Mortgage Lenders Are Experimenting Again
A weekend topic starting with The Street. “In the aftermath of the Great Recession, no-money-down mortgages got a bad rap, blamed for being part of a toxic brew of bad lending that crashed the real estate market. But in a bid to reach credit-worthy buyers struggling to save up thousands to secure a loan, mortgage lenders are experimenting again with very low down-payment mortgages. ‘There are significant barriers preventing people from attaining homeownership and one of the major barriers is the down payment,’ says Elliot Schmiedl, homeownership director for the Massachusetts Housing Partnership. ‘The days of saving up 20 percent down are long gone — now it’s 3% to 6% and people even have trouble making those payments.’”
“Low- or no-money-down mortgages are growing in popularity as the cost of buying increases. U.S. home prices have jumped 6.3% in December compared to the year before, according to the Case-Shiller index. Many zip codes, especially in the Northeast and on the West Coast, have long since blown past their 2005/2006 highs. And these mortgages are not just popular among low- and moderate-income buyers. Many professionals, such as doctors and lawyers, are also dealing with large amounts of debt but, with solid credit scores, make good candidates as well for zero-down loans, mortgage brokers say.”
“‘If you are not able to get into the market you won’t be able to reap the rewards of homeownership in the long haul,’ MHA’s Schmiedl says. ‘I think they (zero down loans) are good in that regard.’”
From the Idaho Statesman. “Affordable houses in Boise and Meridian seem to be fading into history. It’s getting tougher for average buyers elsewhere in the Treasure Valley, too. The median price of an Ada County house is almost $300,000 today, according to Boise Regional Realtors. In Canyon County, it’s almost $200,000. Both prices are record highs. The two counties combined had just 65 houses for sale for less than $200,000. Many were in Nampa and Caldwell. There were only a handful in Ada County, mostly in Kuna and Star.”
“Yet $200,000 is roughly what a median-income Ada County family can afford. The median family income in Ada County is $58,099, according to the Census Bureau. The median house price is $297,500.”
“A Boise buyer with that income and good credit who can put $26,000 toward a down payment and closing costs, who has $400 in monthly debt payments, and who still wants money left for food, entertainment and vacations, can afford a $215,787 home with a 30-year mortgage at a 4.72 percent loan rate, with a monthly payment of $1,458, including taxes and insurance, according to Nerdwallet.”
“Yet prices keep going nowhere but up. The supply of local homes for sale remains extremely tight as people who might have sold their home stay put and remodel instead. Multiple offers remain common.”
From Chicago Now. “You remember the subprime mortgage crisis, right? Skyrocketing homeownership levels, assuring everyone in America that they could become wealthy by participating in the American dream? And the ever popular narrative of evil bankers, forcing people to take on mortgages that they couldn’t afford to pay back? Soaring home prices, followed by a crash? Banks taking people’s homes? A government bailout?”
“Yeah, that wasn’t that long ago. In fact, it should be so fresh in everyone’s memory that we shouldn’t be trying to repeat the same mistakes all over again. Yet, there’s been a lot of hand wringing over the fact that mortgages have been harder to get for people with lower incomes or higher debt levels and homeownership levels are down to 64% from 69% at the peak of the housing bubble (which may have been a historic high). Consequently, last July Fannie Mae raised their allowable debt to income ratio (DTI) for low down payment mortgages from 43% to 50% under certain circumstances.”
“Well, 6 years ago I wrote about How Fannie, Freddie, And The Government Contributed To The Mortgage Crisis and it looks like they are determined to do it all over again. Just to put things in perspective check out Fannie Mae’s historic delinquency rates in the graph below from the Urban Institute. The black line represents the riskiest pool of mortgages with lower down payments and you can see how the delinquency rate peaked around 14%. Do we really want to go back there?”
“However, this time the private sector isn’t going to let these government sponsored enterprises suck them in and they may ultimately prove to be the only adults in the room. According to a Chicago Tribune article the mortgage insurers (the credit enhancers in the graph above) have raised concerns and are setting stricter limits on what they will insure.”
“You can just tell by the tone of that article that the wailing and gnashing of teeth about denying home ownership to tens of thousands is about to begin. But before you join that chorus consider that the American dream is not all that it’s cracked up to be. I’ve actually written about this before but some researchers with a little more credibility than me have once again shown that homeownership doesn’t build wealth. As that article points out, taking control of your finances does.”
‘Low- or no-money-down mortgages are growing in popularity as the cost of buying increases’
Subprime is back. The cycle must be pretty long in the tooth if desperation measures to qualify buyers are being wheeled out again, despite the well known risks.
If they can get a government entity (FHA, GSE, etc) to buy or ensure it, there’s no risk to the lender. If government entity rules need to be changed, that’s probably just the agency head and/or a few politicians that need to be convinced. Probably just the agency head, as I remember Ed DeMarco (former FHFA head) standing in the way of certain easing policies various politicians supported.
“…various politicians…”
Such as Mel Watt?
I’m really curious to find out where Watt goes after his tenure at FHFA is complete.
Brookings?
To hell, hopefully.
So this article doesn’t breathe a word about I/O and neg-am mortgages, which were the real drivers of the bubble? The 2005 bubble was *not* about no-money down, at least not by itself. IMO most of that bubble behavior came from paying only 50-60% of the true PITI, for years on end, until it all reset…
Anyway, look at the perspective of your average annoying Millenial. They are getting up there at age 30+. They have a choice:
1. Get 3.5% from Mom and Dad and buy a house at $2200 PITI.
2. Continue pay $2200 rent in a “luxury” apartment (remember, that’s all they build now, even the Grade B is value-added up to high rent)
What would you do?
So this article doesn’t breathe a word about I/O and neg-am mortgages, which were the real drivers of the bubble?
There were actually more prime mortgages defaults than subprime: http://www.nber.org/digest/aug15/w21261.html
‘There were actually more prime mortgages defaults than subprime’
Hey Oxide, how many years did I point that out to you, with links to back it up? Was it 5 or 7 years? I forget. I just gave up. Truth is over 90% of defaults were prime. The only thing this body of defaults had in common was when they were made, meaning at the highest prevailing prices.
The NBER released a working paper about 6 months ago that kind of shatters the narrative that it was mainly the poor “no-doc”, “interest only”, “arm” loans pawned off on the poor that caused the crash. It was actually the wealthy and middle class that triggered the housing crash.
“Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.”
https://qz.com/1064061/house-flippers-triggered-the-us-housing-market-crash-not-poor-subprime-borrowers-a-new-study-shows/
“The authors’ key empirical finding is that negative equity conditions can explain virtually all of the difference in foreclosure and short sale outcomes of prime borrowers compared to all cash owners.”
So neg-equity prime borrowers are really subprime after all.
Yup.
http://www.bostonglobe.com/business/2018/03/18/new-masshousing-mortgage-program-doesn-require-down-payment/hB4uBAirICrBGbCLrinP3O/story.html?p1=Article_Trending_Most_Viewed
“From a lack of homes for sale to overcrowded open houses to bidding wars, the chance for them to buy a house has become increasingly more remote”
Not just increasingly remote. Increasingly more remote.
Not just as a result of factors ranging from lack of homes to bidding wars. From those very things themselves.
God, the pressure. I think the reporter peed himself while writing this. Thank God someone’s out there to make it right with the dotted-line special.
” last July Fannie Mae raised their allowable debt to income ratio (DTI) for low down payment mortgages from 43% to 50% under certain circumstances.”
A floating fly line with a wooly.bugger … or … hook, line, & sinker? …
The worst day buying real estate is better than the best day in a stream fishing … (eye think that’s how the saying goes …)
“Yet $200,000 is roughly what a median-income Ada County family can afford. The median family income in Ada County is $58,099, according to the Census Bureau. The median house price is $297,500.”
This quote must be based upon the new DTI, because historically a $200,000 house is not affordable on a $58k income.
It probably assumes 20% down, for a financed amount of $160k.
Add in other costs and the median income family only needs to have one year’s worth of pre-tax income saved to close the deal.
What was the historic norm? I think my parents’ home was purchased at around 3X, in 1964. The Great Inflation of the 1970s shrunk the remaining principle owed to a pittance.
My parents’ first two houses were less than 1x my dad’s yearly gross. My father was self-employed, but still exercised restraint rather than buy the most he could afford. He paid $65k in 1972 for the house I grew up in. In inflation adjusted dollars, that’s $394k. The house most recently sold last year for $550k.
“He paid $65k in 1972 for the house I grew up in.”
FWIW, that was an expensive home.
And if he was making more than 65K back then, he was kicking butt.
“He paid $65k in 1972 for the house…”
Salaries and a VW bug went 10x from 1970 to now.
Inflation.
because historically a $200,000 house is not affordable on a $58k income.
The overall median income should never be able to afford a median house. Historically the bottom 35%+ of any American population has rented, for the past 50-60 years. We should be looking at the median income of the pool of buyers, that is, the median income of the top two-thirds? What is that? That’s how we should base the house prices.
LOLZ. You must not be aware that, historically, the ratio of median house price to median income is 2.2X. That you don’t believe it “should” be the case is irrelevant to that FACT.
Good point. My understanding is that 2.2 is just a quick and dirty way to calculate piti as 28% of gross income. But if the median househols buying the median house, then why aren’t the poor buying the cheapest house? They should be able to afford it. But they continue to rent. What’s holding them back? Redlining? 20% down?
2.2X income was a long-term stable equilibrium ratio in flyover before the Bubble blew up the old model starting around 1996.
As the Professor has just attested to, 2.2x has long been the ratio and standard until the FED and bankers started playing currency games. You can go back 60+ years and the statistics prove it.
It matters not if the poor are buying the cheaper houses, what matters is that the cheaper houses are affordable for either the poor to purchase them OR an investor to purchase them and rent them to the poor while also providing the investor with a return on their investment, and at a rental rate which the poor can afford, which again goes back to the 2.2x.
And it used to be one income families using 15 year loans.
They removed the door from the closet and they have turned society into a captive audience.
IIRC, the house my parents bought in the early 1960’s was just a little over 1 years pay for my dad. He was a tool and die maker, and was pretty well paid. Plus he was paid overtime and often worked Saturdays.
Undocumented hit-and-run suspect wanted by ICE now in federal custody:
“An undocumented man suspected of killing the driver of an 18-wheeler in a hit-and-run crash is in the custody of Immigration and Customs Enforcement agents, according to a release from the federal agency.
While department policy prohibits Denver Sheriff deputies from holding an inmate under a civil detainer, deputies are required under the same policy to notify the federal agency before the prisoner is to be released.
But deputies failed to follow through when Zamarripa-Castaneda bonded out.
Denver Sheriff Patrick Firman admitted the department “made a mistake” in releasing Zamarripa-Castaneda before notifying ICE. Three sheriff’s deputies were reassigned amid an investigation.
ICE officials said Zamarripa-Castaneda legally entered the United States on a temporary visa that expired Feb. 13, 2015. ICE said he has overstayed his original temporary visa by more than three years.”
https://www.thedenverchannel.com/news/local-news/undocumented-hit-and-run-suspect-wanted-by-ice-now-in-federal-custody
“Undocumented hit-and-run suspect wanted by ICE now in federal custody:”
He’s not going to be an astronaut now.
but he can be a tenured college prof working on SJW
Just moved to Boise. Have been checking out open houses. We saw a 2/1 in the North End, listed for 330k, went pending with a “new” price of 388k. Total insanity. The house was built in 1910, and had doorways that I had to duck under to pass (I am 6′3″), and the doorways were also oddly narrow - guessing this was a custom build for midgets back in 1910. The realtor even staged the basement, my wife asked me, “who is going to hang out down here, it is like a dungeon.”
Wages here don’t support these prices. In state migration by out of state equity locusts might account for some of the run up, but no way all these houses are being bought with cash. I have noticed more inventory coming online within last two weeks - guessing this is the start to the “buying season”. Hoping this things craters, soon. Complete mania in the Boise market right now.
House next door to me is listed for 870k. It is a nice house, brand new custom construction (not a mass subdivision builder)… but has been on the market since October. Starting price was 950k. Backstory is that owner originally tried to lift the house and add a huge basement. Well, house fell into the hole, and project turned into a complete demolition/removal/rebuild new house from scratch. So he built the new house. My guess is that he has a lot of money tied up on this deal, and he can’t just “give it away”. Two open houses every weekend, lots of traffic… and yet it sits, and sits…
“Just moved to Boise.”
You’ll find a thriving LGBTQ community there.
I don’t really care, what people do in their personal lives is not my business.
Agree - but this group really doesn’t want to keep it private, do they?
They want your children to be educated on what goes on behind their bedroom door.
doubt that’s true about all Boise LGBT peeps
probably keep their heads down in a conservative state
“They want your children to be educated on what goes on behind their bedroom door.”
+1 Yes.
I was talking about California LGBTs. They don’t realize that straight sex ed in the public schools has to do with reproduction…a public concern.
LGBTQ
They removed the door from the closet and they have turned society into a captive audience.
They have no intention of keeping their heads down. Their strategy is to spread out over all the states and eventually take over that state’s politics. That goes for all libs not just gays. I know; i’ve Overheard SJW friends talking about just that; how wonderful it is that so many are moving to northern VA. “We need more progressives there to turn the state blue,” etc.
They removed the door from the closet and they have turned society into a captive audience.
Which is why I cancelled the cable and stopped going to the cinema. You’re only captive if you collaborate with them, and give them your money in the process.
I’m always amazed when I visit people and they have the giant TV blaring even though no one is watching. I guess some people fear peace and tranquility. Maybe they’re afraid that they might have to actually think for themselves.
Its all about normalizing their deviancy. Think about the US in the 50s versus now - theres no comparison, every aspect of culture has been degraded. Fat, brain dead and amoral - no way this society can survive.
Um, there is no way I would want my children to grow up in the 50s. I’ll take the present day please, with all its flaws, quirks, and tensions. Tolerance, that’s what it’s all about. Live and let live.
Uh, what tolerance today? In Blue States, only if you agree with SJWs….
Wages here don’t support these prices.
I suppose. Micron stock has been going nuts lately though. Could have a major local effect?
low rates forever?
i really think thats where we are at cause of the debt load we have created.
global central banks will buy enough govt debt to keep yields down.
‘The Florida Department of Transportation announced the agency was warned about cracking in the Florida International University pedestrian bridge, two days before it collapsed, killing at least six people, but they didn’t listen to the voicemail until Friday.’
https://www.abcactionnews.com/news/state/fdot-warned-about-fiu-bridge-cracking-2-days-before-fatal-collapse-but-didnt-hear-voicemail
low bid?
Cracking?
How about failed engineering? Or the questionable practice of carrying out bridge construction while traffic flows underneath?
The full story will never be told. They built an asymmetrical engineering design and then forgot to put in all the trusses. Then they stress tested it without inspectors on site with traffic still rolling under it.
Several years back a Miami Dade College parking garage collapsed. It didn’t make national news. Then the college built a new building on its Kendall campus whose ground floor is literally cracking. It’s only a question of when it collapses.
All of the elevators on all on its campuses have expired July 2016 elevator inspection certificates.
The Latin Building Association owns the city.
My wife stays out of new construction and elevators.
“They built an asymmetrical engineering design and then forgot to put in all the trusses. Then they stress tested it without inspectors on site with traffic still rolling under it.”
Which goes to my point that MSM articles speculating about cracks causing the disaster are more about engaging the sheeple than explaining what happened.
“The full story will never be told. They built an asymmetrical engineering design and then forgot to put in all the trusses. Then they stress tested it without inspectors on site with traffic still rolling under it.”
Why do you possess this knowledge but the public doesn’t, and won’t be told?
‘Many zip codes, especially in the Northeast and on the West Coast, have long since blown past their 2005/2006 high’
How many years, month after month, have we heard “prices are rising faster than incomes”?
‘The days of saving up 20 percent down are long gone — now it’s 3% to 6% and people even have trouble making those payments.’
Click!
A highly regarded housing analyst said, “6% down payment mortgages are subprime by definition.”
He’s right.
‘Many zip codes, especially in the Northeast and on the West Coast, have long since blown past their 2005/2006 high’
One thing I’ve noticed out west is the YOY price gains this year are far more than previous years. It’s 20% in some locations, whereas it was 10% for many years before that. Prices seem to be going parabolic.
Alameda, CA Housing Prices Crater 12% YOY As Bay Area Economic Conditions Deteriorate
https://www.movoto.com/alameda-ca/market-trends/
homeownership director for the Massachusetts Housing Partnership.
quasi gov cheeze balls
Trump better get busy chopping
Starting with the FBI.
It’s unreal to me how Comey and McCabe do not have the faintest sense of responsibility for their misdeeds. I can understand a certain amount of tight-lipped denial, and I certainly don’t expect them to make public confessions or apologies, but their chit is way over the top. Comey fancies himself as some sort of Second Coming, pure as the driven snow. McCabe is just a nasty, snarling little piece of goods.
Nope, they’re not going to take their lumps, quiet down and hope they don’t get charged (they will). They’re going to petition the lord to be elevated to sainthood.
Comey is especially creepy. It wouldn’t be difficult to imagine him as a Jesuit propositioning some altar boy in the name of God.
I look forward to watching the Mutt n’ Jeff show in the days and weeks to come.
And the one who really takes the cake is John Brennan.
https://twitter.com/thehill/status/975069528974602241
Ya gotta love James Woods’ response to him on Twitter:
https://twitter.com/RealJamesWoods/status/975076654493003777
Be funny if Q was a consortium of him, Seth Rich, Julian Assange, DJT, Mike Flynn and a few others.
If there is a Q, I’m guessing he’s an Erik Prince production.
He kept saying to trust Sessions. Sessions finally delivered.
homeownership director for the Massachusetts Housing Partnership.
quasi gov cheeze balls
There are so many of these “affordable housing” groups in Massachusetts. They position themselves as friends of the poor and working class, but they are nothing of the sort. And their directors are very well paid (and kind of shifty, if you’ve ever had the displeasure of interacting with any of them).
“They position themselves as friends of the poor and working class, but they are nothing of the sort.”
Hey, you do what works.
“And their directors are very well paid …”
Natch …
“… (and kind of shifty, if you’ve ever had the displeasure of interacting with any of them).”
😁
“The median price of an Ada County house is almost $300,000 today, according to Boise Regional Realtors. In Canyon County, it’s almost $200,000. Both prices are record highs.”
We have record highs almost everywhere out west. WA state, Idaho, northern NV, CA, OR. When does this all come crashing down? I am shocked that prices have gone parabolic after the last crash. I never thought it possible.
I’ll have to say that, for the time being, oxide made a good decision to buy her house when she did. The longer this goes on, the better decision it was, especially given the sky-high rents we’re seeing. Around here, it’s $800 to rent a bedroom in a house, and you’re sharing a bathroom with at least one other person, perhaps more.
they have to keep prices from falling to keep confidence up for buyers.
Oh no, she’s a Debt Donkey…. :Rolleyes:
Hello my good friends.
Denver, CO 80211 Housing Prices Crater 9% YOY
https://www.zillow.com/denver-co-80211/home-values/
https://snag.gy/m5EzRB.jpg
Thanks, but my area — the land of boring domestic gov agencies — isn’t bubbling like the rest of the country. We’re at about 3% appreciation since I bought. That’s pretty much the cheapest dollar-store soap in the dishpan. The sexier defense contractors area might bubble a little more.
But then there’s wild-card Amazon….
Cr8er
$7,778.00 Bitcoin price
−$777.77 Since yesterday (USD)
−9.09% Since yesterday (%)
stocks and home equity are the drivers of the economy.
Lower highs, and lower lows…
$7,450.18 Bitcoin price
−$744.56 Since yesterday (USD)
−9.09% Since yesterday (%)
Monthly low…
$7,355.00 Bitcoin price
−$2,700.32 Since last month (USD)
−26.85% Since last month (%)
Apollo Beach, FL Housing Prices Crater 33% YOY As Mortgage Meltdown Accelerates
https://www.movoto.com/apollo-beach-fl/market-trends/
I think median price per sq ft is a better indicator and it’s up 20% over last year. So how is this a meltdown?
Let’s see if we can get Donk Craterton to weigh in.
You talkin’ to me?
One time I looked up one of The Maf’s little market trends. There was a 20% rise in price/sq ft even while median price fell.
The data skew was driven solely by the completion of a small complex of luxury condos. For example, say in 2016 you have only 10 3-bed SFH for sale. Then, in 2017, you again list 10 AFH at a slightly higher price, *and* you build and list 10 brand-new high-end 2-bed condos. The condos are price inflated by square foot because they are luxe. However, they still list for less than the SFH because they’re smaller. The end result is that the SFH actually go *up* in price, but the new condos are cheaper enough to lower the average price. The Maf can still claim a “crater” in overall prices *if* you measure YOY. However, the difference is apparent in the sq ft price. In those shiny condos, sq ft is covered in Pergo, thus raising the sq ft price even if the overall condo price is lower than the SFH.
This skew is common in no-name towns with very small sample numbers, of which The Maf is so fond. The skew is even more severe if those SFH are on large chunks of land, as if often the case in HA’s small unknown towns. Land increases the SFH price with no change in sq ft.
So I just ignore The Maf/HA.
Hey Donk
Hi hon
“So I just ignore The Maf/HA.”
Are you sure?
Mountlake Terrace, WA Housing Prices Crater 10% YOY
https://www.movoto.com/mountlake-terrace-wa/market-trends/
I’d like 100 sq ft of house, 1/2 pound of bologna–make sure to slice it real thin…oh and some swiss, too, maybe 1/2 pound of that.
3% down payment
6% commission to sell = subprime
Imagine buying a reit w a 6% fee
Inflation makes people feel poorer. If they feel poorer, they’ll buckle down and limit their spending. Yet that’s opposite of what the central banks purport to want.
Inflation? If you think wages are going to magically triple or quadruple, you’re not really thinking.
Don’t need wages to go up for inflation to happen. Shrinkage will suffice. (Just finished slicing a sourdough loaf that was 2/3 the size of the loaf the same money would have bought two years ago.)
That reminds me - it’s time to buy a bread machine. I’d rather just make my own.
Rising wages is inflation by definition.
As is shrinking quantity at the same price…
… better known as price fixing completely unrelated to inflation.
Uh, no. Inflation = more money for the same amount of stuff or less stuff for the same amount of money. The latter version works best when incomes are not inflating much.
Incorrect. Inflation begins with wages.
The later you speak of simply collapses demand resulting in diminished profits.
Case in point? Housing.
asset inflation makes people feel wealthier and spend.
“Inflation makes people feel poorer. If they feel poorer, they’ll buckle down and limit their spending.”
In theory (and if they had any sense) this is what they would do, but dumb ‘em down enough and they’ll keep on borrowin’ and they’ll keep on spendin’ … until they can’t; This is the point that their lifestyles radically transform and it is then that they get to enjoy the lifetime camping experience offered up by the Santa Ana river.
If that person has purchased a house, then inflation makes him feel *wealthier.* Inflation means house prices inflate, which gives the man more equity to cash-out refi and spend on boats and boob jobs. The wealth effect.
“The Troubles (Irish: Na Trioblóidí) was an ethno-nationalist conflict in Northern Ireland during the late 20th century. Also known internationally as the Northern Ireland conflict, it is sometimes described as a “guerrilla war” or a “low-level war”. The conflict began in the late 1960s and is usually deemed to have ended with the Good Friday Agreement of 1998. Although the Troubles primarily took place in Northern Ireland, at times the violence spilled over into parts of the Republic of Ireland, England, and mainland Europe.”
https://en.wikipedia.org/wiki/The_Troubles
England is the drizzlin’ chitz.
https://www.creditcards.com/credit-card-news/up-g19-federal-reserve-credit-debt-01082018.php
😁
Saint Augustine Beach, FL Housing Prices Crater 7% YOY As Vacation/Retirement Property Market Collapses
https://www.movoto.com/saint-augustine-beach-fl/market-trends/
One bubble location I watch has reached an all-time high in prices, eclipsing the previous bubble. However, in inflation adjusted dollars it’s still about $90,000 less. Since past performance isn’t always an indicator of future results, all bets are off. Another run-up of $90k would put it at the previous price in inflation adjusted terms, and there’s nothing to say it won’t go higher than that.
This is kind of a disturbing situation given that wages are not going up with inflation. It will be interesting to see how this shakes out, but by the looks of things around here it’s going to be another summer of big boats, RVs, UTVs, motorcycles and debt junkies clogging up the roads and campgrounds.
What inflation?
I’d love to respond, but you’ve turned into a troll who lies and distorts rather than acknowledging facts and having real conversations.
proceed my good friend….
Kure Beach, NC Housing Prices Crater 26% YOY As Coastal Property Market Correction Expands
https://www.zillow.com/kure-beach-nc/home-values/
*Select price from dropdown menu on first chart
Illegal Alien Acquitted of Murdering Kate Steinle Sues Feds for ‘Vindictive Prosecution’
by JOEL B. POLLAK15 Mar 20189,400
Jose Inez Garcia-Zarate, the illegal alien acquitted last year of murdering 32-year-old Kate Steinle in July 2015, has sued the federal government, demanding that it produce documents “pertaining to vindictive prosecution and collusion” with the state government in its prosecution against him.
In November, a San Francisco jury found Garcia-Zarate not guilty of murdering Steinle, agreeing that although he had the gun from which the fatal shot was fired, the discharge could have been accidental.
The jury did convict Garcia-Zarate of felony possession of a weapon. He had seven previous felony convictions and had been deported five times before finding “sanctuary” on the streets of San Francisco, a noted “sanctuary city.”
http://www.breitbart.com/california/2018/03/15/kate-steinle-garcia-zarate-sues-federal-government-vindictive-prosecution-collusion/
Here’s the weekly Fed balance sheet report: https://www.federalreserve.gov/releases/h41/
Very first column at the top of the page is what I’m looking at. Since 04 January 2018, the balance sheet is about 78 billion smaller. But MBS holdings haven’t changed. From 01 March to 15 March, those are about 3 billion less.
Interesting to compare those numbers with the weekly Dow and interest rates.
Neuromance, can you elaborate on “interesting to compare”? Your comments are always great reading, and I definitely want to keep up, but can’t follow what you mean with this one.
This is my understanding of the situation:
• Week to week, the balance sheet changes in size.
• To maintain the size of its balance sheet, the Fed has to buy securities to replace ones that mature. This injects money into the financial system. A balance sheet reduction indicates less money being injected into the financial system.
• I have not done this, but it would be interesting IMO to compare balance sheet ups and downs with interest rate and stock market ups and downs. It would be interesting to see just how sensitive mortgage rates, US 10 years and the Dow are to the balance sheet.
• The Dow has essentially quadrupled and house prices have increased by a very healthy amount since the Fed started injecting money into the financial system via its various forms of QE. As of last year, it bought about a quarter trillion in MBS.
• Look at the weekly MBS holdings, first at January 05 2017, and then at December 07, 2017. They’re not that different. Yet the Fed bought 274 billion in MBS over 2017. Just to maintain those holdings.
Thank you! I understand now — the third point clears it up. You were literally saying that it *would be* interesting to compare those numbers; I had read your comment as implying that it *was* interesting to compare the numbers, and that you didn’t need to say any more beyond pointing to the existence of an apparently self-evident relationship. Apologies for misunderstanding, I should have known that you would spell any conclusions out carefully, as you always do. Thanks again for your always-instructive commentary.
I’m wrong about a lot of things, right about some. Sometimes I hit the nail on the head, sometimes I hit my thumb
+1
I also value your insight Neuromance, and your humility is a credit to the way you think about things.
I was looking for when the Fed first started purchasing MBS. I found this link: https://www.richmondfed.org/~/media/richmondfedorg/publications/research/economic_brief/2014/pdf/eb_14-04.pdf
Very interesting. It shows Congress’ interest in having the Fed buy housing debt, and from 1971 to 2001, it had less than 10 billion of real estate related debt.
The interplay between politicians and Federal Reserve officials is intriguing. There’s all this talk of central bank independence but I suspect there is a lot of interplay. Nowadays, the Fed and politicians I think are much more on the same page than back in the 60s.
terplay between politicians and Federal Reserve officials is intriguing. There’s all this talk of central bank independence but I suspect there is a lot of interplay. Nowadays, the Fed and politicians I think are much more on the same page than back in the 60s.
I remember reading this joke in one of the transcripts of the Fed meetings during the financial crisis:
“I’d like to start with the story of an elderly wealthy gentleman who had taken a young bride and begun to spend money like crazy. His friends got very concerned that he was going to go through his entire fortune, and they elected one of their number to go and talk to him about it. He said, ‘Sam, We’re really concerned. We want to make sure that you know you can’t buy love.’ Sam said: ‘I know you can’t buy love, but if you spend enough money you can buy something that looks so close you can hardly tell the difference.”
I believe the Fed governor who made the joke was Elizabeth Duke. This stood out to me as a perfect example of the lengths that the Fed was willing to go to in order to re-inflate the bubble. Just like the joke above, it’s difficult to distinguish between a bubble and an increase in value. On the surface they kind of look the same, and I suppose that if you do enough QE and hold down rates long enough, you can get to the point where people genuinely start to believe that the price increases we’ve had in the past 6 years are normal. But they are not.
You can’t buy happiness, but if you shoot enough heroine you can hardly tell the difference.
The difference is that eventually there will be hell to pay.
“In 1966, Congress gave the Federal Reserve authority to purchase the debt of agencies guaranteed or owned by the federal government.”
This is the outset of the great society programs.
Sounds like it also might have been the outset of using printing press money to finance government programs in liue of honest taxation.