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New York, DC home buyers eye Philly for next move, report says



Apr 28, 2017

A new Redfin report finds that New Yorkers and Washingtonians were most likely to search for homes in Philadelphia than their own hometowns.

Philly has some obvious draws for New Yorkers and Washingtonians, namely lower median home prices. For example, according to Redfin’s own data, Philly’s median home price was 59 percent of the $375,000 paid for a typical home in D.C. in March.

Also, Philly is just two hours from either city, so commuting to NYC or D.C. while living here isn’t completely out of the question
Report: Philly is the best place for millennials right now
Apr 27, 2017

Young adults are more likely to own homes and make more money than their older peers in Philly than any other U.S. city.


Report: Philly’s home inventory dropped 32 percent in last five years

A new report by Trulia reveals that the lack of affordable and available homes for sale is making it a really tough market for first-time homebuyers.


/ 2 /

The state of Philly’s housing market, in five charts
Pew’s latest report reveals some eye-popping stats about housing in Philly
by Melissa Romero; Apr 7, 2017
1. Median housing prices have risen and home sales hit a major milestone in 2016
2. There were more home sales in 2016 than any year post-Great Recession.
3. There’s still a big need for affordable housing (But dropped from 77,694 in 2014 to 42,886 in 2016)
4. The rent is "too high", even for Philly - with 56.4% paying at least 30% of Income in Rent
5. Homes in Philly are “substantially” more affordable than in other cities
("Salary needed" of $53,422 is very Near the US mean of $52,699; but well below the costs
in other East Coast cities, such as: 39% below Boston, 35% below Washington, and 6% below Baltimore.
But is +65% above Pittsburg and +39% above Detroit.)

"You don’t have to earn the big bucks to be able to afford a median-priced home in Philly—that’s the good news. The bad news is that although you need $53,422 to be able to afford to buy here, the city’s median income is $41,233.
However, that number has been growing steadily in recent years. The researchers write, “Over the last two years, Philadelphia’s median income has grown faster in percentage terms than those of all of the comparison cities, with the exception of Washington.”

> Charts, etc.: http://philly.curbed.com/2017/4/7/15209526/philadelphia-housing-rental-statistics-pew-report

=== ===


It is not surprizing to see the rising interest in Philly from neighboring cities, given:

+ Lower prices, and higher yields,

+ Decent jobs for young people, and their consequent ability to buy their first home there

+ Meantime, the quality of the Philly lifestyle is constantly improving in many ways


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Renewed hopes for 220 mph bullet train from Philly to Baltimore ...

Dec 16, 2016 -

Renewed hopes for 220 mph bullet train from Philly to Baltimore ...

The proposed Northeast Corridor line for the Northeast Maglev train.


A wide-ranging federal proposal to expand the role of railway transportation in the northeast United States could potentially bring a new Amtrak stop to Philadelphia International Airport, crank up the speed of trains and increase the volume of intercity rides along the Northeast Corridor.


Documents released Friday by the Federal Railway Adminstration (FRA) outline a comprehensive plan to improve the efficiency and reliability of the rail system through an investment plan focused on building capacity in the region's economic nerve centers along the corridor, from Washington, D.C. to to Boston.

FRA_Proposal_Map.width-800.pngSource/Federal Rail Administration.

Map of potential projects under FRA's Preferred Alternative Plan.

Formed over a four-year period, the long-term proposal incorporates the feedback of more than 3,200 individuals, agencies and organizations. The full scope of the $120 billion plan, if implemented, would unfold over a 30-year-period, providing more service options and convenience for commuters within and between cities.


For Philadelphians, it could mean speedier and more accessible trips to places like New York City and Baltimore, reviving the eventual prospect of last year's much-hyped bullet train proposal that would whisk locals to the nation's capital and New York in 30 and 25 minutes, respectively, using the Northeast Maglev Train.




Currently, Amtrak's high-speed Acela trains make the Philly-to-D.C. trip in an hour and 40 minutes and Philly-to-NYC in an hour and 10 minutes. The map above, released last year by Maglev as Maryland received $27.8 million for bullet train research, already envisioned a designated stop at Philadelphia International Airport


> more: http://www.phillyvoice.com/renewed-hopes-220-mph-bullet-train-philly-baltimore/

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Length of downturns - this was first posted on the Singapore thread



Haha. Yeah:

"The best time to buy a property is always 5 years ago"


Anyone who says something like that is unaware of cycles - which are real and observable - just look at prices over a long enough period.


Idiot estate agents will show you a graph going back 10-15 years, showing prices rising over the whole period, and think that this makes a case that prices will go on rising. When I see that, I have a model in my mind: "14 years up, 4 years down... the last 2-3 years of the up-phase are the most dangerous."


So if I see 10-12 years of rising market - worse yet: 14 years! - I will be very wary, and want to wait for the drop. That is my attitude towards Hong Kong and Manila right now. I would rather buy in a place like Singapore, after a 3-4 year drop. Even in Singapore, I am somewhat cautious, for reasons that I have described above.


"The best time to buy a property is always 5 years ago"

- was definitely not true in Detroit, where in 4-5 years, nearly a decade of gains were wiped out



And some houses went down to $100-$1000 in value.


"The housing price index in Michigan hit its all time low in 2011. The housing index in Michigan is currently at 139.66, 40 percent higher than its value in 1991. This current index is approximately the same as that from 1997."

> source: http://www.drawingdetroit.com/michigans-housing-price-index-compared/


The US House price drop was widespread, and even San Francisco saw a drop of 72 months (= 6 years)


- so we cannot expect that the entire drop will always be confined to 3-5 years


Once the lows were in place, prices improved dramatically, even in Detroit




But they are still below the price levels of 10 years earlier

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New Home Sales Collapse In April


If you're surprised by the collapse in new home sales in April, then you're not paying attention.





New homes have been relatively weak for a long time



Sales of higher priced homes are sliding

12% of new homes sold in April cost more than $500,000, down from 18% last month. Months’ supply at 5.7 in April compared to 4.9 in March.

And the biggest driver of new home sales collapse was in The West - which saw a 26.3% collapse - the most since Oct 2010...

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Philly Rental boom?


With a strong surge in demand from 2006-2013, and continuing, Philly rents are now surging:




What’s the average rent, and where are the best places to rent in Philadelphia? The average rent in Philadelphia is around $1,556.

Unlike with most major cities, the city itself actually has a cheaper average rent, at $1,350 per month.

It’s often more affordable to rent within the city, though a few neighborhoods have much higher average rent. In Philadelphia, the central districts cost the most money, including:

  • University City ($1,770)
  • Center City West ($1,680)
  • Southwest Center City ($1,610)
  • Logan Square ($1,850).

Nearby neighborhoods like North Philadelphia West ($680) and Spruce Hill ($950) are considerably cheaper. This wide variance between neighborhoods makes it hard to predict what sorts of prices you’ll pay when renting in Philadelphia; what may be the price of a small loft in one area may be a similar price to renting a townhouse in another.


(note about data may be 1-2 years out of date)


> https://www.jumpshell.com/posts/average-rent-in-philadelphia



According to Zumper, rents for 1BR apartment now averages $1,380 per Month, that's the #15 city in the USA


Top 25 + Philly, at #15 - At June 2017


#02 : NewYorkCity, NY : 1BR: $2,900 - 10.8% Yoy / 2BR: $3,400 - 7.90% Yoy
#04 : Boston, MA------ : 1BR: $2,200 - 3.50% Yoy / 2BR: $2,600 - 0.80% Yoy
#05 : Washington, DC-: 1BR: $2,160 - 2.70% Yoy / 2BR: $3,190 +1.30% Yoy
#21 : Baltimore, MD----: 1BR: $1,270 +5.80% Yoy / 2BR: $1,400 - 0.70% Yoy
mean:- 4 East C. cities : 1BR: $2,133 - 2.80% Yoy / 2BR: $2,648 - 2.03% Yoy
#15 : Philadelphia, PA: 1BR: $1,380 +7.80% Yoy / 2BR: $1,570 +9.00% Yoy
Pct. : Philly as % Mean : 1BR : 64.7 % -------------- / 2BR : 59.3 % ----------------

The above figures are up-to-date, and show that Rental growth in Philly is one of the highest,

and the city still has rents at a healthy discount to over East Coast competitors, thought the gap is narrowing now.




> https://www.zumper.com/blog/2017/05/zumper-national-rent-report-june-2017/


> #12 in the US, in Cost of Living: https://www.expatistan.com/cost-of-living/philadelphia

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Philly's population stopped shrinking about 1998, and job growth has returned after the GFC



> source: https://fred.stlouisfed.org/series/ATNHPIUS37964Q


New skyscapers are now changing the Philadelphia skyline:

"Of the top 20 tallest buildings in Philadelphia, only 7 were built before 1986, and of the top ten, ALL of them were built after 1986.
By contrast, in booming Houston, all but 3 of its 20 tallest buildings were built before 1986.
In Dallas, only 5 of the 20 tallest buildings were built in 1986 or after, with just one of them built after 1988.

... Philly re-invented itself. No longer a manufacturing city it is now a world class city for "Eds/Meds/Tourism/Culture"

> SSC-#1403: http://www.skyscrapercity.com/showthread.php?t=1659356&page=71




That's Comcast's new Technology Center, which has been said to be set to do* some "bird flipping" to those who once knocked the city.

The other new factor is how skyscrapers have crossed the river and are now going up on the West bank,

the area (of UPenn and Drexel) called University City


*Not quite finished yet: http://www.skyscrapercity.com/showthread.php?t=1659356&page=70



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New Home Sales Rebound From April Collapse As Median Price Hits All Time High

Following the modest bounce in existing home sales (and disappointment in starts and permits), new home sales bounced in May to 610k (after plunging 11.4% in April, now revised to a 7.9% drop). Of particular note is that median new home prices surged to $345,800 - an all-time record high, with the biggest 3-month spike since Jan 2011.


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Foreign purchases of U.S. residential real estate surged to the highest level ever in terms of number of homes sold and dollar volume.


Foreign buyers closed on $153 billion worth of U.S. residential properties between April 2016 and March 2017, a 49 percent jump from the period a year earlier, according to the National Association of Realtors. That surpasses the previous high, set in 2015.

. . .


Half are in just three states: CA, FL, & TX.


Chinese were the biggest foreign buyers


> http://www.cnbc.com/2017/07/18/foreigners-snap-up-record-number-of-us-homes.html

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Foreign purchases of U.S. residential real estate surged to the highest level ever in terms of number of homes sold and dollar volume.

Foreign buyers closed on $153 billion worth of U.S. residential properties between April 2016 and March 2017, a 49 percent jump from the period a year earlier, according to the National Association of Realtors. That surpasses the previous high, set in 2015.


> http://www.cnbc.com/2017/07/18/foreigners-snap-up-record-number-of-us-homes.html

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San Francisco's Real Estate Cycle




BELOW is a look at the past 30+ years of San Francisco Bay Area real estate boom and bust cycles.

Financial-market cycles have been around for hundreds of years, all the way back to the Dutch tulip mania of the 1600’s.

While future cycles will vary in their details, the causes, effects and trend lines are often quite similar. Looking at cycles gives us more context to how the market works over time and where it may be going -- much more than dwelling in the immediacy of the present with excitable pronouncements of "The market's crashing and won't recover in our lifetimes!" or "The market's crazy hot and the only place it can go is up!"



> more: https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-a-baby


Compare - the downturns in SF seem to line up reasonably well with the General 18 Year property cycle:



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Cities ring housing bubble alarm...

Four major US cities ring housing bubble alarm

  • Home prices in Denver, Houston, Miami and the Washington, D.C., metro area are now considered overvalued.
  • Some previously hot markets, such as San Francisco and the New York City metropolitan area, are cooling down.
  • Low mortgage rates are keeping the market affordable from a monthly perspective, but affordability will likely become a much bigger challenge in the coming years

To determine if a market is overvalued, CoreLogic compares current prices to their long-run, sustainable levels, which are supported by local economic fundamentals like disposable income. An overvalued market is one in which home prices are at least 10 percent higher than that level. The rest of the top 10 markets are considered "at value," but none are undervalued, as prices are higher in all of them compared with a year ago.


"With no end to the escalation in sight, affordability is rapidly deteriorating nationally," said Frank Martell, president and CEO of CoreLogic. "While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge."

Home prices rose 6.7 percent nationally in June compared with June 2016. That is a slightly higher annual gain than May. Prices are now up nearly 50 percent from the trough of the housing crash in March 2011.

. . .


“By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman, 91, said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

The most important market news of the day.
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While the consensus of Wall Street forecasters is still for low rates to persist, Greenspan isn’t alone in warning they will break higher quickly as the era of global central-bank monetary accommodation ends. Deutsche Bank AG’s Binky Chadha says real Treasury yields sit far below where actual growth levels suggest they should be. Tom Porcelli, chief U.S. economist at RBC Capital Markets, says it’s only a matter of time before inflationary pressures hit the bond market.

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New York Apartment Vacancies Projected to Soar (to 11%)


Thousands of new units coming on the market as the rate of job growth already has begun to slow


Residential construction in the Hudson Yards development in New York City last year; thousands of apartments in new buildings are coming on the market in coming months. Photo: Drew Angerer/Getty Images
Aug. 1, 2017

A new report predicts New York City apartment vacancy rates will soar to more than 11% by the end of next year. The scenario, which some local housing analysts rejected, would mean a grim reckoning for landlords.

The forecast, by Ten-X Commercial, an online marketplace for real estate, said rents will slide as thousands of apartments in new buildings come on the market. It noted that the rate of job growth, a driver of the rental market, already has begun to slow.

New York’s vacancy rate, typically in the low single digits, is 3.8%, below the national rate of 4.4% according to Reis Inc., a provider of commercial real-estate data.

“It seems inevitable that you are going to see some pain in the market,” said Peter Muoio, chief economist at Ten-X, who prepared the forecast.

But he said the forecast wasn’t a doomsday scenario because lenders have been much more conservative in their underwriting during the current economic cycle.

The report triggered a pushback from some experts who said it didn’t take into account the complex regional housing market, in which renters throughout the region will be drawn to Manhattan and Brooklyn if rents levels falter.

Nancy Packes, a rental marketing consultant who works closely with apartment developers, said the forecast “didn’t make any sense.”

The report put New York City at the No. 1 position among “top sell markets,” where owners of multifamily properties “might consider selling” because of the prospect of declining owner incomes. Nearly 10,000 new apartments in large buildings—those with at least 40 units—have hit the market since 2016, a total that is due to exceed 40,000 by the end of 2018, according to the report.

Rents, after landlord concessions, already are falling, the report noted, and it predicted that rents will suffer average annual declines of 2.7% through 2020. Owner operating income, or income after subtracting operating expenses, will decline by an average of 4.5% through 2020, the report said.


> https://www.wsj.com/article_email/new-york-apartment-vacancies-projected-to-soar-1501598196-lMyQjAxMTA3MjAyODUwNTgwWj/

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Baby Boomers Who Won't Sell Dominating Housing Market...

  • Older Americans own half of houses, squeezing out youngsters
  • Why a 23-year-old is cruising city streets, knocking on doors

Jake Yanoviak is hunting for houses. On a weekday afternoon in North Philadelphia, the 23-year-old painter cruises along on his bike, its black paint obscured under stickers from breweries and rock bands. He turns onto a side street, where he spots a few elderly neighbors, standing on adjoining porches. He parks, leans on one handlebar and makes his pitch.

“Anybody on the block considering selling?” Yanoviak asks gently. “I’m not a developer, I’m not interested in renting to students. I’m just a kid trying to buy a house, fix it up and live in it.”

Jake Yanoviak / Photographer: Prashant Gopal/Bloomberg

“We’re not going no place,” replies a 70-something woman, relaxing in fuzzy white pig slippers in the row house where she’s lived twice as long as Yanoviak has been alive. “All these houses are taken.”

Like much of his generation, Yanoviak is desperate to get a piece of an increasingly scarce commodity: prime American real estate. Millennials are finding themselves out in the cold because building has slowed, and longer-living baby boomers are staying put, setting up a simmering conflict between the two biggest generations in U.S. history.

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  • 1 month later...
... ...
Gold prices were relatively unchanged after U.S. consumers bought fewer pre-existing homes in August, according to the latest report from the National Association of Realtors (NAR).

Existing home sales shocked with a drop of 1.7% last month to a seasonally adjusted and annualized rate of 5.35 million units, compared to July’s annualized rate of 5.44 million homes, the association said on Wednesday.

This marked the lowest level in twelve months. Economists were expecting to see a 0.3% advance to 5.46 million units.


PHM / Pulte Homes - could topping out - it has been a bellwether for builders - and tends to lead house price ... 12mo :


. . .

The median price for all existing-home types in August was $253,500, up 5.6% from last year, which marked the 66th straight month of year-over-year gains. At the same time, the association said that total inventory as of the end of August declined 2.1% to 1.88 million existing homes available for sale.

"Market conditions continue to be stressful and challenging for both prospective first-time buyers and homeowners looking to trade up," added Yun.

Many economists warn that rising home prices could potentially pose a serious challenge to future sales.

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  • 4 weeks later...

Investors Head to Houston to Buy From Panicked Homeowners...


Distressed Investors Are Already Buying Houston Homes for 40 Cents on the Dollar

Flooded homes, big money, and hard choices.
Bryan Schild drives through the byways of Houston looking for what could be the investment opportunity of a lifetime: homes selling for as little as 40¢ on the dollar. “We Pay Cash For Flooded Homes $$$$$$$$ Don’t fix it, sell it. Quick close,” read the signs piled in the back seat of his Ford pickup.
. . .
Investors such as Schild figure they can buy low, either fix up and flip the houses or rent them out for several years, and unload them later, doubling their money or more.
Schild making Matlock an offer in his flooded house.
Photographer: Prashant Gopal/Bloomberg

Those kinds of bets have often paid off. Buyers who snapped up co-ops and office towers when New York was near bankruptcy in the 1970s made a killing. More recently, companies including Blackstone Group LP and other marquee names bought foreclosed homes after the 2008 financial crisis and are sitting on billions in potential gains.

The cycle begins with small-time investors such as Schild, who’s bought more than 30 waterlogged houses for an average $175,000 apiece. Then Wall Street swoops in...



My brother lives in Houston.

Fortunately. his home was not flooded.

But for those who experienced that, they may have to tear out much of the lower floor. and replace walls and floors.

to make the home livable again. This horrible requirement has been assisted by some (like my brother's church, who does this

work as a charity project.) But not all will have the assistance or the wherewithal to get this done.
So for some sad homeowners, selling out may be the only thing they can do.

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The Smartest Americans Are Heading West
Three Colorado cities are in the Brain Concentration Index’s top 10.
(Not all are west. People are also heading for Washington DC, where many govt jobs can be found.)

October 10, 2017

Three cities in Colorado — a state whose fortunes have been tied to the boom and bust of oil, gas and other commodities — are among the top 10 leading destinations for the nation’s best and brightest as old cow and mining towns morph into technology hubs, according to data compiled by Bloomberg. Another Colorado city is plotting a 21st century revival.

Boulder, the small college town located just north of Colorado’s capital, is ranked No. 1 nationally in the Bloomberg Brain Concentration Index, which tracks business formation as well as employment and education in the sciences, technology, engineering and mathematics. Fort Collins and Denver follow at No. 4 and No. 10, respectively.


Heralding the progress in the Fort Collins metropolitan area, the website of the Northern Colorado Economic Alliance declares the region as “nerdy and proud of it” with major universities producing “a robust workforce of young, highly-educated individuals.” An estimated 35 percent of the population holds a bachelors degree or higher, according to the alliance.

. . .

The disparity from one end of the state to the other is not unique to Colorado. Muskegon, Michigan, a once bustling manufacturing town, tops the Brain Drain Index, while the state is also home to one of the country’s most educated work forces just 2.5 hours away in Ann Arbor. The city, which comes in at No. 12 on the Brain Concentration Index, is home to the University of Michigan and has an unemployment rate of just 3.9 percent.


> https://www.bloomberg.com/news/articles/2017-10-10/the-smartest-americans-are-heading-west-as-computer-chips-replace-cow-chips

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  • 3 weeks later...

Frisco's Bubble fears... too much hype? No longer affordable


Tech & the China factor has driven prices to unaffordable levels. Sales now down from one year ago.




Is there a housing bubble and will it burst in San Francisco?
The Mercury News-5 Oct 2017
A report about the risk of a housing bubble in 20 global financial markets rates San Francisco real estate as the most overvalued among the ...
UBS Global Real Estate Bubble Index 2017: San Francisco is the ...
Business Wire (press release)-28 Sep 2017
UBS Wealth Management's UBS Global Real Estate Bubble Index 2017 report analyzes residential property prices in 20 select urban areas ...
Pending home sales plunge across Bay Area and state
The Mercury News-24 Oct 2017

They rose a modest 2.8 percent in San Francisco. .... we will see california housing prices drop off a cliff, one the new tax bill gets signed by


Home values in Seattle are growing twice as fast as San Francisco ...
Puget Sound Business Journal (Seattle)-26 Oct 2017

Zillow Group (Nasdaq: Z, ZG) is reporting that home values in the the ... "Seattle and San Jose, California, have left San Francisco's housing ..



San Francisco is a “superstar” city buoyed by the growth of high-wealth households.

Prices in San Francisco are up nearly 65 percent since 2011, UBS says, but its housing market is protected by “strong economic fundamentals amid the astonishing boom of tech companies.”

So where might the housing bubble pop?

Toronto tops UBS’s Global Real Estate Bubble Index for 2017. Also at risk of a housing bubble are Stockholm, Munich, Vancouver, Sydney, London and Hong Kong — though London and Hong Kong, also deemed “superstars,” are presumably at less risk than the others in that group.


What could push bubbles toward bursting? Interest rates, for one thing. If they climb, investors could pull back.

And then there’s the general problem of affordabilty.

“The recovery in the U.S. housing market following the bursting of the housing bubble in 2007 has taken national home prices to new heights,” said Jonathan Woloshin, co-head of Americas Fundamental Research at UBS Wealth Management’s chief investment office.

A bit ominously, he added: “In our opinion, housing affordability is significantly more challenged than conventional wisdom posits.”

. . .

  • UBS Wealth Management's UBS Global Real Estate Bubble Index 2017 report analyzes residential property prices in 20 select urban areas around the world.
  • Toronto faces the greatest risk of a housing bubble, followed in descending order by Stockholm, Munich, Vancouver, Sydney, London, Hong Kong, and Amsterdam.
  • For buyers, San Francisco is the most overvalued US city in the study, followed by Los Angeles. Boston and the New York metro area are fair value, while Chicago is the only undervalued city in the study globally.

In San Francisco, in the wake of the technology boom and buoyant foreign demand, real house prices have soared 65% since 2012. Price growth has slowed in recent quarters, but remains 6% above the national average. Despite the thriving economy, average incomes have risen only 10% since 2012 and have not kept pace with house prices, worsening housing affordability further.

In Los Angeles, since 2012, real housing prices have increased by 45%, while across the US the figure is just 23%. The prospering economy and demand from China are fueling the boom and show no sign of decelerating. Prices, however, are still 20% below their 2006 peak. While income growth has escalated in the last two years, housing affordability is stretched and should slow price growth.

In the New York metro area, real prices rose by less than 3% in the past four quarters and are 10% higher than in 2013, when the market bottomed out. The pace of price growth is only half the national average. Manhattan house-price dynamics were much stronger in the last couple of years, propelled by demand from global investors and new luxury developments. But momentum has already slowed in the high-end market.

In Boston, house prices increased by 6% last year and are now 20% higher than in 2012. The regional economy and incomes are growing faster than the national average. Housing affordability remains good compared to other cities in the study. A 60 square meter (650 square foot) flat costs only four annual household incomes. As population growth remains vigorous and supply may be slowing, prices should continue to rise.

In Chicago, since 2012, prices have risen by 15% in real terms but remain 30% below their 2006 peak. Decreasing population, sluggish employment and lackluster economic and income growth hinder the recovery of broad-based demand in the housing market. UBS Wealth Management expects price growth to lag behind the national average in the coming quarters.

With respect to international markets, the outlook in Europe is heating up. Claudio Saputelli, Head of Global Real Estate for UBS Wealth Management's Chief Investment Office (WM CIO), says: "Improving economic sentiment, partly accompanied by robust income growth in the key cities, has conspired with excessively low borrowing rates to spur vigorous demand for urban housing." In the Asia Pacific region, Hong Kong and Sydney's bubble risk have risen since last year. Singapore remains fairly valued, with diminishing risks, while Tokyo has grown more overvalued in 2017.

Superstars take all?

Expectations of long-term rising prices partly explain demand for housing investment in major global cities. Many market participants expect the best locations to reap most value growth in the long run – the superstar model – buoyed by the growth of high-wealth households. Falling mortgage rates over the last decade have also made buying a home vastly more attractive. As long as supply cannot increase rapidly, many buyers see "superstar city" prices decoupling from rents, incomes and national price levels.

The superstar narrative has received additional impetus in the last couple of years from a surge in international demand, especially from China, which has crowded out local buyers. An average price growth of almost 20% in the last three years has confirmed the expectations of even the most optimistic investors.


AFFORDABILITY: Bay Area's red-hot housing market may be cooling off the job market


CAR also reported that the share of homes selling above asking price across the state fell from 31 percent in September 2016 to 29 percent in September 2017. But among homes that sold above asking price, the premium paid over asking climbed from 8 percent to 13 percent.

. . .

Pending home sales fell markedly across California in September, with the largest regional drop-off in the Bay Area where an ongoing housing shortage and exorbitant prices appeared to dissuade some potential buyers.

Statewide, the number of pending sales fell 6 percent on a year-over-year basis in September, while they fell 10.8 percent across the Bay Area.

Locally, pending sales were down even more dramatically, falling 23.5 percent in Santa Clara County compared to September 2016 and 22.4 percent in San Mateo County. They rose a modest 2.8 percent in San Francisco. CAR didn’t include East Bay pending home sales in its survey.

“We can’t ignore the role played by the tight supply in the housing market,” said Oscar Wei, senior economist with CAR.

Still, he pointed to additional factors behind September’s dramatic year-over-year drop-off in pending sales. For one, they fell from an unusually high level: Pending sales had surged “abnormally” in September 2016, Wei said, after the Federal Reserve hinted that it would begin to raise interest rates later that year. As a result, buyers rushed to lock in deals to capitalize on low rates.

Other buyers rushed to close deals in September 2016, he said, because of another complication: New federal rules governing mortgage record-keeping were about to take effect in October. Afraid they would become mired in the new bookkeeping procedures, buyers and agents doubled down in their efforts to secure deals.

. . .

San Francisco, which was credited for its local restaurants, alternative transportation and diversity, is followed by Seattle, famous for recreation, coffee shops and beer breweries, and San Diego, commended for its youth, recreation, and propensity for electric cars.

New Orleans and Portland round out the top five coolest cities.

However, coolness is at best a nebulous concept.


(Philadelphia is not listed as one of the Top 20 "coolest" cities, but it could creep onto the list - particularly if it wins the bid from Amazon, as its 2nd HQ.

The "city of brotherly love", is between two cool cities, NYC and Washington, and is at least as walkable, and far cheaper.)

Amazon Headquarters Tours

Several years ago, we made a conscious choice to invest in downtown Seattle, even though it would've been cheaper for us to move our headquarters to the ...


September was "the ninth month in a row that Seattle home values have grown faster than anywhere else in the nation."


(No wonder Amazon is no looking for an alternative place, to add new employees.)






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Manhattan Office Bubble Fizzles without Big Chinese Buyers


Manhattan, the biggest most expensive trophy market in the US for commercial real estate, used to be particularly appealing to exuberant foreign investors, such as Chinese conglomerates. But in the third quarter, sales volume of large office properties (minimum $5 million and 50,000 sq. ft.) plunged 67% year-over-year to $991 million, the lowest in five years. It was down 90% from the peak in Q1 2015.

“Q3 2017 might signal a return to normalcy for the highly sought-after Manhattan market,” the report by Yardi Systems’ Commercial Café commented.

This chart shows the dollar sales volume of large office properties. The $991 million in Q3 is rounded up to $1 billion:




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Apple's Mothership has landed

Here's how Apple solved the challenge of needing new space


(no second HQ... in a cheaper city)


Apple Park: Apple Campus 2 Now Open September 12, 2017


Good for Apple maybe. but not so good for its employees, who still have to bear the high cost of housing nearby.


Walk to Steve Jobs Theater in Apple Park


With excellent Japanese narration

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Rising Rents Are Pushing More Tenants Past the Breaking Point By
Patrick Clark
October 26, 2017
  • Almost 20 percent of those surveyed struggle to pay the rent
  • Cities rocked by foreclosure crisis still see higher evictions

Rents have increased rapidly across U.S. housing markets as the share of renting households has risen faster than the number of new units. Now, in a survey published Thursday by an apartment-listing service, nearly one in five respondents reports struggling to make the monthly payments.


While big landlords seem to be succeeding at finding tenants who can keep up, the survey, by Apartment List, suggests escalating housing costs may be straining renters’ resources. Eighteen percent of respondents couldn’t pay the full rent due in at least one of the past three months, according to the poll of 40,000 renters. Of those who have registered for the listing site this year, 3.3 percent said they had been evicted in the past, up from 2.8 percent in 2015.


The findings were controlled for income distribution across the website’s 8 million users, according to Chris Salviati, an economist at Apartment List. Its listings skew toward higher-end apartments, attracting more-affluent renters, Salviati said, though it also attracts lower-income renters casting a wide net.

Among households earning up to $30,000 a year, 27.5 percent failed to pay the rent in full in at least one of the past three months. Among those earning $30,000 to $60,000, it was 14.8 percent. Even of those making more than $60,000 a year, it was 8.8 percent.

. . .

The share of households considered rent-burdened--meaning they spend more than 30 percent of their income on debt--ticked down in 2015 but is still historically high. Forty-one percent of renters, meanwhile, said it was hard to find affordable housing near their jobs, according to data from an August survey published by Freddie Mac.


> more: https://www.bloomberg.com/news/articles/2017-10-26/rising-rents-are-pushing-more-tenants-past-the-breaking-point

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  • 2 weeks later...

Millennial Home Buyers Send a Chill Through Rental Markets Homeownership has risen to its highest levels since 2014, causing analysts and investors to wonder whether the rental market’s good times are ending

Nov. 7, 2017

Rising homeownership is adding to the jitters in the residential rental market, which has slumped recently after a long stretch near the top of the commercial real-estate industry.

For most of the current expansion, declining ownership rates have enabled landlords of apartments and single-family units to raise rates far faster than the pace of inflation. Deamnd has been fueled by the millions of people who haven't had the money, credit, or desire to pursue the traditional American dream.


> https://www.wsj.com/articles/millennial-home-buyers-send-a-chill-through-rental-markets-1510056001?mod=trending_now_1

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(This seems to contradict some other articles):


Renting homes is overtaking the housing market. Here’s why

Single-family rentals — either detached homes or townhomes — are developing faster than any other portion of the housing market. These rentals outpace both single-family home purchases and apartment-style living, according to the Urban Institute.


“Almost all the housing demand in recent years has been filled by rental units,” says Sara Strochak, a research assistant with the Urban Institute. She also states that single-family rentals have gone up 30% within the last three years.

This change is unique to newer generations. But when did rentals become so popular? And why are people more inclined to rent than to buy? Below, we’ll further discuss the rise in rentals and how it affects the housing market.


When did the rise in single-family rentals start?

The housing bubble collapse and the recession that followed shattered the decades-old tenet of American wisdom that you can’t go wrong buying a home. Most of the housing market fallout from the Great Recession has finally receded — foreclosures and underwater mortgages are back to traditional levels and housing values have recovered in most places. But one thing hasn’t recovered: Americans’ unquestioned desire to own a home.

Today, single-family rental homes and townhomes make up 35% of the country’s 44 million rental units, compared to 31% in 2006.

Who is leading this trend?

Millennials are leading the way to single-family rentals, and myriad factors contribute to this trend. Many young adults aren’t in a hurry to lay down roots, whether they’re prone to traveling or simply aren’t ready to commit to one area or one home. Student loans and stagnant incomes can also make it harder to save up for a down payment. And it’s inevitable that young people who came of age during the housing bubble would be reluctant to take a leap of faith and commit to a 30-year mortgage.

“While the age distribution of the U.S. population suggests most millennials are reaching the age of household formation and demand for single-family homes, much of this demand is likely to be channeled into the rental market,” says Strochak.


> https://www.usatoday.com/story/money/personalfinance/real-estate/2017/11/11/renting-homes-overtaking-housing-market-heres-why/845474001/

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  • 3 weeks later...

Home Prices Surge...

Dow soars 255 points to record as Senate gets closer to passing tax reform

  • The Senate Budget Committee approved the Senate's tax plan on Tuesday, bringing the upper chamber closer to a floor vote.
  • The Dow, S&P 500 and Nasdaq all hit record highs.
  • Financials had their best day since March 1.

. . .

As the latest housing data shows an uptick in sales, Case-Shiller's 20-City Composite index surged 6.19% YoY in September - the fastest rate of gain since July 2014.

As Bloomberg notes, the residential real-estate market is benefiting from steady demand backed by a strong job market and low mortgage rates. The ongoing scarcity of available houses on the market, especially previously-owned dwellings, is likely to keep driving up prices.

Eight cities have surpassed their peaks from before the financial crisis, according to the report.

All 20 cities in the index showed year-over-year gains, led by a 12.9 percent increase in Seattle and a 9 percent advance in Las Vegas (slowest gains in Washington area at 3.1 percent, Chicago at 3.9 percent)

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  • 1 month later...

Housing Bubble 2.0: U.S. Homeowners Made $2 Trillion On Their Houses In 2017

Americans who are lucky enough to own their own little slice of the 'American Dream' are about $2 trillion wealthier this year courtesy of Janet Yellen's efforts

Americans who are lucky enough to own their own little slice of the 'American Dream' are about $2 trillion wealthier this year courtesy of Janet Yellen's efforts to recreate all the same asset bubbles that Alan Greenspan first blew in the early 2000's.  After surging 6.5% in 2017, the highest pace in 4 years according to Zillow data, the total market value of homes in the United States reached a staggering all-time high of $31.8 trillion at the end of 2017...or roughly 1.5x the total GDP of the United States.

If you add the value of all the homes in the United States together, you get a sum that’s a lot to get your mind around: $31.8 trillion.

How big is that? It’s more than 1.5 times the Gross Domestic Product of the United States and approaching three times that of China.

Altogether, homes in the Los Angeles metro area are worth $2.7 trillion, more than the United Kingdom’s GDP. That’s before this luxury home on steroids hits the market.

In the New York City metro, total home values equal $2.6 trillion, more than the French economy — and enough money to buy 8,494 Boeing 787-10 Dreamliners.

Of course, as we pointed out at the end of November, while staggering, the pricing gains on housing only look to just now be heating up...

As the latest housing data shows an uptick in sales, Case-Shiller's 20-City Composite index surged 6.19% YoY in September - the fastest rate of gain since July 2014.

As Bloomberg notes, the residential real-estate market is benefiting from steady demand backed by a strong job market and low mortgage rates. The ongoing scarcity of available houses on the market, especially previously-owned dwellings, is likely to keep driving up prices.

Eight cities have surpassed their peaks from before the financial crisis, according to the report.

All 20 cities in the index showed year-over-year gains, led by a 12.9 percent increase in Seattle and a 9 percent advance in Las Vegas (slowest gains in Washington area at 3.1 percent, Chicago at 3.9 percent)


Luckily, American's are too 'smart' to get crushed by another housing crash this cycle...no, this time around they're not taking any chances and are instead taking all their equity out of their  homes to buy Bitcoin...which is a genius plan if we understand it correctly.


> https://www.zerohedge.com/news/2017-12-28/housing-bubble-20-us-homeowners-made-2-trillion-their-houses-2017

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