The Housing Bubble

We’ve been touring rental houses again lately. We’ve yet to see one that was charging enough to cover a mortgage for the last sale price, even at current mortgage rates.

One poor owner told us that her, her husband, and her four children were all moving back in with his parents because they couldn’t afford the house anymore. He was a cabinet installer (oddly, the kitchen cabinets were old and awful). According to her they were renting it out for $600/month less than the mortgage payment. How that was going to “help” them I have no idea. I figure it will be in foreclosure within the next 6 months and I didn’t want to deal with that.

The landlords we spoke to were desperate to get us to fill out an application. Each and every one said most applications were from groups of 4-5 roommates or from people who had horrible credit. I’m sure we could get a good deal on one if we find one we like.

Meanwhile, our current rental house is falling apart. We’re still paying less in rent than the mortgage. We know that for sure because the house was purchased just before we moved in. The foundation was washing out. They got a quote for repair that was over $30,000. Instead they’ve filled in some holes and piled up dirt to temporarily stop water from running under the house. Most of the exterior wood is rotten. Now we’ve found termites and they exterminator said the house will need to be tented. They said because of the unusual shape of the house it will require bringing in a crane and will cost a large sum of money.

Glad to still be a renter…

Combo,

Loving your documentary link. I’m watching one on swarms, about how information is exchanged when large groups gather trying to extrapolate to the human condition…. Thanks for posting.

I would like to thank Moman for putting this into words.

Hell hath no fury like a Deadbeat LL who hasn`t made a mortgage payment in over a year when the rent check is 2 days late.

Comment by Moman
2012-01-07 22:20:33

“Reminds me of my situation. Paid $1100/mo faithfully for years, after 1.5 years of no contact and them not replying to emails I didn’t pay one month as I didn’t even know if they still owned the place. Wasn’t but a couple days later that hell hath no fury than a deadbeat LL who doesn’t honor her contracts, but gives me hell for not honoring mine, threatening to trash my credit (good luck, they had a fake SSN & BDay), giving me lines like they have been so gracious to let me rent under market rates for years, that it’s not their fault they weren’t able to flip the condo and are now being sued, etc.”

So banks loan money that does not exist and get paid back with money that does exist. Deadbeats live in houses that do exist that were bought with borrowed money that did not exist in hopes of selling them to a bigger fool that never will exist. Renters pay LLs that do exist with money that does exist for dwellings that also exist even if the LL is not paying the mortgage that does exist which was borrowed from a money supply that did not exist because until the dwelling is foreclosed the Deadbeat LLs property rights still exist. All of this to keep dwelling prices up because if they dropped the Too Big to Fail balance sheets would reveal the fact that they loaned a lot of money that never existed?

My head hurts, I am going to cut my Deadbeat LLs lawn now and probably watch the 1PM playoff game.

Realtors Are Liars®

Mitt Romney has “embraced” the neo-con King-makers, and they, he. Fawning adulation in the MSM to follow.

http://www.aljazeera.com/indepth/opinion/2012/01/2012188243939594.html

The campaign funds from the plutocrats are already flowing.

http://www.opensecrets.org/pres12/contrib.php?cycle=2012&id=N00000286

RETIREMENT PLANNING
JANUARY 8, 2012

Don’t Let Your Grown Kids Ruin Your Future
By RUTHIE ACKERMAN

It’s the Boomer Boomerang.

Baby boomers, who were notorious for prolonging their own adolescences well into their 20s and beyond (”Seinfeld,” anyone?), are feeling the financial sting now that their own offspring have their hands out.

The problem has only grown since the financial crisis, the official recession and the economic doldrums that have swamped the country.

The crux of the matter: The kids are out of work, out of money and maxed out.

But so are Mom and Dad, who have seen their own retirement nest eggs cracked, their retirement incomes shrunk and even the value of their nests—the family home—fall.

And despite those woes, financial advisers are seeing a trend in boomer parents supporting their children, even when it means they are taking away from their own retirement security.

Will Ellis, a financial adviser in La Grange, Ga., tells the story of a 60-something couple driven to the brink of insolvency by their 30-year-old daughter’s profligacy.

A real-estate agent during the housing boom, she racked up $850,000 in debt (including on her house, her car and her second home) before the recession hit and her income was slashed by over 80%.

Lucky for her, Mom and Dad were willing to help out—so much that Mr. Ellis figured they would themselves have gone broke in little more than a decade.

“How much are you willing to sacrifice?” Mr. Ellis recalls asking the retired couple. “Are you willing to give up your own needs?”

Mr. Ellis’s clients made the tough, and right, call. They cut off their daughter.
…

With the MBA, the NAR and the NAHB all immediately voicing their approval of the Fed’s housing market white paper, it must contain a juicy slice of pork for every REIC constituent.

MBA Gives Thumbs Up To Fed’s Housing White Paper
in News > Residential Mortgage
by MortgageOrb.com on Friday 06 January 2012

The Mortgage Bankers Association (MBA) has voiced its approval for the Federal Reserve’s recently released white paper that provides a potential framework for improving the health of the housing market.

MBA President and CEO David H. Stevens, in a press statement released by his office, noted that the white paper - titled “The U.S. Housing Market: Current Conditions and Policy Considerations” - mirrored many suggestions and observations previously raised by the trade association.

“The Fed’s white paper is a thoughtful document that raises a number of very interesting issues that policymakers ought to consider as they seek to solve the ongoing ills of the housing market,” Stevens said. “The Fed staff’s comments validate much of what we have been saying, as it relates to the balance between credit availability and consumer protection, as well as the role that Fannie Mae and Freddie Mac could play in stabilizing and revitalizing the mortgage market.”
…
Blah blah blah…

With all of the exciting news of the Fed’s latest hair-of-the-dog housing market stimulus initiative, I have recently ignored the euro zone debt crisis. Is it poised to end some time soon?

Greek Debt Writedown Should Exceed 50%, Schaeuble Aide Fuest Tells Vima
By Natalie Weeks - Jan 7, 2012 11:04 AM PT

The planned 50 percent writedown of Greek government bonds held by private creditors as part of a debt swap won’t be enough to make the country’s debt sustainable, an adviser to German Finance Minister Wolfgang Schaeuble told To Vima in an interview.

The write down, which aims to lower Greece’s debt to 120 percent of gross domestic product in 2020, will have to be greater and shouldn’t be voluntary, Oxford University professor Clemens Fuest told the Athens-based newspaper.
…

Europe
Eurozone debt doubts drag euro down
The 17-nation currency sank to a more than one-year low against the dollar and hit an 11-year low versus the yen.
Last Modified: 05 Jan 2012 23:47

Analysts expect the euro to stay under pressure this year [Reuters]

The euro has sunk to a more than one-year low against the dollar and hit an 11-year low versus the yen amid concerns over Europe’s debt crisis as Italy and Spain came under intense pressure on the markets.

The 17-nation currency fell as low as $1.2775 on Thursday, its weakest level since September 2010.

Spain said it banks would need 50 billion euros, more than first expected, to cover bad loan losses, while Italian Prime Minister Mario Monti rattled nerves with an unannounced visit to Brussels.

Spanish Economy Minister Luis de Guindos’ estimate of the banks’ bad loans was higher than many private forecasts and sat awkwardly with a European Banking Authority finding that Spain’s five biggest banks require 26 billion euros in fresh capital.

Spain’s new right-leaning government meanwhile warned the country’s social security fund’s accounts are worse than had been feared, with a 2011 deficit of 668 million euros ($856 million) instead of a surplus, adding to the problems.
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China sends warning signals about economic downturn
Posted: 01/08/2012 01:00:00 AM MST
By Robert J. Samuelson
contributing editor of Newsweek and The Washington Post and writes about business and economic issues.

WASHINGTON — Even China? Could the world’s economic juggernaut, having grown an average of 10 percent annually for three decades, face a slowdown or what for China would be a recession? Does it have a real estate “bubble” about to pop? What would be the global consequences? Treasury Secretary Timothy Geithner visits China and Japan this week. These questions form a backdrop. With Europe’s slump and America’s sluggish economy, a sizable Chinese slowdown would be bad news.

There are warning signs. Economist Nicholas Lardy of the Peterson Institute cites three. First, Europe’s slump has weakened China’s trade; Europe buys about a fifth of its exports. Second, housing is showing signs of a bubble and is deflating. Finally, China’s government will have a harder time deploying a stimulus than during the 2008-09 financial crisis. Government debt rose from 26 percent of gross domestic product in 2007 to 43 percent of GDP in 2010.

How all this affects China’s growth is controversial. “Most likely, China will have a soft landing,” says Justin Yifu Lin​, the World Bank​’s chief economist. “Growth goes to 8 percent or 8.5 percent.”
…

Your own little island getaway. Hope there isn’t a storm. Doesn’t look like anyplace to run to.

http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=S245655

TEHRAN, Iran (AP) — An Iranian newspaper quotes a senior commander in Iran’s Revolutionary Guard as saying that Tehran’s leadership has decided to order the closure of the strategic Strait of Hormuz at the mouth of the Persian Gulf if the country’s oil exports are blocked.

Khorasan daily reported Sunday that Ali Ashraf Nouri says the strategic decision has been made by Iran’s top authorities.

Iranian politicians have made the threat in the past, but this is the strongest statement yet that a closure of the strait is official policy.

The U.S. has recently enacted new sanctions targeting Iran’s central bank and its ability to sell petroleum abroad over Tehran’s nuclear program. Washington says Tehran is trying to develop weapons, while Iran denies the charges.

Serenity Now, Serenity Now

Doris Day or Doris Don`t Pay

Que Sera, Sera,
Whatever will be, will be
The Deadbeat’s can live for free
Que Sera, Sera

When I went house shopping
I asked my Realtor what lies ahead
Are there foreclosures, when will they pay?
Here’s what my Realtor said.

Que Sera, Sera,
The Deadbeat’s will live for free
The future’s not ours, to see
Que Sera, Sera

Now I have children, there almost grown
They ask their father, what will I be
Will I be handsome, will I be rich
I tell them tenderly.

Que Sera, Sera,
Whatever will be, will be
The Deadbeat’s will live for free
Que Sera, Sera

Serenity Now, Serenity Now

Denial is ending in at least some corners of the MSM.

Our American Promise is at a crossroads
Originally published Saturday, January 7, 2012 at 10:00 PM

A Rasmussen Poll last October found that only 37 percent of likely voters believed that America’s best days were ahead. In a Gallup survey, 55 percent of respondents said it was very or somewhat unlikely that today’s youth would enjoy a better life than their parents’.

By Jon Talton

Just as strong winds whip a large flag along a fence line in southern Oregon, turbulent economic times are battering the nation’s and the region’s sense of security. Poverty rates in Washington and 31 other states are up, and more than 300,000 here are unemployed.
ALAN BERNER / THE SEATTLE TIMES

I OVERHEAR many conversations about the economy, but the topper came recently in downtown Seattle.

As two well-dressed men discussed the eurozone crisis and high unemployment at home, one said, “I’ll tell you what I think it is: It’s the beginning of the end of the world.”

The severe recession and its staggering aftermath do represent the end of a world, if not the world. We live in the new hard times.
…
Starting in the 1980s, the masters of the universe on Wall Street engineered waves of mergers. They were money machines for the bankers, lawyers and executives. But many made little economic sense. The result was a highly concentrated economy with many cities losing their corporate crown jewels and best jobs.

Still, times seemed good for most in the 1980s and ’90s, the American promise renewed. Americans enjoyed a cornucopia of inexpensive imported goods. The rise of high-tech sectors gave us the personal computer and a profusion of electronic gadgets to delight and distract. The Microsoft Millionaire seemed to emblematize a new age of aspirations.

Middle-class Americans gained entry into domains once largely those of the rich, from easy credit and ever-larger houses to gourmet foods. If pensions were replaced by risky 401(k)s, many embraced the change: In the long bull market, average folks became investing geniuses.

When the bull market and dot-com run ended, Alan Greenspan’s Fed eased credit and the housing boom began. The now-deregulated and highly concentrated banking industry turned it into the biggest, riskiest speculative bubble in history.

They weren’t alone. Both political parties encouraged the binge. Many bought houses they couldn’t afford. Houses became something to flip, a source of easy riches because, the experts assured us, prices would always go up.

Even with stagnant wages, average Americans kept up appearances. Until the bubble burst.

Consumer spending accounts for two-thirds of the economy, and even as more were falling behind, they kept spending. When two-paycheck families, or even multiple jobs, weren’t enough, they went deeply into debt.

Then came the collapse. Millions were ruined. Not one major figure behind the dodgy schemes or outright swindles on Wall Street was prosecuted. A federal criminal investigation of Kerry Killinger, who built venerable Washington Mutual into a gigantic mortgage mill, was dropped. No one, it seemed, would be held accountable for the nation’s biggest bank failure.

IN THE AFTERMATH, the nation is divided more than it has been at any time since the Civil War. We’re split into haves, have-nots and, increasingly, never-will-haves. Divided politically, even as officials of both parties depend on the corporate and Wall Street elite for campaign funding. Separated by arguments over how to fix the economy and restore the American promise.
…

Farr: The Fed is Creating Moral Hazard
Published: Friday, 6 Jan 2012 | 9:42 AM ET
By: Michael K. Farr
Managing Director Farr, Miller & Washington CNBC Contributor

Federal Reserve intervention in the economy has profound implications for not only the prices of goods and services, but also financial assets.

The Fed [cnbc explains] has kept the Fed Funds rate at close to zero for over three years now, with a promise to remain low at least through the middle of next year. As a result, investors across the globe are forced into risky assets that offer better return potential.

This rotation of money into stocks, commodities, high yield bonds, real estate, etc, has lifted the prices of these assets relative to where prices would be otherwise. And higher asset prices have been supportive of our economic recovery.

However, the Fed’s action does not come without risk.

Many economists believe that the Fed’s large-scale monetary policy (to include rate cuts and “Quantitative Easing” [cnbc explains] ) will eventually lead to widespread inflationary pressures across the economy. Others say that forcing investors into risky assets could lead to asset bubbles the likes of which we are very familiar with by now. At the very least, we think the Fed is creating a problem of “moral hazard” which may be difficult to unwind in the future.

Old, anachronistic investors believed that they could, under certain circumstances, lose all of their money when making an investment. But the notion of “caveat emptor” seems to have been lost as the Federal Reserve, Treasury Department, and Congress joined forces to save the financial system. Investors learned that the stock market was far too important to the consumer psyche to let it fall too far. Investors also learned that many companies, and therefore investments in those companies, were simply “too big to fail”.
…

Jan. 6, 2012, 2:55 p.m. EST
Fed seen unveiling QE3 bond plans by summer
Mortgage-bond purchases could begin this spring, analysts say
By Deborah Levine, MarketWatch

NEW YORK (MarketWatch) — A growing number of economists, analysts and bond investors think the Federal Reserve will announce another massive bond-purchase plan by the middle of the year, if forecasts for persistently high unemployment and slowing inflation come to fruition.

While a report Friday showed the U.S. unemployment rate fell to 8.5% in December, the job market is not expected to improve quickly enough for Fed policy-makers, who are looking for a much bigger drop in the jobless rate to support solid economic growth.

There’s debate about how such a program from the Fed will work, but the market’s sense is that someone needs to do something, and the U.S. central bank seems to be the only institution in the country willing and able to take steps to support the economy.

Money managers and strategists say the Fed will have enough reasons — domestic sluggishness, lack of action from Congress and the White House,simmering debt problems in Europe — to begin a third round of quantitative easing, dubbed QE3.

“We have an activist Fed that’s chafing under ongoing weakness in the housing market and chronically high unemployment,” said Bill O’Donnell, head of Treasury strategy at RBS Securities. “By the summertime, we’ll be thinking about or even looking at a QE3. It’s reasonable just to do something. It’s very clear that Washington isn’t about to step up with some bipartisan grand plan, and something will need to be done.”
…

THE OUTLOOK
JANUARY 8, 2012, 3:08 P.M. ET

Unemployment Scars Likely to Last for Years
By BEN CASSELMAN
Chicago

The U.S. job market is showing signs of a sustained recovery. But the country’s prolonged struggle with unemployment will leave scars that are likely to remain for years, if not generations.

The latest labor-market snapshot, out Friday, gave cause for continued, if tepid, optimism. U.S. employers added 200,000 jobs in December, and the unemployment rate ticked down to 8.5%, its lowest level since early 2009.

But economists gathered here for the American Economic Association’s annual convention took a longer and generally dimmer view. Even if recent progress continues, the recession already has had a lasting effect on a generation of workers. Worse, the crisis has laid bare problems in the U.S. labor market that won’t quickly recover when the economy eventually rebounds. And the longer that unemployment remains high, the greater the risk that it will create structural problems that will endure.

The economists here, mostly academics, are studying the causes and effects of the jobs crisis from different angles, and they frequently disagree. Nonetheless, a few common themes emerge.
…

Oh, Good: The Fed Urges More Government Housing Aid
Jan 08, 2012 03:15 PM EST

Hey, I have an idea: how about, instead of searching for new, expanded ways to further the role of the federal government in individuals’ and businesses’ private financial lives and deepen the rut that caused and is keeping us in the economic doldrums, we instead think of ways to scale back the federal government’s power and free people, businesses, and banks up to engage in free enterprise and innovation without interference? Anyone? Ugh, these big-government types just never learn! If Bernanke gets his way, the Fed is going to gum up the works of the housing market even more with their uncertainty-creating ‘interventions.’ Easing, schmeasing:

Three Federal Reserve policy makers said the U.S. government should try new ways to spur the housing market without agreeing about how much more the central bank needs to do to bring down interest rates.

New York Fed President William C. Dudley said in New Jersey yesterday that “additional housing policy interventions” can help boost growth, even as the Fed should consider further easing. Boston Fed President Eric Rosengren, speaking in Connecticut, took the more-aggressive position of supporting the purchase of mortgage-backed securities, while Fed Governor Elizabeth Duke said in Virginia that the central bank’s current monetary stance is “appropriate.”

The comments underscore concerns by Fed officials that they may be reaching the limits of their power to boost growth and lower unemployment through three years of near-zero interest rates and unconventional policy tools. Chairman Ben S. Bernanke this week urged lawmakers to do more to revive the housing market, calling it an impediment to the economic recovery. He delivered a 26-page staff report to Congress outlining possible solutions.

Ron Paul would not be pleased.

January 08, 2012 — Updated January 08, 2012 13:13
US Fed to Drive Housing Market

US Fed policy makers push for more housing aid

Three Federal Reserve policy makers said the US government should try new ways to boost the housing market without agreeing about how much more the central bank needs to do to bring down interest rates.

New York Fed President William C. Dudley said in New Jersey Thursday that “additional housing policy interventions” can help boost growth, even as the US Fed should consider further easing.

Boston Fed President Eric Rosengren, speaking in Connecticut, took a more aggressive position of supporting the purchase of mortgage-backed securities.

Fed Governor Elizabeth Duke said in Virginia that the central bank’s current monetary stance is “appropriate.”

The comments underscore concerns by US Fed officials that they may be reaching the limits of their power to boost growth and lower unemployment through 3 yrs of near-Zero interest rates and unconventional policy tools.
…

Rent now, or get priced out forever.

‘Renter Nation’ rages on as new reality in U.S.
By Diana Olick, CNBC.com
Updated 2d 1h ago

For some it is post-traumatic stress from the housing crash, for others it is the inability to get financing to buy a home. Either way, the rental market continues on its tear.

In the last quarter of 2011, the apartment sector saw its largest quarterly increase in occupied stock of the year, according to Reis Inc.

The vacancy rate dropped to 5.2%, the lowest since 2001 and lower than the last cyclical drop in 2006.

This bucks the historical seasonal weakness typical of the colder months of the year. The fourth quarter also tends to be a weaker leasing period, according to Reis, given that most households make moving decisions in the second and third quarters.
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Housing looms as strong voting issue in presidential election
Although fixing the sagging economy is the biggest concern for potential voters, four national surveys undertaken by real estate organizations indicate that housing is also a major issue.
By Lew Sichelman

January 8, 2012
Reporting from Washington—

At no time in memory has housing been a major issue in a presidential election. Some years, the topic garners hardly more than a passing mention in the planks of either political party.

Right now, housing is not a front-and-center issue for President Obama or any of the Republican presidential hopefuls. But no fewer than four recent national surveys indicate that the issue is a top-of-mind topic among potential voters.

Granted, all four were undertaken by real estate organizations — Realtor.com, HouseLogic, Yahoo Real Estate and Trulia. But the unanimity of their findings underscores just how worried current and future owners are about their homes.

“We were very surprised just how passionate people are” about housing issues, said Julia Reynolds of Move Inc., which operates Realtor.com, the official website of the National Assn. of Realtors.

In the Realtor.com survey, housing was a particularly strong voting issue for “millennials,” also known as the Internet Generation. Millennials were born after 1982, meaning that the oldest will be of prime home-buying age when November rolls around.

On a nearly 3-1 basis, these young voters told the Realtor.com pollsters that what the candidates had to say about housing will be either very or somewhat important to their voting decisions.

In the poll by HouseLogic, a consumer website also operated by the politically powerful Realtors group, housing came in a distant second to jobs as the issue that will have the greatest effect on respondents’ votes in November. But housing ranked way above national security, healthcare, energy or the environment.

Just over half the participants in the Yahoo study want Uncle Sam to do more to help owners who are at risk of losing their homes. A little more than 1 in 4 said the federal government has gone as far as it should to help struggling owners. The rest had no opinion on the matter.
…

Mortgage modification scams trap desperate homeowners
By Jennifer Dixon, Detroit Free Press
Updated 2d ago

The foreclosure crisis that has spread across the country is producing another epidemic: mortgage modification scams that have cost desperate borrowers thousands of dollars — even their homes.

“There are devastating consequences to this fraud,” said Christy Romero, deputy special inspector general who monitors potential fraud in the federal Troubled Asset Relief Program (TARP).

In early December, Romero’s agency, SIGTARP, joined the U.S. Treasury Department and the federal Consumer Financial Protection Bureau to fight scams targeting homeowners seeking mortgage modifications under the U.S. Home Affordable Modification Program (HAMP).

A total of $29.9 billion in TARP funds has been set aside for the federal government’s foreclosure prevention initiatives, including HAMP.

Applying for HAMP is free, as is the loan modification advice of housing counselors approved by the U.S. Department of Housing and Urban Development.

You can apply for the government’s Home Affordable Modification Program (HAMP) on your own or with free help from a housing counselor approved by the U.S. Department of Housing and Urban Development.

Yet scam artists have convinced struggling homeowners to pay a fee in return for false promises of lowering their debt or their mortgage payments.

Other swindlers have had homeowners turn over the deeds to their homes, told borrowers to stop making their payments, or insisted they stop dealing with their mortgage servicer.
…

Fair Game
From East and West, Foreclosure Horror Stories
By GRETCHEN MORGENSON
Published: January 7, 2012

THE authorities have fallen silent lately about a possible settlement over foreclosure abuses at big mortgage servicing companies.

The talks began in earnest last March, and people keep whispering that a deal is nigh. But last week, a spokesman for Shaun Donovan, the secretary of Housing and Urban Development and a lead negotiator, said that there was nothing new to report.

That’s probably not a terrible thing. After all, no deal is better than a bad deal. State and federal authorities jumped into these talks without conducting serious investigations into foreclosure shenanigans. Why strike a deal — one that would, say, shield banks from new litigation over toxic loans, flawed securitizations and the mess at MERS, the registry that has made such a jumble of land records — without knowing what happened?

So it’s nice to know some attorneys general are taking matters into their own hands. One is Martha Coakley of Massachusetts, whose lawsuits against big banks have unearthed important details about dubious mortgage practices.

Another is Catherine Cortez Masto of Nevada. She filed a case against Morgan Stanley that was settled last year, generating as much as $40 million in monetary relief for borrowers. She also participated in a suit against Wells Fargo that resulted in $45 million in principal forgiveness for Nevadans. And she has a case pending against Bank of America.

Last month, Ms. Masto sued Lender Processing Services, the huge default and foreclosure processor that works behind the scenes for most large banks. With this case, she demonstrated how enlightening an in-depth study can be. The complaint, which came after a 14-month inquiry, contends that L.P.S. deceived consumers by committing widespread document execution fraud, misrepresenting its fees and making deceptive statements about its efforts to correct paperwork. Investigators interviewed former L.P.S. employees and customers and examined foreclosures the company had worked on.

“L.P.S. played a critical role in the deceptive foreclosure practices that have harmed Nevada homeowners and burdened Nevada courts,” the complaint said. Consumers have paid the price, it continued, “through bankruptcies, evictions and foreclosures that were predicated upon false, forged, fraudulent and/or inaccurate documents.”
…

Real Estate Markets
5 Events that Really Mattered for Housing in 2011 – and Beyond
By Jed Kolko | December 29, 2011

Government, the mortgage industry and forces of nature all shook the housing market in 2011. They had both an immediate impact and slow-burning effects, setting the stage for a bumpy 2012 with more foreclosures, political battles and local market risks.
…

Are those high monthly nuts crowding out money left over to go to the movie theater?

Smart Spending
Thumbs Down: 2011 Saw Least Movie Tickets Sold Since 1995
By Brad Tuttle | @bradrtuttle | December 28, 2011

Reviews aside, it’s been a bad year at the movies. By the time 2011 comes to an end, ticket revenues are expected to be down 4.5% compared to 2010. This is despite today’s higher ticket prices: The average movie admission crossed the $8 mark for the first time ever in 2011.

U.S. consumers are known for embracing dumb movies, even when the economy’s in rough shape. But each year, and in 2011 especially, more and more people seem to give the modern-day movie-going experience a thumbs down review.
…

I can’t understand why anyone would assume the Fed won’t keep interest rates super-low forever. Do other HBB posters find this puzzling?

Portfolio Strategy
The U.S. Government Bond Bubble (And What To Do About It)
Treasury bond prices will likely suffer a major decline in the next few years. Here are eight high-yielding stocks that are a smarter alternative for the income part of your portfolio.
By Michael Sivy | @MFSivy | December 27, 2011

The Federal Reserve has pumped a massive amount of money into the U.S. economy since 2008.

America’s finances are deteriorating. The Federal debt has increased by more than 50% over the past three years. New liabilities in 2011 totaled $1.3 trillion. And there is no prospect of a quick fix that would bring this snowballing debt under control. As a result, rating agencies have warned that the U.S. credit rating is at risk of a downgrade.

Nonetheless, U.S. Government bonds have been in a major bull market – some analysts are even calling it a bond bubble. Indeed, just as easy money produced a boom in technology stocks in the late 1990s and a housing bubble six or seven years later, a similar boom-and-bust cycle now appears to be under way for government bonds. Prices of long-term Treasuries are up as much as 30% since early this year. Why have such big gains occurred at a time when the finances of the U.S. government are getting so much worse? There are three reasons:

Extremely stimulative Fed policy. Ever since the banking crisis in 2008, the Federal Reserve has been pumping massive amounts of money into the U.S. economy. As a result, interest rates on 10-year Treasury bonds have dropped from 3.9% in 2010 to around 2% today. And since bond prices rise as interest rates fall, Fed policy alone would be enough to create a bond boom.
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Luckily U.S. policymakers do not face social unrest due to housing woes.

Oh wait…

Jan. 5, 2012, 10:01 p.m. EST
China faces social unrest from housing woes
But Beijing likely to keep a lid on serious opposition
By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — Irate Chinese homeowners are among the top policy concerns for Beijing this year, according to analysts who say weakening house prices are stoking serious tensions.

Financial author and CSLA Singapore managing director Fraser Howie calls it the “real unknown” of 2012, as there’s no track record of how this newly emerged class of homeowners would react if the current softening in residential housing prices turns into a prolonged decline.

“It’s too difficult to analyze what’s going to happen,” he said, citing the difficulty in sourcing accurate statistics on the property market and the short history of property ownership in China.

For the most part, property owners have never had to deal with falling prices since the 1998 policy change that helped what’s now viewed as the launch of the modern era of private-home ownership in China.

City University of Hong Kong political scientist Joseph Cheng agrees, saying that “China’s middle class are not used to business cycles yet.”
…

This goes with my new motto: OhbaHma hates black people…..he will never say a word about this:

http://www.clickorlando.com/news/Students-charged-in-bus-attack/-/1637132/7658614/-/lq83w9/-/index.html

The San Diego housing market serial bottom callers are trying their luck again. So far they have been wrong every time at calling a current year bottom in prices, but maybe this year will be when their luck turns around.

U-T EconoMeter Preview
Home prices to rise, EconoMeter panelists say
They were way off in 2011
Written by Roger Showley
11:31 a.m., Jan. 6, 2012

Last week, our U-T EconoMeter panel issued their predictions for 2012. This week we turn to housing. As background, the consensus of eight panelists last year was a slight rise from $335,000 to $336,250 (November medians) and ranged from $300,000 predicted by Marney Cox to $350,000 by Alan Gin, Gary London and Dan Seiver. The actual November 2011 median, as reported by DataQuick, was $315,000.

Get a preview of this year’s predictions, offer your own in our online straw poll and then read all the answers, posting at 6 a.m. Saturday.
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Will San Diego median home prices rise in 2012?
Yes
No
Results
Polls »
What will be the median in November 2012? (Current, Nov. 2011, median stands at $315,000.)
Less than $300,000
$300,000-$315,000
$315,001-$330,000
More than $330,000

Bill Maher must be smashing all the furniture in his place right about now.

Bill Maher Bashes Tim Tebow on Twitter

By Andrew Mindzak, Yahoo! Contributor Network
Dec 28, 12:46 am EST

While most of us were spending time with our families during Christmas Eve and Christmas Day, Bill Maher was busy hate - tweeting against.

After the Denver Broncos were manhandled 40-14 by the Buffalo Bills on Christmas Eve, Maher tweeted, “Wow, Jesus just f**ked #TimTebow bad! And on Xmas Eve! Somewhere … Satan is tebowing, saying to Hitler “Hey, Buffalo’s killing them.” Tebow didn’t exactly have the best game of his career on Saturday against the Bills, completing only 13 of 30 passes for 185 yards along with four interceptions. Tebow tweeted after the game, “Tough game today but what’s most important is being able to celebrate the birth of our Savior, Jesus Christ. Merry Christmas everyone GB2.”

http://sports.yahoo.com/nfl/news?slug=ycn-10757275 - 171k -

What is the one major similarity here to the RE market?

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/3856684

Am I the only one who is utterly flabbergasted by the Fed’s proposed taxpayer-funded revitalization of the zombie GSEs in yet another housing market rescue attempt? You would think they would have at least waited for the SEC charges against former Fannie and Freddie executives to wash through the MSM before rolling out this proposal.

Economic Beat | SATURDAY, DECEMBER 31, 2011
Suit Points to Fannie, Freddie
By GENE EPSTEIN
The SEC’s civil charges against six former executives reveals the staggering magnitude of Fannie Mae and Freddie Mac’s mortgage misdeeds.

Talk about ironies. The housing boom-and-bust that brought the 2008-09 recession has prompted cries to punish the guilty, more often from the left wing than from the right. Enter the Securities and Exchange Commission, chaired by the Obama-appointed Mary Schapiro. On Dec. 16, the SEC announced civil indictments against six former executives of two corporations cited mainly by Republicans as the mortgage villains—government-sponsored enterprises Fannie Mae and Freddie Mac.

Without necessarily meaning to do so, the SEC has made an authoritative case that the two GSEs did in fact play a key role in financing the high-risk mortgages that fueled the housing bubble. To begin with, the facts and figures posted on the SEC Website are the fruit of that agency’s unique subpoena power. And, more important, Fannie and Freddie have themselves mainly affirmed that the SEC’s factual statements are valid, as part of a “Non-Prosecution Agreement” the agency made with the two mortgage giants.

The SEC is seeking “disgorgement of ill-gotten gains with interest” from the six former Fannie and Freddie executives, based on the allegation that they “caused the federal mortgage firms to materially misstate their holdings of subprime mortgages loans….”
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Obama’s Consumer Financial-Protection Trump Card
By Simon Johnson
Jan 8, 2012 4:03 PM PT

Simon Johnson, who served as chief economist at the International Monetary Fund in 2007 and 2008, is a professor of entrepreneurship at the Massachusetts Institute of Technology’s Sloan School of Management.

The biggest news for the Republican presidential-nomination race last week wasn’t the outcome of the Iowa caucuses but the recess appointment of Richard Cordray to head the Consumer Financial Protection Bureau.

Unless you think Rick Santorum can scale up in record time to run a national campaign, the Iowa results just confirmed what we already knew: Mitt Romney is likely to face President Barack Obama in November. The Cordray appointment indicates that the president sees things the same way, and has decided to focus the fight on one of Romney’s vulnerabilities: his views on the financial sector.

The president, of course, can’t make an issue out of too- big-to-fail banks because his administration has helped to solidify their grip on the financial system. The 2010 Dodd-Frank financial-reform law effectively failed to limit lenders’ size, freeing the biggest institutions to grow ever larger. Mega-banks will be harder to deal with, both as healthy institutions and if they run into financial trouble.

Fortunately for Obama, it doesn’t appear that Romney has any objection to “anything goes” in terms of bank size, and isn’t likely to try to make too-big-to-fail an election issue.

Obama will also be reluctant to raise the matter of campaign contributions by bank executives and the political influence that gives them. Both he and Romney are likely to garner roughly equal amounts of cash from the people who run, or benefit from, large financial companies.
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Jan. 7, 2012, 11:11 p.m. EST
QE not likely now, given data: Fed’s Bullard
By Greg Robb, MarketWatch

CHICAGO (MarketWatch) — More bond purchases, otherwise known as quantitative easing, are not likely at least in the short term because the economy seems on more solid ground, St. Louis Federal Reserve Bank President James Bullard said Saturday.

“I don’t think it [QE] is very likely right now because the tone of the data has been very strong right now,” Bullard told reporters after a speech at the American Economic Association meeting.

“We already have an easy policy, and the economy is improving, and so we can probably wait and see for now,” Bullard said.

Bullard said he was encouraged by the December employment report that showed a drop in the unemployment rate to near a three-year low of 8.5%.

“I thought the jobs report was encouraging. Hopefully it is harbinger of more robust activity,” he said.

Bullard said he thinks Wall Street is too gloomy about the outlook.

“I think forecasters are a bit too pessimistic about the U.S. economy,” he said. “The recession has been over for fair amount of time. It is a logical point in the recovery where you would expect somewhat more rapid growth and somewhat better jobs market, so we’ll see if that is what happens.”
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Which of these 1832 sq ft 4br/3ba San Diego homes do you think will sell the fastest? (Note they are identical floor plans, walking distance apart, in the same neighborhood.)

P.S. Wifey sez the Silver Buckle home has been on the market for a lot longer than 2 days — at least since last spring. I guess pricing $86K above the comps hasn’t worked for them, just yet.

$432,900
15741 Lofty Trail Dr Rancho Bernardo, CA 92127
Beds: 4
Baths: 2.5
Sq. Ft.: 1,832
$/Sq. Ft.: $236
Lot Size: 4,922 Sq. Ft.
Property Type: Residential, Detached
Style: Contemporary
Stories: 2
View: Mountains/Hills
Year Built: 1988
Community: High Country West
County: San Diego
MLS#: 110060748
Source: SANDICOR
Status: Active
Active
This listing is for sale and the sellers are accepting offers.
On Redfin: 67 days

Property History for 15741 Lofty Trail Dr
Date Event Price Appreciation Source
Jan 07, 2012 Price Changed $432,900 – SANDICOR #110060748
Dec 03, 2011 Price Changed $447,900 – SANDICOR #110060748
Nov 02, 2011 Listed (Active) $459,000 – SANDICOR #110060748
Oct 27, 2011 Sold (Public Records)
This home was sold at a foreclosure
Foreclosure auction. $393,053 – Public Records
Jul 23, 2007 Sold (Public Records) $554,000 9.4%/yr Public Records
Feb 24, 2000 Sold (Public Records) $284,000 14.1%/yr Public Records
Jun 05, 1997 Sold (Public Records) $198,500 0.1%/yr Public Records
Jul 31, 1992 Sold (Public Records) Abnormal Transaction . $197,500 -100.0%/yr Public Records
Jul 31, 1992 Sold (Public Records) $220,000 -0.6%/yr Public Records
Jun 26, 1989 Sold (Public Records) $224,000 32.2%/yr Public Records
Mar 31, 1988 Sold (Public Records) $158,500 – Public Records
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$519,000
11280 Silver Buckle Way San Diego, CA 92127
Beds: 4
Baths: 2.5
Sq. Ft.: 1,832
$/Sq. Ft.: $283
Lot Size: 4,100 Sq. Ft.
Property Type: Residential, Detached
Stories: 2
Year Built: 1987
Community: High Country West
County: San Diego
MLS#: 120001127
Source: SANDICOR
Status: Active
Active
This listing is for sale and the sellers are accepting offers.
On Redfin: 2 days
Property History for 11280 Silver Buckle Way
Date Event Price Appreciation Source
Jan 06, 2012 Listed (Active) $519,000 – SANDICOR #120001127
Aug 19, 2003 Sold (Public Records) $475,000 12.9%/yr Public Records
May 31, 1996 Sold (Public Records) $197,500 – Public Records

I’ve been contemplating the political ramifications of this Fed gambit. I suspect it is a CYA measure, designed to obscure the origins of the housing bubble in Alan Greenspan’s policies back in the early 2000s and before. J6P doesn’t grasp the long and variable lags which precede the impact of Fed policy actions, and hence is apt to interpret the present housing situation as due to recent policy measures.

If Congress and the executive branch ignore the Fed’s suggestions, the Fed can blame ongoing problems in the housing market on a failure to adopt their present recommendations, rather than due to loose monetary policy a decade ago which led to bubble formation. And if their measures are adopted, Wall Street will succeed to dump their housing market gambling losses on the U.S. tax base, greatly indebting Wall Street to the Fed.

ft dot com
January 8, 2012 10:52 pm
Calls for US taxpayers to bear housing costs
By Shahien Nasiripour in Washington

US Federal Reserve policymakers are increasingly urging fiscal authorities to consider reducing distressed borrowers’ loan balances, a politically fraught position for a central bank that has long sought to distance itself from fiscal policy.

William Dudley, president of the Federal Reserve Bank of New York, said on Friday that taxpayers and mortgage bond investors should shoulder the cost of reducing borrowers’ loan principal. Sarah Bloom Raskin, a member of the Fed’s board of governors, added on Saturday that forcing leading banks to cut mortgage principal as a penalty for poor practices was an option “that should stay on the table”.

The calls come as the Fed confronts dwindling options to jumpstart a weak US economic recovery that appears to be stalling because of problems in the nation’s property market. Home prices are falling, property seizures are rising, lending and refinancing remain subdued and delinquencies have barely budged more than two years after the recovery officially began in the summer of 2009.

“Housing markets have shown little sign of improvement so far in this recovery,” Elizabeth Duke, one of the Fed’s five sitting governors, said last week. “This stands in sharp contrast to the important role that the housing sector has typically played in propelling economic recoveries.”
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