Bits Bucket for July 20, 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
-
May 2024 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 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Here’s one for Goonie:
LIBOR manipulation? Banking giant HBSC revealed to be financing terrorists and drug lords? Authorities forced to call in the military because private security firm, G4S, failed to recruit enough English-speaking guards for the Olympics? It’s been a bad week for London, and now— here come the union thugs!*
“…The Aslef rail union announced on Thursday that 450 of its members in central England would walk out between August 6 and 8 in a dispute over pensions… the decision coincided with a move by border officials to strike on July 26, the day before the start of the Games, potentially delaying thousands of visitors arriving for the showpiece event.
The threat of transport chaos added to pressure on the government, which has already had to call in thousands of extra soldiers to guard the Games after a failed private sector recruitment drive left an embarrassing hole in security….”
http://uk.reuters.com/article/2012/07/19/uk-oly-britain-strike-idUKBRE86I0SX20120719
*Factoid of the day: “thug” comes from the name of the Kali-worshipping gang of professional Indian assassins, the Thuggee”(pronounced “tuggies”) who for centuries ingratiated themselves with traveling caravans, then strangled and ritually murdered their victims. British Imperial Forces finally exterminated them by the 1870’s. Or did they…?
London cabbies are also going on strike to protest the exclusive “Olympic business” only road lanes with exclude cabs.
“…which exclude cabs…”
Not. Enough. Coffee.
What do steadily negative bond yields in the healthier Eurozone country economies portend? My impression is that this has never before happened in world economic history, but I would be interested in any evidence to the contrary.
Is it safe to assume U.S. investors have nothing to fear, so long as our stock market and housing market keep going up?
ft dot com
Last updated: July 18, 2012 11:28 am
Hopes of silver lining in negative bond yields
By Robin Wigglesworth in London
Investors are, in effect, paying half a dozen countries for the privilege of lending them money in the short term following the recent European Central Bank rate cut and a flight by investors to perceived havens.
The fall in short-term bond yields highlights the dislocations caused by the crisis and the ECB’s move this month to stop paying interest on deposits at the central bank.
The six countries with negative yields for government bonds maturing in two years or less are Germany, Finland, Denmark, Switzerland, the Netherlands and, most recently, Austria. On Wednesday, investors for the first time accepted negative yields to invest in two-year German bonds at the primary sale. The average yield on the sale was minus 0.06 per cent for the €4.2bn of bonds on sale.
Switzerland’s two-year bond yield is the lowest of the six, at minus 0.55 per cent, while Austria’s comparable government bond yield edged down to a negative 0.01 per cent on Tuesday.
France’s two-year borrowing costs are also close to falling below zero.
…
Shares, euro and oil dip, Spanish worries linger
LONDON | Fri Jul 20, 2012 3:46am EDT
(Reuters) - European shares edged away from four-month highs and the euro dipped on Friday with concern focused on Spain’s fiscal position despite the expected approval of its bank bailout plan later in the day.
Oil prices also eased after hitting an eight-week peak on supply concerns linked to rising Middle East tension, but the rally in soft commodities, which has seen corn and soybean prices soar to record highs, showed no signs of abating.
The FTSEurofirst 300 index .FTEU3 of top European companies was down 0.3 percent at 1,061.44 in early trade, after closing at its highest level since early April on Thursday, helped by a robust start to second quarter earnings season.
Gradual moves by euro zone authorities to tackle the region’s debt crisis and hopes central banks will ease policy to boost global growth have also improved sentiment in equity markets since the beginning of June.
“I do see profit taking coming in sooner rather than later. I don’t see how the UK and European markets can keep ignoring Spanish bond yields at above seven percent,” said JN Financial senior trader Adrian Redmond.
…
“…hopes central banks will ease policy to boost global growth…”
That cargo cult hope for more central bank helicopter drops of fiat never goes away.
heroin.
U.S. stocks rise for third day as IBM, tech lead
Market Snapshot
July 19, 2012|Carla Mozee and Polya Lesova
LOS ANGELES (MarketWatch) — U.S. stocks extended gains into a third session Thursday as better-than-expected earnings from International Business Machines Corp. and other companies offset weak economic data.
European progress on approving a Spanish aid package to banks also bolstered stocks.
…
Does anyone believe in the stock market anymore? Talk about a rigged casino.
I don’t. But it’s been laughing at me for years now, along with Eddie.
“Does anyone believe in the stock market anymore? Talk about a rigged casino.”
S&P500 return over the past 10 years including dividend reinvestment has been 6.3% annualized. For the past 20 years 8.2% annualized. For the past 30 years 11.57% annualized.
So even in the 10 year period that saw the largest asset bubble and crash ever, 2 wars, 2 recessions and the whole debt ceiling debacle and the annual return was a decent 6+%.
Not too shabby all things considered.
If only I could have known what lengths they’d go to in order to hit that number. But I just wasn’t cynical enough.
If Blackstone is betting on a U.S. housing recovery, I guess it is in the bag.
I wonder how individual U.S. households, who just want to buy a house as a place to live in, feel about bidding against 1% money funneled in through the likes of some of the world’s largest hedge funds? I personally look forward to reading about the greater fools who bet long on the aftermath of history’s greatest ever real estate bubble losing their shirts, but that is just me…
Blackstone bets on US housing recovery, buys 2,000-plus homes-for-rent
Thu Jul 19, 2012 11:16pm IST
(In second paragraph please read “Our exit will be to sell the individual homes to the renters themselves, or there could be a very large market for public housing REITs” instead of “… very large market for public housing units.”)
By Ilaina Jonas
(Reuters) - Blackstone Group LP has spent more than $300 million to purchase over 2,000 foreclosed homes in order to rent and bet on a recovery of the U.S. housing market, the private equity company’s global head of real estate said Wednesday.
“Our bet is over time, vacant homes will fill up and markets will begin to recover,” said Jonathan Gray, senior managing director and global head of real estate. “Our exit will be to sell the individual homes to the renters themselves, or there could be a very large market for public housing REITs.”
Blackstone is one of several hedge fund and private equity firms with plans to raise or those that have raised money to acquire foreclosed homes to rent them out for several years before selling them as the housing recovery takes hold.
“There have been a lot of announced strategies. There have been few people who have actually raised the capital and are executing today,” Gray said while speaking at the CNBC Institutional Investor Delivering Alpha Conference in Manhattan.
“I think they’ll be a relatively small number of us who can get the scale and have kind of organization that can work nationally in the major markets,” he said.
…
Our exit will be to sell the individual homes to the renters themselves… or public housing REIT’s
Oh sneaky sneaky. I can easily see these rental companies keeping rents high to frustrate the renters into buying the homes they live in. And it doesn’t have to be a fire sale price; it only has to be cheaper than the rent. The FB’s that can’t afford to buy, and can’t afford the rising rents will have to move out or shack up. And if you keep offshoring and cutting jobs, more and more FB’s will not be able to buy what they rent.
Meanwhile the lower quality housing to be passed off on the government as “public housing REIT’s.” And who’s going to move into this public housing? The same FB’s who couldn’t afford to buy what they were renting.
This is how you manipulate a “needs” industry and make the middle class into the poor.
“I can easily see these rental companies keeping rents high to frustrate the renters into buying the homes they live in.”
You seem to believe all landlords have some kind of monopoly power; I do not. Frustrated renters can vote with their feet and move to cheaper digs. This even goes for sfrenter.
Monopoly? Of course not. Collusion? Happens all the time in my state.
Frustrated renters can vote with their feet and move to cheaper digs.
I knew you would say that, p-bear. You make it sound like I can drop one apartment for another as if it were an ETF fund. You make it sounds as if all inventory is of equal quality, is in equal proximity to jobs, and comes online instantly like splitting a stock. You make it sound as if moving is frequent, free, and instantaneous. Just like your econ texts. But I’ve lived in a lot of places and rented a lot of years. Here is what I found:
1. I can only move once a year. Breaking a lease, or leasing month to month offsets any savings in price.
2. “Moving to cheaper digs” is a little harder than changing your favorite supermarket.
3. Cheaper digs are lower quality digs.
4. There usually are no cheaper digs. LL’s know full well what the guy across the street is charging, and they match prices. High demand results in a geographic semi-monopoly. Notice this is NOT collusion, as prices are public information.
5. Digs don’t have to be cheaper as long as you can find tenants able to pay. And since we aren’t at 1905 tenement stage yet,* there is still plenty of capacity to shack up incomes or combine gov cheesechecks to make the rent. I saw it happen.
6. Contrary to pure market forces, new inventory does not drop prices. It just sets a new baseline. When one of the shiny new digs opens, suddenly your current digs ARE the cheaper digs.
7. Contrary to pure market forces, competition does not drop prices. They just raise them less. e.g. LL A raises rent by $200. LL B raises rent by $175. Yes, that’s a price war, but notice that prices are still going up. And it’s not worth the hassle of moving for $25 a month. They know this full well. Notice that this is also not collusion, as price are public information.
Housing is a sticky needs industry which is much more immune to market forces.
———–
*We are not so far from tenement stage in the individual burbs where illegal immigrants and their legal kids live 3 families to a house. They have a sign-up sheet on the refrigerator where they reserve a time to use the kitchen.
Could not have said it better, oxide.
+1 oxide. Sometimes we forget that the scenarios in the econ books are like those in the intro physics books, they oversimplify real world conditions to make the textbook case easier to calculate,
http://www.thestreet.com/story/11616596/1/shadow-reo-as-many-as-90-of-foreclosed-properties-held-off-the-market.html
Considering 90% of defaulted property in DC is held off the market, there is collusion.
You seem to believe all landlords have some kind of monopoly power; I do not. Frustrated renters can vote with their feet and move to cheaper digs. This even goes for sfrenter.
I am not here proclaiming a bottom. Or trying to convince anyone else of anything. Just reading everything I can and hoping to make the best decision for my family.
Buying a house is expensive, renting is expensive. I’ve been a renter for 30 years and just getting tired of it. Why so much vitriol?
We have been looking at this from every angle. Reading this board for the past 6 years has helped a lot. But it still doesn’t change the fact that we have kids, are getting older, do not want to live in the country or the suburbs (done both, not for me), and want to live near the ocean.
Yeah, maybe I expect too much. Shoulda become a trader or a doctor or anything that pays more than being a teacher. Shoulda married rich. Or been born rich. Oh well.
But I am resourceful, and with as much knowledge as I can gather and hopefully a little luck, will figure something out. We are not down and out (grateful every day for our jobs and health) and while finding a stable long-term place to live in a place I love may be challenging, I can only hope that it won’t be impossible.
My answer:
1. Jobs
2. Moving costs
3. Kid’s schools
4. Pets
5. Commute
1. Pink slips at almost every school district. Most cheaper places to live have lower wages (for teachers), but even if we found comparable pay, both of us would lose seniority by switching school districts, and with 20+ years between us, in this economy, that’s worth something.
2. Moving costs: all well and good to chase cheaper rentals when you are childless and in your 20’s or 30’s with a house full of Ikea furniture which will fall apart when you move it so why bother…but I’m too old for that anymore. Been there, done that. A borrowed pick up truck and promises of beer and pizza won’t get my middle aged friends carting our stuff to the next apt. Indeedy we have been looking at rentals while also looking to buy. Cost of moving (4 person household plus piano) at it’s cheapest would be $1000. First, last and security on a cheaper house $4-6K.
3. Kid’s schools: a decent school is worth its weight in gold. My kids go to the school where I teach. The sign of a good school is whether a teacher working there will send their own kids to that school. Presently, there are 4 teachers at our school that send their own children there.
4. You may not like kids nor pets, but guess what, not everyone is just like you! I know plenty of people have been dumping their pets at shelters (to be killed) due to housing issues, but I don’t plan to ever be one of those people. Some of us do make decisions based on things other than just ourselves.
5. I hate commuting. This is a serious quality of life issue. The cost of gas and tolls and car maintenance ($200-600 month) can often cancel out any savings on a cheaper hood.
Places I have personally visited since 2001 (when housing started getting crazy) with the idea that maybe I should move:
Austin Texas
Upstate New York (lived there for 6 years, too)
San Luis Opisbo, CA
Santa Cruz, CA
San Diego, CA
Hawaii
Durham, NC
Portland, OR
Seattle, WA
A factor in the Oil City plan that figures for me:
It remains legal in these 29 states to discriminate based on sexual orientation:
Alabama
Alaska
Arizona
Arkansas
Florida
Georgia
Idaho
Indiana
Kansas
Kentucky
Louisiana
Michigan
Mississippi
Missouri
Montana
Nebraska
North Carolina
North Dakota
Ohio
Oklahoma
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
West Virginia
Wyoming
A borrowed pick up truck and promises of beer and pizza won’t get my middle aged friends carting our stuff to the next apt.
lol Too true. Good post, sfrenter.
I think it is the best thing in the world to teach where your kids go.
I taught at a middle school that I would not dream of sending my kids; and had the privelege of , teaching at their school a time or two(I have worked all over Oregon, but 1/2 a year in Dayville was good. We walked to school. I taught 4th grade but the school was k-12 with 85 students.)
If my wife had only been happy there…..
I love being called to work at our kids k-8 community school. My daughter has 18 classmates in 8th grade. Sis’s kids go to expensive private school and there are 35 in my neice’s class in San Mateo
I will work classified($10/hr) for the honor of being around my kids and understanding their environment.
My wife is the lunch lady there too.
She drives them, volunteers on her split(9-11am) and considers her job good. She is looking for more but right now it would have to have lots more hours or bennies to make her change. When the kids are out of this school she will likely need something better.
We stayed home for the greater part of the last decade. A stay at home couple if you will. Of course taking them to the farmers market and me going to school happened in that timeframe, so it is not like we did nothing.
Working with neglected kids out at the coast, I see a difference with my kids behavior as they are not starving for love and acceptance. Most people have been judgemental regarding our parenting but I did not even try to get my wife pregnant.
She was 20 and we were not stable but she was not giving up the kid and we are so content as a couple.
Sf–sorry if I missed it. are you a guy or girl??
are you a guy or girl
I am a she.
Thought so ….how did the triathlon go last week??? Ya never told us….
Thought so ….how did the triathlon go last week??? Ya never told us….
Beat my little sister (again) but not my fastest time. It was sort of an off-the-couch triathlon - didn’t train all that much - but all in all, not too shabby. NYC tri is a fun one, despite the heat and humidity.
The Economist magazine was one of the few that called the bubble prior to its bursting. They did it based on housing prices being out of line with rents. Of course, housing prices got even more out of line prior to the bubble bursting.
Right now, the Economist is saying that housing prices in U.S. are under valued by 19% based on rents. I think that only the shadow inventory is keeping housing prices from rising. Of course, if you released all of them, at once, both houses and rents would fall.
But the question for the board is do you really expect rents to fall 19% prior to the shadow inventory being either sold off or being bulldozed due to decay? I do find it ironic that some of the biggest bears on this board will argue decay to argue against buying a home but do not seem to see that decay is eliminating the overhang of housing.
I’m hoping for regime change before decay completely destroys the vacant housing stock. Perhaps Romney will step up and point out the folly of letting homes crumble into desuetude. The alternative would be to advocate auctioning off empty homes to people like Mr. Ben Jones who can bring them back up to livable standards. Construction employment would increase and housing would become more affordable — a win-win, instead of massive waste of embodied labor and materials.
Rental rates are falling in some of the biggest cities.
LA
Chicago
Denver
NYC
Like Romney is going to tell the banks to sell that inventory pronto and take immediate book loss?
“the banks to sell that inventory pronto and take immediate book loss”
The banks don’t own the inventory. They don’t book the loss. However, Romney won’t tell them to do anything. They are his people.
He is their people.
I rent in one of the nicer hoods of L.A. and I’m paying the same rent as I was in 2007, never went up never went down. And that’s been true for all buildings here, believe me I’ve been looking for 4 years.
“Rental rates are falling in some of the biggest cities.
LA
Chicago
Denver
NYC”
On what planet?
“Landlords boosted apartment rents to record levels in the second quarter as demand from tenants sitting out the home-buying market pushed vacancy rates to their lowest point in more than a decade, according to a report to be released Thursday.
The biggest rent boost of the second quarter was in New York City, where the average rose to $2,935 per month, up 1.7% from the first quarter. Despite the sluggish economy, average rents increased in all 82 markets tracked by Reis Inc., a real estate data firm. Average rents are now at record levels in 74 of those markets and now top $1,000 a month on average in 27 of them, including Miami, Seattle, San Diego, Chicago and Baltimore.
The nation’s vacancy rate fell during the quarter to 4.7%, its lowest level since the end of 2001, Reis said. That’s down from 4.9% in the first quarter of this year and from 8% in 2009, when millions of would-be renters were doubling up or living with family.
“He is their people.”
Top donors to Obama in 2008:
University of California $1,648,685
Goldman Sachs $1,013,091
Harvard University $878,164
Microsoft Corp $852,167
Google Inc $814,540
JPMorgan Chase & Co $808,799
Citigroup Inc $736,771
Time Warner $624,618
Sidley Austin LLP $600,298
Stanford University $595,716
National Amusements Inc $563,798
WilmerHale LLP $550,668
Columbia University $547,852
Skadden, Arps et al $543,539
BS AG $532,674
IBM Corp $532,372
General Electric $529,855
US Government $513,308
Morgan Stanley $512,232
Latham & Watkins $503,295
You were saying…..
Good point, Smithers. Romney would have turned up his nose at such insulting donations from banks — – Mitt would have asked for no less than eight times those amounts.
And donations or no, all that dinero didn’t stop Obama from signing Dodd-Frank, promoting the Consumer Protection Bureau (and Elizabeth Warren), or recess appointing Richard Cordray to head it.
Recess pointing? LOL. Senate wasn’t in recess. But King Barrack didn’t let a trivial thing like constitution get in his way.
I always find hilarious how you guys adore Barrack for being TOUGH on Wall St, then moan about how Wall St and govt are in bed with each other.
Barrack, the fighter for the little guy who vacations in Martha’s Vineyard at $50K a week resorts and hots $40K/head dinners in Hollywood.
PS: How much tax did GE pay again last year? $0.
You remember GE right, the company whose CEO is an Obama BFF. But yeah, Barrack’s fighting for the little guy.
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
Down we go….
Enjoy
LOL. That’s Q1 data. Try to keep up dude, we’re in Q3.
Of course you run from it. You can’t refute it.
Will they even find enough qualified renters to fill up the properties let alone sell to them?
Millions today have damaged credit…but before the crash those millions had very good FICO scores.
So how does Blackstone intend to reconcile the two?
Not to mention much tighter lending.
I recently applied for a short term loan on a furniture purchase from a regional chain. A purchase I could easily pay cash for.
Rejected.
Now I don’t have the best credit in the world, (billing disputes from overcharges and a pending corporate class action resolution in my favor, is my bet) but if lending for small furniture purchases is a problem for someone who hasn’t defaulted on anything NEAR a large scale purchase (house, car, etc) then I see a lot more pain ahead.
Dude you have a pending class action suit. On a scale of 0-10 that’s about a 28 on a scale of credit non-worthiness. You could be wiped out completely. No lender in his right mind would lend you $10 let alone a few thousand for new furniture.
I too bought a bunch of furniture and appliances when moving into the new hours. I financed almost all of it at 0% between 12 and 36 months. I could have paid cash but why do it if there is 0% out there available?
No issues getting approved. I have great credit so I knew it wouldn’t be. But I asked the rep at the appliance store what the FICO score needed was. He said he didn’t know for sure but he’s only had a handful of people get rejected. And of the ones that did, about 1/2 got approved after providing some more information to the lenders. Unless you owe several creditors large sums of money, you’ll get retail financing.
dj yesterday you said,
Hey Dumminj….JT 2.0.1 doesn’t seem to work on firefox 14.0.1 thanks!!
Try this one, it worked for me after firefox updated this am. joshuatree_2_1.xpi
Thank you works fine
My guess is that their exit is
1. Packaging these rental units and selling them to pension funds and other investors.
2. Getting the GSE’s to subsidize the purchase of the homes.
These guys know how to make money via manipulating gov.
Read up on Tishman Speyer
They borrow 80% plus and got other investors for the remaining 20% and way over pay Met Life for Struyvesant town. ie they had almost nothing in it.
Black Rock made money selling the debt, they made money in management fees. Tishman Speyer purchased the Met Life building for a song and then Met Life rented the space back from them. Met Life made a ton of money selling the building. After a few years they declare bankruptcy.
who made money Black Rock Tishman Speyer and Met Life.
Who lost money
GSE’s, pensions, and other investors that these con artists got to investing in the place.
Just my 2 cents
“I think they’ll be a relatively small number of us who can get the scale ??
Translation….I think they’ll be a relatively small number of us who will get the deep deal….
The net residual that they will pay for each house would probably sell in a heart beat in the open market…Ba$turds make on the way up & the way down…
I see the latest kiss of doom in the recent used home price spike coupled with a dip in sales volumes, but then I am a professed bear. What most commentators fail to grasp, but I do not, is the degree to which temporary government life support measures underpin the U.S. housing market. Even with those temporary heroic interventions, the market remains on the precipice of collapse.
Are recession threats already threatening a housing recovery?
Posted by: Jim Buchta under Buying Updated: July 19, 2012 - 3:39 PM
Home sales in Minnesota and across the country continued a streak of year-over-year increases during June, but a slight pull-back in national sales compared with the previous month suggests that still-struggling economy is putting a slight damper on the housing recovery.
The Minnesota Association of Realtors said Thursday morning that home sales across the state were about 5 percent higher than last year. Because of a decline in inexpensive foreclosure sales, the median price got a 10.4 percent boost to almost $160,000 — up 10.4 percent from June of last year.
Across the country home sales were up 4.5 percent compared with last year, but fell 5.4 percent in June to a seasonally adjust annual rate of 4.37 million homes, the lowest number of sales since October, according to the National Association of Realtors.
…
What most commentators fail to grasp, but I do not, is the degree to which temporary government life support measures underpin the U.S. housing market.
Temporary…
I do not think that word means what you think it means.
Good point. But perhaps that which can not go on forever, won’t.
Perhaps, but on a long enough timeline, the survival rate for everyone drops to zero…
Doesn’t France have $hitty credit?
What could possibly go wrong giving unlimited free money to those with $hitty credit?
It seems that is the only way economies work in this era. Was there ever another way? Young people (like under 40) know no different.
Portend? It means that investors think this is the safest place to put their money and that they are very fearful of other places. It is an opinion, not an omen.
Opinions about the financial future often fail — just as omens do.
And? So? Therefore? Your statement just means that it doesn’t “portend” anything. It means some people have an opinion. They may be right. They may be wrong. If the are right it “portends” one thing. If they are wrong, it “portends” something else. But the opinion by itself - without any indication of whether their risk analysis is correct or not - doesn’t “portend” anything.
It is an opinion, not an omen.
But it doesn’t augur well.
It’s a lot more than one opinion. Those negative bond yields reflect the wisdom of a crowd of sophisticated investors. I put a lot more faith in the collective wisdom of bond traders than a disparaging post by an attorney who dislikes my word choice.
Look at what the markets did today if you are interested in how traders are reacting to those negative yields; in short, they are ducking and covering.
Screams deflationary train wreck. Investors would be better off withdrawing funds than paying interest on their own deposits, plus management fees to the brain trust fund managers.
“… management fees to brain trust fund managers.”
These guys are hosed in that in this low return environment they can’t even earn their hefty fees.
I bought myself a black arm band and I am wearing it to symbolize my feeling of mourning and sympathy for the pain and agony these guys must now suffer through.
They get hefty fees whether they make money or not. Dedicate the arm band to something else.
Naw, the the arm band stays. When the returns to their clients go negative then their clients will walk away and take their money (what’s left of it) with them.
“They get hefty fees whether they make money or not.”
Only if they can fool investors into buying their funds…
Hedge fund withdrawals jump to highest since ‘09
By Laurence Fletcher
LONDON | Wed Jul 11, 2012 7:42am EDT
(Reuters) - Hedge fund outflows surged to their highest level in almost three years this month, data from hedge fund administrator GlobeOp shows, in a sign investors may be losing faith in the sector after mixed performance amid choppy markets.
Net outflows from hedge funds, as measured by the GlobeOp GO.L Capital Movement Index, which tracks monthly net subscriptions to and redemptions from funds managing around $187 billion in assets, were 1.17 percent of that total during the month to July 1.
The withdrawals compare with net inflows in each of the previous five months and were the highest level of net outflows since October 2009, when clients pulled out 3.76 percent.
The withdrawals may be an early indicator that investors, who have continued to pile into the $2 trillion hedge fund industry in recent years on hopes it can help them survive choppy markets, are reconsidering their options.
…
A lot of hedge fund investors find out the hard way in the last few years, that accessing their money was very, very hard when times got tough.
For some, their accounts were just flat out frozen until further notice. So when the opportunity arose, no doubt there is a run on the funds.
Not only can withdrawals be frozen, but the funds can require additional capital contributions at the discretion of the fund managers. You really need to read one of these things. They are a mess or a work of art, depending on which side of the equation you are on.
A lot of hedge fund investors find out the hard way in the last few years, that accessing their money was very, very hard when times got tough.
Which is why investing in hedgies isn’t all it’s cracked up to be.
bernake will print more to keep yields low. Refinance that stated income loan today.
If you knew Spain was TBTF, isn’t this the time you would want to buy its bonds, before the inevitable bailout?
Why Spain’s 7 percent bond yields have the world on edge (again!)
Posted by Brad Plumer on July 19, 2012 at 11:38 am
Is it time to start worrying about Europe once more? On Thursday, Spain found itself struggling to borrow money from investors again. As a result, yields on the country’s 10-year bonds rose to 7 percent. Alarming headlines ensued. It’s that scary number again! So why does 7 percent always put the world on edge?
The horror, the horror. (ANDREA COMAS - REUTERS)
Let’s recall the basic situation: The Spanish government is running a large budget deficit. It needs to borrow at least $42 billion this year alone to fund its day-to-day operations. To raise those funds, the country sells various types of bonds, including 10-year-bonds. In return for cash from investors, the Spanish government promises to pay a fixed rate of interest — say, 5 percent — every year for 10 years. At the end of that period, the investors get all of their original cash back.
Now, when investors are nervous that the Spanish government might not repay in full, they demand higher interest rates on these bonds as a sweetener. And that’s what is happening right now. Investors are skeptical about Spain’s ability to repay, especially since the country has a yawning budget deficit and is enacting new tax hikes and spending cuts that could sink its economy deeper into recession. So, investors aren’t willing to buy up Spanish bonds unless they come with a 7 percent interest rate. A very big, very fat sweetener.
The trouble is that 7 percent rate is likely to be unsustainable if it persists for too long. If Spain has to pay that much to borrow money, its deficit will grow even bigger — especially since euro zone inflation is low and Spain can’t just print more money to repay its debts. That, in turn, makes investors even more leery. So they demand even higher interest rates. A cycle of doom starts swirling.
This is exactly what happened to Greece, Ireland and Portugal — once those nations’ 10-year bond yields crossed the 7 percent threshold, they quickly launched into the stratosphere, as the graphic below from Reuters shows. The rest of the euro zone had to step in to bail out all three countries:
…
The Spain bailout is unlikely to be $ per $… or Euro per Euro in this case. More likely, bond holders will be taking some level of haircut. The question is, what will the % haircut be?
Looks like Mr Market is unconvinced by the bailout. It almost seems as though the bailout served to exacerbate fears more than alleviate them.
July 20, 2012, 10:02 a.m. EDT
Europe stocks fall; Spain tumbles on debt worries
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — European stocks extended losses Friday after a request for help from Valencia’s regional government underlined worries about Spain’s debt load and Spanish bond yields soared.
The Stoxx 600 Europe index fell 1.1% to 258.93, paring the index’s weekly gain to 1%.
“Nerves with regard to Europe have not gone away,” said Keith Bowman, an equity analyst at Hargreaves Lansdown PLC in London
The Valencia government said Friday it would apply for help from a new government fund in an effort to meet its refinancing needs.
Spanish bonds tumbled, sending the 10-year yield rising 0.24 percentage point to 7.20%, according to electronic trading platform Tradeweb. Moreover, the yield premium demanded by investors to hold 10-year Spanish bonds over German bunds pushed above 6 full percentage points.
…
You say market
I say manipulated market.
Remember TARP, this is the same game, and you can bet that banks are doing everything they can to scare politicians.
Looks like Mr. Barofsky’s new book has some not-so-nice things to say about TARP, HAMP, whatever.
What I said…
wsj dot com
MARKETS
Updated July 20, 2012, 9:21 a.m. ET
Euro Zone Approves Spain Bank Bailout
BY MATINA STEVIS
BRUSSELS—Euro-area finance ministers Friday released €30 billion (about $37 billion) of the €100 billion loan package set up for Spain to shore up its ailing banks.
Giving the final go-ahead to the fourth euro-zone bailout, the finance ministers stressed that Madrid will need to overhaul …
Given how badly the Housing Bubble has turned out for Western nation economies, you’d think policies to pin economic hopes on housing would be soundly renounced.
But so far, all I have seen and heard have amounted to hair of the dog hangover cures.
Monday, Jul 16, 2012 06:58 AM PDT
Unemployed generation threatens Spain
No end’s in sight to Spain’s economic crisis as the government embarks on new austerity measures
By Paul Ames, GlobalPost
This article originally appeared on GlobalPost.
MADRID, Spain — Beatriz Martinez graduated with a degree in art history three years ago. She’s worked only eight months since then, mostly telemarketing.
Twenty-three-year-old Andrea Gonzales, newly qualified in specialized teaching, works stacking shelves in a supermarket.
And Diego, who declined to give his full name, is a freelance photographer. He’s spent most of his time volunteering with a protest group that tries to protect families from eviction since his commissions dried up.
Meet Spain’s lost generation.
More than half of people under 25 here are out of work. That’s Europe’s highest rate, ahead of even Greece, which has come close. Spaniards are worried the strain it’s exerting on society is putting stability at risk as the government prepares to cut unemployment benefits, among other tough measures aimed at meeting the obligations of a eurozone bailout.
The country’s largest labor union, Comisiones Obreras, or CCOO, says 1.73 million people under 30 are unemployed.
However, it says the real situation is worse than the figure shows. Of the 2.4 million under 30 who have jobs, half of them are working on precarious short-term contracts. Another 200,000 are believed to be on unpaid or poorly compensated “internships” the union criticizes for offering no real training. It says many are schemes for unscrupulous businesses to exploit cheap labor.
Hanging out with friends in Madrid’s gritty Lavapies neighborhood, Martinez says “nobody” entertains hopes the situation will soon improve. “I lost my last job a week ago, and more than half of my friends are in the same situation,” she elaborates. “And the ones who aren’t probably will be in a couple months.”
Like so much that’s wrong with Spain’s economy, the soaring youth unemployment has its roots in last decade’s property boom.
Skyrocketing real estate values prompted construction companies to increase wages to attract workers. Many young men dropped out of school to earn good money working on building sites.
By the height of the boom in 2007, more than a third of Spaniards between the ages of 18 and 24 had dropped out of high school, more than double the European Union’s average.
…
Short term contracts? Poorly paid internships with no real training? Exploitation of cheap, inexperienced labor?
Thank god that will never happen in this country!
Oh wait… too late. By 30 years.
My 18 y/o son has put in over 100 job applications.
He finally got a job working at the Cardinals stadium.. in conversions. That is, converting the stadium from football to concert to football… i.e. putting up and taking down chairs on the floor of the. Expected # of hours of work over the next 3 months??? Maybe 80.
He had a job interview for the college books store for a job that will last about 3 weeks at the start of the semester as everyone rushes in to buy books. He was bummed to find out that it was a group interview, with 10 applicants per session, with 5 sessions being interviewed that day, and more sessions the next day. So, 500 applicants reduced to 100 interviewed… for 7 jobs that last all of 3 weeks.
And that is the grand sum of the interviews he’s gotten in his 3 months of job search and 100+ applications submitted.
Someone had posted here on this site “As far as I know, McDonalds is always hiring.” Oh, how out of touch people are.
And, it is not just my son. His two best friends have also been looking hard, trying to find a job. One hasn’t had a single interview, and the other gave up and DEPed in to the US Navy (leaves for bootcamp in November).
Someone had posted here on this site “As far as I know, McDonalds is always hiring.” Oh, how out of touch people are.
Does your son speak Spanish? One of the reasons I avoid Mickey D’s (besides their lousy burgers) is that their restaurants are always run by illegals, at least in my neck of the woods.
Spain’s problem was that it has a hollowed out economy, which it propped up with a massive housing bubble, much like we did. Unlike us though, they don’t have their own currency and can’t print/borrow pesetas to fund a huge military to absorb some of their unemployed youth.
He has two major strikes against him.
1) He does not speak Spanish. With a significant portion of the potential customer base in AZ being native Spanish speakers, retail jobs favor those that speak Spanish.
2) He’s not an 18-30 y/o, attractive girl weighing less than 130 lbs. Virtually all the retail jobs are now being filled by hot young girls. Even Home Depot cash registers are mostly staffed by ladies that weigh less than 2.5 bags of thin set.
The burgers are being flipped by 30-something men and women, but those front line, customer facing positions… all hot, young, multilingual girls.
The burgers are being flipped by 30-something men and women, but those front line, customer facing positions… all hot, young, multilingual girls.
They always get the first shot at the best jobs. It’s just sad that those are now the best jobs.
It’s better in this country to be born a good looking white woman than almost any other possible combination. You’ve always got the “gold digger” position to fall back on, and you have the same/better opportunities than a white/black/etc man/woman with similar credentials.
Intelligence may be the determining factor for income for most, but, for attractive women, it’s really intelligence coupled with lack of morals/standards that the real path for success. Oh, wait, it’s the same way for men too.
If it’s any consolation, the girls think they have it made, and often end up doing stupid feckless things that take them out of the game. But then there are more where they came from, I guess.
He does not speak Spanish. With a significant portion of the potential customer base in AZ being native Spanish speakers, retail jobs favor those that speak Spanish.
One word: Learn. It will open a lot of doors for him. And not just in Arizona.
Donde esta la biblioteca?
It was the first sentence that came to mind.
Citibank is always hiring if you speak any language other then English.
I sent out over 400 resumes before I found this job.
It used to be 100 would guarantee you a job.
Four. Hundred.
My friends and family didn’t believe me. They were all very close to tossing me to the curb.
Four. Hundred.
And I expect most of them went into a black hole.
Hot girls only send out a couple or none at all. Hot girls get offered jobs even when there are no positions available. More hot girls should be the basis of the job recovery.
Liz,
See my post above.
There’s always a position available for a good looking woman, always. And no, nothing overtly sexual; you can walk into any big company as a good looking woman and typically land a admin assistant job with very, very little effort. Even if there’s not one open.
The China Syndrome Is Spreading; Special Report by Leading Financial e-Letter Investment Contrarians
PRWeb
Published 01:00 p.m., Thursday, July 19, 2012
New York, NY (PRWEB) July 19, 2012
In a recent Investment Contrarians article, editor Sasha Cekerevac argues that one of the pitfalls of being in a global economy is being more closely tied with other economies; if one economy suffers a recession, it can drag down growth in other nations. Cekerevac notes that China has been a strong economic driver in the global economy for many years, but recently, questions are arising about whether or not its economic slowdown will decline into a full-blown recession.
“The economic forecast of China has continued to move down, according to many people, including myself,” comments Cekerevac. “There has been some information from the actual companies, the people on the ground, which shows a disturbing trend for the truly bizarre.”
“…editor Sasha Cekerevac argues that one of the pitfalls of being in a global economy is being more closely tied with other economies;…”
What’s to argue? This is as obvious as water is wet. And although current geopolitical theory says this is the best way to prevent large scale wars due to MAD, it actually prevents nothing of the kind and never has.
Cekerevac notes that China has been a strong economic driver in the global economy for many years
Maybe for raw materials providers like Australia and Brazil. For other countries it’s been a job thief.
If anyone has “driven” the global economy, it’s been us, with decades of trade deficits, funded with borrowed money.
Maybe global warming is really real?
And is it coincidental that GD1 was also accompanied by drought conditions?
Grain prices set records as U.S. drought, food worries spread
By Karl Plume and Deborah Zabarenko
CHICAGO/WASHINGTON | Fri Jul 20, 2012 12:58am EDT
(Reuters) - Grain prices pushed to record highs on Thursday as scattered rains in U.S. Midwest did little to douse fears that the worst drought in half a century will not end soon or relieve worries around the world about higher food prices.
Government forecasters did not rule out that the drought in the U.S. heartland could last past October, continuing what has been the hottest half-year on record.
“There’s a greater chance that there is no relief possible or in sight” for the U.S. Midwest, Dan Collins of the National Oceanic and Atmospheric Administration’s Climate Prediction Center said on Thursday.
More than half the United States was experiencing moderate drought or worse this week, according to the latest U.S. Drought Monitor report issued on Thursday.
More than 70 percent of the Midwest Corn Belt was in some stage of drought in the week ended July 17, up from 63 percent a week earlier. It adds up to the worst drought conditions in the United States since at least 1956, climate experts said.
“We don’t have a reason for saying it’s going to improve,” Kelly Helm Smith of the National Drought Mitigation Center told a briefing on Thursday, adding that warmer conditions in the coming months might well exceed current levels.
…
The question is whether warming is man made. We just had data this week that the climate was warmer during Roman times that it is now. Despite Co2 emissions that have exceeded estimates in 1998, we have not seen Global warming since 1998 despite valiant attempts to manipulate data by moving sensors to heat islands etc. I think if you look to the Southern Hemisphere, or to Great Britain, they would not be talking about Global warming this year. This year is the peak of another solar cycle, why don’t we wait to see what happens when the sun spots disappear?
BTW, the salmon are returning to the Northwest. People are trying to claim it is due to their efforts. However, the PDO has turned cool which means the waters off the coast are cooler and that favors salmon. It is a 30 year natural cycle which also impacts climate. Environmentalism has become a religion not a science. This board would laugh at a Fundie that would say that the drought is due to Obama allowing gays in the military but cannot see that science is being corrupted by people treating it like a religion.
One of the biggest advocates on global warming, James Lovelock, just recanted in May of this year. Here is a quote:
On climate change scientists: “The great climate science centres around the world are more than well aware how weak their science is.”
http://WWW.farmersforum.com
Global warming is being used to justify global government and global taxes. Just as the Aztec priests would use an eclipse to justify human sacrifices and their control on power. They hoped to have it in place prior to the natural cycle changing but their time is quickly running out.
It’s not about absolute temperatures, but the time scale.
I love it when people talk about bad science. It shows a fundamental misunderstanding of the scientific process.
Back to global warming: do you know how many BTUs and tons of toxic gases are put into the environment each year by man-made sources? (this is not even including solids of any kind)
This information can be easily found and is vetted by unquestionable sources from long before we even thought about global warming.
Someone else posted this yesterday but it’s worth reposting:
http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719
http://www.ncdc.noaa.gov/sotc/service/global/global-land-ocean-mntp-anom/201001-201012.gif
sure looks like a trend to me.
Yes, thirty year trends of cooling and warming and I am saying that we have been leveling off for a number of years now and we are probably going to begin the decline since CO2 is not the potent warming agent that the models assume.
In 1974 Time magazine had a cover story about the coming ice age.
10 years later they were sounding the alarm over global warming.
And in both instances experts swore up and down they were convinced they were correct.
Everybody keeps bringing up this old “ice age” theory from decades ago. That was just something from very few scientists that was picked up by the mass media and reported as true. Kinda like the cold fusion thing in the 80s which was later proved to be untrue.
Just because it was reported in Time magazine and was a hot topic for a very short period of time DOES NOT make it the prevailing scientific theory of the day.
Everybody keeps bringing up this old “ice age” theory from decades ago. That was just something from very few scientists that was picked up by the mass media and reported as true. Kinda like the cold fusion thing in the 80s which was later proved to be untrue.
Just because it was reported in Time magazine and was a hot topic for a very short period of time DOES NOT make it the prevailing scientific theory of the day.
We have never been at war with Eurasia!!
No, no… We’ve always been at war with Eurasia.
In the 1920s, speculation in crops drove up prices, causing people to run into places like Oklahoma, Dakotas, and other less favorable farming areas, bust the native sod, and plant crops.
GD1, first crop prices crashed. Then people stopped planting in those less favorable areas. Then, the soil stripped of its native grasses lay bare to the howling winds common across the American heartland, creating the dust bowl. Dirt, exposed to the sun heats up more than grasslands, and those heating conditions decrease rainfall by allowing the heated atmosphere to hold more water.
Darrell — are you an ag economist? That’s a great explanation…
That’s basic history.
Good post Darrell.
Basic, well documented history.
Actually is sounds like an episode of “American Experience” on PBS.
I hate bare dirt exposed to the sun. It just fries it, robs it of nutrients anyway…driving through Idaho I’d see their fields blowing away all the time in the spring. It’s amazing they get any ag done there.
I much prefer having mulch over my growing dirt. Even when the mulch has to be protected from roving cats.
Cue up the thorny tree branches. Walk on those, kitties. Better yet, keep the eff off of them and leave my garden alone.
Not a cat person, I assume. I like the thorn idea as it is pretty much impossible to get your cat to stay in your yard. I don’t even know where our cat goes to the bathroom! But there are all kinds of cats wandering our hood. At least they bury their poo.
The self walking neighborhood roaming garbage dog is no longer tolerated as it was in the past.
My wife taught me what a leash and a fenced yard is for; ever since our dog came home with a turkey-day carcass.
The self walking cat still has the run of neighborhoods.
Our kitty, when not busy going potty in the neighbor’s yard, is like a throw pillow. Not as high maintainance as the dogs.
Any thoughts on for how many more decades Japanese stocks will fall before they finally bottom out?
Bloomberg News
Japanese Stocks Drop as Insurers, Shipping Companies Fall
By Yoshiaki Nohara on July 20, 2012
July 20 (Bloomberg) – Japanese stocks fell, with the Nikkei 225 Stock Average capping a second weekly loss, as brokerages and insurers dropped after U.S. economic reports missed estimates.
Toyota Motor Corp. (7203), a carmaker that depends on North America for 25 percent of its sales, dropped 1.8 percent. Mito Securities Co. led brokerages lower. Tokio Marine Holdings Inc. fell 3.4 percent, pacing declines among insurers. Yamato Holdings (9064) Co. declined 2.4 percent on a report operating profit slid at the parcel delivery service.
The Nikkei 225 fell 1.4 percent to 8,669.87 at the 3 p.m. trading close in Tokyo, dropping 0.6 percent this week. The broader Topix Index slid 1.8 percent to 733.82, with about seven stocks dropping for each that rose. The gauge has fallen 10 out of 11 days.
“The shape of recovery is still uncertain,” said Prasad Patkar, who helps oversee about $1 billion at Platypus Asset Management Ltd. in Sydney. “Equity investors need to be patient in any case, but more so at the present time. Valuations are low, which means dividend yields are reasonable.”
…
They have the same fundamental problem we have in the financial markets: it’s all run by crooks.
Any thoughts on for how many more decades Japanese stocks will fall before they finally bottom out?
Guess that would depend on whether there is any real growth in the Japanese economy and whether the aging Japanese population becomes net buyers as opposed to net sellers of investments, etc.
Magic Eight Ball says “Outlook uncertain.”
Swing and miss #1.
The condo we made an offer on, was on the market for all of 2 days. In those 2 days, there were 6 offers. At $2500 over asking, we were second highest, until the 2 all-cash buyers were given the opportunity to outbid each other.
Non-cash buyers were not given the opportunity to re-bid because the price was moving above expected appraisal and it was assumed the non-cash buyers would have difficulty coming up with the additional down that would be required when the appraisal came back significantly less than contracted price.
So, I ask, what are the odds I’ll ever win the bidding war if cash buyers are always given the opportunity to outbid me, but I’m not given the opportunity to outbid them?
Well, we just have to keep trying.
Big money investing squeezing out the little guy that is just looking to buy a place to house his young-adult kids.
Sounds like a bad time to buy…why not wait until the bid wars stop before getting into the market?
Because the prices will be higher when the bidding wars stop.
Prices fell more than 75% for these condos like what I am interested in buying. The one I made the offer on was last sold in 2008 for $140K, and that was 20% off the peak of $175K. It was on the market for $43.5K.
At that price, carrying costs, including HOA would be $450 a month, but it would rent for $700-800.
The bidding wars are happening because the prices are so good, and they won’t stop until after the prices are not so good anymore.
“Because the prices will be higher when the bidding wars stop.”
Please forgive my forgetting that real estate always goes up.
Perhaps you missed the “75% off peak” comment.
If price/rent and price/income proved a bubble, how come they do not prove we are in over-correction to the downside, at least in this narrow market?
Of course real estate doesn’t always go up, as demonstrated by condos that were selling for $175K at peak now selling for $45K.
It is also true that real estate doesn’t always go down.
“If price/rent and price/income proved a bubble, how come they do not prove we are in over-correction to the downside, at least in this narrow market?”
Bingo.
“…and they won’t stop until after the prices are not so good anymore.”
A collapse in demand would also serve to stop them.
P-bear, did you miss the part about “75% off”? It sounds remarkably like the “pennies on the dollar” scenario that measton warned us about. Did you also miss the part about $450K in carrying costs (less for cash buy) and $700 in rent?
For that kind of return, demand is unlimited.
‘demand is unlimited’
It’s a condo. In Phoenix.
haha, darrell’s got a fever that just won’t quit!
I think it will take another 5 years to wring the optimism out of all the speculators. Buy then.
But maybe it’s time to just forget about the whole thing and do something else with the money.
At what point is a condo a “fair price” for the skeptics? $25K? $15K? $2K? It seem like for many here, anything above $1 is too much for any real estate.
“But maybe it’s time to just forget about the whole thing and do something else with the money.”
Works for me. But then we are lucky to have a stable rental situation, supported by our steady rental payments and an underwater landlord who is happy to accept them.
Sounds like a bad time to buy…why not wait until the bid wars stop before getting into the market?
You are right, and we aren’t rushing in. But the $200 month rental increase last Jan. and the monthly “inspections” gave us a kick in the butt.
If we find the right place at less than PITI + maintenance, then we’ll do it. Our LL is appeased for now and we’ll deal with the rent hike.
We’ve waited this long, we can wait longer.
so long as $50k unit rents for $700, it will be this way. Here in Bend I paid 117k for a unit that rents out for $825. My parents lost out on 4 properties in this same way; offering full price then getting outbid.
So IMO unless rents fall in your area, it will stay this way.
If you spent 100k; can you rent the unit for $1600? Maybe there would be less competition on middle of the market props.
I kept expecting rents to really crash. They are down, but not by that much.
On my street, at the peak, a house was $270K and rent $1600.
House prices fell to $110K and rents to about $1300. That $1300 has been stable for a couple years now.
On the lower end.. the 1000 sqft 2-bedroom, there has been virtually no change in price for the last 4 years. I was renting something like that a decade ago for $700 a month. The rents changed very little in the bubble, nor have they moved since the pop.
same here regarding rents. Rising a little; but now they seem to be falling a little.
Sounds like 45k condos that rent for $700 is overcorrection; thus the rabid bidding wars.
Why don’t investors all go to Phoenix, though? They are fighting here in Bend to pay 160k for units that rent for $1100. They could buy 3 condos for that in Phoenix and collect $2100 in rents.
Cash buyers rule both here and there, though; the $160k place listed for $140k and a bidding war ensued. But likely appraised for closer to $140k; effectively pushing out the folks who rely on financing to buy.
Maybe it is harder to rent them in Phoenix, as here it is difficult to find a rental so vacancies are low. Vacancy rate is high in Tuscon, according to Slim.
Anyone Az folks hear what the Green Valley market is like? My parents want to buy there, will they experience the same types of things that kept them out here and are keeping Darrell out in Phoenix? They can afford to buy and are looking to live there 6 months per year; they don’t care so much about values dropping so long as they can hang their hats there.
Anyone Az folks hear what the Green Valley market is like? My parents want to buy there, will they experience the same types of things that kept them out here and are keeping Darrell out in Phoenix?
If they’re just coming down here for the winter, why not rent a place in the Tucson/Green Valley area? Heck, this city has a 16% rental vacancy rate, which means there’s lots to choose from.
And you and the folks will be personally welcomed by your HBB friend, Slim. Even if we just get together for a meal and/or a drink, I’ll greet you with open arms.
That offer is also extended to every other HBB-er. It’s really fun to meet you in person.
That is nice of you, Slim. Usually they rent in Tuscon for the winter; and with my Dads health (80 yrs old) taking a lousy turn, unless it turns better again, I doubt a purchase will really take place. Their snowbird days are numbered by the realities of aging, I fear.
I think it is his heart(arrythmia, lethargy, lung congestion); he says it is a cold. He could barely participate in their 50th anniversery celebration two weeks ago; and it broke my heart. My mom is the type to have a minor stroke but still bring the cassarole to your house for dinner. Stoic. She broke her foot and Dad has barely the energy to drive her to store for groceries. I am seeing them tomorrow and will try to assess Dad’s health then.
Mom’s brother built a house in Green Valley, so they would like to go there to spend several months hiking and playing cards there each year. God willing. They have earned the right to do whatever they want with their money, even if it is a bit foolish. They have always been ultra conservative with their money and if they want to spend it all so be it.
Mom’s brother built a house in Green Valley, so they would like to go there to spend several months hiking and playing cards there each year. God willing. They have earned the right to do whatever they want with their money, even if it is a bit foolish. They have always been ultra conservative with their money and if they want to spend it all so be it.
I say more power to ‘em!
And I say that mikeinbend and family are hereby invited to a Tucson HBB meetup with Slim. Invitation extended to everyone else as well.
This is not going to end well.
“the little guy that is just looking to buy a place to house his young-adult kids”
Why are you doing that?
Yeah is this a new tradition or something?
Might be a better ROI than sinking your money into stocks or bonds or money market funds.
Even though we hardly ever agree, Sorry.
I have been there, especially when the ex “had to have it”.
Be strong. Better days are coming. There are lots of empty houses out there.
Non-cash buyers were not given the opportunity to re-bid.
This has happened to us on 3 different offers. We were told not to even bother re-bidding since we were not all cash.
Send in your re-bid anyway. It is my understanding that it is their legal obligation to present the written offer to the seller.
Send the written offer with a request that it be presented to the seller. If you have a friend who is an attorney, “cc” the letter to your friend (don’t forget to include the “esq.” after their name).
At least the offer SHOULD be presented to the seller…whether the seller takes it or not is a different story.
PS. In the offer, note that you are NOT an investor, and intend to live in the house with your family and (if true) have the ability to increase your down payment if the appraisal falls short.
You never know when someone is willing to give the little guy a shot…
PS. In the offer, note that you are NOT an investor, and intend to live in the house with your family and (if true) have the ability to increase your down payment if the appraisal falls short.
You never know when someone is willing to give the little guy a shot…
If the difference is a few thousand, maybe. But the difference between asking, our bids, and selling prices has been 50-80K.
And don’t forget to add that you’ll feed the koi to the squirrels for dinner. Geez it’s like 2006…
Raise your offer 15%, minimum. Don’t let someone else get it. We’re running out of houses. Hurry.
I wonder how many people who are living in houses they have not made a mortgage payment on in 3 or 4 years have or are trying to purchase another home at much lower prices, 3 maybe 4 million?
Jul 19, 2012 10:40am
U.S. Existing Home Sales Declined in June
“Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities,” Lawrence Yun, NAR chief economist, said in a statement.
Sounds like we need an instanat replay
“frictions related to obtaining mortgages”
“buyer interest remains solid”
But…..
Unfinanceable
That’s what you are,
Unfinanceable
They repoed your car.
Like the Bubble that you couldn`t see,
Not one house but you bought two or three.
Never before
Has someone been more…
Unfinanceable
In every way,
And forever more
That’s how you’ll stay.
That’s why, Deadbeat, it’s incredible
That someone so Unfinanceable
Thinks that I am
Unfinanceable , too.
[interlude]
Unfinanceable
In every way,
And forever more
That’s how you’ll stay.
That’s why, Deadbeat, it’s incredible
That someone so Unfinanceable
Thinks that I am
Unfinanceable , too.
http://abcnews.go.com/blogs/business/2012/07/u-s-existing-home-sales-decline-in-june/ - -
“how many people who are living in houses they have not made a mortgage payment on in 3 or 4 years have or are trying to purchase another home at much lower prices, 3 maybe 4 million?”
Where did you get your numbers? And would another person (other than a doctor) be willing to put their fingers there?
Those people won’t be able to get a loan right now, they are going to have a hard time buying. The better question is:
How many people HAVE been paying current on their mortgage, but are underwater, and at first opportunity will buy a cheaper home, and hand the keys to the bank on the underwater home they have been servicing.
This is a non-zero number and may be trivial, but I doubt it. I know at least one person trying this, but they continue to be out-bid on homes they are trying to buy before handing the keys back.
“Where did you get your numbers?”
Thin air, that`s why there is a ?
“have or are trying to purchase another home at much lower prices,”
Can you buy and bail? Maybe
Buying a new home and letting the old one go into foreclosure, or doing a short sale, appeals to some homeowners. It’s not easy, but some can do it. Should they?
By Teresa at MSN Real Estate Oct 13, 2011 4:29PM
Can you buy and bail? Maybe - MSN Real Estate
http://realestate.msn.com/blogs/listedblogpost.aspx?post=0495bdc7-3e56-4ce8-a16e-12d08ba27b43 - 119k -
My point is that people who have been not paying for years are already counted in the shadow inventory numbers.
Where the shadow inventory is masked, is not where people are underwater and paying (and intend to pay), but where people are underwater, paying, but looking for their first opportunity to buy/bail.
If you buy today, you’ll be underwater tomorrow.
If we used fundamentals like price/income and price/rent to prove there was a bubble, how come we can not use those same fundamentals to demonstrate that the bubble has largely been removed (on a national average, if not all markets).
The condo I put a bid on a couple days ago was for 1.5x medium income of the target buyer (historical norm 2.5x in this market and 3x nationally) and 64x rent (historical norm 100).
To think that prices that are already 30% historic norm and 75% off peak are going to just keep falling, because you like bumper sticker economics… Well, I don’t think so.
A bubble doesn’t need to be proven considering prices were flat for 100+ years and magically start inflating double digit percentages for the next 15 years.
I couldn’t care less what direction prices go. I’m indifferent. What we is know is;
-Housing Prices are falling
-Housing demand is at 15 year lows and falling
-Housing inventory is at record highs and rising
-Defaults are rising
-Rental rates are falling
-Lending rates are falling
So if you think a condo priced 1.5x median salary is a bargain, then get you’re checkbook out. Whatever you decide, you’re going to find out just how little of a bargain it is over the coming years and decades.
I think you left out a few things we know, like not all markets are the same, or how a total wipeout in real estate would wipe out the financial sector, and the global economy with it….
The condos I am bidding on are not 1.5x median income. They are 1x median income and 1.5x the target household for that size/type of housing.
Sure, prices could continue to crash in this market niche. However, then the question becomes, is ANYWHERE any safer? If real estate on a national basis goes to 75% off peak, then all the banks are wiped out. FDIC will eat up another $5T from the government. That additional debt combined with a minimum 20% decline in GDP when the financial sector collapses, would turn the USA insolvent (as if we are not already). The government then gets to decide if it wants to default on its debt or just print our way into stagflation.
In that “total housing wipe out” scenario that is sure to take down the financial sector and the entire global economy with it… where is more safe than real estate?
You said yourself you’re getting suckered at 1.5x median. You just wrote it. Now it’s 1x? Make up your mind.
And your strawman of “wiping out” the universe is slightly over the top.
Nobody cares about “peak”. It’s immaterial.
I think Housing Is A Loss is accurately identifying the downward pressures on real estate.
I think it’s important not to fall into the trap of “Just because it was so high, and now it’s off the peak, it’s a bargain.” I fell into that trap during the tech bubble. Stock went ridiculously high, then when they dropped to mere absurd levels, I thought it was a bargain, and, it turns out, it wasn’t.
It is true that the people who worked to inflate the bubble - politicians and Wall Street, are now putting the full financial and legislative power of the US behind arresting the slide. But economic fantasy worlds are terribly inefficient and very expensive to maintain. See North Korea, the former Soviet Union.
The “ocean currents” of the economic universe will eventually win out it seems to me. I personally see a long slow leak in housing, until it credibly bottoms and then it will once again rise with inflation.
Even if the government creates the broadest definitions of Qualified Residential Mortgages, and allows lenders to again keep no skin in the game, and also grants lenders Safe Harbor - who’s going to buy those loans besides the government? The real bubble was in mortgage debt, because it was perceived as safe as treasuries and higher interest. Wall Street was generating it as fast as it could because people were buying it as fast as they could. And low interest rates doubly drove up demand for them. Can government deficit spending, buying up those loans, generate enough demand to create another bubble in mortgage debt?
Unlikely, it seems to me.
And… interestingly enough, as I type this, it occurs to me… the FIRE sector once again wants to generate toxic debt with no lender risk retention and no risk of litigation. The reason the bubble occurred previously was because end buyers did not suspect the interest-producing debt would blow up.
Is dodgy mortgage debt once again going to create massive demand among private sector end buyers?
Darrell,
As usual you make a lot of sense.
The doom and gloom real estate types can’t put 2 and 2 together and realize that if their dream came true - 90% deflation in real estate - they’d be homeless with everyone else since that would mean the economy has tanked beyond anything we can imagine.
They might be jobless, and might not be able to afford utilities, but they wouldn’t be homeless.
Dramatically lower housing prices is “gloom and doom”? Really? REALLY?
And the world will come to an end too?
Slithers….. some time ago, we had another youngster here that went by the name of EddieTard. He too frequently used silly false dichotomies, strawmen and hyperbole on this blog. He was leveraged right up on depreciating houses and insisted prices and rents were going up when in fact they were falling……..
…. and still are.
some time ago, we had another youngster here that went by the name of EddieTard.
Well…not exactly. But if you called him that everybody knew who you were talking about.
“They might be jobless, and might not be able to afford utilities, but they wouldn’t be homeless.”
And how will they pay the rent exactly if they’re jobless and can’t afford utilities? If anything the owners will be with a roof over their heads longer as it takes several years to foreclose while it takes 1 or 2 months of not paying rent to get evicted.
Now Darrell is reduced to a checkbook.
You two aren’t even that. You’re Specu-Debtors.
Who do I owe? Generally I don’t have a mortgage. the last one wife had we epically failed on, but hey, someone new owns it now and they paid 200k less for it.
I am current on maintainance which is an ongoing expense, and taxes. The monthy rent I collect pays for that and I don’t owe a red cent or a plug nickel on any of our three cars or on the house.
Alas, sorry you feel the need to attack
Exeter would be disappointed in you.
Do you own or rent?
This isn’t about me kiddo so don’t make it about me.
I guess you’re right. I am a specu-debtor(I just don’t owe anybody any money). OxyMoron
And you won’t answer the question if you are a homerenter or a homedebtor.
You’re here lying to the public about housing. It’s all about you my friend.
If we used fundamentals like price/income and price/rent to prove there was a bubble, how come we can not use those same fundamentals to demonstrate that the bubble has largely been removed (on a national average, if not all markets).
Kinda been wondering this myself…
On the way up, all the inventory of available housing was on the market. Now, a lot of it is not. We are dealing with an artificially restricted supply. You can’t get to supply demand equilibrium when a lot of potential supply isn’t on the market.
In addition, we have artificial demand that is created by overly easy lending. But that was the case in the run up as well and was probably even worse back then.
Darrell, ask “Housing Is A Loss” whether he rents or owns his house. He won’t answer me.
If he truly believes everything that he says, then he should have sold his house and would be renting.
Or else he is a hypocrite.
I’m hard pressed to believe that RAL either owns OR rents. If he owned, he wouldn’t be bragging about prices falling. If he were writing out a rent check each month, he wouldn’t be so quick to leave the cost of renting out of his calculations.
I’ll stick with the Mom’s Basement theory.
Yep….. no longer able to defend your massive financial mistake, you’ve resorted to flailing.
We’re glad you’re you and not us.
It would be nice if Blackstone lost its shirt on all those rental houses they’re buying, along with all the other richies buying them.
The only problem is that we have a “privatize the profits, socialize the losses” system, so if prices tank, the big boyz will be made whole.
Hey combotechie, your mantra is well known, but are you ALL in cash, or do you have some other “safe” investments? Don’t mean to pry, just curious, if you care to share. By the way, I agree with your philosophy, for the most part.
All cash where I can, close to cash where I can’t. I own some stock that my company gives to me via my 401K; I used to sell the stock every quarter and stick the money into the interest generating part of my 401K but the option of selling this stock was yanked away from me. The rest of my 401K - my contributions - are invested in the interest generating part.
I own one other stock - a dividend payer - that I view as a long term hold.
No gold or any other precious metals. Lots of U.S. Savings Bonds collected over the years via payroll deductions.
Thank’s combo. My investments are pretty similar to that right now, minus the dividend stock, which I’m looking into. It’s slim pickin’s out there for us conservative investors…
You guys make me wonder whether your “close to all cash” positions are an anomaly, or whether a large amount of cash sits on the sidelines to the Wall Street casino gambling operation these days?
Investment Banking | Wall Street Earnings
July 19, 2012, 7:58 am
Less Trading At Morgan Stanley; Revenue Slips 24%
By MICHAEL J. DE LA MERCED
Morgan Stanley, with offices in Midtown Manhattan, missed profit estimates for the quarter as it reported a decline in bond, currency and commodity trading.Eric Thayer/ReutersMorgan Stanley, with offices in Midtown Manhattan, missed profit estimates for the quarter as it reported a decline in bond, currency and commodity trading.
5:30 p.m. | Updated
While many banks are getting battered by the trading slump, Morgan Stanley is feeling the pain more acutely.
On Thursday, the bank reported a 24 percent drop in revenue for the second quarter, driven by a significant decline in bond, currency and commodity trading.
Wall Street banks have faced a largely inhospitable environment in recent years, racked by economic uncertainty, the European debt crisis and a new regulatory system. But Morgan Stanley has been trying to navigate the market while also working to transform itself by shedding riskier businesses and building its steadier wealth management arm.
…
Dude. You ask why bond yields are negative, and then wonder if the “all cash or near equivalents is common”. What do you think the bonds of the stronger countries are? Hint: cash equivalents.
Basically, you are buying a bond with 0 to negative yield as a “cash” option, figuring that if those big nations go down, cash will not be any safer than those bonds. And, with the bond you don’t have to worry about FDIC (or other global bank deposit insurance) limits.
The market is booming(?)
But where are the buyers?
Inventory Is Looming,
Realtors Are liars
Condo on the market 2 days, with 6 offers. Par for the Arizona condo market right now.
Someone is buying.
Someone=suckers.
Demand is at 15 year lows.
Not in Arizona, in the market for condos that are 30% below fundamental value and 75% off peak, is the demand at 15 year lows.
Yes demand is at 15 year lows and falling.
“Fundamental value” is meaningless as is “peak”.
Darrell,
I know it doesn’t seem like it at the moment, but listen to Ben. You guys dodged a bullet. There is an artificial pump going on this summer and a massive amount of inventory is intentionally being held off the market to inflate prices and create a sense of urgency. Don’t succumb to the siren lure; your time will come. Soon.
Infestors are buying
To rent or sell
Realtors are lying
Rents always swell
I think I see the disconnect
It seems many hbbers have gone real daft
Coming soon to America (maybe - unless there is QE3, QE4, Stimulus II, III, etc.)
Ireland Bulldozes Ghost Estate in Life After Real Estate Bubble
By Finbarr Flynn - Jul 19, 2012 - Bloomberg
Ireland is opting for bulldozers rather than bankers as it starts to clear the legacy of the housing boom whose collapse brought the economy to its knees.
About 1,850 housing developments, unfinished after the bubble burst in 2008, pockmark the Irish landscape, according to government figures. This week, Ireland’s National Asset Management Agency, the state agency set up in 2009 to purge banks of their most toxic commercial property loans, started the destruction of an apartment block for the first time.
“There’ll be some places where the most sensible decision that can be made will be to demolish,” Housing Minister Jan O’Sullivan said in an interview in her Dublin office on July 10. “If nobody wants to live in them, then the most practical thing to do possibly will be to demolish what is there.”
The so-called ghost estates are the most visible scar left by Western Europe’s worst real-estate crash, which led Ireland to follow Greece in seeking international financial help. In all, about 15 percent of Irish homes are vacant, the country’s statistics agency estimates.
“The people that bought into a dream inherited a nightmare,” said Peggy Nolan, a local lawmaker in Longford. “The taxpayers have paid enough, as far as I am concerned, shame on these developers.”
Out of Control
Why not just fence it in and let the bloods and crips fight over it?
Danes are betting the five-year slump in home values will deepen as record low interest rates fail to entice prospective buyers.
Prices, which have already plunged 25 percent since their 2007 peak, will decline 5.5 percent this year, the government estimates. Record-low interest rates that translate into average borrowing costs of less than 0.1 percent have so far failed to resurrect home values as buyers wait for sellers to buckle under record-long sales times and cut prices lower.
http://www.businessweek.com/news/2012-07-16/danish-bonds-beat-treasures-as-homes-slump-mortgages
Still I suppose when you’ve got the most expensive costs in Europe the only way is down.
UK housing costs the third highest in Europe
Britons pay 40% of income on housing costs – making UK the most expensive place in EU after Denmark and Greece
http://www.guardian.co.uk/money/2012/jul/19/uk-housing-costs-third-highest?newsfeed=true
Housing Is A Loss. Why? Housing depreciates.
Yeah, but I miss “having to do yardwork” when it’s a 110!!!
Depreciation applies to rentals too. You’re paying for the depreciation one way or another.
Depreciation applies to ALL man made items. And the beauty about it in the case of housing? The burden is the owners.
So, do you rent or own?
Nobody cares if you rent, own or live in your car.
But if you are telling the world that it is stupid to own a car, it does say something if you own one.
When you tell people housing is an investment, you’re a liar.
Slim’s Radio Alert: I’ll be returning to the airwaves on Tucson’s community radio, KXCI-FM 91.3, on Sunday, July 22 at 5 p.m. Get ready for one hour of Rock -n- Roll Women!
Note: If you’re not near a radio, you can listen to KXCI online.
Can I call in?
Yup, you sure can! Studio line — and other cool info about the station — ahoy.
Realtors Are Liars will be calling in. Listen for him. His name?
Realtors Are Liars.
Alas I’ll be tucked up in bed.
How the Elites Built America’s Economic Wall
- In their paper, Shoag and Ganong don’t look at why high- income states tightened their regulations, thereby increasing segregation by education level. One possible explanation is that as people get richer and cities get more crowded, the tradeoffs between cheaper housing for newcomers and a pleasant (or at least stable) environment for current residents look different.
- Another consideration is the difference between housing as consumption — a nice place to live — and housing as an investment, promising high returns over time. Making it hard to build new housing in a place people want to live drives up the price of the existing housing stock. Old-timers reap capital gains.
- Finally, there’s the never-mentioned possibility: that the best-educated, most-affluent, most politically influential Americans like this result. They may wring their hands over inequality, but in everyday life they see segregation as a feature, not a bug.
financeyahoocom/news/elites-built-americas-economic-wall-223644894.html
The article doesn’t mention that New York City has perhaps the most liberal development regulations in the U.S. Do new apartments pay property taxes in Texas? Do they help fund infrastructure? Not in NYC, except for taxes in the richest areas of the city.
It just costs more to tear down a six story building and put up a ten story building than it does to build low-rise pre-fab housing on cheap greenfield sites. The Northeast and coastal California are already developed.
Where NIMBY has an effect on housing is in the suburbs. But the suburbs are the places where people with Texas attitudes live.
On one hand, who wants to live in bad neighborhoods?
On the other, who wants bad neighborhoods at all and why are they growing?
Jobs and ONLY jobs are the answer.
When you present data, and people keep chanting the same mantra, it always makes me wonder what their personal objective is.
When houses were selling for close to double their fundamental value, as determined by price/rent and price/income, I go it that those that were speculating in housing didn’t want the insane appreciation to stop.
Now, I present data on how condos in my area are selling for a good 30% below fundamental price/income and price/rent value. And they still want to chant the mantra that housing is crashing and if you buy today you will be underwater tomorrow.
It is hard to convince someone of something, when there is person gain in not getting it.
It’s a religion now that housing will always be a bad investment. Like all religions you will never convince true believers that they’re wrong.
It’s a religion now that housing will always be a bad investment.
buying a home is never an investment, as say, buying an apartment complex is. high rises are investments. but homes? never.
Like this guy, Robert Shiller of the Case-Shiller Index (03:45 minutes duration):
At around 1:40 approximately is the core discussion - “Housing is a terrible, loser investment for the past century”:
http://www.bloomberg.com/video/shiller-says-don-t-buy-a-house-just-for-investment-nXSc8TnVRMa26VKK_koGDQ.html
People go into debt to buy houses, in general. To think the ever increasing house prices, offset by ever increasing debt, provides benefits to the individual is a mistake. It may benefit those who make money on the sale of the house or on the generation or trading of the debt. But for an individual to think that his house is going to be a gold mine one day… it was true for some people who bought in the 70s and sold at the peak of the bubble, but I think that ship has sailed.
People who bought before the advent of securitization (which started in the late 70s) are probably sitting on some serious appreciation. The peak of the securitization market - the net result of which was to saddle the purchaser with the utmost debt possible - I think is probably behind us.
People going ever deeper into debt to buy ever more expensive houses does benefit those feeding on the market, but not the actual purchaser. We’re already in a securitization model. Where’s the next big price jump going to come from? The purchaser already maxed out the amount of debt he can take on in order to purchase the house. 40 year loans? 50 year loans? Some kind of “Saddle-your-progeny-with-undischargeable-debt” loan?
The true bubble was in mortgage debt. Right now there’s a big debate about what mortgages the government will back (the definition of “Qualified Residential Mortgage).
People had an insatiable appetite previously for mortgage debt because (they thought) it was safe, reliable and high interest. Obviously that turned out not to be true. If the FIRE sector can once again loosen up lending standards, create bad loans, and the government is backing those loans, will private buyers be rushing into that market? They don’t want to lose money. Can the government by itself create a new inflation of the mortgage debt bubble?
That’s the real question behind where housing is going. There’s been no effort on the part of politicians or the Fed to reduce support for the mortgage debt market. Its support for that market however seems like a very expensive way to make a very small number of people rich.
If the government reneges on its spending cuts early next year, then the bond vigilantes might answer the question, spiking borrowing costs.
15 year mortgages can be had for under 3%. In most (not all) markets, PITI on a 15 year mortgage is under equivalent rent. If you can’t see why this makes buying a good investment, I won’t be able to convince you otherwise.
If you can’t see why this makes buying a good investment, I won’t be able to convince you otherwise.
it makes it a good buy, historically.
I’m not in any big hurry to buy and I’ll tell you why - housing is not the path to increasing my net worth. Housing was perceived as the path to financial stability and a large return on investment over the past 30 years, after Lew Ranieri invented the Mortgage Backed Security (MBS).
Why? Because house prices were consistently going up. As a result, the average person had to take on more debt to offset the higher prices of housing. It was a feedback loop. Set the price higher, and yes, individuals were able to take on more debt. Sellers dutifully raised their prices as the ability to take on more debt increased. But now, I think we’re past Peak Debt. The amount of debt that the individual can take on was found and exceeded. Lending has tightened up a little bit but not much. People who bought before securitization or during the run up, probably made money. Now, we’re at maximum individual debt load. They know what that is, through the Great Creative Financing Experiment.
We’re still at the plateau of Peak Debt. Peak Debt was reached around 2008, when the financial system started to fail. I don’t see significant run-ups in the future. No matter what happens with QRM and Safe Harbor. I don’t think the government by itself can spark another massive spike in demand for mortgage debt. Yes, in some places prices are going up. The big population and job centers. I don’t see them running away. They’ll be constrained by salaries. But overall, prices are still falling.
Buy now or be priced out forever doesn’t hold anymore. More expensive houses driven by ever more debt - Peak Debt - was reached. FHA is doing yeoman’s work in trying to keep that model going with its low-down, higher default loans. More expensive houses, more individual debt.
Maybe there is a way some clever financier or politician can dream up to saddle the house purchaser with yet more debt. But the whole runup to Peak Debt was an exercise in trying to figure what Peak Debt was for the individual. And they found it. And option ARMS, NINJA loans and low down payments exceeded it.
I don’t see housing is not going to be the path to riches going forward. Or even financial stability. Especially not while the declines in prices continue.
If I ever want to paint the walls polka-dotted, or want to put a pink flamingo in the yard, or just practically speaking, want a reliably static payment and not be at the mercy of a landlord, then yes, that’s the time to buy a house. If I want mobility, no-home-owning hassles and want to continue to build my net worth, then for me renting is still the way to go.
I see housing as more of a lifestyle choice rather than the path to riches. Apparently, so does Robert Shiller.
I see housing as more of a lifestyle choice rather than the path to riches.
exactly. traditionally, housing has been for one’s shelter. it’s not an investment, because through history a home has been a depreciating asset. sure people sometimes make a profit on the house they live in, but mostly no (especially when one factors in maintenance and the falling value of the dollar). and the recent housing bubble was an aberration. add to that the fact that as a nation we are getting poorer, and the price of a home will not keep up with inflation, much less depreciation (although in nominal dollars anything can happen in the short run).
Neuromance, TJ and Nick….. you guys have been posting home run hitting truth for weeks now.
you guys have been posting home run hitting truth for weeks now.
natural law can’t be denied. and it was the foundation for the founding of the USA. it’s the reason we grew so economically strong. free markets are also founded in natural law. or perhaps it’s better to say that natural law brings free markets.
You are in Phoenix, where prices have already crashed hard. Perhaps those who claim they will crash more are in New York, where they are still massively too high.
You are in Phoenix, where prices have already crashed hard.
And still falling.
“And still falling.”
According to the zillow chart, prices in Phoenix proper stopped falling in July of 2011. Average price was 92K. Has crept slowly up to 102K. The curve is the same for every zip code in Phoenix. Of course, it may very well head south again, but until it does, your statement, at least as it pertains to Phoenix, is incorrect.
Zillow? You’re relying on ZILLOW? (Pssst: don’t rely on Zillow.)
You are in Phoenix, where prices have already crashed hard.
The outer reaches of Phoenix, think stop-n-go commutes, have crashed, but the typical 3/2 in Scottsdale with green lawn has barely dipped, and asking prices are still north of $140/sqft.
‘the typical 3/2 in Scottsdale with green lawn has barely dipped’
Yeah, sure. So why all the foreclosures in Scottsdale?
‘asking prices are still north of $140/sqft’
Ask what they want. Btw, ‘asking’ prices are higher in Flagstaff than that.
This is the sort of place (average neighborhood close to ASU) that I’m interested in when prices drop closer to wages.
http://www.redfin.com/AZ/Scottsdale/6913-E-Latham-St-85257/home/26904360
It is hard to convince someone of something, when there is person gain in not getting it.
And it’s even more challenging for someone to be honest after they’ve leveraged neck deep on a depreciating asset. That someone is you.
This isn’t about me kid so don’t make it about me.
Here’s Jared Diamond’s excellent book “Guns, Germs, and Steel” converted into an excellent three-part, three hour documentary.
http://topdocumentaryfilms.com/guns-germs-and-steel/
I’m reading the book right now. Fascinating look at why and how civilization developed as it did.
A great example as to why well-located land is valuable if conducive for human life, if I’ve ever seen one.
In ancient times, it was about access to water and arable land (Fertile Crescent)
It became access to waterways and trade (look at all old cities…access to major waterways).
Now it is access to jobs (the ability to make money to live on) and quality of life (if you don’t need to work).
“Now it is access to jobs (the abiility to make money to live on)…”
IOW it is access to a steady flow of cash.
A question to think about: I you were to buy your job, the one you are working at now, how much money would you be willing to pay for it?
More of a look behind the scenes of how Wall Street views mortgages. This post is part of the SIFMA response to the possibility of municipalities using eminent domain to seize mortgages.
The TBA [To-Be-Announced (TBA) markets for Mortgage-Backed Securities (MBS)] markets are the most liquid, and most important secondary market for mortgage loans. The hundreds of billions of dollars of daily trading in these markets, involving investors around the world, has for 30 years provided significant and tangible benefits to mortgage borrowers and mortgage lenders, and to the U.S. economy. Aside from being a conduit to draw massive amounts of global investment capital to the U.S. mortgage markets, the TBA markets also allow borrowers to obtain affordable rate locks as they shop for a home, and provide a critical risk management tool for mortgage lenders and servicers. The TBA markets are the benchmark for all mortgage markets in the country.
The fundamental concept that underlies TBA markets is homogeneity. In the TBA markets, buyers and sellers trade in a forward manner – that is, a trade executed on a given day may not settle for one, two, or even three months. Importantly, at the time of the trade, the identity of the mortgage-backed securities that will be delivered is not known. Rather, the counterparties agree on certain general characteristics of the pool, such as the issuer, coupon, term (15 or 30 years), and settlement month of the trade. This means that the collateral that falls into the various categories must be considered fungible. Investors must have confidence that, as a general matter, one MBS is interchangeable with another. Performance should be comparable, and risk factors should be similar.
http://www.sifma.org/news/news.aspx?id=8589939537
I hope Incolorado checks in.
Anybody know what town he’s from?
AmorLand.
Loveland or Boulder. Neither are near Aurora.
The gunman went to HS at one of the Poway schools, and grew up a few miles to the south of where we live. Luckily he moved to Colorado, or else he might have ended up at the same theater where my wife and oldest son watched the new Batman movie last night after midnight.
The story makes me very sad. I feel especially sad for the guy’s parents and for the innocent victims who thought they were out for a fun evening and ended up on the receiving end of a terrifying, senseless attack.
I think he lives in Loveland and works in Broomfield. It’s all far far away from Aurora. For those not from around here, Aurora is our Oakland…for better or worse.
Aurora is the anus of the metro Denver area.
Our crazed shooting happened in a church the nicest part of town.
The gunman was upset because he couldn’t find a job.
Holmes had gone on to grad school because he hadn’t found employment. I wonder if there is a pattern.
Leningrad.
I’m safe and sound, Tovarich!
I survived yet another round of senseless, American violence.
This is how politicians kill Wall Street reform:
“According to law firm Davis Polk, regulators have written nearly 9,000 pages of rules and regulations based upon the original 848-page bill, and they’re only 30 percent done. If that ‘inflation rate’ stays consistent, the final Dodd-Frank rule-making documents would total roughly 30,000 pages.
http://www.cnbc.com/id/48260641?__source=mnd|news|&par=mnd
A few days ago somebody here had a question about “fire hardening”.
Wiki-up the term and you’ll get an interesting read.