Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-59907 Sun, 29 May 2016 19:02:55 GMT Last Time this Happened, the Housing Market Collapsed http://implode-explode.com/viewnews/2016-05-29_LastTimethisHappenedtheHousingMarketCollapsed.html According to the Times: "Many say the sudden surge in hyperprice homes -- often built and sold by speculative investors -- is the ultimate bubble signal." And when was the last time this sort of pile-up happened? In 2007 and 2008, just as the housing market was beginning to spiral down and as the Financial Crisis was beginning to mature. So now, the same signs are popping up once again.

While overall home prices were still soaring in the first quarter, at the top 5% of the housing market, the bubble has begun to deflate, with prices down 1.1%, according to Redfin. In some cities, the very top end is starting to take some hits, including in Manhattan where a luxury condo boom has turned into a glut, and where prices have begun to sag.

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iehi-feed-59889 Fri, 27 May 2016 14:17:18 GMT Wells Fargo Reintroduces 3%-Down Mortgages http://implode-explode.com/viewnews/2016-05-27_WellsFargoReintroduces3DownMortgages.html After being called out for its deceptive practices, the bank has scaled back on FHA backed mortgage lending in recent years. Wells Fargo accounted for just 2.5% of total FHA mortgages in 2015, down from 13% in 2010, and ultimately coming to this end game where the bank has a path forward without the FHA... Wells' own mortgage origination pipeline has been slowing down in recent years, and as such the corner office of the country's largest mortgage originator is desperate to find new and innovative ways to boost lending.

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The new program partners with Fannie Mae in order to allow borrowers with credit scores as low as 620 to make as little as a 3% down payment and use income from family members or renters to qualify. Naturally, the intent is to make more loans to low and middle-income borrowers - in the process pushing up home prices countrywide - without going through the FHA.

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iehi-feed-59887 Thu, 26 May 2016 16:55:52 GMT HUD: For many poor families, housing costs are ‘out of reach' http://implode-explode.com/viewnews/2016-05-26_HUDFormanypoorfamilieshousingcostsareoutofreach.html The affordable housing situation is bleak. So bleak that "in no state, metropolitan area, or county can a full-time worker earning the prevailing minimum wage afford a modest two-bedroom apartment," according to the report.

To afford a two-bedroom apartment at the current federal minimum wage of $7.25 an hour, a worker would need to work 112 hours a week, every week, according to the report. That means workers "would have no remaining time during the week for anything other than working and sleeping."

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NLIHC proposes a formula reducing the mortgage interest tax deduction that benefits homeowners. For years, there have been various proposals to change the popular deduction. Whatever reform that might eventually be approved, the coalition wants a portion of the savings to go to affordable housing.

The main benefit of eliminating the mortgage interest tax deduction would actually be to allow home prices to fall to more affordable levels. Of course cutting a sacred "middle class" benefit (even if done so gradually that there'd be no nominal decline in home prices) is politically impossible.

Alternatively, they could make all consumer debt interest (i.e. credit card) tax-deductible. That would be fair.

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iehi-feed-59872 Tue, 24 May 2016 17:52:21 GMT U.S. new home sales race to eight-year high, prices surge http://implode-explode.com/viewnews/2016-05-24_USnewhomesalesracetoeightyearhighpricessurge.html iehi-feed-59836 Fri, 20 May 2016 17:18:28 GMT Germany Strives to Avoid Housing Bubble by Forming New Policies http://implode-explode.com/viewnews/2016-05-20_GermanyStrivestoAvoidHousingBubblebyFormingNewPolicies.html iehi-feed-59809 Tue, 17 May 2016 15:22:43 GMT Man Trawls 30 Years of San Fran Rental Ads; Discovers Reason For Insane Housing Prices http://implode-explode.com/viewnews/2016-05-17_ManTrawls30YearsofSanFranRentalAdsDiscoversReasonForInsaneHousin.html iehi-feed-59787 Sat, 14 May 2016 19:54:46 GMT Luxury real estate blues hit Manhattan http://implode-explode.com/viewnews/2016-05-14_LuxuryrealestateblueshitManhattan.html Hedge fund manager Steve Cohen has been back in the headlines, and it has had nothing to do with regulatory investigations.

The billionaire is having trouble finding a buyer for his Manhattan penthouse and had to lower the asking price to $72 million, according to real estate blog Curbed. That looks like a lot, but Cohen originally listed the four-bedroom apartment for $115 million in 2013... Still, he's a high-profile example of the malaise that has settled over the once red-hot Manhattan luxury real estate market.

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The luxury market sizzled in 2014 and 2015 when hot global demand was chasing limited supply. Monoliths towering more than 1,000 feet sprouted in midtown... developers who had planned to convert the famed Sony Building in midtown Manhattan into ultra-luxury apartments instead recently sold the Chippendale-topped building for a reported $1.4 billion to $1.5 billion. The new owners promptly said they planned to keep the building as office space. "That spared them the black eye of super luxury price cuts," Lightfeldt says.

There is massive supply coming online around the city, at most market price points. Other data we've seen shows that these other market segments have also stalled out or started to decline, price-wise. This surely won't end well.

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iehi-feed-59764 Fri, 13 May 2016 14:11:51 GMT Hong Kong Property Market in 'Free Fall': Bass http://implode-explode.com/viewnews/2016-05-13_HongKongPropertyMarketinFreeFallBass.html Hong Kong property prices have declined and sales are hovering near a 25-year low as the city grapples with the repercussions of a slowing Chinese economy. Home prices have dropped about 13 percent from a peak in September, according to data compiled by Centaline Property Agency Ltd.

The last major housing crash in the former British colony saw prices tumble almost 50 percent in the 12 months from October 1997. They eventually bottomed in mid-2003 when the city was swept up by the severe acute respiratory syndrome epidemic and have almost quadrupled since then.

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The Chinese credit system, according to Bass, is "one of the biggest macro imbalances the world has ever seen." The fund manager said China is already experiencing a "hard landing as we speak." He said he isn't a "permanent bear" on China, instead describing himself as a pragmatist.

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iehi-feed-59756 Thu, 12 May 2016 15:49:12 GMT The New SoCal: Multifamily Construction and International Buyers Dominate http://implode-explode.com/viewnews/2016-05-12_TheNewSoCalMultifamilyConstructionandInternationalBuyersDominate.html iehi-feed-59751 Wed, 11 May 2016 21:42:42 GMT London Is Building More Offices Than Ever http://implode-explode.com/viewnews/2016-05-11_LondonIsBuildingMoreOfficesThanEver.html Developers started a record number of central-London office projects in the six months through March as they tried to capitalize on rising rents.

Construction work began on 51 office buildings during the period, Deloitte LLP said in a report on Tuesday. About 14 million square feet (1.3 million square meters) of space is now under construction, 28 percent more than the previous six months and the highest since March 2008, according to the report.

"In just 18 months, we have seen activity nearly double," Deloitte said in the report, which it started publishing in 1996. "This is perhaps the first survey in a long time where we are able to point to the pendulum swinging away from landlords and back toward tenants."

This doesn't seem to jibe with the rest of the economy, that's for sure. Soon we may see the pendulum doing something more like "crashing" back towards tenants...

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iehi-feed-59731 Sun, 08 May 2016 23:55:06 GMT Britain braced for a ban on second homes http://implode-explode.com/viewnews/2016-05-08_Britainbracedforabanonsecondhomes.html iehi-feed-59677 Sun, 01 May 2016 18:43:23 GMT China's debt reckoning cannot be deferred indefinitely - Magnus http://implode-explode.com/viewnews/2016-05-01_ChinasdebtreckoningcannotbedeferredindefinitelyMagnus.html iehi-feed-59675 Sun, 01 May 2016 18:19:48 GMT The Real Story Behind The True Magnitude of The New Home Sales Collapse http://implode-explode.com/viewnews/2016-05-01_TheRealStoryBehindTheTrueMagnitudeofTheNewHomeSalesCollapse.html iehi-feed-59674 Sun, 01 May 2016 18:14:58 GMT UK housing crisis: four in 10 renters fear they will never own a home http://implode-explode.com/viewnews/2016-05-01_UKhousingcrisisfourin10rentersfeartheywillneverownahome.html David Cameron's pledge to build a property-owning democracy is called into serious question by a landmark survey revealing that almost four in 10 of those who do not own a home believe they will never be able to do so.

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The findings cast doubt on the prime minister's claim before last year's general election that Tory housing policies would transform "generation rent" into "generation buy". In April last year, as he launched plans to force local authorities to sell valuable properties to fund new "affordable homes", Cameron said: "The dream of a property-owning democracy is alive and well and we will help you fulfil it."

The poll -- which found that 58% of people want more, not less, social housing as a way to ease the crisis -- comes as the government's highly controversial housing and planning bill returns to the Commons on Tuesday.

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iehi-feed-59649 Wed, 27 Apr 2016 21:40:40 GMT Why Sam Zell ("The Grave Dancer") Is Cashing Out http://implode-explode.com/viewnews/2016-04-27_WhySamZellTheGraveDancerIsCashingOut.html iehi-feed-59643 Tue, 26 Apr 2016 19:17:39 GMT 30-Year Fixed Mortgage At Root of Housing Instability; Should Be Nixed - Pinto http://implode-explode.com/viewnews/2016-04-26_30YearFixedMortgageAtRootofHousingInstabilityShouldBeNixedPinto.html The 30-year fixed rate mortgage should be retired -- for good. Despite continued proof that it fails to build up wealth for the most disadvantaged Americans, and that mortgage debt should not be a burden as homeowners approach their 50s and 60s, misguided advocates maintain that the 30-year fixed rate mortgage should be at the core of the U.S. housing finance system. The latest proposal by five respected economists including Gene Sperling and Mark Zandi aims to reformulate taxpayer backing of Fannie Mae and Freddie Mac in an effort to keep the 30-year fixed mortgage alive.

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The authors' reform plan, like virtually all the others before it, fails to acknowledge the government's role in past housing finance failures. Failures include the savings and loan (S&L) debacle of the 1980s, Fannie and Freddie's collapse into conservatorship, and the Federal Housing Administration's (FHA's) 3.4 million foreclosures (almost all with 30-year fixed rate loan terms). These crashes did not come about in spite of government support for housing finance, but because of government backing.

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Guaranteeing access to loans independently of market conditions creates an economics free zone, one where the FHA neither prices nor underwrites for risk, where the taxpayer-backed GSEs compete with the FHA for "affordable loans," and where government-backed lending is provided in both good times and bad... It is impossible to simultaneously keep the 30-year fixed rate mortgage at the system's core, protect taxpayers and provide broad access to meet the needs of underserved communities.

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This latest proposal is a policy cul-de-sac, repeating many of the same policy mistakes of the past decades. It is time to substitute shorter term loans of 15 and 20 years, designed to reliably build wealth and maintain buying power, while protecting borrowers and neighborhoods from high levels of foreclosure risk. Such a loan, developed by AEI's International Center for Housing Risk, is already being offered in different versions by a number of banks, credit unions and at least one non-profit. Several state housing finance agencies have also signed on.

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iehi-feed-59639 Tue, 26 Apr 2016 14:41:56 GMT US Home Prices Rise at Solid Pace, Even With Flat Sales http://implode-explode.com/viewnews/2016-04-26_USHomePricesRiseatSolidPaceEvenWithFlatSales.html U.S. home prices continued their steady upward march in February as buyers competed for a limited number of available properties. The Standard & Poor's/Case-Shiller 20-city home price index rose 5.4 percent that month compared with a year earlier, according to a report released Tuesday. That's down slightly from January's 5.7 percent rise.

Prices are rising even as sales have leveled off in recent months. The number of homes for sale last month was 1.5 percent lower than a year earlier. That's pushed buyers to act quickly, with homes on the market just 47 days in March, according to the National Association of Realtors.

Svenja Gudell, chief economist at real estate website Zillow, said the problem is particularly acute for first-time buyers and those looking at mid-level homes.

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iehi-feed-59619 Sat, 23 Apr 2016 17:20:47 GMT America's Wealth Effect From Rising Home Prices Has Been Cut in Half http://implode-explode.com/viewnews/2016-04-23_AmericasWealthEffectFromRisingHomePricesHasBeenCutinHalf.html iehi-feed-59615 Fri, 22 Apr 2016 21:15:56 GMT Drvenkar Custom Homes / Tex Best Custom Builders files for Chapter 7 bankruptcy http://implode-explode.com/viewnews/2016-04-22_DrvenkarCustomHomesTexBestCustomBuildersfilesforChapter7bankrupt.html iehi-feed-59596 Wed, 20 Apr 2016 18:00:21 GMT Missing for millennials: Down payment savings http://implode-explode.com/viewnews/2016-04-20_MissingformillennialsDownpaymentsavings.html Surveys show that most Americans under 35 lack adequate savings for down payments. The result is that many will likely be forced to delay home ownership and to absorb significant debt loads if they do eventually buy. Steadily rising home values in recent years have eclipsed pay increases, making it especially difficult to buy in major growth areas for jobs, such as San Francisco, Denver and Seattle.

Nationally, 37 percent of millennial renters have saved nothing at all for a down payment, according to a survey of 30,000 renters being released Wednesday by Apartment List, a company specializing in rental home searches. At the same time, 79 percent of millennial renters say they aspire to own a home, illustrating a troublesome gap between expectations and financial realities.

Even those diligent enough to set aside money are still short the cash to buy a home. Among larger metro areas, millennial renters who are saving have put aside an average of just $5,830. This marks less than one-fifth the savings needed for the typical 20 percent down payment on a starter home costing $175,000.

Obviously the "solution" is just to get rid of down payments (again)!

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