Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61957 Sun, 26 Mar 2017 16:07:58 GMT Condo Flippers in Miami-Dade Left Twisting in the Wind http://implode-explode.com/viewnews/2017-03-26_CondoFlippersinMiamiDadeLeftTwistingintheWind.html Miami-Dade's spectacular condo flipping mania is in turmoil, with sales plunging, inventory-for-sale soaring, and new supply flooding the market... In February, existing home sales of all types fell 10% year-over-year, to 1,835 homes. These sales "do not include Miami's multi-billion dollar new construction condo market," the Miami Association of Realtors clarified in its report on March 23.

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[The current high] inventory [which is 2x the level in 2013] understates the total number of condos for sale. It only includes units listed for sale on the Multiple Listing Service (MLS). But developers normally don't list their new units on the MLS, and thus they're not included in the above chart.

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iehi-feed-61947 Sat, 25 Mar 2017 15:10:42 GMT Death of the American Dream? Life In Post-Crisis America http://implode-explode.com/viewnews/2017-03-25_DeathoftheAmericanDreamLifeInPostCrisisAmerica.html iehi-feed-61941 Thu, 23 Mar 2017 20:53:03 GMT Renters Now Rule Over Half of U.S. Cities http://implode-explode.com/viewnews/2017-03-23_RentersNowRuleOverHalfofUSCities.html iehi-feed-61932 Wed, 22 Mar 2017 14:58:27 GMT Existing home sales fall from 10-year high http://implode-explode.com/viewnews/2017-03-22_Existinghomesalesfallfrom10yearhigh.html January's sales pace was unrevised at 5.69 million units, which was the highest level since February 2007. Economists polled by Reuters had forecast sales decreasing 2.0 percent to a pace of 5.57 million units last month.

"Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that's pushing up price growth and pressuring the budgets of prospective buyers," said Lawrence Yun, the NAR's chief economist.

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iehi-feed-61926 Tue, 21 Mar 2017 15:13:03 GMT I attended the top of the Canadian Housing Market, so you didn't have http://implode-explode.com/viewnews/2017-03-21_IattendedthetopoftheCanadianHousingMarketsoyoudidnthave.html The second important factor in real estate is financing.  Not everyone has money, so what can they do?  The answers were shocking.  Be ‘creative' was the first response.  Pool your money, borrow from friends and family, own just 5% of a house, get the money however you can and just do it - remember, it only goes up.  Other financing suggestions were get cozy with a lender and they will ‘bend the rules' for you!  The fact that the biggest condo developer in Canada (Brad Lamb) said lenders will bend (but not break, apparently) rules to get you financing in front of 15k people with most people smiling and nodding was shocking.  

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Plenty of "high double-digit monthly yields", retire early with real estate, "everyone needs a place to live - buy apartments" type messages. Almost all of these pitches were second lien lending. Most offered yields in the 8 to 10% range. The presentations all suggested that you can borrow money, if you don't have it, at 4% and then buy these investments at 10% - easy money.

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The Paramount Equity pitch was also interesting and stated in all caps "HIGH DOUBLE-DIGIT RETURNS ON YOUR CASH, RRSP". This product pays monthly, is a second lien mortgage, with a one year term and LTV <85%. Paramount uses clever language that states they cover the cost of defaults. By that they mean they pay some of the fees, not the default risk itself.

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iehi-feed-61913 Sat, 18 Mar 2017 23:53:03 GMT World Out Of Whack: What's Next For Global Real Estate? http://implode-explode.com/viewnews/2017-03-18_WorldOutOfWhackWhatsNextForGlobalRealEstate.html iehi-feed-61909 Sat, 18 Mar 2017 15:37:26 GMT Neel Kashkari: I Almost Couldn't Get a Mortgage, But Banks Should Still Have Larger Capital Buffers http://implode-explode.com/viewnews/2017-03-18_NeelKashkariIAlmostCouldntGetaMortgageButBanksShouldStillHaveLar.html There's a straightforward way to help prevent the next financial crisis, fix the too-big-to-fail problem, and still relax regulations on community lenders: increase capital requirements for the largest banks. In November, the Federal Reserve Bank of Minneapolis, which I lead, announced a draft proposal to do precisely that. Our plan would increase capital requirements on the biggest banks--those with assets over $250 billion--to at least 23.5%. It would reduce the risk of a taxpayer bailout to less than 10% over the next century.

Alarmingly, there has been recent public discussion of moving in the opposite direction. Several large-bank CEOs have suggested that their capital requirements are already too high and are holding back lending. As this newspaper reported, Bank of America CEO Brian Moynihan recently asked, "Do we have [to hold] an extra $20 billion in capital? Which doesn't sound like a lot, but that's $200 billion in loans we could make."

.. [But] Borrowing costs for homeowners and businesses are near record lows. If loans were scarce, borrowers would be competing for them, driving up costs. That isn't happening. Nor do other indicators suggest a lack of loans. Bank credit has grown 23% over the past three years, about twice as much as nominal gross domestic product. Only 4% of small businesses surveyed by the National Federation of Independent Business report not having their credit needs met.

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There is a simple and fair solution to the too-big-to-fail problem. Banks ask us to put 20% down when buying our homes to protect them in case we run into trouble. Similarly, taxpayers should make large banks put 20% down in the form of equity to prevent bailouts in case the financial system runs into trouble. Higher capital for large banks and streamlined regulation for small banks would minimize frustration for borrowers. If 20% down is reasonable to ask of us, it is reasonable to ask of the banks.

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iehi-feed-61884 Wed, 15 Mar 2017 14:42:41 GMT Home builder confidence soared to highest level in 12 years as Trump rolls back regulations http://implode-explode.com/viewnews/2017-03-15_Homebuilderconfidencesoaredtohighestlevelin12yearsasTrumprollsba.html Builder sentiment had moved higher just after the election, but then receded at the start of the year amid rising mortgage rates and a continued labor shortage. Trump signed an executive order at the end of February designed to roll back a 2015 rule from the Obama administration known as the Waters of the United States. Home builders have called the rule "burdensome" and claim that 25 percent of the cost of a home today is due to regulation, including this one.

Builders are not only pleased with Trump's first move on water, they also expect further deregulation to bring down construction costs. There are, however, other roadblocks keeping the nation's builders from producing more homes, which are sorely needed in today's tight housing market.

"While builders are clearly confident, we expect some moderation in the index moving forward," said NAHB Chief Economist Robert Dietz. "Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor."

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iehi-feed-61881 Tue, 14 Mar 2017 14:59:56 GMT Why the Real Estate Market Is Imploding Again... http://implode-explode.com/viewnews/2017-03-14_WhytheRealEstateMarketIsImplodingAgain.html I'm not talking about the housing market. I'm talking about retail real estate... 334 malls are "at high risk of closing." That's about a third of the nation's malls.

... The world's biggest REIT is in trouble. Today's chart shows the performance of Simon Property Group (SPG). Simon owns or has an ownership interest in 190 million square feet of mall floor space. You can see its stock has plunged 26% since August. It's now trading at its lowest level since October 2014.

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iehi-feed-61871 Sat, 11 Mar 2017 20:15:17 GMT Trump Fires Preet Bharara http://implode-explode.com/viewnews/2017-03-11_TrumpFiresPreetBharara.html iehi-feed-61861 Fri, 10 Mar 2017 15:29:55 GMT One in Three U.K. Homeowners Gets More Wealthy From Property Than Work http://implode-explode.com/viewnews/2017-03-10_OneinThreeUKHomeownersGetsMoreWealthyFromPropertyThanWork.html iehi-feed-61848 Wed, 08 Mar 2017 00:35:24 GMT MarK Hanson: Housing Market "Vulnerable"; At "Inflection Point" http://implode-explode.com/viewnews/2017-03-07_MarKHansonHousingMarketVulnerableAtInflectionPoint.html Remember, a "house price recovery" and fundamental, "housing market recovery" are two completely different things. Even after seven years of ZIRP and trillions of government debt and Fed money printing aimed largely at US housing, there is little evidence that a fundamental, end-user, shelter-buyer instigated, "housing market recovery" has occurred.

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I am confident in my data and models that aim to a sudden inflection point, soon, when high-frequency releases such as existing home sales and prices, builder new home sales and prices, pending sales, et al will hit a year-over-year comp wall, which will lead to a string of headline declines through year-end.

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iehi-feed-61842 Mon, 06 Mar 2017 21:47:00 GMT The government doesn't actually want housing to be more affordable (Au) http://implode-explode.com/viewnews/2017-03-06_ThegovernmentdoesntactuallywanthousingtobemoreaffordableAu.html The federal government's problem with making housing more affordable is that it becomes, by definition, cheaper. And that's not something that the federal government wants to see happen for some very understandable reasons.

Back in the Howard era Australians were encouraged to invest in housing as a form of wealth creation, partially as a way of addressing rental strain and mainly as a way to ensure people had assets and therefore didn't go selfishly claiming pensions later on. That's when the negative gearing and capital gains exemptions were introduced that made buying property such a sweet deal.

So now there are a lot of Australians who have put their retirement eggs in the basket marked "leveraging the hell out of my mortgage to buy more investment properties" for the last couple of decades and who will be therefore disadvantaged if the value of housing drops.

The Aussies find themselves in a familiar conundrum. Who could'a predicted it??

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iehi-feed-61820 Fri, 03 Mar 2017 22:54:23 GMT Ruh-Roh: More Homeowners Cashing in on Their New Housing Wealth; Slashing Down Payments http://implode-explode.com/viewnews/2017-03-03_RuhRohMoreHomeownersCashinginonTheirNewHousingWealthSlashingDown.html Home equity lines of credit, known as HELOCs and often serving as second loans, allow homeowners to pull cash out of their homes when they need it. HELOC volume is now up 21 percent in the past two years, to the highest level since 2008, according to Fitch Ratings. It is still nowhere near its housing boom level, when many people treated their homes like ATMs, but the trajectory is definitely pointing higher.

... HELOC volume is now up 21 percent in the past two years, to the highest level since 2008, according to Fitch Ratings. It is still nowhere near its housing boom level, when many people treated their homes like ATMs, but the trajectory is definitely pointing higher.

... Borrowers are also putting smaller down payments on home loans now, starting with less home equity either to save cash or because they can't afford anything more. To put it in perspective, before the last housing boom, the median down payment was just over 7 percent. It then dropped to 3 percent during the height of the boom, as lenders offered all kinds of "creative" loan products that required little to no down payment... down payments rose back above 7 percent again during the recovery. At the end of 2016, the median down payment had fallen to 6 percent, according to ATTOM Data Solutions, and it appears to be headed lower, as lenders offer more low down-payment products...

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iehi-feed-61800 Wed, 01 Mar 2017 23:33:34 GMT So What Are We Going to Do with the Retail Malls? http://implode-explode.com/viewnews/2017-03-01_SoWhatAreWeGoingtoDowiththeRetailMalls.html In some cases, these locations can be redeveloped. Uber bought the art-deco Sears Building in Oakland and is remodeling it for its new headquarters. The buyer of Macy's men's store in San Francisco will redevelop it into something else. No problem. But closing thousands of stores at already struggling malls around the country, in an industry -- brick-and-mortar retail -- that will remain on a sharp downward curve, cannot be so easily dealt with. And it will dog investors in that space for years to come.

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Moody's yesterday warned that retailers have replaced oil & gas as the most distressed sector. Of the retailers it rates, 14% are rated Caa/Ca, which is in deep junk. At the worst point during the Financial Crisis, 16% were rated that low, and many buckled under their debts. It expects current retailers to beat that sad record over the next few years.

Deportation fusion centers, perhaps?

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iehi-feed-61797 Wed, 01 Mar 2017 21:35:33 GMT Mortgage applications surge 5.8 percent, as rates briefly dip (BUT LID STILL ON HIGHER-RATE MARKET) http://implode-explode.com/viewnews/2017-03-01_Mortgageapplicationssurge58percentasratesbrieflydipBUTLIDSTILLON.html Borrowers came back to the mortgage market last week, thanks to a slight retreat in interest rates. Total mortgage application volume rose 5.8 percent for the week compared to the previous week. Still, volume came in 28 percent lower than the same week a year ago...

The gains are not particularly impressive, given how weak mortgage volume has been this year. Applications to refinance a home loan rose 5 percent for the week, reaching the highest level since December, seasonally adjusted, but they are still 45 percent below year-ago levels. That is because interest rates are about 50 basis points higher than a year ago.

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iehi-feed-61783 Wed, 01 Mar 2017 00:17:57 GMT Number of distressed U.S. retailers at highest level since Great Recession http://implode-explode.com/viewnews/2017-02-28_NumberofdistressedUSretailersathighestlevelsinceGreatRecession.html iehi-feed-61777 Mon, 27 Feb 2017 23:04:56 GMT Pending home sales drop to lowest in a year, down in January http://implode-explode.com/viewnews/2017-02-27_PendinghomesalesdroptolowestinayeardowninJanuary.html iehi-feed-61768 Sun, 26 Feb 2017 15:43:28 GMT Investors in America's housing-finance giants lose in court http://implode-explode.com/viewnews/2017-02-26_InvestorsinAmericashousingfinancegiantsloseincourt.html At issue is the Obama administration's decision in 2012 to hoover up all of Fannie and Freddie's profits. Until then, it had received a fixed dividend on its investment. The timing of the shift was striking--just before a surge in the firms' profitability. Since 2008 the Treasury has sucked in about $250bn from the firms, 30% more than the cost of the bail-out.

The change enraged hedge funds who had bought Fannie and Freddie's shares and found themselves expropriated. The investors' lawsuit held that the government overstepped its authority by seizing all profits. A federal court dismissed that claim in 2014; it has taken until now for an appeals court to uphold the most important parts of the decision. An odd aspect of the ruling is that it largely ignored the substantive arguments but concluded the court lacked the authority to curb the government's actions.

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The firms are hardly robust. The Treasury is running down their capital by $600m a year. By 2018 they will have none left. From then on, should the firms make a loss, they will need to draw on an emergency line of credit from the government. Doing so would be characterised by some as a second bail-out.

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iehi-feed-61765 Sat, 25 Feb 2017 14:47:27 GMT Toronto Housing Market May Need Vancouver-Style Cooling, RBC Says http://implode-explode.com/viewnews/2017-02-25_TorontoHousingMarketMayNeedVancouverStyleCoolingRBCSays.html Toronto may require measures to cool its red-hot housing market similar to moves taken in Vancouver if interest rates don't increase, said Royal Bank of Canada Chief Executive Officer David McKay.

The head of Canada's largest lender said Toronto housing is "running hot" and is fueled by a "concerning mix of drivers" that include lack of supply, continued low rates, rising foreign money and speculative activity. Similar circumstances in Vancouver prompted British Columbia's government last year to impose a 15 percent tax on foreign buyers.

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The comments from the bank CEO come as frustration grows over the unaffordability of properties in Canada's biggest city. The average home price in Toronto jumped 22 percent in January from the previous year, the fifth straight month of gains topping 20 percent. Listings have dropped off, down by half from last year, squeezing prices further.

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Since the tax was imposed in Vancouver, monthly transactions in the metro region fell on average by 36 percent compared to a year earlier, according to data from the Real Estate Board of Greater Vancouver. Prices for prized single-family detached homes had been rising in double digits last year. In the past six months, they've fallen 6.6 percent to an average C$1.47 million, according to board figures released earlier this month.

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