A Lot Of People Need To Draw Interest In Their House
A report from the Wall Street Journal. “Robin Manthie and her husband have been looking for their first home in Minneapolis since last May. They thought this spring would bring a flood of inventory, making their search easier. But by most measures it is getting tougher. Ms. Manthie, a 33-year-old consultant, is 41 weeks pregnant, but she and her husband are still trudging to open houses most weekends in search of a four-bedroom home in the $700,000 range — up from $400,000 when they started. ‘It’s shocking. The house [two doors down from] my mother-in-law went in three hours,’ she said.”
The Yakima Herald in Washington. “When Claire Zamora arrived to the Yakima Valley in 2011 to start her job as a speech language pathologist, she didn’t expect to stay long. Six year’s later, she lives in Yakima with her husband and their 11-month-old son. So several months ago, Zamora, 31, and her husband started the home-buying process. The bank approved a loan of up to $200,000 but Zamora hoped to find a home closer to the lower end of their price range - $150,000.”
“Reality hit when she started searching online. The only homes she could find in that price range weren’t in the West Yakima or West Valley neighborhoods she desired. Most homes in that under $150,000 price range were east of 16th Avenue. Zamora knew that just a few years ago, homes cost much less and were within that $150,000 mark - including those in West Yakima neighborhoods. ‘I’m kicking myself,’ she said about not deciding to buy sooner.”
“That market is now limited to buyers willing and able to pay new home prices that are pushing $300,000 or more. Home builders, both locally and nationally, are building more lucrative higher-end custom homes and homes in high-end subdivisions rather than the median-priced residences buyers are desperately searching for.”
“Those in the building industry say rising building costs, which include everything from securing permits to buying construction materials, is driving this move toward higher-end homes. ‘The tug of war between supply and demand has led to bidding wars for scare resources (labor and materials) and significant increases in building costs,’ said Bob Denk, associate vice president of the forecasting and analysis division of the National Association of Home Builders. ‘Unprofitable projects are cancelled, and only the high end of the market gets served.’”
From NBC 2 in Florida. “Fort Myers City Council will vote on renewing their contract with a group putting an end to zombie homes. Those are homes foreclosed on by their owners and nearly abandoned by their lenders. Since 2010, the city has partnered with the group now known as Pro Champs, which designed a database of these homes to make sure they city never loses track.”
“Jay Parson is one of many neighbors living next door to one of these eyesores and said he’s called on the city to take action for years. ‘If they aren’t going to do something with it, tear it down. It’s not going to get better by itself,’ Parson said. He said it’s disappointing to see properties left for dead in communities where property value is fragile. ‘A lot of people like me don’t have money to put into the bank to draw interest, so you need to draw interest in your house,’ he said.”
“Code enforcement said they have more than 130 properties at the point where they need to be torn down. The cost of demolition has gone up, but their funding has actually gone down, so they’re in search of grants to take care of all these homes at once. It could take 10 years demolish all the homes.”
From Raul Ilargi Meijer. “We are witnessing the demise of the world’s two largest economic power blocks, the US and EU. Given deteriorating economic conditions on both sides of the Atlantic, which have been playing out for many years but were so far largely kept hidden from view by unprecedented issuance of debt, the demise should come as no surprise.”
“The debt levels are not just unprecedented, they would until recently have been unimaginable. When the conditions for today’s debt orgasm were first created in the second half of the 20th century, people had yet to wrap their minds around the opportunities and possibilities that were coming on offer. Once they did, they ran with it like so many lemmings.”
“As we’ve also seen, we’ve been plunging ourselves into ever higher debt levels to create the illusion of growth. Now, money (debt) is created not by governments, as many people still think, but by -private- banks. Banks therefore need people to borrow. What people borrow most money for is housing. When they sign up for a mortgage, the bank creates a large amount of money out of nothing.”
“So if the bank gets itself into trouble, for instance because they lose money speculating, or because people can’t pay their mortgages anymore that they never could afford in the first place, the only way out for that bank, other than bailouts, is to sign more people up for mortgages -or car loans-, preferably bigger ones all the time.”
“What we have invented to keep big banks afloat for a while longer is ultra low interest rates, NIRP, ZIRP etc. They create the illusion of not only growth, but also of wealth. They make people think a home they couldn’t have dreamt of buying not long ago now fits in their ‘budget’. That is how we get them to sign up for ever bigger mortgages. And those in turn keep our banks from falling over.”
“Record low interest rates have become the only way that private banks can create new money, and stay alive (because at higher rates hardly anybody can afford a mortgage). It’s of course not just the banks that are kept alive, it’s the entire economy. Without the ZIRP rates, the mortgages they lure people into, and the housing bubbles this creates, the amount of money circulating in our economies would shrink so much and so fast the whole shebang would fall to bits.”
“That’s right: the survival of our economies today depends one on one on the existence of housing bubbles. No bubble means no money creation means no functioning economy.”
“It’s perhaps ironic that the US doesn’t appear to be either first or most at risk this time around. There are plenty other housing markets today with what at least look to be much bigger bubbles. The potential consequences of such -inevitable- developments are difficult to overestimate. Because, as I said, the various banking systems and indeed entire economies depend on these bubbles.”
“The aftermath will be chaotic and it’s little use to try and predict it too finely, but it’ll be ‘interesting’ to see what happens to the banks in all these countries where bubbles have been engineered, once prices start dropping. It’s not a healthy thing for an economy to depend on blowing bubbles. It’s also not healthy to depend on private banks for the creation of a society’s money. It’s unhealthy, unnecessary and unethical. We’re about to see why.”
This was posted in the comments yesterday:
The Bogleheads discuss CRE:
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=215306
I pulled this comment out:
“Re: I don’t understand how commercial real estate making money
retail is only part of commercial, you should consider multifamily, especially small balance multifamily loan ($2-5M in value, less than 50 units)
multifamily is always the least risky and best performing property type within commercial real estate
there are certainly benefit of investing in commercial real estate
1. non-recourse loan: your property can fail and you can just walk away from it, the lender cant touch your other asset to collect the debt
2. its cash-flow lending, you can always continue to improve the property, get more rents out of it, and increase its value/equity, keep doing this and one day you will have 0 equity in the property even at 70 or 60% LTV, and the property will generate healthy cash flow for you”
There are armies of people out there doing this.
‘Zamora knew that just a few years ago, homes cost much less and were within that $150,000 mark - including those in West Yakima neighborhoods. ‘I’m kicking myself,’ she said about not deciding to buy sooner…That market is now limited to buyers willing and able to pay new home prices that are pushing $300,000 or more’
Price doubles and she can’t wait to get in. This is not supply and demand. At higher prices demand should drop. $150,000 may not seem like a lot. I can assure you it is. One big problem is no one is watching out for people like her nor the system. When you have Mel Watt saying “pedal to the metal”, in a casino no less, it’s FUBAR time.
Sounds like my situation in Tampa.
Approved for $150000 and all it’ll buy me is an overpriced shack, trailer or a condo with yuge HOA/maintainance fees.
Oh, or maybe a sinkhole home 40 miles away in Hernando County.
Sit tight, rent and watch your bank account grow while housing craters.
I’d buy a decent sized lot or tear down structure, renovate/build a small core house at affordable mortgage ($150,000 or whatever your comfort level) then add more space later.
I know it can be a hassle w/all the inspections, permits, and hurdles but personally rather pay one-time building costs when possible instead of bleeding HOA fees forever.
Florida is crazy for HOA’s though. you’d have to get raw land or older stock to increase your odds.
Because Denver = Debtver:
http://www.bizjournals.com/denver/news/2017/03/31/youll-need-more-than-half-your-pay-to-buy-a-home.html
Roanoke
lol. Roanoke.
In the Loveland Ski Area cafeteria, eating scrambled eggs, home fries, bacon, sausage, biscuits & gravy, washed down with a half coffee half hot chocolate, whilst looking out the window at the steeps adjacent to Chair #1:
http://www.picpaste.com/20170402_090206.jpg
People with mortgages can’t afford a lift ticket to ski here, and they can’t even afford to pay for this delicious breakfast
From the Raul I. Meijer link …
“It’s when things ceased getting better that ideas started being floated to create the illusion that they still were, and until recently very few people were not fooled by this. While this will seem incredible in hindsight, it still is not that hard to explain. Because when things happen over a period of decades, step by step, you walk headfirst into the boiling frog analogy: slowly but surely.”
Step 1: Dumb ‘em down.
“At first, women needed to start working to pay the bills, health care and education costs started rising, taxes began to rise. But everyone was too busy enjoying the nice slowly warming water to notice. A shiny car -or two, three-, a home in the burbs with a white picket fence, the American -and German and British etc.- Dream seemed to continue.
“Nobody bothered to think about the price to pay, because it was far enough away: the frog could pay in installments.”
Step 2: Profit.
“In the beginning only for housing, later also for cars, credit card debt and then just about anything.”
And profit and profit and profit. As long as the schmucks are dumbed down the profits will continue to pour in.
God’s Plan.
God’s Plan?
Health Care - destroyed and made unaffordable by more and more government regulations and higher and higher taxes…to make things more fair.
Education - destroyed and made unaffordable by more and more government regulations and higher and higher taxes…to make things more fair
Housing - destroyed and made unaffordable by more and more government regulations and higher and higher taxes…to make things more fair
..
Taxes - government has never seen a tax it didn’t like or want not want to increase
“Health Care - destroyed and made unaffordable by more and more government regulations and higher and higher taxes…to make things more fair.”
Luckily the Republican Congress and President are going to fix this.
“Taxes - government has never seen a tax it didn’t like or want not want to increase”
Taxation 101:
If it moves — tax it.
If it stops moving — subsidize it.
If it dies — resurrect it with bailouts.
Here in Cambridge, MA inventory remains low and a 438 square foot second floor condo (accessed by a wooden ladder-type staircase?), sold within a week for $471K, 72K over the asking price of $399K.
Par for the course around here.
https://www.redfin.com/MA/Cambridge/6-Hancock-Pl-02139/unit-2/home/11566321?utm_source=myredfin&utm_medium=email&utm_campaign=instant24_listings_update&utm_content=refresh_with_promo&riftinfo=ZXY9ZW1haWwmbD01MDIxMDQmcD1saXN0aW5nX3VwZGF0ZXNfaW5zdGFudF8yNCZ0cz0xNDkwNjk2ODIzMTEyJmE9Y2xpY2smcz1zYXZlZF9zZWFyY2gmdD1pbWFnZSZlbWFpbF9pZD01MDIxMDRfMTQ5MDY5NTI4MV8zJnJlZnJlc2hfdmFyaWFudD1yZWZyZXNoX3dpdGhfcHJvbW8mdXBkYXRlX3R5cGU9NyZzYXZlZF9zZWFyY2hfaWQ9ODQ0MzM0NCZsaXN0aW5nX2lkPTY0MjUxNjczJnBvc2l0aW9uX251bWJlcj0w
’she and her husband are still trudging to open houses most weekends in search of a four-bedroom home in the $700,000 range — up from $400,000 when they started’
This is Minnesota. And your airbox just became the new comp. It was probably over two years ago that Boston appraisers started using long lines at open houses to justify higher appraisals.
Luckily the appraisal process works in reverse on the way down. Albeit more slowly than on the way up.
To be fair, that is a super cute 1 bedroom in a great location. I’d consider buying if I still worked in that neighborhood. It’s near several of the top universities/employers in the country. T’is tiny!
At least you have nice inventory. That listing out in the bay area would be double the cost and half as nice looking.
Yes, yes, it sucks to pay anywhere near that much for a shot-gun style apartment where only two people (touching) can fit in the living room.
A thousand words …
The velocity of M2 up to the third quarter of 2016.
https://fred.stlouisfed.org/series/M2V
FWIW.
Verrrry interesting, and confirms my sense that we hit peak prosperity in the late 90s (probably well before that in reality though, and there is a lag before it is reflected in the markets) and never recovered. That line is the prosperity of the middle class, being consumed by the locust scum from above and below.
Real wages peaked in 1973. The last time a one wage household could buy a house. It was also the year cheap energy ended, the two are very much related.
The last time a one wage household could buy a house ??
Not true…In much of America a one wage household can afford to buy a house…
It’s very difficult within any metro area despite being in “flyover land.” Towns with population less than 25,000 is where one income can still thrive, IMHO. It’s amazing looking back at the last twenty-five years.
The M1 and M2 are like vodka and water. Add too much water to the vodka and it isn’t worth drinking (analyzing).
The biggest reason for the drop in velocity (M2) is because so much more supply M1 has been added.
From the first link (Fox News, not Wall St. Journal):
‘Chris Prescott, an agent at Redfin, said he has seen examples of sellers receiving 25 offers, including cash buyers bidding significantly over the listing price.
“I don’t know where these cash buyers are coming from,” he said. “We have not seen a market like this in the Twin Cities in a very long time.”‘
WSJ wrote it. If I linked to the original, most likely it would require a subscription.
I am a WSJ subscriber. That very good article was in the us section, not real estate. I wonder how come?
That brings up an interesting phenomenon. Just after the election, the WSJ started running these articles about things headed down. The farm bust. The luxury apartment bust. The commercial real estate bust. Oversupply was a constant theme. Credit drying up, prices falling.
I actually disagree somewhat. I think the WSJ has pulled their punches somewhat, and reported insufficently on oversupply and markets heading down. An article here and there, 5thats it. Kinda hard to find a newspaper reporting the truth. This blog is actually the best place for the kind of news I like. Zero hedge is good, but a bit too much doom and gloom.
I love this blog ben!!
What I mean is in just a few months, they see problems everywhere. The farm thing has been blowing up for three years. Now they tell us a “bust is upon us” complete with tales of woe from stuck farmers.
BTW, in mid-2007 the WSJ contacted me about a lifestyles article they were doing on luxury houses. I have no idea what caused the reporter to reach out to me. So through a lot of questions I took the obvious happy nature of the piece in a different direction. That people were buying second (or third) mcmansions in order to speculate. The bigger the house the bigger the anticipated profit, etc. The reporter was very interested in the implications and asked all sorts of followup questions for over an hour. When they published it was indeed a feelgood thing with all the new paradigm stuff, and not one word from me was in it.
“Kinda hard to find a newspaper reporting the truth.”
It’s there sometimes, just buried in rainbows and unicorns positivity. My favorite thing ever was a WSJ mansion section article maybe two years ago about a couple that lived on the Upper East Side and had the genius idea of buying a summer home in… Tribeca. Rampant speculation, of course, disguised by WSJ as a new paradigm! Vacation in your own city! Everyone’s doing it!
‘My favorite thing ever was a WSJ mansion section article maybe two years ago about a couple that lived on the Upper East Side and had the genius idea of buying a summer home in… Tribeca. ‘
I remember that article too. I am pretty sure we highlighted here on the HBB and that is how I found out about it.
Meanwhile, does anyone remember (I think it was the NY Times) the article, ca. 2007, that made light of people afraid of committing to buy a house and how they were not adulting ( my interpretation). Some of this stuff rings a bell way in advance of adversity rearing its head.
I think it was the NYT. It was all psychological too, like people who didn’t buy a house had something wrong with them.
>Kinda hard to find a newspaper reporting the truth
That’s because you’re making the classic mistake of thinking that the job of newspapers is to report the truth. It’s not. Their main job is to generate as much ad revenue as they can. They do that by printing whatever is “safe”.
‘The farm thing has been blowing up for three years. Now they tell us a “bust is upon us” complete with tales of woe from stuck farmers.’
Nobody could have seen it coming!
Quite right, I stand corrected
I’m a 36 year old renter in Bellevue WA with a good job and plenty of dry powder that’s ready in case of a crash. I followed this blog since 2005. But now I’m thinking that maybe when the crash does come, I’ll just run off to an expat community in Mexico or cinque terre or something, and be a nomad with my husband. I realized recently that I think what I really want out of life is to have zero responsibility. Having a house, no matter the house, is the opposite of that.
Maybe I’ll rent a house from black rock. You know what will happen right? Fannie is already subisidozong their debt. When the crash comes and retail buyers dry up, fnm will incentivize black rock to buy houses to keep the game going and rent those houses to the proles
Picking up a nice yurt and going nomad with your husband doesn’t sound like a bad way to go.
Not a hell of a lot different than a retired couple traveling the country in an RV without the 40 years of kid raising and bill paying to go along with it.
Tending toward nomadic behavior myself, I wonder how “an expat community in Mexico” would be nomadic, exactly.
I’m totally open to ideas. I’m thinking semi-nomadic. My ideas change each week. My latest one is is to continue to rent a place here in Bellevue. (There are plenty of those new high-rises going up that will probably be hard to fill with renters). Live here 5 or 6 months each summer (maybe work at my clinic), then live somewhere else for the rest of the year. THis year it could be mexico, next year it could be Italy, next next year san diego…something like that
This year it could be Mexico, next year it could be Italy, next next year san diego…something like that.”
Great idea if you can swing it. I advise doing it while you’re young before your body starts to fall apart.
Six months in Italy or wherever is doable as long as you’re fine with subletting your apartment (which can be a hassle) or putting your stuff in storage or just living with very little stuff so you can up and go.
I know someone who lives in Merida, Mexico and loves it. Recently I did some online research regarding life for ex-pats and properties in Merida. It is definitely different and you have to give up some luxuries but the cost of living is much lower than in the U.S.
My parents did the RV thing and were lucky enough to winter in a beautiful oceanfront campground in Key Largo FL for 22 years. The property was sold in 2006 and cleared to build, ahem, luxury condos, which broke up their tight knit community. That project failed and the site sat empty and chained off until a couple of years ago new developers turned it into a Marriott Playa Resort and Spa. Sigh.
You can’t just illegally move to Mexico, demand benefits and the right to vote there?
Not sure but two million Americans have moved to and live in Mexico, according to this article:
https://www.theguardian.com/commentisfree/2017/jan/23/trump-futures-mexico-us-interlocked-wall-border
I’m a 36 year old renter in Bellevue WA
Howdy, neighbor! Renting in Bellevue here as well…
Howdy!
Any investors out there actually buying?
Concord, MA Housing Price Plunge 11% YoY As National Housing Demand Craters
https://www.zillow.com/concord-ma/home-values/
Hurry Hurry Hurry new listing……
http://www.mansionglobal.com/articles/58739-supermodel-tyra-banks-lists-manhattan-penthouse-for-17-5m
Supermodel Tyra Banks has just listed her plush Manhattan penthouse for $17.5 million.The 7,000-square-foot spread comes with a hair salon and full staff quarters
The “America’s Next Top Model” creator and host has also listed it for rent for $50,000 per month, but told The New York Times that she would prefer to sell rather than continue renting it out.
“The 7,000-square-foot spread comes with a hair salon and full staff quarters.”
If you’re housing staff in a plush Manhattan penthouse neighborhood, then you’re out of touch with how the other 99% live (or is that 99.8%?).
I wonder what the monthly building association’s fee is for a unit like that.
Tyra must be an extremely high maintenance woman.
Here is a pretty good one today from the failing nytimes about legal/medical weed, and the impacts so far on the commercial industrial RE markets around the country. Lots of old, previously unused warehouses in towns around the country are being re-purposed into grow operations, driving up rents and valuations. Financially, it’s a boom for everyone involved. I withhold judgement about the morality of it. Well, I guess, I think if people want to smoke weed, they’re gonna smoke weed, so might as well grow the good stuff here in the good ole USA.
https://www.nytimes.com/2017/04/01/business/a-real-estate-boom-powered-by-pot.html
In the not so distant future our skies will look as bad or worse than China, except it will be pot smoke rather than industrial pollution they have.
China is running out of coal that is the why it suckered Obama into a green agreement. It wants to keep the price of coal low as long as possible. Of course, when coal really moves up in price wind and solar might really be able to compete without huge subsidies and its air will become much cleaner:
https://wattsupwiththat.com/2017/03/31/the-shame-of-chinese-coal/
Another one for today. What a coincidence. Yesterday there was that UK money article about the new landlord tax changes, affecting something like 440,000 landlords. I had been wondering — if, or how many of those landlords will decide to sell their properties as a result. Here’s one today describing just that. Renters getting kicked out of their homes.
https://www.theguardian.com/money/2017/apr/01/mortgage-tax-relief-cut-doesnt-add-up-buy-to-let-landlords
“”Brewis says he has decided to sell the property because the cut in tax relief on mortgage interest payments for buy-to-let landlords means that in this particular case the maths no longer stack up, and he would end up making a net loss. With what he is paying on the mortgage, against the rent he receives, he says the result will be that “I am not earning anything out of it – in fact, it’s costing me money.””
“Brewis says the couple are upset, and he is, too. “I don’t want to chuck them out – they are in their 60s, they have lived their life in rental, and they are now not in a position to buy somewhere. I provide housing for a lot of people and I don’t charge them over and above market rent – I charge them market rent. If market rents don’t work because of these government changes, I’ve got no choice but to sell up and move on.””
One of the things mentioned for those UK landlords, as a way to avoid the income-tax changes, is to set up a limited company. One of the embedded links in that article talks about it below.
I’ve never been a landlord myself, but after reading horror stories of tenants, all the maintenance hassles, and complex financial situations… Ugh, sounds like being a landlord is one big hassle for not much gain, maybe unless you are some big corporate business.
—
“David Hollingworth of mortgage broker London & Country said there were advantages to using a limited company to buy property, but landlords should consider the implications. “You cannot just transfer a property into a company – you have to sell it to the company and that could trigger other costs,” he said. “While corporation tax is low, you do have to think about things like how you will get your income out of the company.”
“Hollingworth said the structure was unlikely to help anyone with just one or two buy-to-let properties.”
“The Residential Landlords Association (RLA) said its research had found that 40% of landlords had considered switching to limited company status, but that four in five had decided it was unsuitable.”"
One last spam for today, hehe. More from Toronto, about all the ways their government is going to interfere in it, in the name of “fixing things”.
http://news.nationalpost.com/full-comment/terence-corcoran-why-politicians-shouldnt-try-to-cool-down-torontos-housing-market
“”When the Communist rulers of the Soviet Union realized in the 1980s their grand experiment in central planning needed tweaking, they opted for Communism lite. As described by the New Palgrave Dictionary of Economics, this new milder and gentler version of bureaucratic control involved manipulating “prices, taxes, the rules governing enterprise behavior, the rate of exchange etc.””
“That pretty much describes current policy-thinking across much of the Canadian economy, but nowhere more so than around the housing bubble that is allegedly ballooning out of control over Canada’s largest cities and threatening to engulf other parts of the country.”
“The intervention schemes, some already imposed in Vancouver, are popping like wild mushrooms out of the fertile brainpans of Toronto politicians and economic schemers.”
you are debt slaves to fiat!
Lots of inventory not appearing on motovo or zillow
Hmmmmm
Interesting data point for the high end in NYC.
—-
‘Unsellable’ Brooklyn penthouse finally bought for record $15M
Zachary Kussin - March 31, 2017 - NY Post
A triplex penthouse in Brooklyn — a 6,813-square-foot spread atop Dumbo’s striking Clock Tower building that languished on the market for roughly six years — has finally sold for $15 million.
The Clock Tower penthouse, at 1 Main St., is notorious in New York City real estate circles; it sat on the market for years with too-high price tags and endured several brokerage switches before selling.
The $15 million purchase marks a 40 percent discount below the pad’s original asking price of $25 million, according to the New York Times, which first reported the sale.
The Clock Tower pad was last purchased by an unknown buyer, masked behind an LLC, in 2006 for $10.75 million. After re-entering the market in 2009, asking $25 million, the penthouse was de-listed until 2013, when it returned for $18 million following a broker swap.
It even spent some time on the rental market, and briefly asked a sky-high $50,000 per month.
After watching a few minutes of this there doesn’t appear to be much joy in Climateville.
On Viceland’s Jungletown, It’s the Messes That Make for Compelling TV
By Jen Chaney
At first, Jungletown, which debuts tonight at 10 on Viceland, seems like it’s going to be an uplifting Nat Geo–style documentary about idealistic young people coming together to prove that they can change the world for the better. We see men and women from all over the globe — St. Louis, Winnipeg, Glasgow, Buenos Aires — eagerly heading to this almost paradise to engage in Earth-friendly world building from multiple angles. Mostly in their 20s and predominantly white, they talk excitedly about “idea orgasms” and how they want to “go out and be what they want to be” instead of just buying stuff. But after a few days in Kalu Yala — where the staff is paid, but the interns pony up $5,000 for the privilege of learning and working for ten weeks while sleeping on inflatable mattresses under tin roofs — reality starts to assert itself.
Some start to wonder whether the community is truly following sustainable practices. (“You can’t talk about sustainability all day and eat Jif,” says one intern after jars of peanut butter are brought in to help feed the hungry masses.) Questions are raised about how the place is run and where the money is going. Some people wind up leaving because of depression, severe food allergies, or simply an inability to deal with living in such remote, primitive conditions.
http://www.vulture.com/2017/03/jungletown-viceland-review.html
Socialist snowflakes get smacked in the face with reality.
They should let in some illegals and muslim refugees who can sponge off their hard work too.
And allow them to vote on how to divide up their dwindling resources…
Might as well get the full democrat game plan.
Blame the speculators. That drumbeat is getting louder. I don’t blame the speculators themselves — more so the conditions that cause excess speculation to occur. When the world is awash with an unlimited supply of free money, of course there will be rampant excess speculation, all over the place. And moral decay and degeneracy. Duh.
Blame the short sellers. If we ever get a true stock market crash, we’ll see the short-sellers blamed for it, yet again. First they do those circuit-breaker halts, then they ban short-selling altogether. Who knows, maybe they could make a special “short seller tax” too.
Sorry, I lied, one more article, off-topic. Yeah, so it’s Paraguay, not the most important country, but they torched their Congress building yesterday while the bankers were having a big meeting.
https://www.bloomberg.com/news/articles/2017-03-31/paraguay-protesters-storm-congress-after-re-election-changes
My opinion, in the USA if we get a 75% cratering of house prices, like what is being called for by some people here, and also a severe stock market crash at the same time — it wouldn’t surprise me to see our own Congress building torched too.
Only if the EBT cards and section 8 vouchers are cut off.
“But by most measures it is getting tougher. Ms. Manthie, a 33-year-old consultant, is 41 weeks pregnant, but she and her husband are still trudging to open houses most weekends in search of a four-bedroom home in the $700,000 range — up from $400,000 when they started.”
Ya gotta love a good April Fool’s joke!
“In short, the whole enterprise amounts to budgetary madness and demonstrates the monumental magnitude of the Debt Trap that has enveloped the Imperial City.” D. Stockman
Cook County, MN Housing Prices Crater 11% YoY
https://www.zillow.com/cook-county-mn/home-values/
Got 401K? Get out now, because it looks like a classic Ponzi.
http://www.zerohedge.com/news/2017-04-01/warning-us-ponzi-retirement-market-big-trouble-withdrawals-now-exceed-contributions
Or you could invest your 401k in gold stocks…
*****
Actually, this is the likely outcome. Mark my words. A typical American who has invested $100,000 into a typical 401K will find that his or her retirement account will fall to one-tenth its value versus someone who purchased physical gold instead. The coming collapse of the U.S. and Global Oil Industries, due to lower oil prices, will be the factor that destroys the U.S. Retirement Ponzi Scheme. It is not a matter of IF, it is a matter of WHEN.
Deuce-nanna -
It’s April, and it’s been a long winter.
When was the last time you changed the saran wrap liner on your tin-foil hat?
The quote is from the article Einstein..
Was housing used to subsidize O’care?
https://www.nytimes.com/2017/01/30/business/fannie-mae-freddie-mac-fairholme-appeal.html
http://investorsunite.org/
If you’re an investor in Fannie/Freddie, no soup for you!
That does seem like it was the plan all along, eh? Get Yellen to re-inflate the housing bubble to pay for Obamacare.
Perhaps they could just issue Sickness-Backed Securities. Like, if you get cancer, you take out a $500K 30-year loan to pay for it, and they could pool those medical loans into securities and sell them to investors.
Heh, don’t think it hasn’t been thought of. In fact it wouldn’t surprise me to see something like this.
This Economy is Ruined for Many Americans
Wolf Richter • Apr 2, 2017
These Americans are paying the price for the Fed’s efforts to “heal” the housing market. The Fed has implemented elaborate strategies since 2008, among them: cutting its policy rate to near zero, embarking on QE, and bailing out banks and their richest investors, including Warren Buffett and his financial and insurance empire. In 2011, the Fed began encouraging and enabling Wall Street’s biggest private equity firms and other investors to buy up hundreds of thousands of homes out of foreclosure to push up home prices.
This has led to soaring housing costs that have by far outpaced wage growth, if any. And it made it that much harder for these Americans to stay that one paycheck ahead of hunger and homelessness. There are a lot of them. They’re consumers too. And this could be why the economy, which has been ruined for them, has since then not been able to grow at a reasonable pace.
And so, America becomes “Landlord Land.”
As I pointed out in the first comment to this post, many landlords aren’t making any money unless they sell or refinance. A lot of them are cash flow negative after interest. We’ve got a huge segment of the economy producing nothing but interest payments to banks.
Similarly, look at this shack builder saying they can’t build lower priced houses. OK, you’re stuck, build a few big boxes. You could be building and selling hundreds or thousands, but land prices are too high and no one is willing to back down until they’re broke. Boy isn’t this an efficient way to operate?
It’s a he’ll of a system.
In order to avoid a recession and to keep power, massive amounts a debt, bailouts, taxpayer guarantees and a lowering of lending standards.
Recessions actually have to happen in a healthy long term economy.
It wipes away debt. It forces bankruptcy on poorly run businesses. It clears out of the deadwood.
And, most importantly, it keeps businesses and banks about as honest as you can. Bankruptcy and jail time is the only thing they respect.
In a way, healthy recessions are kind of like natural forest fires. When they periodically occur, they are good for the forests. Even some types of trees require the fire in order to sprout new seeds.
When Man prevents natural forest fires from running their course — you get decades of overgrowth which makes the next fire 10x worse than it would have been.
“landlords aren’t making any money unless they sell or refinance. A lot of them are cash flow negative”
Old news but worthy of repeating.
Failure to understand input costs and no clear understanding of the value of a dollar always results in really stupid moves. You think landlords overpaid? End users really screwed themselves.
The input costs, in this case $50/sqft (lot, labor, materials and profit) don’t magically change. If you think they’d did then it’s the best indicator that you overpaid.
This isn’t an efficient way to operate for communities, society, or most individuals. However, if everyone were hurt equally by housing busts, we’d probably have put a stop to them with regulations. It seems the most powerful people actually gain from the busts in cycles - and so the game continues with the super rich eating more and more of the pie.
The average American who thinks there is nothing wrong with “fluctuating” people our of their home and life savings while concentrating wealth is just hoping they’ll get to screw over someone else someday too and become richer. Instead, they are harmed right along with everyone else and don’t see a safer and fairer system that could exist. It’s the one area of life in which many int he US believe in Darwinism.
Nonsense.
“In 2011, the Fed began encouraging and enabling Wall Street’s biggest private equity firms and other investors to buy up hundreds of thousands of homes out of foreclosure to push up home prices.
This has led to soaring housing costs that have by far outpaced wage growth, if any. And it made it that much harder for these Americans to stay that one paycheck ahead of hunger and homelessness.”
Is this the first ever time in history that the Fed chose to bail out those who gambled and lost by going long on housing, to the collective detriment of renters and the next generation of potential homeowners?
What in their mandate authorized this vast wealth transfer to wealthy homeowners who were down on their luck as a self-inflicted consequence of their own foolish financial gambling activities? Is it a version of the Nixon doctrine: ‘If the Fed does it, it’s legal.’
Many L.A. Millennials Have Found a Solution to High Rents
LA Weekly | March 22, 2017 | Dennis Romero
Los Angeles rents are some of the worst in the nation, and don’t even think about buying a home here. Resourceful millennials have found one solution, though: living at home with mom and dad.
A new analysis of U.S. Census Bureau data for America’s largest cities found that 41.5 percent of Greater Los Angeles millennials either still live at home or have moved back in. In the Inland Empire, that figure was 44.5 percent, according to the “Not-So-Empty Nests” report by apartment listing site Abodo.
…
Greater L.A., including Orange County, ranked fourth for U.S. metro areas with the largest percentage of people born between 1982 and 2003 who live at home, according to the analysis. L.A. was topped only by Miami (first), the Inland Empire (second) and New York (third). ”
…
the price of going it alone is so high in the market that millennials would have to spend about 97 percent of their median monthly income ($1,975) just to get into a median-priced, one-bedroom unit in L.A., the site found. Only Washington, D.C., had a higher demand on millennial income (110 percent) for one-bedroom renters
…
Many millennials are not only earning less than their parents did as younger adults, but the majority of millennials who pursue college degrees are eventually saddled with an average student loan debt hovering around $30,000
“Those in the building industry say rising building costs, which include everything from securing permits to buying construction materials, is driving this move toward higher-end homes.”
Makes one wonder what exactly will happen if they ever run out of high end buyers?
the costs to build r ridiculous in ca. Every agency wants a piece of you.
the costs to build r ridiculous in ca. Every agency wants a piece of you ??
I can’t speak for the whole state…But I can for The bay area…The cost have never been higher probably by a factor of 30% +…A friend trying to build a 9 unit apartment building for himself just got the bid from the GC for over $400. per square foot…Another good friend that runs a electrical contracting company bids $137. per hour for electricians in the field…My feeling is I have seen this screen play before but this time time it is at a whole new level…Its out of control and unsustainable….
That’s not how bid estimates are developed nor would a construction contract or subcontract agreement ever be executed on such a bid estimate. And endorsing a pay requisition for payment without the conforming contract bid estimate is illegal.
Your friend is pulling your leg again.
You don’t know WTF you are taking about Dude…
Incorrect. Construction contract admin is my stock in trade.
Go ahead and substantiate your claim.
If I ever save up enough pennies to build my own house, I’m going to hire Race Bannon to build it for me. Seriously, no joke.
Seems like he does quality work, and I’d rather pay $50/sqft for solid quality work than $400/sqft.
I am a long time reader here and can’t believe the housing market still. I live in the east bay of sf and i am renting. The house went on the market 2 weeks ago and it had multiple offers and is in contract for 15k over asking. When does it end??
The day banks eat their bad loans and bankers go to jail for fraud…
Like in the bad old days…
When does it end ??
When the job market goes south….
The unemployment rate is asymptoting to a floor level which has typically preceded recessions in the post-WWII US economy.
I realize this time is different, as the Fed chair is a labor economist…
“The house went on the market 2 weeks ago and it had multiple offers and is in contract for 15k over asking. When does it end??”
Based on our similar experience with selling in the East Bay well over asking with multiple offers in late 2004, I give it three years to plateau and seriously begin to nosedive.
Patience, my friend!
“Based on our similar experience with selling in the East Bay well over asking with multiple offers in late 2004, I give it three years to plateau and seriously begin to nosedive.”
That is about the same as SE Florida, I think the multiple offers over asking went into 2005 down here.
Three years to plateau and seriously begin to nosedive is also just about the same.
The only question I would have is some powerful force going to come in again and put an artificial floor under the crashing house prices?
Because that’s what happened here and after a couple of flat years (2009 - 2010) allowed a price run up to where we sit today.
“The only question I would have is some powerful force going to come in again and put an artificial floor under the crashing house prices?”
So far the new administration’s policies have been more similar than different from predecessors. Look at all the Goldman Sachs alumni in the cabinet, for example.
Of course it was the Fed who took most of the bailout initiative in the post-2008 episode. It could get quite interesting if Trump is able to replace Yellen before the next cratering housing crash.
if Trump is able to replace Yellen before the next cratering housing crash ??
We may not need to wait that long for the crash..I hear the quiet drum beat of elective war again…China visiting soon…Maybe a ultimatum put on the table on NK by the blowhard ?? What better way to deflect attention then a preemptive strike on NK…Are you tired of winning yet ??
Really surprised that rant slipped past the goalie.
“When does it end??”
When the easy credit drys-up.
The snowflakes need to stay in their safe places, first 5 minutes out of 44:10 is all you need.
On the other hand if any of you true believers want to save the planet here is your chance.
JUNGLETOWN
In the depths of the Panamanian jungle an American entrepreneur and hundreds of young people are building the “world’s most sustainable modern town.”
WELCOME TO THE JUNGLE
Staff struggles to fix the water as 80 interns descend into the Panamanian jungle.
https://www.viceland.com/en_us/show/jungletown