I apologize for not posting much this week but I am slammed with work. Maybe some of you can fill in with articles and observations from your local markets? Thanks!
I’m self employed, but with the type of work I do, if I pass on a job they won’t call me next time. So if a lot comes in at once, I just have to find a way to get it done.
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Comment by Prime_Is_Contained
2012-01-31 08:46:06
Best of luck with the crunch, Ben!
Comment by Arizona Slim
2012-01-31 09:13:50
Speaking of crunches, I need a Java expert. Got this mondo project where the Java output is supposed to show up on web pages. And darn if those pages aren’t breaking right and left.
The trouble seems to be invalid HTML code that’s being generated by the Java-based programming that runs the site. And, yes, my coder and I gave them valid code on which to base the page templates.
Any Java folks here? Is it possible to keep a site XHTML and CSS valid if the underlying platform is Java-based?
Comment by Prime_Is_Contained
2012-01-31 09:23:21
Is it possible to keep a site XHTML and CSS valid if the underlying platform is Java-based?
Code is code; it sounds like you just have some bad code if it is generating bogus output. Bad code can be written in any language.
Comment by Liz Pendens
2012-01-31 09:38:34
Ben, Are you still in the property preservation biz?
Seems when they have to be “personally” accountable as a company, they want nothing to do with even a medium risk loans. It is laughable how they did not seem to mind collecting sub-prime and putting it into toxic pools in which to sink investors…..
Bwahahahaha. Some smart attorney should use this in the lawsuits for against the MBS issues…..hello CalPERS….hello PERS, hello OSTRS……
Comment by mathguy
2012-01-31 11:52:44
Slim,
Let me know if you need a hand with the Java stuff.
I’m pretty busy here in N AZ. A lot of that is cuz I’ve been doing this for 3 years and I’ve built up contacts and established myself. But it’s one of those ‘prove yourself with every job’ kinda deals. I’m not seeing any slowdown in the foreclosure rate here. Houses aren’t sitting for 2 years in pre-foreclosure like when I started. And the clients are spending a little on them to get them sold, which wasn’t the case a while back.
Single-family home sales on the Cape dropped 4.25 percent in 2011 compared to the year before, but luxury home buyers helped boost the market as the average price increased from $465,630 to $466,646 and last year saw 11 sales over $4 million compared to only five in 2010.
So far, the mild winter combined with pent-up demand in the higher end market has helped the Cape get off to a strong start with 15 listings over $1 million going under contract since the beginning of December.
Lending requirements have also recently changed in the second-home market with banks requiring 10 percent down, where previously they used to require 20 percent down. In the second week of January, Dean put under contract an oceanfront estate on 5 Walter Road in Harwich Port, listed for $3.6 million.
Wealthier house hunters tend to view property as a relatively safe investment.
“Real estate is the other ‘gold’ for the high-end market,” said Jack Cotton of Sotheby’s International Realty. “It is seen as a safe, secure place where buyers can park their money, use it and enjoy it.”
My Houston bound friends said they pulled out all the stops to get their million dollar home after being outbid several times before getting the house they’re now in. I know from several conversations w/her that long term capital preservation was part of their decision making. Well….besides the avoidance of certain other areas of town. I don’t know if that was about appearances when you’re an oil industry exec, general elitism due to highly connected backgrounds, avoidance of high crime areas, or chosing certain schools for her children.
She had a close blood relative that I always thought should have given them some sort of insight which way to turn on the matter. But it appeared they were just as unsure as the rest of us. I wondered if that meant at the elite level it’s an every guy for himself mentality. She certainly didn’t appear to understand why we haven’t bought yet. There was starting to be a decent level of disdain in her voice when we last visited.
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Comment by Neuromance
2012-01-31 08:28:02
She certainly didn’t appear to understand why we haven’t bought yet. There was starting to be a decent level of disdain in her voice when we last visited.
They have a lot of hope invested in the house. And you are a heretic.
..boost the market as the average price increased from $465,630 to $466,646…
Meanwhile, the Consumer Price Index for rose 3.0% from December 2010 to December 2011.
So, that $1016 gain in non-adjusted dollars? Meaningless compared to the CPI, which suggests that the inflation indexed average price of a house (in 2010) dollars should have risen to $479,599.
But why involve math, let alone carry costs, espically in a Boston Herald (now printed on Boston Globe presses) article?
Brendan and his wife, Emily, thought finding a four bedroom home in the suburbs would be a cinch.
But prices in more than a few suburbs within have held fairly steady or have gone up over the past year. (I quote Brendan and look at prices in the western suburbs in this Globe West piece that ran yesterday.)
Back to Brendan and his wife, who found themselves outbid for a 1950s colonial in need of work last spring. The Lois Street home, on the market for $430,000, wound up fetching $450,000 after a short but furious bidding war.
“There are two kinds of buyers out there right now: people like Brendan and Emily, who figure out how much house they can realistically afford and shop accordingly, and people who buy the house they feel like they deserve, and cross their fingers that the money will work out. The latter are pricing out the former.”
Good one here…and it is the fed and current administration’s policies that are keeping the “deserves” in the game. Don’t worry though…Romney’s polices will do the same. I will rent and save…to hell with Bernanke and Geithner.
There is money out there if you do your homework and qualify. We have great credit, good employment history (2 public school teachers with a combined income of 120K), and 2 kids.
Your household size is significant, I have discovered, because a family of 4 qualifies for assistance on our income that we would never get if we were childless.
So get this:
- pre-approval letter for 530K
- we put 13K down payment (up to 100K interest-free down payment assistance from the city)
I am still shaking my head.
We are looking at rentals and buying simultaneously. Rents are about $3000 month here. Security deposit and first/last is easily 7K.
With 13K of my own money tell me again why I should rent for another 2-4 years?
My resolve to wait out this bubble is getting worn down as the vacancy rate for rentals goes down and the cost of renting goes up and they are passing out money like confetti (at 0% and 4% interest).
If we buy a place this year we plan to stay 10-15 years. If it loses half its value, we walk. Everyone will have bad credit at that point.
Feel free to elucidate me on the holes in my thinking, but hold the flaming snarkiness, ‘cuz that’s not helpful.
Feel free to elucidate me on the holes in my thinking, but hold the flaming snarkiness, ‘cuz that’s not helpful.
Sounds like you’re both counting on CalSTRS to keep their promise(s) since your largest investment sounds iffy; really should have a alternate plan, IMHO.
Comment by michael
2012-01-31 15:00:01
“If it loses half its value, we walk.”
like i said…the u.s. taxpayer.
Comment by sfrenter
2012-01-31 15:20:56
Sounds like you’re both counting on CalSTRS to keep their promise(s) since your largest investment sounds iffy; really should have a alternate plan, IMHO.
You are right, CALSTRS is probably toast.
So 3K month to a landlord or 3K a month to the bank? Our family still needs a roof over our heads.
Inflation, we’re golden. Have a place to live for a fixed rate, pay off as soon as we can, and have a place to live when we are old.
Deflation and housing collapse in SF, we are right where we started -renting again - although this time with lousy credit, just like everyone else.
Comment by polly
2012-01-31 15:22:56
pre-approved for a $530K loan? so that your total house buying power will be $100K + $13K + $530K = $643K?
Yikes.
Comment by Muggy
2012-01-31 17:33:55
“If we buy a place this year we plan to stay 10-15 years. If it loses half its value, we walk. Everyone will have bad credit at that point.”
So 3K month to a landlord or 3K a month to the bank? Our family still needs a roof over our heads.
A quick “rent or buy” napkin calculation: 120 x rent, 120 x $3,000 = $360k. You can’t buy a decent family home in SF for $360k, so renting makes sense unless you have built a cash cushion flipping homes on the way up.
We are in the early stages of a debt fueled demographic depression; this is not the time to chain yourself to a hefty mortgage obligation. Buying high with minimum payments with the caviler thought of returning the keys if things don’t workout isn’t what the country needs right now. Standing by your character and protecting your credit should be your priorities, IMHO.
Also, CalSTRS isn’t going to vanish, but they will be forced to trim-back their lofty promises; recall the pension adjustments forced upon retired airline captains following 9/11.
Natick was where my husband and I first lived together. It is very densely developed. I remember all the problems they were having at the time w/the number of hookers just down the street from the train station I took. I also remember trying to get through the downtown area at rush hour when it was one giant parking lot of inching traffic. Yeah, I can’t imagine it’s worth straining financially to get a toe into Natick. We stayed one year and then were out of there moving to a town which I don’t think supported anywhere near the same number of ho’s if any and which had more of a family feel to it. My commute to Needham was shorter from the 2nd place too.
Another thing that I found funny about the comments was the complaints about the inventory. Boston’s inventory is old. It’s where This Old House is based and that’s for a reason. Things don’t get torn down much. More often then not they are only rerenovated. If you wanted new when I lived in the area you were looking at at least $500k and it was shoehorned onto a teeny lot. That was 1998. Every house we ever went into you had to have your creative juices flowing and the inner calculator cha-chinging in your head to determine if it really was worth that price.
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Comment by Realtors Are Liars®
2012-01-31 18:38:21
I recall how out of touch prices were when I was based out of Boston in 1998-1999. Especially around the Rt128 corridor. I think Boston has experience the bubble for the longest duration. My current counterparts are from Boston. One just paid (borrowed) for a $750k house. He’s a 250k/yr plus bonus guy and on his way to VP. The other is more a peon like me and he bought in the last year too. I didn’t ask him the details as I didn’t want to create a housing enemy on the job.
RIO DE JANEIRO — Ipanema. Across the world, the name of this Rio neighborhood conjures up images of beautiful residents, a laid-back tropical lifestyle and breathtaking natural surroundings. It is all of that.
…the area has been at the forefront of an explosion in city house prices over the last few years, with the Zona Sul, or southern zone of Rio, turning into one of South America’s most exclusive communities.
…“We had an apartment sell two years ago for 2.7 million reals. It just went to a new buyer for 7 million reals,” or $3.76 million.
….Most prices in Ipanema and in Leblon, the similar but slightly more upscale stretch of beach neighborhood just to its west, have doubled or even tripled since 2009. They now average more than 15,000 reals per square meter, or $780 per square foot.
Those are eye-popping increases for many markets. But they are backed by a set of circumstances that have many analysts and industry executives saying they doubt that a real estate bubble is forming.
Brazil’s economy, and Rio’s in particular, has surged since 2008,
…(Rio) is fulfilling a special place in the country’s boom. It is the base of Brazil’s efforts to develop its huge offshore oil reserves and will be a host city for the World Cup in 2014 and the host of the 2016 Summer Olympics.
There also is the proliferation of globally ranked hedge funds in the region, leading local newspapers to nickname Leblon as Brazil’s “Wall Street” — not least because many repatriated financiers working at oceanside boutique operations are making more than they once did in New York.
…there is simply not much space to go around. Ipanema proper is just nine by seven city blocks; Leblon is a bit smaller. And restrictive laws offer very little opportunity for development beyond modestly sized apartment blocks that mostly top out at about five stories.
“There is simply no supply to match the demand,”…
Copacabana,…is a less expensive option. … for those “a bit younger and livelier,” as Ms. Wajnberg puts it, prices in Copa average slightly more than 9,000 reals per square meter.
To its credit, Zona Sul — which includes Ipanema, Leblon and Copa — still feels like a laid-back beach village. Even in Leblon, upscale sushi spots lie down the street from vendors selling coconuts on street corners out of bright green rolling refrigerators. Offices of world-famous companies sit across from knife sharpening and key repair booths.
“Ipanema is working off of a totally new economic model than any of us have ever experienced in the past.” He predicts that a limited supply of land … will prolong the boom indefinitely.
“Ipanema is working off of a totally new economic model than any of us have ever experienced in the past.”
The crazy thing is, that’s a fact.
Over half of all apartments are selling for cash and the other half involves a min of 20% cash. There is no mortgage securitization here. Brazil’s strict bank regulations and their “SEC” make America’s look like a weak joke.
Florida never had a shortage of land. Ipanema, Leblon and Copacabana do.
In an under-housed nation (as was and is Brazil), you can’t bring 20% of your population into the middle-class in a 15 year period (that offered no mortgages) and not expect an even more massive shortage of middle-class homes. Now you combine those issues with Rio finding offshore oil, China’s commodity boom, the World Cup and the 2016 Olympics, mini Wall Streets springing up in residential neighborhoods with no more land….. well now that’s a lot of stuff going on.
It might be a bubble, but it is different than America’s.
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Comment by Prime_Is_Contained
2012-01-31 09:26:10
It might be a bubble, but it is different than America’s.
The rates of price-increase certainly sounds bubblicious, but I agree that the mechanism must be different if there is no securitization. Perhaps the banksters down there haven’t latched on to the idea of processing transactions and selling all of the risk downstream?
Regardless, though, there have been plenty of bubbles throughout history that were based on credit but not securitization…
Comment by Liz Pendens
2012-01-31 09:29:56
I believe the tulip bulbs were purchased with cash in that bubble. Highly leveraged borrowing is not necessary for a crash. “Buy now or be priced-out forever” hype is the only requirement.
Comment by Blue Skye
2012-01-31 10:20:31
Paying cash in a bubble simply focuses the losses. Using credit spreads the pain around. Didn’t Sir Issac lose his cash in the South Seas Bubble?
We have plenty of examples of real estate bubbles where the geographical boundaries were supposedly all built out.
Rio is not in a bubble because the commodities “boom” is on a trajectory to the moon? Good luck with that.
And good luck with the Olympics. IMO hosting the olympics marks a stage in real estate manias equivalent to building the world’s tallest building.
Not that I wish anything but good for Rio and surrounds, but only the people who live there can say there is no bubble without pause. I know you didn’t say that exactly but you are giving us all the arguments for it.
Comment by RioAmericanInBrasil
2012-01-31 10:24:19
I believe the tulip bulbs were purchased with cash in that bubble.
Thank you for mentioning that. Is a tulip bulb fundamentally comparable to an Ipanema apartment? A 9 by 7 block, 44,500 population, prime area surrounded on all sides by water or mountains of a major world city center? A city ranked one of the three most beautiful cities in the world with Ipanema beach that has been voted the “World’s most Sexy Beach”? A city of 12 million people where 2.4 million of that 12 million have emerged from poverty to the middle-class the past 15 years? In a region just discovered the biggest oil field the past 30 years? With World Cup ‘14 and Summer Olympics ‘16 coming to town? Slums being taken over by the cops and billions being spent to upgrade the infrastructure?
This is fundamentally comparable to a tulip? All I’m saying is that if it is a bubble, it is different than others.
Comment by RioAmericanInBrasil
2012-01-31 10:31:50
only the people who live there can say there is no bubble without pause. I know you didn’t say that exactly but you are giving us all the arguments for it.
I am not giving you arguments that Rio is not in a bubble. It might be but even if I thought it was, I would not sell my paid off house here. Why not? Because not. (lol, believe it or not, that is a valid answer in Brazilian Portuguese) I am giving you very valid arguments as to why the bubble is different here if there is one.
I’ve lived through 2 California bubbles. The most reasons I ever heard were 3 or 4 total.
1. Everybody wants to live here
2. There’s no more land
3. High tech/Defense industry protects us (It HAS protected high end silicon valley)
4. The beach or weather.
Well I’ve not only listed 4 fundamental reasons why Rio might be different. I’ve listed about 12. 12 fundamental reasons not 4. That’s why it’s different.
Comment by Liz Pendens
2012-01-31 12:09:19
Good point, Rio. Tulip bulbs are not heavily taxed annually, require no pricey insurance, and are not subject to exorbitant hoa/maint fees. Real Estate is far more illiquid and cannot be physically moved to a different location. I even imagine they can be eaten in a real emergency. An overpriced shack??…
Comment by polly
2012-01-31 12:17:12
If you have a very small area that has essentially become home base for a hedge fund industry making comparable returns (and salaries/bonuses) as the long established North American and European financial centers and the hedge fund industry (worldwide or just locally because of new taxes or something) does not implode, I don’t see any reason why there shouldn’t be some very high priced apartments in that area.
Any number of things could derail it, including a bunch of people deciding that they just don’t like the prices and working from estates outside Rio is better. It only deflates prices if a lot of them decided to do it - Long Term Capital moving to Connecticut didn’t have a meaningful effect on Upper East Side apartments - but it could happen. If the industry is very young right now and becomes much older you could see this. The safety concerns in other areas of the city/country could keep this from happening.
But a huge concentration of wealth in a very small area isn’t the same as a real estate bubble. A few dozen city blocks is or should be peanuts compared to a whole country.
Comment by aNYCdj
2012-01-31 12:41:14
Especially with the hundreds of thousands of acres of orange groves clear cut.. Florida never had a shortage of land. Ipanema, Leblon and Copacabana do.
Comment by ahansen
2012-01-31 20:56:02
Rio, honey.
All you say is likely true, but take a look at your words in light of this board circa 2006. To the casual reader you sound an awful lot like Suzanne.
That said, I truly hope you prove us all incorrect.
Comment by RioAmericanInBrasil
2012-02-01 07:48:24
To the casual reader you sound an awful lot like Suzanne.
I do not because I researched my points.
Comment by Prime_Is_Contained
2012-02-01 08:10:04
LOL! Awesomely funny, Rio!
“but honey—Suzanne researched this!”
LOL… Thanks for starting my morning with a laugh!
Comment by RioAmericanInBrasil
2012-02-01 10:07:20
LOL… Thanks for starting my morning with a laugh!
Thanks for getting the joke!
Comment by RioAmericanInBrasil
2012-02-01 12:56:22
Tulip bulbs are not heavily taxed annually, require no pricey insurance, and are not subject to exorbitant hoa/maint fees.
Property tax here is relatively low compared to the USA.
Insurance? In Brazil, what is homeowners insurance. Can I get that?
hoa/maint: Similar to USA
liquid: No but you can live in it.
Can’t be moved: Like from Ipanema to a slum?
Comment by MrK
2012-02-06 02:49:45
Brazil does live a housing bubble!!!
Its very hard for many Brazilians to see that, because the government is investing hard on propaganda and even faking numbers (such as inflation) to make things look better than they really are. Its a new brazilian-mania! EGOs are huge all over the country!
It all begun when the government decided to boost the sector by giving credit, low interest rates, tax reliefs and money - R$23.000 for middle class families to buy houses… the sector boomed and especulation (or “investments”) came right after that!
Rio is facing a serious housing bubble and after 3 years of euphoria its finally starting to change, signs are everywhere: Apartments are not selling as they used to, records of properties on sale, rents at 0.3% (historically it was 0.5% -0.6%), level of bad debts increasing and THOUSANDS of apartments being built by people that want to resell it, but who’s gonna buy if we already have a record of properties on sale??
In the south zone, where people claim is the best place on earth (lol), we have 14.000 apartments on sale just in ZAP (Brazilian most used internet site for that reason)
Ken DeLeon, a Palo Alto-based Keller Williams agent who works with multiple clients at Facebook, Twitter and LinkedIn, regularly sees homes go for $100,000 to $250,000 over the asking price.
Three weeks ago, one of his listings sold for $400,000 over. The bidding war, he said, was waged between a Google and a Facebook employee.
Palo Alto Online : Are cash-rich homebuyers impacting the market?www.paloaltoonline.com/news/show_story.php?id=22811Cached
“Facebook’s inability to transform the way companies operate their business means that it will remain a niche phenomenon in the grander economic scheme.”
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Comment by Carl Morris
2012-01-31 09:51:49
There’s more to life than business. They are only a “niche phenomenon” to someone who believes otherwise.
Comment by Arizona Slim
2012-01-31 10:09:27
There’s more to life than business. They are only a “niche phenomenon” to someone who believes otherwise.
Agreed.
However, there is quite a bevy of people and companies that have come forth preaching the salvation of social media to the masses of unenlightened businesses. I’ll bet there are several “how social media can help your business grow” seminars in your town this week.
However, down here in the real world, being liked on Facebook doesn’t help a business stay in business. Customers with money do.
Comment by Northeastener
2012-01-31 10:31:57
“Facebook’s inability to transform the way companies operate their business means that it will remain a niche phenomenon in the grander economic scheme.”
The author admits in the article that he is not a Facebook user. He then goes on to compare the Facebook IPO to Netscape and Google and say that the valuation is grossly overvalued… this guy just doesn’t get it.
Facebook has created an entirely new internet ecosystem, similar to what Netscape and Google did. Facebook is a global platform and continues to grow, globally. Businesses who understand how to advertise and market effectively on Facebook will win over businesses who view it as irrelevant. Businesses who understand that facebook has become a social gaming space and take advantage will win over those that think it’s just kids… it’s mostly women ages 20-50. Facebook has become the modern equilivent to crossword puzzles and scrabble.
There are always people who “get it” and those that don’t. This guy doesn’t get it. Businesses that don’t get Facebook, whether it’s small biz or Fortune 500 will eventually fail, the same way Amazon, EBay, Google, and Youtube have destroyed/continue to destroy traditional business models.
Comment by DudgeonBludgeon
2012-01-31 11:08:08
“Facebook has become the modern equivalent to crossword puzzles and scrabble.”
You lost me there. Do you mean to say crosswords and scrabble were at one time economic engines of some sort?
You write as if you are one of those that “get it”. Help me, then, to understand a 100 billion dollar valuation.
It’s not Facebook that’s not being got, it’s the IPO.
Comment by Northeastener
2012-01-31 12:06:07
The point I made in comparing it to “crosswords and scrabble” is in terms of what that demographic is doing with it’s time… playing social games. In years past, they might have watched TV or done newspaper crosswords…
These people are “casual gamers”… a relatively new demographic that didn’t exist or was not marketed to previously in the digital space.
As far as valuations goes, my point was that the author doesn’t get it because he doesn’t use it. He uses other tech IPO’s as examples of what Facebook isn’t doing to the tech space or why the valuation doesn’t make sense, and my arguement is that Facebook is in fact disrupting markets just like Goggle did(does), Netscape did, etc.
Lastly, in terms of the valuations, Facebook is a technological threat to Google in the same way Google was/is a disruptive threat to established players like Microsoft and Yahoo… current valuations are high, but if the company does in fact take ad market share from the likes of Google in the coming years, and continues to revolutionize the casual gaming industry, then the IPO will in hind-sight be seen as cheap.
Remember, we’re talking about an “ecosystem” here, not just a single company. When you have critical mass, other business models and companies spawn to take advantage of the disruption… Zynga is a good example of this (forcing EA to scramble to invest in social game developers btw).
There are other areas as well… an example would be Oracle. Oracle is scrambling to become relevant in the unstructured big-data space as pioneered by Google, Yahoo, and … Facebook. Facebook has solved difficult big-data problems with novel, open-source solutions, and that trickle-down is spawning new companies, services, and demand for programming expertise that is causing disruption to companies like Oracle and MS.
How does this translate into higher valuations for Facebook? Simple, Facebook continues to invest in technological innovation that other companies (aka MS and Oracle) can’t emmulate. Those other companies have to acquire the technology and talent, driving up relative stock values. It also means that Facebook will continue to disrupt the industry and find new, profitable niches while older, slower companies try and catch up or fade away into obscureness
Comment by polly
2012-01-31 12:33:56
I’m sure that social media in general and facebook in particular a huge way for businesses that sell to the general public to reach their audience. But a lot of business happens pretty far away from that sphere. If I were a retail business, I would see social media as essential, but not everything is consumer oriented retail.
If I were a hospital administrator and found out that an employee made a purchase because a company’s facebook page offered Farmville livestock to his personal account with the purchase of 100,000 disposable gloves, I would fire him. (Do guys even play Farmville, or is is a chick thing? I’m not on Facebook.)
Comment by Arizona Slim
2012-01-31 12:44:59
I’m sure that social media in general and facebook in particular a huge way for businesses that sell to the general public to reach their audience. But a lot of business happens pretty far away from that sphere. If I were a retail business, I would see social media as essential, but not everything is consumer oriented retail.
I’m B2B. And Facebook to me would be a huge waste of time. Heck, I’m not even sold on LinkedIn, and that’s supposed to be a great place to make business contacts.
I’m of the mind that forums like this one are great places for making connections. I wouldn’t be at all surprised to see some business ventures arising from here, if they haven’t already.
Comment by mathguy
2012-01-31 13:36:44
Facebook in and of itself doesn’t really have a technological valuation in the same way google does. It has a market share valuation. How much would CNN be worth if they had a global audience of 500 million with virtually no other news outlets that people turned to as their primary source.
Of course they have technology supporting content capture and distribution to those 500 million, but that’s kind of a “solved” problem even if it is still hard to maintain. The point is, Facebook has the 500 million, and they have the organization and infrastructure maintaining it, so it is a turnkey valuation.
I think you’re all overlooking one other thing: The MySpace Factor.
Myspace used to be all the rage and offered(as far as I can tell) pretty much the same functionality as facebook with one major exception: It was pain in the ass to use and arbitrarily restrictive on what you could post on there and how.
And then one day something came along that wasn’t “all up in yo grill’ about what you put in your own profile and bam - everyone switch almost overnight.
The next big thing could come along tomorrow and people could drop facebook like a hot potato or myspace. I still have a myspace account, but when was the last time I logged in? I can’t even remember….
Remember when simple email was sheik and almost everyone used AOL? Now it’s purely utilitarian and can be had from any number of sources. Notice that most blogs (like my own - http://wphr.org - sorry shameless plug) offer you the ability to log in and post/comment with an account from any number of social-ish sites (linkedin,twitter,etc).
Nobody can own the process of internetworking in a social manner any more than anyone can own the internet(it’s just a protocol in the end). At the moment facebook seems to provide the most usable platform for this, but when considering and investment in something like this, I never forget the lessons of AOL and MySpace….
Comment by Northeastener
2012-01-31 13:42:31
If I were a retail business, I would see social media as essential, but not everything is consumer oriented retail.
You’re right, the current Facebook ecosystem is heavily weighed towards consumers and companies who sell/service consumers directly. But it’s all interconnected… “As the plankton go, so to the whale”. Without the consumer, there is no B2B in our economy.
Another way to put it: Is Google a “consumer-oriented retail” company? Is Microsoft? How is it possible that Facebook could threaten the business models of both if Facebook is just a consumer-oriented social media site?
Comment by polly
2012-01-31 15:20:00
Google and Facebook are pretty much the same - their value is in delivering eyeballs. They have the ability to target the eyeballs they recruit more closely than a TV show can, but that is what they do.
Microsoft sells software. They have expanded into the delivering eyeballs business through bing and a few other ventures (don’t they have a picture sharing thing too?), but they still have a basic software business.
Comment by Moman
2012-01-31 16:27:38
The value of Facebook is being able to tailor advertisments to consumers likely to buy the product - they know this via “Likes” and comments.
The wheels will come off when (if) consumers realize they are giving all this information away for free, that has a value to it.
As far as value, I don’t see the value to companies outside of this area. If I needed a plane ticket via AA, and they sent me to their FB page, I’d be choosing a different carrier.
Comment by Northeastener
2012-01-31 16:40:46
Correct Polly. Facebook threatens Google’s ad business, especially since Google can’t target ads at the level Facebook can, as it only has aggregate data. However, Google is doing it’s very best to diversify from the web ad space via plays like google docs and mail, android, etc… but adsense is it’s bread and butter, and that is under pressure.
Microsoft is a software company with some play in the search/ad space via Bing, but still generates most of its revenues from corporate and consumer software sales. Their problem is that Facebook has become the platform of choice for 500 million users and devices are just commodity access points… if I can access FB from my phone, tablet, TV, or other device, why do I need an MS license for Windows? If I’m not using Windows, why do I need MS Office? MS becomes irrelevant to the consumer, and without the consumer, they are in trouble. They are already under pressure from Apple, Google and opensource on the corporate side.
Bottom line, the largest social media site, FB, threatens the existance of two of the largest, most well-known internet/software companies in the world.
Comment by Moman
2012-01-31 16:46:11
Northeasterner,
I disagree that FB is an ecosystem. Apple, Google, and Microsoft have ecosystems. FB is a solution looking for a problem, kind of like real estate salespeople, if you will, in the middle looking to extract something from both sides by connecting buyers and sellers.
IMO, a FB phone would be about as popular as the Garmin phone was.
Comment by Northeastener
2012-01-31 16:58:34
The wheels will come off when (if) consumers realize they are giving all this information away for free
FB users already know and they don’t care…
If I needed a plane ticket via AA, and they sent me to their FB page, I’d be choosing a different carrier.
You can currently get a ticket for AA by going to their website or going to 3rd party sites like Travelocity or Priceline. Facebook becomes another sales channel for them, especially when AA, Travelocity, and Priceline publish FB apps.
Ex. Family wants to plan a Florida family vacation… mom and dad coming from CA, grandma and grandpa coming from MA, aunts and uncles coming from all over… where can they all meet up and view/discuss options/schedules/prices/hotels, etc. and do so in real time with persistance while finding the best deal from various competitors and comparing amenities? FB. Where can they then share pics and updates of that vacation with “friends” and family that didn’t join? FB. Where can friends find information on similar deals because the experience was so highly recommended and they saw their friends having so much fun? FB… starting to get the point?
Whether you accept this or not, choose to adopt the technology or not is irrelevant. 500 million people globally have and continue to do so. As the line between FB and other “services” becomes thinner, FB just becomes part of the daily experience.
Over a million dollars for a median home in PA? I go there often, and, while a very nice area, you’d never catch me paying much over 100/sq/ft for houses like that. It’s just a nice little suburb, not some crazy/glitzy address (like 5th Ave or Palm Beach).
A lot of this shows distinctly how easy the money has come to these employees. No way any “normal” guy is going to blow that kind of money on a house like that (even if they had it); there’s just no “value” for the money. At least some places are actually “special”, PA just happens to be close to big employers and have a good climate. That’s pretty easy to find all over the country for 1/10th the price/sqft.
PA just happens to be close to big employers and have a good climate ??
Well, you are correct but simplistic when it comes to the attractiveness of PA….
That’s pretty easy to find all over the country for 1/10th the price/sqft ??
Oh Please….Where ??
Comment by Overtaxed
2012-01-31 10:51:42
“Oh Please….Where ??”
Well, I wasn’t thinking of anyplace in particular, but, since you asked..
How about Miami, FL? Great climate, lots of houses in the 100/sq/ft range, and plenty of high-tech jobs (I have one of them and my company has dozens open).
How about Dallas, TX? Less good climate, but, if you like heat, this is a great place for you. Tremendous local job opportunities (I have 2 positions in Dallas that I’m trying to fill right now, all pay north of 100K), great business climate. If you’re paying over 100/sq/ft in a Dallas suburb, you’re getting ripped off.
And, finally, how about the Raleigh-Durham area.. Different climate (but, IMHO, very nice), awesome quality of life, and it’s considered by many to be the Silicon Valley of the east (which I’d agree with). Yes, the weather is not NorCal. And house prices are a bit higher than Miami/Dallas (probably 125/sq/ft), but pay is generally higher too.
I travel to PA, Mountain View, Seattle, and across the Bay Area quite a few times a year for work. I like it out there, I do, it’s a nice place to live. But 1000/sq/ft to live in a suburb? That’s crazy talk; it’s no nicer than lots of other places that are a fraction of that cost.
No wonder that people like myself are die hard Ron Paul supporters.
Someone need to plaster those graphs in every place they can find
and hopefully wake up the brain dead sheep and fainting goats out
in Idiocracyland.
Best link EVAR! Check out the sequence at the bottome of the US debt too. There’s also a great discussion going on below it - I think people are waking up a little to the whole Federal Reserve Brand™ Laser Printer scam going on.
Most it is the typical “protect your credit score” stuff. But of course, they have to throw this in:
“Small mistake: You cash out your 401(k) when you leave your job.
Big complication: The loss of substantial future earnings. In 20 years, $2,500, the average 401(k) cash-out, can grow to $11,652 (with an average annual return of 8 percent). ”
This is 4.6x.
Jan 1992, S&P: 404. 8% per year for 20 years (compounded daily) = 1990. I see 4.92. They must have compounded yearly instead of daily.
Actual:1313.
So, it “can” grow by 4.6x but really 3.25 is more realistic. That is 6.1%, not 8%.
Now, should we add a .5% management fee to drop the return to 5.5%? Now we are down to $7700.
Take off another 2.4% for inflation that we had over those 20 years to compare what you can actually buy for that money? $4600.
Now, convince me that returns in the next 20 years are going to be nearly as good as the last 20.
I get it that $11K sounds a lot better than $4,600 but does anyone really buy these “8% return” lies any more?
Scary thing is that PENSION FUNDS still use the mandatory “8% return” as though it’s a God-given right… & as a result… are sooo perliously underfunded… that sometime in the not-so-distant future… they will be next in line for a gub’mint bailout.
The portion of my 401K that is in the “safe” fund earns 0.5%. Take away the management fee of 0.5% and that money is flatlined. The financial world has just about nothing to offer.
The money that I just took out and paid taxes on though, part of that will be spent on a hot tub and a brass dancing pole for my girl friend. She says she needs to exercise. That really gets my “interest”.
The money that I just took out and paid taxes on though, part of that will be spent on a hot tub and a brass dancing pole for my girl friend. She says she needs to exercise. That really gets my “interest”.
I was not attempting to imply that a cash-out was the better option. That would require way more knowledge of the future than I have, such as if we’re going to see a financial collapse, what the tax rates will be 20 years ago, if/how means testing of SS/MC will be implimented, etc.
My only argument is with their wrote assumption of 8% ROI consistently for the next 20 years, plus ignoring management fees and inflation.
My only argument is with their wrote assumption of 8% ROI consistently for the next 20 years, plus ignoring management fees and inflation.
I’m such a meanie that I think that anything over 5% is gravy. And that’s before all of the financial industry locusts start chewing on the ROI with their various fees.
I get it that $11K sounds a lot better than $4,600 but does anyone really buy these “8% return” lies any more?
I sure don’t.
When I was visiting my folks over the holidays, I settled in with a very lengthy book by Jack Bogle, the founder of The Vanguard Group. Book title: Don’t Count on It!: Reflections on Investment Illusions, Capitalism, “Mutual” Funds, Indexing, Entrepreneurship, Idealism, and Heroes.
In essence, he said that a lot of the return that investors hope for is being gobbled up by the mutual funds industry. And he doesn’t have kind things to say about that industry.
The primary objective in a 401K is to earn returns on the money that is not really yours, the deferred tax part of it. With zero returns stretching out to the horizon, and my horizon is not that distant, nothing is to be gained. My strategy is to take whatever out now that I can convert to “the means of my retirement lifestyle”, pay the taxes and have it settled.
The secondary objective is to defer taxes until lower rates late in life. I consider the prospect of lower tax rates later slim. If I retired right now it would only knock me down a few % in tax rate. The 10% penalty does not apply due to my best-if-used-by date. The risks are increasing that the 401K will be savaged, or that my SS will be reduced if I have a 401K. I already cannot get state freebies if i retire with a 401K.
The other objective is the match. Thankfully I can simply recycle contributions and get the match. What’s not to love?
The math is much different if you can take it out without penalty. IMHO, if I were in that situation, I’d take a percentage of it out (call it 50%) and hide it under my mattress. Take enough out so that, on paper, you’re “poor” and wouldn’t take any hit from means testing of SS. Take the rest and invest it as you normally would. Then you have 2 possible income streams, the money under the bed (to make sure you’re always poor on paper) and the 401K that would show whatever income percentage you’d like.
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Comment by polly
2012-01-31 13:53:30
“the money under the bed (to make sure you’re always poor on paper)”
Gee, if you apply for any government programs - like expecting Medicaid to pay for your nursing home care - and you don’t mention that money in the mattress it is called something we discuss a lot on this board. It is called fraud. Depending on the application, it might also be perjury.
Comment by Blue Skye
2012-01-31 14:46:07
There are work arounds. “Money under the mattress” is slang for an annuity in your kid’s name. Also referred to in the Corzine Dictionary as “lost money”. I opened a book and a $100 bill fell out! It was “lost money”. That was not an asset and now it is not income.
Comment by polly
2012-01-31 15:30:26
If there is an annuity in your kid’s name, the kid gets to pay taxes on it. Depending on the kid’s age they might pay taxes on it at your rate. Or they might have legal control over it and decide not to share.
Comment by Blue Skye
2012-01-31 16:25:32
Yes, and they might off me for the insurance money and my gold teeth.
Bogle was referring to the professionally managed mutual funds, which had load fees and other mgmt fees, as the Vanguard type non-professionally managed -follow-the-index didn’t really exist at the time.
The billion-dollar question: What happened to the money? MF Global seems to have used some customer funds to re-pay certain of the firm’s financial partners. Some $200 million of it (or more) likely went to JPMorgan Chase (JPM), where MF Global had a bank account and which cleared trades for the firm. The banking giant appears to have put the squeeze on the broker after MF Global overdrew a proprietary trading account it held with Chase in London. MF Global may have repaid the bank using customer funds.
Although that would violate securities rules, the problem here is that creditors like Chase also had the legal right to ask for their money back. Unless investigators can prove that the money MF Global funneled to these companies was drawn from customer accounts, rather than from the firm’s own accounts, the chances of recovering it are slim.
Sheesh, for one moment there I was all excited, thinking the “got his” comment was something having to do with payback for his many sins. But no, he “got his” meaning “I got mine…”. sniff…sob.
Nearly three months after MF Global collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered. Scott Patterson reports on Markets Hub.
Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.
As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.
Many officials now believe certain employees at MF Global dipped into the “customer segregated account” that the New York company was supposed to keep separate from its own assets—and then used the money to meet demands for more collateral or to unfreeze assets at banks and other counterparties as they grew more concerned about their financial exposure to MF Global.
…
This guy was fired for 20 cents. Of course he was a developmentally disabled bagger at a grocery store who had only worked there for 25 years.
Corzine and the executive team at MF’in Global are of course TCTJ - Too Connected To Jail. So they can “lose” 1.2 large and merely walk away with merely absurd profits instead of truly obscene profits.
Kyle Dowie, 43, was fired from his job at an Iowa supermarket over cashing 20 cents of bottle deposits that were left behind by customers. After a complaint was filed with the Iowa Civil Rights Commission on behalf of Dowie alleged discrimination based on his disability, he is weighing an offer to return to his job.
Dowie, who is mentally disabled, worked for 25 years at the Hy-Vee supermarket in Urbandale, seven miles west of Des Moines. On Nov. 2, after recycling $3.75 worth of bottles from home through the store’s recycling machine, his mother said he tried to redeem 20 cents worth of credit slips dated in September that may have been left by customers.
A friend from up the street was fired from a local store. It was over a cash register error of well under 10 bucks.
Comment by Steve J
2012-01-31 10:16:39
Government investigators can’t find a billion dollars but want the power to police the Internet in order to find illegaly uploaded mp3s and movies?
Comment by polly
2012-01-31 16:03:43
Actually, that legislation was about the movie makers and other owners of intellectual property policing the internet to find ilegally uploaded mp3s and movies. They were just going to use the government to to do the shut down of anyone they accused of wrongdoing instead of what happens now which is you have to prove it first.
Comment by aNYCdj
2012-01-31 18:15:12
Polly you know my stance on this…it is always about suing white people nary a black face getting caught….maybe some lawyer would see the discriminatory way the RIAA has been attacking this problem, for the last 15 years
Comment by aNYCdj
2012-01-31 19:28:16
Interesting 2004 pepsi superbowl commercial…notice the color of the kids
i wont mention the thousands of Illegal cd’s i had to make of little hermies picture and favorite songs at his bar mitzvah….just tell a jewish mom those cd’s are illegal…….not a good idea…
Sarbox has fewer teeth than your average Florida voter.
Jan 30 (Reuters) - Symmetry Medical Inc and several former executives and accountants have settled U.S. Securities and Exchange Commission charges over a ‘pervasive’ alleged accounting fraud at a British unit that distorted the medical device company’s results.
the settlement also marks one of the few times the SEC has invoked the Sarbanes-Oxley governance law of 2002 to claw back sums paid to senior corporate executives while a fraud was going on but who did not know it was occurring.
Former Chief Executive Brian Moore agreed to reimburse $450,000 to Symmetry, while Chief Financial Officer Fred Hite agreed to reimburse $185,000. Hite also agreed to pay a $25,000 civil penalty.
Symmetry also agreed not to violate rules related to financial reporting, books and records and internal controls
The San Diego Housing Commission offers deferred loans, closing-cost assistance grants, and mortgage credit certificates to help low- and moderate-income residents become first-time homebuyers. Since 1990, we’ve helped more than 4,700 families and individuals buy their first homes. There are three different homebuyer programs, the latest of which was created in 2009 with limited funding under the federal Neighborhood Stabilization Program (NSP). The NSP is funded in whole or in part with funds provided by the U.S. Department of Housing and Urban Development (HUD). In addition, the Housing Commission operates a citywide first-time homebuyer program and administers a homebuyer program for the City of La Mesa.
Who is Eligible?
The Housing Commission’s primary program is limited to those planning to buy a home within the City of San Diego, or neighorhoods with postal ZIP codes that begin with 921. “First-time homebuyer” is defined as someone who has not owned a home that served as a primary residence for at least three years. Each homebuyer program has limits on annual household income and the purchase price of a home.
Private equity firms are jumping into distressed housing as the U.S. government plans to market 200,000 foreclosed homes as rentals to speed up the economic recovery.
GTIS Partners will spend $1 billion by 2016 acquiring single-family homes to manage as rentals, Thomas Shapiro, the fund’s founder said. That followed announcements this month that GI Partners, a Menlo Park private equity fund, expects to invest $1 billion, and Los Angeles-based Oaktree Capital Management LP will spend $450 million on similar housing.
“It’s a massive market,” Shapiro said in a telephone interview from New York. “We’re starting to see this as a billion dollar opportunity to buy rental housing.”
“It’s a massive market,” Shapiro said in a telephone interview from New York. “We’re starting to see this as a billion dollar opportunity to buy rental housing.”
I was just about to post that exact same excerpt from that article.
It IS class warfare, and the ruling class is only in the beginning stages of wealth transfer.
“Buy now or rent forever” is exactly what went through my mind as I read that article.
I am getting to the point where the choice seems to be
a) rent indefinitely from a landlord
b) rent money from the bank and buy a house
A major new housing development in Mission Valley could be a sign that San Diego County’s dormant new-home construction industry is coming back to life. The project is transforming an old gravel pit into a planned community of condos, rental units and commercial space.
SAN DIEGO — C.J. Runnells has shown new homes for years. These town homes sell in the low-to-high $400,000 range and they feature the latest technology and styles.
“This is our residence 1-x. It is a four story home. It features three bedrooms, three-and-a-half baths and 1,760 square feet,” said Runnells.
The Shea Homes saleswoman walked through a new model home using sweeping gestures that one might see on “The Price is Right.” That’s easy to do in a townhouse full of designer touches.
“Many of our home shoppers like the brick wall and columns. It reminds them of a very urban feel,” said Runnells.
Her well-practiced presentation hasn’t been used much recently. That’s because the financial collapse crushed the new home industry in San Diego County. The resulting wave of foreclosures flooded the market with cheap competition. But that may be changing.
Sudberry Properties is turning the old Grant gravel quarry on the north edge of San Diego’s Friars Road into a 230-acre planned community. The development will include all kinds of properties.
“The overall master plan is set to include just under 5,000 homes of really different products, different home configurations, both on the rental and for sale. And also on the different price points,” said Marco Sessa, Vice-President at Sudberry Properties.
The first two phases are already on the market. Shea homes is building 200 town homes and Sudberry is putting finishing touches on a 300-unit rental complex. The project developer is not worried about the slumping new-home market.
“Part of that is because there’s so little housing being built right now,” said Sessa. “The last couple of years in the county we’ve built under 4,000 homes and that includes all home types. So there’s certainly a pent-up demand that is building.”
…
Brandie Barbiere walks past her household possessions after they were removed to her front yard during a home foreclosure on Oct. 5, 2011 in Milliken, Colorado. Barbiere said she had stopped making the mortgage payments 11 months before, after she lost more than half her home child care business due to the continued weak economy.
John Moore/GETTY IMAGES
By Bill Schiller Foreign Affairs Reporter
…the Pew Charitable Trust found that in today’s America — proud home to capitalist culture for more than two centuries — just 50 per cent of Americans now have a “positive” reaction to the word “capitalism.”
A key reason for that is America’s unending housing debacle, which has overrun millions of American homeowners leaving them broke, broken and angry.
From 2006 to 2010 American real estate prices plummeted 30 per cent, losing a stunning $6 trillion off their value.
That’s what pushed former realtor Charles Koppa to the edge, inspiring him to launch his grassroots “Mad as Hell” seminars in Ramona, Calif., near San Diego.
His aim, he says, is to arm people with sufficient knowledge to take on the “banksters,” who force-fed investors, then forced foreclosures nationwide, stripping homeowners of whatever equity they had.
Koppa, 71, wants an end to what he calls “foreclosure tyranny,” and hopes to harness the Internet to inspire an “Occupy Our Homes” movement much like Occupy Wall Street.
“I’m tailoring seminars so that people can start to gather forces in their own homes.”
Their theme song, Koppa reveals, is Leonard Cohen’s “Everybody Knows.” (“Everybody knows the fight was fixed/the poor stay poor, the rich get rich.”)
On Tuesday, in response to growing national concern, President Obama vowed to launch an investigation into the handling of mortgages during the crisis.
The tsunami of statistics that attach to the crisis stagger: 2.2 million homes are now in foreclosure with more on the way; $800 billion in existing mortgages are more than 90-days delinquent; new home sales that once stood at 1.28 million in 2005 plummeted to just 305,000 in 2011; and 2 million construction jobs have been lost.
America’s housing sector is a wasteland with some cities featuring not one, but several boulevards of broken dreams.
Given all this, perhaps it was more than idle rhetoric this month when Republican hopeful Mitt Romney, in a speech following his victory in the New Hampshire primary, claimed “the middle class has been crushed” and that his campaign was all about “saving the soul of America.”
But it will take more than rhetoric, idle or otherwise, to steer America back to prosperity.
…
just 50 per cent of Americans now have a “positive” reaction to the word “capitalism.
GOP pollster Frank Luntz has advice for Republicans on how to talk about Occupy Wall Street: don’t use the word “capitalism,” say “I get it” to the protesters and never use the word “bonus” to talk about executive bonuses.
Why does it matter whether your mortgage just went underwater yesterday, or have been so for years? You would still take a big haircut whenever you finally got around to selling.
The foreclosure rate in North San Diego and Southwest Riverside counties fell dramatically in 2011, although it remains well above normal levels, according to a North County Times analysis of data from ForeclosureRadar.
Notices of default, which start the foreclosure process, fell in every ZIP code in the region, but the dip in foreclosures was more uneven. Most North County coastal ZIP codes saw an increase in foreclosures, as high-end houses lost value faster than the rest of the market. But much of the rest of the region saw a steady drop in foreclosures and defaults as lenders started pushing customers toward selling for less than they owed in loans.
“More servicers and banks are willing to consider a short sale,” said Mark Goldman, an instructor at San Diego State University. “They’re coming to realize they’ll have more income on a short sale than they will on the expense of a foreclosure.”
A short sale occurs when an owner sells for less than what is owed for the house.
In 2011 in North County, lenders sent 22.6 notices of default per 1,000 households, down 12 percent from 2010. Lenders took back at foreclosure auctions 11 houses per 1,000 households, down 14 percent from 2010.
In Southwest Riverside County, where the foreclosure crisis was more severe, the drop was more dramatic. Lenders sent 41 notices of default per 1,000 households, down 20.4 percent from 2010. And lenders took back 27.4 houses per 1,000 households at auction, down 20.2 percent from 2010.
Although the foreclosure rates in both regions are still very high —- economists said the annual rate should be 4 foreclosures per 1,000 households in a healthy market —- they’re both about half what they had been during 2008, a peak year.
Foreclosure rates were more mixed. Of six beachfront North County ZIP codes, four saw foreclosure rates rise in 2011: Del Mar, Oceanside, Carlsbad and Cardiff.
These tend to be among the priciest houses in the region.
“It would be just a guess, I think a lot of the self-employed people, physicians and attorneys and so forth, are feeling the heat of the economy,” Goldman said.
In 2011, owners of the most expensive houses in the region had to lower their prices to get their houses sold. As an anecdotal example, fitness guru Jenny Craig listed her Rancho Santa Fe house for $10 million, but sold it last month to her daughter and son-in-law for $6 million.
Falling home prices tend to drive up foreclosures, said Chris Thornberg, an economist with Beacon Economics in Los Angeles. When homeowners fall into financial trouble, they try to sell their houses. If they can’t get enough to cover loans, they either fall into foreclosure or enter a short sale.
For most of the market, the big price drops happened between 2007 and 2009. Although more price drops may be in the pipeline, most people who are underwater have been for years, Thornberg and Goldman agreed.
…
I still find it shocking that so many American households are locked in a one-on-one game of foreclosure poker with Megabank, Inc. The competition seems patently unfair.
In Southern California, the number of default notices filed on properties fell 10.2% from a year earlier. Above, a foreclosed house in Glendale.
January 25, 2012|By Alejandro Lazo, Los Angeles Times
Fewer California borrowers entered foreclosure during the final three months of the year, according to new data. But the holiday respite, coming after a sharp summer increase in new defaults, may not last.
The number of California homes entering foreclosure in the fourth quarter fell 11.9% from the same period in 2010 to the second-lowest level over the last four years, said DataQuick, a real estate information firm in San Diego. A total of 61,517 notices of default, which are filed to initiate foreclosures, were recorded on California properties during the fourth quarter. That was a 13.7% drop from the third quarter of 2011.
Some economists say California and other states will probably see an increase in foreclosure actions as banks deal more aggressively with seriously delinquent mortgages. That increase probably will push home prices lower.
“There is just a lot of volatility in the data right now because there are seasonal factors that are affecting the foreclosure numbers,” said Celia Chen, a housing economist with Moody’s Analytics. “I think we are heading upward, but it is not going to be a solid trend up.”
Default notice filings fell sharply in December, particularly those involving loans from Bank of America and Bank of New York Mellon, and helped drag down the overall quarterly numbers. Average daily filings on behalf of Bank of New York Mellon dropped 75% from November to December; filings on behalf of Bank of America dropped 50%, Wells Fargo 20% and JPMorgan Chase 13%, DataQuick said Tuesday.
The number of homes taken back through the foreclosure process also fell, by 11.8% from a year earlier to 31,260. The majority of the loans entering the foreclosure process in the fourth quarter were made in 2005 to 2007, when poor lending practices by major institutions were rampant.
Californian homeowners were a median nine months behind on their payments when they received a notice of default from their lender. Among the state’s largest counties, mortgages in San Francisco, Marin and San Mateo counties were the least likely to go into foreclosure. Homes were most likely to enter the foreclosure process in Sacramento, San Joaquin and Stanislaus counties, according to DataQuick.
In Southern California, the number of default notices filed on properties fell 10.2% from a year earlier, and the number of homes taken back by banks fell 11%.
Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate, found reason for optimism in the figures.
“At this point in the cycle, there is little reticence by large financial institutions to put properties into the foreclosure process,” he said. “The housing cycle is showing signs of turning.”
…
The Naked Capitalism blog has estimated the size of shadow inventory at 10 million. That’s a lotta houses, peeps.
In most circles “shadow inventory” refers to properties that are at some level of foreclosure. If we extended this term to cover properties that were listed for sale, but didn’t sell, and those that are being rented out “until the market improves,” I think we could expect to see a figure close to 20 million.
The “smartest guys in the room” must have read the Fed’s White Paper on the notion of Uncle Sam supporting the rentership market, as private equity is trying to cash in on the proposal.
Jan. 31 (Bloomberg) — Private equity firms are jumping into distressed housing as the U.S. government plans to market 200,000 foreclosed homes as rentals to speed up the economic recovery.
GTIS Partners will spend $1 billion by 2016 acquiring single-family homes to manage as rentals, Thomas Shapiro, the fund’s founder said. That followed announcements this month that GI Partners, a Menlo Park private equity fund, expects to invest $1 billion, and Los Angeles-based Oaktree Capital Management LP will spend $450 million on similar housing.
“It’s a massive market,” Shapiro said in a telephone interview from New York. “We’re starting to see this as a billion dollar opportunity to buy rental housing.”
…
“We’re starting to see this as a billion dollar opportunity to buy rental housing.” ??
Yep….And the money men will make it again by paying 30 cents on the dollar…They are happy because they are going to the bank “Big Time”…The lenders are happy because the problem on their books goes away with one check…NAR is happy because the shadow supply is now gone and the remaining limited supply will boost housing prices…
And here in Tucson, the rental vacancy rate is already way up there at 16%.
But that doesn’t stop the developers, believe you me. There are three student apartment complexes — big, multistory ones — under construction or about to break ground. And, guess what, the market for high-end student rentals is already quite competitive. Those kids will move from complex A to complex B at the drop of a hat.
BTW, I know of one student-oriented complex that has become so crime-ridden that it’s called Knifepoint.
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Comment by Steve J
2012-01-31 10:35:02
Knifepoint - I love that name, I going to start using it.
Comment by Arizona Slim
2012-01-31 11:20:48
Knifepoint - I love that name, I going to start using it.
A friend whose son manages a nearby complex told me about Knifepoint’s crime problem. Her son has seen more than a few students in his rental office after they’ve spent a night at Knifepoint. These kids are so spooked by Knifepoint that they’ll break leases and forfeit deposits to get away from there.
The increase in the rental pool should at least put downward pressure on rents ??
I would make a better and more likely argument for downward pressure on rents…When these guys get a hold of all this inventory they will “cannibalize” the market for renters…You won’t be able to compete with them….
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Comment by Prime_Is_Contained
2012-01-31 10:30:21
they will “cannibalize” the market for renters…
Good point. If they have a sufficiently-low cost-basis (e.g. due to insider deals), they may be able to undercut the market in order to have a lower-than-market vacancy rate.
Comment by Moman
2012-01-31 11:49:41
This is exactly what will happen. And then all the mom-and-pop investors (speculators?) will be wiped out again.
Comment by Arizona Slim
2012-01-31 12:02:39
This is exactly what will happen. And then all the mom-and-pop investors (speculators?) will be wiped out again
In mine own neighborhood, we’ve already seen the collapse of the first round of “mom and pop” rental property speculators. These were people who bought sometime during the past decade, and, alas, they didn’t get the appreciation fairy visit that they hoped for.
More than a few of them overpaid when they purchased. They also learned some very hard lessons in the realities of dealing with tenants. Especially the house-wrecking variety of tenants.
Comment by DaveBro in SonomaCo
2012-02-01 00:54:18
Interesting slant. Several friends and co-workers here in Sonoma County are buying rental properties. I wonder about the wisdom of that. I think there is more potential price downside, but mostly I don’t want to deal with being a landlord. (And yes, I feel a little like I’m missing the boat.)
I would hate to lose principal in exchange for a small amount of income (although I’m making nothing on my cash now).
“It’s a massive market,” Shapiro said in a telephone interview from New York. “We’re starting to see this as a billion dollar opportunity to buy rental housing.”
Ah, yes. Another in-VEST-or who’s about to learn about the joys of landlording.
Enjoy those 3 a.m. phone calls from tenants with backed up toilets, Mr. Shapiro. I’m sure the tenants will enjoy them too.
Yeah, this is exactly what we need… deep pocket private equity coming in and putting a floor on SFH prices by taking the inventory off-market and flooding rental markets.
Does anyone realize that these “private equity funds” will keep SFH prices from hitting bottom? Here my family is still waiting for prices to correct to “affordable” levels and now comes Wall St., who created the bubble to begin with, to keep prices from becoming affordable.
And don’t get me started on what this will do to the rental market… destroy small-time landlords who are lucky to break-even at the end of the year, between wear-and-tear, capital improvements, and vacancies.
This is the type of thing that helps banks and Wall St., and does nothing for the “average joe”. In fact, this just concentrates more of the “wealth” of this country into the hands of the 1%… anyone else outraged?
Bulletin » Case-Shiller survey shows November decline in U.S. house prices
Jan. 31, 2012, 12:01 a.m. EST Davos is just an ego trip for the 1% Commentary: What’s wrong with Davos and how to fix it
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — The World Economic Forum in Davos, Switzerland, has just wrapped up, and the world is a better place.
Now we know which billionaire can ski and solve — or perhaps cause — a banking crisis at the same time.
If it sounds silly, it’s nothing compared to the four-day event in one of the most exclusive ski resorts in the world. After wrecking the global economy, the powerful and rich are back to their insulated worlds. In one session, panelists and the audience were asked if 20th century capitalism was failing in the 21st century society. Read full story on Davos panel .
Almost no one raised their hand, except…
David Rubenstein, managing director of the private equity powerhouse Carlyle Group, Raghuram G. Rajan, Professor of Finance at the Booth School of Business at the University of Chicago; Ben Verwaayen, chief executive of Alcatel-Lucent (ALU +1.12%); and Brian T. Moynihan, CEO of Bank of America Corp (BAC +1.27%).
In a nutshell, you can see the essential problem with Davos. It’s really not the “make the world a better place” forum it purports to be. It’s an ego trip for billionaires and politicians. It’s a place to reinforce the political and economic equation of haves and have-nots.
…
the political and economic equation of haves and have-nots.
Lib media propaganda fomenting class-warfare. Why do Americans hate the rich so? Even considering taxing the rich more is hate and tax is theft. This hateful entitlement attitude is everywhere. Everyone feels entitled to the producers money. Case in point. I produce. I have money but everybody wants to steal it. I go to the grocery store and they want like $500 for what I buy but if I want to buy more they want more of MY money. Why? Because they hate producers like me. They are jealous that I enjoy expensive food so they charge me more to punish me.
If I make 40 million dollars next year the FedGov will steal about 15% of it because the moochershate me. Now this is Socialism because now a producer like me will have 15% less of MY money to open that new factory in China.
SAN LUIS OBISPO, Calif. (MarketWatch) — Commodities guru Jim Rogers wrote: “Bull in China, Investing Profitably in the World’s Greatest Market.” A former partner of hedge genius billionaire George Soros, he blamed the Fed for igniting two catastrophic financial bubbles back in 2007. So he shorted Fannie Mae, banks and home builders, abandoned America just before the 2008 meltdown, and moved to China.
But should you follow his lead? Forget America? Invest in China, the “World’s Greatest Market?” Maybe follow Rogers earlier advice in “Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market?”
After all, China is the hottest economy on Earth. And commodities are so red-hot China is “buying up the world” to lock up commodities essential to feed China’s skyrocketing growth to 2050 and beyond.
But gamble on China? Risk your retirement nest egg? Compete against China for global commodities?
Don’t. This is a no-win scenario: for China, the USA, the world and you.
OK, so you’re mad at Wall Street for losing over $10 trillion of America’s retirement assets in the dot-com crash and subprime meltdown. And you know they’ll do it again. But buy China? No. When China collapses (and it will) you better not have your retirement invested over there. They’ll nationalize it, devalue it, wipe you out.
…
Now why would China “collapse”? How? Did it “collapse” in 2008 during the greatest world-wide financial and economic crises in our lifetime? Maybe the stocks will collapse but the economy? The growth? China is expected to have a “horrible” year in 2012 with only 7.5% growth and this is off a base much greater than even 4 years ago.
Do you even envision China with a negative GDP growth year in your lifetime?
Firstly, how will America totally run out of money we can print? And America will not cease to be an economic power in any of our lifetimes IMO.
Secondly, why do so many Americans still think China or any other part of the world cannot grow without America booming anymore? Many economies grew even before America existed. All our our money already in China is leading to no Chinese domestic growth? That would not make sense.
A Brazilian who works for a Brazilian hedge fund here told me that their in-house economist used to visit USA 4 times a year and China one time a year. Now it’s China 4 times a year and USA one time a year.
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Comment by polly
2012-01-31 14:02:17
It is presumed that China hasn’t turned the corner of having enough internal demand to be able to sustain growth if they don’t have huge exports. Whether that is true or not, I don’t know, but I know that if I were an aging adult in a society which had no publicly administered social safety net and a one-child policy in place for at least two generarions, I would be nervous about who was going to support me in my old age. Having more savings rather than less would seem like a good idea.
When I was sharing a bus seat with a woman from China working for the IMF, the first thing she asked me after I told her how great my new *one bedroom* apartment was, was when my parents were going to move in with me.
Fact Part of Post:
For example, in California “water-related energy use consumes 19 percent of the state’s electricity, 30 percent of its natural gas, and 88 billion gallons of diesel fuel every year – and this demand is growing.” (from the 2005 CEC report pdf online).
In West Australia, it’s even worse with energy intensive desalination plants.
Opinion Part of Post
If the price of energy goes up, the price of water should go up and its availability will go down. With the EROEI of oil still in decline, it would seem that energy prices will increase due to increased costs of inputs. That increase combined with an assortment of taxes that may be levied on energy production in the future (I am making no judgment on their efficacy, just assuming that they will be imposed) seem to point to further energy price increases. That said, the deflation that seems to be occurring globally will mitigate any increase in the price of energy.
MrBubble
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Comment by BlueStar
2012-01-31 12:25:37
As of 2011 Texas uses 40% of it’s surface water (rivers & lakes) to cool it’s electric plants. Projections are for a 20% growth in electricity demand by 2050. Since most of this water use is evaporation cooling it stays in the H2O cycle but the wind carries it out of Texas. This does not count the tens of thousands of acre feet of water that is removed from the water cycle by drilling for hydrocarbon extraction and permanently injecting the waste thousands of feet under ground. Even at these levels we won’t run out of drinking water for 30 or 40 years but the environmental damage to agriculture and to the regional landscape will really hurt the local economy.
Comment by The_Overdog
2012-01-31 13:37:37
The site below disagrees with you if I am reading it correctly. It says that TX uses 595,000 ML per year, enough for 3 million people or 2.5% of total water used (as of 2007). It also says the majority is closed loop, and not lost to evaporation.
In any case, it’s an interesting read as the study is being done to manage the water/electricity relationship across the US with Texas as the test case, and the population growth and environmental damage you mention is definitely the primary concern.
When China collapses (and it will) you better not have your retirement invested over there. They’ll nationalize it, devalue it, wipe you out.
About a decade or so ago, a very unhappy Arizona Slim was picking up mail at a local post office. I was in a down state because a publishing venture that I’d slaved over for many years had recently gone bust-o.
Well, there was a guy who was also picking up his mail, and his story topped mine. Seems that he’d opened a Coca-Cola bottling plant in Shanghai. And he lost it to the Chinese government. I gathered that the plant got too successful for their tastes.
I’ll never forget what he told me about business: If it was easy, everyone would be doing it.
+1, Slim. Any profits made in China are made at the pleasure of the regime. There is ZERO rule-of-law or historical basis for complaining if they decide not to let you keep it.
In other words, it is unfettered crony capitalism at its worst.
I seem to recall LVSands having some ruffles w/their Macau Resort. I think for a brief period it appeared there might be threat of the government taking over that site.
Nov. U.S. house prices slide 1.3%: Case-Shiller
By Steve Goldstein Jan. 31, 2012, 9:04 a.m. EST
WASHINGTON (MarketWatch) — U.S. house prices slumped 1.3% in November, according to the S&P/Case-Shiller 20-city composite house price index released Tuesday. Year-on-year, prices fell 3.7%, with 13 of 20 areas seeing annual returns decrease. Atlanta prices are down 11.8…
Here is the full MW story on the November Case-Shiller Index numbers:
Jan. 31, 2012, 9:04 a.m. EST
Nov. U.S. house prices slide 1.3%: Case-Shiller
By Steve Goldstein
WASHINGTON (MarketWatch) — U.S. house prices slumped 1.3% in November, according to the S&P/Case-Shiller 20-city composite house price index released Tuesday. Year-on-year, prices fell 3.7%, with 13 of 20 areas seeing annual returns decrease. Atlanta prices are down 11.8% year-on-year, and Detroit and Washington D.C. were the only cities with positive returns. The peak-to-current decline for the 20-city composite is -32.9%.
Original asking price was $650k. It just sold for $500k. Not sure this will translate the 3x median income end since the inventory in estate niche and the sub $200k homes is where the inventory bloat is. Well, at least that’s true if you;re looking for a house you don’t need to dump another $50k to $100k into because of the neglect.
THIS HOUSE at 5160 Kinloch Circle, Fayetteville, has four bedrooms, five full baths and 6,432 square feet.
Asking price: $650,000.
Selling points: The U-shaped ranch home has a large kitchen, game room, sauna, office, in-law area, outdoor granite grilling station, pool and cabana with fully equipped kitchen, bath and laundry. It was featured as a House of the Week Jan. 9, 2011.
“Selling points: The U-shaped ranch home has a large kitchen, game room, sauna, office, in-law area, outdoor granite grilling station, pool and cabana with fully equipped kitchen, bath and laundry. It was featured as a House of the Week Jan. 9, 2011.”
No more “built in bbq.” Now it’s referred to as a “grilling station.”
I see an awful lot of owned by realtor verbiage attached to some of these listings. One flagged on her Craigslist listing that that would make her a better negotiator. That particular house was more of a median type home. There is one home owned by a realtor I keep watching to see if it gets put on the market. It’s waterfront. The taxes aren’t too bad in that town but there is no way she is making sales like she used to because she pushed into another territority she used to have nothing to do with. I can only imagine the hen chatter from the reigning realty queens in the town she moved into.
There is also a local numbnuts realtor that has taken over Craigslist and if you click on one of his many links he’ll say if your realtor is really that good why are you on his site looking separtately. So he’s trying to steal clients. Just this weekend some other realtor has taken to flaming him on the Syracuse boards because he’s not following the Craigslist rules. It’s crazy watching it all go down.
And I bet you dollars to donuts that people who would have a granite grilling station would use gas and press their burgers as they cook and believe that searing “seals in the juices”. Pearls before swine with more money than sense or taste.
While I was visiting my folks in PA, I was regaling with the details of nearby houses for sale. One house, which has been owned by a member of the DuPont family for quite a few years, is on the market for $575k.
While I was reading the real estate ad via Mom’s computer, I was rattling off all the features this house had. Mirrored exercise room. Master bed/bath with a private porch. A stream runs through the property. That sort of thing.
Mom had one reaction to all of these features: “So what?”
How Fat Could You Get, If You Really, Really Tried? Infinitely Fat?
Posted on November 15, 2011 by Adam K
What if, on a perverse whim, you decided that you wanted to become the fattest human being ever to grace God’s green Earth.
Could you do it? If not, why not?
Here’s the recipe…
Just “overeat” a little bit each day, and you’ll get there. The record for fattest person ever is something like 1,500 pounds. So say you’re already 250 pounds. That means you just need to gain 1,250 more pounds, and you’ll win and be immortalized in Guinness. Awesome!!! Now, 1,250 pounds is a lot. But not if you stretch the gain out over a decade. You’d only need to gain 125 pounds a year —basically 1 pound every three days. Since there are 3,500 calories in a pound, you’d just need to “overeat” by like 1,200 calories a day. Don’t get me wrong: that’s still a boatload. It’s like an extra tray of brownies a day. But it’s doable.
(This is bogus man, you can draw a line through 2 dots and get Infinitely thin but you can’t get Infinitely Fat)
The reality, though — assuming your crazy little experiment doesn’t kill you — is that, at some point, you’d hit a limit. You cannot accumulate fat infinitely, no matter how much you stuff your face. You might pee out the excess; or your metabolism would spike to compensate. The reality is: the body is rigged with all sorts of mechanisms designed to keep itself (somewhat) stable.
Except most people’s bodies seem to reach a threshold where the body knows it’s good and fat and starts throwing the excess away. I feel sorry for the few whose bodies for whatever reason don’t do that.
Oh, if you haven’t followed the link to the story, do so. The comments are great.
Here’s a sample via Ron in Arizona:
“No ownership, no responsibility. Many of these rental homes will be trashed within a year devaluing the rest of the neighborhood. Been there. Suffered that.”
“No ownership, no responsibility. Many of these rental homes will be trashed within a year devaluing the rest of the neighborhood. Been there. Suffered that.”
correct prehaps the government will give the speculators a hand and give them a good deal on these homes and grant all their new rentals section 8 status
Housing and labor remain the cornerstones of our economy. In fact, the health of our labor market follows that of housing just like night follows day.
The near term prospects for both housing and labor remain decidedly challenging. The success of assorted federal programs to support housing so far have obviously been underwhelming.
That said, there are rumblings emanating from Washington that the Obama administration may end run Congress while unilaterally launching a massive program to support housing via Freddie (NYSE:FRE)/Fannie (NYSE:FNM) orchestrated refinancings.
…
In addition to a massive loan modification/refinancing program, might we also see Uncle Sam and our major money center banks become our nation’s largest landlords by a program to rent current REO (real estate owned) properties rather than trying to sell them?
…
It has been almost one year since I bought a 2br rental house for $19k here in east coastal central FL. I have a great renter who keeps the place cleaner than I would and always pays rent on time. The rental market is strong here right now and the low end rentals such as this one are in very high demand. From what I hear mine is far nicer than most others available in this price range ($550/mo). Been keeping an eye out for another but more patience is required. Will update further pending any new developments.
ps- Monster abandoned house accross street from where I live (donkey house) is still vacant now going on five years. Spring hay crop in front yard is almost ready for donkey grazing season. Maybe Bernanke will rent it to someone…
There’s a guy named Gary Eldred who has written several books about buying rental houses. One of his suggestions is to make an offer on places that are for rent. Why? Because quite often, the landlord is burned out and looking for a way out.
Although the above case is different, I concur with sleepless_near_seattle’s suggestion. Make ‘em an offer!
Who owns it? Good question. All I know is that it doesn’t matter. “Bank” owner has been way late chasing market down. Right now they are asking $300k, but have turned down multiple close offers over the last year. I know about $600k is owed on the property. I would only pay about $75k for it as a rental in the current market/condition of the house. But that’s just me. Really hard to get more than $800/mo from renters around here. Lots of FBs and no good-paying jobs dictate the market, not the media.
I would only pay about $75k for it as a rental in the current market/condition of the house. But that’s just me. Really hard to get more than $800/mo from renters around here. Lots of FBs and no good-paying jobs dictate the market, not the media.
I would make an offer based on what was said above. Who knows? You might be making the only offer they’ve ever gotten.
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Comment by sleepless_near_seattle
2012-01-31 16:37:49
And I’ll return the favor and have Slim’s back on this one. Seriously, offer $75k. Heck, offer $50k. Submit pictures of the ugliness. Submit records of the going rental rate. And remind them of the little fact that…it’s been VACANT FOR 5 YEARS!
I wasn’t always this way, but I’ve learned from many of my colleagues that the worst they’re going to say is, “No.”
Comment by sleepless_near_seattle
2012-01-31 16:49:27
Oh, and do a title search to make sure you know what liens have been submitted against the place. Surely there are at least tax liens in place.
Comment by oxide
2012-01-31 17:47:14
Empty for five years = you’ll need 3-4 years rent payments in order to fix it up. Buy hassle-free gold instead.
I am Pressboardbox, briefly was Politicians are Feces (but it was too hard to do the trademark symbol every time my pos computer crashed). A little HBB history for those who have hung in there.
Net official debt issuance worldwide is approaching zero. The US is still trying, but not much. Keep in mind all the fetid marked to market stuff that is still under the rug.
Again, I do not understand the data. It seems to be net private sector, but lists gov. Well, if it is intended to be gov, then the USA Fed Gov alone is issuing $1.3T a year new debt.
I wish the graphs did a better job of explaining the data.
Mark-to-fantasy is about to become the mark-to-nightmare they’ve been avoiding for the last 5 years.
Russia and Germany had their change. China sort of had their change. Europe, contrary to popular belief is having a general Golden Age, and South America is doing pretty well.
Guess who’s still trying to maintain the old status quo along with their 2 closest allies?
WASHINGTON (MarketWatch) — U.S. house prices dropped sharply in November to mark the third straight drop, according to a closely followed index released Tuesday.
The S&P/Case-Shiller 20-city composite home price index dropped 1.3% to take the year-on-year drop to 3.7%.
The declines were broad, with only one city, Phoenix, managing a monthly gain. On a year-on-year basis, only hard-hit Detroit and Washington D.C. managed annual gains.
The tumble has been particularly rough in Atlanta, where prices fell 2.5% on the month to bring the annual drop in the city to 11.8%, the worst of the 20 cities measured.
Atlanta, Las Vegas, Seattle and Tampa reached new lows.
…
The latest Case-Shiller data, which goes up to November 2011, shows both the 10 and 20-city composites falling further into the rabbit hole. The 10 and 20-city indices are down 3.6% and 3.7% respectively over the November 2010 as home prices remain stuck at mid-2003 levels.
Both indices are barely off their lows (10-city 1% above, while 20-city barely 0.6% north of its trough) and are down about 33% from the pre-crisis peak. “The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand,” said index chairman David Blitzer.
The situation is dire indeed. Both the federal government and Bernanke’s Federal Reserve have gone to great pains to try to revive the ailing markets, to no avail. Current mortgage credit supply is “much tighter” than before the housing bubble, according to Goldman Sachs’ research analysts, while the securitization market has all but disappeared since the crisis. About 90% of all mortgage originations are essentially backed by the government, the analysts explained.
We were not forced to buy homes by “them.” Some of us were greedy and wanted to keep flipping real estate and got caught when the music stopped. Some were stupid and leveraged their homes to pay down credit card debt and write off the interest — or take on even more consumer debt. Some were always better off in an apartment or rental. True, some just bought at the wrong time; but that’s called “bad luck” and not quite the result of a mustached black hat forcing an innocent widow at gunpoint to sign on the dotted line. What are we to think when the president thunders, “We learned that mortgages had been sold to people who couldn’t afford or understand them”? What does “we learned” mean? Did we ever not know? And what does his passive-voice “had been sold” mean? Are we to learn now that it does not mean “bought”? Americans did not “buy” houses, but were pried out of their beds to have too costly homes “sold” to them?
Chase Bank, who ended up servicing our last mortgage after it was resold twice, hounded and hounded us to take out a 2nd mortgage. Like the sirens of Greek myth, pouring on all his charm he tried to get me to think of vacations I could take, private schools my kids could go to, expensive improvements on the house I might want until finally I laughed, told him he was the devil, and hung up on him. The house was within $20k of being paid off. I’m sure all that untapped equity was killing him.
They came after homeowners with a purpose. There’s no way in hades I’m letting those bloodsuckers off the hook.
They came after homeowners with a purpose. There’s no way in hades I’m letting those bloodsuckers off the hook.
I could chime in with the long story of the dotty elderly neighbor who took out a WF reverse mortgage after succumbing to their charms, but you’ve read it before. She wasn’t of sound mind to be signing anything like reverse mortgage contracts. Heck, a contract with the Book of the Month Club was a stretch.
Long story short: House was foreclosed less than three years after it was reverse mortgaged.
We were not forced to buy homes by “them…..some just bought at the wrong time; but that’s called “bad luck””
Ladies and gentlemen of the HBB jury, I say many, yes many FB’s WERE FORCED to buy homes and I’ll make the quick case.
forced definitions: imposed by coercion, made necessary by an unexpected situation, false or unnatural…An aspect of coercion is duress i.e. extreme unlawful pressure.
Firstly, ladies and gentlemen, only about 35% of USA’s housing are rentals so logic would assume that there were not enough rentals available at ANY period in the history of America for all people needing and/or seeking a new dwelling at any one time to find a rental. Therefore many of them “had” to buy or WERE forced to buy.
It’s just cruel math. The fact that not all of them wanted to rent is irrelevant to the case because even if all of them DID want a rental, a rental was not available to all of them but only to about 35% of them therefore logic and math would assume that maybe 55% would have been forced to buy a home even if they wanted to rent. The other 10% could have stayed put maybe or lived in their mom’s basement but this still does not negate the fact that the majority were forced to buy (in an unnatural marked) or would have been forced to buy even if they wanted a rental.
So if they had to buy they were forced by one of the definition of forced: made necessary by an unexpected, or unnatural situation.
Even disregarding the math, the case could be well made that they were forced by one of the aspects of force: coercion and duress i.e. extreme unlawful pressure.
Were there not aspects EVERYWHERE of extreme unlawful pressure? In pushing no-doc loans? Unlawful appraisal fraud? The unlawful conspiracy of “hitting the number” between Realtors, appraisers and mortgage pushers? Realtors unlawfully lying about other bidders and other lies? The upward pressure on prices by Wall Street pushing junk mortgage securities? This my friend IS coercion..This my friends is forced.
The defense of the honor and character of my fellow Americans in the face of years of mental duress and conspiratorial coercion….. rests.
Nobody had to follow the herd or jump to the brush-beaters. Being crushed by the herd or killed by the brush beaters was a perfectly acceptable outcome.
Not.
This country maintains the most incredible fiction of having free with with no consequence of not hollowing the herd, I have ever seen.
What does this mean in the context of people needing to move into a market where not everyone can rent because of lack of rental units?
What does this mean in the context of the market largely affected by coercion - pushing no-doc loans, unlawful appraisal fraud, unlawful conspiracies of “hitting the number”, unlawfull lying about other bidders and other lies, the upward pressure on prices by Wall Street pushing junk mortgage securities?
This my friend IS coercion..even in the context of free-will. This my friends is forced.
Rental stock in small town America is almost absent. I remember talking to someone years ago who had moved from one small town to another and had to buy in both paces because there were no rentals of any kind available. I had never lived in a town that small, so was unaware of the dearth of rentals.
I think it was explained in a thread within the past few weeks, but I can’t seem to find it. The whole Buffett discussion. It’s been said he pays less income tax RATE than his secretary. Then it was countered that when you add what his company pays to what he pays in cap gains (15% + 35%, respectively), his rate is more like 50%. What was the counter to THAT?
Buffet’s statement was not including corporate tax.
He said, that with payroll taxes and income taxes, his effective rate at 16.75%. Calculated on that basis, then his effective rate was less than his secretary’s.
This was pre the 2% discount, so we can assume her payroll was about 7.6%, meaning her effective income taxes were 10% or higher.
Dividends are paid out of current year or cummulative profits (profits since the company was formed and not previously paid out as dividends, so old companies always have some). If you pay out to your shareholders and have neither, the pay out is return of capital and isn’t taxed at all. I think it reduces your basis in your shares, but it has been a *long* time since I checked those rules.
I was doing battle against a guy who, on his personal FB page, under “People Who Inspire (guy’s name here),” has the following listed: Limbaugh, Beck, O’Reilly.
“Simply put, the healthcare system we have rewards expensive specialty care over primary preventative care. In order to reduce expensive specialty care – you have to add primary preventative care. “
“In order to reduce expensive specialty care – you have to add primary preventative care.”
One of the truly great myths.
Preventive care will keep some previously uninsured patients out of the hospital, they also will live long enough to fall victim to very expensive diseases like Alzheimer’s and certain cancers.
Moreover, preventative care is the recipe for overtreatment.
Millions more people will receive unnecessary tests and scans, leading to unnecessary procedures.
Nothing is better for the insurance company, or Medicare’s, long term balance sheet like unexpected, fatal cardiac arrest or stroke at age 55……
Moreover, preventative care is the recipe for overtreatment.
Millions more people will receive unnecessary tests and scans, leading to unnecessary procedures.
I agree.
And, ya know what? I’ve found that not having the money and/or the insurance to pay for tests and scans suddenly makes a lot of them unnecessary.
Like dental X-rays. I’m of the mind that they’re only needed when a problem needs to be diagnosed. The dentist’s “need” to update the files does not qualify as a problem.
The house we lived in for 3 years has finally come back on the market. Acutally pretty quickly, the foreclosure hearing was Aug 30, 2011.
Bought by our landlord for 319k in 2006.
On the market today as a foreclosure for 175k. (45% haircut)
The funniest part is that the in-laws want to move close and their Liar has actually sent them this house as a possibility. He has no idea we lived there. He told my wife it was ‘turn key ready’, and we laughed and laughed. After having lived there three years, and knowing all the ins and outs of the place, we wouldn’t offer a cent more than 120k. We KNOW there is about 25k worth of repairs to make it liveable, and another huge chunk of upgrades to make the place nice;it hasn’t had the best owners over the past 15 years and the neglect shows.
We’ll be curious to see when it sells and for how much.
1/25/12 3/2 SFH listed for $498K
1/26/12 We put in an offer for $527
1/28/12 15 offers (ours in the bottom 5)
1/29/12 First and only open house cancelled
We’re gonna get a motor home, quit our jobs, and home-school the kids…
I know a couple that did the work from the motor home thing for several years. (They were both computer programmers.) It went well for them, but then her daughter had a baby. They both decided to stop traveling so that they could be near the grandchild.
Wait for the ugly one. My uncle and his husband’s house was filled with nasty wallpaper when they bought it. Wallpaper was replaced with cheerful paint a while ago. It took some work, but they got a better deal on the house because it didn’t show well. The kids even use the trampoline that was left in the backyard.
That’s okay, sfrenter, for a 1949 built home, those windows SUCK (cosmetically).
How about this? Screw the places that are officially for sale. Drive the neighborhoods you’re interested in, looking for houses with no drapes (or go at night several nights a week looking for places that always look unlit). Contact the county or use county websites to find the owner. Write some letters.
The best finds for your money are sales you and the seller control directly. I’m amazed how many I can spot on random drives.
I’ll admit I haven’t bought a house this way (I’m far too cheap for their still sky high asking prices), but I HAVE talked to several absentee owners who’ve responded to letters I’ve written. Eventually I’ll find the person who just wants to sell and be done with it.
S&P Warns Cuts Loom for G20 Nations on Health Costs
Developed nations in Europe, as well as Japan and the United States, are likely to suffer the largest deterioration in their public finances in the next four decades as more elderly strain social safety nets, S&P said in a report.
“Steadily rising health-care spending will pull heavily on public purse strings in the coming decades,” S&P analyst Marko Mrsnik wrote in the report. “If governments do not change their social protection systems, they will likely become unsustainable.”
If no reforms are adopted, health-care-related credit downgrades would likely start within three years, eventually leading to an increase in the number of junk-rated countries as of 2020, the study showed.
Byun Yanggyu, director of macroeconomics at the Korea Economic Research Institute warned developed nation will eventually become the victims of their social safety nets.
“The more developed countries get, the more complicated their welfare structures become. In order to cover all necessary means in terms of welfare, spending elsewhere will have to shift there,” Byun told Reuters.
“I believe our country is headed more so in that direction… and it will dull our production in the end,” he said. “There is a bigger chance that developed countries will be subject to a downgrade from this point of view.”
Health care will likely be the fastest-growing expenditure for developed countries, which already have high social protections and rapidly worsening demographic profiles.
For example, Japan’s population is expected to decline by 30 percent by 2060, with two out of every five people turning 65 or older, according to official data.
Japan’s welfare spending, which includes pensions and health, is expected to reach nearly 108 trillion yen ($1.4 trillion) in the current fiscal year, around 22 percent of gross domestic product .
By 2025/26, spending is forecast to hit 141 trillion yen.
“Over time it must be a real problem for Japan,” said Adrian Foster, head of financial markets research at Rabobank International in Hong Kong. “There’s a call for authorities to push through fiscal reform. When you look at the government they seem to lack any real ability to respond to it.”
My pimp (recruiter) is on the verge of getting me back to LA. I have already been warned by an employee there of the resentment and low morale there, and that hiring consultants, even us very experienced ones, will not be welcome by the braves. So I anticipate some of those formerly kind will no longer be. I am cool with that. My only goal is to make my immediate lead happy. I will see by tomorrow. Meanwhile I am getting more headhunters on e-mail and voicemail.
The local client moved my exit time closer. So my last day on this contract is this Friday. I already have a flight scheduled out the tenth and too soon to change now. So I will spend next week visiting Siesta Key Beach again, visiting friends at the pizza and wine bar, saying bye to other gym regulars, and boxing things up. I boxed up my 32″ flatscreen, but won’t need to send it till this Friday.
Hate figure: George Soros is loathed by many conservative activists
This isn’t exactly the kind of endorsement the Romney campaign is looking for. It’s probably even less welcome than the purported nod for Newt Gingrich from crooked GOP congressman Randy ‘Duke’ Cunningham sent from his jail cell.
Speaking in Davos, gathering place for the global elites and upscale chattering classes, billionaire investor George Soros - loathed by conservative activists for his ‘zillion-dollar left-wing radical agenda machine’ - seemed to be pretty much OK with the notion of a Romney presidency.
‘Well, look, either you’ll have an extremist conservative, be it Gingrich or Santorum, in which case I think it will make a big difference which of the two comes in,’ he told Chrystia Freeland of Reuters in a videotaped interview. ‘If it’s between Obama and Romney, there isn’t all that much difference except for the crowd that they bring with them.’
Soros theorised that ‘Romney would have to take Gingrich or Santorum as a Vice President and you probably have some pretty extreme candidates for the Supreme Court’ but the ‘Obama administration is a bit exhausted’ so presumably - he implied - a Romney administration would at least have the advantage of renewed vim.
…
ORLANDO, Fla. — In Tampa yesterday, after accusing Mitt Romney of cutting off kosher meals for Jewish patients in hospitals, Newt Gingrich described what his victory would mean for Florida.
“When we win tomorrow,” he said, “we’ll send a signal to George Soros, Goldman Sachs, to the entire New York and Washington establishment: Money can’t beat people power.”
An hour later, Robert Stacy McCain caught Gingrich in Ft. Myers, where he picked up this “money power” ball and sprinted through four football fields.
Referring to an interview that Soros — a billionaire notorious for his funding of left-wing causes — gave to Reuters last week in Davos, Switzerland, Gingrich summarized Soros as saying, “We think either Obama or Romney’s fine, but Gingrich, he would change things.” The anti-Gingrich cabal, said the former House Speaker, also includes investment banking giant Goldman Sachs, which backed President Obama four years ago and now — having profited from taxpayer-funded Wall Street bailouts — is bankrolling Romney’s campaign attack ads. “Those ads are your money recycled to attack me,” Gingrich told the hundreds gathered outside Page Field airport here.
And later, this:
I think we have an obligation to our children, to our grandchildren, to fundamentally change Washington and, frankly, to fundamentally change New York. We deserve to know the truth about the last four years. We deserve to know what happened to our money.
Where’s the money? After zagging right and left and trying different attacks on Mitt Romney, Gingrich returns to the essential blue collar hit: The man’s money comes from the same rotten place as the rich banker who put your mortgage into a junk CDO. Gingrich will arrive in Michigan and Arizona as the anti-Goldman Sachs candidate, a uniform that fits whether you’re hitting Romney or Obama. If it works, the anti-Bankster vote is no longer Ron Paul’s exclusive property.
…
(Updates with Quinnipiac poll in seventh paragraph. For more 2012 campaign news, see ELECT.)
Jan. 30 (Bloomberg) — Newt Gingrich, accusing Republican presidential primary opponent Mitt Romney of being a “fundamentally dishonest” tool of Wall Street, pledged to stop big banking firms such as Goldman Sachs Group Inc. from “rigging the game.”
Pressing his underdog campaign into the last full day before Florida’s primary election tomorrow, Gingrich spoke of running a White House that would “challenge the system head- on” and disrupt the “Wall Street elite.”
“To the degree they survive by rigging the game,” Gingrich said in an interview with Bloomberg News, “they have a lot more to fear. To the degree that they’re willing to be in a very investment-oriented, high-tempo, entrepreneurial world, they have more to gain.”
Gingrich said his plans, like eliminating the capital gains tax and repealing the Wall Street regulations of the Dodd-Frank Act, would benefit the banking industry. Gingrich also said he’d consider new legislative changes, including replacement of the Glass-Steagall Act, a 1933 law that increased bank regulations and was repealed in 1999. He said he would stop deals like the $13 billion payment Goldman Sachs received for American International Group, Inc. investment guarantees after the bailed-out insurer received billions from the U.S. government.
…
The drag ‘em down, knock ‘em out fight between Romney and Gingrich has exposed the soft underbelly of American politics, which is the unholy alliance between Wall Street and K Street.
The banksters can lie, cheat, pretend and bribe all the politicians they want; regardless, the elephants under the living room rug are no longer very well hidden.
Fixing this is simple:
1) Let those who lost money take their lumps.
2) Let housing prices fall to levels the market can bear.
Foreclosure ghost towns have popped up around the country
- Getty Images North America via @daylife
Don’t expect housing to contribute to the so-called economic recovery any time soon. Home prices continue to drop month-after-month according to the latest S&P/Case-Shiller Home Price Index in the face of record low-mortgage interest rates, suggesting all of Bernanke’s attempts at reviving what he considers a key sector of the economy have been futile.
Tight lending standards and a record high number of foreclosed properties on bank’s balance sheets will continue to push down on prices and hamper any recovery.
The latest Case-Shiller data, which goes up to November 2011, shows both the 10 and 20-city composites falling further into the rabbit hole. The 10 and 20-city indices are down 3.6% and 3.7% respectively over the November 2010 as home prices remain stuck at mid-2003 levels.
Both indices are barely off their lows (10-city 1% above, while 20-city barely 0.6% north of its trough) and are down about 33% from the pre-crisis peak. “The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand,” said index chairman David Blitzer.
The situation is dire indeed. Both the federal government and Bernanke’s Federal Reserve have gone to great pains to try to revive the ailing markets, to no avail. Current mortgage credit supply is “much tighter” than before the housing bubble, according to Goldman Sachs’ research analysts, while the securitization market has all but disappeared since the crisis. About 90% of all mortgage originations are essentially backed by the government, the analysts explained.
Foreclosures and distressed asset sales are a big part of the problem. According to Nomura, “tighter lending standards and widespread expectations of further declines in home values have been depressing home sales on a larger scale. In addition, a growing share of distressed assets in home sales that are typically sold at a 20% discount are putting downward pressure on house prices.” According to RealtyTrac, there were 224,395 new foreclosures in November and only 58,601 sales of foreclosed properties.
A major problem is that there aren’t many options on the table. The massive supply of distressed properties directly obstructs the possibility of a self-sustaining economic recovery, as Fed Chairman Bernanke has made clear. Major banks like JPMorgan Chase, Bank of America, and Citi, with millions of these on their balance sheets, are still feeling the drag. In their attempts to offload these and free up capital, which could then be used to beef up capital ratios or for lending, banks incurred in robo-signing, failing to follow legal procedures in their attempts to express-foreclose on people.
…
Remember back when the Federal Reserve Chair was unsure whether housing was in a bubble?
Now the Washington Post is publishing articles with Housing Bubble in the headline. I’d say we’ve come a long way since Ben started this blog.
If only the WaPo writers could stop referring to declining affordability as “an improvement,” perhaps DC could move past the denial phase of the hosuing bubble stages of grief.
View Photo Gallery — Home prices drop again — How does your city stack up?: The Standard & Poor’s/Case-Shiller home price index offers a monthly asssessment of how home prices are faring from city to city. In the most recent report, from November 2011, only one city saw an increase in prices for the month.
By Peter Whoriskey, Tuesday, January 31, 5:04 PM
Since the depths of the recession, key aspects of the economy have rebounded. The nation’s output has grown. The stock market began an ascent. The unemployment rate drifted down.
But housing?
Data released Tuesday showed that seasonally adjusted housing prices have reached a post-bubble low, as the minor surge that began in 2009 fizzled, to be followed by the almost continuous slide of the past 18 months.
The housing bust, in other words, appears to be even worse than it was at the nadir of the recession.
For millions of homeowners, that’s an unsettling reality, and potentially an issue in the presidential campaign. But the damage may be far more widespread.
By making people feel less wealthy, according to economists, the decline in home values inhibits consumer spending and hampers the nation’s stop-and-start economic recovery.
“The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand,” said David M. Blitzer of S&P Indices. “I spent the weekend scratching my head and saying, ‘Isn’t there some good number in here?’ ”
The Standard & Poor’s Case-Shiller seasonally adjusted housing index for 20 cities dropped again in November, the last month for which data were available, falling to a level not seen since 2003.
In the Washington region, seasonally adjusted prices have been relatively flat since April 2010, according to the index, but they remain about 27 percent below their peak.
Of the 20 cities in the index, only three — Denver, Minneapolis and Phoenix — showed improvement from the month before.
…
Name:Ben Jones Location:Northern Arizona, United States To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
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I apologize for not posting much this week but I am slammed with work. Maybe some of you can fill in with articles and observations from your local markets? Thanks!
Glad to see you are looking at things the right way!
Yes, always glad to hear someone is busy at work and not wondering when their employer will decide they’re redundant.
I’m self employed, but with the type of work I do, if I pass on a job they won’t call me next time. So if a lot comes in at once, I just have to find a way to get it done.
Best of luck with the crunch, Ben!
Speaking of crunches, I need a Java expert. Got this mondo project where the Java output is supposed to show up on web pages. And darn if those pages aren’t breaking right and left.
The trouble seems to be invalid HTML code that’s being generated by the Java-based programming that runs the site. And, yes, my coder and I gave them valid code on which to base the page templates.
Any Java folks here? Is it possible to keep a site XHTML and CSS valid if the underlying platform is Java-based?
Is it possible to keep a site XHTML and CSS valid if the underlying platform is Java-based?
Code is code; it sounds like you just have some bad code if it is generating bogus output. Bad code can be written in any language.
Ben, Are you still in the property preservation biz?
Yes.
Here is an article that made me shake my head….not a “local story” but still interesting:
“Citigroup Inc. will no longer purchase “medium or high-risk” loans that could result in buyback requests from Fannie Mae or Freddie Mac.”
http://www.americanbanker.com/issues/177_17/correspondent-loans-mortgage-quality-control-1046034-1.html
Seems when they have to be “personally” accountable as a company, they want nothing to do with even a medium risk loans. It is laughable how they did not seem to mind collecting sub-prime and putting it into toxic pools in which to sink investors…..
Bwahahahaha. Some smart attorney should use this in the lawsuits for against the MBS issues…..hello CalPERS….hello PERS, hello OSTRS……
Slim,
Let me know if you need a hand with the Java stuff.
zakuhn@fusionent.com
mathguy
How ’bout a report from the trenches, Ben?
“How ’bout a report from the trenches, Ben?”
I think he gave us one, right here:
I am slammed with work.
I’m pretty busy here in N AZ. A lot of that is cuz I’ve been doing this for 3 years and I’ve built up contacts and established myself. But it’s one of those ‘prove yourself with every job’ kinda deals. I’m not seeing any slowdown in the foreclosure rate here. Houses aren’t sitting for 2 years in pre-foreclosure like when I started. And the clients are spending a little on them to get them sold, which wasn’t the case a while back.
‘prove yourself with every job’
Sounds like the music biz. If you play well at somebody’s wedding, you get ten more opportunities.
Play badly, no more opportunities.
Here ya go…
Single-family home sales on the Cape dropped 4.25 percent in 2011 compared to the year before, but luxury home buyers helped boost the market as the average price increased from $465,630 to $466,646 and last year saw 11 sales over $4 million compared to only five in 2010.
So far, the mild winter combined with pent-up demand in the higher end market has helped the Cape get off to a strong start with 15 listings over $1 million going under contract since the beginning of December.
Lending requirements have also recently changed in the second-home market with banks requiring 10 percent down, where previously they used to require 20 percent down. In the second week of January, Dean put under contract an oceanfront estate on 5 Walter Road in Harwich Port, listed for $3.6 million.
Wealthier house hunters tend to view property as a relatively safe investment.
“Real estate is the other ‘gold’ for the high-end market,” said Jack Cotton of Sotheby’s International Realty. “It is seen as a safe, secure place where buyers can park their money, use it and enjoy it.”
http://www.bostonherald.com/business/real_estate/view.bg?articleid=1399071&srvc=rss
“…but luxury home buyers helped boost the market as the average price increased from $465,630 to $466,646…”
Maybe wealthy San Diegans are cashing out and relocating to your hood, as I keep reading about how our high end is getting hammered…
My Houston bound friends said they pulled out all the stops to get their million dollar home after being outbid several times before getting the house they’re now in. I know from several conversations w/her that long term capital preservation was part of their decision making. Well….besides the avoidance of certain other areas of town. I don’t know if that was about appearances when you’re an oil industry exec, general elitism due to highly connected backgrounds, avoidance of high crime areas, or chosing certain schools for her children.
She had a close blood relative that I always thought should have given them some sort of insight which way to turn on the matter. But it appeared they were just as unsure as the rest of us. I wondered if that meant at the elite level it’s an every guy for himself mentality. She certainly didn’t appear to understand why we haven’t bought yet. There was starting to be a decent level of disdain in her voice when we last visited.
They have a lot of hope invested in the house. And you are a heretic.
I do believe you are spot on, Neuromance.
how our high end is getting hammered ??
Not here…High end is going vertical “AGAIN”…
..boost the market as the average price increased from $465,630 to $466,646…
Meanwhile, the Consumer Price Index for rose 3.0% from December 2010 to December 2011.
So, that $1016 gain in non-adjusted dollars? Meaningless compared to the CPI, which suggests that the inflation indexed average price of a house (in 2010) dollars should have risen to $479,599.
But why involve math, let alone carry costs, espically in a Boston Herald (now printed on Boston Globe presses) article?
Wealthier house hunters tend to view property as a relatively safe investment.
Uh-oh. Methinks that their concept of safety will get a major rewrite.
Another:
A sign of changing times: Priced out of Natick
Brendan and his wife, Emily, thought finding a four bedroom home in the suburbs would be a cinch.
But prices in more than a few suburbs within have held fairly steady or have gone up over the past year. (I quote Brendan and look at prices in the western suburbs in this Globe West piece that ran yesterday.)
Back to Brendan and his wife, who found themselves outbid for a 1950s colonial in need of work last spring. The Lois Street home, on the market for $430,000, wound up fetching $450,000 after a short but furious bidding war.
http://www.boston.com/realestate/news/blogs/renow/2012/01/a_sign_of_chang.html
Interesting comments:
http://www.boston.com/realestate/news/blogs/renow/2012/01/a_sign_of_chang.html?comments=all#readerComm
“There are two kinds of buyers out there right now: people like Brendan and Emily, who figure out how much house they can realistically afford and shop accordingly, and people who buy the house they feel like they deserve, and cross their fingers that the money will work out. The latter are pricing out the former.”
Good one here…and it is the fed and current administration’s policies that are keeping the “deserves” in the game. Don’t worry though…Romney’s polices will do the same. I will rent and save…to hell with Bernanke and Geithner.
‘The latter are pricing out the former.”
Who is lending to them?
the U.S. taxpayer.
http://www.quickenloans.com/home-loans/fha-loan?gclid=CIe0lIHz-q0CFahgTAodpxbPmg&qls=GAW_QSFHA003.0000537280&ef_id=gY5OhNu-ulwAAMVh:20120131183240:s
Who is lending to them?
There is money out there if you do your homework and qualify. We have great credit, good employment history (2 public school teachers with a combined income of 120K), and 2 kids.
Your household size is significant, I have discovered, because a family of 4 qualifies for assistance on our income that we would never get if we were childless.
So get this:
- pre-approval letter for 530K
- we put 13K down payment (up to 100K interest-free down payment assistance from the city)
I am still shaking my head.
We are looking at rentals and buying simultaneously. Rents are about $3000 month here. Security deposit and first/last is easily 7K.
With 13K of my own money tell me again why I should rent for another 2-4 years?
My resolve to wait out this bubble is getting worn down as the vacancy rate for rentals goes down and the cost of renting goes up and they are passing out money like confetti (at 0% and 4% interest).
If we buy a place this year we plan to stay 10-15 years. If it loses half its value, we walk. Everyone will have bad credit at that point.
Feel free to elucidate me on the holes in my thinking, but hold the flaming snarkiness, ‘cuz that’s not helpful.
Feel free to elucidate me on the holes in my thinking, but hold the flaming snarkiness, ‘cuz that’s not helpful.
Sounds like you’re both counting on CalSTRS to keep their promise(s) since your largest investment sounds iffy; really should have a alternate plan, IMHO.
“If it loses half its value, we walk.”
like i said…the u.s. taxpayer.
Sounds like you’re both counting on CalSTRS to keep their promise(s) since your largest investment sounds iffy; really should have a alternate plan, IMHO.
You are right, CALSTRS is probably toast.
So 3K month to a landlord or 3K a month to the bank? Our family still needs a roof over our heads.
Inflation, we’re golden. Have a place to live for a fixed rate, pay off as soon as we can, and have a place to live when we are old.
Deflation and housing collapse in SF, we are right where we started -renting again - although this time with lousy credit, just like everyone else.
pre-approved for a $530K loan? so that your total house buying power will be $100K + $13K + $530K = $643K?
Yikes.
“If we buy a place this year we plan to stay 10-15 years. If it loses half its value, we walk. Everyone will have bad credit at that point.”
I have had similar thoughts myself, honestly.
I also think it’s a likely scenario.
So 3K month to a landlord or 3K a month to the bank? Our family still needs a roof over our heads.
A quick “rent or buy” napkin calculation: 120 x rent, 120 x $3,000 = $360k. You can’t buy a decent family home in SF for $360k, so renting makes sense unless you have built a cash cushion flipping homes on the way up.
We are in the early stages of a debt fueled demographic depression; this is not the time to chain yourself to a hefty mortgage obligation. Buying high with minimum payments with the caviler thought of returning the keys if things don’t workout isn’t what the country needs right now. Standing by your character and protecting your credit should be your priorities, IMHO.
Also, CalSTRS isn’t going to vanish, but they will be forced to trim-back their lofty promises; recall the pension adjustments forced upon retired airline captains following 9/11.
Natick was where my husband and I first lived together. It is very densely developed. I remember all the problems they were having at the time w/the number of hookers just down the street from the train station I took. I also remember trying to get through the downtown area at rush hour when it was one giant parking lot of inching traffic. Yeah, I can’t imagine it’s worth straining financially to get a toe into Natick. We stayed one year and then were out of there moving to a town which I don’t think supported anywhere near the same number of ho’s if any and which had more of a family feel to it. My commute to Needham was shorter from the 2nd place too.
Another thing that I found funny about the comments was the complaints about the inventory. Boston’s inventory is old. It’s where This Old House is based and that’s for a reason. Things don’t get torn down much. More often then not they are only rerenovated. If you wanted new when I lived in the area you were looking at at least $500k and it was shoehorned onto a teeny lot. That was 1998. Every house we ever went into you had to have your creative juices flowing and the inner calculator cha-chinging in your head to determine if it really was worth that price.
I recall how out of touch prices were when I was based out of Boston in 1998-1999. Especially around the Rt128 corridor. I think Boston has experience the bubble for the longest duration. My current counterparts are from Boston. One just paid (borrowed) for a $750k house. He’s a 250k/yr plus bonus guy and on his way to VP. The other is more a peon like me and he bought in the last year too. I didn’t ask him the details as I didn’t want to create a housing enemy on the job.
Well Michael you and I, on extreme polar ends, stand shoulder to shoulder against the corrupt machine.
$780 per square foot? Yea but we’ve got the beach and coconut vendors and cobblers next door to hedge funds.
Ipanema Has It All, Including Skyrocketing City Home Prices
http://www.nytimes.com/2012/01/20/greathomesanddestinations/20iht-reipanema20.html
RIO DE JANEIRO — Ipanema. Across the world, the name of this Rio neighborhood conjures up images of beautiful residents, a laid-back tropical lifestyle and breathtaking natural surroundings. It is all of that.
…the area has been at the forefront of an explosion in city house prices over the last few years, with the Zona Sul, or southern zone of Rio, turning into one of South America’s most exclusive communities.
…“We had an apartment sell two years ago for 2.7 million reals. It just went to a new buyer for 7 million reals,” or $3.76 million.
….Most prices in Ipanema and in Leblon, the similar but slightly more upscale stretch of beach neighborhood just to its west, have doubled or even tripled since 2009. They now average more than 15,000 reals per square meter, or $780 per square foot.
Those are eye-popping increases for many markets. But they are backed by a set of circumstances that have many analysts and industry executives saying they doubt that a real estate bubble is forming.
Brazil’s economy, and Rio’s in particular, has surged since 2008,
…(Rio) is fulfilling a special place in the country’s boom. It is the base of Brazil’s efforts to develop its huge offshore oil reserves and will be a host city for the World Cup in 2014 and the host of the 2016 Summer Olympics.
There also is the proliferation of globally ranked hedge funds in the region, leading local newspapers to nickname Leblon as Brazil’s “Wall Street” — not least because many repatriated financiers working at oceanside boutique operations are making more than they once did in New York.
…there is simply not much space to go around. Ipanema proper is just nine by seven city blocks; Leblon is a bit smaller. And restrictive laws offer very little opportunity for development beyond modestly sized apartment blocks that mostly top out at about five stories.
“There is simply no supply to match the demand,”…
Copacabana,…is a less expensive option. … for those “a bit younger and livelier,” as Ms. Wajnberg puts it, prices in Copa average slightly more than 9,000 reals per square meter.
To its credit, Zona Sul — which includes Ipanema, Leblon and Copa — still feels like a laid-back beach village. Even in Leblon, upscale sushi spots lie down the street from vendors selling coconuts on street corners out of bright green rolling refrigerators. Offices of world-famous companies sit across from knife sharpening and key repair booths.
“Ipanema is working off of a totally new economic model than any of us have ever experienced in the past.” He predicts that a limited supply of land … will prolong the boom indefinitely.
“Ipanema is working off of a totally new economic model than any of us have ever experienced in the past.”
The crazy thing is, that’s a fact.
Over half of all apartments are selling for cash and the other half involves a min of 20% cash. There is no mortgage securitization here. Brazil’s strict bank regulations and their “SEC” make America’s look like a weak joke.
Florida never had a shortage of land. Ipanema, Leblon and Copacabana do.
In an under-housed nation (as was and is Brazil), you can’t bring 20% of your population into the middle-class in a 15 year period (that offered no mortgages) and not expect an even more massive shortage of middle-class homes. Now you combine those issues with Rio finding offshore oil, China’s commodity boom, the World Cup and the 2016 Olympics, mini Wall Streets springing up in residential neighborhoods with no more land….. well now that’s a lot of stuff going on.
It might be a bubble, but it is different than America’s.
It might be a bubble, but it is different than America’s.
The rates of price-increase certainly sounds bubblicious, but I agree that the mechanism must be different if there is no securitization. Perhaps the banksters down there haven’t latched on to the idea of processing transactions and selling all of the risk downstream?
Regardless, though, there have been plenty of bubbles throughout history that were based on credit but not securitization…
I believe the tulip bulbs were purchased with cash in that bubble. Highly leveraged borrowing is not necessary for a crash. “Buy now or be priced-out forever” hype is the only requirement.
Paying cash in a bubble simply focuses the losses. Using credit spreads the pain around. Didn’t Sir Issac lose his cash in the South Seas Bubble?
We have plenty of examples of real estate bubbles where the geographical boundaries were supposedly all built out.
Rio is not in a bubble because the commodities “boom” is on a trajectory to the moon? Good luck with that.
And good luck with the Olympics. IMO hosting the olympics marks a stage in real estate manias equivalent to building the world’s tallest building.
Not that I wish anything but good for Rio and surrounds, but only the people who live there can say there is no bubble without pause. I know you didn’t say that exactly but you are giving us all the arguments for it.
I believe the tulip bulbs were purchased with cash in that bubble.
Thank you for mentioning that. Is a tulip bulb fundamentally comparable to an Ipanema apartment? A 9 by 7 block, 44,500 population, prime area surrounded on all sides by water or mountains of a major world city center? A city ranked one of the three most beautiful cities in the world with Ipanema beach that has been voted the “World’s most Sexy Beach”? A city of 12 million people where 2.4 million of that 12 million have emerged from poverty to the middle-class the past 15 years? In a region just discovered the biggest oil field the past 30 years? With World Cup ‘14 and Summer Olympics ‘16 coming to town? Slums being taken over by the cops and billions being spent to upgrade the infrastructure?
This is fundamentally comparable to a tulip? All I’m saying is that if it is a bubble, it is different than others.
only the people who live there can say there is no bubble without pause. I know you didn’t say that exactly but you are giving us all the arguments for it.
I am not giving you arguments that Rio is not in a bubble. It might be but even if I thought it was, I would not sell my paid off house here. Why not? Because not. (lol, believe it or not, that is a valid answer in Brazilian Portuguese) I am giving you very valid arguments as to why the bubble is different here if there is one.
I’ve lived through 2 California bubbles. The most reasons I ever heard were 3 or 4 total.
1. Everybody wants to live here
2. There’s no more land
3. High tech/Defense industry protects us (It HAS protected high end silicon valley)
4. The beach or weather.
Well I’ve not only listed 4 fundamental reasons why Rio might be different. I’ve listed about 12. 12 fundamental reasons not 4. That’s why it’s different.
Good point, Rio. Tulip bulbs are not heavily taxed annually, require no pricey insurance, and are not subject to exorbitant hoa/maint fees. Real Estate is far more illiquid and cannot be physically moved to a different location. I even imagine they can be eaten in a real emergency. An overpriced shack??…
If you have a very small area that has essentially become home base for a hedge fund industry making comparable returns (and salaries/bonuses) as the long established North American and European financial centers and the hedge fund industry (worldwide or just locally because of new taxes or something) does not implode, I don’t see any reason why there shouldn’t be some very high priced apartments in that area.
Any number of things could derail it, including a bunch of people deciding that they just don’t like the prices and working from estates outside Rio is better. It only deflates prices if a lot of them decided to do it - Long Term Capital moving to Connecticut didn’t have a meaningful effect on Upper East Side apartments - but it could happen. If the industry is very young right now and becomes much older you could see this. The safety concerns in other areas of the city/country could keep this from happening.
But a huge concentration of wealth in a very small area isn’t the same as a real estate bubble. A few dozen city blocks is or should be peanuts compared to a whole country.
Especially with the hundreds of thousands of acres of orange groves clear cut..
Florida never had a shortage of land. Ipanema, Leblon and Copacabana do.
Rio, honey.
All you say is likely true, but take a look at your words in light of this board circa 2006. To the casual reader you sound an awful lot like Suzanne.
That said, I truly hope you prove us all incorrect.
To the casual reader you sound an awful lot like Suzanne.
I do not because I researched my points.
LOL! Awesomely funny, Rio!
“but honey—Suzanne researched this!”
LOL… Thanks for starting my morning with a laugh!
LOL… Thanks for starting my morning with a laugh!
Thanks for getting the joke!
Tulip bulbs are not heavily taxed annually, require no pricey insurance, and are not subject to exorbitant hoa/maint fees.
Property tax here is relatively low compared to the USA.
Insurance? In Brazil, what is homeowners insurance. Can I get that?
hoa/maint: Similar to USA
liquid: No but you can live in it.
Can’t be moved: Like from Ipanema to a slum?
Brazil does live a housing bubble!!!
Its very hard for many Brazilians to see that, because the government is investing hard on propaganda and even faking numbers (such as inflation) to make things look better than they really are. Its a new brazilian-mania! EGOs are huge all over the country!
It all begun when the government decided to boost the sector by giving credit, low interest rates, tax reliefs and money - R$23.000 for middle class families to buy houses… the sector boomed and especulation (or “investments”) came right after that!
Rio is facing a serious housing bubble and after 3 years of euphoria its finally starting to change, signs are everywhere: Apartments are not selling as they used to, records of properties on sale, rents at 0.3% (historically it was 0.5% -0.6%), level of bad debts increasing and THOUSANDS of apartments being built by people that want to resell it, but who’s gonna buy if we already have a record of properties on sale??
In the south zone, where people claim is the best place on earth (lol), we have 14.000 apartments on sale just in ZAP (Brazilian most used internet site for that reason)
Ken DeLeon, a Palo Alto-based Keller Williams agent who works with multiple clients at Facebook, Twitter and LinkedIn, regularly sees homes go for $100,000 to $250,000 over the asking price.
Three weeks ago, one of his listings sold for $400,000 over. The bidding war, he said, was waged between a Google and a Facebook employee.
Palo Alto Online : Are cash-rich homebuyers impacting the market?www.paloaltoonline.com/news/show_story.php?id=22811Cached
And here’s a fun little story from Forbes:
Four Reasons Why Facebook’s IPO is Irrelevant
Key point from the story:
“Facebook’s inability to transform the way companies operate their business means that it will remain a niche phenomenon in the grander economic scheme.”
There’s more to life than business. They are only a “niche phenomenon” to someone who believes otherwise.
There’s more to life than business. They are only a “niche phenomenon” to someone who believes otherwise.
Agreed.
However, there is quite a bevy of people and companies that have come forth preaching the salvation of social media to the masses of unenlightened businesses. I’ll bet there are several “how social media can help your business grow” seminars in your town this week.
However, down here in the real world, being liked on Facebook doesn’t help a business stay in business. Customers with money do.
“Facebook’s inability to transform the way companies operate their business means that it will remain a niche phenomenon in the grander economic scheme.”
The author admits in the article that he is not a Facebook user. He then goes on to compare the Facebook IPO to Netscape and Google and say that the valuation is grossly overvalued… this guy just doesn’t get it.
Facebook has created an entirely new internet ecosystem, similar to what Netscape and Google did. Facebook is a global platform and continues to grow, globally. Businesses who understand how to advertise and market effectively on Facebook will win over businesses who view it as irrelevant. Businesses who understand that facebook has become a social gaming space and take advantage will win over those that think it’s just kids… it’s mostly women ages 20-50. Facebook has become the modern equilivent to crossword puzzles and scrabble.
There are always people who “get it” and those that don’t. This guy doesn’t get it. Businesses that don’t get Facebook, whether it’s small biz or Fortune 500 will eventually fail, the same way Amazon, EBay, Google, and Youtube have destroyed/continue to destroy traditional business models.
“Facebook has become the modern equivalent to crossword puzzles and scrabble.”
You lost me there. Do you mean to say crosswords and scrabble were at one time economic engines of some sort?
You write as if you are one of those that “get it”. Help me, then, to understand a 100 billion dollar valuation.
It’s not Facebook that’s not being got, it’s the IPO.
The point I made in comparing it to “crosswords and scrabble” is in terms of what that demographic is doing with it’s time… playing social games. In years past, they might have watched TV or done newspaper crosswords…
These people are “casual gamers”… a relatively new demographic that didn’t exist or was not marketed to previously in the digital space.
As far as valuations goes, my point was that the author doesn’t get it because he doesn’t use it. He uses other tech IPO’s as examples of what Facebook isn’t doing to the tech space or why the valuation doesn’t make sense, and my arguement is that Facebook is in fact disrupting markets just like Goggle did(does), Netscape did, etc.
Lastly, in terms of the valuations, Facebook is a technological threat to Google in the same way Google was/is a disruptive threat to established players like Microsoft and Yahoo… current valuations are high, but if the company does in fact take ad market share from the likes of Google in the coming years, and continues to revolutionize the casual gaming industry, then the IPO will in hind-sight be seen as cheap.
Remember, we’re talking about an “ecosystem” here, not just a single company. When you have critical mass, other business models and companies spawn to take advantage of the disruption… Zynga is a good example of this (forcing EA to scramble to invest in social game developers btw).
There are other areas as well… an example would be Oracle. Oracle is scrambling to become relevant in the unstructured big-data space as pioneered by Google, Yahoo, and … Facebook. Facebook has solved difficult big-data problems with novel, open-source solutions, and that trickle-down is spawning new companies, services, and demand for programming expertise that is causing disruption to companies like Oracle and MS.
How does this translate into higher valuations for Facebook? Simple, Facebook continues to invest in technological innovation that other companies (aka MS and Oracle) can’t emmulate. Those other companies have to acquire the technology and talent, driving up relative stock values. It also means that Facebook will continue to disrupt the industry and find new, profitable niches while older, slower companies try and catch up or fade away into obscureness
I’m sure that social media in general and facebook in particular a huge way for businesses that sell to the general public to reach their audience. But a lot of business happens pretty far away from that sphere. If I were a retail business, I would see social media as essential, but not everything is consumer oriented retail.
If I were a hospital administrator and found out that an employee made a purchase because a company’s facebook page offered Farmville livestock to his personal account with the purchase of 100,000 disposable gloves, I would fire him. (Do guys even play Farmville, or is is a chick thing? I’m not on Facebook.)
I’m sure that social media in general and facebook in particular a huge way for businesses that sell to the general public to reach their audience. But a lot of business happens pretty far away from that sphere. If I were a retail business, I would see social media as essential, but not everything is consumer oriented retail.
I’m B2B. And Facebook to me would be a huge waste of time. Heck, I’m not even sold on LinkedIn, and that’s supposed to be a great place to make business contacts.
I’m of the mind that forums like this one are great places for making connections. I wouldn’t be at all surprised to see some business ventures arising from here, if they haven’t already.
Facebook in and of itself doesn’t really have a technological valuation in the same way google does. It has a market share valuation. How much would CNN be worth if they had a global audience of 500 million with virtually no other news outlets that people turned to as their primary source.
Of course they have technology supporting content capture and distribution to those 500 million, but that’s kind of a “solved” problem even if it is still hard to maintain. The point is, Facebook has the 500 million, and they have the organization and infrastructure maintaining it, so it is a turnkey valuation.
I think you’re all overlooking one other thing: The MySpace Factor.
Myspace used to be all the rage and offered(as far as I can tell) pretty much the same functionality as facebook with one major exception: It was pain in the ass to use and arbitrarily restrictive on what you could post on there and how.
And then one day something came along that wasn’t “all up in yo grill’ about what you put in your own profile and bam - everyone switch almost overnight.
The next big thing could come along tomorrow and people could drop facebook like a hot potato or myspace. I still have a myspace account, but when was the last time I logged in? I can’t even remember….
Remember when simple email was sheik and almost everyone used AOL? Now it’s purely utilitarian and can be had from any number of sources. Notice that most blogs (like my own - http://wphr.org - sorry shameless plug) offer you the ability to log in and post/comment with an account from any number of social-ish sites (linkedin,twitter,etc).
Nobody can own the process of internetworking in a social manner any more than anyone can own the internet(it’s just a protocol in the end). At the moment facebook seems to provide the most usable platform for this, but when considering and investment in something like this, I never forget the lessons of AOL and MySpace….
If I were a retail business, I would see social media as essential, but not everything is consumer oriented retail.
You’re right, the current Facebook ecosystem is heavily weighed towards consumers and companies who sell/service consumers directly. But it’s all interconnected… “As the plankton go, so to the whale”. Without the consumer, there is no B2B in our economy.
Another way to put it: Is Google a “consumer-oriented retail” company? Is Microsoft? How is it possible that Facebook could threaten the business models of both if Facebook is just a consumer-oriented social media site?
Google and Facebook are pretty much the same - their value is in delivering eyeballs. They have the ability to target the eyeballs they recruit more closely than a TV show can, but that is what they do.
Microsoft sells software. They have expanded into the delivering eyeballs business through bing and a few other ventures (don’t they have a picture sharing thing too?), but they still have a basic software business.
The value of Facebook is being able to tailor advertisments to consumers likely to buy the product - they know this via “Likes” and comments.
The wheels will come off when (if) consumers realize they are giving all this information away for free, that has a value to it.
As far as value, I don’t see the value to companies outside of this area. If I needed a plane ticket via AA, and they sent me to their FB page, I’d be choosing a different carrier.
Correct Polly. Facebook threatens Google’s ad business, especially since Google can’t target ads at the level Facebook can, as it only has aggregate data. However, Google is doing it’s very best to diversify from the web ad space via plays like google docs and mail, android, etc… but adsense is it’s bread and butter, and that is under pressure.
Microsoft is a software company with some play in the search/ad space via Bing, but still generates most of its revenues from corporate and consumer software sales. Their problem is that Facebook has become the platform of choice for 500 million users and devices are just commodity access points… if I can access FB from my phone, tablet, TV, or other device, why do I need an MS license for Windows? If I’m not using Windows, why do I need MS Office? MS becomes irrelevant to the consumer, and without the consumer, they are in trouble. They are already under pressure from Apple, Google and opensource on the corporate side.
Bottom line, the largest social media site, FB, threatens the existance of two of the largest, most well-known internet/software companies in the world.
Northeasterner,
I disagree that FB is an ecosystem. Apple, Google, and Microsoft have ecosystems. FB is a solution looking for a problem, kind of like real estate salespeople, if you will, in the middle looking to extract something from both sides by connecting buyers and sellers.
IMO, a FB phone would be about as popular as the Garmin phone was.
The wheels will come off when (if) consumers realize they are giving all this information away for free
FB users already know and they don’t care…
If I needed a plane ticket via AA, and they sent me to their FB page, I’d be choosing a different carrier.
You can currently get a ticket for AA by going to their website or going to 3rd party sites like Travelocity or Priceline. Facebook becomes another sales channel for them, especially when AA, Travelocity, and Priceline publish FB apps.
Ex. Family wants to plan a Florida family vacation… mom and dad coming from CA, grandma and grandpa coming from MA, aunts and uncles coming from all over… where can they all meet up and view/discuss options/schedules/prices/hotels, etc. and do so in real time with persistance while finding the best deal from various competitors and comparing amenities? FB. Where can they then share pics and updates of that vacation with “friends” and family that didn’t join? FB. Where can friends find information on similar deals because the experience was so highly recommended and they saw their friends having so much fun? FB… starting to get the point?
Whether you accept this or not, choose to adopt the technology or not is irrelevant. 500 million people globally have and continue to do so. As the line between FB and other “services” becomes thinner, FB just becomes part of the daily experience.
Over a million dollars for a median home in PA? I go there often, and, while a very nice area, you’d never catch me paying much over 100/sq/ft for houses like that. It’s just a nice little suburb, not some crazy/glitzy address (like 5th Ave or Palm Beach).
A lot of this shows distinctly how easy the money has come to these employees. No way any “normal” guy is going to blow that kind of money on a house like that (even if they had it); there’s just no “value” for the money. At least some places are actually “special”, PA just happens to be close to big employers and have a good climate. That’s pretty easy to find all over the country for 1/10th the price/sqft.
PA just happens to be close to big employers and have a good climate ??
Well, you are correct but simplistic when it comes to the attractiveness of PA….
That’s pretty easy to find all over the country for 1/10th the price/sqft ??
Oh Please….Where ??
“Oh Please….Where ??”
Well, I wasn’t thinking of anyplace in particular, but, since you asked..
How about Miami, FL? Great climate, lots of houses in the 100/sq/ft range, and plenty of high-tech jobs (I have one of them and my company has dozens open).
How about Dallas, TX? Less good climate, but, if you like heat, this is a great place for you. Tremendous local job opportunities (I have 2 positions in Dallas that I’m trying to fill right now, all pay north of 100K), great business climate. If you’re paying over 100/sq/ft in a Dallas suburb, you’re getting ripped off.
And, finally, how about the Raleigh-Durham area.. Different climate (but, IMHO, very nice), awesome quality of life, and it’s considered by many to be the Silicon Valley of the east (which I’d agree with). Yes, the weather is not NorCal. And house prices are a bit higher than Miami/Dallas (probably 125/sq/ft), but pay is generally higher too.
I travel to PA, Mountain View, Seattle, and across the Bay Area quite a few times a year for work. I like it out there, I do, it’s a nice place to live. But 1000/sq/ft to live in a suburb? That’s crazy talk; it’s no nicer than lots of other places that are a fraction of that cost.
Apologize for not posting much this week but I am slammed with work.
Okay, so now I know who I got this “slammed with work” bug from — our very own Ben Jones.
‘Bout time this happened. The last six months have been slowwwwww.
European debt explained in semi-trucks of cash:
http://demonocracy.info/infographics/eu/debt_piigs/debt_piigs.html
No wonder that people like myself are die hard Ron Paul supporters.
Someone need to plaster those graphs in every place they can find
and hopefully wake up the brain dead sheep and fainting goats out
in Idiocracyland.
Note: Especially the US graphs.
Best link EVAR! Check out the sequence at the bottome of the US debt too. There’s also a great discussion going on below it - I think people are waking up a little to the whole Federal Reserve Brand™ Laser Printer scam going on.
When will the lies stop?
I was going through the Yahoo headline when I came upon on “small money mistakes than can cost you big”.
http://shopping.yahoo.com/articles/yshoppingarticles/795/money-missteps-that-matter/
Most it is the typical “protect your credit score” stuff. But of course, they have to throw this in:
“Small mistake: You cash out your 401(k) when you leave your job.
Big complication: The loss of substantial future earnings. In 20 years, $2,500, the average 401(k) cash-out, can grow to $11,652 (with an average annual return of 8 percent). ”
This is 4.6x.
Jan 1992, S&P: 404. 8% per year for 20 years (compounded daily) = 1990. I see 4.92. They must have compounded yearly instead of daily.
Actual:1313.
So, it “can” grow by 4.6x but really 3.25 is more realistic. That is 6.1%, not 8%.
Now, should we add a .5% management fee to drop the return to 5.5%? Now we are down to $7700.
Take off another 2.4% for inflation that we had over those 20 years to compare what you can actually buy for that money? $4600.
Now, convince me that returns in the next 20 years are going to be nearly as good as the last 20.
I get it that $11K sounds a lot better than $4,600 but does anyone really buy these “8% return” lies any more?
Scary thing is that PENSION FUNDS still use the mandatory “8% return” as though it’s a God-given right… & as a result… are sooo perliously underfunded… that sometime in the not-so-distant future… they will be next in line for a gub’mint bailout.
Nothing to see here… move along.
The portion of my 401K that is in the “safe” fund earns 0.5%. Take away the management fee of 0.5% and that money is flatlined. The financial world has just about nothing to offer.
The money that I just took out and paid taxes on though, part of that will be spent on a hot tub and a brass dancing pole for my girl friend. She says she needs to exercise. That really gets my “interest”.
Brass pole, hot tub what an opportunity cost. This will pay back HUGE dividends in the years to come.
OK dJ, the dividends are not exactly HUGE, but they are exactly perfect!
I’ve been looking for something worth “investing” in for the past 5yrs—glad to hear that you found something, Blue!
The money that I just took out and paid taxes on though, part of that will be spent on a hot tub and a brass dancing pole for my girl friend. She says she needs to exercise. That really gets my “interest”.
Bwaa haa haa
I wouldn’t ‘cash out’ but I’d sure as hell roll it over to vanguard or a bank ira.
Darrell did you include the 8% return on the 10% penalty you lose during the cash out?
I was not attempting to imply that a cash-out was the better option. That would require way more knowledge of the future than I have, such as if we’re going to see a financial collapse, what the tax rates will be 20 years ago, if/how means testing of SS/MC will be implimented, etc.
My only argument is with their wrote assumption of 8% ROI consistently for the next 20 years, plus ignoring management fees and inflation.
My only argument is with their wrote assumption of 8% ROI consistently for the next 20 years, plus ignoring management fees and inflation.
I’m such a meanie that I think that anything over 5% is gravy. And that’s before all of the financial industry locusts start chewing on the ROI with their various fees.
I get it that $11K sounds a lot better than $4,600 but does anyone really buy these “8% return” lies any more?
I sure don’t.
When I was visiting my folks over the holidays, I settled in with a very lengthy book by Jack Bogle, the founder of The Vanguard Group. Book title: Don’t Count on It!: Reflections on Investment Illusions, Capitalism, “Mutual” Funds, Indexing, Entrepreneurship, Idealism, and Heroes.
In essence, he said that a lot of the return that investors hope for is being gobbled up by the mutual funds industry. And he doesn’t have kind things to say about that industry.
My take:
The primary objective in a 401K is to earn returns on the money that is not really yours, the deferred tax part of it. With zero returns stretching out to the horizon, and my horizon is not that distant, nothing is to be gained. My strategy is to take whatever out now that I can convert to “the means of my retirement lifestyle”, pay the taxes and have it settled.
The secondary objective is to defer taxes until lower rates late in life. I consider the prospect of lower tax rates later slim. If I retired right now it would only knock me down a few % in tax rate. The 10% penalty does not apply due to my best-if-used-by date. The risks are increasing that the 401K will be savaged, or that my SS will be reduced if I have a 401K. I already cannot get state freebies if i retire with a 401K.
The other objective is the match. Thankfully I can simply recycle contributions and get the match. What’s not to love?
The math is much different if you can take it out without penalty. IMHO, if I were in that situation, I’d take a percentage of it out (call it 50%) and hide it under my mattress. Take enough out so that, on paper, you’re “poor” and wouldn’t take any hit from means testing of SS. Take the rest and invest it as you normally would. Then you have 2 possible income streams, the money under the bed (to make sure you’re always poor on paper) and the 401K that would show whatever income percentage you’d like.
“the money under the bed (to make sure you’re always poor on paper)”
Gee, if you apply for any government programs - like expecting Medicaid to pay for your nursing home care - and you don’t mention that money in the mattress it is called something we discuss a lot on this board. It is called fraud. Depending on the application, it might also be perjury.
There are work arounds. “Money under the mattress” is slang for an annuity in your kid’s name. Also referred to in the Corzine Dictionary as “lost money”. I opened a book and a $100 bill fell out! It was “lost money”. That was not an asset and now it is not income.
If there is an annuity in your kid’s name, the kid gets to pay taxes on it. Depending on the kid’s age they might pay taxes on it at your rate. Or they might have legal control over it and decide not to share.
Yes, and they might off me for the insurance money and my gold teeth.
Oldy but a goody:
Where Are the Customers’ Yachts? or A Good Hard Look at Wall Street
By Fred Schwed
whoa, Bogle wrote that? Vanguard excepted, right? lol
Bogle was referring to the professionally managed mutual funds, which had load fees and other mgmt fees, as the Vanguard type non-professionally managed -follow-the-index didn’t really exist at the time.
Jamie got his …
Burned MF Global customers may be out of luck
The billion-dollar question: What happened to the money? MF Global seems to have used some customer funds to re-pay certain of the firm’s financial partners. Some $200 million of it (or more) likely went to JPMorgan Chase (JPM), where MF Global had a bank account and which cleared trades for the firm. The banking giant appears to have put the squeeze on the broker after MF Global overdrew a proprietary trading account it held with Chase in London. MF Global may have repaid the bank using customer funds.
Although that would violate securities rules, the problem here is that creditors like Chase also had the legal right to ask for their money back. Unless investigators can prove that the money MF Global funneled to these companies was drawn from customer accounts, rather than from the firm’s own accounts, the chances of recovering it are slim.
http://www.cbsnews.com/8301-505123_162-57368218/burned-mf-global-customers-may-be-out-of-luck/
“Jamie got his …”
Sheesh, for one moment there I was all excited, thinking the “got his” comment was something having to do with payback for his many sins. But no, he “got his” meaning “I got mine…”. sniff…sob.
Jamies.been.punished.enough.already.having.his.birthday.dinner.interrupted.by.the.Bear.Stearns.collapse.in.2008
POOF! $1.2 billion = $1,200 million dollars just disappeared.
By contrast, my wife goes into a tizzy if $11 goes missing from her wallet.
BUSINESS
JANUARY 30, 2012
Money From MF Global Feared Gone
By SCOTT PATTERSON and AARON LUCCHETTI
Nearly three months after MF Global collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered. Scott Patterson reports on Markets Hub.
Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.
As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.
Many officials now believe certain employees at MF Global dipped into the “customer segregated account” that the New York company was supposed to keep separate from its own assets—and then used the money to meet demands for more collateral or to unfreeze assets at banks and other counterparties as they grew more concerned about their financial exposure to MF Global.
…
…and they wonder why they go no respect from the hoi poloi?
You lose $10 from your job and your fired if not arrested.
This guy was fired for 20 cents. Of course he was a developmentally disabled bagger at a grocery store who had only worked there for 25 years.
Corzine and the executive team at MF’in Global are of course TCTJ - Too Connected To Jail. So they can “lose” 1.2 large and merely walk away with merely absurd profits instead of truly obscene profits.
Kyle Dowie, 43, was fired from his job at an Iowa supermarket over cashing 20 cents of bottle deposits that were left behind by customers. After a complaint was filed with the Iowa Civil Rights Commission on behalf of Dowie alleged discrimination based on his disability, he is weighing an offer to return to his job.
Dowie, who is mentally disabled, worked for 25 years at the Hy-Vee supermarket in Urbandale, seven miles west of Des Moines. On Nov. 2, after recycling $3.75 worth of bottles from home through the store’s recycling machine, his mother said he tried to redeem 20 cents worth of credit slips dated in September that may have been left by customers.
http://news.yahoo.com/iowa-man-fired-over-20-cents-may-return-231305763–abc-news.html
A friend from up the street was fired from a local store. It was over a cash register error of well under 10 bucks.
Government investigators can’t find a billion dollars but want the power to police the Internet in order to find illegaly uploaded mp3s and movies?
Actually, that legislation was about the movie makers and other owners of intellectual property policing the internet to find ilegally uploaded mp3s and movies. They were just going to use the government to to do the shut down of anyone they accused of wrongdoing instead of what happens now which is you have to prove it first.
Polly you know my stance on this…it is always about suing white people nary a black face getting caught….maybe some lawyer would see the discriminatory way the RIAA has been attacking this problem, for the last 15 years
Interesting 2004 pepsi superbowl commercial…notice the color of the kids
http://www.youtube.com/watch?v=0yYlgPD6hX0
…notice the color of the kids
You know what I like about paddy chicks?
what do tell………
i wont mention the thousands of Illegal cd’s i had to make of little hermies picture and favorite songs at his bar mitzvah….just tell a jewish mom those cd’s are illegal…….not a good idea…
Hmmm. Didn’t money get clawed back from Madoff’s clients who cashed out before the ponzi scheme was exposed?
Yep—but you didn’t really expect the same rules to apply to the big-boys, did you??
Sarbox has fewer teeth than your average Florida voter.
Jan 30 (Reuters) - Symmetry Medical Inc and several former executives and accountants have settled U.S. Securities and Exchange Commission charges over a ‘pervasive’ alleged accounting fraud at a British unit that distorted the medical device company’s results.
the settlement also marks one of the few times the SEC has invoked the Sarbanes-Oxley governance law of 2002 to claw back sums paid to senior corporate executives while a fraud was going on but who did not know it was occurring.
Former Chief Executive Brian Moore agreed to reimburse $450,000 to Symmetry, while Chief Financial Officer Fred Hite agreed to reimburse $185,000. Hite also agreed to pay a $25,000 civil penalty.
Symmetry also agreed not to violate rules related to financial reporting, books and records and internal controls
http://www.lse.co.uk/FinanceNews.asp?ArticleCode=k6mj4ysrgltk0gi&ArticleHeadline=Symmetry_Medical_execs_settle_SEC_fraud_charges
First -Time Homebuyers
The San Diego Housing Commission offers deferred loans, closing-cost assistance grants, and mortgage credit certificates to help low- and moderate-income residents become first-time homebuyers. Since 1990, we’ve helped more than 4,700 families and individuals buy their first homes. There are three different homebuyer programs, the latest of which was created in 2009 with limited funding under the federal Neighborhood Stabilization Program (NSP). The NSP is funded in whole or in part with funds provided by the U.S. Department of Housing and Urban Development (HUD). In addition, the Housing Commission operates a citywide first-time homebuyer program and administers a homebuyer program for the City of La Mesa.
Who is Eligible?
The Housing Commission’s primary program is limited to those planning to buy a home within the City of San Diego, or neighorhoods with postal ZIP codes that begin with 921. “First-time homebuyer” is defined as someone who has not owned a home that served as a primary residence for at least three years. Each homebuyer program has limits on annual household income and the purchase price of a home.
In the dating world, if you haven’t had a gig for three years, you are considered a “virgin”. Interesting parallel to “first time home buyers”.
Buy now or rent forever.
Private equity firms are jumping into distressed housing as the U.S. government plans to market 200,000 foreclosed homes as rentals to speed up the economic recovery.
GTIS Partners will spend $1 billion by 2016 acquiring single-family homes to manage as rentals, Thomas Shapiro, the fund’s founder said. That followed announcements this month that GI Partners, a Menlo Park private equity fund, expects to invest $1 billion, and Los Angeles-based Oaktree Capital Management LP will spend $450 million on similar housing.
“It’s a massive market,” Shapiro said in a telephone interview from New York. “We’re starting to see this as a billion dollar opportunity to buy rental housing.”
“It’s a massive market,” Shapiro said in a telephone interview from New York. “We’re starting to see this as a billion dollar opportunity to buy rental housing.”
I was just about to post that exact same excerpt from that article.
It IS class warfare, and the ruling class is only in the beginning stages of wealth transfer.
“Buy now or rent forever” is exactly what went through my mind as I read that article.
I am getting to the point where the choice seems to be
a) rent indefinitely from a landlord
b) rent money from the bank and buy a house
And so it goes- the same pigs who brought the economy to its knees will be rewarded with all the spoils. Grab your guns..
Four years of brutally-high unemployment and massive loss of household net worth does not necessarily equate to ‘pent-up demand’ for new homes.
New Home Building May Return To San Diego
Monday, January 30, 2012
By Erik Anderson
Evening Edition
A major new housing development in Mission Valley could be a sign that San Diego County’s dormant new-home construction industry is coming back to life. The project is transforming an old gravel pit into a planned community of condos, rental units and commercial space.
SAN DIEGO — C.J. Runnells has shown new homes for years. These town homes sell in the low-to-high $400,000 range and they feature the latest technology and styles.
“This is our residence 1-x. It is a four story home. It features three bedrooms, three-and-a-half baths and 1,760 square feet,” said Runnells.
The Shea Homes saleswoman walked through a new model home using sweeping gestures that one might see on “The Price is Right.” That’s easy to do in a townhouse full of designer touches.
“Many of our home shoppers like the brick wall and columns. It reminds them of a very urban feel,” said Runnells.
Her well-practiced presentation hasn’t been used much recently. That’s because the financial collapse crushed the new home industry in San Diego County. The resulting wave of foreclosures flooded the market with cheap competition. But that may be changing.
Sudberry Properties is turning the old Grant gravel quarry on the north edge of San Diego’s Friars Road into a 230-acre planned community. The development will include all kinds of properties.
“The overall master plan is set to include just under 5,000 homes of really different products, different home configurations, both on the rental and for sale. And also on the different price points,” said Marco Sessa, Vice-President at Sudberry Properties.
The first two phases are already on the market. Shea homes is building 200 town homes and Sudberry is putting finishing touches on a 300-unit rental complex. The project developer is not worried about the slumping new-home market.
“Part of that is because there’s so little housing being built right now,” said Sessa. “The last couple of years in the county we’ve built under 4,000 homes and that includes all home types. So there’s certainly a pent-up demand that is building.”
…
Pent up demand? From where? Certainly not the half of the total US workforce that makes $500 and less.
(Broken.keyboard.post)and.per.Bloomberg.only.7%.of.those.laid.off.since.2008.have.regained.their.previous.incomes
Actually the median in 4Q11 was $764 a week.
http://www.bls.gov/news.release/pdf/wkyeng.pdf
Of course that’s still no reason to cheer.
Actually the median in 4Q11 was $764 a week
That’s full-time jobs. Many jobs are not full-time because many corporations do not want to pay full-time job benefits.
Before or after taxes?
After ~the usual payroll deductions, that come. out to ~$600.
My feet hurt just thinking about 4 stories in a SFH?????
1760sq ft???? how much space did the 3 flights of stairs take off that?
I imagine thats less than 500 sq ft per floor once you take the stair wells out.
I hope they put in a fire escape.
Why the American dream could come to an end
Published On Sun Jan 29 2012
Brandie Barbiere walks past her household possessions after they were removed to her front yard during a home foreclosure on Oct. 5, 2011 in Milliken, Colorado. Barbiere said she had stopped making the mortgage payments 11 months before, after she lost more than half her home child care business due to the continued weak economy.
John Moore/GETTY IMAGES
By Bill Schiller Foreign Affairs Reporter
…the Pew Charitable Trust found that in today’s America — proud home to capitalist culture for more than two centuries — just 50 per cent of Americans now have a “positive” reaction to the word “capitalism.”
A key reason for that is America’s unending housing debacle, which has overrun millions of American homeowners leaving them broke, broken and angry.
From 2006 to 2010 American real estate prices plummeted 30 per cent, losing a stunning $6 trillion off their value.
That’s what pushed former realtor Charles Koppa to the edge, inspiring him to launch his grassroots “Mad as Hell” seminars in Ramona, Calif., near San Diego.
His aim, he says, is to arm people with sufficient knowledge to take on the “banksters,” who force-fed investors, then forced foreclosures nationwide, stripping homeowners of whatever equity they had.
Koppa, 71, wants an end to what he calls “foreclosure tyranny,” and hopes to harness the Internet to inspire an “Occupy Our Homes” movement much like Occupy Wall Street.
“I’m tailoring seminars so that people can start to gather forces in their own homes.”
Their theme song, Koppa reveals, is Leonard Cohen’s “Everybody Knows.” (“Everybody knows the fight was fixed/the poor stay poor, the rich get rich.”)
On Tuesday, in response to growing national concern, President Obama vowed to launch an investigation into the handling of mortgages during the crisis.
The tsunami of statistics that attach to the crisis stagger: 2.2 million homes are now in foreclosure with more on the way; $800 billion in existing mortgages are more than 90-days delinquent; new home sales that once stood at 1.28 million in 2005 plummeted to just 305,000 in 2011; and 2 million construction jobs have been lost.
America’s housing sector is a wasteland with some cities featuring not one, but several boulevards of broken dreams.
Given all this, perhaps it was more than idle rhetoric this month when Republican hopeful Mitt Romney, in a speech following his victory in the New Hampshire primary, claimed “the middle class has been crushed” and that his campaign was all about “saving the soul of America.”
But it will take more than rhetoric, idle or otherwise, to steer America back to prosperity.
…
A whole new generation has once again been suckered by the lure of “capitalism”.
I think you ment cronyism.
No longer any difference. If there ever was.
History says there never was.
just 50 per cent of Americans now have a “positive” reaction to the word “capitalism.
GOP pollster Frank Luntz has advice for Republicans on how to talk about Occupy Wall Street: don’t use the word “capitalism,” say “I get it” to the protesters and never use the word “bonus” to talk about executive bonuses.
Why does it matter whether your mortgage just went underwater yesterday, or have been so for years? You would still take a big haircut whenever you finally got around to selling.
Home / North County Times Blogs / Business / On the Realside /
HOUSING: Foreclosures, defaults plummet in 2011
By ERIC WOLFF ewolff@nctimes.com | Posted: Wednesday, January 11, 2012 6:00 pm
The foreclosure rate in North San Diego and Southwest Riverside counties fell dramatically in 2011, although it remains well above normal levels, according to a North County Times analysis of data from ForeclosureRadar.
Notices of default, which start the foreclosure process, fell in every ZIP code in the region, but the dip in foreclosures was more uneven. Most North County coastal ZIP codes saw an increase in foreclosures, as high-end houses lost value faster than the rest of the market. But much of the rest of the region saw a steady drop in foreclosures and defaults as lenders started pushing customers toward selling for less than they owed in loans.
“More servicers and banks are willing to consider a short sale,” said Mark Goldman, an instructor at San Diego State University. “They’re coming to realize they’ll have more income on a short sale than they will on the expense of a foreclosure.”
A short sale occurs when an owner sells for less than what is owed for the house.
In 2011 in North County, lenders sent 22.6 notices of default per 1,000 households, down 12 percent from 2010. Lenders took back at foreclosure auctions 11 houses per 1,000 households, down 14 percent from 2010.
In Southwest Riverside County, where the foreclosure crisis was more severe, the drop was more dramatic. Lenders sent 41 notices of default per 1,000 households, down 20.4 percent from 2010. And lenders took back 27.4 houses per 1,000 households at auction, down 20.2 percent from 2010.
Although the foreclosure rates in both regions are still very high —- economists said the annual rate should be 4 foreclosures per 1,000 households in a healthy market —- they’re both about half what they had been during 2008, a peak year.
Foreclosure rates were more mixed. Of six beachfront North County ZIP codes, four saw foreclosure rates rise in 2011: Del Mar, Oceanside, Carlsbad and Cardiff.
These tend to be among the priciest houses in the region.
“It would be just a guess, I think a lot of the self-employed people, physicians and attorneys and so forth, are feeling the heat of the economy,” Goldman said.
In 2011, owners of the most expensive houses in the region had to lower their prices to get their houses sold. As an anecdotal example, fitness guru Jenny Craig listed her Rancho Santa Fe house for $10 million, but sold it last month to her daughter and son-in-law for $6 million.
Falling home prices tend to drive up foreclosures, said Chris Thornberg, an economist with Beacon Economics in Los Angeles. When homeowners fall into financial trouble, they try to sell their houses. If they can’t get enough to cover loans, they either fall into foreclosure or enter a short sale.
For most of the market, the big price drops happened between 2007 and 2009. Although more price drops may be in the pipeline, most people who are underwater have been for years, Thornberg and Goldman agreed.
…
I still find it shocking that so many American households are locked in a one-on-one game of foreclosure poker with Megabank, Inc. The competition seems patently unfair.
Initial foreclosure filings fall 11.9% in fourth quarter
In Southern California, the number of default notices filed on properties fell 10.2% from a year earlier. Above, a foreclosed house in Glendale.
January 25, 2012|By Alejandro Lazo, Los Angeles Times
Fewer California borrowers entered foreclosure during the final three months of the year, according to new data. But the holiday respite, coming after a sharp summer increase in new defaults, may not last.
The number of California homes entering foreclosure in the fourth quarter fell 11.9% from the same period in 2010 to the second-lowest level over the last four years, said DataQuick, a real estate information firm in San Diego. A total of 61,517 notices of default, which are filed to initiate foreclosures, were recorded on California properties during the fourth quarter. That was a 13.7% drop from the third quarter of 2011.
Some economists say California and other states will probably see an increase in foreclosure actions as banks deal more aggressively with seriously delinquent mortgages. That increase probably will push home prices lower.
“There is just a lot of volatility in the data right now because there are seasonal factors that are affecting the foreclosure numbers,” said Celia Chen, a housing economist with Moody’s Analytics. “I think we are heading upward, but it is not going to be a solid trend up.”
Default notice filings fell sharply in December, particularly those involving loans from Bank of America and Bank of New York Mellon, and helped drag down the overall quarterly numbers. Average daily filings on behalf of Bank of New York Mellon dropped 75% from November to December; filings on behalf of Bank of America dropped 50%, Wells Fargo 20% and JPMorgan Chase 13%, DataQuick said Tuesday.
The number of homes taken back through the foreclosure process also fell, by 11.8% from a year earlier to 31,260. The majority of the loans entering the foreclosure process in the fourth quarter were made in 2005 to 2007, when poor lending practices by major institutions were rampant.
Californian homeowners were a median nine months behind on their payments when they received a notice of default from their lender. Among the state’s largest counties, mortgages in San Francisco, Marin and San Mateo counties were the least likely to go into foreclosure. Homes were most likely to enter the foreclosure process in Sacramento, San Joaquin and Stanislaus counties, according to DataQuick.
In Southern California, the number of default notices filed on properties fell 10.2% from a year earlier, and the number of homes taken back by banks fell 11%.
Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate, found reason for optimism in the figures.
“At this point in the cycle, there is little reticence by large financial institutions to put properties into the foreclosure process,” he said. “The housing cycle is showing signs of turning.”
…
Turning? To what? Fertilizer?
The Naked Capitalism blog has estimated the size of shadow inventory at 10 million. That’s a lotta houses, peeps.
In most circles “shadow inventory” refers to properties that are at some level of foreclosure. If we extended this term to cover properties that were listed for sale, but didn’t sell, and those that are being rented out “until the market improves,” I think we could expect to see a figure close to 20 million.
I would consider the shadow inventory to be the houses without people living in them, not listed for sale and notlisted for rent.
These are the net excess houses.
The “smartest guys in the room” must have read the Fed’s White Paper on the notion of Uncle Sam supporting the rentership market, as private equity is trying to cash in on the proposal.
Foreclosures Draw Private Equity as U.S. Sells Homes: Mortgages
January 31, 2012, 9:00 AM EST
By John Gittelsohn
Jan. 31 (Bloomberg) — Private equity firms are jumping into distressed housing as the U.S. government plans to market 200,000 foreclosed homes as rentals to speed up the economic recovery.
GTIS Partners will spend $1 billion by 2016 acquiring single-family homes to manage as rentals, Thomas Shapiro, the fund’s founder said. That followed announcements this month that GI Partners, a Menlo Park private equity fund, expects to invest $1 billion, and Los Angeles-based Oaktree Capital Management LP will spend $450 million on similar housing.
“It’s a massive market,” Shapiro said in a telephone interview from New York. “We’re starting to see this as a billion dollar opportunity to buy rental housing.”
…
“We’re starting to see this as a billion dollar opportunity to buy rental housing.” ??
Yep….And the money men will make it again by paying 30 cents on the dollar…They are happy because they are going to the bank “Big Time”…The lenders are happy because the problem on their books goes away with one check…NAR is happy because the shadow supply is now gone and the remaining limited supply will boost housing prices…
So whats not to like ??
NAR is happy because the shadow supply is now gone and the remaining limited supply will boost housing prices…
The increase in the rental pool should at least put downward pressure on rents…
And here in Tucson, the rental vacancy rate is already way up there at 16%.
But that doesn’t stop the developers, believe you me. There are three student apartment complexes — big, multistory ones — under construction or about to break ground. And, guess what, the market for high-end student rentals is already quite competitive. Those kids will move from complex A to complex B at the drop of a hat.
BTW, I know of one student-oriented complex that has become so crime-ridden that it’s called Knifepoint.
Knifepoint - I love that name, I going to start using it.
Knifepoint - I love that name, I going to start using it.
A friend whose son manages a nearby complex told me about Knifepoint’s crime problem. Her son has seen more than a few students in his rental office after they’ve spent a night at Knifepoint. These kids are so spooked by Knifepoint that they’ll break leases and forfeit deposits to get away from there.
The increase in the rental pool should at least put downward pressure on rents ??
I would make a better and more likely argument for downward pressure on rents…When these guys get a hold of all this inventory they will “cannibalize” the market for renters…You won’t be able to compete with them….
they will “cannibalize” the market for renters…
Good point. If they have a sufficiently-low cost-basis (e.g. due to insider deals), they may be able to undercut the market in order to have a lower-than-market vacancy rate.
This is exactly what will happen. And then all the mom-and-pop investors (speculators?) will be wiped out again.
This is exactly what will happen. And then all the mom-and-pop investors (speculators?) will be wiped out again
In mine own neighborhood, we’ve already seen the collapse of the first round of “mom and pop” rental property speculators. These were people who bought sometime during the past decade, and, alas, they didn’t get the appreciation fairy visit that they hoped for.
More than a few of them overpaid when they purchased. They also learned some very hard lessons in the realities of dealing with tenants. Especially the house-wrecking variety of tenants.
Interesting slant. Several friends and co-workers here in Sonoma County are buying rental properties. I wonder about the wisdom of that. I think there is more potential price downside, but mostly I don’t want to deal with being a landlord. (And yes, I feel a little like I’m missing the boat.)
I would hate to lose principal in exchange for a small amount of income (although I’m making nothing on my cash now).
probably making renting cheaper than buying for a long while to come.
Which will make the result in that buy/rent calculator change quite a bit.
“It’s a massive market,” Shapiro said in a telephone interview from New York. “We’re starting to see this as a billion dollar opportunity to buy rental housing.”
Ah, yes. Another in-VEST-or who’s about to learn about the joys of landlording.
Enjoy those 3 a.m. phone calls from tenants with backed up toilets, Mr. Shapiro. I’m sure the tenants will enjoy them too.
Yeah, this is exactly what we need… deep pocket private equity coming in and putting a floor on SFH prices by taking the inventory off-market and flooding rental markets.
Does anyone realize that these “private equity funds” will keep SFH prices from hitting bottom? Here my family is still waiting for prices to correct to “affordable” levels and now comes Wall St., who created the bubble to begin with, to keep prices from becoming affordable.
And don’t get me started on what this will do to the rental market… destroy small-time landlords who are lucky to break-even at the end of the year, between wear-and-tear, capital improvements, and vacancies.
This is the type of thing that helps banks and Wall St., and does nothing for the “average joe”. In fact, this just concentrates more of the “wealth” of this country into the hands of the 1%… anyone else outraged?
Arbitrage Section 8. What’s the goverment pay a month for a 3 bedroom house rental in PHX? What’s that same house cost per month to buy?
Bulletin » Case-Shiller survey shows November decline in U.S. house prices
Jan. 31, 2012, 12:01 a.m. EST
Davos is just an ego trip for the 1%
Commentary: What’s wrong with Davos and how to fix it
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — The World Economic Forum in Davos, Switzerland, has just wrapped up, and the world is a better place.
Now we know which billionaire can ski and solve — or perhaps cause — a banking crisis at the same time.
If it sounds silly, it’s nothing compared to the four-day event in one of the most exclusive ski resorts in the world. After wrecking the global economy, the powerful and rich are back to their insulated worlds. In one session, panelists and the audience were asked if 20th century capitalism was failing in the 21st century society. Read full story on Davos panel .
Almost no one raised their hand, except…
David Rubenstein, managing director of the private equity powerhouse Carlyle Group, Raghuram G. Rajan, Professor of Finance at the Booth School of Business at the University of Chicago; Ben Verwaayen, chief executive of Alcatel-Lucent (ALU +1.12%); and Brian T. Moynihan, CEO of Bank of America Corp (BAC +1.27%).
In a nutshell, you can see the essential problem with Davos. It’s really not the “make the world a better place” forum it purports to be. It’s an ego trip for billionaires and politicians. It’s a place to reinforce the political and economic equation of haves and have-nots.
…
the political and economic equation of haves and have-nots.
Lib media propaganda fomenting class-warfare. Why do Americans hate the rich so? Even considering taxing the rich more is hate and tax is theft. This hateful entitlement attitude is everywhere. Everyone feels entitled to the producers money. Case in point. I produce. I have money but everybody wants to steal it. I go to the grocery store and they want like $500 for what I buy but if I want to buy more they want more of MY money. Why? Because they hate producers like me. They are jealous that I enjoy expensive food so they charge me more to punish me.
If I make 40 million dollars next year the FedGov will steal about 15% of it because the moochers hate me. Now this is Socialism because now a producer like me will have 15% less of MY money to open that new factory in China.
Let them eat cake.
And we know how things worked out for Marie Antoinette, don’t we? She didn’t get it either.
while michelle o. goes on 50,000 dollar underwear shopping sprees in the modern era.
Debunked already, rusty.
Bulletin » Case-Shiller survey shows November decline in U.S. house prices
Jan. 31, 2012, 12:01 a.m. EST
Short China: Its commodities bubble is set to pop
Commentary: Empire-building, overpopulation, greed, hoarding
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — Commodities guru Jim Rogers wrote: “Bull in China, Investing Profitably in the World’s Greatest Market.” A former partner of hedge genius billionaire George Soros, he blamed the Fed for igniting two catastrophic financial bubbles back in 2007. So he shorted Fannie Mae, banks and home builders, abandoned America just before the 2008 meltdown, and moved to China.
But should you follow his lead? Forget America? Invest in China, the “World’s Greatest Market?” Maybe follow Rogers earlier advice in “Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market?”
After all, China is the hottest economy on Earth. And commodities are so red-hot China is “buying up the world” to lock up commodities essential to feed China’s skyrocketing growth to 2050 and beyond.
But gamble on China? Risk your retirement nest egg? Compete against China for global commodities?
Don’t. This is a no-win scenario: for China, the USA, the world and you.
OK, so you’re mad at Wall Street for losing over $10 trillion of America’s retirement assets in the dot-com crash and subprime meltdown. And you know they’ll do it again. But buy China? No. When China collapses (and it will) you better not have your retirement invested over there. They’ll nationalize it, devalue it, wipe you out.
…
When China collapses (and it will)
Now why would China “collapse”? How? Did it “collapse” in 2008 during the greatest world-wide financial and economic crises in our lifetime? Maybe the stocks will collapse but the economy? The growth? China is expected to have a “horrible” year in 2012 with only 7.5% growth and this is off a base much greater than even 4 years ago.
Do you even envision China with a negative GDP growth year in your lifetime?
When the US runs out of money….
When the US runs out of money….
Firstly, how will America totally run out of money we can print? And America will not cease to be an economic power in any of our lifetimes IMO.
Secondly, why do so many Americans still think China or any other part of the world cannot grow without America booming anymore? Many economies grew even before America existed. All our our money already in China is leading to no Chinese domestic growth? That would not make sense.
A Brazilian who works for a Brazilian hedge fund here told me that their in-house economist used to visit USA 4 times a year and China one time a year. Now it’s China 4 times a year and USA one time a year.
It is presumed that China hasn’t turned the corner of having enough internal demand to be able to sustain growth if they don’t have huge exports. Whether that is true or not, I don’t know, but I know that if I were an aging adult in a society which had no publicly administered social safety net and a one-child policy in place for at least two generarions, I would be nervous about who was going to support me in my old age. Having more savings rather than less would seem like a good idea.
When I was sharing a bus seat with a woman from China working for the IMF, the first thing she asked me after I told her how great my new *one bedroom* apartment was, was when my parents were going to move in with me.
So who is selling China their much-needed water? Scott Walker?
So who is selling China their much-needed water? Scott Walker?
What is the implication? China will collapse because of much-needed water?
It seems to me that shortage of water has been the next big problem of the future and it always will be.
To support the growing population our Southwest has needed water for over 200 years. Did it collapse yet because of that need?
Nope. But its at the point where the rivers have been sucked dry, and the aquifers that take 10,000 years to replenish are going to run out.
Us or China?
It’s a function of energy.
Fact Part of Post:
For example, in California “water-related energy use consumes 19 percent of the state’s electricity, 30 percent of its natural gas, and 88 billion gallons of diesel fuel every year – and this demand is growing.” (from the 2005 CEC report pdf online).
In West Australia, it’s even worse with energy intensive desalination plants.
Opinion Part of Post
If the price of energy goes up, the price of water should go up and its availability will go down. With the EROEI of oil still in decline, it would seem that energy prices will increase due to increased costs of inputs. That increase combined with an assortment of taxes that may be levied on energy production in the future (I am making no judgment on their efficacy, just assuming that they will be imposed) seem to point to further energy price increases. That said, the deflation that seems to be occurring globally will mitigate any increase in the price of energy.
MrBubble
As of 2011 Texas uses 40% of it’s surface water (rivers & lakes) to cool it’s electric plants. Projections are for a 20% growth in electricity demand by 2050. Since most of this water use is evaporation cooling it stays in the H2O cycle but the wind carries it out of Texas. This does not count the tens of thousands of acre feet of water that is removed from the water cycle by drilling for hydrocarbon extraction and permanently injecting the waste thousands of feet under ground. Even at these levels we won’t run out of drinking water for 30 or 40 years but the environmental damage to agriculture and to the regional landscape will really hurt the local economy.
The site below disagrees with you if I am reading it correctly. It says that TX uses 595,000 ML per year, enough for 3 million people or 2.5% of total water used (as of 2007). It also says the majority is closed loop, and not lost to evaporation.
http://www.ecologyandsociety.org/vol16/iss1/art2/
In any case, it’s an interesting read as the study is being done to manage the water/electricity relationship across the US with Texas as the test case, and the population growth and environmental damage you mention is definitely the primary concern.
They will invade Nepal.
When China collapses (and it will) you better not have your retirement invested over there. They’ll nationalize it, devalue it, wipe you out.
About a decade or so ago, a very unhappy Arizona Slim was picking up mail at a local post office. I was in a down state because a publishing venture that I’d slaved over for many years had recently gone bust-o.
Well, there was a guy who was also picking up his mail, and his story topped mine. Seems that he’d opened a Coca-Cola bottling plant in Shanghai. And he lost it to the Chinese government. I gathered that the plant got too successful for their tastes.
I’ll never forget what he told me about business: If it was easy, everyone would be doing it.
+1, Slim. Any profits made in China are made at the pleasure of the regime. There is ZERO rule-of-law or historical basis for complaining if they decide not to let you keep it.
In other words, it is unfettered crony capitalism at its worst.
…which is why the transnationals love it. “Free market” baby!
Corporate communist capitalism. The corporate wet dream.
We’d love to buy your software, but first we need atleast 25% of the development staff to be located in China.
They only call it a trade war if we shoot back.
I seem to recall LVSands having some ruffles w/their Macau Resort. I think for a brief period it appeared there might be threat of the government taking over that site.
Poor whittle Eddie.
Nov. U.S. house prices slide 1.3%: Case-Shiller
By Steve Goldstein Jan. 31, 2012, 9:04 a.m. EST
WASHINGTON (MarketWatch) — U.S. house prices slumped 1.3% in November, according to the S&P/Case-Shiller 20-city composite house price index released Tuesday. Year-on-year, prices fell 3.7%, with 13 of 20 areas seeing annual returns decrease. Atlanta prices are down 11.8…
I miss the EddieTard and his delusions of grandeur.
Keep.spanking.them.on.the.MarketWatch.reader.comments.Mortgage.National
+1 Pbear….How ya doing with that condo rental Edee ??
Eddies still waiting to be seated at Applebees.
“Eddies still waiting to be seated at Applebees.”
lmao
Here is the full MW story on the November Case-Shiller Index numbers:
Jan. 31, 2012, 9:04 a.m. EST
Nov. U.S. house prices slide 1.3%: Case-Shiller
By Steve Goldstein
WASHINGTON (MarketWatch) — U.S. house prices slumped 1.3% in November, according to the S&P/Case-Shiller 20-city composite house price index released Tuesday. Year-on-year, prices fell 3.7%, with 13 of 20 areas seeing annual returns decrease. Atlanta prices are down 11.8% year-on-year, and Detroit and Washington D.C. were the only cities with positive returns. The peak-to-current decline for the 20-city composite is -32.9%.
Original asking price was $650k. It just sold for $500k. Not sure this will translate the 3x median income end since the inventory in estate niche and the sub $200k homes is where the inventory bloat is. Well, at least that’s true if you;re looking for a house you don’t need to dump another $50k to $100k into because of the neglect.
http://blog.syracuse.com/cny/2012/01/what_it_went_for_5160_kinloch_circle_fayetteville.html
WHAT IT WENT FOR: $500,000.
THIS HOUSE at 5160 Kinloch Circle, Fayetteville, has four bedrooms, five full baths and 6,432 square feet.
Asking price: $650,000.
Selling points: The U-shaped ranch home has a large kitchen, game room, sauna, office, in-law area, outdoor granite grilling station, pool and cabana with fully equipped kitchen, bath and laundry. It was featured as a House of the Week Jan. 9, 2011.
“Selling points: The U-shaped ranch home has a large kitchen, game room, sauna, office, in-law area, outdoor granite grilling station, pool and cabana with fully equipped kitchen, bath and laundry. It was featured as a House of the Week Jan. 9, 2011.”
No more “built in bbq.” Now it’s referred to as a “grilling station.”
I REALLY hate RE hype.
What’s worse is they drink their own koolaid.
I see an awful lot of owned by realtor verbiage attached to some of these listings. One flagged on her Craigslist listing that that would make her a better negotiator. That particular house was more of a median type home. There is one home owned by a realtor I keep watching to see if it gets put on the market. It’s waterfront. The taxes aren’t too bad in that town but there is no way she is making sales like she used to because she pushed into another territority she used to have nothing to do with. I can only imagine the hen chatter from the reigning realty queens in the town she moved into.
There is also a local numbnuts realtor that has taken over Craigslist and if you click on one of his many links he’ll say if your realtor is really that good why are you on his site looking separtately. So he’s trying to steal clients. Just this weekend some other realtor has taken to flaming him on the Syracuse boards because he’s not following the Craigslist rules. It’s crazy watching it all go down.
“outdoor granite grilling station”
And I bet you dollars to donuts that people who would have a granite grilling station would use gas and press their burgers as they cook and believe that searing “seals in the juices”. Pearls before swine with more money than sense or taste.
“in-law area” . I have one too, it’s called the backyard. In winter it’s the garage
While I was visiting my folks in PA, I was regaling with the details of nearby houses for sale. One house, which has been owned by a member of the DuPont family for quite a few years, is on the market for $575k.
While I was reading the real estate ad via Mom’s computer, I was rattling off all the features this house had. Mirrored exercise room. Master bed/bath with a private porch. A stream runs through the property. That sort of thing.
Mom had one reaction to all of these features: “So what?”
The buyer’s IQ is supposed to drop in proportion to the number of amenities
Pie r round, cornbread r square.
Pie r round
Infinitely thin.
Pie r squared is circle area.
Infinitely Fat?
How Fat Could You Get, If You Really, Really Tried? Infinitely Fat?
Posted on November 15, 2011 by Adam K
What if, on a perverse whim, you decided that you wanted to become the fattest human being ever to grace God’s green Earth.
Could you do it? If not, why not?
Here’s the recipe…
Just “overeat” a little bit each day, and you’ll get there. The record for fattest person ever is something like 1,500 pounds. So say you’re already 250 pounds. That means you just need to gain 1,250 more pounds, and you’ll win and be immortalized in Guinness. Awesome!!! Now, 1,250 pounds is a lot. But not if you stretch the gain out over a decade. You’d only need to gain 125 pounds a year —basically 1 pound every three days. Since there are 3,500 calories in a pound, you’d just need to “overeat” by like 1,200 calories a day. Don’t get me wrong: that’s still a boatload. It’s like an extra tray of brownies a day. But it’s doable.
(This is bogus man, you can draw a line through 2 dots and get Infinitely thin but you can’t get Infinitely Fat)
The reality, though — assuming your crazy little experiment doesn’t kill you — is that, at some point, you’d hit a limit. You cannot accumulate fat infinitely, no matter how much you stuff your face. You might pee out the excess; or your metabolism would spike to compensate. The reality is: the body is rigged with all sorts of mechanisms designed to keep itself (somewhat) stable.
http://caloriegate.com/the-black-box/how-fat-could-you-get - 45k
Except most people’s bodies seem to reach a threshold where the body knows it’s good and fat and starts throwing the excess away. I feel sorry for the few whose bodies for whatever reason don’t do that.
Isn’t 1200 calories more like two or possibly three brownies a day? How is that a “tray”?
One pint of Ben and Jerry’s every evening will do ya for 1250 calories. That’s not so difficult.
The hard part is having only one pint of ice cream.
FIBI - Investments for idiots by idiots:
Investing the TBTF way in underwater housing.
http://finance.yahoo.com/news/foreclosures-draw-private-equity-u-150127753.html
Coming soon to a neighborhood near you: More rental houses owned by absentee landlords. Ain’t we got fun!
Oh, if you haven’t followed the link to the story, do so. The comments are great.
Here’s a sample via Ron in Arizona:
“No ownership, no responsibility. Many of these rental homes will be trashed within a year devaluing the rest of the neighborhood. Been there. Suffered that.”
“No ownership, no responsibility. Many of these rental homes will be trashed within a year devaluing the rest of the neighborhood. Been there. Suffered that.”
correct prehaps the government will give the speculators a hand and give them a good deal on these homes and grant all their new rentals section 8 status
“No ownership, no responsibility”
Know ownership, know responsibility.
I’m surprised that NAR hasn’t created the bumper sticker yet!
It’s great to know the FedGov is backing a TBTF slum lordery initiative!
Fed’s White Paper On Housing: Might Uncle Sam Become A Landlord?
By Larry Doyle on January 6, 2012
Housing and labor remain the cornerstones of our economy. In fact, the health of our labor market follows that of housing just like night follows day.
The near term prospects for both housing and labor remain decidedly challenging. The success of assorted federal programs to support housing so far have obviously been underwhelming.
That said, there are rumblings emanating from Washington that the Obama administration may end run Congress while unilaterally launching a massive program to support housing via Freddie (NYSE:FRE)/Fannie (NYSE:FNM) orchestrated refinancings.
…
In addition to a massive loan modification/refinancing program, might we also see Uncle Sam and our major money center banks become our nation’s largest landlords by a program to rent current REO (real estate owned) properties rather than trying to sell them?
…
One year update:
It has been almost one year since I bought a 2br rental house for $19k here in east coastal central FL. I have a great renter who keeps the place cleaner than I would and always pays rent on time. The rental market is strong here right now and the low end rentals such as this one are in very high demand. From what I hear mine is far nicer than most others available in this price range ($550/mo). Been keeping an eye out for another but more patience is required. Will update further pending any new developments.
ps- Monster abandoned house accross street from where I live (donkey house) is still vacant now going on five years. Spring hay crop in front yard is almost ready for donkey grazing season. Maybe Bernanke will rent it to someone…
Off to vote for Ron Paul.
“Been keeping an eye out for another but more patience is required.”
“Monster abandoned house accross street from where I live (donkey house) is still vacant now going on five years.”
Who owns it? Why not write a letter and see if you can make that rental #2?
There’s a guy named Gary Eldred who has written several books about buying rental houses. One of his suggestions is to make an offer on places that are for rent. Why? Because quite often, the landlord is burned out and looking for a way out.
Although the above case is different, I concur with sleepless_near_seattle’s suggestion. Make ‘em an offer!
Who owns it? Good question. All I know is that it doesn’t matter. “Bank” owner has been way late chasing market down. Right now they are asking $300k, but have turned down multiple close offers over the last year. I know about $600k is owed on the property. I would only pay about $75k for it as a rental in the current market/condition of the house. But that’s just me. Really hard to get more than $800/mo from renters around here. Lots of FBs and no good-paying jobs dictate the market, not the media.
I would only pay about $75k for it as a rental in the current market/condition of the house. But that’s just me. Really hard to get more than $800/mo from renters around here. Lots of FBs and no good-paying jobs dictate the market, not the media.
I would make an offer based on what was said above. Who knows? You might be making the only offer they’ve ever gotten.
And I’ll return the favor and have Slim’s back on this one. Seriously, offer $75k. Heck, offer $50k. Submit pictures of the ugliness. Submit records of the going rental rate. And remind them of the little fact that…it’s been VACANT FOR 5 YEARS!
I wasn’t always this way, but I’ve learned from many of my colleagues that the worst they’re going to say is, “No.”
Oh, and do a title search to make sure you know what liens have been submitted against the place. Surely there are at least tax liens in place.
Empty for five years = you’ll need 3-4 years rent payments in order to fix it up. Buy hassle-free gold instead.
I am Pressboardbox, briefly was Politicians are Feces (but it was too hard to do the trademark symbol every time my pos computer crashed). A little HBB history for those who have hung in there.
I.am.Rick.Santorum’s.unofficial.social-media.campaign.coordinator
LOL - santorum - google it.
Liz, I wondered if you were pressboard, but I wasn’t sure until the donkey-grazing reference!
Here is some more data from the Ministry of Truth that says the Great Credit Expansion is over:
http://1.bp.blogspot.com/-5sQ7OOMMdKo/TvCvyH1M8RI/AAAAAAAADDk/yn3BhlzmKaQ/s1600/boom+bust.png
Net official debt issuance worldwide is approaching zero. The US is still trying, but not much. Keep in mind all the fetid marked to market stuff that is still under the rug.
The Fed’s biggest nightmare is here.
Again, I do not understand the data. It seems to be net private sector, but lists gov. Well, if it is intended to be gov, then the USA Fed Gov alone is issuing $1.3T a year new debt.
I wish the graphs did a better job of explaining the data.
Like the Ministry of Truth really wants you to get a handle on it?
BTW I think it is supposed to be ALL debt, net.
Krugman had a graph of total debt a few days ago, ie private plus public as a percentage of GDP. It was flat to falling.
Mark-to-fantasy is about to become the mark-to-nightmare they’ve been avoiding for the last 5 years.
Russia and Germany had their change. China sort of had their change. Europe, contrary to popular belief is having a general Golden Age, and South America is doing pretty well.
Guess who’s still trying to maintain the old status quo along with their 2 closest allies?
Jan. 31, 2012, 10:30 a.m. EST
U.S. house prices slide 1.3% in November
Case-Shiller index shows 32.9% drop from peak
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — U.S. house prices dropped sharply in November to mark the third straight drop, according to a closely followed index released Tuesday.
The S&P/Case-Shiller 20-city composite home price index dropped 1.3% to take the year-on-year drop to 3.7%.
The declines were broad, with only one city, Phoenix, managing a monthly gain. On a year-on-year basis, only hard-hit Detroit and Washington D.C. managed annual gains.
The tumble has been particularly rough in Atlanta, where prices fell 2.5% on the month to bring the annual drop in the city to 11.8%, the worst of the 20 cities measured.
Atlanta, Las Vegas, Seattle and Tampa reached new lows.
…
The latest Case-Shiller data, which goes up to November 2011, shows both the 10 and 20-city composites falling further into the rabbit hole. The 10 and 20-city indices are down 3.6% and 3.7% respectively over the November 2010 as home prices remain stuck at mid-2003 levels.
Both indices are barely off their lows (10-city 1% above, while 20-city barely 0.6% north of its trough) and are down about 33% from the pre-crisis peak. “The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand,” said index chairman David Blitzer.
The situation is dire indeed. Both the federal government and Bernanke’s Federal Reserve have gone to great pains to try to revive the ailing markets, to no avail. Current mortgage credit supply is “much tighter” than before the housing bubble, according to Goldman Sachs’ research analysts, while the securitization market has all but disappeared since the crisis. About 90% of all mortgage originations are essentially backed by the government, the analysts explained.
We were not forced to buy homes by “them.” Some of us were greedy and wanted to keep flipping real estate and got caught when the music stopped. Some were stupid and leveraged their homes to pay down credit card debt and write off the interest — or take on even more consumer debt. Some were always better off in an apartment or rental. True, some just bought at the wrong time; but that’s called “bad luck” and not quite the result of a mustached black hat forcing an innocent widow at gunpoint to sign on the dotted line. What are we to think when the president thunders, “We learned that mortgages had been sold to people who couldn’t afford or understand them”? What does “we learned” mean? Did we ever not know? And what does his passive-voice “had been sold” mean? Are we to learn now that it does not mean “bought”? Americans did not “buy” houses, but were pried out of their beds to have too costly homes “sold” to them?
Sold in 04,
Chase Bank, who ended up servicing our last mortgage after it was resold twice, hounded and hounded us to take out a 2nd mortgage. Like the sirens of Greek myth, pouring on all his charm he tried to get me to think of vacations I could take, private schools my kids could go to, expensive improvements on the house I might want until finally I laughed, told him he was the devil, and hung up on him. The house was within $20k of being paid off. I’m sure all that untapped equity was killing him.
They came after homeowners with a purpose. There’s no way in hades I’m letting those bloodsuckers off the hook.
They came after homeowners with a purpose. There’s no way in hades I’m letting those bloodsuckers off the hook.
I could chime in with the long story of the dotty elderly neighbor who took out a WF reverse mortgage after succumbing to their charms, but you’ve read it before. She wasn’t of sound mind to be signing anything like reverse mortgage contracts. Heck, a contract with the Book of the Month Club was a stretch.
Long story short: House was foreclosed less than three years after it was reverse mortgaged.
In my mind, Wells Fargo = bloodsucker.
Thank you. I could not agree more.
We were not forced to buy homes by “them…..some just bought at the wrong time; but that’s called “bad luck””
Ladies and gentlemen of the HBB jury, I say many, yes many FB’s WERE FORCED to buy homes and I’ll make the quick case.
forced definitions: imposed by coercion, made necessary by an unexpected situation, false or unnatural…An aspect of coercion is duress i.e. extreme unlawful pressure.
Firstly, ladies and gentlemen, only about 35% of USA’s housing are rentals so logic would assume that there were not enough rentals available at ANY period in the history of America for all people needing and/or seeking a new dwelling at any one time to find a rental. Therefore many of them “had” to buy or WERE forced to buy.
It’s just cruel math. The fact that not all of them wanted to rent is irrelevant to the case because even if all of them DID want a rental, a rental was not available to all of them but only to about 35% of them therefore logic and math would assume that maybe 55% would have been forced to buy a home even if they wanted to rent. The other 10% could have stayed put maybe or lived in their mom’s basement but this still does not negate the fact that the majority were forced to buy (in an unnatural marked) or would have been forced to buy even if they wanted a rental.
So if they had to buy they were forced by one of the definition of forced: made necessary by an unexpected, or unnatural situation.
Even disregarding the math, the case could be well made that they were forced by one of the aspects of force: coercion and duress i.e. extreme unlawful pressure.
Were there not aspects EVERYWHERE of extreme unlawful pressure? In pushing no-doc loans? Unlawful appraisal fraud? The unlawful conspiracy of “hitting the number” between Realtors, appraisers and mortgage pushers? Realtors unlawfully lying about other bidders and other lies? The upward pressure on prices by Wall Street pushing junk mortgage securities? This my friend IS coercion..This my friends is forced.
The defense of the honor and character of my fellow Americans in the face of years of mental duress and conspiratorial coercion….. rests.
Get real. We all have free will.
Nobody had to follow the herd or jump to the brush-beaters. Being crushed by the herd or killed by the brush beaters was a perfectly acceptable outcome.
Not.
This country maintains the most incredible fiction of having free with with no consequence of not hollowing the herd, I have ever seen.
Get real. We all have free will.
What does this mean in the context of people needing to move into a market where not everyone can rent because of lack of rental units?
What does this mean in the context of the market largely affected by coercion - pushing no-doc loans, unlawful appraisal fraud, unlawful conspiracies of “hitting the number”, unlawfull lying about other bidders and other lies, the upward pressure on prices by Wall Street pushing junk mortgage securities?
This my friend IS coercion..even in the context of free-will. This my friends is forced.
Rental stock in small town America is almost absent. I remember talking to someone years ago who had moved from one small town to another and had to buy in both paces because there were no rentals of any kind available. I had never lived in a town that small, so was unaware of the dearth of rentals.
BBB (Barry’s Buzzword Bingo) we’ll need at least 25 words – five across and five down. How about these (nearly all of these were uttered in the SOTU):
Green, Technologies, Union (unionized), Students, Smart
Balanced, Fair Share, Deduction (tax), Millionaires, Rules
Invest, Universities, Overseas, Poverty, Teachers
Bipartisan,Banks, Clean Energy, Predecessor, Wealthiest
Greedy, Hope, False Choice, Environment, Wall Street
All the more reason why I’m glad I went to a science lecture instead.
Is makenomistake a word?
Let me be clear, I think that “makenomistake” is rapidly approaching the word event horizon.
…nonetheless…
That and “letmebeclear”.
I see an event horizon in that expression’s future. Wouldn’t be prudent to suggest how close that event horizon might be.
A little help here, folks.
I think it was explained in a thread within the past few weeks, but I can’t seem to find it. The whole Buffett discussion. It’s been said he pays less income tax RATE than his secretary. Then it was countered that when you add what his company pays to what he pays in cap gains (15% + 35%, respectively), his rate is more like 50%. What was the counter to THAT?
Buffet’s statement was not including corporate tax.
He said, that with payroll taxes and income taxes, his effective rate at 16.75%. Calculated on that basis, then his effective rate was less than his secretary’s.
This was pre the 2% discount, so we can assume her payroll was about 7.6%, meaning her effective income taxes were 10% or higher.
If I include the tax my company pays, I am at 70%.
Payroll was another wrinkle I’d forgotten about. Thanks.
But does he/Berkshire really pay 35% corporate tax? I assume they can take advantage of deductions that lop off quite a bit from that.
generally, dividends…by definition…are paid from previously taxed earnings and profits. so if you receive a dividend it has been taxed at 35% already.
Really because Exxon pays dividends and has had zero tax reporting periods. This is not uncommon
http://www.politico.com/news/stories/1111/67509.html
measton,
Dividends are paid out of current year or cummulative profits (profits since the company was formed and not previously paid out as dividends, so old companies always have some). If you pay out to your shareholders and have neither, the pay out is return of capital and isn’t taxed at all. I think it reduces your basis in your shares, but it has been a *long* time since I checked those rules.
It’s a straw-man an argument.
Buffet was not talking about his company, he was talking specifically about his personal INCOME.
As for the company paying 35%, almost NO corporation pays that rate and over half pay NO federal income tax.
I was doing battle against a guy who, on his personal FB page, under “People Who Inspire (guy’s name here),” has the following listed: Limbaugh, Beck, O’Reilly.
Enough said?
Here comes another bubble that’s ripe for popping. From Forbes:
Healthcare’s Medical Gluttony
Key point:
“Simply put, the healthcare system we have rewards expensive specialty care over primary preventative care. In order to reduce expensive specialty care – you have to add primary preventative care. “
“In order to reduce expensive specialty care – you have to add primary preventative care.”
One of the truly great myths.
Preventive care will keep some previously uninsured patients out of the hospital, they also will live long enough to fall victim to very expensive diseases like Alzheimer’s and certain cancers.
Moreover, preventative care is the recipe for overtreatment.
Millions more people will receive unnecessary tests and scans, leading to unnecessary procedures.
Nothing is better for the insurance company, or Medicare’s, long term balance sheet like unexpected, fatal cardiac arrest or stroke at age 55……
Moreover, preventative care is the recipe for overtreatment.
Millions more people will receive unnecessary tests and scans, leading to unnecessary procedures.
I agree.
And, ya know what? I’ve found that not having the money and/or the insurance to pay for tests and scans suddenly makes a lot of them unnecessary.
Like dental X-rays. I’m of the mind that they’re only needed when a problem needs to be diagnosed. The dentist’s “need” to update the files does not qualify as a problem.
The house we lived in for 3 years has finally come back on the market. Acutally pretty quickly, the foreclosure hearing was Aug 30, 2011.
Bought by our landlord for 319k in 2006.
On the market today as a foreclosure for 175k. (45% haircut)
The funniest part is that the in-laws want to move close and their Liar has actually sent them this house as a possibility. He has no idea we lived there. He told my wife it was ‘turn key ready’, and we laughed and laughed. After having lived there three years, and knowing all the ins and outs of the place, we wouldn’t offer a cent more than 120k. We KNOW there is about 25k worth of repairs to make it liveable, and another huge chunk of upgrades to make the place nice;it hasn’t had the best owners over the past 15 years and the neglect shows.
We’ll be curious to see when it sells and for how much.
Notes from the ground:
1/25/12 3/2 SFH listed for $498K
1/26/12 We put in an offer for $527
1/28/12 15 offers (ours in the bottom 5)
1/29/12 First and only open house cancelled
http://www.trulia.com/homes/California/San_Francisco/sold/7124754-539-Holyoke-St-San-Francisco-CA-94134
We’re not talking Pacific Heights here. Working class, mostly owner-occupied homes in this neighborhood. Nearby houses renting for 3K month.
We’re gonna get a motor home, quit our jobs, and home-school the kids….
We’re gonna get a motor home, quit our jobs, and home-school the kids…
I know a couple that did the work from the motor home thing for several years. (They were both computer programmers.) It went well for them, but then her daughter had a baby. They both decided to stop traveling so that they could be near the grandchild.
the pictures make the home look longer than it is I think.
very old home with a dilapidated fence around the backyard
15 offers that sucks like the old days here in Ventura Co where they would bid up anything.
shortgages cause large price distortions . I once read a study showing a 10% shortgage causing a 100% price gain. A study done in the 1700’s England
who was the winning bidder ? Chinese ?
Wait for the ugly one. My uncle and his husband’s house was filled with nasty wallpaper when they bought it. Wallpaper was replaced with cheerful paint a while ago. It took some work, but they got a better deal on the house because it didn’t show well. The kids even use the trampoline that was left in the backyard.
That’s okay, sfrenter, for a 1949 built home, those windows SUCK (cosmetically).
How about this? Screw the places that are officially for sale. Drive the neighborhoods you’re interested in, looking for houses with no drapes (or go at night several nights a week looking for places that always look unlit). Contact the county or use county websites to find the owner. Write some letters.
The best finds for your money are sales you and the seller control directly. I’m amazed how many I can spot on random drives.
I’ll admit I haven’t bought a house this way (I’m far too cheap for their still sky high asking prices), but I HAVE talked to several absentee owners who’ve responded to letters I’ve written. Eventually I’ll find the person who just wants to sell and be done with it.
http://www.cnbc.com/id/46200399
S&P Warns Cuts Loom for G20 Nations on Health Costs
Developed nations in Europe, as well as Japan and the United States, are likely to suffer the largest deterioration in their public finances in the next four decades as more elderly strain social safety nets, S&P said in a report.
“Steadily rising health-care spending will pull heavily on public purse strings in the coming decades,” S&P analyst Marko Mrsnik wrote in the report. “If governments do not change their social protection systems, they will likely become unsustainable.”
If no reforms are adopted, health-care-related credit downgrades would likely start within three years, eventually leading to an increase in the number of junk-rated countries as of 2020, the study showed.
Byun Yanggyu, director of macroeconomics at the Korea Economic Research Institute warned developed nation will eventually become the victims of their social safety nets.
“The more developed countries get, the more complicated their welfare structures become. In order to cover all necessary means in terms of welfare, spending elsewhere will have to shift there,” Byun told Reuters.
“I believe our country is headed more so in that direction… and it will dull our production in the end,” he said. “There is a bigger chance that developed countries will be subject to a downgrade from this point of view.”
Health care will likely be the fastest-growing expenditure for developed countries, which already have high social protections and rapidly worsening demographic profiles.
For example, Japan’s population is expected to decline by 30 percent by 2060, with two out of every five people turning 65 or older, according to official data.
Japan’s welfare spending, which includes pensions and health, is expected to reach nearly 108 trillion yen ($1.4 trillion) in the current fiscal year, around 22 percent of gross domestic product .
By 2025/26, spending is forecast to hit 141 trillion yen.
“Over time it must be a real problem for Japan,” said Adrian Foster, head of financial markets research at Rabobank International in Hong Kong. “There’s a call for authorities to push through fiscal reform. When you look at the government they seem to lack any real ability to respond to it.”
News Flash! Old people cost money and they don’t work! We’ll have to toss them into the street or we’ll all die! Film at 11!
35%,
Does Berkshire really pay 35%? Hint: check their 10-K.
My pimp (recruiter) is on the verge of getting me back to LA. I have already been warned by an employee there of the resentment and low morale there, and that hiring consultants, even us very experienced ones, will not be welcome by the braves. So I anticipate some of those formerly kind will no longer be. I am cool with that. My only goal is to make my immediate lead happy. I will see by tomorrow. Meanwhile I am getting more headhunters on e-mail and voicemail.
The local client moved my exit time closer. So my last day on this contract is this Friday. I already have a flight scheduled out the tenth and too soon to change now. So I will spend next week visiting Siesta Key Beach again, visiting friends at the pizza and wine bar, saying bye to other gym regulars, and boxing things up. I boxed up my 32″ flatscreen, but won’t need to send it till this Friday.
Get back to LA and I’ll invite you to my Master’s swim group.
I did not know you are into that! It’s a deal. South Bay? I am likely to be near the Torrance blvd masters swim complex by cuty hall in two weeks.
Argh! City Hall.
Loyola Marymount’s pool. Best pool in LA I think. Outdoor, heated, staffed full time chemical monitoring. The view is nice, too.
I’m David Lereah. Then I was Lawrence (fun)Yun briefly… Then I was Lester Appleton Young.
Now I just discredit and troll lying piece of $hit realtors.
Hey troll, did you see my bumper sticker suggestion above?:
“No ownership. No responsibility. Know ownership. Know responsibility.”
That should bring you (and house prices) back.
“Lester”
Would that be Leslie’s new, post-gender change moniker?
Romnobam
George Soros says there ‘isn’t all that much difference’ between Romney and Obama
By Toby Harnden
Last updated at 12:32 AM on 28th January 2012
Hate figure: George Soros is loathed by many conservative activists
This isn’t exactly the kind of endorsement the Romney campaign is looking for. It’s probably even less welcome than the purported nod for Newt Gingrich from crooked GOP congressman Randy ‘Duke’ Cunningham sent from his jail cell.
Speaking in Davos, gathering place for the global elites and upscale chattering classes, billionaire investor George Soros - loathed by conservative activists for his ‘zillion-dollar left-wing radical agenda machine’ - seemed to be pretty much OK with the notion of a Romney presidency.
‘Well, look, either you’ll have an extremist conservative, be it Gingrich or Santorum, in which case I think it will make a big difference which of the two comes in,’ he told Chrystia Freeland of Reuters in a videotaped interview. ‘If it’s between Obama and Romney, there isn’t all that much difference except for the crowd that they bring with them.’
Soros theorised that ‘Romney would have to take Gingrich or Santorum as a Vice President and you probably have some pretty extreme candidates for the Supreme Court’ but the ‘Obama administration is a bit exhausted’ so presumably - he implied - a Romney administration would at least have the advantage of renewed vim.
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As they say, politics breeds strange bedfellows. If Moonbeam Gingrich keeps this up, he may even earn my vote.
Newt Against the Banksters
By David Weigel
Posted Tuesday, Jan. 31, 2012, at 10:45 AM ET
ORLANDO, Fla. — In Tampa yesterday, after accusing Mitt Romney of cutting off kosher meals for Jewish patients in hospitals, Newt Gingrich described what his victory would mean for Florida.
“When we win tomorrow,” he said, “we’ll send a signal to George Soros, Goldman Sachs, to the entire New York and Washington establishment: Money can’t beat people power.”
An hour later, Robert Stacy McCain caught Gingrich in Ft. Myers, where he picked up this “money power” ball and sprinted through four football fields.
And later, this:
Where’s the money? After zagging right and left and trying different attacks on Mitt Romney, Gingrich returns to the essential blue collar hit: The man’s money comes from the same rotten place as the rich banker who put your mortgage into a junk CDO. Gingrich will arrive in Michigan and Arizona as the anti-Goldman Sachs candidate, a uniform that fits whether you’re hitting Romney or Obama. If it works, the anti-Bankster vote is no longer Ron Paul’s exclusive property.
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Bloomberg
Gingrich Dubs Romney ‘Wall Street Elite’ Before Florida Vote
January 31, 2012, 7:54 AM EST
By Michael C. Bender and Julie Hirschfeld Davis
(Updates with Quinnipiac poll in seventh paragraph. For more 2012 campaign news, see ELECT.)
Jan. 30 (Bloomberg) — Newt Gingrich, accusing Republican presidential primary opponent Mitt Romney of being a “fundamentally dishonest” tool of Wall Street, pledged to stop big banking firms such as Goldman Sachs Group Inc. from “rigging the game.”
Pressing his underdog campaign into the last full day before Florida’s primary election tomorrow, Gingrich spoke of running a White House that would “challenge the system head- on” and disrupt the “Wall Street elite.”
“To the degree they survive by rigging the game,” Gingrich said in an interview with Bloomberg News, “they have a lot more to fear. To the degree that they’re willing to be in a very investment-oriented, high-tempo, entrepreneurial world, they have more to gain.”
Gingrich said his plans, like eliminating the capital gains tax and repealing the Wall Street regulations of the Dodd-Frank Act, would benefit the banking industry. Gingrich also said he’d consider new legislative changes, including replacement of the Glass-Steagall Act, a 1933 law that increased bank regulations and was repealed in 1999. He said he would stop deals like the $13 billion payment Goldman Sachs received for American International Group, Inc. investment guarantees after the bailed-out insurer received billions from the U.S. government.
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Gingrich said his plans, like eliminating the capital gains tax
So… Gingrich wants Romney to pay a zero percent tax on almost all of his millions of income. Nice.
Sweet serendipity:
The drag ‘em down, knock ‘em out fight between Romney and Gingrich has exposed the soft underbelly of American politics, which is the unholy alliance between Wall Street and K Street.
Got popcorn?
The banksters can lie, cheat, pretend and bribe all the politicians they want; regardless, the elephants under the living room rug are no longer very well hidden.
Fixing this is simple:
1) Let those who lost money take their lumps.
2) Let housing prices fall to levels the market can bear.
1/31/2012 @ 4:28PM
No Hope For Recovery As Housing Falls Deeper Down The Rabbit Hole
Foreclosure ghost towns have popped up around the country
- Getty Images North America via @daylife
Don’t expect housing to contribute to the so-called economic recovery any time soon. Home prices continue to drop month-after-month according to the latest S&P/Case-Shiller Home Price Index in the face of record low-mortgage interest rates, suggesting all of Bernanke’s attempts at reviving what he considers a key sector of the economy have been futile.
Tight lending standards and a record high number of foreclosed properties on bank’s balance sheets will continue to push down on prices and hamper any recovery.
The latest Case-Shiller data, which goes up to November 2011, shows both the 10 and 20-city composites falling further into the rabbit hole. The 10 and 20-city indices are down 3.6% and 3.7% respectively over the November 2010 as home prices remain stuck at mid-2003 levels.
Both indices are barely off their lows (10-city 1% above, while 20-city barely 0.6% north of its trough) and are down about 33% from the pre-crisis peak. “The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand,” said index chairman David Blitzer.
The situation is dire indeed. Both the federal government and Bernanke’s Federal Reserve have gone to great pains to try to revive the ailing markets, to no avail. Current mortgage credit supply is “much tighter” than before the housing bubble, according to Goldman Sachs’ research analysts, while the securitization market has all but disappeared since the crisis. About 90% of all mortgage originations are essentially backed by the government, the analysts explained.
Foreclosures and distressed asset sales are a big part of the problem. According to Nomura, “tighter lending standards and widespread expectations of further declines in home values have been depressing home sales on a larger scale. In addition, a growing share of distressed assets in home sales that are typically sold at a 20% discount are putting downward pressure on house prices.” According to RealtyTrac, there were 224,395 new foreclosures in November and only 58,601 sales of foreclosed properties.
A major problem is that there aren’t many options on the table. The massive supply of distressed properties directly obstructs the possibility of a self-sustaining economic recovery, as Fed Chairman Bernanke has made clear. Major banks like JPMorgan Chase, Bank of America, and Citi, with millions of these on their balance sheets, are still feeling the drag. In their attempts to offload these and free up capital, which could then be used to beef up capital ratios or for lending, banks incurred in robo-signing, failing to follow legal procedures in their attempts to express-foreclose on people.
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Remember back when the Federal Reserve Chair was unsure whether housing was in a bubble?
Now the Washington Post is publishing articles with Housing Bubble in the headline. I’d say we’ve come a long way since Ben started this blog.
If only the WaPo writers could stop referring to declining affordability as “an improvement,” perhaps DC could move past the denial phase of the hosuing bubble stages of grief.
House prices hit post-bubble low
View Photo Gallery — Home prices drop again — How does your city stack up?: The Standard & Poor’s/Case-Shiller home price index offers a monthly asssessment of how home prices are faring from city to city. In the most recent report, from November 2011, only one city saw an increase in prices for the month.
By Peter Whoriskey, Tuesday, January 31, 5:04 PM
Since the depths of the recession, key aspects of the economy have rebounded. The nation’s output has grown. The stock market began an ascent. The unemployment rate drifted down.
But housing?
Data released Tuesday showed that seasonally adjusted housing prices have reached a post-bubble low, as the minor surge that began in 2009 fizzled, to be followed by the almost continuous slide of the past 18 months.
The housing bust, in other words, appears to be even worse than it was at the nadir of the recession.
For millions of homeowners, that’s an unsettling reality, and potentially an issue in the presidential campaign. But the damage may be far more widespread.
By making people feel less wealthy, according to economists, the decline in home values inhibits consumer spending and hampers the nation’s stop-and-start economic recovery.
“The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand,” said David M. Blitzer of S&P Indices. “I spent the weekend scratching my head and saying, ‘Isn’t there some good number in here?’ ”
The Standard & Poor’s Case-Shiller seasonally adjusted housing index for 20 cities dropped again in November, the last month for which data were available, falling to a level not seen since 2003.
In the Washington region, seasonally adjusted prices have been relatively flat since April 2010, according to the index, but they remain about 27 percent below their peak.
Of the 20 cities in the index, only three — Denver, Minneapolis and Phoenix — showed improvement from the month before.
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