Current Homeowners Could See Their Value Plummet
A weekend topic starting with Global News in Canada. “It sounds like an unorthodox concept: Meeting complete strangers to see if you’re compatible to buy a house together. But as bizarre as it might sound, that’s exactly what happened on the third floor of the Toronto bar the Pilot in Yorkville on Thursday night. Lesli Gaynor, the organizer of C-Harmony: Creating Co-operative Connections said the idea came to her when she watched her sons using dating apps.”
“‘I have three young men and I was thinking about their reality and thinking about all of the apps they engage with on a daily basis and one of them has … used a dating site,’ Gaynor said. ‘It literally occurred to me that why can’t we take that kind of app or that style of meeting people and apply it to different things. It works for romance, so I think it could work for a mortgage.’”
The Philadelphia Inquirer. “The text I received last month from a friend back home in North Carolina caught me off guard. ‘I’m looking to buy a townhome,’ wrote my 25-year-old friend, unexpectedly mulling a decision to make the leap from renting a two-bedroom apartment in Charlotte. ‘Is now a good time to buy?’”
“It’s almost indisputable that, in the nation and region, the housing market at the moment is experiencing one of its best periods in recent history. In a conversation not long ago, local Realtor Mike McCann, of Berkshire Hathaway HomeServices Fox & Roach, told me the market is the strongest he’s seen in his more than 30 years of work. Home prices are reaching nearly the same heights they did before the housing bubble burst. This time, however, it’s happening much more naturally.”
“Yet just because home prices are rising today doesn’t mean they will be rising next month, next year, or two years from now. Online and in classrooms, questions over the future of the market abound: Are we in the midst of a housing bubble? And could that ultimately lead to another real estate recession?”
“National and local experts have begun predicting that this price acceleration can’t sustain itself. ‘Home prices,’ S&P CoreLogic Case-Shiller National Home Price Index chairman David Blitzer said last year, ‘cannot rise faster than income and inflation indefinitely.’”
From KVAL in Oregon. “Rents and median home prices in Springfield are rising about twice as fast as incomes have gone up, according to a city planning report. Median incomes went up 20 percent for Springfield residents between 2000 and 2013. At the same time, rents climbed 39 percent. Median house prices went up 43 percent. ‘People are squeezed. People are squeezed because their incomes have not increased as fast as the cost of housing has increased,’ said Tom Mulhern, executive director at Catholic Community Services.”
The Mercury News in California. “Major reforms are needed to lower tax rates and simplify the tax code, but that shouldn’t come at the expense of current and prospective homeowners, according to realtors. In a statement released soon after President Trump’s tax proposal was announced late last month, the National Association of Realtors said while the president’s tax proposal is well-intentioned, ‘it is a non-starter for homeowners and real estate professionals who see the benefits of housing and real estate investment at work every day.’”
“‘The mortgage interest deduction and the state and local tax deduction make home ownership more affordable, while 1031 like-kind exchanges help investors keep inventory on the market and money flowing to local communities,’ said William Brown, president of the national realtor group. ‘Those tax incentives are at risk in the tax plan released today. Current homeowners could very well see their home’s value plummet and their equity evaporate if tax reform nullifies or eliminates the tax incentives they depend upon, while prospective home-buyers will see that dream pushed further out of reach.’”
The Real Deal on New York. “After years of unloading massive amounts of cash in NYC, Chinese investors are now pulling back amid new capital controls out of Beijing. Residential brokers interviewed by The Real Deal said that in the last few months, some Chinese buyers have been unable to access their own cash — making it difficult for them to close deals. Meanwhile, commercial executives in New York said they’ve seen fewer Chinese institutions bid for trophy properties, while fund managers told TRD they’ve had difficulties raising money in major Chinese cities such as Shanghai and Beijing.”
“For New York, all of this amounts to some very unpleasant withdrawal symptoms. Not only has the industry become heavily dependent on Chinese investment, but the real estate market here is at a less than optimal point. Projects throughout the city are already feeling the squeeze, and both the residential and commercial sectors are softening.”
“Wendy Cai-Lee, a former executive at East West Bank who recently left to start her own debt and equity fund Oenus Capital, said the impact that the latest capital controls have had on cash flow to real estate deals in the U.S. is ‘very real.’ ‘There are larger deals that were effectively halted and a few deals that got killed,’ she said.”
“Scott Latham, a senior investment-sales broker at Colliers International, said that the cyclical slowdown in New York’s market did more to curtail Chinese investment than regulations. It started in mid-2016 ‘with uncertainty because of the election and Brexit, and then [capital controls] started to pile on,’ he noted. ‘It’s not as simple as just singling out the Chinese.’”
From The Guardian on Australia. “The burden of housing costs is biting even in Australia’s wealthiest suburbs as an unprecedented one in four households nationally face mortgage stress, according to the latest in a 15-year series of analyses. Households in Toorak and Bondi, prestigious pockets of affluence in Australia’s biggest cities, have made the list of those struggling to meet repayments amid rising costs and stagnating wages, research firm Digital Finance Analytics has found.”
“Finder.com last week found 57% of mortgagees could not handle a rise of $100 or more in monthly repayments. ‘The surprising thing is that people in Bondi in NSW, for example, or even young affluents who have bought down in Toorak in Victoria are actually on the list [of mortgage stressed],’ said the firm’s principal, Martin North. ‘The reason is they’ve bought significantly large mortgages to buy a unit, modified or brand new. They’ve got bigger incomes than average but essentially they are highly leveraged so they have little wiggle room and of course any incremental rate rise, because they’ve got such big mortgages, slugs them pretty heavily.’”
“Semi-retirees who moved to central coast NSW but are still exposed to large mortgages while their incomes were falling away were another atypical snapshot of those in financial distress, North said. ‘And the people at the top, the most affluent households, the ones who’ve got really big properties, have the lifestyles to match. So again, their spare cash is not huge. And that point – it isn’t just the mortgage belt, it isn’t just the typical battlers who are actually exposed here – shows is a much broader, more significant problem.’”
From Massachusetts Live. “Marjorie Evans was nearly in tears as she watched repo men, police officers and locksmiths converge on her Worcester home Thursday morning. Constables from housing court arrived at her 158 Orient St. home to evict her. The bank has allegedly tried to remove Evans from the property 10 times in the past two years. Evans has a ‘manageable disability’ that has been exacerbated by the court process. She had hired a lawyer to represent her in housing court, but the attorney suffered a fatal heart attack a month before her hearing.”
“She was forced to represent herself and revealed her disability to the court. She was allegedly questioned for 20 minutes about her condition. ‘I stood in court and told them, ‘There’s no way that Freddie Mac bought this property, there’s no way Freddie Mac filed those documents, those are all lies.’ And yet, the housing court is willing to accept Freddie Mac’s word and allow them to destroy me,’ Evans said.”
‘I stood in court and told them, ‘There’s no way that Freddie Mac bought this property, there’s no way Freddie Mac filed those documents, those are all lies.’ And yet, the housing court is willing to accept Freddie Mac’s word and allow them to destroy me’
I’ve heard stamping your little feet works Marjorie.
I’ve heard stamping your little feet works Marjorie.
We need to chip in and buy Margie a boat ticket to Butthurt Island, where the HBB’s exiles and castaways can show her how it’s done.
“I’ve heard stamping your little feet works Marjorie.”
Actually, she’s probably right about Freddie Mac, which was one of the entities looted to subsidize Obozokare. And at this point, I admire her for attempting to forestall the eviction, any way she can. Screw the banks, screw Fannie and Freddie, the Fed, and the whole sorry mess. The sooner it implodes once and for all, the better.
There really aren’t any rules, anymore. Just a bunch of government thugs such as “repo men, police officers and locksmiths” all working for the Fed, one way or another.
Oh - there are rules.
The little people are expected to follow them to the letter.
But if you name ends in Clinton or obama or has a (D) after it - you can ignore them at your leisure.
Or make up new ones.
Margie you destroyed yourself the day you agreed to pay a 300% premium for a depreciating asset and then you failed to repay the fool that lent you the dough. Next time, you’ll exercise diligence and better understand the value of the item you’re considering and it’s historic price before agreeing to borrow.
The poor donks…… the poor poor donks.
From Massachusetts Live. “Marjorie Evans was nearly in tears as she watched repo men, police officers and locksmiths converge on her Worcester home Thursday morning.
Sorry, Margie, but you see, it isn’t actually YOUR home until you’ve paid off the mortgage and have a free-and-clear title in hand. Prior to that, you’re just a renter, too.
Exactly - Love how everyone is calling themselves “home owners” as soon as they sign a mortgage. Usually for more than 1/2 their monthly income.
And if they have some sob story about why they can’t pay their mortgages, they expect those obligations will just be waived or forgiven. Part of the pathological sense of victimhood and entitlement that has overtaken us.
The Great Reset can’t be too far off.
“Part of the pathological sense of victimhood and entitlement that has overtaken us”
Not to mention members and former members of the armed forces who sit in judgment on the rest of us. After doing the dirty work of the banks all over the planet, while leaving the citizens they’re supposedly sworn to protect to rot in their home country.
Yeah - I do feel sorry for some of these people. Housing used to be for shelter. Most young families want to buy a home as their parents did. They can’t always get a job in an affordable part of the country so what are they to do? Rent for 10 years while saving for a huge downpayment - using up all their savings? Really what is the answer HBBers?
Rent for half the monthly cost. Buy later after prices crater for 65% less.
“Not to mention members and former members of the armed forces who sit in judgment on the rest of us.”
WTH is that all about? Is some vet judging you somehow?
“Really what is the answer HBBers?”
1. Rent a place at under 30% of your monthly income.
2. If you can’t find such a place where you live, relocate to a cheaper area.
What if there is not a job available in your field in a cheaper area? How can you time this cratered market? It only lasted for about 2 years max in the last 14 years before yet another bubble occurred.
Are families now expected to raise their children in apts? Or rental properties where they may have to move at the owner’s whim? Change schools and continually uproot their children so as not to be FBs?
Dear Jessica,
Moving your kids around is less traumatic than you think and helps them learn how to socialize in different environments, like they’ll have to do when they get out into the labor market.
Financialization has closed the door to the middle-class home-owner life-style in the populated parts of the USA. Adapt or perish.
Are families now expected to raise their children in apts?
Many millions of families have done that and there’s no problem. The kids don’t all end up in prison.
Looks like we have some bankers on here -
No, what you have here are folks who’ve already got theirs.
So, screw you, Jessica. Too bad, so sad. Sad panda boo-hoo.
That you work hard and try to do right by other people is meaningless.
It is never your home. Even if you own it free and clear.
Try missing a property tax payment.
Union goons with guns will throw you our in a heartbeat.
Public union pensions will be paid.
Correct. You’re not really buying the house, you’re buying the rights to resell it, maybe at a profit, at some future date.
You can paint the walls whatever color you want, but most likely you can’t do much outside without getting approval.
‘Scott Latham, a senior investment-sales broker at Colliers International, said that the cyclical slowdown in New York’s market did more to curtail Chinese investment than regulations. It started in mid-2016 ‘with uncertainty because of the election and Brexit, and then [capital controls] started to pile on,’ he noted. ‘It’s not as simple as just singling out the Chinese.’
The Real Deal report is worth reading in full. From February 8th, 2017:
“New York City is still the No. 1 destination for foreign capital in the world, according to this year’s AFIRE rankings, but it is no longer an environment in which foreign money — particularly from China — will buy anything in the market at any price. This year, China has clamped down on outbound foreign investment, and firms caught flouting the new laws will be punished harshly, China First Capital CEO Peter Fuhrman said. While most New Yorkers in commercial real estate are aware of the capital slowdown, Fuhrman said they are probably not taking it seriously enough.”
“‘I have the perception that the full weight and severity of these capital controls hadn’t been fully felt here,’ Fuhrman said. ‘It’d be fair to say that the Chinese central government dropped a financial bomb on its businesses.’”
“One of the Chinese government’s chief concerns when instituting the investment restrictions, Fuhrman said, is over outbound investors getting fleeced while paying record-breaking prices. ‘A concern of Chinese regulators is their investors have been really bad buyers,’ Fuhrman said. ‘This can sadly be seen more and more in the larger real estate deals they have done. What they are extremely concerned about is just about every acquisition the Chinese have made, is they have overpaid severely and foolishly, and that has spurred a loss of a lot of Chinese sovereign wealth.’”
http://thehousingbubbleblog.com/?p=9989
There’s more to it than just capital controls. These guys are being had.
Caw!
‘A concern of Chinese regulators is their investors have been really bad buyers,’ Fuhrman said. ‘This can sadly be seen more and more in the larger real estate deals they have done. What they are extremely concerned about is just about every acquisition the Chinese have made, is they have overpaid severely and foolishly, and that has spurred a loss of a lot of Chinese sovereign wealth.’
I never said they were good buyers of foreign real estate just said they would have the money to buy since their economy would keep on growing.
Sure, they would rather break laws to get money out to buy RE in countries that have a sliver of China’s supposed GDP. Your reasoning doesn’t hold up.
I think that is a separate issue. The Chinese do worry that full communism will come back so they want to have a nest egg outside the country.
It is far more likely that they are worried that the biggest Ponzi debt pyramid in human history will fall in on itself, sooner rather than later.
Economic calamity of the scope likely to follow will completely delegitimize the Communist regime. It’s how the great Chinese dynasties of the past have ended.
“The Chinese do worry that full communism will come back so they want to have a nest egg outside the country.”
You’d think someone would figure out that communism is a failed model and let it remain in history’s dustbin from now on.
Chinese look pretty frugal compared to the Japanese and even the US:
http://www.usdebtclock.org/world-debt-clock.html
There will be a reckoning for sure. China is first in line because of their $30Tr credit pyramid atop a foundation of miserable poverty, corruption, waste and horrendous wealth disparity.
Debt-fueled growth works great, right up until the point of collapse.
Business News | Fri May 5, 2017 | 5:21am EDT
China April data to show solid growth, but high debt poses risks
Labourers work on the construction site of a high-speed railway in Linyi, China April 27, 2017. REUTERS/Stringer
A looming flurry of Chinese data is expected to show the world’s second-largest economy maintained solid momentum in April after a surprisingly robust first quarter, but the pace is seen tapering off as Beijing turns the screws on debt risks and a hot property sector.
A Reuters poll of indicators from goods trade to industrial output as well as retail sales, loans growth and property investment signaled the Chinese economy was motoring along at a nice clip even as some moderation was evident as demand at home and abroad slackened.
The value of exports was seen rising 10.4 percent on-year, and imports up 18.0 percent, below the sizzling 16.4 percent and 20.3 percent growth rates notched in March, partly reflecting a drop in commodity prices.
The trade surplus for April was tipped at a solid $35.50 billion, rising from $23.93 billion in March.
“The economy is turning a bit more than people anticipated,” said Julian Evans-Pritchard, an economist at Capital Economics in Singapore, adding that April’s data could surprise on the downside, similar to recent PMI surveys.
“The main leading indicator is that since last summer, credit growth has been slowing. Often it takes a while for slower credit growth to show up in the data,” he said, noting tightening measures currently underway were also putting the brakes on growth.
…
“but the pace is seen tapering off as Beijing turns the screws on debt risks and a hot property sector.”
Sounds like China is in control. Economies collapse when the PTB lose control.
The crows seemed to be calling his name, thought Caw.
You are missing the bigger picture here. The big question is - what will be the world’s next reserve currency.
How will the fact that China now has Special Drawing Rights (SDR) on the World Bank affect us?
Why do those people wander around in their PJs? Weird…
Just as weird are people who have the compulsion to lie on an anonymous housing blog.
People in glass houses shouldn’t throw stones.
Agreed.
So why don’t you stop throwing them?
Chinese walk of shame?
Bagging
Is there a cut off age for a mortgage?
My mil took out a mortgage at age 67
Like it is uncommon in the US?
http://www.cnn.com/2014/02/19/living/pajama-pants-stretchy-clothes-fashion/index.html
And then there is the magic of fractional reserve banking on the downslide. If the banking system starts with $1 of capital it can be leveraged into 100’s or $1000’s in loans. If $1000 of that money escapes the system via capital flight that original $1 of capital is destroyed along with 999 others and all the commitments in between. The parties to those commitments are crushed.
The Chinese are calling this phenomenon “Daisy Chaining”.
Google “Hypothecation”.
Home prices are reaching nearly the same heights they did before the housing bubble burst. This time, however, it’s happening much more naturally.”
There is nothing “natural” about the Keynesian fraudsters at the Fed and central banks pumping trillions in printing-press “stimulus” - financial crack cocaine - into its asset bubbles and Ponzi markets, while the same unsound and often illegal practices that caused the first housing bubble have reached even new heights of insanity, unchecked by our asleep-at-the-switch or complicit regulators and enforcers.
There’s a report being widely published that house prices aren’t above their “pre-recession” level. Uh, you mean pre-bubble level? The implication of course is that prices could, no must(!) go higher still. We’re going to test this nonchalance attitude.
‘The mortgage interest deduction and the state and local tax deduction make home ownership more affordable, while 1031 like-kind exchanges help investors keep inventory on the market and money flowing to local communities,’ said William Brown, president of the national realtor group. ‘Those tax incentives are at risk in the tax plan released today. Current homeowners could very well see their home’s value plummet and their equity evaporate…’
‘make home ownership more affordable…could very well see their home’s value plummet and their equity evaporate’
‘Muricans have never been deeper in debt, while living-wage jobs are still disappearing. Student debt and car loans have hit insane new highs, while delinquencies are rising sharply. Healthcare costs are spiraling out of control, which will only worsen under the abomination of a health care bill the Republicrat duopoly just passed for the benefit of their insurance company donors. Somethings got to give - tapped out ‘Murican consumers will be increasingly unable to cover their mortgages as costs keep rising and the Fed keeps destroying their purchasing power with its monetary policies and money-printing.
https://libertyblitzkrieg.com/2017/05/04/student-loans-and-healthcare-two-issues-that-will-define-american-politics-going-forward/
‘Current homeowners could very well see their home’s value plummet and their equity evaporate if tax reform nullifies or eliminates the tax incentives they depend upon, while prospective home-buyers will see that dream pushed further out of reach.’”
Logic fail
I think the peddlers of fake news assume no one really reads and tries to understand what they write. They just expect everyone to react to the emotional tone and get the memo that they’re supposed to be against xyz.
Trumped!
Trump Tax Plan Could Hit Bay Area Homeowners Hard
April 26, 2017 6:54 PM By Len Ramirez
SAN JOSE (CBS SF) — President Trump’s new tax plan could deal a heavy blow to some Bay Area homeowners, according to tax specialists.
The plan eliminates several itemized deductions, including those for property and state taxes which could add thousands to people’s annual tax bill.
Annette Nellen is a CPA and director of the graduate tax program at San Jose State University.
“That can be a big hit to individuals, especially in California,” confirmed Nellen. “We’re a high-tax state and property taxes are high too.”
Nellen said other aspects of the Trump plan might make up for those losses in some cases.
She explained that a couple with a combined income of $150,000 and a $600,000 mortgage might actually see their overall taxes go down.
“He does talk about doubling the standard deduction. For a married couple, that would mean going from about $13,000 to $26,000,” said Nellen. “There’s a good chance for a lot of people who make between $60,000 to $150,000 that their itemized deductions are less than that.”
But several taxpayers KPIX 5 talked to are not happy to be losing the popular property tax deduction.
Dean Sherrell lives in Hercules and is about to open a small coffee shop in downtown San Jose. He says that deduction is most needed in California.
“We’re in an abnormal area,” said Sherrell. “California is a different beast so making one broad spectrum change in tax code doesn’t fit for us or maybe places like New York where real estate prices are completely different from the rest of the country.”
…
This is where Mike was introduced to 4-D chess, now that he is hoping GOP senators will protect these regressive tax dodges in place for mostly white, rich landowners while poor people get no such benefit.
I never said that I was hoping for it, just that it will happen.
“Are families now expected to raise their children in apts?
Many millions of families have done that and there’s no problem. The kids don’t all end up in prison.”
WELL…you sure don’t seem to mind if what Ben described happens.
You have yours. Now that you do, que sera sera is your response to others and the diminished lives they will lead.
OF COURSE YOU ARE HOPING IT WILL HAPPEN. Otherwise, you wouldn’t lead the lifestyle you already lead. You’d voluntarily give it up.
Don’t pretend otherwise. You aren’t fooling a single soul.
Exactly. That’s why the dishonest sales presentation is called a “pitch”. Throw out anything and see what sticks.
That’s why the dishonest sales presentation is called a “pitch”?
You mean like Trump University ??
“They just expect everyone to react to the emotional tone and get the memo that they’re supposed to be against xyz.”
Like the pitch for Hillary, WikiLeaks revealed that she had a pitch for the common folk and the truth for bankers. Does your butt still hurt maybe preparation H might help. Just saying.
Does your butt still hurt ??
You won. Get over it. Quit crying.
How does someone with such tiny hands cause such butt hurt scdave? I am not crying I am laughing that he is causing such pain to globalists and liberals, not necessary the same people but there sure is a lot of overlap.
Don’t be such a bully Dan. As much as you are wrong with your predictions, you shouldn’t be picking much on any of the rest of us.
causing such pain to globalists and liberals
Soon the pain will be felt a large majority of the population.
Right one wrong dozens right you have been wrong about China about housing and China for ten years caw caw caw
Ok huckleberry, what have I been wrong about on China?
You were totally wrong on Chinese wages, which I tutored you on. You were totally wrong on distillation of gasoline in the refinery. You vindicated me when you stated that China lies about their GDP.
My main assertion is that credit expansion is not a sustainable miracle. It will take time to see if that is wrong (for the first time ever).
You were wrong on both instances and I provided the links that proved it you just stated the CIA was wrong and Wikipedia was wrong. You cannot even admit you were wrong.
Data Mr. Crowman….. Data.
Salem, OR Housing Prices Crater 22% MoM
http://www.movoto.com/salem-or/market-trends/
Data HA, Albuquerque is on the list and interesting one of the few places where the actual incomes significantly exceed what is needed:
http://www.msn.com/en-us/money/realestate/19-us-cities-where-you-can-live-comfortably-on-less-than-dollar50000-a-year/ss-BBzOGLG?ocid=spartandhp&fullscreen=true#image=8
Actually Dan, I gave you the links that showed how the drones at the CIA completely misunderstood the data they took directly from the official Chinese release. They failed to read and understand the title which stated the wages were only for urban workers. You failed to comprehend this as well. Failure to get the basics right leads you to numerous false conclusions later on.
LOL on your Wiki article. Wiki can be an interesting introduction to some things but it can not be taken as gospel all the time. Many articles are naive and inaccurate. Even you could write one. I have real experience and training as a process engineer and a plant engineer in the refinery. You didn’t get an explanation out of me because you went arrogant bully. I’d prefer to let you enjoy your ignorance, it will lead to many false conclusions. I still laugh at the whopper you made a while back thinking gasoline could be stored in crude oil tanks. Enjoy!
Because NAR and MSN said so.
Gotcha Mr. Crowman.
Sorry you can say I was a plant engineer all you want Blue but it does not change anything, the need to produce gasoline drove demand for around 80 years and the type of oil that produced the most gasoline was in the most in demand and the that was and still is the lighter grades. Finally, a refinery cannot just produce one product although it has some latitude in producing more of one some times than other. If you really were what you claim to be you would know that WikiLeaks is not wrong, moreover neither is the CIA on the other issue, you cannot just convert yuan to dollars to know what Chinese make you have to take into account what a yuan can purchase in China to understand their true wage, the CIA does it you do not, and I do it because it is the most accurate measurement, you do not like it so you contradict no, I was not wrong on either one and no you do not know anymore than the CIA or WikiLeaks on either one of these two subjects, you were just wrong now lets just move one.
PS Blue had you not made this personal and essentially called me an idiot at the beginning of the dispute I would never had made this personal. My views are well supported in numerous links that I provided not only the two I cited today but numerous other ones that show that refiners favor one crude over the other depending on the crack spread and how much of each product they want to produce and until a few years ago the strong preference was for crudes that produce more gasoline. Even today they prefer the lighter crudes since they also produce more diesel. And while you claim to be an expert I remember you were calling the crude produced by fracking oil shale instead of shale oil and anyone that really knows oil knows that they are not the same that oil shale is not even considered to be real oil.
With a globe awash in crude, record excess productive capacity, cratering demand and profitability all the way down to $8 a barrel and prices falling, all that doesn’t matter my good friend.
Race just looking for a little logical consistency. Why is California one of the poorest states in the union? Because its cost of living is so high. If you just looked at incomes California is not poor. The CIA methodology adjusts for purchasing power. The Chinese live far better on their incomes because outside a few cities rents are far less than Americans pay as are many other items. I am licensed to practice law in California, I could probably increase my income by 20% by moving there and practicing law. But I could never live in a nice house for less than 20% of my incomes as I do in the Albuquerque area. You and many on this board know that while asset bubbles may raise nominal income, they never raise real incomes. California’s real estate bubble has raised incomes but they are poor because of the asset, not despite that fact. It works the other way too, where areas of have a low cost of living people live better than their incomes would suggest, sorry China is one of those areas and the CIA recognizes it and the methodology is not wrong, it is the evaluation you make on this board every day.
“oil shale is not even considered to be real oil”
You’re like a Johnny Appleseed of wrongness.
Wrong. Oil Shale is rock. Nobody but you confuses the rock with the oil.
“the crack spread”
It is obvious that you do not even know what this means. If the refinery is designed with sufficient cracking capacity it can produce the desired amount of gasoline from the cheapest heavy crude. It can make gasoline from lighter cuts using reforming (powerforming). The distillation column has not controlled refinery product mix for over 50 years. You simply do not understand enough about this to speak with any authority. It’s as if you prefer to spout ignorance. So, you’re wrong again.
Just cannot admit you were wrong, you know what I meant and you are wrong about the entire argument that started which as why light oil trades higher than heavy oil, now you are just being a weasel, “if the refinery is designed with sufficient cracking capacity”, at what price? You can never produce all gasoline and it will be much more expense to process hence the premium for light oil. You were wrong just admit it and move on, I do not see my other post on China which explains why you were wrong on that too.
PS shale oil is oil from shale and thus is not rock. Oil shale is a rock but we are not talking about real oil within that rock we are talking about kerogen I still do not think you even know that.
Refining Engineer. High Severity Hydrofining Specialist. Colony Project. Parachute CO. You are completely wrong about what I might know. Were you even born back then?
Unfortunately for you, you have no interest in what you can learn from people with actual practical experience. You’re just a blustering bully. I never liked bullies much.
‘Finder.com last week found 57% of mortgagees could not handle a rise of $100 or more in monthly repayments’
Wait til they find out people who have money will be the first to throw down the keys.
Inconceivable! The kind of financially irresponsible people who take on unsound levels of debt for things they can’t afford are impeccably honest and scrupulous when it comes to paying off their mortgages. Surely they will do whatever they have to do to honor their financial obligations.
I’m pretty sure I read that in the prospectus of one of those mortgage lenders.
Inconceivable! (From “The Princess Bride”)
https://www.youtube.com/watch?v=Z3sLhnDJJn0
I’m going to repeat something to make a point. Back in the 80’s it made big news in Texas when rich people started walking away from shack loans. And a lot did, even though their mansions weren’t near as inflated as today. And I’ll repeat the story of Mr Biggs (I call him) in Flagstaff when I first started doing foreclosure work. Fancy second (or third or fourth, who knows) home, I got a call to place a secondary lock as it was in pre-foreclosure. It was for sale (as they all were) so protocol was to contact the agent and see if we could do it without drilling the lock and making a mess. She was furious. “Mr Biggs is very well off and could easily pay off the mortgage at any time.” I asked her to contact Biggs and she meekly called back. “Mr Biggs said to go ahead and put the lock on, he’s walking away.”
Flagstaff was and is still a big secondary shack market. I probably spent half my time in those early years foreclosing in the most expensive neighborhoods in town.
But you see, Ben, it’s different this time. That panel of real estate experts on CNBC looked into the cameral and assured me of this.
And that was back in the bad old days of 20% downpayments
Imagine how this plays out with 3-5% downpayments
3-5%downpayments less 5% downpayment assistant programs.
Got subprime?
“Finder.com last week found 57% of mortgagees could not handle a rise of $100 or more in monthly repayments. ‘The surprising thing is that people in Bondi in NSW, for example, or even young affluents who have bought down in Toorak in Victoria are actually on the list [of mortgage stressed],’ said the firm’s principal, Martin North.
How many FBs are barely hanging on, getting deeper into debt, and living paycheck to paycheck? Any unexpected medical bills, tax increases (assured), job losses, etc. could push a sizable percentage of the fools who overpaid for their shacks into an untenable position when it comes to paying their mortgages.
But hey, at least they’re not throwing money away on rent.
“How many FBs are barely hanging on, getting deeper into debt, and living paycheck to paycheck?”
Not enough, but there is still hope.
What are FBs?
Here in northern VA - I was chatting with an agent at an open house. We were discussing mortgage brokers and I said I wanted to put at least 15% down. Her mouth dropped and she looked like she had seen a ghost. She actually stammered and said “yeah, that would be great”. One of in-laws is an agent here - said people are buying homes 5 to 6 times their income.
So, that is how all these homes are being sold here in the swamp.
FBs = F**ked Borrowers. As in, “homeowners” who borrowed way more than was prudent to buy a way overpriced house. And when the housing bubble bursts, said borrowers are well and truly…well, you know…buggered.
Hence the term FB. You’ll be seeing it a lot more in here going forward, as we dust if off from the 2007 housing bubble implosion.
They also get a math lesson on how leverage works going up and going down
It’s gonna be ouch!
“What are FBs?”
Gifts from God. Products of our outstanding educational system.
Victims, each and every one of them. Putty in the hands of the unscrupulous realtors and mortgage lenders who made them sign away their financial future.
It’s kind of a scam. People are told by people in suits behind mahogany desks, and by practiced salespeople that ‘They can do this, we stand with you.’ So they take out huge debt, and all of those people encouraging them to do so get their commissions. The loan is then purchased by the government, and none of the original sales team has any exposure after that. The FB steps aboard the foreclosure conveyor belt, the house house stays off the market for years, first upon default, then the bank holds it off till the price is right, finally it’s sold to an investor. It’ll be years before a qualified consumer can bid on the house. All this lowers inventory, which helps drive up prices.
However - I wonder if this system will eventually seize up as it actually becomes too efficient, inventory drops too low to sustain the NAR and the loan originators and lenders at levels they want.
It already seized up. Housing demand is at 20 year lows in spite of the fact they fired the afterburners on mortgage crime mid 2014 as seen in this chart.
https://3.bp.blogspot.com/-pB-O3T326Qg/WPa0SIOjvRI/AAAAAAAAq1w/EVkwVTGKFuocrTMm6zlV5ONMkPlzgZuIACLcB/s1600/MBAApr192017.PNG
“then the bank holds it off till the price is right”
Banks do NOT want to hold houses on their balance sheet. If they do one of 2 things (or both) happen and neither one is good.
1) Regulators get on them for two large a % of Loans in OREO or foreclosure or DQ. (Investors won’t be happy either at high levles)
2) The Bank must increase the amount of equity it holds agains these “damaged” assets. If I recall correctly we were holding19% equity on all Trouble Debt Restructured loans. You can’t make any money holding that much equity on a poorly performing asset.
Regulators…
You mean those guys who suspended accounting rules to foam the runway for the banks?
“Banks do NOT want to hold houses on their balance sheet.”
Really?! Then why did they not put them all on the market back from 2010-2012, when they had so many more thousands available to sell?
From the infamous Century 21 ad:
“This listing is special.” (Suzanne the realtor)
“Suzane researched this!” Harpy of a wife with galactic sense of entitlement who is stupid enough to trust the validity of “research” conducted by someone with a vested interest in selling her and her husband a house at the highest possible price point.
https://www.youtube.com/watch?v=20n-cD8ERgs
The first comment:
“If I ever wake up and I’m in this guys position, I’ll be packing my bags and move to Nepal to spend the rest of my days alone in the montains smoking hash.”
Ha!
“people are buying homes 5 to 6 times their income.”
Now add in the taxes, insurance and depreciation at $3/sqft per year puts them at 8-10x annual.
But, but…property ladder!
We are all going to be rich with that equity!
How else am I going to retire or pay for school loans I cosigned?
“8-10x annual”
Like riding the mechanical bull; you can hang on for a while.
the 5 most grossly overvalued stocks comprise 42% of the Nasdaq:
amazon
google
facebook
microsoft
aapl
I wonder how busy they have been buying back their own stock?
R. I. G. G. E. D.
Central banks are buying it,too. Wonder what stocks Fed’s beeb buying?
Here’s one CB’s portfolio.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/04/19/SNB%20Q1%20holdings.jpg
The economy is like an ecosystem. Changing one thing can have myriad, unexpected side effects: http://imgur.com/gallery/O4EjR
“Current Homeowners Could See Their Value Plummet”
Why is this a concern, given that central bankers stand in the ready with the next round of bailouts to prop up home prices? It’s turtles all the way down.
Think about this the next time you hear a UHS going on about a housing “crisis”:
“Homeowners put their hard-earned money on the line to make an investment in themselves and their communities, and it’s on them to protect that investment. Common sense says owning a home isn’t the same as renting one, and American’s tax code shouldn’t treat those activities the same either,” said Brown.’
Call me crazy Willie, but with all these stretched average joes, it would be common sense to cut back on subsidies for shack buyers, maybe eliminate them all together like tax dodges for property tax. Renters can’t deduct anything, and this social engineering you describe just so happens to line your pockets. Don’t forget, when a house is an investment, it’s just a business decision to walk away.
But, but…we need government to make things fair.
How else will they buy the votes of the FSA?
“No loan is exempt; no bank is immune. For those who thumb their nose at us, I promise vigorous enforcement,”
– Attorney General Janet “Burn those Babies” Reno
‘A lot of blog posts have been written about what the National Association of Realtors is doing wrong or what they “ought to be doing” with regard to this or that. I have written some of those posts myself. I think it is important if one is going to find and point out things that are wrong that they also see and point out things that are right.’
‘If not for the word “REALTOR” – which became our NAME, thanks to the individuals on some NAR committee a long time back, we would most likely be referred to by the home buying pubic as “Used House Salesman”. I like the title, Realtor a lot better. I’m thinking you do too. I’ve mentioned this to a few Realtor friends in person and thought it was about time I mentioned it to my friends here.’
‘Thank you, NAR!! Nice job.’
https://theamericangenius.com/editorials/realtors/thank-you-nar-or-would-you-prefer-to-be-known-as-a-used-house-salesman/
The title of Honesty is preferred by some over the character trait.
Had he turned over a new leaf he’d have been covered by the statute of limitations. Instead he doubled down.
‘1031 like-kind exchanges help investors keep inventory on the market and money flowing to local communities,’
If anyone understands why this deliberate monopolization of the free market does not violate the Sherman Antitrust Act, please share your legal insight.
Perhaps help is on the way?
Mar 29, 2017 @ 01:38 PM
Shining a Spotlight on the FTC’s Most Important Antitrust Role
James Cooper, Contributor
I write about the intersection of information policy, law, & economics
Opinions expressed by Forbes Contributors are their own.
Although mega-mergers and large tech companies tend to grab the antitrust headlines, the abuse of government process to limit competition poses a far greater threat to consumers. Acting Federal Trade Commission (FTC) Chairman Maureen Ohlhausen has given this problem the attention it deserves in her “Economic Liberty” agenda. The initial focus on the low-hanging fruit of occupational licensing is a great start, but threats to economic liberty are broader.
Let’s start with the root of the problem. Why would firms prefer to use the government rather than collude or merge to reap monopoly profits? One large reason is our Constitutional structure. First, although collusion to fix prices or allocate territories can lead to huge fines and even jail time, joining with your rival to lobby for a law that keeps pesky innovators out of the market is protected by the First Amendment under the Noerr-Pennington Doctrine. Second, because states are sovereign actors in our federal system, with narrow exceptions, the so-called “State Action Doctrine” puts even the most anticompetitive state laws beyond the reach of antitrust enforcement. Don’t get me wrong: federalism and freedom of speech are part of the fabric that makes our system of government so special, yet rent seekers have stretched these fundamental protections beyond all recognition so they can fleece consumers with impunity.
You can see now why the government route is preferred. First, you won’t go to jail for working with your competitor to lobby for a bill. Second, as elementary game theory teaches, without a credible threat of punishment, cartels are inherently unstable. But when an anticompetitive agreement becomes the law, the state becomes your cartel enforcer. What’s more, these schemes are unlikely to run into serious opposition. Why? Industries are often well organized—any one hear of the National Association of Realtors—while consumers, with so much else going on in the lives, rationally pay little attention to bills winding their way through their state houses. And once in place, the same forces that make these laws easy to pass mean they aren’t going anywhere.
So what grows in the Petri dishes created by broad antitrust immunity? Occupational licensing is perhaps the most visible pathogen. But more esoteric, yet equally harmful, conditions also emerge. For example, as the Internet’s disintermediation potential became apparent in the early part of this century, it’s no coincidence that “minimum service requirements”—laws designed to prevent online real estate brokers from assisting consumers who wanted to sell their home on their own—began to sprout.
…
“online real estate brokers from assisting consumers who wanted to sell their home on their own”
Canada already has fixed this.
Poorest state in the nation…
$84,000 a year now qualifies as low income in high-cost Orange County
The affordability index in Orange County has narrowed as rising home prices and mortgage rates priced out the average house hunter. (File photo by Jebb Harris, Orange County Register/SCNG)
By Jeff Collins | JeffCollins@scng.com | Orange County Register
PUBLISHED: May 3, 2017 at 5:23 pm | UPDATED: May 5, 2017 at 12:41 am
Low-Income Workers Get Priced Out Of California Beach City
A family of four with an annual income of $84,450 or less now qualifies as low income in Orange County.
A single person living alone qualifies as low income if he or she earns $58,450 or less a year.
Orange County has the fifth-highest income threshold in the nation, according to new income limits released last month by the U.S. Department of Housing and Urban Development.
Government and private agencies use HUD’s income calculations to determine eligibility for a wide variety of assistance programs, ranging from rent subsidy vouchers and public housing to mortgage assistance. While low-income families qualify for some programs, others are limited to households earning far less, with limits as low as $31,300 for a family of four.
Record-high rents and home prices are driving up Southern California income limits. Orange County apartment rents, for example, increased 20 percent over the past seven years, while the median sale price of an Orange County house has jumped 40 percent.
“When you tell somebody that’s making $70,000 that they’re low income, they go, ‘What? That’s low income?’ Unfortunately, that’s what comes from living in a high-cost county,” said Cesar Covarrubias, executive director of the Kennedy Commission, an Irvine-based affordable housing advocacy group. “That makes it difficult for working families at all levels.”
Under the 2017 figures, Orange County’s income threshold for a family of four jumped $5,450 from last year’s level. The only metro areas with higher income limits are San Francisco; Fairfield County, Connecticut; Silicon Valley and Honolulu.
Even a six-figure salary doesn’t cut the mustard in San Francisco, Marin and San Mateo counties. A family of four there earning $105,350 or less now is considered low income, HUD figures show.
Orange County income limits for a family of four exceed Philadelphia’s ($66,550), Seattle’s ($72,000), Los Angeles County’s ($72,100), San Diego’s ($72,750) and Boston’s ($78,150).
…
Are Dumbocrats really too stoopid to realize that housing subsidies drive up home prices and rents, making housing ever less affordable?
Trump budget: San Diego housing faces cuts
San Diego’s poorest renters could be hit hardest under a $6.2 billion cut proposed by the Trump administration for the Department of Housing and Urban Development.
Phillip Molnar
Contact Reporter
San Diego’s poorest renters could be hit hardest under a $6.2 billion cut proposed by the Trump administration for the Department of Housing and Urban Development.
Right now, HUD provides yearly rental assistance to roughly 25,000 San Diego County families with more than $242 million in Section 8 funds. There are about 100,000 families on the waiting list for assistance across the county.
Many of the cuts were identified in budget documents as not demonstrating results and part of an overall effort by the Trump administration to reduce federal spending. All cuts need to be approved by Congress.
The proposed budget keeps rental assistance at the same levels but doesn’t take into account increased housing costs. It also cuts programs to build more subsidized housing units and eliminates down payment assistance projects for first-time buyers.
You wouldn’t let a little thing like not having a corkscrew stop you from enjoying that bottle of wine you just bought, right? Watch these videos to see what lengths people will go to to open a bottle of wine in a pinch.
“The high rents in the region mean we are paying more per unit,” said Kelly Duffek, assistant director of the county Housing and Community Development Services. “You don’t have to be a mathematician to figure out that if you have a set amount of money, and the rents are going up, it means fewer people that we can help each month.”
…
housing subsidies drive up home prices and rents, making housing ever less affordable
Of course, that’s true of everything that the government does. If Trump builds his wall, the cost of building walls will increase.
Remember when Swiss banks were renowned for their discretion and prudence? Neither do I.
http://www.zerohedge.com/news/2017-05-06/mystery-central-bank-buyer-revealed-goes-q1-buying-spree
It’s almost time.
There’s no time left for you.
The first time it took 21 years, this time it was only 5 years.
PS
Kudos on the tune selection Professor.
I am working on learning to play it on my steel string guitar…
This is really bad customer service
Man sues American Airlines after being ‘crushed’ by two obese passengers during 14-hour flight
https://www.yahoo.com/news/australian-sues-american-airlines-being-115031733.html
Nothing worse than getting sandwiched between obese folks while traveling in a flying cattle car.
Passengers should have to pay by the pound for their airline tickets. And charged an excess weight surcharge if they’re morbidly obese.
‘A failed bank with several branches around metro Atlanta has been shut down by federal government. The Federal Deposit Insurance Corporation confirmed on Friday that Guaranty Bank, which also owns BestBank, had been shut down by the Office of Comptroller of Currency. The FDIC entered into a purchase and assuming agreement with First-Citizens Bank & Trust Company which will immediately take over all deposits.’
‘The Milwaukee Journal-Sentinel reports that Guaranty had been under orders by federal regulators since 2009 to improve its financial condition. But the bank struggled to return to profitability and boost its capital to required levels.’
‘The paper reports that, in 2012, Guaranty sold off its national Shelter Mortgage unit to bolster the bank’s capital, but the boost was temporary. In the last 10 calendar years, Guaranty has posted a profit just twice, records from the FDIC show. Its worst calendar year loss was $52.6 million in 2009. In calendar year 2016, Guaranty lost $4.2 million.’
‘The company has struggled over the years to recover from losses stemming from the housing and foreclosure crisis. BestBank had 34 branches across metro Atlanta.’
You know what they say about cockroaches….
Highlands Ranch, CO Housing Prices Crater 6% YOY As Denver Area Tanks
https://www.zillow.com/highlands-ranch-co/home-values/
Oh dear - the supply of Greater Fools may be drying up as would-be buyers balk at paying insane bubble prices for shacks.
https://www.theguardian.com/australia-news/2017/may/07/im-not-doing-this-any-more-the-rush-to-escape-sydneys-mad-house-prices
Jokes that write themselves …
First the set-up:
“Suniva Creates the Latest Solar Debacle”
“Written by Anne Fischer 28 April 2017″
“Suniva filed for bankruptcy protection on 17 April, and then nine days later filed a trade case mechanism with the International Trade Commission (ITC) to try to impose tariffs and to set minimum prices on all imported solar modules. This would add tariffs to those already imposed on Chinese modules.
“Who is Suniva?”
“Suniva is based near Atlanta, Georgia and has manufacturing facilities in Georgia and Michigan. On its website, the company claims to be the ‘leading American manufacturer of high-efficiency, cost-competitive PV solar cells and modules.’”
Okay, that was the set-up, now for the punch line ..
“Suniva is majority owned by a Chinese company, Shunfeng International Clean Energy.”
Bahahahahahahahahahahahahaha …
Hang on, the punch line continues to play itself out …
“In the past two years, as prices on solar modules dropped and demand decreased due to oversupply, Suniva was losing millions. Ultimately the company filed for bankruptcy, placing blame on Chinese manufactures who flooded the US market with cheap imports.
“Why file Section 201?”
“Suniva’s filing a petition under section 201 of the Trade Act of 1974 is a condition of its bankruptcy. If the ITC determines that Suniva was “seriously injured” by solar imports, it can recommend to the Trump administration provide relief to Suniva in the form of tariffs on all imports in order to curb competition from manufacturers in any country other than the United States. Suniva sees this as an effort to get back into business with American-made modules.”
http://www.solarnovus.com/suniva-creates-the-latest-solar-debacle_N10838.html
“demand decreased due to oversupply”
In a rational world, oversupply increases demand as prices fall. Unless of course it is still a very stupid idea.
Unless it was based on cheap debt and not demand…
Don’t forget the subsidies - without them, alternative energy still doesn’t pencil out.
In my state, when you install residential solar, you get paid (wait for it) TEN TIMES the market rate for each excess kWH that you deliver into the grid. Your non-solar neighbors are paying for this in the form of higher energy prices (such as when they agree to pay extra on their bill for “green” energy).
Completely unsustainable.
Completely unsustainable.
The foolishness of those who don’t understand market forces might actually be sustainable…
Student and car loans hit all-time high of $2.6 trillion. How will these debt donkeys possibly be able to buy into a housing bubble or pay rising rents without becoming delinquent on their loans?
http://www.zerohedge.com/news/2017-05-05/us-student-auto-loans-hit-new-all-time-high-26-trillion
Once again, worthless regulators have failed to catch endemic fraud and sketchy practices in Canadian subprime mortgage lender Home Capital. Seems like we’ve been down this road before.
http://www.macleans.ca/economy/what-the-home-capital-crisis-reveals-about-the-housing-market/
“It sounds like an unorthodox concept: Meeting complete strangers to see if you’re compatible to buy a house together. But as bizarre as it might sound, that’s exactly what happened on the third floor of the Toronto bar the Pilot in Yorkville on Thursday night.
The social fabric and quality of life of the middle and working classes is being destroyed by unaffordable housing prices. Heckova job, central bankers.
F*ck ‘em. They didn’t adapt.
from AZ
But one state found a special way to send refugees packing. And it only highlighted how little these foreigners respect our country and way of life.
http://patriotjournal.com/muslim-refugees-are-fleeing-arizona-like-the-plague-all-it-took-was-one-genius-change
Chinese brokers have been using warehouses full of iron ore and copper as collateral for loans - and in many cases, multiple loans using the same collateral, i.e. “rehypothecation” to use the word coined when Jon Corzine ripped off MF Global account holders and got off Scott-Free because, you know, rehypothecation isn’t really stealing in our crony capitalist wonderland. So now what happens when the value of that collateral sitting in warehouses is tanking?
I’m sure our resident crow connoisseur can somehow spin this as a positive for China’s economic miracle.
http://www.telegraph.co.uk/business/2017/05/04/commodities-slump-china-tremors-opec-failure/
A snip or two from Wikipedia …
“In 2007, rehypothecation accounted for half the activity in the shadow banking system. Because the collateral is not cash it does not show up on conventional balance sheet accounting.”
Bahahahaha … let’s move on …
“Before the Lehman collapse, the International Monetary Fund (IMF) calculated that US banks were receiving over $4 trillion worth of funding by rehypothecation, much of it sourced from the UK where there are no statutory limits governing the reuse of a client’s collateral. It is estimated that only $1 trillion of original collateral was being used, meaning that collateral was being rehypothecated several times over, with an estimated churn factor of 4.
“Following the Lehman collapse, large hedge funds in particular became more wary of allowing their collateral to be rehypothecated, and even in the UK they would insist on contracts that limit the amount of their assets that can be reposted, or even prohibit rehypothecation completely. In 2009 the IMF estimated that the funds available to US banks due to rehypothecation had declined by more than half to $2.1 trillion - due to both less original collateral being available for rehypothecation in the first place and a lower churn factor.
“The possible role of rehypothecation in the financial crisis of 2007–2010 and in the shadow banking system was largely overlooked by the mainstream financial press, until Dr. Gillian Tett of the Financial Times drew attention in August 2010 to a paper from Manmohan Singh and James Aitken of the International Monetary Fund which examined the issue.”
FWIW and all that.
My favorite parts of these snips (two of them):
1. Conventional balance sheet accounting does not reflect the rehypothecation so even if an investor does his due dil as he is supposed to do he will still remain in the dark.
2. If the collateral that is used for backing is used several times over then, in reality, it is not used as backing at all; This backing might just as well be composed of thin air.
I like it, of course.
let us count the bubbles
popped
farm-cre-car- EDU- luxury air boxes
next? res RE , stocks
BTW if you rent a people house w kids ,dog etc you end up paying for lots of minor stuff.
I just had to redo mucho fencing as the dogs figured a way out.
Own or rent that would be out of pocket.
so if we are in a bubble would anyone invest in a 3x bear ETF like FAZ which is down like over 50% since the election?