke to shrug off what was happening in the financial and housing markets. The potential problem is that it sends a signal to participants in the financial markets that they don’t have to worry about interest-rate rises, so they can take advantage of cheap credit to leverage up and take more risks.”

“The issue is what’s going to happen over the next few years. The longer the Fed keeps interest rates at ultra-low levels and promises not to raise them rapidly, the greater the danger of history repeating itself. Two things that we know about bubbles are that, once they get going, they are self-reinforcing, and that they place central bankers in a bind. For as long as the bubble lasts, the economy looks great, and policy makers have an incentive to let it proceed. This is what happened to Greenspan and Bernanke.”

“If the U.S. economy were to experience a third bubble in twenty years, we would be confirming Marx’s famous statement, in ‘The Eighteenth Brumaire of Louis Napoleon,’ that history repeats itself, first as tragedy and then as farce. The Fed chair doesn’t want that written on her tombstone.”

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