Posts Tagged ‘Florida’
Las Vegas Housing: 8% Of Single Family Homes Vacant, Yet New Construction Permits Up 50%
Saturday, 04 May 2013 18:17
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Submitted by Michael Krieger of Liberty Blitzkrieg blog,

If there is any market that demonstrates the complete and total misallocation of capital that results from Banana Ben Bernanke’s money printing and artificially low interest rate policy, it the latest phony American housing bubble. With a record numbers of citizens on the food stamp electronic breadline, with unemployment stubbornly high no matter what data you use, billionaire financial oligarchs are running around bidding up “homes for rent” and pricing out the random average person that actually has the capacity or desire to bid. I just read an excellent article that demonstrates the degree of insanity that has now been unleashed upon the streets of Las Vegas.

(Read more…)

As the title of the post mentions, a study from the University of Nevada at Las Vegas show some 40,000 homes are vacant, or 8% of the metropolitan area’s single-family housing stock.  So it would seem that this would provide plenty of good deals for investors right?  Certainly there doesn’t seem to be a need for new home construction.  Well think again!  In their QE-forever induced delirium, homebuilders have gone Chinese and in Las Vegas “permits for new home construction are up 50 percent, twice the national average.”

My favorite line in the entire article comes at the end when a prospective buyer explains what happens when an actual citizen attempts to purchase a home to actually live in:

“We know there is a minute chance we get anything,” she says. “The most frustrating part of all this is how home prices keep going up and up, yet you have so many empty homes.”

Oh and it seems Oaktree has followed Och Ziff’s lead and pulled back from the “buy to rent” insanity.  Soon all that will be left are the dumb money and homebuilders, who should start thinking about what kind of bailout they will lobby for when this entire thing unravels.  From Reuters:

These big investors and a handful of others have bought at least 55,000 single-family homes across the U.S. in the past year. In the Vegas area alone, they have accounted for at least 10 percent of the homes sold since January 2012, according to a Reuters analysis of housing transactions.

 

That added firepower helps explain why home prices in this metropolitan area of 2 million people are up 30 percent over a year ago, far more than the national average of 10 percent. Permits for new home construction are up 50 percent, twice the national average.

 

Las Vegas would seem a highly unlikely locale for a new housing bubble. There are at least 20,000 homes in some stage of foreclosure, and the jobless rate hovers near 10 percent, some two points above the U.S. average. A healthy housing market depends on people having good-paying jobs so they can accumulate down payments and finance their mortgages.

Healthy markets?  That’s so last century!

Cracks are showing in Vegas and beyond. Here, rents on single-family homes were down an average of 1.9 percent in March from a year ago. In other regions targeted by institutional buyers, such as Phoenix, Southern California, Atlanta and Florida, rents are either falling or flat, according to online real estate service Trulia.

 

Industry insiders estimate that roughly half of the more than 55,000 homes acquired by institutions over the past year in the U.S. have yet to be rented.

In Oceania, that is a market signal for build more homes.

The combination of rising acquisition costs, prolonged rental lead times and declining rental income is disrupting the spread-sheet analysis behind Wall Street’s bet. That could pose problems for what once seemed like a slam dunk. It could also give pause to stock-market investors as some players list their shares. American Homes 4 Rent, based in Malibu, Calif., has said it expects to file soon for an initial public offering.

Taking bets as to how soon after its IPO America Homes 4 Rent will go BK.

Early last year, Oaktree Capital Management agreed to provide up to $450 million in equity to real estate investment firm Carrington Capital Management for its foreclosed-home acquisition program. Carrington was projecting an internal rate of return of 25 percent over a three-year period for its portfolio of single-family homes in several cities, according to a marketing document.

 

Oaktree is now reluctant to commit more money to the trade after souring on the buy-to-rent strategy, said people familiar with the firms. Oaktree saw returns on rents compress and no longer is comfortable with Carrington’s initial heady yield projections, they said.

 

The Vegas market has unsteady legs. Statistics compiled by the University of Nevada at Las Vegas show some 40,000 homes are largely vacant – 8 percent of the metropolitan area’s single-family housing stock. Housing research firm RealtyTrac estimates there are 20,000 single-family homes in the metro area either owned by a bank or in some stage of foreclosure.

 

“We know there is a minute chance we get anything,” she says. “The most frustrating part of all this is how home prices keep going up and up, yet you have so many empty homes.”

Thanks Ben.

Full article here.

    



 
Housing Bubble 2.0 Edition: “25 Markets Where Flipping Homes Is Most Profitable”
Thursday, 02 May 2013 11:27
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Tuesday’s Case Shiller update index showed something very troubling: as a whole, the US housing market in its broadest sense, has barely budged in the past four years (chart). And yet, what is unmistakable, and what has given many the impression that there is a “recovery” (despite clear recent signals to the contrary) are media attempts to spark a buying frenzy in several of the key markets that were responsible for the prior housing bubble, such as Florida, California, Nevada and Arizona. And how do we know they are succeeding, if only until the Bernanke liquidity bubble pops again? Courtesy of articles such as this: “25 markets where flipping homes is most profitable.” Nuff said. (Read more…)

The full-blown bubble may not be here, but what is worse is that the bubble is certainly raging in key “liquidity-pocket” MSAs, even as various other regions continue to drag the overall housing market ever lower. 

Which makes sense: in an America in which everything is increasingly polarized into two camps, and where even the Fed is schizophrenic about the future of the country, it is only logical that a New Normal housing bubble rages even as the overall housing market continues to tank.

Finally, it is quite obvious that none of these “homes” are being bought as homes, and all are basically speculative momentum chasing instruments, where everyone is certain a greater fool idiot will step up and buy the flip. And yes, we have seen all of this before and it ended in tears.

From RealtyTrac, as advice for those who just can’t wait to flip that house:

Flipping  homes — buying, rehabbing and reselling for a profit usually within about 90  days — will likely become more favorable for investors in 2013 as home prices  are expected to continue climbing. And while buying  homes as rentals still offers a solid rate of return in many markets, even  buy-and-hold investors typically flip properties periodically to fund their ongoing  rental purchases.

 

RealtyTrac  selected the top 25 markets nationwide where flipping single family homes  offers the highest rate of return based on the flipper’s gross profit — the  difference between average original purchased price and the eventual flipped  sales price of a flipped home.

    



 
Case-Shiller Composite Rises 0.3% In February, Back To September 2010 Levels
Tuesday, 30 April 2013 08:27
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If there is one admirable thing about the Case Shiller Home Price Index report (which sadly shows data for February so a nearly three month delay) is that even according to its authors, it is the Non-Seasonally Adjusted number that is representative of what is going on in housing. And, as the chart below shows, very little is going on as the broader price level continues to undulate in a very tight range with little real moves to the up or downside.

Posting a level of 146. (Read more…)57 for the broad Composite 20 index, there was a 0.3% increase sequentially, and a flatline in prices in the past 6 months, as the index has not budged from its level since September. Of course, that does not mean there are not bubble pockets in the US. As noted yesterday, Los Angeles is quite frothy, posting a 1% increase in February (a number which will since surge if Altos’ data is correct), second only to Phoenix (at 1.1%). Alternatively, eight MSA saw a decline in February, with weaker markets in Denver, DC, Chicago, Detroit, Minneapolis, Charlotte, Cleveland and Seattle. But at least the old stronghold “bubble” locations: California, Nevada and Florida are back to doing what they do best. On a year over year basis, the Composite 20% jumped by 9.3% due to a very weak market in early 2012, which was the main reason for the Fed to eventually activate QEternity.

From the report:

“Home prices continue to show solid increases across all 20 cities,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The 10- and 20-City Composites recorded their highest annual growth rates since May 2006; seasonally adjusted monthly data show all 20 cities saw higher prices for two months in a row – the last time that happened was in early 2005.

 

“Phoenix, San Francisco, Las Vegas and Atlanta were the four cities with the highest year-over-year price increases. Atlanta recovered from a wave of foreclosures in 2012 while the other three were among the hardest hit in the housing collapse. At the other end of the rankings, three older cities – New York, Boston and Chicago – saw the smallest year-over-year price improvements.

 

“Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy. The 2013 first quarter GDP report shows that residential investment accelerated from the 2012 fourth quarter and made a positive contribution to growth. One open question is the mix of single family and apartments; housing starts data show a larger than usual share is apartments.”

 

In February 2013, the number of cities that posted positive monthly changes increased; Boston, Dallas, New York, Portland and San Diego are now among the MSAs posting month-over-month gains.

 

Even though eight MSAs posted monthly declines, all twenty cities showed increases when compared to their February 2012 levels. Atlanta, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, Phoenix, San Diego, San Francisco and Tampa were the ten MSAs that continued to report double-digit year-over-year gains. San Diego and Tampa recorded their first months of double-digit annual increases of just over 10.0%.

Sequential change: mixed bag.