Industry Pushback And Fear-Mongering
A weekend topic starting with CNBC. “In the midst of the mad selling and explaining and quantifying and qualifying of potentially the biggest U.S. tax overhaul in decades, President Donald Trump’s chief economic advisor stood at a White House podium and made a bold declaration: ‘People don’t buy homes because of the mortgage deduction.’”
“Richard Green, director and chair of University of Southern California’s Lusk Center for Real Estate, notes that the deduction is most important to those living in states like California, which has both high tax rates and high home prices. Home prices there, he said, could drop without the deduction.”
“The National Association of Realtors, one of the most powerful lobbying organizations in Washington, vehemently opposes any change to the deduction. In response to Cohn’s statement, NAR President William Brown said, ‘There’s a reason our nation has incentivized homeownership in the tax code for over a century. It works, and helps make homeownership more affordable for middle-class families who might not otherwise be able to close the deal, while setting them on track for a strong financial future.’”
The Mercury News in California. “California’s largest group of realty agents has warned that a Republican tax-reform proposal would erode the attractiveness of buying a house in the Golden State — but economists pointed out that these effects could also cause a dip in home prices that have skyrocketed. ‘There are several variables, but it would reduce home prices,’ said Fred Foldvary, a lecturer in economics at San Jose State University. ‘Right now, home prices are propped up by implicit subsidies, such as deductions for mortgage interest, property taxes, and other tax benefits. All of these puff up the value of residential real estate.’”
“‘It’s supply and demand,’ said Annette Nellen, a professor of accounting and taxation at San Jose State University. ‘If the demand for housing drops, the prices of homes could drop.’ The negative impacts from lost tax deductions, however, would primarily affect those in higher income-tax brackets, Nellen said.”
From Bloomberg. “Shanghai restaurateur David Hu said he’s nervous about wiring money to Australia for a home purchase because of China’s crackdown on currency outflows. Instead, he plans to carry the cash in a suitcase. The 61-year-old intended to move about A$85,000 ($66,000) to Melbourne this month, the last part of his financing for a deal struck last year. ‘Buying a property abroad was and is still workable,’ said Hu, though he described the process as a ‘lot more troublesome’ nowadays.”
“Some buyers are eschewing pricey hubs like New York for less-expensive areas such as Florida and Texas, according to Eric Lam, chief executive of Shiju, the overseas broker unit of Shenzhen World Union Properties Consultancy Inc. They’re typically spending up to 3 million yuan ($450,000) for U.S. homes, and as much as 2 million yuan for U.K. properties, prices that make for manageable down payments using exchange quotas, Lam said.”
“Developers continue to count on demand for prime luxury housing from the wealthiest Chinese buyers. On Monday, a crowd gathered in a Beijing hotel as the first 16 apartments from the towering 125 Greenwich Street project in lower Manhattan, were offered up at prices from $1.2 million to $12 million. ‘It’s about how determined home buyers are to get their money out, and whether their resolve is strong enough’ to risk punishments for breaking the rules,’ said Lam. He acknowledged that growth would have been stronger without the capital curbs.”
The Urban Developer in Australia. “This week we have seen another example of shortsightedness in the banking sector with ANZ bank tightening its restrictions on lending to apartment buyers in 18 suburbs in Brisbane and seven in Perth due to ‘growing fears’ of an oversupply in Australia’s capital cities. ANZ’s red-flag comes a little over a month after Citi clamped down on lending in 90 ‘blacklisted’ suburbs around Australia. The big-four bank issued a list of 25 suburbs in which loan to value ratios will be capped at 80 per cent of the apartment’s value.”
“From the outset, it is prudent to acknowledge that there are indeed pockets of oversupply in nearly all capital city markets in the country. Anyone with an ear to the ground would have realised this 12-24 months ago when the development boom was under way and every man and his dog was launching an apartment project. But this is the reality of a self-correction and, quite frankly, a move that will clear the decks and allow for the marketplace to sensibly recalibrate.”
“Whilst it will take some time to absorb the stock that has been developed, there are several factors that suggest we won’t experience ‘blood on the streets’, as some punters would suggest. So, What’s This all Mean? Well, it means that most of us are simply getting caught up in the media hype and failing to observe the underlying data. The very smart, local developers (think major player in South Brisbane!) are actually buying sites when others are running for the hills based on yesterday’s data. They’re looking beyond their nose, despite others trying to cut it off.”
From Macleans in Canada. “Canada’s real estate market has seen a lot of changes over the past year or so. Interest rates have gone up twice. Governments in B.C. and Ontario implemented foreign buyer taxes and other measures to cool housing markets, and the Greater Toronto Area is experiencing a dramatic slowdown in sales. More stringent mortgage stress-tests were introduced for borrowers last year, too, reducing demand.”
“Now yet another change is on the horizon that the real estate industry warns will hit the housing market hard, with spill-over effects to the broader economy. Industry pushback and fear-mongering is predictable when regulations are proposed, but in this case, the housing industry isn’t exactly wrong. A proposed policy change from the country’s banking regulator threatens to reduce home sales, knock some first-buyers out of the market and push others to buy less expensive homes. That is the whole point, in fact—and it may be just what Canada needs.”
“With a decision approaching, the housing industry has amped up warnings that the changes spell trouble for the housing market, first-time buyers and the economy at large. Tim Hudak, CEO of the Ontario Real Estate Association, said the plans amount to a ‘war on first-time homebuyers’ and that the cumulative impact of tightening measures ‘risks capsizing the housing market altogether.’”
“Far from mounting an attack on homebuyers, however, regulators are trying to prevent a disaster from befalling those same homebuyers and threatening the economy. In what will come as news to no one, Canadians are heavily indebted. The household debt-to-income ratio hit another record high of 167.8 per cent in the second quarter of the year.”
“The debt service ratio, a measure of disposable income put toward loan payments, is set to increase to 16.3 per cent by 2021, according to the Parliamentary Budget Office, a level Canada has never seen. The number of households with a home equity line of credit and a mortgage against their properties has increased nearly 40 per cent since 2011. Non-mortgage debt is rising, too, including installment loans—high-interest, short-term products.”
“Bank of Canada Governor Stephen Poloz has signalled the central bank is on a tightening path, albeit a very cautious and gradual one. Still, that marks a dramatic shift after years of excessively loose monetary policy. Previously, Canadians could renew their mortgages and obtain more favourable rates. Now the odds are they’ll have to pay more come renewal time. Those who opt for variable-rate mortgages can expect the same.”
From Metro News in Canada. “Don’t be distracted by claims from the real estate industry that adding more housing supply will solve Metro Vancouver’s broken housing system, housing experts told delegates to the annual Union of B.C. Municipalities conference. ‘The supply claims are mainly about distracting us from doing things on the demand side,’ Josh Gordon told the city councillors and local government staff gathered for a conference. ‘They do not want us to tackle demand: they want to be able to build endlessly for the world’s rich.’”
“Gordon, an assistant professor at Simon Fraser University’s School of Public Policy, presented along with David Ley, a professor emeritus in the University of British Columbia’s Department of Geography, and urban planner Andy Yan, director of SFU’s City Program. All three highlighted the staggering, and widening, disconnect between local incomes and house prices. Ley highlighted a measure of affordability developed by the Demographia survey: housing is considered severely unaffordable at a rate of 5.1, and Vancouver is currently rated at 11.8.”
“Vancouver is now attempting to ‘gently’ increase density in single family neighbourhoods, but has faced criticism for not allowing denser buildings like townhouses and low-rise apartment buildings in all single family zones. ‘With supply, we always need to put an adjective in front of the word supply: it’s affordable supply. You do not need more million dollar-plus condo or townhouse units, which is typically what’s been provided,’ Ley said. ‘New supply might decrease overall affordability, by driving up land prices through speculative land assembly when land zoning is anticipated — as we see happening along many of the thoroughfares.’”
“‘There’s a reason our nation has incentivized homeownership in the tax code for over a century. It works, and helps make homeownership more affordable for middle-class families who might not otherwise be able to close the deal, while setting them on track for a strong financial future.’”
The BS is getting deep…
Multiple lies are imbedded in that statement. Makes one ask why UHS types desperately want houses to be grossly overpriced.
I don’t support the MID, but I think the basic principle in allowing State taxes to be deducted from Federal taxable income was to avoid being taxed on taxes. We’re already taxed on income used to pay sales and excise taxes.
State taxes used to be small and minor. When the income tax was introduced, almost no states had an income tax.
Today, depending on city and state - and easy 15% can be lost to income taxes and another 15% to property taxes.
States are basically “cutting in line” in front of the federal government from taxes. And it is now really big money.
The big liberal/progressive states thought they had a loophole. Ever increasing state taxes to fund their insane spending, buying votes of the free sh*t army and public unions while stiffing the Federal government.
It had to end.
while stiffing the Federal government ??
Stiffing ?? LOL….No other state is even close…
e IRS. Per capita values are based on population estimates from the Census Bureau for July 1, 2015.[1]
Rank State Gross collections (in thousands)[2] Revenue per capita (est.) Ratio to GSP
1 California $405,851,295
UC Berkeley report: Half of Bay Area wants to leave over housing
Curbed SF-22 hours ago
Every few months a new public opinion poll suggests more and more Bay Area denizens want to hit the road over the high cost of housing.
How sky-high housing costs make California the poorest state
The Mercury News-Sep 28, 2017
How sky-high housing costs make California the poorest state …. The jobs draw people to the bay area and clearly fast mass transit and more high rise rentals …
‘Gilroy leaders worried last week about having a place for their children to live and work. High housing costs and not enough jobs were threatening the lives they had planned, they said at a meeting of the Gilroy General Plan Advisory Committee. Millennials can’t afford to buy or rent a house, and there isn’t much nightlife to attract them here, officials said.’
“Their generation of people leave Gilroy and don’t come back,” said City Council Member Cat Tucker. “There’s nothing here for them to do. There’s not the downtown like San Jose has. You speak to a lot of people around here who want a downtown like Los Gatos or Morgan Hill, these aren’t millennials. They want clubs like in San Jose. If they do come to Gilroy, they come back because they have got on their feet and they can afford a house. When they are young and single, no, there’s nothing in Gilroy to do, not only housing and cost issues. We went out on Friday night and there was nobody there. I asked, ‘Where is everybody?’”
‘Those willing to endure the daily commute into San Jose are often seeking a small-town lifestyle and homes with yards. With a median home value in Gilroy of $689,200 compared to $1.2 million in Santa Clara County (including Gilroy), home buyers can get more bang for the buck in Gilroy.’
‘With a lower median household income of $83,027 in Gilroy as compared to $96,310 in Santa Clara County, home buyers come to get more house and more yard for their dollar.’
“I have a new neighbor, next door, a young couple from San Jose and it’s been a year and I don’t know their names,” Tucker said. “I don’t know how many times I’ve waved to them and they never wave back.”
‘As existing property owners hope to sell their properties for top price, efforts made to revitalize downtown have often been stymied.
“We had a property downtown that we wished to buy so we could demolish the building and make park and plaza there,” Tucker said. “The owner wanted double the money. There are a lot of restrictions for government to buy property, you need to buy at fair market value. Just because the guy is gouging you and wanted way more than it was assessed at we couldn’t’ do it.”
‘The cost of land in Gilroy, while lower than in San Jose, is still very high. The cost of land, taxes, permits, construction material and labor drives up costs. The single largest cost variable is land.’
“In San Francisco, the cost of land per unit is three times as expensive than the actual structure,” Sanchez said. “Oakland is 1.5 times as expensive and San Jose is somewhere in between that. Gilroy’s land value has gone up and you can’t charge rent to cover those costs.”
‘With expected rents of comparable units for a two bedroom apartment in San Jose of $3,600 as compared to $2,900 in Gilroy, many developers feel they need utilize higher density to make projects financially viable.’
‘The owner wanted double the money…Just because the guy is gouging you and wanted way more than it was assessed at we couldn’t’ do it.’
‘The single largest cost variable is land.’
It’s pretty simple - greed.
BTW, $689k in Gilroy? Oh boy.
more Bay Area denizens want to hit the road over the high cost of housing ??
There is some truth to that…I have mentioned here before that just this year I have had 5 friends leave Ca…1 to Reno…2 to Idaho…1 to Oregon and 1 to Arizona…Not one of these friends had to leave financially…They all owned their homes…So, my point is, there is something deeper going on than just housing cost…
Crime, graft, corruption, poverty and poor quality of life are named as top reasons to leave wonderful CA.
BTW, $689k in Gilroy? Oh boy ??
Its the classic drive till you qualify effect…And, unless you are self employed and can flex your commute hours, the drive both ways to Silicon Valley is a nightmare every day…
“They all owned their homes…”
Yeah well when prices are quadruple, better to sell and bank the money for a more comfortable future. This has been going on since the earlier days of the bubble, like the 80s.
better to sell and bank the money for a more comfortable future ??
None of them had to sell to have a more comfortable future…There are other reasons beyond money…
“…They all owned their homes…So, my point is, there is something deeper going on than just housing cost…”
No, they left BECAUSE of the high housing prices - it enabled them to sell for a windfall profit, and live more cheaply somewhere else. You really don’t get it.
You don’t know chit dude.
“None of them had to sell to have a more comfortable future…”
Of course.
A relative of mine sold in 1979, earlier in the housing bubble, and it doubled his retirement fund. Moved to Western Kansas. Downsizing it was called. Money in the bank way up and expenses way down. A world unknown to perpetual debtors.
Money in the bank way up and expenses way down ??
At some point how much is enough ?? If you have the level of comfort that you desire, what does it matter if you have another million in the bank ?? Your not going to use it, so, the motivation to sell is greatly diminished just because of a high value on your house…That was the case for my friends that left…
If that were really the case, why do Californians rank highest in personal bankruptcy and lowest in net worth?
That’s fine Davey if your friends are so rich they wouldn’t notice another million. That’s not exactly normal though I hate to tell you, and surprising that a debt donkey like you would pretend that it is.
Anyway, you are still trying to tell me that I am wrong about my own experience, as if you were the only one here…
My wife and I have lived in Santa Clara for more than 40 years. We have no debt and paid off our mortgage 28 years ago. Family and friends are what keep us here.
That’s usually the case. Eventually you’ll be overcome by the poverty, crime and graft in CA.
Total tax burden has gone from 8% to 40% since 1915
Free hc countries it’s even higher
My grandfather was born in 1915 and hid childhood was miserable. Life sucked back in those days.
My grandfather was born in the 1890s and he had a wonderful childhood. Life started to suck 20 years later and he moved to the US. Then life was great again. Timing is important.
Luck was also important back in those days. There were diseases that killed a lot of kids before they reached the age of 5. That had to be rather unpleasant for the parents.
Total tax burden has gone from 8% to 40% since 1915
Free hc countries it’s even higher
True, but they don’t have to pay 15-20K to insure their families like we do in the USA. A colleague from Ireland thought I was yanking his chain when I told him how much our employer provided insurance cost. When I told him that even though it was that expensive that we still have copays and deductibles, he was astonished.
“Total tax burden has gone from 8% to 40% since 1915″
The Tax Foundation publishes “Tax Freedom Day” the day theoretically when Americans pay all their taxes (federal, state, local, property, etc.)
Tax Freedom Day was April 22 in 1979. And it’s come later ever since.
Think about that.
https://taxfoundation.org/tax-freedom-day-2014-data-tables/
“Total tax burden has gone from 8% to 40% since 1915″
How did they fund dialysis in the good ‘ol days?
Today, depending on city and state - and easy 15% can be lost to income taxes and another 15% to property taxes.
Colorado: State income tax is 4.63% of Federal Net (not gross) income. Property Tax - depends on how expensive your house is. In my case it’s 2% of my gross income.
Got TABOR?
Those percentages have to be BS. I found this website. It says that the state tax for a person with a million dollar income would be a bit less than 11%. That’s without entering any deductions. Interestingly, a person with an income of $50,000 pays less state income tax in California than Colorado.
https://smartasset.com/taxes/income-taxes
I meant to write that that 11% state tax is in California.
That calculator doesn’t even include the standard deduction or the personal exemption.
You can fart around on TurboTax and figure out tax liability. I think I last did it in 2014, and at that time a single self-employed person in California would pay $76,000 in FIT, SIT, and SE taxes on $200,000 Schedule C Net Profit, so 38% effective rate. That doesn’t include deductions for mortgage interest, property taxes, car license, etc. And there’s a clown who posts here that insists he pays 54 cents tax on the last dollar of profit he earns.
If you lived in NYC and earned $200K your marginal tax rate would be 51%. Your employer would pay another 11% on your behalf. If you earned more the IRS rate could be higher.
I agree with you in that the overall taxes are too high for the middle class, or ordinary “working” class (with income less than 100k). I suspect that many of you who regularly post here do not fall in this category. But, in principle, the federal taxes should be minimal in comparison to the state taxes so that the citizens of the United States can have the freedom to choose which state they want to live in. If any taxes need to get lower, it is the federal taxes, not the state taxes. I support for the zero tax from the federal government except for the defense spending.
I support for the federal government to support English language instruction.
I support people, states and FedGov not spending money they don’t have in current revenues.
I support returning government to to acting as a protector of property rights and eliminating every other function it has taken over and billed us for.
With rental rates half the monthly cost of mortgage, taxes, insurance and depreciation, they’ll say and do anything to maintain the status quo.
The MID incentivizes loan owners to carry debt. True homeowners don’t need a MID. Dump it.
Bankers need the MID to help incentivize consumers to turn themselves into the financial equivalent of plankton in the ocean (aka whale food).
Tell those propaganda lies to the hordes of Americans living in homeless encampments because they have been priced out forever by command-and-control economic policies deliberately targeted at driving up housing prices…
‘The supply claims are mainly about distracting us from doing things on the demand side,’ Josh Gordon told the city councillors and local government staff gathered for a conference. ‘They do not want us to tackle demand: they want to be able to build endlessly for the world’s rich.’
This is how I’ve come to feel about the supply and demanders. Look at how they squeal like a stuck pig when any of the gazillion props are even questioned. Look at how they resort to infantile semantics and tear jerking ploys. “Oh, you’re attacking motherhood and apple pie!”
August 28, 2017
“For decades, the ability to deduct the interest on a home mortgage has been one of the most untouchable sacred cows of the tax code. It is particularly revered in Los Angeles and other areas with high real estate prices, where the annual tax savings can be the difference between being able to afford a house or continuing to rent. Now, Republicans crafting legislation to overhaul the federal tax system and cut rates are considering placing new limits on the home mortgage interest deduction. And thousands of Californians could feel the pain.”
“The move comes as GOP lawmakers and Trump administration officials already have proposed killing another break — the deductibility of state and local taxes — that benefits California residents more than those in any other state. The housing industry strongly opposes efforts to place new restrictions on the deduction, arguing that would lead to lower housing prices because there would be less of a financial incentive to buy instead of rent. At the same time, Democrats from California and other states with high housing prices are gearing up to fight any change.”
“‘I think that harming the ability for Americans to own their home is like attacking motherhood and apple pie,’ said Rep. Judy Chu (D-Monterey Park), whose district includes Pasadena and much of the San Gabriel Valley. ‘I represent a district with homes that are very high-cost, so they have even more reason to be concerned about it,’ Chu said.”
http://thehousingbubbleblog.com/?p=10186
Put a sock in it Judy, this crap is going to be a disaster and it’s too late to save your precious district from an a## pounding.
Democrats protecting a rich and ultra rich housing tax loophole.
The poor and the middle class don’t use it. And, in fact, they subsidize the rich because of it.
DJT is going to point this out over and over…it is gonna be fun.
But…But…Russians!
+++++++
Democrats from California and other states with high housing prices are gearing up to fight any change.”
Limousine liberal, latte liberal, NIMBY…the list goes on…
The banking clan wants the MID to stay as it is. I doubt Trump will be able to repeal it, so I will be very impressed if he pulls it off.
Raising the standard deduction effectively does the same thing. It’s a distinction without a difference.
I doubt Trump will be able to repeal it, so I will be very impressed if he pulls it off ??
MID is a distraction….What Trump and his cronies really want is the elimination of the estate tax…Thats the big enchilada…
What happens won’t change much now, IMO. All these government actions are way too late. But it is very illuminating how the REIC reacts. If shack demand is soooo strong, so invincible, how could a little tax change dent it? That’s nothing compared to privatizing the loan biz, or allowing interest rates to normalize, or Jeebus forbid! sell some of those MBS and treasuries they bought with imaginary money.
What are they afraid of? Let’s take the training wheels off, it’s been a decade. What’s the worse that could happen? They keep telling us “it may flatten a bit” and “we need more supply to give us affordability”.
I’ll tell you what I think: a real mania can’t pause. Like the Myanmar line from yesterday, it could only go up. Take that away for just a bit, and look out below. Actually we get exactly the opposite: in the past few years, when sales or prices started to stall, out comes Mel with his bag of tricks. It’s become so common now it’s hardly noted in the media or even here. Lower this standard, cut this requirement, drip drip. And the REIC is terrified to even test a market without every support imaginable.
The wild card is what these other governments and even central banks are doing. Interest rates are going up, loan availability is collapsing in Australia, for instance, especially for investors. Entire zip codes blacklisted. As I’ve said before, the most significant change in 2017 has been the Chinese capital controls.
Ben Jones: What happens won’t change much now, IMO. All these government actions are way too late. But it is very illuminating how the REIC reacts.
The NAR’s organizational mandate is to increase profit for its members. It does that by encouraging policies which increase sales. So anything other than a robust increase in sales is going to elicit complaints. An actual decrease, as recently happened is going to elicit cries of Armageddon.
As far as building more goes, I’m convinced there is a significant amount of speculative demand. Damaging open land and existing neighborhoods to build high density housing for trading purposes will feed the REIC but when this current cycle ends, it will just lead to more empty, incomplete buildings and a lower standard of living.
Ironically it will result in a higher standard of living. Like everything else, liquidation prices are a small fraction of asking prices.
2banana’s Rule:
Long term democrat rule + public unions + free sh*t army = misery, ruin and bankruptcy
Why don’t people want to live under progressive/liberals? High taxes, big government, lots of regulations, insane public unions for the “children,” total gun control…
It has everything!
+++++
Fed-up Illinois homeowners consider moving: ‘It’s not just the property taxes on my home; it’s all of them’
Chicago Tribune | 09/29/17 | Gail Marksjarvis & Corilyn Shropshire
Mallin’s not the only one leaving the state. In 2016, Illinois lost 37,508 people, putting the state’s population at its lowest level in nearly a decade, according to U.S. census data. It was the third consecutive year the state lost more residents than any other state. The state’s population count for 2017 won’t be released until December.
Housing construction already is being affected, he said. With construction costs high and demand muted, only 7,511 single-family homes were built in the Chicago metro area during the 12 months ending with July.
Before the recession, 40,000 new homes were being constructed each year. Normal demand is closer to 15,000 to 20,000 new homes a year, Ramella said.
According to CoreLogic, a global property information firm, the Chicago area is one of the U.S. metropolitan areas with the highest percentage of homeowners underwater with their mortgages, meaning they owe more than their homes are worth. During the second quarter of this year, 10.8 percent of residences in the Chicago metro area were underwater, compared with 13.5 percent during the second quarter of 2016, according to CoreLogic.
“Taxes are rising so much it’s crowding out the value of homes,” Ablin said. “In many respects a person could argue that housing is cheap in Chicago, and in many respects it is cheap. But it is cheap for a reason.”
Funny Zumper clams chighetto prices,rents going up.
Ignoring big tax increases
‘It could take decades and cost billions to build enough housing to make even a modest dent in home prices in the Bay Area and across the state, a team of economists reported. The quarterly UCLA Anderson Forecast casts doubt upon efforts in San Francisco and surrounding communities to lower the cost of living, suggesting that investments far beyond what is contemplated would be needed to stop folks from paying exorbitant prices for wallpapered shoeboxes within a scooter’s distance of San Francisco Bay.’
‘Jerry Nickelsburg, director of the UCLA forecast team, said it would take 20 percent more housing to achieve a 10 percent reduction in prices. Such a reduction throughout California would bring costs down roughly to 2014 levels, he said, citing figures provided by the Legislative Analyst’s Office.’
Jerry if prices fell 3% there would be so much wailing and teeth-gnashing in California we’d all go deaf. Look at the terminology:
‘what is contemplated would be needed to stop folks from paying exorbitant prices for wallpapered shoeboxes within a scooter’s distance of San Francisco Bay’
Get the government loan caps down to what Kansas has. Crater on your wallpapered shoeboxes.
How to have affordable housing with one dime of government money.
1. The government (taxpayers) will not buy or guarantee ANY housing loans
2. Banks will eat their bad loans - period
3. If a bank eats too many bad loans, they will be audited and the executives will go to jail. And the bank may fail.
4. 20% down payments
5. Foreclosures will happen within 60 days and the house will be put back on the market
6. Fraud and GAAP laws will be vigorously enforced
7. No bailouts of ANY kind
Good plan.
But with all the corruption, graft and backroom deals, well, you know the story about snowballs in hell
Indeed, what is the chance of that happening, especially in California?
“Indeed, what is the chance of that happening, especially in California?”
It would be negative zero if there were such a thing as a negative zero.
How about just selling the tens of millions of bank-owned foreclosures which have been withheld from the market? Where’s that story?
If banks owned the loans without any chance of selling to the government or a bailout…
These houses would be back on the market in a heart beat.
Where’s that story ??
It’s imbedded in your tiny brain.
You appear to be the most thin-skinned, defensive and immature commenter on this blog. At the slightest hint of a disagreement, you resort to childish behavior which most mature adults would be ashamed to exhibit.
Probably a tumor, kinda like McCain. And Pelosi. And Reid. And, and, and. You see a connection here?
Its not a tooma!
‘Jerry Nickelsburg, director of the UCLA forecast team, said it would take 20 percent more housing to achieve a 10 percent reduction in prices. Such a reduction throughout California would bring costs down roughly to 2014 levels, he said, citing figures provided by the Legislative Analyst’s Office.’
Is this really a policy goal that someone on high wishes to achieve?
My cousin yesterday reminded me that new housing developments around San Bernardino were torn down after the Great Recession because of the fear that lower home prices would exacerbate the wave of defaults and debt destruction already underway. Never mind all the Mellenials who are priced out forever…the people who made the crazy loans had to be made whole!
I first heard the story about San Bernardino teardowns from my cousin yesterday. If anyone has details, please share.
Realtors are liars.
Flower Mound, TX Housing Prices Crater 7% YOY
http://www.movoto.com/flower-mound-tx/market-trends/
‘Bank of Canada Governor Stephen Poloz has signalled the central bank is on a tightening path, albeit a very cautious and gradual one. Still, that marks a dramatic shift after years of excessively loose monetary policy.’
‘One of the biggest names in Canadian investing says that the Bank of Canada acted “far too late” on raising interest rates and that the country’s housing markets still has room to fall. Stephen Jarislowsky, the billionaire investor and founder of Montreal-based Jarislowsky Fraser told BNN in an interview that the Bank of Canada’s move to raise interest rates last week – its second this year – came too late to stem questionable foreign investment.’
“The acceleration of our interest rate, of course, was necessary. It was far too late,” Jarislowsky told BNN. “The housing boom should have been stopped and we shouldn’t have allowed foreigners to buy houses with money which I’m not sure how clean it was. That should have been stopped way before and now these increases in the interest rates are making it even more attractive for foreigners to buy our bonds when they don’t want to buy American bonds anymore.”
‘Jarislowsky believes that the slide in real estate prices still has further to go and that foreign investors have merely started moving their money out of Toronto and Vancouver and into other markets, such as Montreal.’
“I think [the housing market] will go down further,” Jarislowski told BNN. “When you remember the American breakdown of the housing market, it went much deeper. You don’t stop at the mid-point, you go much deeper. In the long run housing can only go up by the productivity of the country plus inflation. We have by far surpassed that rate of housing price increase and we’re still allowing housing prices to increase by allowing foreigners to buy. Now they are actually also buying in Montreal.”
We can see now that New Zealand, Canada, Australia, the UK, China are to one degree or another reversing many years of blowing up bubbles to clamping down. It should be noted that Greenspan realized there was a bubble and he popped it. What is Yellen doing? Besides packing her bags, that is.
We can see now that New Zealand, Canada, Australia, the UK, China are to one degree or another reversing many years of blowing up bubbles to clamping down
Are they? Or is it just lip service?
It should be noted that Greenspan realized there was a bubble and he popped it.
Which bubble was that, Ben?
I thought the Greenspan Doctrine was to ignore bubbles, claim no one can really identify them, and do nothing about them, except pump tons of liquidity afterwards to mop up the mess.
A History of Fed Leaders and Interest Rates - The New York Times
https://www.nytimes.com/interactive/2015/12/11/…/fed-interest-rates-history.html?…3
Dec 16, 2015 -
June 2006: The Fed, after raising interest rates at 17 consecutive meetings, beginning in 2004, ends its campaign to slow the economy and forestall inflation.
‘On the basis of 2006 market data that were indicating a marked decline, including lower sales, rising inventories, falling median prices and increased foreclosure rates,[citation needed] some economists have concluded that the correction in the U.S. housing market began in 2006.[10][55] A May 2006 Fortune magazine report on the US housing bubble states: “The great housing bubble has finally started to deflate … In many once-sizzling markets around the country, accounts of dropping list prices have replaced tales of waiting lists for unbuilt condos and bidding wars over humdrum three-bedroom colonials.”[29]‘
‘The chief economist of Freddie Mac and the director of Joint Center for Housing Studies (JCHS) denied the existence of a national housing bubble and expressed doubt that any significant decline in home prices was possible, citing consistently rising prices since the Great Depression, an anticipated increased demand from the Baby Boom generation, and healthy levels of employment.[56][57][58] However, some have suggested that the funding received by JCHS from the real estate industry may have affected their judgment.[59] David Lereah, former chief economist of the National Association of Realtors (NAR), distributed “Anti-Bubble Reports” in August 2005 to “respond to the irresponsible bubble accusations made by your local media and local academics”.[60]‘
‘Among other statements, the reports stated that people “should [not] be concerned that home prices are rising faster than family income”, that “there is virtually no risk of a national housing price bubble based on the fundamental demand for housing and predictable economic factors”, and that “a general slowing in the rate of price growth can be expected, but in many areas inventory shortages will persist and home prices are likely to continue to rise above historic norms”.[citation needed] Following reports of rapid sales declines and price depreciation in August 2006,[61][62] Lereah admitted that he expected “home prices to come down 5% nationally, more in some markets, less in others. And a few cities in Florida and California, where home prices soared to nose-bleed heights, could have ‘hard landings’.”[32]‘
‘Home price appreciation has been non-uniform to such an extent that some economists, including former Fed Chairman Alan Greenspan, have argued that United States was not experiencing a nationwide housing bubble per se, but a number of local bubbles.[64] However, in 2007 Greenspan admitted that there was in fact a bubble in the U.S. housing market, and that “all the froth bubbles add up to an aggregate bubble”.[35]‘
‘Former Federal Reserve Chairman Alan Greenspan had praised the rise of the subprime mortgage industry and the tools which it uses to assess credit-worthiness in an April 2005 speech.[106] Because of these remarks, as well as his encouragement of the use of adjustable-rate mortgages, Greenspan has been criticized for his role in the rise of the housing bubble and the subsequent problems in the mortgage industry that triggered the economic crisis of 2008.[107][108][109] Concerning the subprime mortgage mess, Greenspan later admitted that “I really didn’t get it until very late in 2005 and 2006.”[36]‘
https://en.wikipedia.org/wiki/United_States_housing_bubble
‘the National Association of Realtors (NAR), distributed “Anti-Bubble Reports” in August 2005 to “respond to the irresponsible bubble accusations made by your local media and local academics”.
‘Among other statements, the reports stated that people “should [not] be concerned that home prices are rising faster than family income”, that “there is virtually no risk of a national housing price bubble based on the fundamental demand for housing and predictable economic factors”, and that “a general slowing in the rate of price growth can be expected, but in many areas inventory shortages will persist and home prices are likely to continue to rise above historic norms”
Sounds like today.
“fundamental demand for housing”
wow!
that sounds exactly like today. “fundamental demand” back then was many thousands of SFR more than most areas needed.
“fundamental demand” today seems to be many more thousands of MFR than needed.
My hypothesis at this point is SFR and MFR are more closely linked than realized. The excess in MFR will bring SFR down with it.
Sale of a life time. I’m holding on to my pennies.
Exactly where we are right now. Amazing.
But again, “no one saw it coming”…
BOJ’s Kuroda is part of the problem
Four-and-a-half years since Haruhiko Kuroda took office as governor and embarked on an unprecedented experiment in quantitative easing (QE), the bank is still far from its goal. It has swept up 40% of Japanese government bonds and a whopping 71% of exchange-traded funds. The bank’s balance-sheet has tripled. It is now roughly the size of the American Federal Reserve’s.
source:
https://www.economist.com/news/finance-and-economics/21729798-its-inflation-target-again-postponed-policy-unchanged-bank-japan
Not a joke question.
What happens when the BOJ owns 100% of the market?
Thank God for DJT.
Tomorrow (OCT 1st) starts the great Fed unwind of the obama era QE purchases.
It may be slow, it sure ain’t sexy and it will not buy DJT any votes.
But it is a few steps in the RIGHT direction.
One idea I read is that BOJ “forgives” the govt debt and the govt issues more debt and BOJ just buys it.
The other idea is to do straight monetization a la Wiemar. The govt creates debt and BOJ just buys it.
More fuel for the global asset bubbles. Well done, CBs. Well done
As long as there is no inflation, what is there to stop central banks from gobbling up .gov bonds?
That question may be the true cause of trichotillomania.
I think where the bonds are bought is part of the answer.
Bonds bought from banks (that they have on their balance sheets) become excess reserves or loanable funds, i.e., they become actual or available credit. This stokes asset bubbles.
Bonds bought directly from the treasury to finance the budget (aka direct monetization) becomes effective demand. i.e., they are used to buy goods and services. I have to believe that this sort of bond buying will inevitably stoke the inflationary fires.
Is the only end game a complete loss of faith in a currency? I am absolutely astonished at how long these central banking games can go on.
Are you sure it wouldn’t buy him votes? There are a lot more voters with a stake in the end of financialization than there are asset owners, and a lot of the former probably have a better idea of what’s good for them than they’re given credit for.
Vancouver, WA Housing Prices Crater 8% YOY On Plummeting Housing Demand
https://www.zillow.com/old-evergreen-highway-vancouver-wa/home-values/
Remember Grasshopper
“When you put your hand in a fence where there is a lion, then you will get bitten,”
WATCH: Free State lion bites ‘stupid’ hooker’s hand
September 30, 2017
http://www.heraldlive.co.za/news/2017/09/30/free-state-lion-bites-stupid-hookers-hand/
Not that kind of hooker!
Ginger or Mary Ann?
Ginger brings da hotness. Lola prefers the skipper in chaps.
Mary Ann, no contest! Aged better and she can cook - remember all those banana cream pies she made for Gilligan? I think thats the only thing he ate.
“Aged better and she can cook…”
+1 Good call.
One more time, and now permanent. Default and live free for years.
Southern Nevada foreclosures tumble as new law kicks in
Still don’t have a lease (it was up on June 30.) We are paring down our belongings and prepping for another move. Watched “The Money Pit” (1986) to keep my head on straight.
So again TPTB will let the Beats simmer on the back burner while not paying their mortgages and clam to be victims all so their Houses don’t go into foreclosure and collapse the housing market.
Oh I forgot about how this cr@p keeps rent inflated. Seems like I just lived through that not too long ago.
You don’t hear anything here about people squatting in their should-have-been-foreclosed-years-ago houses anymore. I bet some people have had their tenth anniversary of paying nothing.
The Vegas RE shills say that the prices are reasonable because they’re only about a little more than half way back to the 2006 bubble peak (unlike other cities that have passed it.)
“I bet some people have had their tenth anniversary of paying nothing.”
You both sound like you could use a pick me up so I’ll do my best.
True story
Dude I know did have about his tenth anniversary of paying nothing on his mortgage last year, problem was he wasn’t paying insurance either. Recently there was a bad fire, house uninhabitable.
No problem, out on the road living in the used Fifth Wheel bought with diverted mortgage payments.
Problem, house he thought bank had given up on years ago now pursuing him for mucho dinero.
There used to be a saying here about no FB dollar being left behind or something.
Still sucks that Tarara, palmetto and millions of others are left dealing with high rents, goofy landlords and stupid high house prices all these years later.
Thanks, Jeff. I haven’t given up hope. The LL’s agent is kind of casual, and he knows we’d like to stay. I told him he was giving me agita.
I certainly would have made different choices if I had known things would get this crazy and go on for so long.
“Still don’t have a lease (it was up on June 30.) We are paring down our belongings and prepping for another move.”
TBoom, you have my sympathies. We were month to month for a good part of six years at a rental. Never knew when the axe was going to fall. It finally did a couple of months ago. “Owner says sell!”. What a fire drill. Had to move out of the area to keep the rent down and the housing comparable to what we had.
Moving sucks, I don’t mind sayin’, especially when rents are in a bubble as much as housing. Very stressful. But I like where we are now, so I it worked out OK. North Florida is a lot less congested.
Thanks. He keeps telling me it’s coming. So’s Christmas.
My big problem is I have a few pets more than I oughta. Right now, if anyone asks, I go all Pink Panther - that is not my dog.
But do they bite?
Dark and lonely on the summer night.
Watchdog barking - Do he bite?
Ha, Jeff, there was one LL I kind of wanted to kill (at least maim.)
Portland, OR Housing Prices Crater 10% YOY On Skyrocketing Housing Inventory
https://www.zillow.com/king-portland-or/home-values/
Is Puerto Rico RE a buy?
Look at what the connected do. Remember the whole protest over using Vieques for military bombing? Jesse Jackson was involved - joined by his wife - a mere few weeks after the news came out that he fathered a child with another woman while married to her. How could this be? Follow the money - they were involved in a big scheme to get the land on the cheap as it has some of the nicest reefs in the area. I think the whole move to open up Cuba was a similar deal. I would not be surprised to see a move on PR as well.
CNN meltdown on election night. This is fun:
https://m.youtube.com/watch?v=9LTMOsnTuCs
Clinton’s press secretary Brian Fallon on Trump’s early lead
https://www.youtube.com/watch?v=YPiY37O1jFI
A comment:
” … the day after this election, one of the mistakes the Trump campaign will look back on is their failure to contest a state like Michigan earlier on …” …. OOPS.’
It never gets old.
I had a bottle of wine and a few bottles of beer. So, this is a late night ranting for a mostly lurker, and I do not know if this comment will be allowed or not, and Ben, I do understand if you choose not to allow it since this is a comment from a drunkard. For my background, I immigrated to the United States in 2002 when I was in high school. I consider myself an American, whether you accept it or not.
I really do understand your support for DJT and the GOP and your deride for Dems. I do, too, hate Dems and their policies as much as I hate the GOP. This seems to be a class war between the upper middle class who are mostly composed of high-earning, highly educated professionals including “working” lawyers, doctors and successful people in the tech field, represented by Democrats and the top 1 percent represented by the GOP. It seems not many politicians care about the ordinary citizens in the bottom 75 percentile who have hard time just getting by and do not make enough contribution for their campaigns while both (GOP and Dems) do show come “fake” compassion for them (or us including myself). However, in effect, the war between the upper middle class and the top 1% seem just stifling the grassroot people with rising housing, medical, and education costs.
In terms of the last (education) costs, I see that, with many American citizens receiving financial aids and foreign students paying the full costs, my observation is that it “may be” beneficial for the country at least for undergraduate educations.
For the graduate educations where most students receive the tuition waiver and a little stipend to get by while working as TA, RA and etc, hmmm, the benefit I can argue for the States is only if these intellectuals stay in the States and make innovations in the American “industry”.
Many of the intellectual innovations are freely shared by the GNU principal, and the United States seems getting enough return for the investment. as there are certain US tech companies who effectively utilizes them. So, at the moment, they are more beneficial for the States. However, who are they making innovations? If you really take a closer look, they are mostly foreign nationals. The question is that they are in the States at the moment, making tons of contributions, will they remain in the States when the adversities (crash) hit? If they leave, who has the copyright to the contributions. I guess (I am not the law expert), by the GNU principle, it can still be used in the US tech companies, but will they be used as effectively as the original author of the innovation. I doubt that. I work in a tech company specialized in the data science, and I see that most leading data scientists are immigrants.
The US has lost its manufacturing sector. If it loses the tech as well, it will be a serious problem. The FIRE sector alone will not be able to extract wealth from other countries to compensate for the loss. Especially, India and China have abundance of workers educated in the US. If only they had the enough capital to invest in the tech, they would be able to catch up with the US tech. Easy money facilitated by the central banks around the world would enable this.
What should the US do for the benefit of the country? The US should understand its comparative advantages it has established so far with billions of dollars and strive to keep it. Make the US a happy place to live.
Make shacks affordable, removing weird tax incentives for the investors. Shacks should be the most affordable to people who actually live in them compared to “investors.” It looks like many people in this blog criticize the demand boosting policies for would-be homeowners. I agree that they have gone too far. But the more serious problem is the tax incentives for the speculators: tax deductions for the specious “depreciation” and tax incentive to buy another shack if one has to sell a shack.
Provide the children of the US citizens with good basic education. The US education system is seriously wrong, economically (not legally) supporting the segregation of the rich and poor. You have to be in certain neighborhood to get into the good schools that again support the overvalued shack prices in certain areas. If you look closely how those school district boundaries are drawn, you will find it ridiculous. Several attempts have been made, and I am told that these efforts failed miserably. It looks like most Americans are convinced that there is no way to maintain a good education system without segregation. No, it is not. It just has not been tried long enough to establish a system that works. It works in many other countries.
Otherwise, I only see that the US would be losing the world power unless it forcefully steal wealth from other countries through military actions, wars. I have seen in the past few decades that these small-scale attempts made by the US was only detrimental to the country. The US is stupid enough, it might try a large-scale war at the risk of nuclear wars to see if it works.
They are still running adds on tv in CA for those who were duped during the last housing bubble.
keepyourhomeca
So that basically means its taking taxpayer money to keep those folks in their overpriced house and real homebuyers have to inflated home prices. Where is the justice in that?
Oh yeah, one more thing to add. There are a lot of wealth to steal from the South Korea in helping the war with the North Korea, including Samsung mobile/electronics (Galaxy phones and other general appliances), LG electronics (Laundry/washing machines, TV and monitors), textile companies and other baby products with a better quality (compared to Chinese products) that are gaining increasing market share as the Chinese products are becoming more expensive.
DJT said everything was rigged until he got in office. Now he says all is awesome because of him. Whats your take on this?
Get your rage-ravaged skull on the Trump Train.
Apparently, most words from him are outright lies. But if I compare DJT with Obama, yeah, I would prefer DJT.
DJT’s official policies are mixed with reasonable stuffs and ridiculous stuffs. But most of those “ridiculous” stuffs never get passed and some of the reasonable stuffs are being implemented on small scales. He may not have accomplished something big, but he’s doing well in that he does little.
But what did Obama do? He has accomplished something big “Obama care.” But healthcare industry has inelastic demand. If you are sick, you need to get treatment. Then, it is no-brainer that the benefits from any demand boosting policy would go to insurance companies, hospital owners and doctor (Doctors can get their fair share because their labor market is controlled to have a serious shortage). His major accomplishment was only detrimental to the country. What did he do on the supply side, which is far more important to improve the health care in the US? If you look at the labor data, health care employment has seen its slowest growth during the Obama years.
It is not that I support DJT, but if I have to choose one, it is DJT. Of course, I am desperately hoping for other better options.
we need to buy some of our own debt and send out some more freebies to duped homeowners. LMFAO
whose balance sheet gets racked up with debt next?
If I were a dictator, I would create a retrospective tax on those who gained most during the bubble years to share the burden.
“There are a lot of wealth to steal from the South Korea…”
Who do you think buys our treasuries while we spend $ trillions like drunken sailors?
To be clear, I do not support any war. I was just being sarcastic. This post meant to be a continuation of another post above.
Oh, I forgot to add Huyndai automobiles.
never bet against america! w. buffet
Nobody took a knee?
Beyonce Sings Whitney Houston’s National Anthem at the Inauguration
https://www.youtube.com/watch?v=VwLnN3Fwl4w
I guess everyone knows this stock market rally is totally rigged and they missed out as evidenced by CNBC’s ratings cratering to 22 year lows.
I turned it on awhile back in its total absurdity and cheer leading by clueless folks posing as experts.
Por que?
Zillow predicts Atlanta up 6%
Free beer ¿