Linking ≠ endorsement. Enjoy and share:
↑ Silicon Valley PM Group: California Water-Saving Plumbing Law Effects Investment Property Owners, Sellers, Property Managers and Property Management Companies
Solid information by Attorney David Roberson:
A California law enacted in 2009 is finally taking effect and causing concerns among property owners, sellers, buyers, and realtors. California Civil Code Section 1101.4 requires owners of single-family residences which were “built or available for use on or before January 1, 1994” which will be altered or improved on or after January 1, 2014 to install water-conserving plumbing fixtures only when the existing plumbing fixtures are “non-compliant” by certain dates specified below.
A noncompliant plumbing fixture is defined by California Civil Code Sec. 1101.3 as: …
↑ Beyond ‘frozenomics’: What’s hurting the housing market
This has been our position on it too. Diana Olick:
While weather makes for a fair argument, it is not the full picture of this winter’s housing slowdown. Sales are weaker across the nation, but they are falling hardest in the West, where weather is less of a factor. New numbers this week from Southern California are a clear example.
↑ Fannie Offers REO Incentives to Owner Occupants
… the house must be in HomePath’s FirstLook period – a 20 day window during which only owner occupants are eligible to submit an offer on the property, giving them the opportunity to purchase without competition from investors.
That’s not good for investors. Will it encourage owner occupants in single-family homes who should remain renters? Will we have a stable enough economy to avoid another crash that would just ruin buyers’ finances?
↑ Ruling: US courts can handle Chinese drywall suits – The Washington Post [source updated]
U.S. courts have jurisdiction over claims that a Chinese drywall company’s defective product wrecked homes, and a company that failed to show up in court must pay $2.7 million for damage to seven Virginia couples, a federal appeals court in New Orleans has ruled.
The 5th U.S. Circuit Court of Appeals upheld a district judge’s ruling that Taishan Gypsum Co. Ltd must pay the couples, who were chosen as representative of about 300 Virginia families.
↑ How to Invest in Long-Distance, Turn-Key Rental Properties | Invest Four More
This is a good, transparent discussion by Mark Ferguson.
Always get references for any company you are going to do business with. Ask the company for references from current customers and search online for any reviews of that particular company. …
Check the history and track record of a company. Check the BBB, see how long they have been in business and ask how many deals they have done.
Ask for the details on any home you want to buy. How old is the furnace, hot water heater, wiring, plumbing etc. You want to make sure the major components are good and the company did not put lipstick on a pig to cover up faults.
Wednesday’s decision says that state law requires landlords to do whatever is reasonably necessary to keep their properties in a “safe and sanitary condition.”
↑ thinkbroadband :: Open DNS Resolver Check
DNS Check is a tool to test if you are running an open DNS resolver on the computer you are connecting from. This can help identify possible security vulnerabilities.
↑ Get ready: a large portion of China’s $1.8 trillion in trust products may be headed for default this year — Quartz
Last month, China’s banking sector dodged a potential catastrophe when a mystery group stepped in at the 11th hour to pay investors in the now-infamous “Credit Equals Gold #1, a defaulted $495-million trust product. Barely two weeks have passed and now another trust product has failed to pay back investors.
There are signs that bubble may finally be bursting, as sales have started slumping since Dec. 2013 ….
It’s going to accelerate. They won’t be able to just shrug it off. Just how bad it will get remains to be seen though.
↑ Swelling Debt Spreads Among China’s Local Governments – China Real Time Report – WSJ
The nation’s total local government debts, estimated at 17.9 trillion yuan at the end of June 2013, might not pose immediate threats to the country’s economy because the central government still has plenty of funds to deal with any actual defaults, economists have said. But some regions with high debt ratios have shown signs of stress and been forced to add more land sales to repay the debts.
“Once some local governments fail, it will affect the entire financial system,” Mr. Wen said.
↑ What Does “Keynesian” Mean? | Uneasy Money
Actually Say’s Law is a description of what happens in an economy when trading takes place at disequilibrium prices. At disequilibrium prices, potential gains from trade are left on the table. Not only are they left on the table, but the effects can be cumulative, because the failure to supply implies a further failure to demand. The Keynesian spending multiplier is the other side of the coin of the supply-side contraction envisioned by Say. Even infinite wage and price flexibility may not help an economy in which a lot of trade is occurring at disequilibrium prices.
That makes sense.
↑ Australia’s housing bubble ready to burst, US investment guru claims | Business | theguardian.com
This guy is sharp.
“The rule with bubbles is that they always go back to where the bubble started. So the US housing bubble started to grow in 2000 and now house prices have fallen back to that point — a 55% fall.”
“We’ve had bubbles throughout our time — oil, gold, stocks. But China is the biggest bubble in modern history. It’s 30% overbuilt in everything and has huge over-investment. The housing market is valued at 28 to 35 times income in the major cities. London, by way of contrast, is 15 times.
“For people who say the government can control it, I say that’s bad. It means a bigger bubble and a bigger burst.”
Dent [Harry Dent] sees falling Chinese demand leaking out into the economies of countries dependent on selling their commodities to the superpower, starting a vicious circle in which demand then falls for Chinese manufactured goods and spreads back.
Then there is the wildcard of China’s ultrawealthy, more than half of whom now have investments overseas, according to a study by Bain & Company and quoted by Dent.
… Dent says he will apologise if he’s proved wrong, which he acknowledges could happen if central banks revert to their printing presses rather than slowing monetary stimulus as many are now doing.
↑ IMF Paper Refutes Rogoff, Reinhart Debt Study – Real Time Economics – WSJ
“Our results do not identify any clear debt threshold above which medium-term growth prospects are dramatically compromised,” the paper says.
The authors also say that it’s the direction in which debt levels are moving, not the absolute levels of debt, that appear key.
“Among countries with the same debt levels, the growth performance over the next 15 years in countries where debt is decreasing is better than that in countries where it is increasing,” it says.
However, the authors find that high levels of debt can lead to volatility in GDP due to market pressures and fiscal and monetary responses aimed at getting debt under control.
But they conclude that high debt levels are not necessarily associated with subpar growth over the medium term.
The New Deal response to the Great Depression showed this clearly. In fact, higher federal debt is what got us back on track.
↑ NuOffer says QR codes keep digital documents secure, even when they’re printed out | Inman News
Documents, as secure as they may be in digital form, typically lose any digital security they have when printed out, which can spell trouble for all parties in a real estate transaction.
NuOffer, a real estate startup that streamlines the offer process by allowing agents to draft, sign and send an offer digitally, says it’s devised a way to keep security data associated with each document that’s handled by its platform tied to that document — even when it’s printed out.
Yes, but explain to us how this is in anyway unable to be a forged printout with the QR code simply copied and pasted onto the forgery?
↑ Robo-signing whistleblower sues 22 companies for mortgage fraud
A whistleblower who gained fame for shining the light on the foreclosure robo-signing scandal is suing the banks involved.
Lynn E. Szymoniak has filed a lawsuit against 22 financial institutions, including JPMorgan Chase, Wells Fargo and Bank of America — alleging that the companies submitted thousands of false claims to the Department of Housing and Urban Development.
[Lightly edited:] “…mortgage documents were regularly being used in foreclosures across the country that, among other defects, were backdated, had falsely stated dates of transfer, had fraudulent notarizations, had forged signatures, were signed by employees of the servicers or document preparers who often falsely claimed to be officers of the originating banks and other entities up the chain of assignments, and were ‘robosigned’.” “Such fraudulent assignments and note endorsements formed the basis for the submission of at least tens of thousands of false claims to the U.S. Department of Housing and Urban Development … for payments pursuant to the mortgage insurance program administered by the Federal Housing Administration.” “…To add insult to injury, not only did Defendants use the fraudulent assignments and endorsements to procure insurance payments from HUD, they also charged HUD for the cost of filing the fraudulent documents in the foreclosure proceedings.”
Will there be an argument concernign standing?
MBA estimates that sales of new single-family homes were running at a seasonally adjusted annual rate of 543,000 units in January 2014, based on data from MBA’s Builder Applications Survey.
“While the big jump may appear to conflict with other data, such as MBA’s purchase application index and NAR’s existing home sales data that point to a weak market for existing homes, our Builder Application Survey estimate is consistent with reports of homebuilder sentiment that show strength in the market for new homes,” said Mike Fratantoni, MBA’s Chief Economist. “It is also worth noting that the significant January increase also followed a particularly slow pace of sales in November and December.”
That is seasonally adjusted, which makes the numbers interesting, as we’ve seen nearly uniform post saying January was uniformly bad.
Renderings have been released of The Hudson Spire, potentially the future tallest building in the U.S. If built, the tower would surpass One World Trade Center and become the fourth-tallest building in the world after the Burj Khalifa in Dubai, The Shanghai Tower in China, and the Makkah Royal Clock Tower in Mecca, Saudi Arabia. Massey Knakal has been retained to sell the Hudson Boulevard facing site at 435 Tenth Avenue.
↑ China Appears on Verge of Dangerous Real Estate Decline – The Epoch Times
The slowdown in the real estate market is having a more pronounced impact on the smaller cities than many predicted.
“Real creative and big companies in China are located in top tier cities, and almost none of them are in China’s third and fourth tier cities. This leads to brain drain and population outflow in those places,” Jason Ma said.
“So small cities can only rely on natural resources such as mining or government projects. But local governments have less and less ability now because of huge local debts.”
This exacerbates what observers have called “ghost cities”: under-occupied cities, where vast sums of money has been spent on real estate projects that then generate insufficient income to service the enormous debts.
↑ South Korea’s housing market: Lumping it | The Economist
They don’t pay rent in South Korea. The accounting is equally strange: missing.
… Sun Dae-in, the author of a recent book on Korea’s housing market, says the deposits held by landlords must be seen as debts. He estimates that about half of all jeonse money (about 300 trillion won) is used to finance a second or third property. If added to housing loans, the average LTV ratio would jump from just under 50% (the regulated limit) to over 75%. Last November the Bank of Korea estimated that a tenth of Korea’s 3.7m jeonse landlords may find it hard to repay tenants’ deposits.
This had occurred to us, but we hadn’t fleshed out our thoughts like this. Walter Kurtz:
As discussed earlier, the supply of mortgage-backed securities (MBS) continues to fall behind the potential demand – even with the Fed’s taper in place. New issuance has steadily declined over the past year, with the Fed becoming an increasingly larger proportion of that market.
Some of the decline in new issuance has been due to the drop in mortgage refinancing – old securities don’t amortize as quickly and fewer new securities are issued. But part of the reason for the lower volume of these securities remains the supply of mortgage loans. The total mortgage debt outstanding is barely growing – with a great deal of that growth coming from multi-family residence (apartment) financing.
While some would say that $9 trillion of MBS paper should be sufficient, one has to keep in mind that the US and the global economy is now substantially larger than it was in 2007. MBS, particularly agency bonds, are becoming a smaller portion of the overall capital markets, worsening the shortage of higher quality bonds (see story). Liquidity in that market has also suffered, with average daily trading volumes at the lowest levels in nearly a decade (see chart). These are some of the reasons the Fed should return the MBS market to the private sector by exiting its purchases as soon as possible.
That is not a reason for the taper given by the Fed. We’d be interested to know why.
We had alluded before to hot money moving back into the US to make up the difference in the Fed’s taper but didn’t like the fallout in the emerging markets and the downside to the global economy, of which the US is a part.
It could backfire.
↑ CONVERSABLE ECONOMIST: A German Employment Miracle Narrative
While academics and policymakers will continue to dispute the reasons for Germany’s stellar performance in reducing unemployment in the last few years, I’ll just note that none of the possible answers look easy. Having productivity growth outstrip wages over time, so that labor costs relative to competitors fall, isn’t easy. Reorganizing industry around global supply chains that include suppliers from lower-wage economies isn’t easy. Increasing inequality of wages isn’t easy. The “structural labor market reforms” that include trimming back on early retirement and unemployment insurance isn’t easy. U.S. discussions of economic policy sometimes make it sound as if the government can just “create jobs” with large enough spending and/or tax cuts, or low enough interest rates. But real and lasting solutions to reducing unemployment and keeping it low aren’t that easy.
Some of those things Timothy mentions may not be what we would want to do or necessarily the only or best way Germany could have proceeded.
We can’t come back to the New Deal often enough as an example of the government creating jobs with large enough spending. We’d simply create relatively more and better jobs than those during the New Deal. The result would be faster and better than the New Deal’s.
↑ Blackstone-Fueled Single-Family Home Boom Lifts Chicago – Bloomberg
The tan, three-bedroom house on Chicago’s North Side sits half a block from a Family Dollar store and a pawn shop — an unlikely patch of gold to mine for Blackstone Group LP (BX) in the single-family rental market.
The world’s largest alternative-asset manager is among investors buying distressed properties in the Chicago area after private-equity and hedge-fund firms helped send property values surging in hard-hit markets such as Phoenix and Atlanta. That demand, along with low mortgage rates and a growing economy, is now fueling a recovery in the third-biggest U.S. city as it joins the housing resurgence that already has bolstered much of the country.
We find these developments fascinating concerning, among other things, how quickly they’re happening.
“2014 is starting off with high demand from e-commerce and other users who are in the market for large, sophisticated space, and lots of it,” said Craig Meyer, president of industrial brokerage at JLL. “This will make 2014 the ‘year of the distribution center.’ Modern space with proximity to population centers and a robust logistics infrastructure will dominate the industrial real estate sector in 2014.”
Growth driven by ‘clicks’ surpassing ‘bricks’: A staggering 40 percent of big-box industrial requirements are correlated to e-commerce — a sector growing globally by 20 percent each year. As retailers develop new real estate models to support their omni-channel logistics models, they are looking at six primary types of warehouse space, ranging from mega-distribution centers to smaller delivery centers in urban areas. In 2014, we expect to see demand for urban logistics centers to support same-day package delivery.
↑ ASU report sees home-price gains stalling in 2014
Big home price increases aren’t expected to continue in most parts of metro Phoenix this year, and some neighborhoods might see a dip in values.
The latest report from Arizona State University’s W.P. Carey School of Business is forecasting home-price gains will stall in 2014. Prices have been climbing steadily since September 2011.
“We are seeing a big drop in demand compared with the last two years, and there are ominous indications of a softening market when we dig deep into the numbers,” said Mike Orr, director of the Center for Real Estate Theory and Practice at the Carey School.
He cited evidence of the market’s softening: Sales of single-family homes were down 17 percent in December 2013 compared with the year before.
↑ We’re living in a wage-suppressed world, and disinflation is here | Inman News
This week Bloomberg ran this spectacular chart showing how pervasive disinflation has become. We do not have low inflation because some prices are rising a lot and others offset by falling. Prices are flat for nearly everything, in largest part because incomes are too flat to compete to buy anything.
A flat-price world drowning in productive capacity is not conducive to business formation, and so a wage-suppressed world reinforces itself.
With all the traditional challenges multifamily building owners have faced when attempting to implement energy-efficient upgrades for their units, this new evidence points to a number of regional programs that have shown that these challenges can be averted and that there are cost-effective energy savings opportunities not yet realized in the current multifamily market.