Demand and financing could collapse before the sea consumes a single house.
.. “These boats are going to be the canary in the mine,” said Cason, who became mayor in 2011 after retiring from the U.S. foreign service. “When the boats can’t go out, the property values go down.”
.. Relative sea levels in South Florida are roughly four inches higher now than in 1992. The National Oceanic and Atmospheric Administration predicts sea levels will rise as much as three feet in Miami by 2060. By the end of the century, according to projections by Zillow, some 934,000 existing Florida properties, worth more than $400 billion, are at risk of being submerged.
.. Saltwater is creeping into the drinking water supply. The area’s drainage canals rely on gravity; as oceans rise, the water utility has had to install giant pumps to push water out to the ocean.
.. Sean Becketti, the chief economist at Freddie Mac, warned in a report last year of a housing crisis for coastal areas more severe than the Great Recession, one that could spread through banks, insurers and other industries.
.. Citing Florida as a chief example, he wondered if values would decline gradually or precipitously. Will the catalyst be a bank refusing to issue a mortgage? Will it be an insurer refusing to issue a policy? Or, he asked, “Will the trigger be one or two homeowners who decide to sell defensively?”
.. He described South Florida’s real estate market as “pessimists selling to optimists,” and said he wanted to cash out while the latter still outnumbered the former.
.. Since the end of 2010, median home prices in and around Miami rose 120 percent, almost twice the statewide average and three times the national rate. In January, a building in Palm Beach County called The Bristol topped $300 million in units sold, achieving the distinction of the most-expensive condominium in that county’s history
.. Realtors in Florida face no legal requirement to warn potential buyers about those flood risks. Albert Slap, president of Coastal Risk Consulting, which helps homeowners and governments measure their exposure to flooding, said he thinks that will soon change: Just as the public demanded mandatory disclosure of asbestos and lead paint, people will insist on the same disclosure if a house suffers regular floods.
And when that happens, Slap said, many Florida home prices will tumble.
.. “Anybody in these floody areas, if they disclose to a buyer, the buyer probably won’t buy that property,” said Slap, whose company is doing work for the city of Miami Beach. “That’s going to drive the value down to zero, well before water is up to their front door.”
.. “The next black swan is the failure of housing finance to take climate change into account,” he said. “There will be a large number of homes that will lose substantial value, and will default on mortgages, if nothing is done to help them.”
.. : The government simply won’t be able rescue homeowners who wait too long to sell. “There isn’t enough money,” he said.
.. The National Flood Insurance Program is up for reauthorization this year; fiscal conservatives have said they want to use that opportunity to reduce the program’s subsidies, so that people are paying something closer to the full cost of their risk.
A cut in federal subsidies would particularly hurt Florida, which despite its exposure pays the lowest average flood-insurance premiums in the country, according to FEMA data.
It’s official. It’s a bubble!
What scares the heck of me, beyond the 22% Y/Y appreciation, is the nature of sales these days. In speaking with agents I see a few clear and worrisome trends.
First, “bully offers” have become the norm these days when they used to be the exception. Bully offers are aggressively high offers that bidders submit before the official offer date. For example, a seller and their agent will market the home as accepting offers on a set date (usually Tuesday), but bidders will come in with preemptive offers shortly after the listing goes to market, canceling out the stated Tuesday offer night. Basically if you’re trying to purchase a home in Toronto you can’t react quickly enough since the bully offers come in so fast, leaving many interested parties no time to react.
.. Since 1999, the Teranet-National Bank Toronto Home Price Index has risen an incredible 200%. In contrast Japan’s home price index rose 193% in the 17 years prior to its peak, and the US S&P/Case-Shiller National Home Price Index rose 152%
.. I have to run now. I’m interviewing some real estate agents to give me a quote on what my home is worth. Who knows, maybe Garth has rubbed off on me and I can convince my wife to sell our home and lock in a massive profit. These type of gains don’t come along too often in life!
Why Liberals Oppose Ben Carson
Trump’s HUD nominee grew up poor, and he knows public housing isn’t where people prefer to live.
The main objection to school reformer Betsy DeVos, Mr. Trump’s pick for education secretary, is not that she’s never been a classroom teacher but rather that she wants to expand school choice, which threatens union control of public education... His upbringing doesn’t make him a housing expert, but like the general who knows war and is therefore less likely to venture recklessly into a new one, Dr. Carson’s background does make him better able to empathize with the plight of the poor... Besides, if the state of inner-cities is any indication, the last thing low-income residents need is more of the same so-called expertise that Dr. Carson lacks... HUD and other agencies equated racial disparities in loan approvals with racial discrimination, even if there were no actual complaints of racism from would-be borrowers. To keep the federal watchdogs happy, lenders came up with ways to meet the government’s numerical targets. All of this was of course done in the name of helping minorities. But when you make it possible for people to receive loans they can’t really afford, you also risk saddling them with foreclosed homes and bad credit ratings... There are few if any federal agencies in greater need of a makeover than HUD, and that makeover is unlikely to come from the type of “expert” at the helm who would appease Dr. Carson’s critics. It’s HUD’s view of housing that is warped, not Dr. Carson’s. Mr. Trump has tapped a nonpolitician to clean up a mess created by political pros and bureaucrats who have an agenda that often differs from the needs of the poor. Let’s see if Dr. Carson is up to the job.
Donald Trump says he wants to fix cities. Ben Carson will make them worse.
While Carson was on the faculty of the Johns Hopkins University medical school, located in one of the nation’s poorest and most troubled big cities, he took little interest in urban issues. In his ill-fated primary campaign, he railed against “social engineering,” a swipe at efforts to open housing in mostly well-to-do, overwhelmingly white communities to minority home buyers and renters.
.. Trump’s selection of Carson echoes Ronald Reagan’s choice of Samuel Pierce as his HUD secretary. Like Trump, Reagan had lashed out against inner cities and pledged to slash social spending. Like Trump’s supporters, the majority of Reagan’s voters did not live in cities. And like Trump, he had little support among African Americans. But like Trump, Reagan wanted a black face in a high place for a little legitimacy in a post-civil-rights-movement White House. And, like Trump, Reagan had pledged to loosen housing and financial regulations.
.. HUD was an easy target for Reagan, as it is for Trump. It had been created by Lyndon B. Johnson at the peak of his Great Society to meet the huge demand for affordable housing in American cities and to grapple with the ravages of mass suburbanization, nearly complete racial segregation and capital flight from cities, all of which had been heavily bankrolled by the federal government.
.. In 1968, HUD took on the additional responsibility of “affirmatively furthering fair housing,” the gargantuan task of undoing decades of discriminatory real estate and home-lending practices.
.. None of these missions was popular: Republicans criticized HUD as a meddling “big government” agency. Southern Democrats railed against its civil rights goals. And suburban whites fiercely resisted even modest efforts to open the housing market to racial minorities.
.. the department became a bastion of crony capitalism, particularly under Republican presidents.
.. real estate speculators and politically connected developers, who sold shabby houses to desperate buyers at above-market prices, backed by inflated appraisals
.. One of Pierce’s assistant secretaries resigned when it came out that HUD staffers had helped him type and proofread his book, “Privatizing the Public Sector.”
.. Staffers directed money to Republican-connected lawyers, consulting firms and developers. One of the dozens swept up in the resulting investigations by federal prosecutors and Congress was Trump’s former campaign manager, Paul Manafort , who had successfully lobbied for about $43 million in federal subsidies for a shabby New Jersey housing complex. He received $326,000 in fees
.. Like Pierce, Carson is shaping up to be a token black Cabinet member. Trump has not appointed any other black officials so far
.. We don’t know much yet about how Carson will run HUD, but his lack of experience with urban policy, his bromides about socialist planning, his indifference to fair housing and his calls for individual boot-strapping don’t bode well for the future of metropolitan America. And in a climate of privatization and deregulation, championed by the country’s new real estate developer in chief, Carson’s inexperience could be a serious liability.