Bits Bucket for June 27, 2012
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
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
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
April 2025 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
I posted this yesterday but late in the evening so here goes again:
I would like to review the statements I keep making again and again. Let’s see some folks poke holes in the argument.
The arguments against housing are - demographics, student loans, global wage arbitrage.
Demographics is a real killer. The largest pool of savings amongst the boomers is in their housing stock. They ALL think that they can either sell to someone and/or get a reverse mortgage.
Of course, this is doomed.
There are far fewer families behind them (simple demographics) and those families have ever lessening opportunities (global wage arbitrage) along with record student debt (non-dischargeable in bankruptcy.)
The reverse mortgage is doomed too except for the ones that cash out first because sooner or later the companies that offer these will figure out the above. Now, it is entirely possible that the government enters the business of guaranteeing these mortgages which pushes the problem out even further as to taxpayer losses (= monetization.)
It’s entirely possible but is it probable?
Student loans can be made dischargeable but only the private ones. I simply don’t see how either Republican or Democrat can argue seriously that the taxpayer get stiffed. That is an EPIC FAIL when it comes to getting re-elected which is all that politicians care about.
Did I miss anything?
I don’t get how demographics dooms us. The Millenials alone outnumber the Boomers. Demographics is one of the few areas where the US isn’t in a lot of trouble, at least compared to most of the rest of the world.
I saw this data recently as well…the Millenial data surprised me–I wasn’t aware of it previously. By the time the boomers are starting to pass away in greater numbers, the Millenials will be coming of age.
This is why the bankruptcy of SS is a myth. A myth created to give Wall St control of SS.
‘A myth created to give Wall St control of SS’
I doubt anyone wants social security because there’s no money in it. It’s all being spent as soon as it comes in on stuff like this:
‘The Army’s pixelated camouflage uniform is getting scrapped — after costing $5 billion and making soldiers easier targets because the design stood out in nearly every environment they were worn in, according to a report in The Daily.’
‘Researchers at the Natick Soldier Center in Natick, Mass. told The Daily that the gray-green uniform debuted in 2004 after Army brass interfered in the selection process, choosing looks and politics over science’
http://www.stripes.com/news/us/army-s-5b-failed-pixelated-uniform-getting-scrapped-1.181435
Hmm…I wondered why so many military in the DC area wear camo on a day to day basis. If they can’t use that stuff in teh field, I guess it makes sense to use it up in environments where standing out is an afvantage. Some of the drivers around here need pedestrians to be higher visibility.
I think they wear the camo as a sign of solidarity with the members of the armed forces who are in combat zones.
“I don’t get how demographics dooms us. The Millenials alone outnumber the Boomers.”
Key word families. As in two stable incomes. Also they need to be in the “home/loan-owner economic class” not merely just of a certain age.
10 sellers for 11 buyers sounds great. The sellers are pricing at two working parents with great jobs and benefits and no other substantial debts just like their experience, but the problem is the 11 potential buyers are mostly single and un/der/employed and already heavily in debt. Whoops.
“10 sellers for 11 buyers sounds great. The sellers are pricing at two working parents with great jobs and benefits and no other substantial debts just like their experience, but the problem is the 11 potential buyers are mostly single and un/der/employed and already heavily in debt. Whoops.”
Right. Because every boomer came out of the womb making $100K and married with 2.2 kids?
Millenials are people between the ages of 17-30. Of course the vast majority in this group will be single without a pot to piss in. It’s called being young. 10 years from now when they’re 27-40, they’ll be married, with kids and earning decent money and ready to buy a house right around the time their parents are ready to sell their house.
Where are these “decent money” jobs going to magically appear from? Especially considering that the boomers are putting off retirement for longer and longer because - SURPRISE - they relied heavily on the value of their house for retirement.
It’s a Catch-22, and house prices are on the losing end.
“…boomers are putting off retirement for longer and longer because - SURPRISE - they relied heavily on the value of their house for retirement.”
How is that going to work out for them if they have to sell to the broke, debt-strapped under-40 set?
I guess so long as low-downpayment, federally guaranteed lending is readily available from the FHA, Fannie Mae and Freddie Mac, it’s all good?
Vince, bravo! You said it rather better than I was thinking it.
# millenial people vs. # retirees: irrelevant
# millenial careers vs. # retirees: relevant
Millennials have high student loan debt burdens and grim job prospects (sorry to have to repeat FPSS’s points).
I thought he was making the ‘there simply aren’t enough people in the following generations’ point that many mistakenly make. There are more Millenials than Boomers, so that is an incorrect point.
His points about student loan debt burden and grim job prospects were made as separate points, and I treated them as such, as I agree with them.
Sorry to have to explain what was clearly written.
“His points about student loan debt burden and grim job prospects were made as separate points, and I treated them as such, as I agree with them.”
I don’t get your point about ’separate points.’
Think of housing demand as a three-legged stool, where the legs depend on demographics, student loan debt and global wage arbitrage. Cut off all three legs, and demand collapses.
You don’t sell your “move up” house to a 25 year old. If you are still in your starter house, OK, but since the millenials can’t afford even the starter house, you are going to have to fight with anyone else to sell to gen-x and gen-y (millenials aren’t the same as gen-y, right?) A lot of them already have houses. If they are successful they aren’t looking to trade their starter house for your starter house.
The run-up in student debt has been quite spectacular since 2008!
I expected it to go up but I didn’t expect the explosion that occurred.
Incidentally, universities are milking it for all its worth. The Deans are the new Realtors!
And, law school is one of the worst. They are churning out twice as many lawyers as there is demand. Another case of destroying future demand for the present.
And yes, that is powerfully deflationary.
“The run-up in student debt has been quite spectacular since 2008!
I expected it to go up but I didn’t expect the explosion that occurred.”
It happened so quickly and explosively that Realtards® don’t have a clue yet about how dead in the water future housing demand is, as evidenced by the endless posts and reposts here of NAR ignoramus talking points. You can almost hear their future lament over the generational collapse in demand: ‘Nobody could have seen it coming!’
“I don’t get how demographics dooms us. The Millenials alone outnumber the Boomers.”
Let me try and explain it to you.
When SS was started there were 8 workers for every retiree.
So, 8 people could be siphoned from to pay for 1 person to sit at home and collect money.
Your overly simplified view that just having more people is somehow a panacea is beyond my comprehension.
We now have 3 people paying for every retiree.
If the Millenials are 2x the boomer population, then every 2 of you can pay for the support of 1 retiree.
The numbers are worse than that. Do you want 1.5 to 1?
What rate is NOT a problem.
SS is bankrupt.
All the money me and my compatriots have put in is GONE. We are supporting the current group of retirees who have lived the most lavish lifestyle of any generation in the Universe. Many double and triple dipping, and demanding their “rights” to government support because the “paid in” about 2% over 20 years.
The number of retirees is outstripping the ability of the number of workers to support it.
The difference is made up by FED money printing.
I don’t mind you having a 2 to 1 ratio of workers to retirees. Just hand me 1/2 your paycheck and I will spend my time shopping, while you work. I will do my part, “consuming”, thereby creating “demand”, so you can do your part……WORKING and PRODUCING the things I want to consume. We use this same logic with politicians like Nancy Pelosi when we consider welfare recipients.
Oh, yea, and the welfare people aren’t technically retired, even though many are technically retired, but they need more ’stuff’, too. They help “consume”, so that has real value, supporting the economy…?
Does this help you understand the basic problem?
FPSS why can’t all student loans be discharged? We don’t live in a “rule of law” nation so I’m not seeing any law problem. Manufacture a distracting crisis, sell all student loans to a GSE, and then “poof” the GSE outta existence? “Trade” the banks tax credits in exchange for expunging loans to “save the financial system” or something like that?
FPSS a fourth argument might be energy cost, you can live in a “good” neighborhood pre-peak oil, but post-peak thats going to be unheatable /uncoolable and uncommutable. Neighborhoods close enough to be commutable at $10/gal gas currently need bullet proof vests and armed guards, or are insanely expensive, or, frankly, both.
A fifth argument might be, are taxes more likely to go up or down? You can only pay for housing whats left over after taxes, and that fraction always shrinks unless you’re so poor you can’t afford it anyway or so rich it doesn’t matter. I’m sure we’ll have a new carbon tax soon, areas without prop or sales tax will probably gain them, maybe a federal VAT on the way in addition to the expanding income tax and expanding AMT, a trade war with China is basically a tax on trade via tariffs, whatever it is thats going on with healthcare is basically a tax on being sick… I guarantee my after tax income is going to drop.
A sixth argument might be tied to the rule of law thing above, its going away / gone. So, if you have to pay rent to the city, and to the HOA, and the HOA tells you exactly what you may and may not do outside the house, and the city building codes tell you what you may or may not do inside the house, and your owner (the govt) can take it away at their leisure via eminent domain, and your mcmansions are crammed together so you can shake hands out your window with your neighbor… how is ownership different than renting? In the long run we’re all just renting from the govt anyway, so why put money down if you’ll never “really” own it? I sense a generational sense in attitudes, especially once the kids who see “own real estate = poverty” grow up.
A seventh argument might be multi-generationally low interest rates means multi-generationally high prices. Buyers are taking a guaranteed capital loss if they buy now. Guaranteed. Can’t price-inflate our way out because there will absolutely be no wage-inflation therefore you can technically inflate the loan away, but the street riots if not revolution means the house will be burned down in the rioting so it doesn’t matter anyway. No way out of taking a massive capital loss.
why can’t all student loans be discharged?
The enormous transfer of wealth this represents would be unacceptable to many.
I was not well enough off to finish high school let alone go to college. I have paid far more than $1M in taxes, much of it to support education yet I don’t have kids. I don’t like the idea of transferring another $1T onto the taxpayers in favor of govt recipients.
“I don’t like the idea”
Oh please. Me either, but no one in charge cares. The bailouts were opposed by something like 90% of the population and they passed anyway. The government does not represent nor rule for the people. If we didn’t have a single party political system where both sides represent the same elite, maybe that kind of mis-representation would have consequences, but that is not so and is not going to change.
All we need is a way for banks to profit and commissioned sales industries (like used house salespeople) to profit and maybe .edu to profit by making higher ed less of a financial disaster, and its a done deal. We may not like it, but we are not represented in government nor do we have a political voice. If you can find me a $500M/yr political action committee who would lose by a bailout, maybe you have a chance? I’m guessing something like a collections agency PAC?
Hmm, who contributes more to election campaigns, NAR plus banks, wall street, and the entire educational industrial complex, or the collections agency PAC plus CT and vinceinwaukesha? No crystal ball required for this prediction. Only question is when student loan forgiveness will be rolled out, not if.
Somebody has to pay for those loans. Either the students or shareholders of the banks that loan. Shareholders equal people who have 401ks and invest in stock mutual funds in those 401ks. Hint: one or two large financial institutions are typically in the top ten holdings.
Don’t tell me most HBBers do not invest in tax deferred plans.
Somebody has to pay for those loans. Either the students or shareholders of the banks that loan.
I remember when we used to say that about home loans. And then as soon as the banks were in danger it was no longer true.
Unless the Fed has figured out how to print real wealth, it’s still true that somebody has to pay for it. For instance, consider those ultra-low interest rates supported by the Fed’s monetary policy since the onset of the Great Recession: Retirees who used to fund their living expenses out of interest earned on safe investments don’t have that channel available to them now.
It looks like those retirees who used to depend on interest earnings off CDs for living expenses will enjoy no respite until after 2014 at the soonest.
June 27, 2012, 3:02 p.m. EDT
U.S. economy likely needs more help: Fed’s Evans
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — The Federal Reserve likely will have to take further steps to boost the economy, the central bank’s leading advocate for so-called quantitative easing said Wednesday.
“At some point, we are likely to need to do more,” Chicago Fed President Charles Evans said in an interview with reporters. Evans isn’t a voting member this year on the Federal Open Market Committee.
The economy is growing, but “we’re a lot closer to being put in a position where growth could stall,” he added. “Given all the risks we are facing, that is a very unfortunate place to be.”
The big question at the moment is whether the economy picked up in the spring and is now softening, or if the economy was “not really that great throughout this entire period.”
Evans, a leading dove on the central bank, said he would favor more easing based on current data. He has marked down his growth outlook to a 2% to 2.5% rate over the next two years, from his prior forecast of a 2.5% to 3% rate.
The Fed president reiterated his position that the central bank should tell the market that it would keep interest rates near zero, as long as unemployment remains above 7%, and as long as inflation does not threaten to rise above 3%.
At the moment, the Fed has said it thinks it will keep rates ultralow until late 2014.
…
I bet it goes WAY past 2014 - possibly 2020 (but that’s a guess and to be taken with a probabilistic salt.)
“sell all student loans to a GSE, and then “poof” the GSE outta existence?”
Exactly why would the banks sell their student loans to a GSE? They are not dischargable in bankruptcy. They accrue (though don’t always collect) money on that loan every single month. Since it isn’t dischargable, they don’t have to determine whether it is likely to be paid. As far as the accountants are concerned it will always be paid eventually. I think the originating fee on the private ones includes a one time life insurance premium so they get the money even if you die still owing the loan. They have no reason to sell those loans. They are the best money makers they have. And with the co-signers, they have other people to go after to get the money as well. The kid is on the hook for over 50 years, but the parents or grandparents are on the hook too.
FPSS is right. The only way to “fix” the debt is to make it dischargable in bankruptcy and maybe even to mess with the co-signers level of responsibilities. Can’t be done for the ones that already exist. Could theoretically be done for the ones going forward. But if it is done for the ones going forward you can essentially expect them to disappear unless they are secured by an escrow account or similar wealth of the co-signer, which means they disappear almost completely. Do you have any idea how powerful colleges and universities are are in DC? Cut them off from the flow of cash from private student loans? Uh, uh. Never going to happen.
Also to add, the great credit expansion is coming to a close. People will have to live within their means without amortizing everything.
“Did I miss anything?”
What if Uncle Sam starts handing out green cards like Halloween candy to desirable immigrants?
I once heard Romney say that we are insane to be giving advanced degrees in engineering/mathematics/sciences from top schools to foreigners and then sending them home. I think his quote was that we should be stapling green cards to their diplomas.
By the time we do that though, the would-be immigrants may not want to stay here…the opportunity may be better back home.
By the time we do that though, the would-be immigrants may not want to stay here…the opportunity may be better back home.
That’s already true for Chinese and Indian grads. A lot of them want to get their degrees here, then go back home.
My fear is that “a lot of them” becomes “nearly all of them”.
Then why are the H1-B Visas still “selling out” fast if they are all going home? My HP colleagues in Bangalore had a much lower standard of living that we do, earning a fraction of our pay. I know a PRC gal who went back to China, only because she couldn’t find a job here (she has a degree in finance). She DESPERATELY wants to come back to the states.
My fear is that “a lot of them” becomes “nearly all of them”.
My last trip to Silly Valley showed me that the place is swarming with as many Indians and East Asians as ever, and they keep arriving.
Maybe if they did go home there would be this housing pricing collapse people here yammer about. But when I spoke with my Asian colleagues they wouldn’t stop yakking about “appreciation” and “equity” and their new BMW and 70″ TV.
My last trip to Silly Valley showed me that the place is swarming with as many Indians and East Asians as ever, and they keep arriving.
I’ll bet the Asian restaurant scene is to die for. And I do love me some curry!
My last trip to Silly Valley showed me that the place is swarming with as many Indians and East Asians as ever, and they keep arriving.”
yep We have a new Chinese graduate from USC a MSEE and all he talks about is how he is trying to buy a condo and keeps getting outbid.
Foreign students pay for their education in full. The bring in tens of billions of dollars every year into the country through tuition, rent paid while at school, food purchased, etc.
If they want to stay, great. If they want to go home, great. The US doesn’t owe them anything and they don’t owe the US anything either.
I agree unless they took a slot away from an American who would have liked to earn that degree and work in America while meanwhile American employers complain that there are no qualified candidates…
Foreign students pay for their education in full.
Some do, many don’t.
Undergraduates almost always pay; graduate students rarely do.
Lower taxes back home.
Get what you can get for your house today because it’s going to be much less tomorrow for many years to come.
Home owners insurance - is there a good primer on what is best [true replacement cost versus assessed value of a house] definition for the neophyte [SAT word] to read and get an handle on? Over the phone I can not get a clear answer as to which one is guaranteed to kick in if my house is damaged/fire. Thanks
Google?
Insurance only covers the structures, not the land. They will not pay out the full assessment of your “house” because that includes the land value.
Roy
Your state Dept Of Insurance is a good place for you to get print information or look online.
They usually are a better source than the FIRE sector.
By the way, love the chat name. You are my rainbow today.
Mr Smithers, first an apology for not responding promptly yesterday. WRT:
“Option 1: Pay $2000/rent for 180 months. Save $1000 a month. You’ve spent $3000/month for 180 months and at the end you own $180K house outright.
Option 2: Buy $400K house today. Get 3% interest rate. Pay $3000 including tax/insurance a month for 180 months. You’ve spent $3000 for 180 months and the end you have a paid off house.
And my example assumes your rent stays at $2000 for the next 15 years which is highly unlikely. More realistically by year 10 your rent is at $3000.
Unless today’s $400K house drops in value to below $150K, 15 years from now, you’re worse off with your save and rent plan.”
The point I was trying to make was precisely that. A median house is worth exactly what the median income can afford to toss in at the current interest rate. Therefore the sale price will crater when interest rates return to normal, to say nothing of the inevitable overshoot.
I’m trying to do “balance sheet optimizing”. You’re clearly doing “cashflow optimizing”. In the long run balance sheet optimization always leads to more wealth.
In your scenario #1 using your made up numbers, looking at the balance sheet at +15 years, the net worth is made up of a brand new $180K house.
In your scenario #2 using your made up numbers, as interest rates revert to the norm and the sales price craters, the net worth is made up of a somewhat worn, ready for major repairs (roof, appliances, hvac, etc) house that formerly sold for $400K but due to higher/normal interest rates combined with wear and tear and extensive future maintenance expenses could only sell for $100K, perhaps. Also lets be honest who has a job for 15 years without unemployment or other issues… that house is going back to the bank.
Someone who uses the “cash flow optimization” route to “wealth” is going to be around $100K poorer than someone using “balance sheet optimization” route to “wealth” using your own numbers.
Also your rather imaginary claim that rent will go up 50% merely requires that incomes will go up 50%. Oh wait, they’re falling. Hmm. Let me know how that works out for you. Also I will see your 50% rate increase over 15 years and up the bet with a 100% property tax increase.
Anecdote time. Thru the power of da internets I just checked and my bachelor pad apartment at 410 kimberly dr was renting for exactly $425/mo in 1993 and currently found a quote online while googling for “starting at $605″ for the same building, and as I lived in the littlest apartment in that building in the (arguably second) worst location in the building, I assume my former bachelor pad has gone from 425 to 605. So, your claim is that in the 19 years of the biggest property bubble, credit bubble, biggest bubble in illegal alien invasion boosting housing demands (something like 10% of the population of Mexico moved here), and most importantly the biggest jobs bubble in the history of humanity rents have gone up all of 42% in 19 years, but you are claiming during the tail end of the second great depression plus the beginning of our own “japan experience” that rents will somehow go up 50% in a mere 15 years. Well… get back to me on that. I find that unlikely.
Another anecdote is my prop tax has gone from $3000 in 2000 to $3500 in 2012 not terribly far from the bachelor pad. That’s 16% in 12 years.
That is a slower rate of growth than the rent, BUT its not the same time frame, the rent equation includes the dotcom boom. Also my house is of a social class a step above my student grade bachelor pad, thats the decision I made. There are luxury apartments that would be better comparable to my house but I don’t have stats on them.
The relevant point is the rent I pay to the city for my prop tax goes up “about as much” as the rent I pay to a landlord, and since the dollar value is “about the same” that means the cost of renting a semi-furnished apartment increase no faster or slower than the cost of renting dirt from the city. So I would completely disregard claims relating to buying being cheaper because rents will go up… Given equal property, it curiously seems that both rent and prop tax go up in roughly equal lockstep dollar value amounts… Renter Vince had to pay an extra $25 rent going from 95 to 96, and loanowner Vince had to pay an extra $25 tax going from 03 to 04. Eh no big deal. Those increases would be easier if my pay had increased since 2000 (I’m in tech, sad to say) but my pay is only “about” the same.
To some extent a quantitative analysis involving stacks of numbers is just a massive distraction from a painfully straightforward qualitative analysis. Hmm path one is I’ll try to get rich by having the bank pay me interest, vs path two is I’ll try to get rich by having me pay the bank a even higher rate of interest. Wonder which one will work better?
Therefore the sale price will crater when interest rates return to normal
“I don’t think that word means what you think it means”. Interest rates aren’t returning to normal. Ask the Japanese what “normal” means to them over the last 20 years. Now we hear talk from the EU Central Bank (see Zerohedge article today) about negative interest rates… that’s right, NEGATIVE rates. Not negative rates when taking inflation into account, but negative real rates.
Debt is the problem. Money is not flowing because of too much debt. Interest rates must be low to service all the debt. Housing is a global bubble. Rates will stay low to extend and pretend until this whole “house of cards” collapses. I said it last night and I’ll say it again: This was a one-way trip.
What does it mean when the bankers charge you to hold onto your money? You spend your money or keep it in the mattress…
Do you not see where this is going? The politicians and bankers will force people to spend money if that’s what it takes to prop up asset prices and the economy.
See InColorado’s post yesterday about inflation expectations and behavior in Mexico in the 1970 if you need more proof…
‘Ask the Japanese what “normal” means to them over the last 20 years.’
Ask the Japanese what “stock market recovery” or “real estate market recovery” means to them over the last 20 years.
Ask the Japanese what “stock market recovery” or “real estate market recovery” means to them over the last 20 years.
The Japanese have a few things going against them: one is demographics, they have an aging and declining population (unlike ours). Second, their central bankers aren’t nearly as psychotic as the Europeans and the US. In fact, I think it was Bernanke that said the Japanese should have been quicker and more forceful with their monetary policy. Remember, we’re talking about “Helicoptor Ben” here…
they have an aging and declining population (unlike ours).
The truth is that US population growth is the lowest on record as measured in the most recent US Census.
Yep, the idea that ‘going Japan’ is somehow shorthand for super-low rates and tons of stimulus spending, over a long period of time and with bad effect, is belied by the actual history of their collapse, which involved very slow and hesitant reaction by their central bank, and nothing like the stimulus that many seem to think occurred.
Not to mention the fact that they didn’t really ‘crash’ in the sense of a wipeout- they’re still the third largest economy, with an extremely high standard of living, one of the longest life expectancy rates, and Tokyo RE is still some of the most expensive in the world.
They’ve just been holding steady for few decades (after a major asset pricedown), which given their demographic problem, is really not that bad.
So I just saw FPSS’s response to my post in yesterday’s Bits Bucket. I didn’t use the same quote on purpose, just a funny coincidence.
Vince,
The plural of anecdote isn’t data.
See the second chart that shows rents. From 1993 to today the index went from about 80 to about 130 which is ~65% increase. I said in 10-15 years there would be a 50% increase in rent. I was probably too low with that estimate.
Look at the graph going back to 1983, the increase in rents has been steady for the past 30 years. You’ll notice at no point during the past 30 years have rents actually fallen even during the recessions of the early 90s, early 2000s. During the 2009-2010 recession, rents increased a tiny bit, while real estate was crashing and burning.
http://www.jparsons.net/housingbubble/
You’ll notice at no point during the past 30 years have rents actually fallen even during the recessions of the early 90s, early 2000s.
Indeed. To put things in perspective, the multi-family I currently own was owned by my neighbor in 1974. He told me he paid $60,000 and charged $25/wk. It was a six-family back then, four-family now, so he grossed about $600/mo. That same property now grosses $2900.
Rents historically trend with inflation, as do house prices… and everyone here knows my stand on the inevitability of inflation due to Central Bank actions. And before anyone throws the “affordability of rent” card out as it relates to the upper limit of rent increases, two things:
*This is shelter. People will do without everything except food, shelter, and transportation, to survive.
*Rents still rose over the last 35 years, while middle-class wages were not rising (and indeed falling as compared to inflation). How have they kept up? The same way they always have: downsizing, waiting longer to start families, increased occupancy, and doing without.
*This is shelter. People will do without everything except food, shelter, and transportation, to survive.
Ever look at all the TV satellite dishes on the poorest of houses even trailers? Amazing!
I count that as downsizing: living in a trailer vs. an apartment. The funny thing is that someone owns that trailer, and it probably isn’t the resident…
In my park there is no renting allowed. So either they own it or the bank does.
Isn’t it odd that Slithers cherrypicks the very duration that involved massive overleveraging of the type the world as never seen in history?
……. nah…. Not Slithers….
There seem to be a few stuck landlords posting on this site. Not that there is anything wrong with that.
Also vince..
Your anecdote is comparing apples to strawberries.
Has your old apartment been renovated in the past 19 years?
You imply that the area is full of illegals now and it wasn’t then.
Your example is like saying I bought a new Honda Accord for $20K in 1993 and that same car today sells for $2000. Therefore the price of cars has decreased by 90%.
So you’re comparing 1993 prices when the apartment was 19 years newer and in a non-illegal area with prices of 2012 for an apartment 19 years older in an area that has gone downhill. And even so, the price is up 42%.
Why don’t you do an apples to apples comparison. Find an apartment in a neighborhood that matches what your old ‘hood was like in 1993 and an apartment that is the same age today as your old one was in 1993. I’ll bet anything the price will be way north of $605.
‘I’m trying to do “balance sheet optimizing”. You’re clearly doing “cashflow optimizing”.’
Realtors® are into ‘how-much-a-month’ thinking.
Japan’s been “going Japan” for over 20 years. And the sun still comes up every day in Tokyo. And there aren’t riots on the streets. And people live normal lives.
In other words, the long term effects of a housing bubble and crash didn’t materialize into the doom and gloom scenario many here are predicting.
“And the sun still comes up every day in Tokyo.”
And housing and stock prices keep on falling, after twenty years without a post-mania bottom.
Balance sheet optimization assuming rents will increase by 0% over the next 30 years. Optimize away…
Strawmen caricaturists inevitably conjure up an implausibly extreme scenario to support their position.
I read the lengthy posts from yesterday and see we are at it again today. I think it’s a big indicator of the “frame of reference” that Americans have come to use to view our world. Most Americans have become addicted to finance to support a “lifestyle”, which is what finance is all about. Get today and pay back over time, so you can have all the bells and whistles (using an old saw) of the American Dream. What dream? To me, this has been a financial nightmare.
So, let’s look at life just a little bit differently. Houses are places to live, not investment schemes, which is what they seem to have become.
The 30 year mortgage allowed the “lifestyle” of the Middle class and provided a FORCED savings plan, whereby, when the house was paid off, the inflation would cover the interest payments. If you bought for 25,000, and paid nearly 100,000 by the time you included PITI, after 30 years, the current value would be $100,000. You could sell the house for what you put into, thereby making it look like a good ‘investment’. And it probably was, and is.
The financialization processes, whereby loans were given away under ridiculous terms made the prices double and triple in a few years. It was a horrible Bankster robbery of America, aided and abetted by CONgress.
However, and I digress, a HOUSE is a place to live. It can be as simple as a mobile home, or a one-room shack.
During the Big Depression years and thereafter, many young familes BUILT their own houses with money they saved for several years prior to marriage. In many cases, they built part of the house and added on. Even in my youth, there were companies that built to any stage of completion, i.e., rough framing and dried in housing.
While the outrageous requirements by governments of building and minimum standards, requiring all kinds of added expenses to a house, you and I can easily live in a one room house with a toilet, a sink and a single power outlet. You don’t need a finished floor, fancy trim, multiple rooms, a shower would be nice, by 2-1/2 baths with double sinks? It’s really all about what you can afford to build.
I bought the current house I am rehabbing for the cost of framing.
The idea of buying a FINISHED house is a financial decision based on a luxury lifestyle. Most people in the world would be happy to have simple shelter. It’s not that difficult to start out small and “add on”.
That is the world that most of the people on this blog and in the US market place at large simply do not understand.
You are haggling over price and terms of existing and new construction, believing that you must maintain a luxury lifestyle that you have “earned”, so you are willing to PAY, in monthly payments, the full cost of that lifestyle, amortized over 30 years.
You simply don’t seem to see any alternatives. Wage slavery is an accepted way of life, and you will find the best “deal” by working the financial numbers of opportunity cost, interest, cost of replacement, inflation/deflation, tax alternatives, etc, etc, etc.
Why not just find a simple place to live and PAY CASH.
When you have more money and decide you want a covering on the floor, then put one down.
I realize it’s awful to live a simple, low cost, barren lifestyle and save your money until you can afford to “upgrade”.
I know it’s tough. Everyone around has a better life than you, and the agent has just shown you how, you too, can have this middle-class lifestyle for just $1000 per month, plus repairs and maintenance, for 30 years, or until you can find a buyer to take over the payments.
you and I can easily live in a one room house with a toilet, a sink and a single power outlet. You don’t need a finished floor, fancy trim, multiple rooms, a shower would be nice, by 2-1/2 baths with double sinks?
[snip]
The idea of buying a FINISHED house is a financial decision based on a luxury lifestyle. Most people in the world would be happy to have simple shelter. It’s not that difficult to start out small and “add on”.
That is the world that most of the people on this blog and in the US market place at large simply do not understand.
You are haggling over price and terms of existing and new construction, believing that you must maintain a luxury lifestyle that you have “earned”, so you are willing to PAY, in monthly payments, the full cost of that lifestyle, amortized over 30 years.
You simply don’t seem to see any alternatives. Wage slavery is an accepted way of life, and you will find the best “deal” by working the financial numbers of opportunity cost, interest, cost of replacement, inflation/deflation, tax alternatives, etc, etc, etc.
Why not just find a simple place to live and PAY CASH.
When you have more money and decide you want a covering on the floor, then put one down.
This is a point worth repeating. Your description of building the basics and then finishing over time is exactly how I grew up. My parent’s house has been mostly finished for a few years now, but my parent’s bedroom floor is still particle board. The amount of time spent owing money on the house was better measured in months rather than years.
I’d have considered doing something similar, but land prices near my work were insane and unfortunately my wife isn’t the type to do construction work in between mom work like my mother was. And it’s not something I’d want to take on without her complete buy-in. So instead we paid cash for something really cheap, and we wait.
You’re not framing the debate as buy vs. rent. You’re framing the debate as live a comfortable life vs. bare minimum life. Buy vs. rent is irrelevant. You can rent an unfinished shack as easily as you can buy one. In both cases it will cost less than a finished house.
If your only goal is to pay as little as possible for shelter, why have have a fixed structure at all? Most of us could live in a tent for free or at most for the nightly cost of a camping spot which is $5. $150/month rent. Talk about savings!! Why even worry about the prices of real estate?
I am framing the debate on affordability WITHOUT credit extensions. I am eliminating the “monthly” costs. You always assume you must be making a payment to buy or rent.
You can pay cash and then pay neither.
The only reason for “owning” a house, or paying off the debt is to eliminate the MONTHLY payment.
If you buy on credit, you immediately become a renter.
If you don’t have the cash for a $100,000 house, live in a trailer until you can come up with the cash or live in a smaller house.
I am framing the debate on affordability WITHOUT credit extensions.
Prices are set at the margins. If credit(margin) is extended and market participants choose to use it, they will have an advantage in the bid over those who don’t, generally speaking. BTW, most investors who are cash buyers raised that money from other investors… very similar to “credit”.
What you’re really talking about is going against human nature. There is a lesson in the ant and grasshopper fable, and it involves the nature of people.
“If you don’t have the cash for a $100,000 house, live in a trailer until you can come up with the cash or live in a smaller house.”
After I completed my schooling I rented rooms in other people’s houses or other cheap accomodations because it was all I needed. Just because you’re no longer a starving student doesn’t mean it’s not a good idea to live like one awhile longer. When I finally bought my first small house (just shy of age 30) I couldn’t just buy it outright but it was close. I doubt that this would work as well in current times, but a lot better than expecting everything a year or two after graduation.
If you buy on credit, you immediately become a renter.
If you don’t have the cash for a $100,000 house, live in a trailer until you can come up with the cash or live in a smaller house.
Not true at all. I own a multifamily and borrowed heavily to purchase it. I live in one unit and rent the rest out. Basically, I live “rent free”. Yes, I still have a mortgage (balance sheet) and have to pay it every month regardless of my vacancy rate, but I have cash flow to pay PITI almost every month (cash flow).
Am I living in a smaller apartment than many of my peers who bought a SFH? Yes, but I still have two bedrooms, two baths, a kitchen, living room, dining room, and a large yard with a deck. Is it ideal? Not at all, but I saw the problems and challenges of being a landlord as a better alternative to renting or buying more than we could afford at that stage of our lives.
“I am framing the debate on affordability WITHOUT credit extensions. I am eliminating the “monthly” costs. You always assume you must be making a payment to buy or rent.
You can pay cash and then pay neither.”
You’ll always pay something. There’s property tax, there’s repairs, there’s maintenance. I don’t know much about trailer parks, but I assume there’s some type of monthly fee paid to live in one. Like I said, unless you live in a tent in the park, you will pay to live somewhere, whether your own, or rent or finance or buy with cash.
Stockton to file for bankruptcy, will be largest U.S. city to fail (so far)
http://www.latimes.com/news/local/la-me-stockton-bankruptcy-20120627,0,2285815.story
Let’s see how many others will follow? It seems like the tidal wave of these are on the horizon.
Which will be the first state to file? Illinois, my native state, or CA?
Let’s see how many others will follow? It seems like the tidal wave of these are on the horizon.
Expect to see Mammoth Lakes file within the next week.
Largest? I seem to remember NYC being all but officially bankrupt but just barely dodging it by being bailed out.
Maybe they mean largest recently?
Maybe they mean largest recently?
Maybe they mean largest to actually have filed Chapter 9?
Orange County is larger but not a city.
Of course they do. I was just pointing out that the only difference between them and one of the largest cities on the planet was a technicality and not having friends in the right places.
NYC was too big to fail.
Really?
State big part of Scranton’s fiscal crisis
Published: June 13, 2012
One of the most famous headlines in American newspaper history was published Oct. 30, 1975, by The Daily News, New York: “Ford to City: Drop Dead.”
President Gerald Ford, in a speech the previous day, never used the words “drop dead,” but said he would veto any bill that offered direct financial help to New York City, which was headed for bankruptcy. Mr. Ford said later that the headline cost him New York, thus the presidency, in his 1976 race against Jimmy Carter.
Scranton, with enough cash to cover one payroll and no prospects for raising more, received the “drop dead” treatment Monday from the Corbett administration, in the person of Alan Walker, secretary of the state Department of Community and Economic Development.
“There is going to be no manna from heaven,” Mr. Walker said. “It’s up to the community to solve the fiscal problems with the resources it has.”
…
Crickets: Chirp! Chirp!
“It seems like the tidal wave of these are on the horizon.”
That news comes as a bit of a sour note against the chorus of MSM articles currently singing the ‘housing market recovery’ song. Wasn’t Stockton one of twenty-or-so ‘ground zeros’ for the housing crash around the U.S.?
Geeezus…don’t these pols have ANY idea that these booms are temporary? That’s scary.
Hell I knew Montana’s was temporary before I even understood the scope of the housing bubble component. At the time I assumed oil would crash again, but it’s still going. Meanwhile everything else here is depressed.
Friend’s son is a building contractor up in MT. And he’s a good one.
But business is down so much that he couldn’t even afford to see a doctor after he tore his ACL on the job.
I thought that states aren’t capable of filink for BK, due to the fact that they are given a charter to exist by the federal government (or something like that - any lawyers want to chime in?)
Of course, nothing is stopping the federal government from changing the rules mid-game.
Time to snap up a waterfront property.
The Californian city of Stockton looks set to become the largest US city to declare bankruptcy, after a deadline to make a deal with its creditors passed.
The housing boom was good to Stockton. Flush with property tax, the city developed its waterfront, with a new marina and sports complex, and negotiated generous pension and healthcare benefits for city employees.
Stockton’s unemployment and violent crime rates now rank among the top in the nation. One in every 195 Stockton homes filed for foreclosure in May, according to RealtyTrac.
More than 15% of the population of Stockton is unemployed – nearly double the national average.
City buildings have been repossessed and “Out of Business” signs are a common sight.
http://sfluxe.com/2012/06/27/californian-city-faces-bankruptcy-news-of-the-day/
The effect of a municipal BK (town or city) on property values is not yet well known. We don’t know what to expect around here but ourimminent BK has recently killed the RE sales market.
We are so dependent on some services here like snow removal for instance that if enough of these services went away so would the population. I suppose the amount of impact on services is what will impact values. Loss of benifits will have a trickle down effect as well, it is a small town and the percentage of the population that woks for, or worked for the town is high.
Mammoth Mountain Ski Area just announced the closing of June Mountain Ski Area, which will deal a BK like blow to the village of June Lake but they can’t file, they are not incorporated.
Mammoth Lakes going BK? How could that be?
Unable to pay obligations as they come due.
On Friday there is a $43M bill due and the creditor has a writ of mandate.
The town agreed to development rights and then took them back so the town could instead pursue FAA funds.
The developer sued and won.
Time to snap up a waterfront property.
Along the central valley’s Ganges?
To Save the Euro, Leave It (Germany)
“A better, bolder and, until now, almost inconceivable solution is for Germany to reintroduce the mark, which would cause the euro to immediately decline in value. Such a devaluation would give troubled economies, especially those of Greece, Italy and Spain, the financial flexibility they need to stabilize themselves.”
“A weaker euro would also encourage greater foreign investment. For example, Spain’s distressed real estate market would become far more attractive.”
http://www.nytimes.com/2012/06/27/opinion/to-save-the-euro-germany-must-leave-it.html?_r=1
I am beginning to think that this might actually happen.
Germany likes being on an artificially depressed currency (compared to what its currency would be if it had its own). That is why their exports are relatively cheap.
Gated slums:
http://money.msn.com/family-money/poverty-has-a-new-address-suburbia-fiscaltimes.aspx
FWIW, the people in the article aren’t your typical slum dwellers: they are educated, career people who are down on their luck. They aren’t pimps, drug dealers or welfare queens.
If they don’t get back on their feet they will eventually lose their homes to foreclosure. The houses will either be added to the shadow inventory or resold to someone with a job.
But just because someone loses their job doesn’t magically turn them into white trash, nor their nabes into “slums”.
And as for the nabes turning into section 8 wastelands, where is the money for that? Most communities have long waiting lists for section 8 vouchers, years long in some cases. I remember when Ft. Collins announced they had some new vouchers to award, people camped out overnight in below freezing weather in the hope of getting one. IIRC hundreds camped out but only 20 or 30 vouchers were awarded.
And that was it. 30 new vouchers for the entire year in a city of almost 150K. And this is a city that is growing, adding 2000-3000 new residents each year.
Gated slums:
A lot of these peeps have been dead, financially speaking, for years often relying on HELOC equity extraction to postpone a frightening reality…you’re no longer a member of middle-class.
I impressed the heck out of a grocery store clerk Monday night when I guessed my total bill before she rang it up. I was just thirty cents over (I considered it an estimate). Skill I picked up when I was unemployed. Used to be able to hand the clerk exact change before she even rang it all up. Having a few “I don’t really feel middle class anymore” skills isn’t a bad thing.
Sorry I missed yesterday’s posts. Too busy.
I just wanted to comment on some of the ridiculous things posted about immigration and immigration ‘reform’.
First. We don’t need reform. We tried that in 1987 and got the promise from the Democrats that if we allowed amnesty for millions of Americans, we would control the borders, and not allow an influx of millions more. As always, it was another time when the Republicans ‘reached across the aisle’, only to get let the left have it’s way.
We need immigration enforcement.
The President should be in serious trouble for taking the positions he has, basically saying he will not enforce existing laws. This is nothing new, making up laws and enforcing selective laws is the sign of any fascist. Unfortunately for us, Romney’s statements about creating a magnet for more illegals by saying he would provide get in free cards is another political pandering game.
We need to stop all the so-called ‘civil rights’ issues that surround identifying who people are and whether they are legal residents and citizens of the United States. I have traveled to more than a dozen countries outside the US. I need a passport and identification just to get in. I need to have a passport at every hotel. I am strictly forbidden to take employment if I did not get permission prior to entering. When asked, you need to show identification.
You can’t do anything here without identification, and VOTING should never be allowed without Identification.
AS for the impossibility of DEPORTING the millions of illegals, is not impossible, at all.
First, have strict IDentification rules and serious penalties for hiring illegals. And ENFORCE them. Many will leave because they can’t find work.
Next, do as Arizona has done, CHECK identifications, whenever prudent. Every other civilized country does. If you are not here legally, good-bye.
The numbers sound daunting when you visualize a train of buses headed for the border, but we are not going to be doing this in one day, or one week, or even in one year.
The Mall of America, one mall, in one city in Minnesota has over 40 million visitors a year. That’s more than all the illegals here in America at present. The left makes it sound like it’s impossible to accomodate so many people. It obviously is not. You just can’t put all of them on the bus the same day.
And finally, for the ‘American born’ children of illegals, and with their children brought across the border, we do like we have ALWAYS done with children, i.e., the children are the property of the parents and go where they go. If the parents are deported, we don’t “break up families”, we send the children with them.
I have 2 siblings born oversees. My parents did not leave them in England. They actually had to apply for Citizenship and have double-citizenship as a result. They had to prove they were naturalized citizens. And no, they are not “latinos”, so yes, the same RULES apply to everyone.
The problem is simple. The political class has lacked the will stop the onslaught of the illegal invasion for 30 years. Now, the invaders are a political class because their numbers have grown so large. California is the first state to be taken over, and it has not been to their benefit.
They are bankrupt.
Supporting millions of illegals for education, healthcare and government benefits is a huge NET drain on the US and needs to stop now. It should have stopped a long time ago. We don’t need the ‘demographic shift’. We need law enforcement.
The political class has lacked the will stop the onslaught of the illegal invasion for 30 years.
It’s not that they lacked the will. The problem is that both side benefit from illegal immigration: future voters and cheap labor.
I’ve always found the immigration charade to be quite amusing. Obviously, Obama wants to win the Latino vote, but the Republicans were having difficulty agreeing upon solid platform.
Half want the cheap labor to keep agribusiness profitable. Illegals also have a higher tendency to not complain when they’re being sprayed with pesticides and they and their families subsequently develop much higher incidents of cancer, etc. Or those that will never complain when they’re not provided with basic safety in, say, these meat packing facilities. I had a friend once tell me “well we need to employ illegals in agribusiness because US citizens aren’t willing to work at this wage.” I had to explain to him that this was the definition of market wages: if you can’t find someone willing to work at the wage you’re offering, then you obviously need to increase the wage to what the market will absorb. Or, you can tap a third-world country to the south and take advantage of an endless supply of exploitable labor. We choose the latter so that we can get $.99/lb beef at Walmart.
And then there’s the issue of US government subsidizing agribusiness. Now this is years ago, but I recall reading how the US subsidies to corn, along with NAFTA open trade policies, were pushing the price of US corn below what the Mexican farmers could get at market, in effect driving the Mexican farmers off their land. The logical place for these Mexican farmers to seek work would be the Promised Land to the north.
Our lackadaisical enforcement of existing policies with our society subsequently absorbing all these extraneous secondary costs is nothing more than an added subsidy to business.
So one side wants cheap, exploitable labor; the other side wants to reduce the burden on society and government. But you cannot have both.
This is only a tip of the iceberg. What a mess. But at least it’s fun to watch.
We choose the latter so that we can get $.99/lb beef at Walmart.
Huh? The price of beef is what the market will bear, it’s a commodity. Any labor savings accomplished by using illegal labor just go to ConAgra’s bottom line.
“Huh? The price of beef is what the market will bear, it’s a commodity. Any labor savings accomplished by using illegal labor just go to ConAgra’s bottom line.”
Right you are, no labor costs involved whatsoever in the price of beef. Cows raise and slaughter themselves and then the carcases are chopped up, frozen, packed and shipped by unicorn fairies.
You are being purposefully obtuse, Smithers. The cost of producing the beef impacts the amount produced, not the price. If noboby would pay more than $1 a pound for beef and it cost $2 a pound to make, then none would be produced, but the fact that it costs $2 a pound to make doesn’t change what people are willing to pay.
“The cost of producing the beef impacts the amount produced, not the price.”
This has to be the most ridiculous thing I’ve read in a while.
So in your world if the cost of labor went to $1000/hr for every employee tomorrow in the beef industry, price would still stay at $0.99/lb for beef. Fascinating.
There will always be demand for beef no matter the price. At $100 a pound there will be demand. Not much demand, but some. You’ll always have the eeeeevil 1% willing to pay $150 for a burger. To say that production costs have no impact on price is laughable.
“You are being purposefully obtuse, Smithers.”
C’mon now. He’s an established liar.
You are very wrong here, Smithers. Its a pure supply and demand equation, ie elasticity. If the cost of production goes way up, less gets produced as it cannot be produced profitably.
+1000
+1001
Robert Shiller on housing as an investment. I found it surprising such a high profile player in the RE arena would be quite so blunt.
“There’s a huge difference between the housing market and the stock market. If you’re going to live in a house and you don’t want to, you’re doing it just for investment gains, it’s a loser investment, a terrible, loser investment for the last century.
…
Leverage has a downside too and that’s what we’re discovering now.”
Bloomberg radio/video link (a little over 3 minutes long):
http://eplayer.clipsyndicate.com/cs_api/iframe?auto_next=0&auto_start=0&page_count=5&pl_id=8178&show_title=0&va_id=3578242&windows=1
I hope this view starts to pervade people’s minds…as an owner occupant, housing should be considered consumption of shelter, not an investment.
You would be surprised however, how many wealth managers (people whose clients have tens, sometimes hundreds of millions in wealth), advise their clients to consider their primary residence as part of their real estate allocation…as if any of those people would downside their homes when it came to rebalancing their portfolio…
as if any of those people would downside their homes when it came to rebalancing their portfolio…
I hear Tom Brady and Gisele Bundchen just sold their Boston-Back Bay townhouse for 9+ Million… They still have their CA mansion though.
Sorry, Beacon Hill, not Back Bay…
I’m thinking more a guy worth $50MM, with $20MM in a concentrated stock position (perhaps a CEO/CFO, etc.), who calls his $7.5MM mansion his 15% real estate allocation.
If the company he works for is Nokia/RIMM, etc., and that $20MM evaporates, he isn’t going to sell the house to rebalance his portfolio, even though real estate now makes up 25% of his portfolio.
He wouldn’t outright own it in the first his. His personal shell corporation would.
“… in the first place…” *sheesh*
NBC News used Schiller last night to hype a story that housing is back!1!! He didn’t quite say that, but whatever. He said if the current bump keeps up for 12 months, we’ll have something.
I’ve given up trying to explain to the homedebtors and other such money renters that their house isn’t an investment. They can’t get it through their media-thickened skulls.
I’ll share it with you all, though: Your residence isn’t an investment for two reasons:
1. It doesn’t build wealth in excess of inflation. You start the ‘investment’ with a house in your socio-economic group, and end with a house in your socio-economic group. No net gain at all.
2. It doesn’t deliver an income.
The ONLY reason why people came to believe that their personal residence was an “investment” was because of a short period of house flipping MADNESS. People were walking away with 20%-100% capital gains, all untaxed, and people everywhere just went NUTS trying to duplicate that.
There are only TWO ways to make a house or condo an investment, and generally those don’t involve living in it:
1. Speculative capital gain in a very short period. In short, you buy low and a relatively short time later you sell high.
2. Rental income. Obviously you can’t live in the damned thing while that happens.
1. It doesn’t build wealth in excess of inflation. No net gain at all.
actually, its maximum real value was when it was finished. from the point it was completed, its real value (not nominal), began to slide.
it’s a wasting asset that will eventually turn into a liability. and when it becomes a liability, it will be torn down.
The U.S. housing recovery news is more important to Wall Street than the festering, unfettered Eurozone debt crisis…for the moment.
June 27, 2012, 10:55 a.m. EDT
U.S. stock indexes rise on domestic data
Pending home sales climb to two-year high in May
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks rose on Wednesday, extending gains into a second day, with investors cheered by domestic economic data and a respite from headlines from Europe.
“We may be reaching a point where expectations are low enough that U.S. data is not disappointing to the downside so much, and Europe is at least not grabbing attention with bad headlines at the moment,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
“But, like any case of congestive heart failure, you know the long term is going to be trouble,” McCain said of Europe’s debt trouble.
A two-day gathering of European leaders starts Thursday in Brussels.
…
“The U.S. housing recovery news is more important to Wall Street than the festering, unfettered Eurozone debt crisis…for the moment.”
I agree.
Unless the housing news results in increased jobs and economic activity, we will be back on the EU roller coaster soon enough.
Realtors® are liars.
Signed,
“RAL contact”
In a former lifetime, when I was a Realtor, we had an expression:
Buyers are liars and Sellers are Story-tellers.
Having been on the other side of the trade, I can tell you about all the things those Buyers and Sellers come up with to change the view of the property you are discussing exchanging.
I learned early to VERIFY everything they told me.
I agree with your general premise, but think the current comparison gives Liars a bad name, simply by association.
For a finale today, I would like to review past comments from some years back about OBAMA being best compared to “Chance, the Gardener” in the 1979 film “being there”.
With the recent release of the books about Obama’s 2 autobiographies, detailing how most of the information provided by Obama is more a fantasy than real life experiences, we could truthfully say that Obama is living in a dream-world.
The sad thing is that this imposter is living in the White House of the United States and carries the title of President of the United States.
A man who see the Constitution as a “collection of negative rights”, much like that useless shill Ginsberg on the US Supreme court.
They are definitely Kindred spirits, deranged in every way.
I think the Chance comparison is a good one. He become President of the United States, too, even though he knew absolutely nothing about much of anything, but still was lauded by all the press and movers and shakes as the most profound candidate they had seen in their lifetimes.
Fiction is much closer to real life than many people perceive.
Here is a clip from YouTube on “Being There”, with the insightful, Chance, the Gardener:
► 2:27► 2:27
http://www.youtube.com/watch?v=YgGvd1UPZ88
Very few Presidents were actually qualified to do the job.
A point made quite well by Helen Thomas (yes, her) in the book Listen, Mr. President.
Very few Presidents were actually qualified to do the job.
Not according to the qualifications defined by the drafters of the Constitution. Are you saying we should add more?
+1.
The biggest qualification being the president to be must think and act like I would.
“With the recent release of the books about Obama’s 2 autobiographies, detailing how most of the information provided by Obama is more a fantasy than real life experiences, we could truthfully say…”
In other words:
Based on the opinions of 2 conservative authors, we can conclude…
Logic fail.
“Rate on 30-year mortgage falls to record low”
http://www.usatoday.com/money/economy/housing/story/2012-06-21/mortgage-rates/55732928/1
So why finance a house today when you know you can save another 50% or more in financing costs later as rates continue to crater?
Why buy a house today when housing prices are falling?
Why buy a house today when housing prices are falling?
To dollar cost average in?
“To dollar cost average in?”
How do you dollar-cost average a one-time lumpy purchase with a price tag in the hundreds of thousands of dollars?
I don’t believe it is possible to do so; that’s why I advise to not buy a home when prices are falling.
sorry, no sarc tags…. that was a joke. thought everyone would get that.
First I thought you were joking, but you also got me to asking myself whether there is an avenue for dollar-cost averaging into a home purchase. One possible approach: Rent while dollar-cost-averaging what would otherwise go to paying the extra costs of ownership into other more profitable investments besides falling-knife real estate. In six years, after housing is a lot lower than now, use the proceeds of your alternative investment portfolio to make an all-cash purchase.
To rent it out. Rents always go up.
To rent it out. Rents always go up.
That would be great if that were true….. but it’s not. Rents are falling.
Don’t believe me? See for yourself.
“The largest year-over-year percent declines in rental prices were observed in Denver (-8.8%), Chicago (-4.8%) and Los Angeles (-2.6%). Atlanta was the only market that saw a significant rise in rental prices, increasing 6.3% from $737 to $783 between Q1 2011 and Q1 2012.”
http://newsroom.transunion.com/MediaLibraries/TransUnion/Documents/graphics/1Q12/Q1-2012_SolutionsReport.pdf“
so the obvious question is what is employment and population doing in those metros seeing rental declines?
I’m guessing that the uhaul rates leaving those metros with negative yoy rental rates is higher than those metros with growing rental rates. I’m guessing unemployment in those metros with declining rental rates is also rising. Jus a guess.
There’s what you said. And then there’s all this……
WSJ:
“Like the rest of the country, New York City has weathered several recent years of economic turbulence. But amid the uncertainty, a new report shows that at least one trend has remained consistent: The rent keeps going up.
…..
the report comes at a sensitive time: The city’s Rent Guidelines Board is scheduled to vote Thursday on increases of anywhere from 1.75% to 6.75% for about one million rent-stabilized apartments throughout the city, a contentious annual event that can attract heated rhetoric from both sides. About a quarter of New York tenants live in rent-regulated apartments.
Even during the downturn, the city’s median rent increased to $1,100 a month in 2011 from $950 in 2008, according to an analysis to be released Wednesday by the Community Service Society, an advocacy group for low-income New Yorkers. ”
San Jose Mercury News:
“According to Trulia, rents are up in all of the largest markets, except in Las Vegas, where rents declined 2.5 percent in May year-over-year. Nationally, rents were 6 percent higher than they were a year ago. Rents in Oakland, Miami, and Denver are up over 10 percent year-over-year.
Rents and asking prices and rents have jumped in the metro areas of San Francisco and San Jose. According to Trulia’s rent monitor, rents in San Francisco in May rose 14.4 percent from May 2011. In the San Jose metro area, rents increased 9.1 percent year-over-year.”
Chicago Business:
“Renting in River North was becoming an increasingly expensive proposition for Himanshu Kumar. While the 32-year-old consulting firm manager had been mulling taking on a mortgage for a while, a nearly 17 percent rent hike in January reinforced his desire to purchase a condominium.”
Zillow:
“SEATTLE, June 20, 2012 /PRNewswire/ — National home values rose for the third month in a row, climbing 0.5 percent from April to a Zillow® Home Value Index[i] of $148,100. While home values continued to decline on an annual basis, falling 0.9 percent from May 2011 to May 2012, this is the smallest year-over-year decline since October 2007, according to the May Zillow Real Estate Market Reports[ii].
National rents also rose from April to May, increasing 1.8 percent, according to the Zillow Rent Index[iii]. Rents rose on a monthly basis in 77 percent of the 344 markets covered by Zillow.”
Don’t even bother going to other sources…the source he provides shows average rents rising nationally at 4.4%.
Keep on dreaming landlords.
“Atlanta was the only market that saw a significant rise in rental prices, increasing 6.3% from $737 to $783 between Q1 2011 and Q1 2012.”
Every former homeowner who went through foreclosure has to live somewhere.
Last man standing and all that…
It’s quite fascinating watching the Real-Trolls come out from under the rocks……. all it takes is truth to get them spinning their lies like whirling dervishes.
For Truthy:
LA Times:
“Rents are surging from New York to Los Angeles. The average monthly U.S. rent for apartments hit $1,008 in the first quarter, pushing past the all-time high set in the third quarter of 2008, according to the data firm RealFacts.
Menachem Krinsky of Hancock Park recalls how in late 2008 every street seemed ornamented with “for rent” signs when he first moved to Los Angeles from the East Coast. Back then, his landlord was so desperate to keep him as a tenant that he slashed his rent of about $2,000 by $800 after Krinsky’s first roommate bailed on the lease.
These days, however, Krinsky’s search for a one-bedroom apartment costing around $1,500 is shaping up to be a major headache.”
CNN:
NEW YORK (CNNMoney) — Renting used to be cheaper than buying. But in many U.S. cities that’s no longer the case, as rents continue to climb and home prices stagnate.
The median rent for all types of rental homes hit $1,350 a month in March, up from a median of $1,285 a month 12 months ago.”
US News & World Report:
“Average rents nationwide ticked up more than 4 percent over the past year, according to a new study from financial information and risk management firm TransUnion, which culled data from more than 130,000 rental applications across the country.”
Oh Mr. Slithers The Realtor.
When will you liars ever learn to be honest with the public?
All the evidence shows rents are rising but like any true believer you refuse to see what’s in front of your own two eyes. It’s cool man, you go on believing rents are falling and will continue to fall for the next 30 years.
And there you go again. Misrepresenting my posts. Although I expect this from you realtors it’s worth point out to the public that you’re misrepresenting my words because I didn’t say rents would fall for 30 years.
Now why would you do something like that?
Food fight!
“Oh Mr. Slithers The Realtor”
How do you know Slithering is a Realtard®?
National average up 4.4%.
“Why buy a house today when housing prices are falling?”
Because you’ve done more in depth analysis, including the cost of suitable rental equivalents, property taxes, insurance, maintenance, transportation options, school zones, and your personal preferences and decide when that it’s worth it?
Does not fixating on one factor make me a Realtor?
“So why finance a house today when you know you can save another 50% or more in financing costs later as rates continue to crater?”
You can’t be serious. In case you are, the answer is if you hold all other things equal, lower rates equal higher prices. So you refinance if rates go down and you get a lower rate without paying the higher price.
You can’t argue that one of the things that will drive prices down is higher rates and then also argue that lower rates will also result in lower prices. So no matter what happens, prices will go lower. Got it.
You could very well be right that prices are headed lower, but if you want to convince people of that, you might try using sound logic and actual facts. I can’t speak for everyone, but I certainly find that more compelling than repeating “prices will drop” over and over.
What do you mean “I could be right that prices are headed lower”???
Prices are falling…. JackA$$.
I live in Phoenix. According to Case-Shiller, prices are up 9% year over year. But I’m sure you’ll somehow manage to interpret that as prices are falling. Prices “have fallen”. They are not “falling”.
Go short the S&P housing index for Phoenix and let me know how that turns out for you. Let me know if you need me to explain what that means to you. Jacka$$.
Would it help if I repeat “prices are rising liar” over and over?
Poor real-troll….. desperately holding onto what was and never will be again.
Let go or be dragged.
Not even sure what your comment means. It’s not possible to show that prices are rising any more simply than by literally pointing to rising prices. I guess some part of your brain must accept it or you wouldn’t have resorted to your pathetic “well then you must be a troll” argument.
I think most people come to this blog for intelligent debate. You seem to be here to repeat your mantra and insult anyone that disagrees. I’ll look to other posters on this blog for intelligent debate. Good luck with your mantra.
That’s right. Slither away you corrupt liar.
I can’t tell if Truthy is for real or putting on a show. I hope for his/her sake it’s a show. I’d hate to think someone was that insane.
Bet against housing by shorting the S&P housing futures you simple-minded coward.
Falling prices is the truth. Get over it and stop lying to the public about it.
Good riddance.
“I can’t tell if Truthy is for real or putting on a show. I hope for his/her sake it’s a show. I’d hate to think someone was that insane.”
My guess is it’s a little of both. He believes it. And he’s also putting on a bit of a show.
The real show is you realt-liars. You’re lying to the public. You know it and so does everyone here. It’s no secret.
How do Realtards® perpetually lie to the public and get away with it? Are Americans really dumb enough to keep falling for their lies?
There has to be a reason for the propaganda push…I am pretty sure the reason is Fear.
“…Fear.”
Never underestimate the power of STUPIDITY.
Hadn’t a concensus been reached a while back that the board wonldn’t tolerate name-calling and personal attacks? Ben???
“Prices are falling…. JackA$$.”
“It’s quite fascinating watching the Real-Trolls come out from under the rocks”
Can’t we speak to each other like civil human beings?
Sorry realtors. It’s not gonna work.
Prices are falling…. JackA$$.
Could have just said, “Except that prices are falling.” Maybe it’s time to consider decaf?
“You can’t argue that one of the things that will drive prices down is higher rates and then also argue that lower rates will also result in lower prices. So no matter what happens, prices will go lower. Got it.”
1) A return to fundamental equilibrium prices in the wake of a mania can result in lower prices regardless of whether interest rates go up, down or sideways. Witness Japan: So far as I am aware, they have had two decades of falling prices against a persistent backdrop of ultra-low interest rates. Higher rates would have only served to make things worse.
2) The U.S. currently enjoys the lowest long-term interest rates in over fifty years. If you think this will last forever, I have news for you:
Rates will likely stay low. I’ll refer you back to your own example of Japan. And forever is a very long time. I won’t be around forever so I have to make decisions based on a much shorter time frame. A couple of decades of ultra low interest rates might as well be forever as far as how it impacts my current decisions. If you want to make decisions today based on what may happen in 2+ decades I wish you luck.
And I agree that low rates don’t necessarily cause prices to rise. I said all other things equal. All other things are not equal. There are many other factors that are putting downward pressure on prices. I was only pointing out that Truth’s logic was flawed. On second thought, I should probably be encouraged that he at least attempted to use logic.
“2) The U.S. currently enjoys the lowest long-term interest rates in over fifty years. If you think this will last forever, I have news for you:”
Japan’s had close to 0% rates for 20+ years or so with no sign of changing any time soon. The US had had low interest rates for 10 years (with a 1-2 year spike in 2006/2007). There’s no reason to think another 10 or more of low rates can’t continue.
Your argument boils down to low interest rates long term can’t happen because it just can’t happen. If 10 years ago I told you the annual deficit would be $1T+ in 2012 you would have laughed at me. And here we are with $1T deficits as the new normal.
Lots of things that people swear up and down simply can’t happen…happen.
And for anyone that is convinced that higher rates are a foregone conclusion, I’d suggest you short US treasuries. It’ll be the easiest money you ever made. You don’t even have to short them just buy an etf like TBT.
There are a handful of people on this blog that claim to be 100% certain of an outcome, but are still scared to put their money behind it. Why is that? Expressing an opinion financially shows a lot more conviction than sitting on a blog all day repeating the same thing over and over.
And there are a handful of liars like yourself who attempt to create doubt about falling housing prices.
You’re a liar.
“Your argument boils down to low interest rates long term can’t happen because it just can’t happen.”
Wrong again, Slitherin. Your argument boils down to ‘continually falling home prices can’t happen so long as rates stay low forever.’ But rates are at a generational low and housing prices are still falling. Higher rates would only serve to accelerate the falling knife’s descent.
Prices are too high, you know it, I know it, we all know it. Like I have said a few times in the recent past, go outside and look around your local malls and restaurants, then come back and tell me 2005 is here again.
There are 14 THOUSAND excess empty housing units for sale in Phoenix
http://www.zillow.com/homes/phoenix_rb/#/homes/for_sale/Phoenix-AZ/40326_rid/34.012827,-111.177521,33.198477,-113.072662_rect/8_zm/
Now step forward and explain yourself you liars.
And, just as a point of information, there are many Arizona municipalities that don’t even have a population of 14k.
recently sold in Phoenix 83,984 results.
For Sale(13K)For Rent(3803)Make Me Move(978)Recently Sold
There are 14k TOTAL HOUSES FOR SALE in Phoenix. And you included vacant land in your search. What does “excess empty housing units” mean? You believe that all houses that are for sale are empty?
I can only assume that you’re implying that 14k houses for sale is a lot. Not sure people would agree given over 4 million people live here. In any case, that’s down from a high of almost 50k.
And before you make the shadow inventory argument I’ll make it for you. There are currently a little over 20k properties that have received a notice of trustee sale. So let’s be extreme and assume 100% of them foreclose. We may be double counting some, but let’s again be extreme and say that’s 34k units of inventory. The monthly average number of sales YTD is about 8k per month so that’s a little over 4 months of supply INCLUDING shadow inventory. Are you implying that’s high???
14 THOUSAND empty housing units in Phoenix. 14 THOUSAND.
What are you talking about? You’re saying that every housing unit for sale in Phoenix is empty? What are you possibly basing that assumption on? In any case, for the sake of argument, let’s just say they ARE all empty. At the current sales pace they’ll all be sold in less than 2 months. You’re pointing to that as a problem?
Since you can’t seem to make an actual argument, just go ahead and repeat “14 THOUSAND empty housing units in Phoenix” again. Maybe you can add bold instead of just capitalizing it. That would be significantly more compelling.
14 THOUSAND and prices cratering.
“Get what you can get for your house today because it’s going to be much less tomorrow for many years come”.
Then put your money where your enormous mouth is and bet against the S&P housing futures.
“Bet”? lmoa
Use your pittance you robbed from suckers and take your own position on it Jacka$$.
OH
MY
GOD!!
14 T-H-O-U-S-A-N-D (yes you read that right, thousand, not hundred) houses for sale in the 5th biggest city in the country where every year about 50,000 new residents show up.
Quick run for the hills everyone.
For the Power-Smithers-Rental Team:
The 2005 run up was an anomaly and is never coming back. Did you really think that the demographics of the Phoenix Metro Area could really support 500k starter homes and 300k apartment conversion condos? Please, have you taken a look around? I even see businesses boarding up in “Affluent” Scottsdale.
If you were simply used house salespeople, you would not be on here pushing your agenda, you would be hoping for increased transaction volume, not rising prices and rents. No, you have skin in the game, you have been out there buying or you are clinging to failed investments from yesteryear. Come clean…the truth will set you free.
“Normal” for Phoenix is about 40,000.
Sure thing Rental Pimp.
Not having a good time with banks in the UK.
Barclays has been fined £290m ($450m) for trying to manipulate a key bank interest rate which influences the cost of loans and mortgages.
http://www.bbc.co.uk/news/business-18612279
The chairman of the Treasury Committee has branded the meltdown of RBS’s computer system “completely unacceptable”.
Andrew Tyrie MP, the Committee chair, has demanded a report from the bank by the end of this week explaining what went wrong.
http://www.bbc.co.uk/news/business-18607169
A sharp deterioration in the outlook for the global economy over the last six weeks provoked Bank of England governor Mervyn King to back an extra £50bn of quantitative easing, MPs heard on Tuesday, adding to the gloom surrounding the UK’s prospects for recovery.
http://www.guardian.co.uk/business/2012/jun/26/uk-economic-outlook-worse-eurozone-bank-england?newsfeed=true
http://finance.fortune.cnn.com/2012/06/27/barclays-libor/?iid=HP_LN&hpt=hp_t2
Since when is interest rate manipulation by banks illegal?
The Wall Street multibillion-dollar scandal no one is talking about
By Stephen Gandel, senior editor
March 23, 2012: 5:00 PM ET
The LIBOR trading scandal could turn out to be far worse for Wall Street than its mortgage troubles.
FORTUNE — Much of the talk about bad behavior on Wall Street since the financial crisis has been about mortgages with a little bit of insider trading sprinkled in. And that makes sense. Everyone immediately understands what a mortgage is. And the housing bust that resulted from all those bad home loans affected us all. And Hollywood has taught us to ooh and ah over insider trading.
But there is another scandal that has come out of the financial crisis that at least to me makes the mortgage underwriting scandal look like small peanuts, and it has been heating up lately. Two weeks ago, the government disclosed that it is looking into bringing criminal cases against traders and banks that manipulated a key bank lending rate, called LIBOR. A source close to the case says the government’s “may” will be dropped soon. Both Barclays and Deutsche Bank have disclosed that they have been the focus of investigations. Banks have suspended dozens of traders. Today, Credit Suisse announced that it was cooperating with regulators on the case. Traders at UBS reportedly are already working with the government on its investigation. Looking for instances in which Wall Streeters go to jail, unlike mortgages, this may be the one.
And yet because it is over a technical sounding bank lending rate, and has been developing for years, the scandal has mostly passed over the public without a real knowledge on what it’s about. But to understand the real rot on Wall Street, and how widespread it is, you should.
…
“The LIBOR trading scandal could turn out to be far worse for Wall Street than its mortgage troubles.”
$450m in hush money is all it took to make this go away.
Hmmmm….hush money….and who is the head of the DoJ…that just got granted executive privilege with respect to a huge scandal?
And Obama is not bought and paid for…yeah right.
Are we going to pretend any of the other options aren’t also bought and paid for?
Thanks for this.
Does anyone have an inkling of how much moolah Barclays raked in from the LIBOR price fixing exercise? Whatever the figure is, I’m guessing it is a lot more than $450m it cost them to end the probe.
So long as the rewards of financial crime far exceed the penalties, I expect it to continue to rage out of control.
ft dot com
Last updated: June 27, 2012 7:53 pm
Barclays pays $450m to end Libor probe
By Brooke Masters and Caroline Binham in London and Kara Scannell in New York
US and UK authorities have fined Barclays more than $450m for attempting to manipulate the London interbank offered rate, a benchmark interest rate that is used globally to set the price of everything from credit card fees to corporate loans.
Bob Diamond, Barclays chief executive, said he and three of his top lieutenants would waive any bonus for this year “to reflect our collective responsibility as leaders” as the British bank admitted to “misconduct” spanning five years and three contintents in its submissions to the bank panels that set Libor and Euribor, the Brussels rate.
The Barclays settlement is the first shoe to drop in a sprawling probe that was launched by the US Commodity Futures Trading Commission and now spans nearly a dozen regulators and more than 20 banks. Wednesday’s settlements were with the UK Financial Services Authority, the CFTC and the US Department of Justice.
The investigations are continuing and the record fines from the FSA and CFTC are expected to set a basis for settlement negotiations with individuals and other institutions. Libor, the reference rate for $360tn in contracts worldwide, is set by banks submitting rates at which they believe they can borrow in a reasonable market.
But the statements by the authorities included email exchanges in which Barclays’ submitters agreed to requests from traders to adjust their rates, sending responses including “always happy to help” and “done … for you big boy”.
In one email exchange, an ex-Barclays employee successfully asks a derivatives trader to submit a lower Libor rate and then writes “Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger.”
…
“Housing Bottom ‘May Be a Ways Off Yet”(quite the understatement;))
http://www.mortgageservicingnews.com/msn_features_reo/housing-bottom-could-be-ways-off-1031062-1.html
“Shadow inventory is overwhelming and will continue to be a weight on the market,” Feder said.
And it gets better…..
“The growth we’re seeing in the housing market is being fueled by the sale of distressed real estate properties. The nondistressed marketplace continues to plummet,” Feder added. “The impact this will have on the industry going forward is to at-best stagnate and we will more likely begin to migrate toward that motivated segment. Our concern is that if you get an extreme shock to the housing market, like a Spanish debt crisis, it’s this motivated price and motivated buyers that are going to become the market and these prices will converge and housing will take a massive dip.”
Why buy a house today when prices and interest rates are cratering? Buy later after prices crater for 75% less.
Az Slim
How are your folks doing?
(Haven’t seen an update in a while.)
Last time I talked to my mother, she had to ring off so she could take the dog for a walk. He’s a 100-pound Labrador Retriever who’s old and slow. He walks at the speed of molasses.
As best I can tell, Mom isn’t using the cane anymore. And she’s been driving since, oh, April. The car is a stick shift VW.
My dad? Let’s just say that I’m pleased that he still recognizes me when I call.
Slim
Thanks. Sounds like your mom mended well. Your dad has a long journey, but your mom’s is even harder. I feel for all of you.
Labrador Retriever = I’m not a Dr Oz fan, but he did nickname his Lab, Rosie, a funny name, “a flabador”. LOL
Thanks for the sentiments, Awaiting. They’re much appreciated.
Considering rental rates are half the total monthly carrying costs of a mortgage, why buy?
Twin Cities house prices falling faster than the national average
http://www.startribune.com/blogs/159724465.html
Why buy a house in Minneapolis or Saint Paul when the price declines are accelerating? Rent for half the monthly cost of buying and let the sellers take the hit.
“Property prices in Australian cities falling, latest data shows”
http://www.propertywire.com/news/australasia/australia-cities-property-prices-201206056604.html
Yesterday someone was saying prices in Australia were going up? Well?
Down down down with the global housing bubble!
UK Housing Market Hit by Falling Sales and Prices
http://www.ipinglobal.com/ipin-live/406459/uk-housing-market-hit-by-falling-sales-and-prices
DIVE!
“Vancouver housing sales fall sharply in May”
http://www.straight.com/article-700826/vancouver/greater-vancouver-housing-sales-fall-sharply-may-compared-same-month-year-ago
The Problem: Grossly Inflated Housing Prices
The Solution: Dramatically Lower Housing Prices
The “solution” is coming to every city, town and state in America.
And now for falling rents
Stealth concessions in large US cities = falling apartment building rents
http://multifamilyexecutive.com/rents/transunion-lists-10-major-metro-rental-changes-in-q1.aspx?cid=MFEBU050312
Houston DOWN
Los Angeles DOWN
Washington, DC DOWN
Chicago DOWN
Denver DOWN and CRATERING
It’s a renters market folks. Why lose money buying a depreciating house when you can rent for a fraction of the cost?
“A recently released TransUnion rental screening report reveals that not every hot apartment market started out 2012 with the same force it enjoyed in early 2011. The report shows that on a national average, rental rates for major metro areas during the first quarter of 2012 went up by 4.4 percent, from $829 to $865. But in some of the most sought after markets it appears concessions were in fact being made based on the year-over-year analysis, at least by property managers using TransUnion’s multifamily services. The data analysis for the report was conducted by collecting data from property managers using TransUnion’s rental screening solutions. The report included data from more than 130,000 rental applications”
Stop harshing the Realiars®’ mellow!
I note that the DC per-oxide hasn’t posted much today as opposed to normal given my post in the morning.
I also note that it’s been notoriously post-partisan. I hope it continues but that’s probably a pipe-dream!
Realtors don’t feel that way I am sure.
Repubs vs Dems is like asking which of Sandler’s movies do you like? Billy Madsion or Happy Gilmore?
Facts tend to be inconvenient. Very inconvenient.
They are like sunshine. Disinfect everything.
The whole partisan garbage just bores me. It’s entirely predictable and I’m with Ben on this one. (His comment on this subject is entirely unprintable by his own standards so I’ll refer you to him.)
“The whole partisan garbage just bores me.”
Lots of valuable HBB band with goes down the toilet whenever 2banana and Smithers get into full-blown Repugnican propaganda mode.
I have no love for the Candy-Crappin’ Unicorn™ either!
They are politicians. They live to be re-elected. That’s the goal. They’ll lie as much as it takes to get there.
FPSS,
I have spent years on this blog trying to write well reasoned, insightful posts, and in return I was given the name “the “stupidest bitch that a realtor can buy.”
I don’t owe you anything.
Oxy,
This blog has something like 30,000 discrete readers. Your antagonists can be counted on the fingers of one hand. Fret not.
You have to admit, it’s a funny tag…
“…30,000 discrete readers.”
Abandon hope, all ye who enter here.
Bulletin» J.P. Morgan’s ‘London Whale’ loss could hit $9 billion: N.Y. Times
June 27, 2012, 2:10 p.m. EDT
Divided EU dents hopes for summit breakthrough
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — Here’s a novel twist.
Instead of banking on a breakthrough as European leaders prepare for yet another in a long string of summit meetings billed as a “make-or-break” effort to get a grip on the 2-1/2 year old euro-zone debt crisis, traders are heading for the exits as policy makers bicker publicly over how to ensure Spain and too-big-to-bail Italy aren’t fatally excluded from global credit markets.
“Investors appear to have finally learned that the usual behavior of allowing hopes to rise ahead of a summit is often not well rewarded,” said Jane Foley, senior currency strategist at Rabobank International in London.
…
Breaking Up is Hard To Do
Breaking Up Big Banks Hard to Do as Market Forces Fail
By Christine Harper - Jun 27, 2012 9:25 AM PT
Seventeen years ago fund manager Michael F. Price spurred the merger of Chase Manhattan Corp. and Chemical Banking Corp., creating what was then the biggest U.S. bank and laying the foundation for JPMorgan (JPM) Chase & Co.
Now he has a new message: It’s time to break up.
The stocks of five of the six biggest U.S. banks — JPMorgan, Bank of America Corp. (BAC), Citigroup Inc. (C), Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) — are languishing at or below tangible book value. That means the pieces are worth more than the whole, Price said.
“Within the banks are wonderful assets,” said Price, who sold his fund-management company for $610 million in 1996 and now runs MFP Investors LLC in New York. “How long are the boards of directors going to stand by and take no action and let them be pounded? So far there’s no indication that any of these banks or boards of banks is willing to do anything about it.”
Politicians and regulators have resisted calls from some investors to split up conglomerates that were assembled over two decades by executives such as former Citigroup Chief Executive Officer Sanford “Sandy” Weill and former Bank of America CEO Ken Lewis. These universal banks offered customers everything from checking accounts and insurance to derivatives trading and merger advice. The 2008 financial crisis and subsequent performance of the companies is calling that into question.
Broken Model
…
“Rent prices falling in Loyala U. neighborhoods”
http://www.loyolaphoenix.com/rent-prices-falling-in-rogers-park
Down we go in Chicago
Rogers Park used to be a seriously dangerous neighborhood when I lived in Chicago but it gentrified around 1999-ish.
With the bubble, it got seriously crazy so I’m not terribly surprised that it is collapsing.
It has terrible connectivity to the city (which is where the jobs are) and I’m assuming that nobody from Northwestern (= Evanston) wants to pay the city taxes by living there.
Realtors® are the veriest varlets that ever gnarled with a tooth.
Bubble kept on biggering AND BIGGERING AND BIGGERING!
Then that bubble blowed up real good.
Housing markets in Asia Pacific face uncertainty due to economic woes and govt policies
by Ray Clancy on June 15, 2012
Housing markets in Asia Pacific face uncertainty
Continued government intervention in property markets across Asia has proved effective, as lending restrictions, additional taxes and protection from hot foreign money has led to a quarterly drop in mainstream prices across Malaysia, Taiwan and Singapore.
The latest analysis report from consultants Knight Frank shows that China has seen house prices fall due to government policy and India, which is facing a stuttering economy, also saw prices turn negative over the last three months.
…
Australia continued to see its housing market deflate with the fifth consecutive quarterly price fall and Japan saw a continuation of its long term price falls.
…
Aside from breaking up systemically important megabanks into small, easy-to-regulate pieces, is there any way to stop the global financial crime syndicate from robbing the worlds’ free people blind?
Legal/Regulatory June 27, 2012, 8:11 am
Barclays Settles Regulators’ Claims Over Manipulation of Key Rates
By BEN PROTESS and MARK SCOTT
A branch of Barclays in London
Regulators delivered the first blow in a major investigation into whether big banks had improperly set key interest rates that affected how consumers and companies borrowed money around the world.
On Wednesday, Barclays agreed to pay $450 million to resolve accusations that it had tried to manipulate rates to benefit the bank’s own bottom line. At the height of the financial crisis, regulators say, the big British bank reported bogus figures that in some cases had influenced a benchmark for student loans, credit cards and mortgages.
The Barclays deal, struck with regulators in Washington and London and the Justice Department, caps a multiyear investigation that yielded one of the largest regulatory penalties tied to the financial crisis. The settlement is the first in a series of potential cases against other financial firms, including HSBC, Citigroup and JPMorgan Chase.
Regulators are worried that big banks set certain rates to their own advantage, in an effort to lift profits during the crisis and fend off concerns that their health was ailing. Such benchmarks, including the London interbank offered rate, or Libor, and the Euro interbank offered rate, or Euribor, are used to determine the lending rates for corporations and consumers.
The Barclays settlement, which offers clues about the scope of the inquiry, may provide a template for future actions. The deal also lays the groundwork for broader reform measures that could reshape how banks report benchmark rates. As part of the settlement, Barclays agreed to adopt new controls and measures to prevent a repeat of the regulatory breakdown.
“The honesty and integrity of a benchmark like Libor is critical because Libor itself courses through all the facets of borrowing and lending in our economy,” said Gary Gensler, chairman of the Commodity Futures Trading Commission, the American regulator involved in the Barclays case. “Banks must not attempt to influence” the rates, he said, to protect “their reputation or the profitability of their trading positions.”
A Rate-Setting Mechanism of Far-Reaching Effects
In the Barclays case, regulators say they uncovered “pervasive” wrongdoing that spanned a four-year period and touched top rungs of the firm, including members of senior management and traders stationed in London, New York and Tokyo. A 45-page complaint laid bare the scheme that unfolded from 2005 to 2009, describing how Barclays had made false reports with the aim of manipulating rates to increase the bank’s profits. Barclays was also accused of “aiding attempts by other banks to manipulate” Euribor.
Traders seeking favorable rates received a welcome reception from bank employees who set the benchmark. “Always happy to help,” one employee said in an e-mail.
…
Got whale blubber?
June 28, 2012, 3:58 a.m. EDT
J.P. Morgan ‘London Whale’ loss may hit $9B:report
Stories You Might Like
Dollar gains as hopes fade for EU summit
MADRID (MarketWatch) — The credit-derivative trading loss that J.P. Morgan Chase initially estimated at $2 billion may have ballooned to as much as $9 billion, according to a New York Times report. The report, citing sources described as having been briefed on the situation, said that J.P. Morgan has already exited more than half of the soured position, having previously stated that it aimed to clear the position by early 2013. The trade was executed by the bank’s chief investment office in London — whose top executive, Ina Drew, was brought down by the incident — and first came to light May 10. CEO Jamie Dimon was called to testify before the U.S. Congress on the matter earlier this month.