A Free, Open And Transparent Market
A reader posed these questions. “I approach this premise carefully. With a certain depth of thought and a lack of resultant clarity, I ask: What if:
1) Home prices rise to meet current rents.
2) Resulting in underwater homeowners newly afloat
3) Resulting in fewer foreclosures and more lenders/mortgage holders willing to forgive some debt, refi, or agree to a short sale because their loss margins are diminished.
4) Resulting in greater demand and greater supply.
5) Resulting in equilibrium; homeostasis.
6) It’s all local.
7) Given the current job market and prospects, the interest rates will need to be artificially suppressed, or GENX and GENY will be totally screwed without parental contribution.
Ain’t the future bright??”
A reply, “None of what you suggest makes sense in light of current market fundamentals. However, with enough government-sponsored gearing, I suppose any kind of wacky price movement is conceivable.”
Arabian Business. “Some assets in Dubai’s property market are now undervalued, and it is realistic to expect that prices can regain their 2008 highs, one of the emirate’s most prominent property bosses has claimed. Hesham Al Qassim, the CEO of Wasl Asset Management – which is the emirate’s largest landlord, managing the property portfolio owned by the Dubai Real Estate Corporation – said that current prices meant that now was ‘the right time’ to invest in the local market.”
“When questioned as to whether prices could regain the peaks of four years ago, Al Qassim said: ‘They might get higher.’”
From Gold Coast. “In a glimmer of hope that the city’s battered housing market may finally be turning around, median house prices in the June quarter increased 2.8 per cent to $467,000. ‘I do think this is a sign that finally the Gold Coast housing market has bottomed out and we are seeing a move in the right direction,’ John Newlands, Real Estate Institute of Queensland Gold Coast chairman, said. ‘This is the first positive move in house prices in four years, which is significant. First homebuyers have also been reasonably active over the quarter in certain price ranges. The $400,000 bracket is considered good value by buyers in the entry-level market.’”
“Mr Newlands said there were signs that interstate investors were returning to the Gold Coast market. ‘I think they have been waiting for signs that the market really was at the bottom before they finally committed,’ he said. ‘But affordability and increased confidence in the market are meaning we are definitely seeing a lot more sold signs around the suburbs.’”
The Wanganui Chronicle. “ASB chief economist Nick Tuffley said house prices here had stayed high compared to incomes and would likely continue to rise. ‘We may look like we’re over-valued and high compared to other countries. We’re still likely to see in the short term a little more house-price pressure coming through. We don’t have an oversupply of housing in general and we have some fundamental supply constraints in places like Auckland and Christchurch.’”
“Barfoot & Thompson managing director Peter Thompson said house prices here were set by a free, open and transparent market. ‘It’s what a person is prepared to sell for and to buy for,’ he said. ‘I admit it’s making it harder for people to get into property. Getting more properties on the market will stabilise it. We’re coming into spring so we might start seeing that.’”
“Last week, a two-bedroom Sandringham house valued at $720,000 fetched $1.1 million at auction. The 1940s weatherboard house at 23 Watea Rd surprised listing real estate agent Christine Wooding at Barfoots. Expectations were more around the mid-$800,000s, she said. Developers bid against one another for the property, which is on a section of more than 800sq m.”
The Globe & Mail. “The Vancouver housing market isn’t the pressure cooker it used to be, which makes buying a house a far less painful endeavour than in years past. But no one’s about to call Vancouver a ‘buyer’s market.’ Nice houses that are priced right are selling within days, some in bidding wars. But anything priced too high or considered undesirable is apt to sit idle in this market, which is, according to the Real Estate Board of Greater Vancouver, witnessing the lowest total sales for the region since July, 2000.”
“Teacher Barb MacKay says it took her about a year and a half to find the right house to buy. She found it recently on a 30-by-90-foot lot in New Westminster. She’d originally seen the bungalow a year ago, listed for $490,000. However, she thought it needed too much work. Someone else purchased the house, did the renovations, and recently relisted it. By now, Ms. MacKay knew the house was a good deal, especially with the renovations all done, and she made an offer. There were other offers, but she got the house a couple of months ago for $592,000. ‘I think there is still stuff out there, but a lot of it is unaffordable,’ she says.”
“Jay Berman, who lives in Manhattan Beach, Calif., purchased an 800-square-foot condo in Vancouver’s West End 20 years ago, with a dream of one day retiring there. His plan has changed, so he put the condo on the market two months ago, for $299,000, which would seem a steal for a large one-bedroom in one of the most desirable neighbourhoods in Canada. But so far, he’s had no interest.”
“‘We’re not in a hurry, so it doesn’t matter much, but yeah, I guess I thought it would be pretty quick at that price,’ says Mr. Berman. ‘I think in a neighbourhood as nice as that, it would be at least $100,000 more for a comparable condo in Southern California.’”
The LA Times. “If you are looking to buy a starter home in Southern California, then you are likely to pay a premium from last year. With fewer low-cost homes and foreclosures on the market, people looking to get into the market at a cheap price are paying more. DataQuick reported that the number of homes in the Southland that sold for less than $200,000 fell 5.8% from the same point a year earlier. Homes between $300,000 and $800,000 surged 13.4%. Sales of homes costing more than $800,000 rose 7.2%.”
“Those changes in the kinds of homes selling helped lift the overall median last month. The median price for the region last month was $306,000, a 2.0% increase from June and up 8.1% from July 2011. But the median is also far from a perfect measure of home price appreciation. It often reflects the kinds of homes selling during a certain period and the kinds of neighborhoods these homes sold in.”
“For instance, during the worst of the housing slump the median price dragged as foreclosures dominated the market, particularly in inland parts of California such as Riverside and San Bernardino. The trend for now is headed in the other direction. The firm DataQuick estimated that about half of the 8.1% annual gain in July’s median sale price could be attributed to the change in the mix factor.”
“PGA champion Tiger Woods has sold his condominium in Corona del Mar for $2,213,875. But like many other residential real estate owners, Woods landed in the rough when it came to selling a place bought before the housing downturn. Public records show he bought the property in 2004 for $3 million.”
The East Valley Tribune. “In a turnaround that may be nothing short of amazing, the price of the average home in Arizona rose more in the last year than anywhere else in the country. New figures today from the Federal Housing Finance Agency show a year-over-year hike in sales prices of 12.9 percent. And prices in just the last quarter are up close to 6 percent. What makes this particularly noteworthy is the same report issued exactly one year ago found exactly the opposite. The FHFA found prices had dropped almost 15 percent from the same time in 2010.”
“But Michael Orr said that there may be a bit less to the increase than the pure numbers show, at least as it affects the typical Arizonan. Orr, director of the Center for Real Estate Theory and Practice at Arizona State University, said much of the market is being driven by investors anxious for a bargain. As the inventory of affordable homes dries up, he said, the investors find themselves bidding against each other.”
“He said, though, that this double-digit price increase recorded by FHFA does not necessarily reflect what all homes in Arizona are bringing. Orr said the index tends to weigh heavier with the sale of new homes which are being financed with conventional mortgages. At the other extreme, he said the federal agency seeks to filter out ‘distressed’ sales forced by foreclosures. ‘It depends on what you measure,’ he said.”
“At the other extreme, he said the federal agency seeks to filter out ‘distressed’ sales forced by foreclosures. ‘It depends on what you measure,’ he said.”
Figures don’t lie, but liars do figure.
Looks like Tiger learned first-hand how a home sale by Dutch auction works:
Property History for 2616 OCEAN Blvd
Date Event Price Appreciation Source
Jul 31, 2012 Sold (MLS) $2,213,875 – CRMLS #U12001617
Jul 25, 2012 Sold (Public Records) $2,214,000 -3.6%/yr Public Records
Jul 11, 2012 Pending (Backup Offers Accepted) – – CRMLS #U12001617
Jun 28, 2012 Price Changed $2,345,000 – CRMLS #U12001617
Apr 23, 2012 Listed (Active) $2,495,000 – CRMLS #U12001617
Apr 27, 2004 Sold (Public Records) $3,000,000 29.9%/yr Public Records
Jun 13, 2001 Sold (Public Records) $1,416,000 15.6%/yr Public Records
Mar 09, 1999 Sold (Public Records) $1,020,000 – Public Records
“His plan has changed, so he put the condo on the market two months ago, for $299,000… 20 years ago…”
Either he owns the place outright by now or he needs the money badly. Berman, you are a little late for the selling party!
I can hear the massive hissing from the Canadian bubble all the way down here.
“We’re not in a hurry,”
Bwahahahahahaha! Wish I had a penny for every time I’ve heard or read that statement and similar ones from a scrude buyer over the course of this debacle. “We’re not in a hurry” “We don’t need to sell” “We’re not giving it away” “It’s for sale, but only at a price” “We’ll rent until the market comes back” “We can afford to carry it”
In other words “We’re scrude, but won’t admit it”.
Here is an interesting web site for information on San Diego inventory. It shows almost twice the number of homes compared to the 5,760 shown on Redfin, which supposedly lists all homes on the MLS, including foreclosures, plus for-sale-by-owner homes.
The Department of Numbers documents that San Diego inventory reached a bubble-era peak of 21,075 in August 2006, then subsequently dwindled to the historically low current level of 10,379; got shrinkage?
I don’t trust Redfin any more, especially since their CEO has come out as a housing market bottom caller.
San Diego Asking Price and Inventory History
Date Single Family & Condo
Inventory 25th Percentile
Asking Price Median
Asking Price 75th Percentile
Asking Price
August 2012 10,379 $249,900 $389,167 $711,667
July 2012 10,673 $247,680 $385,395 $701,400
June 2012 10,978 $244,500 $378,250 $692,498
May 2012 11,251 $239,944 $370,875 $674,250
April 2012 11,586 $237,180 $359,580 $647,699
March 2012 11,949 $233,725 $336,250 $617,250
February 2012 12,071 $230,450 $349,950 $601,750
January 2012 12,149 $231,257 $350,000 $598,180
December 2011 12,892 $234,750 $355,750 $613,450
November 2011 13,772 $239,225 $360,858 $621,975
October 2011 14,563 $239,940 $366,798 $627,760
September 2011 14,975 $244,000 $375,975 $644,473
August 2011 15,524 $249,358 $379,590 $649,683
July 2011 15,949 $249,225 $379,225 $649,600
June 2011 15,849 $249,675 $377,000 $649,675
May 2011 15,694 $245,975 $375,140 $646,580
April 2011 15,402 $241,644 $369,500 $631,725
March 2011 15,296 $238,475 $362,475 $607,475
February 2011 15,010 $235,475 $359,500 $599,450
January 2011 14,529 $237,400 $355,600 $591,400
December 2010 15,136 $239,950 $369,475 $615,969
November 2010 16,108 $244,400 $378,560 $640,780
October 2010 16,872 $247,625 $386,725 $655,975
September 2010 17,130 $247,075 $389,356 $668,475
August 2010 16,860 $249,900 $399,000 $683,300
July 2010 16,428 $249,675 $399,000 $693,000
June 2010 15,753 $248,975 $396,750 $690,975
May 2010 15,248 $245,600 $392,980 $690,320
April 2010 14,650 $240,859 $387,000 $678,600
March 2010 13,783 $236,960 $378,580 $672,360
February 2010 12,837 $234,500 $374,250 $662,475
January 2010 11,884 $233,750 $377,475 $693,750
December 2009 11,913 $235,225 $388,225 $738,000
November 2009 12,013 $240,680 $402,580 $778,800
October 2009 11,670 $246,000 $424,947 $827,750
September 2009 11,932 $245,000 $430,250 $840,750
August 2009 11,774 $247,400 $445,960 $875,600
July 2009 11,828 $234,225 $434,186 $862,498
June 2009 11,526 $236,900 $434,600 $865,958
May 2009 11,994 $239,750 $428,700 $843,500
April 2009 12,539 $227,500 $393,225 $777,225
March 2009 14,535 $217,160 $366,800 $691,400
February 2009 14,912 $215,750 $355,473 $663,000
January 2009 14,551 $223,037 $360,751 $668,064
December 2008 15,116 $229,991 $367,228 $673,341
November 2008 15,905 $236,721 $373,497 $678,447
October 2008 16,441 $243,675 $379,975 $683,725
September 2008 17,061 $249,737 $389,760 $696,200
August 2008 17,728 $256,975 $399,225 $699,000
July 2008 17,807 $269,200 $401,200 $699,000
June 2008 18,427 $279,360 $409,940 $690,122
May 2008 18,557 $284,475 $415,975 $683,250
April 2008 18,683 $294,622 $419,225 $675,000
March 2008 18,530 $299,580 $426,978 $669,980
February 2008 18,323 $312,372 $432,225 $654,500
January 2008 17,469 $325,750 $445,750 $658,750
December 2007 19,196 $336,780 $453,340 $674,380
November 2007 20,208 $347,225 $465,700 $686,220
October 2007 20,777 $354,900 $478,557 $695,335
September 2007 21,050 $369,100 $487,450 $699,000
August 2007 20,748 $377,000 $493,975 $702,200
July 2007 20,448 $381,380 $499,180 $716,500
June 2007 19,418 $385,000 $499,999 $729,647
May 2007 18,505 $387,725 $504,975 $733,497
April 2007 17,114 $389,400 $509,780 $737,115
March 2007 15,966 $389,475 $510,000 $741,200
February 2007 15,266 $389,850 $510,000 $743,350
January 2007 14,898 $392,279 $520,499 $749,000
December 2006 17,164 $393,725 $522,450 $748,725
November 2006 18,583 $395,000 $525,000 $749,000
October 2006 19,917 $398,980 $528,540 $749,180
September 2006 20,840 $399,000 $532,749 $749,699
August 2006 21,075 $399,450 $535,625 $749,925
July 2006 20,556 $399,960 $539,160 $750,000
June 2006 19,798 $399,900 $539,225 $750,000
May 2006 18,060 $399,360 $539,000 $749,960
April 2006 16,800 $399,000 $537,666 $749,946
Joe Blow is broke, so Joe needs to sell off his 10 cars. Joe’s cars, once valued at $150k, are worth $50,000. Joe can’t sell his cars for what he needs. The car fairy comes and gives Joe $150k for his cars. Joe is ecstatic. Party on, Joe. The car fairy takes the cars into car fairy inventory land. The car fairy loves cars, not money.
1) The housing bubble inflated as a result of debauched lending standards, allowing strawberry pickers to promise to pay millions of dollars (principle plus interest) for a house.
2) The government seeks to maintain those prices in order to keep the current financial system profitable. Additionally, it’s an easy way to get tax revenue.
Instead of trying to contain the damage to the predatory lenders and the muppet borrowers, the government actively seeks to make the rest of the us pay the price while protecting the culpable groups.
I say let the predators and muppets take their medicine, instead of making the rest of us take it.
I personally doubt any predicted future economic change with no fundamental support, especially when the prediction is based on a strawman description of current economic reality.
Take this one, for instance:
“Home prices rise to meet current rents.”
1) Home purchases are lump-sum transactions, making home prices versus rents an apples-to-oranges comparison.
2) Since home ownership costs are already above their rental equivalents in most places where people want to live, it will not be possible for home “prices” to rise to meet current rents.
3) With a flood of investment homes soon to enter the rental market and ongoing efforts by the PTB to artificially inflate purchase prices, a more plausible scenario is for increasing divergence in favor of an ever lower cost of renting versus owning.
Well, I have to admit. Obama kicked some ass.
$5 Trillion in debt, the Stimulus, TARP, HARP, HEMP, unlimited bailouts of Freddie and Fannie, bailing out the banks, bailing out Wall Street, etc.
Obama has done it. We have a new housing bubble.
All I can say - FOUR MORE YEARS!
‘We have a new housing bubble’
IMO it’s the same bubble. The psychology is what makes a mania, and note how quick people were to latch onto the first whiff of getting rich quick.
The same thing happened in Canada, Australia, China, London and New Zealand, among others. The mania stumbled, the govts/central banks stepped in and revived it. Of course, the greedy individuals are the ones building and buying houses.
So the question I have is how long this will last in the US? It’s really kind of minor and spotty. I suspect the collapse of AU/Asia and Canada will prevent a repeat of the Australian/China experience; the pending double dip recession also due to a lack of structural changes. But in any case, recovery has been set back by years. Millions more will default. Prices will probably over-shoot lower even further as a result.
Oh, and for the media types out there; this is the most significant economic story right now.
“…this is the most significant economic story right now.”
…and one which is highly unlikely to ever be mentioned at the RNC convention, as RP has been silenced. Besides, they need to allow plenty of time to continue hammering away at the birther issue.
http://www.youtube.com/watch?v=XDKWm92EvhU&feature=related
Text link, September 6, 2001:
http://paul.house.gov/index.php?option=com_content&task=view&id=393&Itemid=60
‘We are now witnessing the effects of the accumulated problems of thirty years of fiat money-not only the dollar but also all the world currencies-something the world has never before experienced. Exactly how it plays out is yet unknown. Its severity will be determined by future monetary management- especially by the Federal Reserve. The likelihood of quickly resolving the deeply ingrained and worldwide imbalances built up over thirty years is remote. Yielding to the addiction of credit creation (as has been the case with every market correction over the past thirty years) remains irresistible to the central bankers of the world.’
‘The monetary inflation of the 1900s produced welcomed profits of $145 billion for the NASDAQ companies over the five years between 1996 and 2000. Astoundingly this entire amount was lost in the past year. This doesn’t even address the trillions of dollars of paper losses in stock values from its peak in early 2000. Congress has expressed concern about the staggering stock-market losses but fails to see the connection between the bubble economy and the monetary inflation generated by the Federal Reserve.’
‘Instead, Congress chooses to blame the analysts for misleading investors. The analysts may not be entirely blameless, but their role in creating the bubble is minimal compared to the misleading information that the Federal Reserve has provided, with artificially low interest rates and a financial market made flush with generous new credit at every sign of a correction over the past ten years.’
‘By preventing the liquidation of bad debt and the elimination of mal-investment and overcapacity, the Federal Reserve’s actions have kept the financial bubble inflated. Of course it’s an easy choice on the short run.’
‘The Federal Reserve credit created during the last eight months has not stimulated economic growth in technology or the industrial sector, but a lot of it ended up in the expanding real-estate bubble, churned by the $3.2 trillion of debt maintained by the GSEs.’
‘The GSEs, made up of Fannie Mae, Freddie Mac, and the Federal Home Loan Bank, have managed to keep the housing market afloat, in contrast to the more logical slowdown in hotel and office construction. This spending through the GSEs has also served as a vehicle for consumption spending. This should be no surprise, considering the special status that GSEs enjoy, since their implied line of credit to the US Treasury keeps interest rates artificially low.’
‘ Ever since the fall of 1999, the Fed has monetized GSE securities, just as if they were US Treasury bills. This message has not been lost by foreign central banks, which took their cue from the Fed and now hold more than $130 billion of United States GSE securities. The Fed holds only $20 billion worth, but the implication is clear. Not only will the Treasury loan to the GSEs if necessary, since the line of credit is already in place, but, if necessary, Congress will surely accommodate with appropriations as well, just as it did during the Savings and Loan crisis. But the Fed has indicated to the world that the GSEs are equivalent to US Treasury bills, and foreign central banks have enthusiastically accommodated, sometimes by purchasing more than $10 billion of these securities in one week alone. They are merely recycling the dollars we so generously print and spend overseas.’
‘After the NASDAQ collapsed last year, the flow of funds into real estate accelerated. The GSEs accommodated by borrowing without restraint to subsidize new mortgages, record sales and refinancing. It’s no wonder the price of houses are rising to record levels.’
‘Even though significant price increases need not exist for monetary inflation to place a hardship on the economy, stock prices, housing prices, costs of medical care and education, and the cost of government have all been rising at very rapid rates.’
‘The deception regarding price increases is supposed to reassure us and may do so for a while. The Fed never admits it, and the Congress disregards it out of ignorance, but the serious harm done by artificially low interest rates–leading to mal-investment, overcapacity, excessive debt and speculation causes the distortions that always guarantee the next recession.’
‘Serious problems lie ahead. If the Fed continues with the same monetary policy of perpetual inflation, and the Congress responds with more spending and regulations, real solutions will be indefinitely delayed. The current problems, hopefully, will cause us as a nation and, in particular, Congress to reassess the policies that have allowed the imbalances to develop over the last thirty years.’
It seems like the consequences are coming home to roost.
PewResearchCenter
Released: August 22, 2012
The Lost Decade of the Middle Class
Fewer, Poorer, Gloomier
Chapter 1: Overview
As the 2012 presidential candidates prepare their closing arguments to America’s middle class, they are courting a group that has endured a lost decade for economic well-being. Since 2000, the middle class has shrunk in size, fallen backward in income and wealth, and shed some—but by no means all—of its characteristic faith in the future.
These stark assessments are based on findings from a new nationally representative Pew Research Center survey that includes 1,287 adults who describe themselves as middle class, supplemented by the Center’s analysis of data from the U.S. Census Bureau and Federal Reserve Board of Governors.
Fully 85% of self-described middle-class adults say it is more difficult now than it was a decade ago for middle-class people to maintain their standard of living. Of those who feel this way, 62% say “a lot” of the blame lies with Congress, while 54% say the same about banks and financial institutions, 47% about large corporations, 44% about the Bush administration, 39% about foreign competition and 34% about the Obama administration. Just 8% blame the middle class itself a lot.
Their downbeat take on their economic situation comes at the end of a decade in which, for the first time since the end of World War II, mean family incomes declined for Americans in all income tiers. But the middle-income tier — defined in this Pew Research analysis as all adults whose annual household income is two-thirds to double the national median — is the only one that also shrunk in size, a trend that has continued over the past four decades.
In 2011, this middle-income tier included 51% of all adults; back in 1971, using the same income boundaries, it had included 61%. 2 The hollowing of the middle has been accompanied by a dispersion of the population into the economic tiers both above and below. The upper-income tier rose to 20% of adults in 2011, up from 14% in 1971; the lower-income tier rose to 29%, up from 25%. However, over the same period, only the upper-income tier increased its share in the nation’s household income pie. It now takes in 46%, up from 29% four decades ago. The middle tier now takes in 45%, down from 62% four decades ago. The lower tier takes in 9%, down from 10% four decades ago.
…
With “recoveries” like this one, who needs depressions?
P.S. IT’S BUSH’S FAULT.
U.S. Incomes Fell More in Recovery, Sentier Says
By Jeff Kearns - Aug 23, 2012 1:21 PM PT
American incomes declined more in the three-year expansion that started in June 2009 than during the longest recession since the Great Depression, according an analysis of U.S. Census Bureau data by Sentier Research LLC.
Median household income fell 4.8 percent on an inflation- adjusted basis since the recession ended in June 2009, more than the 2.6 percent drop during the 18-month contraction, the research firm’s Gordon Green and John Coder wrote in a report today. Household income is 7.2 percent below the December 2007 level, the former Census Bureau economic statisticians wrote.
“Almost every group is worse off than it was three years ago, and some groups had very large declines in income,” Green, who previously directed work on the Census Bureau’s income and poverty statistics program, said in a phone interview today. “We’re in an unprecedented period of economic stagnation.”
While gains in hourly earnings and average hours worked per week may have had “a minor mitigating effect” on income declines, they couldn’t offset a jobless rate that hasn’t fallen below 8 percent since February 2009 and a record duration of unemployment, according to the Annapolis, Maryland-based firm.
The average duration of unemployment increased to a record 41 weeks in November and remains at 39 weeks, Labor Department data show. Almost 5.2 million Americans have been out of work for at least six months.
Earnings Drop
Real median annual household income fell to $53,508 from $54,916 during the 18-month recession from December 2007 to June 2009, according to the firm’s study of income data for the 36- month period ended in June 2012. Incomes kept falling during the 36-month period since then, dropping to $50,964 in June 2012.
Men living alone experienced the worst drop in income, losing 9.4 percent, while married couples fared best with a 3.6 percent decline, the report shows. Incomes are before tax and adjusted for changes in consumer prices and expressed in constant June 2012 dollars.
“Median annual household income declined significantly for both family and non-family households,” Green and Coder wrote. “Real median annual household income declined more significantly for younger households.”
…
Men living alone experienced the worst drop in income
Or perhaps that could be rephrased as men who experiencing the worst drop in income also unexpectedly experienced living alone.
But Ron Paul is insane…(according to anti-capitalist HBBers here, they know who they are. I know who they are)
“The Lost Decade of the Middle Class”
Let’s ignore this negative Nelly crap, and get on with what’s important- cutting taxes for the wealthy.
“But Ron Paul is insane…(according to anti-capitalist HBBers here, they know who they are. I know who they are)”
Not only them, Bill, but also the ultra rightie Smithers find RP insane.
Ron Paul is the only sane member of Congress. It is depressing that he often has difficulty expressing his thoughts in an upbeat and “salable” way. He ideologies are spot on, in terms of the net effect of FED interference in the markets.
Unfortunately, it takes a long time for bad decisions to work their way into the market and melt it down.
BAd decisions carry from one administration to the next and I see that often the wrong party gets the blame.
Ron Paul should have gotten a Nobel Peace Prize for trying to save us from financial collapse, but, no, the “peace president”, gets nominated after leaving his first term as a US congressman because ????
Oh, he got really good grades in college after immigrating from indonesia. No? That’s not it?
‘the Federal Reserve has provided artificially low interest rates and a financial market made flush with generous new credit at every sign of a correction over the past ten years’
Isn’t this what we are still doing Bronco? What is it they say of someone who keeps trying the same thing, over and over, expecting a different result?
I don’t disagree, Ben. My point is there is a very small sliver of the population that understands this and agrees with RP’s position.
Apparently Warren Buffett is going long(ish) on RE:
http://live.wsj.com/video/why-buffett-is-betting-big-on-housing/432BAEE2-88DB-4382-9496-2DA9F86E3047.html?mod=wsj_article_tboright#!432BAEE2-88DB-4382-9496-2DA9F86E3047
Any idea what his angle might be? Maybe a “hit and run” profiting on the next dead cat bounce? Could he actually be drinking the Kool-aid?
‘Last year, Buffett said the real estate market would recover in 2011 or early 2012. While home sales have risen recently, it would be a stretch to call the past year a recovery, and Buffett doesn’t try. “I was dead wrong,” he writes’
http://finance.fortune.cnn.com/2012/02/25/buffett-on-housing/
“Any idea what his angle might be?”
And for a more serious answer to “what his angle might be,” I refer you to the MSM echo chamber’s reverberating housing recovery mantra. Too bad that no thought whatsoever underlies any of the data-driven commentary.
New-Home Sales Rose Sharply in July 2012, Adding to Housing Recovery
Aug 23, 2012 11:48 AM EDT
Builders sold 25 percent more new homes in July 2012 than they did in July 2011. Daniel Gross on housing’s comeback.
Here comes housing—again. On Wednesday the National Association of Realtors reported that existing-home sales rose in July—up 2.3 percent from June and up 10.4 percent from July 2011. On Thursday the Census Bureau reported that new-homes sales were up by a much more significant margin.
Sales came in at an annual rate of 372,000. That’s up 3.6 percent from June’s total of a 359,000 annual rate (which itself was revised upward from the initial report of a 350,000 rate). More important, the July 2012 figure was up a whopping 25.3 percent from the July 2011 figure. In fact, through the first seven months of this year, new-homes sales are up 21 percent from the first seven months of 2011.
While new-home sales are still far below their bubble-era peak—back in the golden years of 2005 and 2006, new home sales topped 1 million—something is clearly happening. The pace of activity is rising. Inventory is falling. At the end of July there were only 142,000 completed new homes for sale. That’s down from 165,000 in July 2011, a 14 percent decline. For each of the past 12 months, the inventory of available homes for sale has declined, while the pace of sales has been rising. At the current rate of sales there are only 4.6 months’ worth of new supply on the market; a year ago, there were 6.7 months’ worth.
…
Depends on their idea of “recovery.” They aren’t going to find a 2003-2006 recovery. At best we can expect an inflation-driven recovery, along with the acceptance that the new housing normal is a higher % of income than in the past.
“…along with the acceptance that the new housing normal is a higher % of income than in the past.”
That sounds to me like homeowner optimism. When you reflect on the extraordinary measures Uncle Sam has recently undertaken to prop up housing prices at their recent historically anomolous levels, the question becomes whether such measures are sustainable, either politically or economically.
Unless it turns out that the bubble is here to stay, a more plausible future trend is overshooting to a point where housing costs fall below their traditional share of 30% of household income, followed by a reversion to historic norms.
I don’t know, p-bear. But I’m not sure that it’s homeowner optimism, because the standard of living is not limited to housing. Look at the price of food, of gasoline, health insurance, college, etc. Meanwhile, incomes are stagnant, mainly because career jobs have been outsourced leaving only lucky duckie jobs.
I’m tired of hearing that this is “unsustainable.” HBB has been saying it’s unsustainable for — how long? 5-6 years? And yet it’s been sustaining. And it seems that the rest of world is in even worse shape, assuring that we will sustain even longer.
‘And yet it’s been sustaining.’
‘The average American family’s net worth dropped almost 40% between 2007 and 2010, according to a triennial study released Monday by the Federal Reserve. The stunning drop in median net worth — from $126,400 in 2007 to $77,300 in 2010 — indicates that the recession wiped away 18 years of savings and investment by families.’
‘Much of the drop off in net worth — to levels not seen since 1992 — was attributable to a sharp decline in housing values, the Fed said.’
http://money.cnn.com/2012/06/11/news/economy/fed-family-net-worth/index.htm
“…along with the acceptance that the new housing normal is a higher % of income than in the past.”
…
” Look at the price of food, of gasoline, health insurance, college, etc. Meanwhile, incomes are stagnant, mainly because career jobs have been outsourced leaving only lucky duckie jobs.”
Your second point undercuts the first. If incomes are stagnant and the prices of the other components of a decent standard of living, such as food, gasoline, health insurance, college, etc are going up in price, that leaves a smaller share of income available to pay for oversized, overfurnished, overpriced housing.
“‘Much of the drop off in net worth — to levels not seen since 1992″
Right where prices are headed…. early 1990’s levels.
IMO it’s the same bubble.
That’s my take too. It was about to pop nationwide, but we “saved” it and only a few of the very weakest hands had to take a loss. They’re still trying to shove most of the loss onto the rest of us.
“They’re still trying to shove most of the loss onto the rest of us.”
The bubble cannot properly be relegated into the lens of history’s rear-view mirror until the bagholder identification process is complete.
“IMO it’s the same bubble.”
” Homes between $300,000 and $800,000 surged 13.4%. Sales of homes costing more than $800,000 rose 7.2%.”
Pretty much says it all right there.
I found a note inviting me to come back and say ‘hi!’
1. This is a pre-election pause. This winter will be bad (Sequestration anyone?) I’m one of the 2 million who do not know if they have a job in 2013. Thankfully I have contacts. (Of the 2 million, most don’t even yet realize they are at risk either… I suspected and now know I’m at risk, so I at least have time to react.)
2. I know too many families trapped by their home. Only insanely low interest rates are keeping the market alive her in California.
3. I should have listened to the guns, butter, and gold crowd when this all started…
Got Popcorn?
Neil
Wow, great to hear from you.
What we can’t seem to figure out around here is whether TPTB can make the “insanely low interest rates” permanent. So far it would seem maybe they can…
Hi Neil!
I am also one of those 2,000,000 and positioned myself so that I can be without a job the next 12 years. My contract was officially extended to December 31 but I know things can rapidly change in the next two months. I am ready to spend time at home full time in Phoenix in case of the layoffs affecting me.
Renting all this time has really paid off. This fall if I get knocked out ofmy job, I will know that my sixteen years of renting and 12 years of living far below my means has paid off. You are right. Many people ignored the macro economy and the credit crisis and instead took on deep obligations. I do have an excellent recruiter. But I found I have a 45% markup. My staffing company is milking me and has every incentive to keep me. I will take it for awhile. Still squirreling away cash!
Ran out of popcorn.
P.s. you and I are hated by many HBHers simply because we work in defense, which is a necessary expenditure for a America if we are to have a government (”provide for the common defense.”). But slob types expect us to work without pay.
Wrong. Nobody hates Neil. You are hated because you are a gloating a$$hat.
Ef u. You are one of the haters
Truth hurts, huh Bill?
Nice job of proving Grizzly right, Mr. Bill.
Pretty sure the two of you proved him right.
Really? His comeback, to facts that were presented, was to say eff u. Very witty, I must say.
Just saying that because he was called an a$$hat.
By the way, what exactly is an a$$hat? I prefer a$$ clown, but I’m not really sure what that is either.
No, we expect you not to be a hypocrite.
BiLA = “Lets get rid of government…….except of course, the part of government that sends me paychecks….”
If you work for DOD, you’ve been on the gravy train since Reagan. Come out and play with all of us in the civilian world, and see how the wretched refuse lives.
Ed u too. Another hater. I hate you back
Bill,
He’s making a point. Why not repudiate it?
Don’t bother, GS, everyone who suckles at the government’s teat feels they are entitled and that they deserve it.
It’s worse than that, GS-fixer. Bill the Nomad could easily quit his job now and take his pile and still be an a$$hat.
He needs to give all that government contractor money back and THEN play with the civilians before coming close to countering the hypocrisy.
I don’t see it that way because I’m pretty sure he could have made just as much and piled it up just as much in a normal civilian tech career using the same techniques.
Thank you, Carl, for soothing the vitriol with a voice of moderation.
Maybe, Carl, but that has to remain a thought experiment.
As for vitriol, p-bear, save it for those who have been lording it over us for years, scolding us for making bad life choices like getting married, having a child, staying in one place more than 6 months, not being lucky with the college major, and thinking of more important things than six-pack abs and whether we have $60K or $600K in the bank.
But taunting aside, here’s what I’m really afraid of: I’m afraid that his lifestyle will become the new normal. We’ll all be single childless migrants, or shacking up with family, just to “live within our” ever lowered “means.” It’s a slippery slope. In the 70’s, two incomes were a luxury, now it’s a necessity. We used to move every 3-5 for a promotion, now we move just to stay employed (at least I did.) Moving in with family is making a comeback. College degrees, with loans, hadn’t been necessary, now they are. 30-day revolving credit is the standard, not an emergency. Just a few moths ago HBB was haranguing a young couple from a newspaper article for, god forbid, having ONE child. How dare they. We’re already on the road to Bill the Nomadism; and it looks like there’s no stopping.
“As for vitriol, p-bear, save it…”
I save vitriol for trolls who post BS here, and stay out of squabbles between regulars; I am familiar enough with the regular cast of characters who post here to respect them for who they are, and have no desire to pile on when sibling conflict arises.
You don’t work in defense. You work for the WAR DEPARTMENT. With military bases/presences in over 130 countries, at least have the cahones to call it what it is.
I’m starting a movement to rename the department of defense back to it’s original name. It’s more accurate at this point.
My goodness Neil, where have you been ??
Neil!
Yes, we have popcorn!
Neil! Awesome! Great ta seeya, bro’.
I’m a long time lurker who gained 5 pounds eating popcorn and reading the bubble blog. Finally I lose the weight and ooops…. neil is back.
Prices have moved rapidly in New Zealand but its still seen by some as undervalued.
Take the Auckland “hot” suburb of Onehunga, where it’s tough to find a standalone place under $NZ500k ($us400k). This is one of the few.
http://www.realestate.co.nz/1844968
The thing is that suburbs like this are trendy and considering Aucklands attraction as an international city it is still good value. Olive trees, fruit trees, a harbor view and a safe quiet area… Most people in first world countries would say that’s a good deal. Prices aren’t bad when you put the NZ lifestyle into the mix … and th only people who carry guns around the streets are the police - and even they keep them in the car trunk..