The Housing Bubble

OK, I’m confused. Are the Bush tax cuts expiring, or not?

Need a spreadsheet to help me figure out interest on a small loan I made to a relative. They [a 20-something, for a car] only make random payments but I want to keep track of the 5% interest I am charging them [okay I really am not trying to make a profit, but want them to be held accountable - would give them a blood transfusion if I needed to but as I said trying to teach responsibility]. So anyone know/have a template of such ??? Thanks.

“The Fed can create all the money it wants, but it cannot command it to flow uphill. The new money flows downhill where the fun is: to the bond market. Bond speculators are having a field day.”

~Antal Fekete

My 82 year old fathers response to someone named Jeff…

Somebody named Jeff submitted this challenge to TEA Partiers on Lew Rockwell’s blog. We couldn’t resist answering him.

I have a few simple questions for these angry voters and their favored candidates:

1) Have you consistently refused to vote for Republicans and Democrats, either by not voting or voting third party? (Some have, Jeff, and some haven’t. A majority may have supported the GOP for years in the belief the party would do what it promised and live within the means of the taxpayer. The last time we, personally, voted for a Republican or Democrat presidential candidate was 1964. And you?)

2) Do you advocate abolishing or drastically reducing Social Security? (It’s on the skids and needs strong medicine if it’s to survive, but TEA Party folks - like most Americans - are only lately coming to understand the fundamental demographic problem. Two few workers supporting too many recipients! And the Trust Fund is mostly gov’t IOUs!)

3) Do you advocate abolishing or drastically reducing Medicare? (The maximum Medicare tax anybody paid when it started in 1966 was $23.00 for the entire year. The tax slowly rose, outlays rose faster, and a great many TEA Party patriots have come to realize it is doomed. It’s this kind of government mis-management that gave rise to the TP movement in the first place!)

4) Do you advocate the immediate removal of U.S. military forces from foreign nations, and drastically reducing the DOD budget? (Jeff, that’s a loaded question and you know it. Every one knows that the USA has built up a shockingly expensive military operation around the world and that something must be done about it. But you want to close the whole thing down “immediately” and throw thousands of military people into the civilian work force? Doing what?)

5) Do you advocate abolishing the Federal Reserve system and repealing laws that prohibit currency competition? (The Federal Reserve began management of the U.S. dollar in 1913 and has driven its value down to less than 5¢. Of course it ought to be put out of business and the money of the Constitution restored. But the issue of fiat currency versus commodity money is only now finding its way into the national debate. Give TEA Party supporters from now ’til the election of 2012 and then ask ‘em the question. They are acquainting themselves with the tricks Congress and the Federal Reserve have been playing with our common medium of exchange and it takes some time to sort it all out. We pity the politico who doesn’t also study up on this before November, 2012.)

Jeff concludes by saying that if you haven’t answered his questions to suit him “You have NO business complaining about the ’state of the union.’ ”

He is quite wrong, of course. As long as Congress and other levels of government are extracting money from your purse, and wasting so much as a dime of it, you have every right to complain. Loud…and often. ~JW

Wow,

Yahoo reporting actor Randy Quaid and wife arrested for burglary and squatting plus damage in their old house.

We have a beloved Cousin Eddie here too !

A project manager at the company where I work bought a second home (around 200k) in Texas for his daughters because they don’t make enough money after graduating from college (one has a degree in music, the other a degree in international business).
He put 20% down, and he will temporarily pay half the mortgage, insurance and taxes, while the daughters are expected to pay for the other half.
The ‘rent’ the daughters are paying will be used as ‘equity’ whenever they decide to sell the house or when the daughters want to buy the house from their pArents.
He said the main reasons behind his decision were:
1. He couldn’t stand seeing his daughters throw money away in rent.
2. He knows his daughters couldn’t buy on their own.

been combing over the most recent Flow of Funds report which seems to scream that consumers are not deleveraging on their own. When you subtract out write-offs where borrowers are being cut off by their lenders, the resulting amount of shrinkage in ourstanding credit is miniscule.

For a while economists had me believing in a generation of stagnating growth and a bounce between light deflation/inflation. But now I’m back to watching for the big bang with expectations of forced austerity, another post dead cat bounce giant leg down.

I’m normally somewhat annoyed by the SF Chron’s placement of real estate “stories” on the front page of their website. These stories look more like thinly-veiled adverts to me. But today’s story adds a kicker: the price has gone down to $2.699 million from $4.5 million in July 2009.

Within a month of putting her two-bedroom house in San Francisco on the market recently, homeowner Linda Gao had five offers, each one above her asking price of $699,000. So before accepting the most-attractive bid, she threw in an extra condition: If you want to buy my house, you have to feed the squirrels.

Ah, the good old days….

Two weeks later, she and the buyer hammered out a contract that included feeding the backyard wildlife, which Ms. Gao has done three times a week for the past two years. “I don’t think it matters if it’s a buyer’s market or a seller’s market,” Ms. Gao says. “Anyone with a good heart would feed them.”

Indeed, when Susan Butler was negotiating to buy Ms. Gao’s San Francisco property, she was resigned to the feeding schedule. “At that point, I said, ‘Yeah, what the hell, I’ll feed the squirrels,’” she said. She signed a contract in April, paying $815,000 — or $116,000 over the asking price. Will Ms. Butler actually feed her new furry friends? “Probably not,” says the college administrator. “I don’t want to encourage other rodents.”

If this poster child for FB overpayment is still in the house, I bet she’s subsisting on squirrel kabob.

Now the chidrens can sign themselves over to the gubmint…

Citigroup shedding student loan business
Citigroup sells student loan business as growing federal role shakes up industry

BOSTON (AP) — Citigroup Inc. is exiting the private student loan business, as the government changes the playing field by making Uncle Sam the primary lender to students.

The government’s growing role is cutting out private lenders from much of the business of financing higher education, prompting lenders to decide whether to exit the business entirely or scale back.

On Friday, Citigroup said it is selling its 80 percent stake in Student Loan Corp., its student loan business, and about $32 billion in related assets to Discover Financial Services and the student lender Sallie Mae.

The combined transactions will bring Citigroup $1.8 billion in cash, but Citi said it will take a loss of about $500 million in this year’s third quarter because of the deals.

Dug out Operation Mindcrime last night. How come nobody makes concept albums anymore?

That would be sweet if someone made a concept album about a Florida Realtor, say from the year 2003 - 2012.

An e-mail exchange from my cousin and me. We have both owned silver and gold for a long,long,long time. Just a little Ins.

Me~”If I have learned only one thing in life, it is that any market or system that can be manipulated will be, done by some of the so called “good” in “your” best interest folks. Money/wealth/cash/, etc… controls the world, period. Always has, always will. A thousand more laws can be written, and a sharp person will find a way to use them to their advantage”.

“I gave up thinking that anything is going to change, vote for whoever you want to, they are basically all the same, power hungry egotists. Best thing to do IMO is try and grab what you can while you can, and screw the system as much as possible without breaking the law and going to jail”.

“There’s and old song called “tree top flyer”(it is about a drug/pot smuggler) makes a whole lot of since to me, in that you do your level best to see that the government gets the very least possible. I loath government far more than wall street, but that’s just me”.

Sent: Sunday, September 19, 2010 12:21 AM
Subject: $6,000 silver

Yes, it’s a stretch, but there are some good points made here. BTW, I’ve just read the latest COT reports and it seems JPM is increasing its short position now–not trying to cover. Perhaps they are shorting more in order to drive the price down to cover…I have no idea. I do know they have rigged the silver market for years. JPM has the encouragement and permission of those in charge–The Fed and private central banks to do illegally collude to suppress silver prices. (Congress is definitely not in charge).

$6,000 Silver and ONE BANK
Bix Weir

http://www.roadtoroota.com/public/94.cfm

The silver markets are rigged. Every day. Every trade. Every option. Every derivative. The silver markets have been rigged since the early 1970’s when Alan Greenspan introduced computer market trading systems to the world beginning the long term commodity market rigging operation.

This Country Just Can’t Deal with Reality Any More
As Election Day 2010 approaches, the consequences of the nation’s three-decade-old decoupling from reality are becoming painfully obvious.
Consortium News / By Robert Parry

As Election Day 2010 approaches – as the United States wallows in the swamps of war, recession and environmental degradation – the consequences of the nation’s three-decade-old decoupling from reality are becoming painfully obvious.

Yet, despite the danger, the nation can’t seem to move in a positive direction, as if the suctioning effect of endless spin, half-truths and lies holds the populace in place, a force that grows ever more powerful like quicksand sucking the country deeper into the muck – to waist deep, then neck deep.

Trapped in the mud, millions of Americans are complaining about their loss of economic status, their sense of powerlessness, their nation’s decline. But instead of examining how the country stumbled into this morass, many still choose not to face reality.

Instead of seeking paths to the firmer ground of a reality-based world, people from different parts of the political spectrum have decided to embrace unreality even more, either cynically as a way to delegitimize a political opponent or because they’ve simply become addicted to the crazy.

http://www.alternet.org/story/148206/this_country_just_can%27t_deal_with_reality_any_more

Home Sales, Goods Orders Probably Rose ~ Bloomberg
Home Sales in U.S. Probably Rose in Sign Real Estate Market Is Stabilizing

Home sales probably increased in August, a sign the U.S. real estate market is stabilizing after the expiration of a tax credit caused demand to plunge, economists said before reports this week.

The chicoms need to do mo consume’n…

China Must Spur Consumption to Meet Global Challenges, Bank Adviser Says

China confronts a challenging international environment and must boost domestic consumption, said Li Daokui , an academic adviser to the People’s Bank of China, at a financial forum in Beijing today.

I went house and neighborhood hunting yesterday, and every person I met owned 4-6 rentals for “cash flow” and thought next year So Ca would be in a real estate recovery. When you mention analytics you get the “this neighborhood is going up, after all, it’s local”… All of them thought we’ve bottomed. What am I missing? I must be a jaded buyer.

The mailman seems to be the real estate expert around this neighborhood. Nothing like the “phone game”.

Dems to voters: You may hate us, but GOP is worse
AP

WASHINGTON — With just six weeks to avoid a possible election catastrophe, Democrats are trying to limit the damage with a closing argument that’s more plea than platform: We know you voters are furious with us, but just let us explain why the Republicans would be worse.

The strategy requires an autumn influx of voters willing to view the election as a choice between two imperfect parties — and imperfect candidates on each ballot line — rather than as a chance to slap the Washington establishment that the public seems to dislike so deeply.

But the Democrats admit the Republicans have a big emotional advantage with voters who are fed up with high unemployment, soaring deficits and what many see as an arrogant Congress and administration that rammed a revolutionary health care plan down their throats.

If voters keep burning with the throw-the-bums-out fever that animated so many primaries, Democrats would be likely to lose more than 40 House seats, costing them the majority and positioning Republicans to block virtually any Obama initiatives in the next two years. Losing the Senate majority, which would require a 10-seat Republican gain, is less likely.

Democratic candidates want to convince these voters that no matter how much they hate the status quo, they would be worse off under a Republican Party that hasn’t learned from its mistakes and is lurching ever harder to the right.

Christine O’Donnell: “I Dabbled Into Witchcraft”

http://www.youtube.com/watch?v=nECxQUi_pr0

Here is an enticement for Ben to come back to San Diego soon:

San Diego breweries score big at Great American Beer Festival
Peter Rowe
Saturday, September 18, 2010 at 3:00 p.m.

Pizza Port Carlsbad was named large brewpub of the year, as San Diego County breweries turned in a record performance at the Great American Beer Festival in Denver.

The Carlsbad member of the Port empire took seven of the 15 medals awarded local operations. This was the second consecutive year that Carlsbad Pizza Port was named the nation’s top brewpub.
…

“Steady reductions” = persistently negative first derivative = ongoing price declines

Home price reductions hold steady in San Diego
By Jennifer Davies
Thursday, September 16, 2010 at 12:02 p.m.

While homeowners are still slashing prices, the number and size of those reductions in San Diego are smaller than the national average, says a new report by Trulia.com, a real estate website.

As of Sept. 1, 23 percent of all homes for sale in San Diego had seen a price reduction, unchanged from a month ago but up from September 2009 when 20 percent of homes had their price reduced. Nationally, 26 percent of all homes had their offering price cut.

The average percentage of reductions in San Diego was 8 percent, which is 2 percent lower than the national average.
…

Given the existence of a signed mortgage contract, isn’t the question of whether to walk away from a mortgage a household business decision between a homeowner and his lender rather than a moral issue?

Most oppose walking away from mortgage
By Jennifer Davies
Wednesday, September 15, 2010 at 2:59 p.m.

A majority of Americans believe it is “unacceptable” for homeowners to stop paying mortgage payments and walk away from their homes, says a Pew Research Center survey.

Of the 2,967 adults surveyed during the second half of May, 59 percent said they believed it was wrong for a homeowner to stop making mortgage payments and surrender their home to a lender. Still, 19 percent said it was OK to walk away while another 17 percent said it depended on the homeowner’s circumstances.

The acceptable reasons for walking away were: not enough money to meet expenses (22 percent); just enough to meet basic expenses (25 percent); meet expenses with a little left over (19 percent); or live comfortably (14 percent).

Of those surveyed, 21 percent said their mortgages were more than the value of the house, while 48 percent said their home had lost some of its value.

Those whose home value had declined were more likely to think walking away was an acceptable option compared to those whose homes had not lost value (20 percent vs. 14 percent). A quarter of all renters (25 percent) said it was acceptable to stop making mortgage payments.
…

This is old, but I can’t resist a post suggesting that the “savvy” under-30 home buyers are back on the prowl.

Savvy couple on the way to buying home
Consultation gives newlyweds confidence in their saving abilities

By Melanie Stevens, SPECIAL TO THE UNION-TRIBUNE,
Sunday, April 25, 2010 at 12:04 a.m.

Newlyweds Briana and Alex Palacio are renters in North Park now, but their offer on a home in Chula Vista has been approved in time to qualify for the $8,000 homebuyer tax credit. The Palacios said their financial consultation helped them make the offer. 
…

What drives the stock market higher against the headwinds of a never-ending barrage of worse-than-expected data releases?

Higher Close Even As Consumer Sentiment Drops
Friday September 17, 2010 - 17:37 PM EDT

Despite a drop in consumer sentiment, the markets closed modestly higher with the Dow rising 13 points to 10,607. Nasdaq gained 12 points to 2315.
…

Too late to claim a 2009 home purchase date in order to qualify for $8K in stimulus?

IRS bungling some homebuyer tax-credit claims
By Kenneth R. Harney
Saturday, September 18, 2010

The federal homebuyer tax credit programs have been widely praised for stimulating real estate sales but reviled by critics who see them as a multibillion-dollar waste of the government’s money.
…
Out of about 1.77 million credit filings during 2009, auditors identified 73,119 individual returns from taxpayers who received credits and whose account records at the IRS had incorrect — or no — purchase dates. Among the findings:

– 59,802 recipients who purchased their homes in 2009 were incorrectly recorded by the IRS as having purchased during 2008, or no year was identified.

– 9,122 credit recipients bought their homes during 2008, but the IRS recorded the purchases as occurring in 2009. This could result in potential tax revenue losses of nearly $31 million, auditors estimated, because those individuals might not be asked to repay the homebuyer credit over 15 years even though their 2008 purchase date requires them to do so.

– 4,195 recipients’ claim forms had no purchase date stated or the purchase occurred prior to 2008. “These claims should not have been processed,” auditors said.

Beyond these claims, a total of 514,987 tax credit requests contained purchase dates that “cannot be verified” because the data was not captured by IRS computers.
…

We’re holding out for the $25K homebuyer tax credit, no strings attached.

Homebuyer tax credit has glitch
By SHANNON BEHNKEN
Published: September 19, 2010

TAMPA - The federal homebuyer tax credit did its job to boost the real estate market, but many involved - from buyers to the Internal Revenue Service - have run into problems with confusing wording and stipulations.

The result: Hundreds of thousands who’ve already filed for the credit will have to give the money back.

More than 2.6 million eligible for the credit have bought homes since July 2008. They’ve received $19 billion in tax breaks.

But it turns out that nearly half of those who received the money for the credit, claimed on their 2009 tax returns, will have to return it, according to an audit from the U.S. Treasury inspector general for tax administration.…

Do dead people really qualify for the $8K first-time home buyer tax credit? I can certainly understanding how processing those could create quite an IRS backlog.

Posted on Sun, Sep. 19, 2010
At IRS, backlog for home buyers’ tax credit
By Alan J. Heavens

Inquirer Real Estate Writer
The IRS continues to have trouble handling claims for home buyer tax credits, a Treasury Department audit shows.

The audit by the Treasury Inspector General for Tax Administration, completed Aug. 16, said some taxpayers not entitled to the credit received it and others who were supposed to get it did not.

A previous audit completed in June found that thousands of taxpayers - including prison inmates serving life sentences - fraudulently claimed a total of $134 million in tax credits, and that the IRS missed them all.

The IRS has tightened procedures since the June audit to stem the flow, the inspector general said.

The audit found that though $10.1 million in credits were claimed by 1,326 taxpayers the Social Security Administration identified as dead, the IRS succeeded in blocking 528 of those from receiving the more than $4 million they claimed for the credit.
…

So the neighbors across the street yesterday had their driveway arrayed with junk-laden folding tables and are at it again today in what must be their fifth garage sale of the year. I can’t believe they never run out of used crap to try to palm off on their neighbors! It almost makes me wonder if they are running some kind of fencing operation.

Was out with my sons yesterday driving around Del Mar (high-end coastal area of SD just north of La Jolla). Unlike our area, Rancho Bernardo, where the RE market seems moribund, we saw many “For Sale” and “Open House” signs along the main thoroughfare. I suggested that it might be fun to visit a couple of open houses, but my oldest son objected, saying it would make him sad. I asked why, and he expressed concern that the sellers would soon join the ranks of the homeless. I am not sure how often his concern is warranted; I would hope most of those finding themselves in the position of having to currently sell a home in Del Mar will soon join the ranks of the renters, rather than the homeless, but who knows? (Cue in FPSS to wish these forced sellers the worst possible transition…)

Drove past a new development near one of my sisters yesterday, place has been clear cut, has 6-7 houses in it, a real-a-tor had a BBQ grill set up with a small tent and lots of deflating balloons. Sign on the road read, come ‘tour’ our homes and enjoy a hot dog while looking at our “hot” deals. Place is a cookie cutter POS. They did have what appeared to be one hot dog eater on site, I’m sure it was a local just dinning and dashing. I would have stopped if they had hamburgers/steaks & beer. These real-a-tors need to get their $hit together.

Why be angry with Christine O’Donnell?
Pat Buchanan blasts Rove, Krauthammer, and other conservatives for trashing the Delaware Republican nominee for U.S. Senate

“To the Republican establishment, tea party people are field hands. Their labors are to be recognized and rewarded, but they are to stay off the porch and not presume to sit at the master’s table.

“And what O’Donnell did, with her amazing victory, is to imperil that establishment’s return to power. That is why these Republicans went ballistic.” TEA Party & GOP

I keep hearing that Christine O’Donnell is not smart enough to ably occupy a U.S. Senate seat. She doesn’t know Washington protocol, she’s not up to speed on all those big world and national issues that senators must face every day, she has no real experience in the craft of big-time politics, etc., etc. Besides…Sarah Palin and S.C. Sen. Jim DeMint supported her! Ergo - the Democrat will win.

The U.S. Constitution never said the states had to send power-hungry career-bent politicians to the Senate, although those are the kind of people naturally attracted to the job. The people of Delaware appear to be aiming in a different direction.

Onondaga County’s sales tax formula hits towns hard

Salina Town Supervisor Mark Nicotra paid $239 in county property taxes this year on his modest, split-level home in the town’s Lyncourt section. Next year, that bill would more than double to $510 under the budget proposed by Onondaga County Executive Joanie Mahoney last week.

“It’s certainly distressing to see that,” he said when a reporter broke the news to him.

He won’t be the only distressed taxpayer in the county next year. County taxes on most homes in Syracuse’s suburbs would rise sharply — some, as in Salina, doubling or nearly doubling — if Mahoney’s proposed $1.19 billion spending plan is adopted by county lawmakers.

And since many homes are worth more than Nicotra’s $85,000 residence, the impact would be much greater on them. For example, a home in Clay worth $180,000 would see its county tax bill jump from $570 to $1,088.

“For the general public, it’s going to be a surprise,” Nicotra said.

http://www.syracuse.com/news/index.ssf/2010/09/onondaga_countys_sales_tax_for.html

http://www.shellypalmermedia.com/2010/09/17/from-the-industrial-age-to-the-information-age-kicking-and-screaming/

Blog - Friday September 17, 2010 - Add Comment
From The Industrial Age To The Information Age Kicking And Screaming

The economic crisis of 2007/2008 is universally blamed for the recession of 2009/2010. Today, when describing our current economic conditions, pundits and politicians alike cite job creation as the only way back. The unemployment rate is exceptionally high, but it fails to reflect an unfortunate reality: Yes, the average ~9.7 percent unemployment number is much higher than it should be, but — this is not a homogenously distributed statistic. In some areas, unemployment is tipping the scales above 40 percent. And, to make matters worse (as if that were possible) underemployment, which cannot truly be calculated, is at an all time high.

It is easy to understand how we are affected by underemployment. You can use yourself as a focus group of one. Are you making more money now than you were in 2007? Are you spending your money the same way you spent it in 2005? Doubtful on both counts.

When you add in the effect of the thrift paradox (where people hoard cash and save to help themselves, but ultimately destroy the economy that empowers their livelihood) we find ourselves in a troublesome place with opportunistic politicians (and pundits) offering sound bite solutions to a hugely complex problem.

Here’s the thing. I keep hearing people talk about jobs. But I don’t hear anyone talking about the root cause of our economic issues. And, as we all know, if you ask the wrong questions, you are guaranteed to get the wrong answers.

Percentage of survey respondents expressing confidence in housing as an investment (Fannie Mae survey)

Don’t buy until this percentage dips to well below 50%!

News Hub: A Dimmer View of Home Ownership
Sept. 16, 2010

The American dream of owning a home has lost some of its allure after years of falling home prices and owners facing financial ruin, a new survey by Fannie Mae shows. Nick Timiraos discusses.

I wonder why so many here are so against yard sales?
They’re not socialistic, they’re about the only free market capitalistic thing left that any income bracket can participate in.
I suspect it’s the smidgen of anarchy involved, the inability to control it that some people don’t like.
I doubt there would be the same complaints if it were a concert benefiting a persons favorite cause, or some such upper class to do.
They’re a great way to meet people, interact with your neighbors and make some extra money while doing it. Young people can learn the in’s and out’s of good business practices, the value of things and money, and improve social skills while thinking on their feet, some things which every level of the income scale could use some improvement on.
And yes, some cities curb property rights and declare only three yard sales are allowed per year, the wrongness of that is easy to see if you replace the phrase yard sale with birthday party or BBQ.

Minus ten points to me, I didn’t pick up on the jest.

the imbecility of those positions… quite a few of those around, that’s for sure.

Lunatics to the Left, Lunatics to the Right, and Not a Drop to Drink

“…The United States is not a happy country.”