The Ongoing Positive Economic Cycle Raises The Question
A report from the New York Post. “Is the private sector allowed to do anything anymore? For nearly 80 years, Washington has subsidized homeownership — creating massive distortions both in house prices and in what neighborhoods look like. Now the feds will subsidize rental homes as well — expanding government control over even more of the economy. Freddie Mac wants to provide $1 billion to medium-size landlords for rental housing, the New York Times reports. This just a few months after Fannie issued its own $1 billion guarantee for Blackstone, a huge rental property owner. The big picture is the definition of a reasonably functioning free-market economy: If you want to buy a house, you should be able to find someone willing to lend you the money to do so, provided you have the resources to repay the loan.”
“If you want to rent an apartment, you should be able to find someone to rent you an apartment, whether you can afford modest rent or high rent. Likewise, the apartment owner should be able to find a lender, based on your rental income. The government should target subsidies only to people who can’t work because of disability or age, and give temporary help to others — not declare the entire market broken and take over.”
The American Statesman in Texas. “In a good sign for Austin apartment dwellers, the metro area’s average apartment rental rates slowed their swift rise in the first half of the year as supply began to catch up with demand, industry experts say. The overall occupancy rate dipped slightly, averaging 93.3 percent across the metro. Over the past six months, 4,136 apartment units came online, and a net of almost 2,400 units were leased, which caused the decline in occupancy, said Charles Heimsath’s Capitol Market Research, which tracks the apartment market.”
“RealPage, a rental housing technology and analytics firm based in Richardson, shows that ongoing construction has slowed to about 15,200 units, down from a recent high of 19,000 to 20,000 units. But the oncoming additions still translate to aggressive growth of 6.6 percent in Austin’s supply of new apartments, said Greg Willett, chief economist for RealPage. Sam Radbil, Abodo’s senior communications manager said that the region’s slower job growth ‘could keep rents in check, as developers and property managers attempt to keep vacancies at a minimum. No one wants an empty luxury apartment building,’ Radbil said.”
From San Francisco Curbed in California. “Rental site Zumper released some figures this week comparing Bay Area cities in terms of median rents compared to one another and to the same time last year. The results—rents are down significantly year over year almost everywhere. Redwood City is down 10.5 percent ($2,970/month). Palo Alto ($2,720/month) is down 1.8 percent year over year. Moving up the peninsula, South San Francisco and Burlingame are both down as well ($2,410/month, minus 10.7 percent and $2,350/month, minus 13.9 percent respectively).”
The Longmont Times Call in Colorado. “Construction has stopped suddenly on an apartment complex east of Longmont after a change in contractors and revisions to the foundation plans. Work on Springs at Sandstone Ranch, a 240-unit development, has ceased for the time being. A visit to the site showed three partially-constructed buildings. The walls on one were lilting precariously, and weeds had grown up around the foundation. Workers at a nearby project couldn’t recall how long the site had been dormant. A security guard at the property declined to answer questions.”
“The developer of the project is Wisconsin-based Continental Properties. Officials for the company did not respond to multiple requests for comment. It’s unusual to see projects halted for foundation issues, said Longmont developer Keith Burden. ‘I can’t recall a time I’ve ever seen that,’ he said.”
The Star Tribune in Minnesota. “A Hennepin County judge has appointed an administrator to oversee 17 apartment complexes owned by a Minneapolis landlord under fire by tenants and city regulatory authorities. The receivership covers more than a quarter of Stephen Frenz’s properties in Minneapolis and includes 436 apartment units. The order was issued by Hennepin County District Judge Mel Dickstein, after a mortgage lender initiated a rare foreclosure action, largely over allegations that Frenz failed to disclose that Spiros Zorbalas, who was banned by the city from owning apartment properties in Minneapolis, had a financial interest in Frenz’s buildings.”
“A foreclosure over misrepresentation of ownership ‘is very unusual,’ said Larry McDonough a Dorsey & Whitney attorney who wrote the law creating housing courts in Hennepin and Ramsey counties. ‘Foreclosures are almost always about nonpayments’. Frenz’s company, National Housing Fund, took out a $26.5 million loan on the properties in 2014 and did not make a March payment, putting him in default, but the lenders focused on the allegation that Frenz reneged on a pledge to not make Zorbalas an owner.”
“Nathan Morda, who rents a studio apartment from Frenz in a building facing foreclosure, said he was optimistic that a new receiver could lead to repairs. He said his apartment has mice and insect infestations, mold and plumbing problems and is not warm enough in the wintertime. ‘These buildings need a thorough upgrade,’ he said.”
The Banker and Tradesman in Massachusetts. “Rising construction costs and a slowdown in the luxury rental market may accomplish what neighborhood opposition could not: put the brakes on a 44-story apartment tower in Boston’s West End. Developer Equity Residential is taking a wait-and-see attitude on development sites in coastal markets, CEO David Neithercut said.”
“‘We’ve got some sites that we currently have in L.A. and in the Bay Area and in Boston that we could do something on but we’re not going to pursue those very aggressively at the current time,’ Neithercut told analysts this week during a conference call to discuss the company’s second-quarter quarter earnings. ‘The teams continue to work on them, but we’ll just sort of see how things play out.’”
“Equity Residential owns 23 apartment communities in Greater Boston totaling approximately 6,103 units with average rents of $2,941 and an occupancy rate of 95.7 percent as of June 30. Executives have said they are monitoring potential headwinds in the local multifamily market because of rapid development in Boston and Cambridge, with three-quarters of the new supply competing against their existing properties.”
From Bisnow on Massachusetts. “A leading Boston developer says a limited supply of high-end condos in the market is behind his firm’s push for condo conversions at its latest residential development. HYM Investment Group’s decision to convert 118 apartments into 55 condominiums at its Bulfinch Crossing residential tower comes as thousands of market rate rentals are poised to hit the market and several developers shift to offer for-sale units.”
“About 12,000 market-rate residential units are expected to hit the greater Boston market in 2017, according to the Q1 2017 NAI Hunneman Metro Boston Multifamily report. The current 2.5% vacancy rate is still below the market’s average over the last five years, and the number is only expected to moderately increase with all the new supply. The ongoing positive economic cycle still raises the question of whether the city is post-peak pricing and heading for a crash.”
“Boston’s diverse economic portfolio and attractiveness to foreign investment are constantly cited as to why the city is in a great position, but, with eight years since the last recession, it seems logical the city is overdue for a crash even if Boston’s condo market is a new revenue stream. ‘I’m a developer, so we see nothing but blue skies and sun,’ HYM Investment Group founding partner and managing director Thomas O’Brien joked. ‘There is a cycle of things, and we’re in a part of the cycle where we have to be mindful of a recession looming.’”
‘Frenz’s company, National Housing Fund, took out a $26.5 million loan on the properties in 2014 and did not make a March payment, putting him in default, but the lenders focused on the allegation that Frenz reneged on a pledge to not make Zorbalas an owner.’
Yeah, let’s focus on something other than he hasn’t made a payment.
‘Freddie Mac wants to provide $1 billion to medium-size landlords for rental housing, the New York Times reports. This just a few months after Fannie issued its own $1 billion guarantee for Blackstone, a huge rental property owner…If you want to buy a house, you should be able to find someone willing to lend you the money to do so, provided you have the resources to repay the loan’
Note to the author: the GSE’s and HUD have shoveled around a trillion Yellen bucks at the apartment biz in the last few years alone.
‘I’m a developer, so we see nothing but blue skies and sun,’ HYM Investment Group founding partner and managing director Thomas O’Brien joked.’
These clowns don’t need to be incentivized to over do it. But that’s what happened.
Not unexpected.
The goal here, of course, is to sink the middle class.
Keep the price tags of home ownership and rentals out of the reach of the middle class, and you’ve got it made. If you’re a socialist.
A small upper class and a massive lower class.
That’s the goal of socialists. Reduce the standard of living for most people so you can lord over them.
How better to realize than to institutionalize “I have mine, so screw you.”
Funny, that. It just like what liberals and progressives accuse big business of doing.
“That’s the goal of socialists. Reduce the standard of living for most people so you can lord over them.”
Socialists? You keep using that word. I do not think it means what you think it means.
Socialists ??
Anybody that does not see it exactly the right wing way.
@scdave
Macbeth has provided enough elaboration of his thoughts here to get a better hearing than this, even if he’s deliberately being provocative about terms.
What we have in this country is crony captialism and socialism for the rich, privatized gains with public losses. It’s not hard to link what’s wrong to either term.
Personally I’d prefer to make a distinction between sincere, moral Americans at both ends of the political spectrum and the elitist/globalist/warmongering set who dominate “both sides of the aisle” in our political and media institutions.
But (a) that point of view has been informed in part by things Macbeth himself has written in the past about ethics, morals, and courtesy, and (b) his main point here — that the reduction of American living standards is deliberate — stands. And is important, even if he tagged the responsible parties with a broad and messy brush. Let’s not lose the plot.
Well, I note that the “socialism” which you decry is persisting if not blossoming with Republicans in charge of the WH and Congress. I realize that Republican/Democrat labels have recently become fairly irrelevant.
Maybe it is high time for Democrats and Republicans to merge into the Lootercan party, staffed and operated by Goldman Sachs alumni.
According the Chomsky this single party is called the Business party, which has two factions, Democrats and Republicans.
Infinite money ——————> Infinite Debt
“‘Freddie Mac wants to provide $1 billion to medium-size landlords for rental housing, the New York Times reports. This just a few months after Fannie issued its own $1 billion guarantee for Blackstone, a huge rental property owner…”
There are no words… Why on earth would Blackstone, one of the largest private equity and hedge fund firms in the world, need a guarantee from Fannie? There is, perhaps, no finer example of privatize the profits, socialize the losses. This is an absolute outrage.
“There are no words …”
Wrong! The words are: Dumb ‘em down, and profit.
Dumb down the ignorant pukes to the point whereby they will accept ANYTHING that is done to them, then sit back and reap the profits.
Piece of cake. Thank you No Child Left Behind.
Bahahahahahahahahahahahahahahahahahahahahahahahaha.
“Why on earth would Blackstone, one of the largest private equity and hedge fund firms in the world, need a guarantee from Fannie?”
Need has nothing to do with it. This is a case of pigs taking full possession of their own feeding trough.
It would be fascinating to see who the decision makers were here.
“If you want to rent an apartment, you should be able to find someone to rent you an apartment, whether you can afford modest rent or high rent.
The author of this essay seems to think that “the market” will provide a full range of apartment options, from Grade A+ to Grade C. Does she even know that developers have built only luxury for the past 5-10 years?
Not that this excuses Fannie and Freddie. They should have limited their loans to affordable units, not some free-for all the chase profit on the taxpayer dime.
Austin, TX Housing Prices Crater 7% YOY
http://www.movoto.com/austin-tx/market-trends/
I found this interesting photo essay written by John Sanphillippo over on the New Geography website.
He makes some interesting points about how places change over time and the long term shifts in the economy and how they affect certain places.
If you are scouting out places for your own “Oil City” plan, then you’ll want to see the piece.
Enjoy
Postcards from the Zombie Apocalypse
http://www.newgeography.com/content/005701-postcards-from-zombie-apocalypse
“The future drivers of change will be the same as the previous century – only in reverse. The great industrial cities of the early twentieth century as well as the massive suburban megaplexes that came after them were only possible because of an underlying high tide of cheap abundant resources, easy financing, complex national infrastructure, and highly organized and cohesive organizational structures. Those are the elements of expansion.”
“But once the peak has been reached there’s a relentless contraction. The marginal return on investment goes negative as the cost of maintaining all the aging structures and wildly inefficient attenuated systems becomes overwhelming. The places that do best in a prolonged retreat from complexity are the ones with the greatest underlying local resource base and most cohesive social structures relative to their populations. The most complex places with the most critical dependencies will fail first as the tide recedes.”
The great industrial cities of the early twentieth century as well as the massive suburban megaplexes that came after them were only possible because of an underlying high tide of cheap abundant resources
Pretty sure commodities have been trending down. The new mantra in the oil industry is “lower forever”.
And the lack of easy financing moving forward (once it ends) will only make things better. The price of housing will go down.
Nice post Ol’Bubba. I will forward this to a few friends.
That vacant strip mall is foreboding.
With that kind of empty space between structures, I’m not sure I’d call these “suburbs.” They are exurbs, or even rural leapfrog towns.
I don’t know if this is true or not but it makes for a good read …
Whorehouse sues church over lightning strike.
https://www.tuscl.net/?page=post&id=21966
The article in the link was dated 2013.
It starts with “Joke I got in email…” and ends with this:
“…The crusty old judge read through the plaintiff’s complaint and the defendant’s reply, and at the opening hearing he commented, “I don’t know how the hell I’m going to decide this case, but it appears from the paperwork, that we now have a whorehouse owner who staunchly believes in the power of prayer, and an entire church congregation that thinks it’s all bullshit!”
Well, Mr. Banker, if it wasn’t a true story, then they couldn’t publish it on the internet, now could they?
‘put the brakes on a 44-story apartment tower in Boston’s West End. Developer Equity Residential is taking a wait-and-see attitude on development sites in coastal markets, CEO David Neithercut said.’
‘We’ve got some sites that we currently have in L.A. and in the Bay Area and in Boston that we could do something on but we’re not going to pursue those very aggressively at the current time’
I believe this is the biggest US landlord and they are out. These markets and Austin were the hottest - and they overshot. There’s a guy in the Austin report saying, “our market is at equilibrium.”
‘ongoing construction has slowed to about 15,200 units, down from a recent high of 19,000 to 20,000 units. But the oncoming additions still translate to aggressive growth of 6.6 percent in Austin’s supply of new apartments’
It’s gonna be another twitter. BTW, rents have been falling in all these places for a year, year and a half maybe. So when they say YOY, it’s crunch time:
‘rents are down significantly year over year almost everywhere. Redwood City is down 10.5 percent ($2,970/month). Palo Alto ($2,720/month) is down 1.8 percent year over year…South San Francisco and Burlingame are both down as well ($2,410/month, minus 10.7 percent and $2,350/month, minus 13.9 percent respectively’
How do those 5% cap rates look now?
Falling rental prices to dramatically lower and more affordable levels is the only way out of this disastrous economy. Especially in this areas you mention.
How do those 5% cap rates look now ??
They look more like 4% or 3% now. And, what’s the trend.
I seem to recall folks crowing about how smart Sam Zell was for selling suburban apartments to Starwood, but keeping the apartments in denser urban centers.
Yet the urban centers are where developers are adding numbers like 18% and 20% to their base (LA and San Diego, respectively)–and, unsurprisingly, rents are falling in these places where they are building a lot.
Yet at the same time, the national rent picture shows rents still going up, which must be because rents in non-urban centers continue to rise.
http://www.msn.com/en-us/money/markets/%E2%80%98honey-you%E2%80%99ve-been-scammed%E2%80%99-she-was-told-she-lost-her-home-of-30-years/ar-AAoULl5?li=BBnb4R7&ocid=mailsignout
So was the house paid off or was she a serial equity mortgager who was in trouble no matter what?
+++++
“I literally lost everything because of these people, and it’s breaking my heart,” said Barkley, a retired accountant. “I paid for it all myself, didn’t have a man to pay for it for me, and then some stranger gets to destroy it.”
The scam began in 2011 when Araya’s group started sending out mailers and put up Internet ads promising mortgage modifications under an Obama administration program meant to stem fallout from the housing crisis.
“‘I literally lost everything because of these people, and it’s breaking my heart,’ said Barkley, a retired accountant.”
A retired accountant. It figgers.
Burning, burning, burning stupidity.
“Sammy Araya and his Crib”
https://www.youtube.com/watch?v=jZxmLdDh2Tk
Hehe… be sure to see the comments!
The worst part of that is the hip-hop music in the background. From what I can tell, this guy is proud of using this scam for “the come-up.”
(”The come-up” is the hip-hop term for the act of starting from nothing on the streets to making it big. And whether or not the come-up is a legal come-up appears to be rather irrelevant.)
Gotta love his church motto, “Give ’til it hurts.” ROTFLMFAO!
I’ve been visiting this blog of some time, but haven’t commented till now. If I’ve learned anything from the blog, it’s that the pros of renting outweigh the cons.
it’s that the pros of renting outweigh the cons ??
That depends on a lot of factors. My last house I lived in for 36 years. Do you think I made a mistake buying instead of renting for those 36 years ?
Yep
LOL HA. I guess for you living in mom’s basement it makes no sense to buy.
Is this directed at me? If so, sorry to disappoint. I rent a very nice condo in a nice neighborhood, and my mom doesn’t even have a basement.
Is this directed at me ??
No. It was meant for Mafia blocks also know as HA (Housing Analysts) along with God only knows how many other handles he goes by. But if you follow the blog you can tell when it’s him because it’s the shame garbage that comes off his keyboard every single post.
Ha ha! OK.
Don’t mind Dave. He struggles with being honest.
And you need to get back onto your meds, HA.
It’s extremely rare to be able to live in one place that long anymore. My mother worked for the same company for 35 years, she was only able to do that by living in three different cities.The company she started with was bought by a larger company, located in a different city, then that company moved their corporate office to yet a another city. My wife and I have had to move three times, due to being laid off from jobs, and not being able to replace them in the same location. I would say the next generation will be even worse. If you live of the grid to some extent, or are lucky enough to remain employed in the same area, then yes, it’s better to own than rent.
It’s extremely rare to be able to live in one place that long anymore ??
I respectfully disagree.
“I respectfully disagree.”
Me too.
I’ve been at the same job for 20 years.
My wife has been in the same industry for 16+ (her last job she was at for 10 years, and she won’t be hurting for work here),
I live in a cul-de-sac of 6 homes that were built about 25 years ago.
3 of the 6 homes are owned by the original owners, one next to me the guy has lived in for 15+ years. We moved in 6 years ago, and the other guy is new, but has worked in the area for 10+ years.
Maybe I’m just not seeing the whole picture, but from where I sit, it’s not that rare to put down roots and stay in one place/area for a long time.
I think the right way to see it is that it used to be quite rare for people to move jobs every couple of years, and now that is becoming much more common, which is leading to people more frequently move.
That doesn’t mean that it’s rare to live in one area for a long time–it just means that it’s less common.
Even decades ago people with good careers didn’t generally stay in the same region for decades. My grandfather worked in middle management for a large company from the mid-40’s to the early 70’s and was transferred multiple times to different regions of the country.
I lost many friends during my childhood when dads were transferred to some other, distant region.
Lower Forever, it’s true that people relocated, but usually those transfers came with promotions, and the company would pay for the move or even arrange the move themselves. The promotion more than paid for the cost and inconvenience of relocation. But Bill’s transfers are due to layoffs — a very different scenario. My career has been the same way, but at least I was lucky enough to replace my job losses with slightly greater salaries. It’s also worse than it was 35 years ago because now, you need two incomes to support a household, which means both spouses need to move and find new jobs, even if only one is laid off.
And Bill is right, it will be far worse for future generations. They will have to move just to keep a paycheck, and be lucky to keep the same salary. So each move incurs a loss. I suppose the best that the Millenials can hope for is to gig-economy from their iPad, or live in a Tiny Home which they can truck all over if they need to.
This thread was about renting vs owning.
“This thread was about renting vs owning.”
I own my home outright. I have a daughter in college, and a son starting in another year. I could not afford to pay rent and the college bills simultaneously.
Buying house in 2017 is a different matter than 36 years ago.
Buying house in 2017 is a different matter than 36 years ago ??
Hmmm. I would have to agree with that Ben although I could not really afford my house when I bought it Based on my income.
Nobody else can afford it either which explains why demand cratered.
Remember….. You can ask$50k for your run down 10 year old Honda Civic but where is the buyer at that price?
So it is with all depreciating assets like houses.
When my parents bought their home 40+ years ago, they got a 3% down loan…and they borrowed the 3% from a family member.
And over the years, they paid off the mortgage, and now live without a mortgage.
I’ve actually been wondering about this for some time, Ben. Did people tend to take on huge monthly payments to own a home ~40 years ago? I’ve been lurking here for a while and I get the impression that the concept of taking on a mortgage payment that’s 50% of your monthly income is a new thing. My family currently rents, and for what we pay in rent, we’re priced out of our neighborhood if we tried to get a mortgage for the same amount to buy a place.
1981 $107,710
http://www.realestateabc.com/graphs/calmedian.htm
Check this graph out:
http://helena7×7.com/wp-content/uploads/2015/08/recessions-recoveries-bubbles-30-years-of-housing-market-cycles-in-san-francisco-marin8.jpg
You Have to Earn 172 Percent of the Median Income to Buy a Median House in Los Angeles
by Bianca Barragan Feb 16, 2016
https://la.curbed.com/2016/2/16/11028498/los-angeles-housing-affordability-2015
And that’s at 4% interest rates.
“Median house sales prices increased and the percentage of households able to afford a median priced house declined in Q1 2017 from Q1 2016 in almost every county in California except San Francisco, which stayed the same at 13%, the lowest affordability percentage in the state.”
https://www.paragon-re.com/trend/bay-area-housing-affordability
Did people tend to take on huge monthly payments to own a home ~40 years ago ??
I did. Not suggesting wrong or right move just telling you I did. I had confidence in my ability and commitment to make enough money to afford our house. It worked out well. But, Ben has a good point. Things are much different today then they were 36 years ago. At least in the expensive locations.
Wow those graphs are interesting. It looks as though in the US at large house prices would increase roughly with the rate of inflation, which makes sense, but in the more recent past they’ve been going crazy. I mean, the observation about the median income vs the median price seems pretty indicative, given that you’d expect the median income to afford the median-priced home.
My parents bought the house I grew up in in the mid 80’s and were paying something like 15% interest on a 15 year mortgage. They sold the place in early 2007 for 100k more than they bought it for. I remember my dad telling me that after the work he put in to keeping the place in decent shape, that he broke even overall. I thought it was an interesting observation. I can hardly imagine mortgages going for 15% today.
Speaking of the comparison to median home price to median incomes, what is the supposed economic justification for the disparity? From where I’m sitting, it appears to represent the hopes and dreams of “home owners” who are speculating (oh wait, I mean “investing”) in the real estate market hoping for a huge windfall profit.
the observation about the median income vs the median price seems pretty indicative, given that you’d expect the median income to afford the median-priced home
But if you stop and think about it, the situation is even worse than the numbers initially appear.
This is median household income. That used to mean the husband, one person, supporting the entire family. Now the wife usually works as well.
So the median incomes of two people working full time isn’t anywhere near enough to afford a median-priced home. Subtract one of these incomes as if we were back in the time when only one adult per household worked, and you see how much worse it really is.
I was up in Santa Cruz last week, AKA Tentless City. The number of homeless people who were sleeping out on the open ground was shocking. I went for an early morning scenic walk along the beach, the lingering memory of which will be of people sleeping right out on the sand. Another harrowing image which will long haunt me is of a young homeless man with a wild look in his eyes and torn pants jaywalking across the street at a brusque pace until stumbling directly in front of my rental car in fast-moving, heavy traffic. Luckily I have quick reflexes, as a driver with slower reactions could easily have run him over.
The stratospheric rise in California housing costs seems to come with ever increasing homelessness…go figure!
It’s the greatest fools, the biggest idiots, who set the prices. I don’t mean that these great fools are the SELLERS, no, I mean these great fools are THE BUYERS.
Idiot buyers who, in one way or another, get access to money. The money doesn’t have to be theirs (and most likely it isn’t), they only have to get access to it. Once they get access to the money - huge gobs of money - then the throw it at the market. And prices respond accordingly. And - presto! - wealth is thereby produced.
Dumb, stupid money appropriately applied = magic.
“Another harrowing image which will long haunt me is of a young homeless man with a wild look in his eyes and torn pants jaywalking across the street at a brusque pace until stumbling directly in front of my rental car in fast-moving, heavy traffic.”
This scam artist was hoping for an quick insurance claim.
Just call him, “Slippin’ Jimmy”
The stratospheric rise in California housing costs seems to come with ever increasing homelessness…go figure!
When the state is run by a corrupt political clique whose business model is graft, patronage, “redistribution of the wealth,” and enabling and encouraging social parasitism and votes-for-entitlements, no one should be surprised by “ever increasing homelessness” and vagrancy.
This is an anomally associated with the parabolic stage of price run-up in a mania of historic proportions. Before U.S. housing prices became extremely volatile around 1996, buying a home was a boring, if safe, means for families to build long-term savings. Thereafter it became a fast, wild ride to wealth or poverty depending on financial acumen, timing, location, and to a large degree, luck.
Buying housing was never a ‘means to build savings’ any more than buying a car or other depreciating asset builds savings, although it was sold to the public that way.
The only way to make the equation work is to buy some dilapidated, barely livable house and then repair it minimally. Bank all the cash saved by not renting. The problem with this solution is the judgements of others that are so often based on the way your house looks. In other words, the X-ers and Millenials have a much reduced standard of living for all intents and purposes. I lived in two houses without central heating and showers that barely worked. I had my kids shower at the gym. But, this is America and you at least can go to a nice gym- unlike some other countries. I have several degrees and I finally saved enough to start buying houses with cash, but it took a long time and my kids have some psychological scars from not being able to have friends over our house or some people not being friends with them due to our housing. I work in a stem field and make the same money or less, than 15 years ago! How many others are like me? And I’m someone who finally made it. So many can’t or don’t.
So curiosity killed the cat, but, first I have a few questions. What STEM field? A nursing degree that is not from an accredited college? What State?
There are very few “dilapidated, barely livable houses” available for sale, at least not in areas with Jobs. Those houses were all snapped up during the 2009-ish bust and cosmo-flipped for a premium.
As for dilapidated houses in rural areas, they are almost not worth fixing up. You’re better off buying it as a tear down and putting a new pre-fab on the land.
“I get the impression that the concept of taking on a mortgage payment that’s 50% of your monthly income is a new thing.”
It implies new assumptions and new norms. It believes you are going to make a lot more money in the future than now and that 50% will decline dramatically. It will only be 25% in the future, you are told. What if if the things you are buying with the other 50% double in cost ? What if your taxes rise 3% a year? What if you are living in an environment where there is social peer pressure to update that kitchen because it had granite which was changed to quartz which now is being updated to finished cement ?
What if the people you trust are gaming you? “Only work with family.” you are advised. Do you know people in a large family who had to deal with the estate of a parent?
Good Luck.
“I get the impression that the concept of taking on a mortgage payment that’s 50% of your monthly income is a new thing.”
I consider it a good start. Start at 50% of your monthly income and work your way up from there.
It sounds like you always get your pound of flesh, Mr. Banker! May we never meet
“It sounds like you always get your pound of flesh, Mr. Banker! May we never meet :)”
If you have any sense at all … we won’t.
But there are others, others with no sense at all, who I WILL meet and they will promise - they will WILLINGLY promise - to hand over to me not only one pound of their flesh but ALL of their flesh - gifts of flesh stretched out over many, many decades.
It implies a New Era of lax lending standards and subprime mortgages by another name which smell as foul.
Alphonso,
How old are you? Your remark about non-accredited degrees is an attempt to discredit me. Let me assure you I have two Bachelor’s and part of a Master’s from good state universities. Do you doubt that Gen X’ers have been absolutely decimated by the economic travesties of the last few decades? Housing is only one part of the problem, but it is a major player. Dealing with skeptical boorish babyboomers is another issue. I personally know a 50 year old man with a degree in Art History, and who has training as a welder who is unemployed. A 49 year old woman with a PHD in Chemical Engineering who got a fasttrack teaching credential and works teaching middle school, and a 20 something who has a degree in chemistry that does have a fulltime job in Portland, but who only makes 30 thousand per year. How exactly are these people supposed to become upwardly mobile and buy overpriced houses or pay exorbitant rents??
“How exactly are these people supposed to become upwardly mobile and buy overpriced houses or pay exorbitant rents??”
They become upwardly moble by allowing themselves to be sucked into the Great Debt-Slave Creation Machine, that’s how. There is No Other Way.
Bahahahahahaha … I like to think of this moment as the Gotcha moment. After the Gotcha moment is reached Those Who Have Lost Their Minds are the ones who dictate prices - power prices - and these powered-up prices are deemed to be a Good Thing because these powered-up prices magically CREATE WEALTH.
Bahahahahahaha … prices powered by debt creates wealth, or, simply put, debt equals wealth. An entire population of successfully dumbed-down ignorant pukes have bought into this, this, this whatever-it-is, and so here we are: Dumb borrowed money relentlessly and forever chasing prices upward and upward. Those who borrow (seemingly) reap the rewards and those who refuse to play the game get left behind to watch and to marvel and to piss and moan.
At some point, for some people, Suzanne will step in and convince some Watchers (those on the sidelines) to dip their foot in (which ends up becoming PLUNGING ALL IN) by telling them “You can do this!”
And so they “Do This”: They Do This by coming into the bank and placing their signatures on papers that are usually never read or understood and which often contain interesting words and phrases such as “adjustable rate” and “introductory rate” and “interest only” and other, er, lucrative words and phrases and (amazingly!) they do this with great glee and with great joy.
And Suzanne (who did all the work) gets her cut, and I (who did no work at all) get my cut, and the buyers not only get a cut, they get slashed to the bone and they get to enjoy bleeding for years - decades even.
Life is good for some, not so good for others.
Buffett: “When you combine ignorance and borrowed money, the consequences can get interesting.”
There is no shortage of ignorance (many thanks go out to No
Child Left Behind), and as of now there seems to be no shortage of borrowed money so what we have before us is a consequence that is getting - has gotten - … interesting.
Stay tuned.
Is it true that our school system is teaching our children improper fractions?
“Is it true that our school system is teaching our children improper fractions?”
Wrong question.
Correct question:
Is it true that our colleges are teaching young adults improper fractions?
Answer: Yes
So much for those vaunted STEM degrees. It still irks me that every President has to go through some charade about “getting kids interested in math and science,” probably not even knowing that there aren’t the jobs that people think there are.
If willing to live in someone’s garage or maybe a tent in the back yard, I’m sure a STEM major can get a job in Silicon Valley
But yeah, I’ve never seen STEM jobs go unfilled, except in the cases where the employer won’t even offer a bump in pay. Every place I have worked there has been no shortage of candidates to fill an open position. Too many places offer zero or absurdly low annual pay increases. That doesn’t sound like a shortage of candidates to me.
FWIW, it is better to have a STEM degree and be unemployed than it is to be employed without a STEM degree.
How exactly are these people supposed to become upwardly mobile and buy overpriced houses or pay exorbitant rents??
They aren’t. As a Gen Xer myself I have zero sympathy for the Boomers who have lived through the most boom times in this country and come out short. A lifetime of free love and drugs, low college costs and housing costs, making us latch key kids because they had easy access to jobs, running up the debt while destroying the environment and outsourcing industries. Their life was a nonstop party compared to the next generations who will have to clean up their mess. I could name countless Boomers who lived and spent and never saved, and now I should feel bad? Absolutely not.
Always someone to blame.
I’ve seen comments here on this blog and on others by Gen Xers about boomers, and it’s always the same sad song: “The boomers dunnit!”
Now, if I went strictly by those fatuous comments, and by the actions of one particular parasitic sack of crap genxer who pretty much ruined a profitable medium sized business built by boomers, I would say the GenX was nothing but a bunch of feral, lying, parasitic poser victims with a taste for SSRIs who set the stage for the SJW phenomenon. And just so no one can see what they’re doing, they blame the boomers as a diversion (Look! Over there!)
But that would be a generality.
The generation to watch is Gen Z. My experience with them has been nothing short of amazing. I dunno where these kids came from, but it’s been an honor to know some of them. They know things suck, but instead of playing the victim card, they’ve got their sleeves rolled up and they’re trying to do something about it. They give me a lot of hope for the future of the planet.
If so then it sounds like Gen Z is the first to grow up with no memory or expectations of returning to the way things used to be.
Julie
“Your remark about non-accredited degrees is an attempt to discredit me. Let me assure you I have two Bachelor’s and part of a Master’s from good state universities.”
Let me assure you that you have your first degree in liberal arts and then you switched over to something that pays the bills. Doing “a part of a Master’s degree” gives mixed messages to a STEM employer.
In reviewing your records they see ONE undergraduate degree and lots of credits. The world is filled with “ABDeees”….all but the dissertation.
I’m aware of the universe that baby-boomers created for you. The advice I gave my son was not given to you. Employees want to see closure.
Millennials who flocked into SNAP are getting their heads handed to them.
http://www.zerohedge.com/news/2017-07-31/snap-crashes-near-record-lows-ipo-lockup-expires
Mr. Banker says: “Quick! Cash out all of your home equity and …
… and BUY THE DIP!
(Bahahahahahahahahahahahahahahahahahahahahaha)
Oh, Snapchat the company. At first I thought you were talking about SNAP welfare benefits.
Ditto.
No, Stanley Fischer. Taking our money issuance and monetary policy away from the Keynesian fraudsters running the criminal private banking cartel called the Federal Reserve would be the “best cure” for global low interest rates.
http://www.marketwatch.com/story/feds-fischer-says-fiscal-regulatory-measures-best-cure-for-global-low-interest-rates-2017-07-31
“A social media campaign to derail HBO’s planned modern-day Southern slavery drama quickly caught fire, prompting the cable channel to ask detractors to withhold judgement until they see “Confederate”.
What an interesting idea: Wait until you see a show before you pass judgement on it.
https://apnews.com/0e7beba6eea1404490720923932fb7e9/NoConfederate-campaign-against-HBO-slave-drama-takes-off
Freddie Mac wants to provide $1 billion to medium-size landlords for rental housing
FWIW, that isn’t a whole lot. Of course, it’s probably the tip of the iceberg.