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All of the signs of the top of the last bubble are re-emerging

By Patrick following x   2018 May 1, 8:25pm 521 views   11 comments   watch   sfw   quote     share    


http://investmentresearchdynamics.com/homebuilder-stocks-overvalued-over-leveraged-and-going-lower/

All of the signs of the top of the last bubble are re-emerging. Home equity “cash out” loans are soaring again at what is likely peak home prices. According to Freddie Mac, cash-out “refis” are at their highest level since 2008.

We saw how this movie ended the last time around. If you forgot, rent “The Big Short.” A private investment management company in California, Carrington Holding Company, has a mortgage lending facility that will now underwrite and fund mortgages to borrowers with credit scores as low as 500. Carrington will do loans up $1.5 million on homes/condos and home equity cash outs up to $500k. Recent credit events like foreclosure, bankruptcy or a history of late payments are acceptable. This business plan will not end well.
1   TrumpingTits   ignore (0)   2018 May 1, 8:44pm   ↑ like (2)   ↓ dislike (0)   quote        

Patrick says
If you forgot, rent “The Big Short


Yes. If only to see Margo Robbie in a bathtub explaining what is going on. :)

Hmmmm...this is a great investment opportunity! I should call Carrington and get one of these ridiculous loans, by a house I can't even hope to pay even interest-only payments on.

..then, walk away.

So what if I have a foreclosure on my credit record? In another six years or go another Carrington will come along and not care about that, either.

#MoralHazard
2   Feux Follets   ignore (1)   2018 May 2, 7:03am   ↑ like (1)   ↓ dislike (0)   quote        

Update on the Most Splendid Rental Bubbles & Crashes in the US

Chicago rents collapse, New York’s swoon, Southern California’s boom. And the US average hides all the drama on the ground.

The situation with rents in the most expensive US rental markets can be summarized like this: Free-fall in Chicago, where the median asking rent for two-bedroom apartments has plunged 32% from its peak, a similar collapse in rents in Honolulu, double-digit declines from the peak in New York City and Washington DC, mixed movements in the Bay Area, a blistering boom in Southern California, and everything in between.

Watered down into a tidy nationwide average, the median asking rent for one-bedroom apartments in the US rose 1.4% in April compared to a year ago, to $1,185. And for two-bedroom apartments, it rose 2.2% from a year ago to $1,422.

A peculiar phenomenon cropped up last November: The median asking rent for 1-BR apartments suddenly surged by the double-digits, even as the median asking rent for 2-BR apartments was barely edging up. This phenomenon endured for four months but has now collapsed (the phenomenon remains unexplained, though some suspects have been lined up):



More: https://wolfstreet.com/2018/05/01/update-apartment-rental-bubbles-crashes-in-the-us/
3   FNWGMOBDVZXDNW   ignore (2)   2018 May 2, 7:23am   ↑ like (0)   ↓ dislike (0)   quote        

I would imagine that there are a number of people taking out helocs in anticipation of rates going up. But if the trend continues, that would be troubling. Property values have increased unsustainably in MD suburbs of DC. In NOVA, prices haven't been appreciating much more than inflation. The whole DC area seems to be on a 2.5% appreciation trajectory over the last 8 yrs based on Case Schiller.
It would be interesting to see plots like houses available, months on the market, number of sales, rent prices, yearly appreciation, etc. plotted from 2000-2009, and then superimpose 2011- present on the same plot.
4   Hassan_Rouhani   ignore (2)   2018 May 2, 8:17am   ↑ like (0)   ↓ dislike (0)   quote        

WarrenTheApe says
Hmmmm...this is a great investment opportunity! I should call Carrington and get one of these ridiculous loans, by a house I can't even hope to pay even interest-only payments on.

..then, walk away.

So what if I have a foreclosure on my credit record? In another six years or go another Carrington will come along and not car


I know a guy from Georgia (country, not US state) who did exactly that last time around. He's now living like a king in his home country because $1M is yuuuuuuge money there.
5   lostand confused   ignore (0)   2018 May 2, 8:23am   ↑ like (1)   ↓ dislike (0)   quote        

Chicago-who wants to live there. DEmocrats want to tax everything.
6   Strategist   ignore (1)   2018 May 2, 10:45am   ↑ like (0)   ↓ dislike (0)   quote        

Patrick says
All of the signs of the top of the last bubble are re-emerging. Home equity “cash out” loans are soaring again at what is likely peak home prices. According to Freddie Mac, cash-out “refis” are at their highest level since 2008.

Terrible analysis. These are cherry picked correlations. There is no cause and affect with the variables mentioned.

Feux Follets says

If rents are crashing, why did the 2 bedroom rents increase?
7   FNWGMOBDVZXDNW   ignore (2)   2018 May 2, 10:49am   ↑ like (0)   ↓ dislike (0)   quote        

Strategist says
If rents are crashing, why did the 2 bedroom rents increase?

1 bedroom rents increased as well - just not as fast as before.
8   TrumpingTits   ignore (0)   2018 May 2, 8:57pm   ↑ like (0)   ↓ dislike (0)   quote        

Strategist says
If rents are crashing, why did the 2 bedroom rents increase?


My Occam's Razor guess: People who have one bed rooms are now rooming with people with more bedrooms. Save money. A classic sign that rents were peaking.
9   rootvg   ignore (0)   2018 May 2, 9:07pm   ↑ like (0)   ↓ dislike (0)   quote        

I think we all know the bubble is about to burst. My theory is, as soon as Trump gets his second term we're going to have a bad recession. We're overdue.
10   TrumpingTits   ignore (0)   2018 May 2, 9:09pm   ↑ like (0)   ↓ dislike (0)   quote        

rootvg says
I think we all know the bubble is about to burst. My theory is, as soon as Trump gets his second term we're going to have a bad recession. We're overdue.

It will hit the Bluetard Zones the hardest. Yes, technically the commuting exurbs next to the bluetard urbs get hit the hardest, but they were but economic and housing extensions of the urbs themselves anyway.

And who cares if it hits those zones the hardest? They don't vote GOP anyway.
11   Strategist   ignore (1)   2018 May 2, 9:12pm   ↑ like (1)   ↓ dislike (0)   quote        

rootvg says
I think we all know the bubble is about to burst.


Yup. It may happen very soon. Like 2028.




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