May 24, 2017

Genuine Sellers And Speculators Alike High And Dry

A report from Bloomberg on Canada. “Home Capital’s troubles started with ‘unlucky’ brokers. That’s what Canadian banks and insurers call the mortgage merchants who get caught submitting fraudulent loan documents. Yet the brokers, whose names are now on databases maintained by lenders and mortgage insurers, can still win business since they haven’t been prosecuted for fraud. The failure to stop such practices is exposing cracks in Canada’s vaunted regulatory structure, drawing parallels to the U.S. a decade ago. ‘The early days of growth in the subprime market in the U.S. were like this — then it got out of hand,’ said Jim MacGee, an associate professor of economics at Western University in London, Ontario. ‘At some point, you’re going to have people who take short cuts. When people are facing pressure to get into a house, you have brokers who are facing pressure to get them in there. They just hear, ‘How can you get me in there?’”

From AOL Money on the UK. “A house price crash is notoriously difficult to predict. At the time, we all merrily carry on buying and selling, oblivious to the fact that disaster is lurking just around the corner. It’s only after the fact that we can see the glaring signs that change was coming. The signs are there, however, if you look closely, and should be ringing alarm bells for us all. House prices have reached a record of 7.6 times earnings, which has pushed them out of reach of a huge number of buyers. In some parts of the country, they have hit more than ten times average earnings.”

“A third of properties on the market at the moment are discounted by an average of £25,000. Prices have fallen over the past month, and the past three months. In the pricier parts of London, the falls are even more marked. Prices here peaked some time ago, and in many cases have dropped significantly since. The number of buyers registering with estate agents is falling too. In March, the number of buyers per branch dropped to 397 - down from 425 in February. It means that despite the fact that there are very few homes for sale - sellers are still struggling.”

The National on Dubai. “‘Why do you still recommend Dubai property as an investment?’ asked an old friend worn out by an onerous refurbishment project and annoyed at the recent fall of rents in the city. Landlords have seen the capital value of their units fall in value by 25-30 per cent in the past three years since the government acted to prick what looked like another housing bubble in formation back at the end of 2013.”

“You have to look at the downside risk in stocks and note that hey, it looks an awful lot bigger than the upside. Dubai property by contrast looks to be at the bottom of a classic three-year real estate down cycle. As I have remarked in this column before, this summer is likely the bottom. Note that my picks are completed and not off-plan property. I am weary of anything that smacks of flipping property after watching the implosion of the last Dubai bubble in 2009. The rental yield of a villa or apartment yet to be delivered is zero, and negative really if you have to keep your money tied up in it for much longer than originally promised.”

“One final reason to pick real estate over stocks and bonds is so obvious people often forget it – the leverage of a mortgage.”

The Japan Times. “Apartment construction is booming as the wealthy rush to invest in rental housing as a way to reduce inheritance tax and banks hand out easy mortgages, but concerns are mounting that excessive supply paired with a shrinking population could soon lead to the bursting of the bubble. Many are investing in apartments to take advantage of a discount that applies to land with rental housing on it. Banks have been only too happy to accommodate them with mortgages.”

“The rapid expansion of housing supply has left landlords in areas other than Tokyo and Osaka struggling to fill units. A realtor at a major company warned that the market is ‘in dangerous territory where landlords are struggling to pay the bills.’”

The Vietnam Bridge. “Tien Phong has quoted analysts warning about a ‘bubble’ in the high-end apartment market segment, with more and more apartment projects put up for sale recently. From central business to new districts, investors and brokers are struggling to boost sales. High-end apartments are in a two-year slump. ‘Hanoi doesn’t have more low-cost apartment projects, while there are very few new house and villa projects,’ explained Nguyen Van Dinh, deputy chair of the Vietnam Real Estate Brokers Association.”

From The Australian. “Rents for Brisbane apartments have fallen by as much as 17 per cent over the past six months amid an unprecedented flood of unit ­developments on to the city’s market, according to one of Queensland’s biggest property managers. Prominent agency owner Andrew Coronis, managing director of Coronis, which operates 23 offices across southeast Queensland, said tenants were moving more readily to get better deals, forcing existing unit stock and ‘investor-style’ apartment owners to cut prices.”

“Brisbane’s market has suffered a sharp turnaround with a collapse in off-the-plan apartments to one-third of the level compared to last year and strain in the construction industry resulting in builder CMF Projects going into admin­istration. ‘We’re seeing a 17 per cent drop in rents and it is happening right now,’ Mr Coronis said. ‘It is between 10 (per cent) and 17 (per cent). Everybody is scrambling to lock tenants down.’”

The China Economic Review. “Struggling to control a housing bubble, the city government announced measures on March 26 that effectively closed loopholes that had allowed new commercial buildings to be turned into homes and sold to individual buyers. The new measures have purchasers of such homes scrambling for a way out, Caixin reports. In desperation, dozens of buyers trapped in other commercial housing developments appealed to the city government for help The restrictions have also sent the commercial real-estate market in China’s biggest cities into a tailspin, leaving genuine sellers and speculators alike high and dry, and forcing developers to change their business models.”

From Shanghai Daily in China. “About one month ago, Janet Li moved into a two-bedroom apartment with her husband in the Huangpu District. In what was a bit of a surprise, the couple was able to find a rental in just over a week. The landlord, whose flat has been vacant for three months, was so happy when the property agent brought Li and her husband to view the apartment, that she reduced the rent by 1,000 yuan (US$144) a month, about a 7 percent discount.”

“Many factors play into the decline. Migrant workers are going home as metropolitan life becomes too expensive and job prospects in the hinterland hometowns improve. People investing in rental properties have increased, causing a glut of homes to let. And people who can’t sell homes in an increasingly regulated market are sometimes forced to rent them out instead.”

“‘I’ve heard so many times from work colleagues and friends that rents have been soaring in Shanghai in the past few years,’ Li said. ‘I hardly expected a landlord to give us discount and even without any haggling. This will give us time to look around for an apartment to purchase and will help cut commute time for me and my husband.’”




RSS feed

133 Comments »

Comment by Ben Jones
2017-05-24 05:34:50

I’m getting on a plane home in a couple of hours. Here’s the subscription Caixin article referenced above, with the usual FB’s:

http://www.caixinglobal.com/2017-05-23/101093931.html

 
Comment by Albuquerquedan
2017-05-24 05:49:12

http://www.thefiscaltimes.com/latestnews/2017/05/23/Moodys-downgrades-China-expecting-financial-strength-erode-debt-rises

Yawn. Outlook raised to stable. Mitigating factors mentioned I have been saying for years, high domestic savings, low government debt. Has to learn to accept 5%+ growth since it should not continue to increase debt. That is essentially what I said a few weeks ago when I said it must learn to accept lower growth or around eight years from now it will face a crisis. Markets are yawning and so and I nothing new in the Moody’s report. A year ago when it went to a negative outlook, people wondered if Moody’s was going to do a major downgrade did not happen.

Comment by Ben Jones
2017-05-24 05:50:50

Wake up and smell the crow sleepy head.

 
Comment by Raymond K Hessel
2017-05-24 06:07:36

Buford “Bubba” Blue: “You can barbecue it, boil it, broil it, bake it, saute it. Dey’s uh, crow-kabobs, crow creole, crow gumbo. Pan fried, deep fried, stir-fried. There’s pineapple crow, lemon crow, coconut crow, pepper crow, crow soup, crow stew, crow salad, crow and potatoes, crow burger, crow sandwich….”

Comment by Albuquerquedan
2017-05-24 06:40:20

Everybody loves Raymond eating his Peking crow because no collapse is in sight, the outlook was actually raised to stable.

Comment by Blue Skye
2017-05-24 07:38:29

“outlook was actually raised to stable…”

Doesn’t that mean the downgrade (rating of increased risk) is not expected to improve anytime soon?

(Comments wont nest below this level)
Comment by Albuquerquedan
2017-05-25 07:16:12

Yes and more importantly Moody’s does not expect the situation to worsen anytime soon and since China still has a high rating enjoy your Peking Crow, I think you pair that with Night Train. Enjoy!!!

 
Comment by Blue Skye
2017-05-25 10:36:15

What’s not to like about a credit rating just above Slovakia?

 
 
 
 
Comment by Blue Skye
2017-05-24 06:42:28

“the world’s second-biggest economy will erode in coming years as growth slows and debt continues to rise.”

“the pump-priming has also been accompanied by runaway credit growth and has created a mountain of debt - now standing at nearly 300 percent of gross domestic product (GDP).”

Someone should tell these people that Dan says China is the world’s first-biggest economy and that their debt is insignificant.

 
Comment by Jingle Male
2017-05-25 05:01:17

Outlook raised to “Stable”? What???

They downgraded the credit rating ABD. The agencies always go from negative outlook to stable once they downgrade. That’s like saying my new grade went from a B minus to a straight C and bragging you no longer have a minus next to your new grade.

 
Comment by In Colorado
2017-05-25 08:04:05

Mitigating factors mentioned I have been saying for years, high domestic savings, low government debt.

If individuals are saving like the proverbial ant and their government has low debt, why did they get downgraded?

The one-notch downgrade in long-term local and foreign currency issuer ratings, to A1 from Aa3, comes as the Chinese government grapples with the challenges of rising financial risks stemming from years of credit-fueled stimulus.

All those millions of unoccupied apartments in ghost cities weren’t paid for with cash.

Comment by Blue Skye
2017-05-25 10:50:15

“All those millions of unoccupied apartments…”

The bonds of the Chinese central government are only the tip of the iceberg anyway. Those construction projects were funded at the local level and most of the local and provincial bonds are mysterious junk.

https://www.ft.com/content/799a1afa-3135-11e7-9555-23ef563ecf9a

““Provinces have very limited information about the off-balance sheet finances of local governments,” the World Bank said in its March presentation.”

A massive mountain of dodgy debt.

 
 
 
Comment by oxide
2017-05-24 08:15:22

Hey palmetto, some winning for you:

http://thehill.com/policy/finance/334768-here-are-the-66-programs-eliminated-in-trumps-budget

“Agriculture Department — $855 million

· McGovern-Dole International Food for Education

· Rural Business-Cooperative Service

· Rural Water and Waste Disposal Program Account

· Single Family Housing Direct Loans

Comment by Mr. Banker
2017-05-24 09:04:29

Swamp draining.

Comment by scdave
2017-05-24 12:06:46

Swamp draining ??

LOL. He is the swamp.

Comment by palmetto
2017-05-24 14:49:59

Baizuo!

(Comments wont nest below this level)
 
 
Comment by MightyMike
2017-05-24 14:58:10

Of course Mr. Banker would approve. The proposed budget will be give one percenters like him big tax cuts and rain misery and suffering on the poor and working class.

Comment by Blue Skye
2017-05-24 16:39:31

MightyPoorMike, did you look at the list? Which one of the agencies would keep you from being miserable if it were not cut?

I looked at the list and didn’t know most of the money grabs by name. Only one that made me flinch.

(Comments wont nest below this level)
Comment by MightyMike
2017-05-24 17:05:11

I wasn’t referring to myself personally. There are some Americans who actually give a damn about their fellow citizens.

A quick look at the list of agencies shows that includes the Legal Services Corporation, which funds lawyers for people who can’t afford, thus ensuring their constitutional rights. The law that created it was signed by that extreme leftist Richard Nixon. Then there’s LIHEAP, which helps poor, elderly and disabled people heat their homes during the winter, probably saving thousands of lives annually.

The fact that you don’t recognize the names of the agencies listed should prompt you to withhold judgment. I don’t know what the Chemical Safety Board is, but I imagine that there’s a possibility that there could be drawbacks to eliminating it.

More importantly, I wasn’t referring specifically to that list. Those numbers are small change compared to the cuts to food stamps, disability insurance and Medicaid and the proposed tax cuts and defense spending increases.

 
Comment by FTHBwannabe
2017-05-24 17:34:23

Cuts to the budget should trigger more attention to fraud. The funds must go to people in need. We know that there are many people who do not need assistance receiving it anyway.

 
Comment by Blue Skye
2017-05-24 18:32:40

“some Americans who actually give a damn about their fellow citizens.”

That more or less is most of us. I asked you what you saw that shouldn’t be cut and you sort of answered, but you more condemned everyone for not being generous enough.

I’ve seen a lot of boondoggles in my time, and I especially do not like paying folks $100,000 a year to manage charity. There doesn’t seem to be much discussion of that.

 
Comment by MightyMike
2017-05-24 18:47:15

I asked you what you saw that shouldn’t be cut and you sort of answered, but you more condemned everyone for not being generous enough.

No, I didn’t condemn everyone for anything. Your statement appeared to assume that I was only concerned about spending cuts that would affect me directly and personally.

 
Comment by Blue Skye
2017-05-24 22:26:06

OK Mikey, you got any specific objections about any agency or program?

 
Comment by Mr. Banker
2017-05-25 05:41:43

“some Americans who actually give a damn about their fellow citizens.”

I am one of those Americans. I consider each and every American citizen to be a current or potential profit center and it is in my interest to give a damn about each and every one of them as I do with all other sources of my income.

 
Comment by MightyMike
2017-05-25 08:51:47

OK Mikey, you got any specific objections about any agency or program?

I listed two before you even posed this question. Now, it’s your turn. Please go through each of the 66 agencies, explain what it does and why America would be better without it.

 
Comment by Rental Watch
2017-05-25 09:36:02

Check out usafacts.org.

Great stuff.

 
Comment by Rental Watch
2017-05-25 09:50:42

An interesting tidbit.

We have more than tripled government aid to the disadvantaged from 1980 until today (in real dollars). The poverty rate is still about the same (13% vs. 13.5%).

Has our “War on Poverty” been successful? Or a giant waste of money?

BTW, I find answers like “the single mom in Cleveland certainly thinks that it has been successful.” to be baloney. You can’t set policy based on empathy.

 
Comment by MightyMike
2017-05-25 10:02:10

We have more than tripled government aid to the disadvantaged from 1980 until today (in real dollars). The poverty rate is still about the same (13% vs. 13.5%).

Did you get that statistic from usafacts.org?

 
Comment by aNYCdj
2017-05-25 10:15:06

There was always a need to better yourself and that was taken away because well it hurt peoples feelings

Workfare doesn’t work and is abusive it may work temporally for someone who never had a job, but not for people who had good jobs and the rug was pulled out from under them.

People need to be forced to read, write and speak English for their EBT card. before any kind of real job training is offered.

and those with skills put to work in their field so they have a current job on their resume. EG if you are a paralegal work for the innocence project or legal aid not the sanitation dept.

 
Comment by MightyMike
2017-05-25 10:36:44

Has our “War on Poverty” been successful? Or a giant waste of money?

It must be more successful and less wasteful than our wars against Iraq and Afghanistan. Of course, a lot of that waste ended up in the pockets of defense contractors rather than poor single mothers and their kids. For some reason that sort of waste is OK with a lot of people.

 
Comment by Rental Watch
2017-05-25 10:56:48

Did you get that statistic from usafacts.org?

Yes.

Page 14 of their 58 page “USAFacts Summary 2017″.

They pull all the data from government sources, and cite all sources extensively.

 
Comment by MightyMike
2017-05-25 11:22:39

Do you have a link for that? I’d love to see if they include programs for senior citizens.

 
Comment by Rental Watch
2017-05-25 11:31:26

It must be more successful and less wasteful than our wars against Iraq and Afghanistan.

You’ve set the bar really low and are deflecting.

The most wasteful government program in history was better than the war in Iraq.

It doesn’t mean it was a good idea.

 
Comment by Rental Watch
2017-05-25 11:43:02

usafacts.org

There are headings at the top.

Click on “Reports”
Then “Summary 2017″ on the dropdown.

If you want to seek greater levels of detail, the section in question is:

Promote the General Welfare=>Standard of Living and Aid to the Disadvantaged=>Cash and Non-Cash Programs to Aid Disadvantaged.

The most costly programs they call out are:

Child Tax Credit
EITC
SSI
Housing Assistance
Medicaid/Medical Assistance
Pell Grants
SNAP
Unemployment

I don’t think any of these are geared specifically for seniors.

SSI provides some help for seniors (but also disabled, etc.), but that category is less than 15% of the whole.

In other words, the increase in spending is not tied to changing demographics.

 
Comment by MightyMike
2017-05-25 15:20:18

You’ve set the bar really low and are deflecting.

I didn’t deflect. I made a related point. You know that the war on Iraq was a trillion dollar waste. Yet when you want to discuss wasteful spending the example that comes to mind is the spending that helps a poor woman (in a big faraway city) feed her kids, not the spending that increases the profits of large corporations.

 
Comment by MightyMike
2017-05-25 16:28:19

Regarding all of those programs, Medicaid is probably the one that has grown the most in dollar terms. That’s no surprise. It’s well known that expanding Medicaid is one of the ways that Obamacare expanded coverage.

In any other developed country health like Canada or the UK, health care spending wouldn’t be on a list of programs for the disadvantaged. It’s just a service provided to all citizens.

Also, around a quarter of all Medicaid spending goes to senior citizens and 11% of SNAP recipients are seniors.

 
Comment by Rental Watch
2017-05-25 16:31:44

The war in Iraq was stupid…I said so at the time, and I’ll say it again. A complete and absurd waste of resources and lives.

We are talking about a forward-looking budget–just because we wasted a Trillion dollars on a stupid war doesn’t justify further waste.

The example I gave was simply to note the absurdity of politicians that bring out individual sob stories to justify policy.

With demographics as they are, difficult decisions need to be made going with respect to budgeting. Efficacy of spending should be right at the top of the list.

We have expanded the annual expenditures on our “war on poverty” programs by $500B since 1980 beyond the increase that would have been simply due to larger population, and these increased costs look to be on track to be spent forever–and would be expanded even further if the Democrats had their way.

That’s a Trillion dollars every 2 years more than we were spending in 1980.

Yet poverty rates are not declining.

It seems that since we are spending an extra $500B per year with no positive impact on poverty levels, we should take a really hard look at this spending to figure out if we can do something better/different with the money.

Maybe, just maybe, we should give some resources and flexibility to local governments to experiment with different ideas. What works in Minneapolis might not work in Los Angeles.

I heard of a (private) program in SF where the homeless are given brooms/mops, cleaning supplies to clean up the streets. If they work, they get paid (in gift cards). People help counsel them, they get a feeling of worth, with the ultimate goal of getting them off the street. And as an added bonus, the streets smell slightly less like urine.

I don’t know if the program has been going on for long enough to see meaningful results, but one of the folks involved was able to give an example of one of these participants who now has a place to live and an actual job.

Long Beach has lowered it’s homeless population substantially the last couple of years through outreach and the involvement of community members.

This kind of stuff needs to be done at the local level with the involvement of the community, NOT simply by throwing Federal taxpayer money at the problem.

 
Comment by MightyMike
2017-05-25 16:54:36

Regarding the poverty rate, you may have missed a footnote on page 37 of that USAFacts report:

The Official Poverty Measure (OPM) shown here is used to determine eligibility for government programs. It excludes many government transfers in calculating income for individuals.

It doesn’t make any sense that the amount of money spent on anti-poverty programs would be tripled without any poverty being alleviated. Though the Medicaid expansion did help a lot of people above the poverty line.

When it comes to most issues having to do with poverty, there isn’t that much difference between different states really. A number of those programs that you listed, such as SNAP, unemployment insurance and Medicaid are already joint state/federal programs. Shifting more responsibility to the states would just reduce the benefits available to poor people in Republican states.

 
Comment by Rental Watch
2017-05-25 17:08:54

So, we have the same number of poor, and we are spending more and more on each person? Where does that end exactly?

Anti-poverty programs should be geared toward lifting people out of poverty (exclusive of government transfers) at least as much as alleviating suffering.

In medical terms, we should focus more on cures than treatments.

We should do more teaching of how to fish, and less giving away of fish.

As a taxpayer in a blue state, I would prefer less spending at the federal level (even knowing that it likely means more at the local level to pick up the slack). It’s simply a more efficient use of capital if decisions on how to spend resources are made closer to home.

If the “cost” of that change is that red states have to either spend more of their own money, or face a voter revolt, or provide less of a safety net for their constituents? Fine. Politicians love getting re-elected. Good luck to them if they turn a blind eye.

 
Comment by MightyMike
2017-05-25 17:37:33

So, we have the same number of poor, and we are spending more and more on each person? Where does that end exactly?

Clearly that’s not the case. The US population has grown by more than 40% since 1980.

As I stated above, some of the increase in spending has gone to people above the poverty line. That includes the Medicaid expansion and the increased SNAP eligibility. The latter was the result of policy changes made by both federal and state governments during the Bush and Obama administrations. Also, as I stated, a noteworthy portion of that increase also comes from the aging of the population.

We should do more teaching of how to fish, and less giving away of fish.

This one is a lovely sentiment. A large portion of all people of all people who receive SNAP and Medicaid are either disabled, elderly or already employed. For the group who are employed, the problem is that their jobs don’t pay much. A small number can be helped to get better jobs, but a small number. Since there are many millions of jobs that pay very little, there will always be millions of Americans who work full time and are poor nevertheless.

Going back to that list, “more teaching of how to fish” could mean more Pell grants.

It’s simply a more efficient use of capital if decisions on how to spend resources are made closer to home.

This is an assertion that sounds like a belief. I doubt that there’s much evidence to support it.

 
 
 
 
Comment by taxpayer
2017-05-24 10:11:42

kewl - chop it all exceptin maybe Oxide

everyone will die

gop knee knocking , hiding under their desks

Comment by Professor Bear
2017-05-25 06:49:39

Only your close pals get a spot on Uncle Sam’s version of Noah’s Ark, and the rest drown, except for Social Security recipients and friends of defense-related departments (whose coffers swell).

Nice vision. Have you considered a run for Congress?

 
 
Comment by butters
2017-05-24 10:35:10

End result, programs eliminated = 0

Comment by Don!
2017-05-24 13:43:39

They don’t even fake it anymore. Tax cuts for us, more disability for you.

 
 
Comment by palmetto
2017-05-24 14:55:39

Those single family housing loans from the USDA hafta go. We have two or three entire entire sprawling subdivisions of those a couple of towns over. They replaced the orange groves.

Comment by Blue Skye
2017-05-24 16:41:21

Apparently the USDA is a contradiction in itself.

 
Comment by MightyMike
2017-05-24 17:06:47

A lot of the OJ in the supermarkets comes from Brazil. So there’s a globalist angle to that story too.

Comment by redmondjp
2017-05-24 22:23:41

“The Dukes are going to corner the entire frozen orange juice market!”

(from the movie Trading Places - great movie if you’ve never seen it)

(Comments wont nest below this level)
 
 
 
 
Comment by PitchforkPurveyor
2017-05-24 08:58:17

“That’s what Canadian banks and insurers call the mortgage merchants who get caught submitting fraudulent loan documents.”

Fraud is the main ingredient in all bubbles, real estate and otherwise. Somebody posted a link where subprime auto lenders only verified income on 8% of loan applicants. And people wonder why auto prices are out of sight? Nothing short of perp walks will change things.

Comment by taxpayer
2017-05-24 12:01:27

boots- used autos are falling so fast I keep upping the year of the used car I’ll buy.

Comment by Puggs
2017-05-24 14:25:27

Not yet in our corner of the world. Prices still too high.

Comment by In Colorado
2017-05-25 03:23:59

And like last time, once new car sales crater, used car prices will rise (due to fewer trade ins)

(Comments wont nest below this level)
Comment by Jingle Male
2017-05-25 05:08:53

Used car prices never went up, they just fell slower!

 
Comment by In Colorado
2017-05-25 05:32:26

I remember them rising for a short while, because they were in demand and the supply was low (due to fewer trade ins). I even recall thinking “this is stupid, you can get a new one, with a full warranty, for just a few thousand more”. That blip was short lived.

But used prices have been slow to drop. My car is 4 years old, and I’ve seen similar ones on cars.com, with asking prices that are 70% of what I paid for it when it was new.

 
Comment by Bradford99
2017-05-25 06:42:53

I think you’re mistaken. This time, the auto market will be affected by 2 main factors. 1. The record breaking growth of the past few years, in new car sales, is over. It’s already happening. 2. There are a bajillion cars coming off lease between now and 2019. They will glut the used market. No shortage of new or used.

New and used cars will fall. If you want to track something, check the nada value for a 2014 Hyundai Genesis. It’s falling 4% per month each month! The value fell 12% since 1/1/17. That is not normal

 
Comment by taxpayer
2017-05-25 07:28:49

yep, I started looking 2013, then 14, now 15
I only drive 4k a year so new is stupid

 
Comment by In Colorado
2017-05-25 07:46:08

It’s possible that this time it will be different. But it’s also possible that some people will keep their leased cars, as it will be cheaper to buy it at the end of the lease than to replace it with a new one.

Time will tell.

 
Comment by Puggs
2017-05-25 08:54:49

I see the argument about bazillions of cars coming off lease. However, what are all those people going to drive if they all turn in their cars? Get into another new lease or buy the car they were leasing?? It’s not going to leave a huge swath of idle cars like most are thinking. Unless everyone starts riding unicycles.

 
Comment by Puggs
2017-05-25 08:56:55

My price point is around 10K. Everything is still OVERPRICED.

 
Comment by Rental Watch
2017-05-25 09:27:07

I only drive 4k a year so new is stupid

Me too (low mileage). My philosophy is a bit different…I buy new so I can have something nice to drive, but then drive it into the ground, until I simply can’t take it anymore, and buy new again.

I hate the auto buying process, so I want to do it as infrequently as possible.

My current ride is a 2010 model. I figure I have at least another 7, potentially 10+ more years before I get the itch to buy another car. And at that point, if we have self-driving fleets of Uber/Lyft/Waymo’s out there, perhaps we’ll go to a one-car household.

 
 
 
 
 
Comment by Apartment 401
2017-05-24 11:24:02

Chase Bank emailed me an offer for $595 cash back if I take out a mortgage with them.

Comment by oxide
2017-05-24 11:45:06

Damn, they must think those Millenials can be bought for cheap.

And how much you want to bet that the “cash back” is really a pre-paid Visa card or similar? So Visa gets a 5% kickback, for “the homeland security of the children,” of course.

I haven’t seen actual cash in years. As a new year’s resolution, I tried to use cash only but wow it was inconvenient. I need to cut my incidental spending!

Comment by Mr. Banker
2017-05-25 06:16:36

“Damn, they must think those Millenials can be bought for cheap.”

Dumb ‘em down, and profit.

 
 
 
Comment by phony scandals
2017-05-24 11:40:00

Highest paid baseball players the year you were born

By John-Henry Perera, Chron.com / Houston Chronicle Updated 10:10 am, Sunday, May 21, 2017

http://www.chron.com/sports/article/Highest-paid-baseball-players-the-year-you-were-11149993.php

Comment by AbsoluteBeginner
Comment by phony scandals
2017-05-24 17:39:31

Hands down “The Greatest Sports Deal Of All Time”

The NBA Finally Puts An End To The Greatest Sports Deal Of All Time

JAN 7, 2014 @ 10:59 AM

Donald Schupak, the Silnas had, since 1976, received a portion of the NBA’s television rights fees which added up to an estimated $300 million. The NBA has long wanted to somehow end the Silnas sweet deal. And it looks like, with an upfront payment of a cool $500 million or so, the NBA will finally get its wish.

https://www.forbes.com/sites/monteburke/2014/01/07/the-nba-finally-puts-an-end-to-the-greatest-sports-deal-of-all-time/

 
Comment by junior_kai
2017-05-24 19:16:48

I’m very much enjoying the destruction of ESPN. Losing an average of 10K subscribers per DAY this year, and bleeding 200MM cash every year. Ouch! But keep pushing caitlyn as a hero, see how that works out - nobody gives their daughter that name anymore.

Comment by Mr. Banker
2017-05-25 06:19:44

“… nobody gives their daughter that name anymore.”

No, they give it to their sons.

Bahahahahahahahahahahahahaha …

(Comments wont nest below this level)
 
 
 
 
Comment by snake charmer
2017-05-24 12:38:39

“The failure to stop such practices is exposing cracks in Canada’s vaunted regulatory structure, drawing parallels to the U.S. a decade ago.”
__________________________/

Who vaunted it other than people who were self-interested in the rules being bent or ignored? Canada decided to monetize its sane and stable reputation, but that only works once.

 
Comment by taxpayer
2017-05-24 13:38:42

re-up for 30 yrs as a debt slave for $10-20
K of mort sck?
https://finance.yahoo.com/news/big-drop-mortgage-rates-juices-110014386.html

Comment by Rental Watch
2017-05-24 15:03:11

If I could teach people one thing about a mortgage, and one thing only, it’s that the 30-year amortization schedule is a MAXIMUM length of time.

And so, if you can lower your interest rate by by refinancing into a new 30-year loan, you can always choose to pay it off over the same timeframe as your old loan (assuming the cost to refinance is minimal).

Except you will pay less than your old loan.

Example: You had a $100k, 5% mortgage, and have been paying on it for 5 years. Your payment is $536.82, and after 5 years of such payments, you will have $91,829 remaining.

If you then refinance that into a 4% fresh 30-year mortgage, you can either pay the prescribed payment of $438.41 per month, and pay it off in 30 (35 years from the original loan), or you can choose to pay an extra $46.30 per month (for a total of $484.71), and be done on the original schedule.

You save about $50 per month of interest…and get paid off on the same timeframe.

Or, if you want to keep paying the same amount, you can accelerate the repayment by almost 4 years.

Refinancing into a lower rate is almost always a good idea, if the cost to refi is minimal.

Comment by Blue Skye
2017-05-24 15:19:52

What should I do if I don’t have a mortgage?

Comment by Puggs
2017-05-24 17:37:49

Add to that ever increasing pile of cash!!!

I have so much money left over at the end of the month after NOT paying a mortgage that I’m running out of places to throw it.

(Comments wont nest below this level)
 
Comment by scdave
2017-05-24 17:45:58

What should I do if I don’t have a mortgage ??

Nothing. You are in your sweet spot. No mortgage and nothing to “fear”.

(Comments wont nest below this level)
Comment by Blue Skye
2017-05-24 18:40:52

Embracing slavery to debt are you?

 
Comment by redmondjp
2017-05-24 22:26:17

Nothing? You still have to pay your annual rent payment to the county . . . forever. For my little shack, that’s around $400 per month and rising.

 
Comment by In Colorado
2017-05-25 03:54:15

I just don’t get why taxpayers in other states don’t revolt at the ballot box. They just grab their ankles, smile and say stupid things like “what are you going to do?”

 
Comment by In Colorado
2017-05-25 07:53:36

I’ve also heard people say “I love paying lots of taxes, because it means I’m making a lot of money.”

It also reminds me of a time not so long ago when gas was over $4. As I pulled in to fill the tank a dude I know will filling up his Suburban and the meter was well past $100, I light heartedly said “ouch” and his response was “it’s no big deal.” Implying that he was a big shot and could easily afford it.

 
Comment by MightyMike
2017-05-25 08:57:24

It could be that he just lives near his job.

 
Comment by MightyMike
2017-05-25 09:00:03

I just don’t get why taxpayers in other states don’t revolt at the ballot box.

That’s the story of California’s Proposition 13. It didn’t work out too well.

 
Comment by Puggs
2017-05-25 09:01:51

These are people who have stock in Vaseline.

 
Comment by Rental Watch
2017-05-25 09:28:44

it’s no big deal.

Households are spending less and less on gas as a percentage of income over time…so this person’s view is becoming more and more prevalent.

 
Comment by Puggs
2017-05-25 09:51:32

“I just don’t get why taxpayers in other states don’t revolt at the ballot box.”

We try. It’s all the other goobs who want to keep spending (bonds) money on School athletic field upgrades, co

Grrrrrr. At this rate in 10 years my county rent payment will be just as much as my former mortgage!

 
Comment by DF
2017-05-25 11:10:18

$100/fillup is a lot, but in the big picture, it’s not that burdensome, especially if you could afford a new Suburban (they’re like what, $50k-$80k?) in the first place.

I can even remember being in college back around 2002 and not really financially hurting from my car’s 12-13mpg because a) I didn’t drive it much; and b) gas was something like $1/gallon.

I also remember a few years ago being at the Chevy dealer getting some part for my car and hearing this couple talking about how they didn’t drive their lifted Silverado much because they couldn’t really afford the gas for it.

 
Comment by In Colorado
2017-05-25 13:07:52

That’s the story of California’s Proposition 13. It didn’t work out too well.

That’s because they did it wrong.

 
 
Comment by Mr. Banker
2017-05-25 05:38:09

“What should I do if I don’t have a mortgage?”

Rush down to the bank and load up on one. Don’t allow your equity to rot away, cash all of it out ASAP!

YOLO! Ask for the YOLO loan and receive a free cup of coffee!*

* coffee refills may entail an additional nominal charge.

(Comments wont nest below this level)
 
Comment by Professor Bear
2017-05-25 06:55:47

Help people with mortgages pay for their houses through tax breaks, federally subsidized insurance on supersized loans, and bailouts as needed…

(Comments wont nest below this level)
 
 
Comment by FTHBwannabe
2017-05-24 17:18:17

Then, why don’t they refinance into a 25-year fixed conventional loan and get even lower rate? Why 30 year again? Of course, we cannot tell solely by this number, but if more than the usual number of people are responding to a minor change in the interest rate, it may indicate certain financial distress that American homeowners are experiencing.

Comment by Rental Watch
2017-05-24 17:52:03

Then, why don’t they refinance into a 25-year fixed conventional loan and get even lower rate? Why 30 year again?

Flexibility.

You aren’t going to get much of an interest rate break between a 30-year and a 25-year loan, but if you do a 25-year, you won’t have the flexibility to pay less if for some reason it suits you.

I’m about 5-years into my 30-year mortgage…and I asked a while back what my rate would drop to if I refinanced to a 15-year amortizing loan. It was only a move of about 3/8 of a point…not enough to warrant the significant increase in required payment. I can always pay the mortgage down on a 15-year schedule if I want.

Frankly, I don’t think there is a high level of financial stress out there…Freddie puts up a refinance report, that is still showing a relatively large number of people voluntarily refinancing into a 15-year loan from 30-years. That’s good.

When I read articles like the one posted, I always laugh because there is no way of knowing what is causing an uptick up or down in refinance activity. It’s probably just noise in the data.

(Comments wont nest below this level)
Comment by FTHBwannabe
2017-05-24 18:18:59

Hmmm, that is comforting. Yeah, I agree that the number does not mean much, especially when the volume is small. So, this time, we may expect slow and sticky decline of home prices when the money becomes less easy unless there is an innovation that opens up a big investment opportunity.

 
Comment by Blue Skye
2017-05-24 18:45:14

“I don’t think there is a high level of financial stress out there…”

Because you do not see the bubble, you do not see the fragility. Stress is a mood. Fragility is material even if not recognized. When this housing bubble bursts, you will see plenty of stress.

 
Comment by rms
2017-05-26 07:28:38

“I’m about 5-years into my 30-year mortgage…”

The closing costs are almost paid for… couple more years.

 
 
 
 
 
Comment by new attitude
2017-05-24 14:51:43

Shiller said today that stocks could go up 50% to get back to valuations of 1999.

Place your bets, with the Fed or against.

I think I’ll start adding defense stocks and water utils each mo, trickle in.

Comment by azdude
2017-05-24 16:35:41

DUDE is a paid mouthpiece. These folks are career white collar criminals.

 
 
Comment by Neuromance
2017-05-24 16:00:28

Toronto Homeowners Are Suddenly in a Rush to Sell
by Kim Chipman
Bloomberg
May 24, 2017, 11:07 AM EDT

Home Capital may be achieving what so many policy measures failed to do: cool down a housing market that soared as much as 33 percent in March from a year earlier.

Early data from the Toronto Real Estate Board confirms the shift in sentiment. Listings soared 47 percent in the first two weeks of the month from the same period a year earlier, while unit sales dropped 16 percent. Full-month data will be released in early June.

Recent competition for homes had some prospective buyers so desperate they were buying properties “sight unseen,” said Shawn Zigelstein, a Toronto-area agent with Royal LePage Your Community Realty. Others made offers without an inspection.

The average selling price in the Toronto area was C$890,284 ($658,000) through May 14, up 17 percent from a year earlier …

https://www.bloomberg.com/news/articles/2017-05-24/toronto-bidding-wars-turn-to-homebuyers-remorse-as-market-slows

 
Comment by Raymond K Hessel
2017-05-24 16:18:50

Oh dear. This looks suspiciously like an incipient bursting housing bubble.

http://wolfstreet.com/2017/05/24/toronto-house-price-bubble-pops/

 
Comment by azdude
2017-05-24 16:34:41

CAPITULATE AND BUY! THE BOYS ON WALL STREET WONT LET YOU MAKE AND MONEY SHORTINGING. gO LONG!

 
Comment by Raymond K Hessel
2017-05-24 16:35:03

Oh dear. FBs who bought in San Francisco last month are already underwater.

https://www.bloomberg.com/news/articles/2017-05-24/san-francisco-goes-from-first-to-worst-in-u-s-home-price-gauge

 
Comment by Raymond K Hessel
2017-05-24 16:36:13

Yet the brokers, whose names are now on databases maintained by lenders and mortgage insurers, can still win business since they haven’t been prosecuted for fraud.

When did Eric Holder become Canada’s new AG?

 
Comment by AbsoluteBeginner
Comment by Puggs
2017-05-24 17:39:02

Yup!!

 
 
Comment by Raymond K Hessel
2017-05-24 18:47:36

No country ever “deflates” its housing bubbles. Market forces and true price discovery handle that task.

https://www.bloomberg.com/view/articles/2017-05-23/what-canada-should-do-about-its-housing-bubble

Comment by azdude
2017-05-25 04:42:50

they encourage overpriced housing until sh@t hits the fan.

 
 
Comment by Raymond K Hessel
Comment by Albuquerquedan
2017-05-25 07:17:49

Really is that why China’s stock exchanges were up so much today?

 
 
Comment by Raymond K Hessel
2017-05-25 05:35:18

Couples who lack the commitment to marry are nonetheless buying houses together. Seems like a very solid long-term financial proposition to me.

/sarc

https://moneyish.com/heart/heres-the-latest-proof-that-marriage-is-dying/?mod=mktw

Comment by oxide
2017-05-25 09:52:28

That’s part of what started my rings-and-papers meme. Idiot Millenial women. If the guy doesn’t propose to you, then you should propose to the guy. If he still says no, then that’s proof that he doesn’t care enough about you to risk buying houses and having kids with. What do these snowflakes think is going to happen in 10-15 years?

Comment by In Colorado
2017-05-25 13:01:17

If you propose to him, he’ll probably break up with you.

 
 
 
Comment by Professor Bear
2017-05-25 06:41:17

“Struggling to control a housing bubble, the city government announced measures on March 26 that effectively closed loopholes that had allowed new commercial buildings to be turned into homes and sold to individual buyers.”

So if I am a Chinese real estate developer, then I can wave a magic wand and instantly transform commercial buildings into houses?

“The new measures have purchasers of such homes scrambling for a way out, Caixin reports. In desperation, dozens of buyers trapped in other commercial housing developments appealed to the city government for help The restrictions have also sent the commercial real-estate market in China’s biggest cities into a tailspin, leaving genuine sellers and speculators alike high and dry, and forcing developers to change their business models.”

At least the high-and-dry trapped sellers are not underwater…so far as they can tell.

 
Comment by Professor Bear
2017-05-25 07:11:53

I smell government-insured mortgages behind this news. How else could it pencil out for Mr Banker to gamble on uncommitted couples?

Your federal tax dollars are encouraging people to live together in sin.

Here’s the latest proof that marriage is dying
The number of unmarried people buying homes together is on the rise
The key ring is the new wedding ring.
May 25, 2017

It used to be that you fell in love, got married, and then bought a home together. Now, many people are skipping the marriage part — and going right to buying a home together. The number of non-married people who got mortgages together rose from 20% last year to 22% this year, according to data on single-family homes released Thursday from real estate research firm ATTOM Data Solutions.

Comment by Albuquerquedan
2017-05-25 07:19:19

A least they will not have the expense of a divorce when they lose the house.

Comment by Professor Bear
2017-05-25 08:05:11

They may have other problems, though. Like this (unmarried) gay man I know, whose faithful partner of fifteen years recently passed. The house they lived in was in the decedent’s name, and somehow the survivor’s name did not get into a will before his partner’s untimely demise. Now the surviving partner faces the prospect of getting the home where he lives sold out from under him by his dead partner’s relatives.

Comment by MightyMike
2017-05-25 08:48:57

Did he die suddenly? If he was sick for a while, the surviving partner should have been preparing to move if possible.

(Comments wont nest below this level)
Comment by Professor Bear
2017-05-25 13:31:49

I forgot that people who are preoccupied with caring for a dying loved one are supposed to have perfect foresight in their future household planning efforts, at least according to economic theory.

 
Comment by Tarara Boomdea
2017-05-25 13:58:35

You’re right. Toward the end, you’re just trying to get through each day.

 
Comment by MightyMike
2017-05-25 14:58:36

I suppose you’re right. The planning should have happened earlier.

 
 
 
 
Comment by taxpayer
2017-05-25 08:09:58

smelly mel watt wanted the folk on welfare to get morts

we have all and more of the CRA type programs that got the bubble going.
Not as big,but just as bad

Comment by Professor Bear
2017-05-25 08:41:39

One thing I don’t get about the Democratic Party philosophy: Why do they like programs that lead their favored constituents (e.g. chosen minority group members) down the road to financial ruin?

Comment by taxpayer
2017-05-25 09:55:44

simple , 87% of welfare warriors vote dem

govnics in dc area seem unconcerned about swamp drainage

(Comments wont nest below this level)
 
 
 
 
Comment by azdude
2017-05-25 09:12:54

all the doubters of the stawk market scheme need to pull your money out from under the mattress and give it to wall street so they can buy another home in the hamptons.

Comment by Gordon Gekko
2017-05-25 12:43:30

scheme? You guys are so cute sometimes.

 
Comment by Financial Moralizer
2017-05-25 13:40:59

Any more bears jumping out of buildings yet?

Comment by azdude
2017-05-25 14:02:29

BUY whAT u HaTE the LeAst!

Comment by Financial Moralizer
2017-05-25 15:31:34

When the guy running zerohedge capitulates and says he went long stocks, the top is in. :)

(Comments wont nest below this level)
 
 
 
 
Comment by azdude
Comment by Tarara Boomdea
2017-05-25 10:35:42

Years ago I was at the Aladdin one evening. That girl reminds me of the women we saw at one of the bars there. Whatever, I was just a little surprised because there were so many.

The name changed later, and at a certain point the new sign construction was good for a laugh.
Planet Ho

 
Comment by new attitude
2017-05-25 11:34:04

AZ - you are your music

 
 
Comment by azdude
2017-05-25 13:36:29

The schemers want your money !

 
Comment by Raymond K Hessel
Comment by azdude
2017-05-25 14:54:48

The FED will blow air back in the bubble!

 
 
Comment by Raymond K Hessel
 
Comment by Raymond K Hessel
2017-05-25 14:01:57
 
Comment by Raymond K Hessel
2017-05-25 14:59:54

The word is out: if you want to sell your “luxury house” (aren’t they all?) in Manhattan, you have to DROP THE PRICE.

https://www.bloomberg.com/news/articles/2017-05-25/manhattan-luxury-home-sellers-getting-the-message-cut-the-price

 
Name (required)
E-mail (required - never shown publicly)
URI
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post