What Triggered This Whole Seize-Up
Readers suggested a topic on the election. “Will the housing market impact of next week’s election outcome be major, minor or inconsequential? For instance, if Obama wins, will he stay the course on recent interventions? If Romney wins, will there be any significant policy changes?”
I said, “I see reports asking why the candidates aren’t talking about housing. But there are some big issues: the fate of Fannie and Freddie. Bernanke’s role at the Fed and the QE/zero interest rate policy. A lot gets said about the jobs/economy, right? But how huge is this idea that the central bank has that housing prices will save the economy? Shouldn’t that get a lot of attention in an election?”
A reply, “I think that no one is talking about housing for the same reason they’re not talking about illegal immigration. It’s just too fraught an issue to bring up during the campaign. But AFTER the election? That’s going to get interesting.”
One had this, “Who is Obama’s man at the Federal Reserve? Bernanke. Romney says Bernanke is GONE. And good riddance. A huge difference. There are major differences in ideologies. Obama: everything should be done by more government agencies, and more government debt and spending. Romney: cut back on government agencies. Stop putting the taxpayer on the hook for stupid lending ideologies of Fannie and Freddie.”
A reply, “So who is Romney going to put in charge of the Fed? Someone who will inflict austerity on the banks by slamming the bars on the Discount Window, casting AIG adrift, and sinking the QE? I think not…”
Another asked, “So, Japan has had ZIRP for 20-some years. However, IIRC, they typically run in a mild deflationary environment. Here, we’ve had ZIRP for about four years now. And we run in around a 2% inflation environment, at least (excluding the necessities - food, housing/rent, medical, education, energy, and even it seems to me, clothes).”
“How long will the populace, and the 800 lb silverback in the room - seniors - accept this level of wealth erosion?”
Finally, “I personally think that the prior 4 years were masked somewhat through the recovery in the stock market. If we have 4 years of stagnant stock market, ZIRP, and 2%+ inflation, we will see a big shift in sentiment toward a candidate who runs on a ‘fix the deficit’ platform.’”
The Atlantic. “As hard as Florida’s swing against Obama seemed, there were actually just two counties in the state that went from voting for him to voting for Republican Gov. Rick Scott: Volusia, which contains Daytona Beach, and Flagler, its neighbor to the north. Driving down the main streets here, it’s not hard to see why. It’s still the tail end of tourist season but so much is closed for good. Restaurants boarded up. Dilapidated motels. A former car dealership; a furniture store in the last throes of a going-out-of-business sale. When people aren’t buying houses, they don’t buy much new furniture.”
“The median home price, which peaked in 2006 at $175,000 and now is less than $80,000 and still declining. Even as the rate of foreclosure has slackened in most parts of the country, in Florida, it’s double the national average and rising. The unemployment rate, 8.7 percent, is 13th highest in the country. The growth that powered the state’s economy in the boom years — jobs in tourism and construction and real estate, along with a no-income tax policy — was essentially a Ponzi scheme that collapsed, leaving everyone holding the bag.”
“Many economists argue that the Obama administration’s failure to act more aggressively on housing is the No. 1 reason the recovery has not been quicker or more complete. Obama himself in a recent interview called the effort on housing ‘modest,’ in the course of attacking Romney for having said he would do even less. And so in Florida, on the central economic issue the state faces, Obama finds himself with nothing much to sell.”
“‘I voted for Obama. Everything sounded so lovely. We needed a change,’ said William Archiello, a 55-year-old van-service owner who votes in Florida but still spends half the year in his native New Jersey. ‘He fooled me.’ Archiello sees evidence all around that things have never been worse. ‘Every three days, someone knocks on my door — ‘Can I clean your pool? Can I cut your palm trees?’ he said. ‘I own four rental properties — that was my retirement. Now the value is down 65 or 70 percent and I can’t retire. I’ll be working until it bounces back.’”
“And then there was Debbie Clark, a 58-year-old retired paralegal. ‘I think Romney is a puppet, an idiot, not up to date,’ she said. ‘He’s so out of touch with the 21st Century.’ She voted for Obama four years ago and was determined to do so again.”
From Cincinnati.com. “The costs of the housing crisis remain steep in Greater Cincinnati and across the nation, yet the presidential candidates barely touch on the topic. ‘I find it absolutely remarkable,’ said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio. ‘If you look at what triggered this whole financial market seize-up, it was housing.’”
“Since 2006, Greater Cincinnati homeowners have joined families nationwide who’ve lost $7 trillion in home equity. One in four local families – 111,397 in all – are ‘under water’ on their mortgages. That cripples their ability to refinance at today’s historically low rates or sell their homes, leaving them vulnerable to foreclosure if their finances take a downturn.”
“With all this at stake, then, why isn’t more being said on the campaign trail – especially in Ohio, a key swing state? Obama’s recent speeches in Ohio suggest housing is not top-of-mind for him. He talks about the automakers’ bailout. He talks about struggling middle-class families’ search for jobs and their tax burden. But the literal roof over those families’ heads? Not so much.”
“Obama’s Republican challenger hasn’t taken up the cause of struggling homeowners, either. In fact, Romney had this to say during his primary campaign: ‘Don’t try and stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up, and let it turn around and come back up.’”
“Romney recently released a white paper on housing that includes a two-page plan. It says he will reform Fannie Mae and Freddie Mac, which guarantee most home loans, and ‘bring clarity’ to foreclosure alternatives. Details are nonexistent. The plan says that putting people back to work is the best solution to the housing crisis.”
“Roger Davis of Fairfield, a retired police officer, is one of millions of Americans looking for answers. He has pinched pennies to keep up payments on the house he and his wife bought five years ago. Their home has lost so much value in the years since that the family is now underwater. Davis is disgusted that his bank hasn’t met him halfway by allowing him to refinance. ‘People are walking away from their homes – we’re not doing that, and we’re getting penalized,’ Davis said. ‘We’re trying to be good Americans.’”
“Shaun Bond, director of the University of Cincinnati’s Real Estate Center, said banks are in the business of making a profit. He and others point out that there’s a question of ‘moral hazard’: Writing down the principal would reward those who bought more house than they could afford.”
“Even some underwater homeowners agree government shouldn’t be in the business of bailing them out. Allan and Jody Hensley of Sharonville, who married two years ago, are trying to sell her former house in Price Hill. Even though they’re going to take a loss on it, Allan Hensley wants only one thing from the politicians: ‘I think the biggest solution is to get this economy turned around.’”
Davis is disgusted that his bank hasn’t met him halfway by allowing him to refinance. ‘People are walking away from their homes – we’re not doing that, and we’re getting penalized ??
I have often wondered why ( assuming we are going to have any government intervention in this mess ) they did not focus on interest rate support…IMO, if the focus was on reducing the underwater owners interest rate significantly, there would be incentive to stay in the game and continue to pay down the principal…At some point, you would no longer be underwater…
This is extreme but I use it only as a example…Interest rate is reduced to “zero” for 7 years…After that the interest rate goes to 5-year T-Bill + 2%…Owner stays in the house and keeps up the maintenance because they has a vested interest and the next 84 monthly payments go directly to principal pay-down…
Bank/Lender gets principal back and in theory, would have a more stable and sale-able loan after 7 years…
I don’t think he’s after a lower interest rate:
‘Davis is disgusted that his bank hasn’t met him halfway’
Halfway to what? Split the loss? As far as refinancing, that’s being done through the GSE’s where greater than 100% of LTV is loaned. Here’s a couple of problems; that takes a bad loan from the lender and puts it on the GSE balance sheet. They are already broke, so who’s gonna pay the for the re-default, which can be as high as 50% of the time. And that’s just a year or two into these programs. How many will re-default in 10 years, or 15?
Another problem is not many people want to refinance an underwater loan. They either walk away or want principle reduction. Here’s what’s problematic about loan mods:
‘There were 10.8 million homeowners who owed more on their mortgages than their home was worth in the second quarter of the year, down from 11.4 million in the first three months of 2012, CoreLogic said. That accounted for 22.3 percent of properties, down from 23.7 percent. An additional 2.3 million borrowers had less than 5 percent equity in their homes, considered to be near negative equity.’
‘The large number of underwater homeowners - also known as being in negative equity - has raised concerns borrowers could choose to walk away from their homes rather than struggle with burdensome mortgages. But most underwater borrowers are continuing to pay their mortgages, the report showed. The share of homeowners that were underwater and up to date on their payments was 84.9 percent, up slightly from 84.8 percent in the first quarter.’
If you start reducing balances, everyone is going to want one, or will likely stop making payments. Loan defaults could increase 7-800%. Plus, loan mods just lower overall prices eventually. The govt./central bank is trying to raise prices, not lower them.
It’s sort of a game, with politicians pretending to care, and be ‘doing something,’ hoping that the ’share of homeowners that were underwater and up to date on their payments’ keep sending in the checks.
2.3 million borrowers had less than 5 percent equity in their homes, considered to be near negative equity ??
Near ?? Thats is in effect negative equity when you consider cost of sale so add that group to the 10.8 million and you have 13.1 million homeowners with negative equity…Thats a lot of roof tops…
Who is the Fed buy $40 billion of mortgage paper a month from? The GSEs, or is it old paper from banks?
Does the answer matter if the GSEs are in the business of buying paper from the banks?
Bank => GSE => Fed
“They are already broke, so who’s gonna pay the for the re-default, which can be as high as 50% of the time. And that’s just a year or two into these programs. How many will re-default in 10 years, or 15?”
Will the Fed’s $40 bn / month QE3 purchase of MBS possibly bury these losses in some stealthy manner?
Plus, loan mods just lower overall prices eventually. The govt./central bank is trying to raise prices, not lower them.”
I don’t know about that. it keeps homes off the market which supports prices.
‘People are walking away from their homes – we’re not doing that, and we’re getting penalized,’ Davis said. ‘We’re trying to be good Americans.’
Public safety workers retire early in life, so a second career in a consulting role utilizing previous experience is an option. However, a bankruptcy on his credit rating will ruin that opportunity due to the security clearance going poof; he’s looking out for [his] future, not trying to be a good American. Nice try, Roger.
“Bank/Lender gets principal back and in theory, would have a more stable and sale-able loan after 7 years…”
Nice plan, scdave, except for that whole business-has-to-make-a-profit model. You know, the basis of a capitalist economy? Your plan pretty much says the banks are either insolvent, or have no profits. That has a fairly direct effect on, oh gee, their stocks. Their stocks are all worth ZERO.
That’s why everything devolved down to screwing the taxpayer, and why screwing the taxpayer was also delayed by using massive government borrowing. One solution was put off on somebody else (the taxpayers), and that meta-solution was then put off on somebody else again (the sons and grandsons of taxpayers), etc. All part of kicking the can down the road.
I truly believe now that there’s only one chance that a Libertarian will actually get elected into a high national office, and that’s just in time to take all the blame for the massive collapse that our delays are building. Just like the Republicans are deferring to Obama to let him take part of the blame for the inevitable problems of the next 4 years, eventually both major parties will retreat right before the collapse and let a period of utter chaos reign, over which Libertarians will rush in, naively believing the people have elected them, but in actuality, they will be setup to take the ultimate blame for stuff like a total collapse of common government services (while taxes will still be collected, even violently, and pensions and benefits and contracts will be paid behind the scenes).
After all, when you’re borrowing 40% of your federal budget for years on end, a near-total collapse of government services is inevitable.
“You know, the basis of a capitalist economy? Your plan pretty much says the banks are either insolvent, or have no profits. That has a fairly direct effect on, oh gee, their stocks. Their stocks are all worth ZERO.”
Letting failed businesses go to ZERO without bailout support is also a part of the basis for a capitalist economy. If it works well to achieve the potential benefits of free market capitalism in the fishing or restaurant industries, then why not test it out the approach in banking?
Obama: everything should be done by more government agencies, and more government debt and spending
That is a myth. Federal spending has actually risen much more slowly under Obama than Bush and by some studies, more slowly than any President since Eisenhower.
http://cdn.factcheck.org/UploadedFiles/2012/06/Federal_Spending_Bush_Vs_Obama.png
Who Is The Smallest Government Spender Since Eisenhower? Would You Believe It’s Barack Obama? Forbes
It’s enough to make even the most ardent Obama cynic scratch his head in confusion.
Amidst all the cries of Barack Obama being the most prolific big government spender the nation has ever suffered, Marketwatch is reporting that our president has actually been tighter with a buck than any United States president since Dwight D. Eisenhower.
http://www.forbes.com/sites/rickungar/2012/05/24/who-is-the-smallest-government-spender-since-eisenhower-would-you-believe-its-barack-obama/
Darn those facts.
This is misleading. A statistic without context. Obama is not thrifty. What’s missing is the mention that he picked up the massive spending ball where Bush II’s admin left off and sped it up. I remember him telling Bush to leave the unspent bailout money on the desk for him. The guy is a spendthrift, as was Bush.
He’s a debt junkie that wants to make everyone else debt junkies.
Step up for your enslavement. Be a patriot. The empire needs more debt junkies.
Obama is not thrifty…I remember him telling Bush to leave the unspent bailout money on the desk for him.
Getting a little desperate? Cognitive dissonance hurts, eh?
Obama’s the tightest pres with a buck since Eisenhower.
Ooh! The pain! It must be untrue somehow! Make it stop!
The Anti Keynsian Kenyan, is he?
I know you enjoy lying with the “facts” and have a few drones who chime in to say “see, I knew it. It’s a Fact”. But your presentation, as usual, is slanted and doesn’t present a true picture of actual spending.
Rate of Increase in spending is a relative number.
What determines REAL SPENDING is the dollar amount.
And what is really most disconcerting is the DEFICIT amount. Obama is by far the Worst.
The numbers are skewed because BUSH II left his final year with a 1.4 trillion dollar deficit, that many say should be credited to Obama. If Obama had zero rise in spending, he would still be SPENDING the highest amount in history of deficit spending for ALL 4 years. The article tries to claim the Bush data was added to Obama, but was not.
HERE is a breif summary of DEFICIT SPENDING under the last years of Bush and Obama:
Obama Deficits Bush Deficits
FY 2013*: $901 billion FY 2009†: $1,413 billion
FY 2012: $1,089 billion FY 2008: $459 billion
FY 2011: $1,300 billion FY 2007: $161 billion
FY 2010: $1,293 billion
Although the federal deficit is the amount each year by which federal outlays in the federal budget exceed federal receipts, the gross federal debt increases each year by substantially more than the amount of the deficit each year. That is because a substantial amount of federal borrowing is not counted in the budget. See here.
Note:
* Federal Deficit is budgeted.
† Some people have emailed to insist that the FY 2009 deficit should be assigned to Obama. Good point.
And just for a good comparison, here is an article from the Same publication, by another author,just a few months ago, that completely disputes the claims of your article, because we are talking about DEFICITS, i.e., spending money you don’t have:
http://www.forbes.com/sites/jamesglassman/2012/07/11/the-facts-about-budget-deficits-how-the-presidents-truly-rank/
It confirms that OBAMA is the Biggest deficit spender, which is what counts, because OUTGO exceeds reciepts by TRILLIONS of dollars, something no one else could match. OBAMA, dead last in fiscal responsibility.
A short quote:
As for spending itself, during the George W. Bush years (2001-08), federal outlays averaged 19.6 percent of GDP, a little less than during the Clinton years (1993-2000), at 19.8% and far below Reagan, whose outlays never dropped below 21 percent of GDP in any year and averaged 22.4%. Even factoring in the TARP year (2009), Bush’s average outlays as a proportion of the economy was 20.3 percent – far below Reagan and only a half-point below Clinton. As for Obama, even excluding 2009, his spending has averaged 24.1 percent of GDP – the highest level for any three years since World War II.
Americans can judge for themselves whether deficits are “enormous”– but only if they have the facts. In this case, there is no denying the order in which the last five presidents rank on the basis of deficits: Clinton, Bush 43, Bush 41 and Reagan in a virtual tie, and Obama.
end of excerpt.
So, there you have it. OBAMA, the HIGHEST percent of GDP spending for any 3 years since WWII. Highest, not lowest.
His spending is OUTRAGEOUS. So, stop trying to lie for the guy. It makes you look stupid.
(Obama’s historically slow growth in spending) A statistic without context. (Pres. Obama) picked up the massive spending ball where Bush II’s admin left off
No. Your comment is misleading and absent context because it does not acknowledge the context of history.
1. Obama inherited the Great Recession, 2 Wars and a gutted tax base.
2. Obama’s historically slow growth in Federal spending is extraordinary. Your argument that he picked up a “spending ball” and ran with it is made moot because EVERY President prior to Obama “picked up the massive spending ball” where his predecessor left off. You think Obama was the only president who was left a “spending ball” from a prior president? No.
So my point stands:
Obama’s spending rose more slowly than under any President since Eisenhower, notwithstanding the “spending ball” Obama inherited.
His spending is OUTRAGEOUS. …..It makes you look stupid.
No. What makes YOU look stupid is not acknowledging that most of Obama’s spending is due to policies and wars started before he took office. These are facts. Then throw in the Recession and the TaxCutsForTheRich and Corporations and we have a massive deficit. Deal with it.
“What makes YOU look stupid is not acknowledging that most of Obama’s spending is due to policies and wars started before he took office.”
Sorry, false. Mathematically and legally false. Obama is the commander-in-chief of the US armed forces. He could have stopped the wars with a couple of phone calls. And his government was raking in over $2 trillion in actual revenue each year. These monkeys can’t run things on that sort of money? It’s because they have no will to cut the fluff, like the Export-Import Bank.
I’m tired of watching Liberals make excuses for Obama’s apparently total lack of executive power, leadership and so on. Maybe we should have let Bush remain in office since Liberals are implying he’s the last guy who actually had executive power.
And before you ask, no, I didn’t vote for Bush, I didn’t vote for McCain, and I won’t vote for Romney. I keep voting for Ron Paul or the Libertarian Party, whichever will put an end to this runaway fiscal train.
Obama is the commander-in-chief of the US armed forces. He could have stopped the wars with a couple of phone calls.
“Could have”? So because Obama “could have” that means he should have? Of course not.
You don’t stop 2 major wars on a dime for politics or to save money. Why not? The mission, the troops, the responsibility, the national reputation, the invaded country’s well being after being shellacked by us, Iran’s eye on Iraq, the oil, the rebuilding of the Taleban etc etc.
Obama would have been pilloried by the right if he instantly “stopped the wars with a couple of phone calls.”
Obama’s apparently total lack of executive power
It’s funny when the right describes Obama as a “Dictator” who lacks leadership and under-uses his executive power.
It’s like saying the Democrats want to raise taxes on the rich but don’t want to pay for it.
Rio, you’re only proving what I just said. Obama is the CINC of the US military. He has no superior officer in his chain of command; the chain ends with him. He doesn’t need to consult with the Congress when making a military decision, even to attack an entire nation (in the past the President would have to seek Congressional approval, but we unconstitutionally just skip that now).
So other than inheriting 2 wars which require spending, spending, spending, he won’t stop them, meaning he supports them. And that was the other point.
So which one is it, Rio? Obama is powerless by choice, or he supports the Bush spending regime by choice. It’s gotta be one of those. WHICH ONE?!
So which one is it, Rio? Obama is powerless by choice, or he supports the Bush spending regime by choice. It’s gotta be one of those. WHICH ONE?!
Again…this one:
You don’t stop 2 major wars on a dime for politics or to save money. Why not? The mission, the troops, the responsibility, the national reputation, the invaded country’s well being after being shellacked by us, Iran’s eye on Iraq, the oil, the rebuilding of the Taleban etc etc.
You don’t stop 2 major wars on a dime for politics or to save money.
+1, Rio. I said as much on the day we first went into Iraq. I thought it was a mistake to invade, but once we had done it, would couldn’t just withdraw immediately.
It amounts to the same principle that applies when you walk into a store: you broke it, you bought it.
National reputation?
LOL!
A couple of drone strikes ought to take of that.
Hurricane Sandy and the Myth of the Big Government-vs.-Small-Government Debate
by Matt Taibbi
In the abstract, most Americans want a smaller and less intrusive government. In reality, what Americans really want is a government that spends less money on other people.
Hurricane Sandy is a perfect, microcosmic example of America’s attitude toward government. We have millions of people who, most of the year, are ready to bash anyone who accepts government aid as a parasitic welfare queen, but the instant the water level rises a few feet too high in their own neighborhoods, those same folks transform into little Roosevelts, full of plaudits for the benefits of a strong state.
The truth is, nobody, be he rich or poor, wants his government services cut. Drive up and down route 128 outside Boston, you’ll see a lot of affluent white people waving Romney signs, complaining about entitlement spending. But about four thousand percent of those same people working along the high-tech ring there are totally dependent on the Pentagon contracts that keep doors open at companies like Raytheon and General Dynamics.
Here in the tri-state area, and especially in the lower Manhattan region I’m staring at out my window right now, you’ll get much of the same – lots of whining now about deficit spending and the parasitical 47%, but also conspicuous silence a few years ago, when in one fell swoop, taxpayers had to spend about twice the amount of the annual federal budget just to save bonus seasons on Wall Street for the few thousand of our local assholes who nearly blew up the world economy.
http://www.rollingstone.com/politics/blogs/taibblog/hurricane-sandy-and-the-myth-of-the-big-government-vs-small-government-debate-20121101#ixzz2BB8jGWQ5
‘the instant the water level rises a few feet too high in their own neighborhoods, those same folks transform into little Roosevelts’
This is kinda funny. Let me put it into a local perspective. Here in N AZ we’ve got a lot of forests. Due to what everyone now agrees was decades of mis-management, periodic fires were suppressed to the point that there are too many trees, too closely together, and too close to residential areas. The Forest Service is trying to catch up with thinning and controlled burns.
If there is a wildfire, the various government departments may let it burn, or if near houses, etc, try to extinguish it. People living near the fires naturally have a keen interest in how that works out. In other words, they sort of expect the people they have paid to stop the fires to actually stop them. It should be noted that there is no alternative to stopping wildfires. The governments own almost all the forests. They wouldn’t allow any private group to fight the fires. And the concept of private firefighters in forest lands is never even contemplated, much less put to a vote.
So we’re pretty much at the mercy of the govt when it comes to wildfires, because they have assumed that role and won’t let anyone else get involved.
Now, we are often told that the best way to prevent personal property loss from forest fires is to create a defensible space from structures and surrounding vegetation and trees. The government doesn’t do that for you. And I don’t think they should. Plenty of people have pine trees all around their houses; hanging over the roofs. If those houses should burn down in a wildfire it’s pretty much the owners fault.
Who makes flood control plans? Who takes tax money to do that? And when have you heard of a private effort being allowed to take the place of govt flood planning and work? Doesn’t the govt ‘own’ almost all the waterways?
‘taxpayers had to spend about twice the amount of the annual federal budget just to save bonus seasons on Wall Street’
We had to? I seem to recall most citizens were strongly against it. The govt went ahead and gave them the money anyway. Who’s to blame for that?
Milton Friedman’s economics are at the core of current libertarian & republican economic philosophy. Under supply side economics there is zero economic value in the government owning any land (except maybe the 200 mile ocean international limit for defense). Build it, mine it, drill it, burn it, what ever creates economic growth. If we could just convince the 47% to realize they lost this battle 32 years ago we can move on to stage 3. Under Freidman, the ideal national government won’t need any of the parts that deal with social or environmental issues so we wouldn’t even having this discussion.
‘Build it, mine it, drill it, burn it’
In this part of the country, various govt entities own a lot of the land. Back in 2005 I would post reports on auctions from the BLM or Arizona State Trust to home builders. Up and up it went, then the bids just stopped. What happens? They don’t auction any more land. (BTW, they lease it out for mining, cows, whatever. Usually at a loss.)
So when they could get $500,000 for an acre of scrub, they held auctions every month. Now, nothing. They didn’t pay for the land, the taxpayer maintains it. Meanwhile, we’re told rents are up, houses in Flagstaff still have a median north or $300k, and almost no one here earns enough to buy.
Who does this benefit? I know many young families that would like to own a house, but can’t afford it, or are up to their eyeballs in debt. Yet we are surrounded by empty land in every direction. And the govts refuse to sell anything unless they can get bubble era prices for it.
There isn’t any reason why we can’t have $30-40-50k new houses in Arizona, except for govt hoarding, greedy developers and entrenched REIC politicians.
Can’t argue with you there. What’s an acre of undeveloped land worth if there are no roads or utilities to support it. Not much unless it has water or minerals on it.
Your comment:
“There isn’t any reason why we can’t have $30-40-50k new houses in Arizona, except for govt hoarding, greedy developers and entrenched REIC politicians.”
America is fundamentally incapable of producing citizens who care enough to band together and stop it. If they did care we would have at least seen an effort for a general labor strike. Nothing… silence. Our vote is meaningless but have 30-40 million people go on strike and things would change faster than you can say ‘Pass the Patriot Act’.
There isn’t any reason why we can’t have $30-40-50k new houses in Arizona
There it is. $50k new houses. Why? Because that’s about all it takes to build one.
Why do people sign up for a lifetime of slavery to pay massively inflated prices for these depreciating assets?
They have no idea of the value of a dollar. None.
“What’s an acre of undeveloped land worth if there are no roads or utilities to support it.’
It’s worth about the same as an acre of land on a road with utilities at edge of pavement.
Why do people sign up for a lifetime of slavery to pay massively inflated prices for these depreciating assets?
I’m not saying people should foolishly do so…
But the fact that houses can be cheaply-built where there is plentiful cheap land does not mean they can be build cheaply everywhere.
Some of us would prefer to have an affordable house where there are actually jobs to be had as well.
New construction these days tends toward the move-up crowd, not the starters. I imagine the builder’s profit margin really increases too for those amenities not found in starter homes. There’s still plenty of loaded folks getting ready to retire, and that “dream” home better be loaded with goodies. The starter home crowd can barely scratch together a down payment, and their budding careers mean a smaller mortgage. Follow the money!
Some of us would prefer to have an affordable house where there are actually jobs to be had as well.
hmmm…. isn’t it interesting that there was always affordable houses “where there are actually jobs”.
“and that “dream” home better be loaded with goodies.”
Correction: It better be affordable or guess what…… there is no buyer for it.
“And the govts refuse to sell anything unless they can get bubble era prices for it.”
Is it responsible government policy to sell the land cheaply when we have out of control deficits?
“There isn’t any reason why we can’t have $30-40-50k new houses in Arizona, except for govt hoarding, greedy developers and entrenched REIC politicians.”
We have the same situation here in the Columbia Basin with a 3br/2ba spec rancher selling for roughly $155k, which is too high for the region’s wages, and yet there is land as far as the eye can see. So young families get help from their parents, and they enter into lengthy mortgages that will devourer their future unless wages rise.
IMHO, the high costs associated with shelter are likely a by-product of LBJ’s Great Society. Our family uses very few, if any, of the services enabled by my county’s property taxes, but there are scores of people who apparently can’t get through life without a permanent safety net. At the other end of the shelter scam are legions of well compensated people who have likely never produced anything with intrinsic value. Paying true cost for shelter would likely undermine much of the above.
In the abstract, most Americans want a smaller and less intrusive government. In reality, what Americans really want is a government that spends less money on other people.
Exactly. Like the uninsured small biz owners I mentioned the other day, who don’t want loans to rebuild their businesses, they want grants (free money). I’m sure these same folks bitch and moan about people on foodstamps.
I wonder if Romney will follow through on his plans to get rid of FEMA?
I wonder if Romney will follow through on his plans to get rid of FEMA ??
Given how much he has flipped around can you depend on anything he has said happening other than increasing the military budget ??
OK, since we’ve got some Obama supporters here, let me ask a question. What do those who support the President think his housing policy will be in the next four years, should he win? What do you expect will happen to the housing market? And as a result, what will happen with foreclosure levels, and prices?
I think he will be gridlocked from doing anything meaningful and that about all he can do is what is already happening. And even with that, most of the funds that were sloshing around have been allocated to the states and are rapidly being used up.
Other than selling Fannie/Freddie owned houses to hedge funds with “must rent for X years” (which they will tire of once they realize that complying with local landlord/tenant rules actually costs money), there is little he will be able to do. Republicans will keep the House and additional money comes from there.
“And even with that, most of the funds that were sloshing around have been allocated to the states and are rapidly being used up.”
What would prevent the Fed from allocating a lot more funds to whatever, through, say, QE4?
Housing policy of both major candidates would be terrible. Neither of them really wants the government out of the debt-issuing or debt-backing busiesses.
I believe many Obama supporters are reacting to Mitten’s social positions, general flip-flopping, and keeping his own money outside the US while ours is subject to taxes. Many of us would support a 3rd party, especially if the other 2 parties would allow other parties to participate in debates. The contrast would become more clear–not the fake contrast between R/D’s but the real contrast with independent thinkers.
What do those who support the President think his housing policy will be in the next four years, should he win?
Same as it has been but a bit less obstruction to market forces because Obama will not face another election.
What do you expect will happen to the housing market?
To me, much depends on the interest rates. If rates don’t change much, I’d say 50% of the market will trend side-ways. 25% of the market will rise a bit. (the 25% where it’s cheaper to buy than rent and in the very rich areas) And the 25% of the market (where it’s cheaper to rent) will show slow price declines.
I think we will see national year over year “price increases” but those “increases” will not be keeping up with the real inflation rate.
I don’t think the above number predictions would be much different under Romney.
OK, since we’ve got some Obama supporters here ??
Just to be clear, I am a Obama voter but not necessarily a supporter of many of the democratic party positions…Its the alternative that I cannot support for many reasons so you might say its Obama by default…
Now to your question on housing;
I am not sure housing will be very high on the Agenda…I think it will be all about balancing the budget through cuts, taxes and complete overhaul of the tax code…
Now, out of that agenda, there may be impacts to housing…
What do you expect will happen to the housing market ??
IMO, the largest portion of the declines in prices in the hardest hit area’s may be behind us…In other words, If in a certain hard hit area of Florida, prices are down to $80,000. in the mean, there may not be a lot of downside risk…Not suggesting there is upside…Just saying the downside may be risk may be small…
Now for other area’s, such as mine, that have seen prices in many area’s above 2007 peak, I think the downside risk is significant…
Reason’s;
#1. Elimination or severe restriction in interest deduction..
#2. Elimination of deduction for real estate taxes
#3. Elimination of the $500k tax free
#4. Cost of funds going up
#5. Inflation in everything meaning less disposable income
#6. Tax reform effectively having everyone pay more
#7. Under-Employment
#8. A future that will have increasing supply
what will happen with foreclosure levels, and prices ??
With either President elected I think its more of the same…Neither is going to remove support for the banks and crater the economy back into recession…They will continue to allow the lenders to leak the inventory out to give the market some price support along with low rates…
But here is the question that also needs to be asked…Given the past 40 year history of housing prices what would be your future expectations on prices ??
I would make the argument that given the headwinds and changes coming that directly impact housing prices, is it a stretch to think that the cost of a house in anywhere america would be the same 10 years from now that it is today ?? In other words, should we all change our future expectations about housing that has been framed by 40 years of price appreciation ??
I would say yes…
scdave, I have to agree, it’s Obama by default. I didn’t vote Dem for Senate or House. I voted for an Independent (former Republican) for Senate–Rob Sobhani and I voted Republican in the House race.
Sobhani in particular will probably get close to 15% here in MD. There are people who have a fiscally conservative sentiment but realize that the GOP really can’t be fiscally conservative. The GOP is too dependent on older voters and its image as “pro defense”. The fact that 15% are voting for a 3rd party candidate in a Senate race is really going to be a “F-U” to the national GOP party.
+1, sc.
I think the administration would continue to manage the housing market down, down, down as gradually as possible to avoid a mass freak-out when pension funds that are still heavily invested in MBS start to default. And they will. Rising interest rates are a given, which will necessarily further hasten the decline in housing prices.
More Boomers will be retiring, so I think there could be a shift toward subsidizing senior living communities (or conversions) instead of SFH. And I don’t think he’d let the MID survive another four years on any but primary owner-occupied residences, and still make a credible case for middle class tax reform.
“Rising interest rates are a given, which will necessarily further hasten the decline in housing prices.”
To play my accustomed devil’s advocate role, what would ever possibly require the Fed to stop suppressing interest rates?
Ben, I think it’s all going to stay nearly constant. I’ve been predicting a bounce along the bottom for a long time, and I think that’s what we’re going to get. I suspect that in 2016, my house will be zestimated nearly the same as what I paid for it. Or, at most, it will rise in value just enough to pay a realtor to sell it.
I think most of these sob stories will be over by 2016. That’s when interest rates will finally rise.
“I’ve been predicting”
You scoped flea shit on a slide and you call it a forecast?
Hey sweetie, how are ya today?
I think most of these sob stories will be over by 2016. That’s when interest rates will finally rise.
Oxy, why do you think rates will rise in 2016?
“Oxy, why do you think rates will rise in 2016?”
Her realtor said so. So she believes
Oxide? Believe a realtor? In what parallel universe?
uh huh.
Foreclosures will move from housing bought during the bubble to either post-bubble or pre-bubble. Most of the stuff built during the bubble still has a 15-20 years of useful value if it was built OK to begin with so they probably will still be occupied.
I expect a big change in the Fannie/Freddie world in the next four years. The tipping point will most likely come from outside the US, like a crises in Europe, China or Japan. At the point when our equity markets are buckling would be the perfect time to drop the axe and the big money will step in and take it private. They will pay pennies on the dollar (backed by new debt instruments) and their new mortgage interest rates will be fixed at 7% for 30yr. which should stop a lot of speculation.
‘I own four rental properties — that was my retirement. Now the value is down 65 or 70 percent and I can’t retire. I’ll be working until it bounces back.’”
Then you better pace yourself because you’re going to be working for a long time. Now get to work….. bitch.
If the OWNED the properties, he would not be worried about what they are “worth”, he’d just be worried about what they rent for/what cash flow is.
My in-laws are ~50 months away from owning their rental house and ~30 months away from owning their own house. Over the past few yrs they’ve finally started to listen to me and do regular maintenance and give up the idea of selling and buying another house when these are paid off. My wife and I have told them we’ll do anything to help them stay in the house, but if they sell and move some place “fancy” we will most likely be unable to help. In reality, the distance probably wouldn’t be bad, but I would be disgusted to such a degree I would not want to enable the move. The rental house brings in $2300/month in rent (good for a small row house) and now has updated maintenance… they’d be foolish to sell it. And their own house is well located (next to my wife’s work) and the right size for a bunch of seniors (1300 sq ft).
$2300/month for a townhouse? Where is this place?
And you wonder why I bought?
Well it has 4 BR. Canton part of Baltimore City. There are new-ish 1BR and 2BR apartments in luxury buildings nearby. Those rent for $1700 for a studio up to $3000 for 2BR as of the last time I checked. So 2300 for 4 BR is a good price.
PITI for that house is 1260/month, BTW. Roughly 4 yrs until paid off.
I agree, the prices are nuts. And I don’t necessarily disagree with you buying as long as youre going to live in it a long time. I don’t know your age situation, though.
early 40’s. Sorry, I didn’t hit the jackpot young, as you did.
Is that where they filmed The Wire?
I doubt any of The Wire was filmed near Canton or Fells Point. Michael Phelps does live here, though. More to your point, Canton is probably 90+% white. Like DC, Philly, and New York, Baltimore is highly segregated. If you want low rent, you have to go north of Eastern Avenue or, better yet, north of Lombard Street. If you go 15 blocks north of the white areas, you can get a house to rent for under 1000/month but watch out.
The “poor white” areas from Season 2 of the Wire (”The Docks’) are all rich white areas now. Locust Point and Federal Hill, down by the new Four Seasons condos. The Under Armour headquarters is over there and it’s very gentrified now. A 3 or 4 BR rowhouse with no upgrades or off street parking would be a solid 2500/month on most of those blocks.
“$2300/month for a townhouse?”
I’ve got a family member in San Mateo, CA Baywood Park hills in a townhouse for $2850/month. If you bought there the monthly payments would nearly double! The rent or buy decision is a no-brainer.
You can service a 1.25 million loan for about 6K a month. Town houses are pricey in the bay area, but not that pricey.
“You can service a 1.25 million loan for about 6K a month.”
I dunno, maybe; there’s still principal to pay down too.
There’s a huge difference between the hills and the flatland around there. Their area is above the FHA / Fannie guarantee limit, but not over $1-million for town houses. Amazingly, prices are rising around there right now, and somebody out there is plunking down the money.
I also visited a friend who has a Los Gatos, CA home, 50’s rancher, 1,350-sqft, 3br, 1ba, spitting distance to the 17 freeway (think noise); only $873k.
Yeah, I’m fugg’n price out. . .way out!
and somebody out there is
plunking downborrowing the money.FTFY.
Yah, we’ve been seeing prices in the peninsula area rising pretty briskly. I’m guessing this is the part of the ‘dead cat bounce’ where the entrails fell out of the corpse on the last splat, giving the resulting carcass less weight so it can bounce a little more highly on the government’s low-rate trampoline. Sooner or later the market will come to rest in a puddle at the low point on the trampoline, which will likely be lower than anything we’ve seen so far.
Yah, we’ve been seeing prices in the peninsula area rising pretty briskly.
And these prices are above the FHA/Fannie mortgage guarantees. IOW, these are buyers with money.
“800 lb silverback in the room”
Haha, there’s a lot of truth to this. If housing prices fall, we’re going to hear a lot of crying from people in retirement or near retirement. Most of them won’t be able to retire if they can’t unload their house for wishing prices. Very few have held onto the same house for 20+ yrs, which was normal in previous generations. Even more have borrowed against the house (”hey gramps, where’s that HELOC money?”). Others are just anchored to the idea that their house is an “investment” that is “worth” some price that would imply 5-10% annual appreciation. The kicker? When we were house-hunting, it seemed like most people do awful patch-jobs on their residence, rather than fixing problems. The group that was most likely to list a house with tons of deferred maintenance issues? Seniors. (And I won’t even start to mention how many of these houses had extremely outdated interiors which would necessitate extensive repairs. I’m not talking about not having granite, I’m talking about having awful wallpaper, flimsy fixtures (plastics, shiny faux-brass), and so forth.
Interesting angle. But I wasn’t even talking about housing prices, I was thinking about just cash and cash-equivalent savings.
Japan has been able to get away with offering zero interest rates for 20 years because of their deflationary environment. Here, we have at least 2% inflation. And that’s with zero interest rates. That’s a good clip of wealth erosion for the populace.
People here are actively having their wealth eroded while people in Japan were not. I think in that data point lies the social sustainability of zero interest rate policies.
I really look forward to seeing what happens on the 6th. If ZIRP goes on for a long time, with inflation, I think the politicians will pay the price.
“Since 2006, Greater Cincinnati homeowners have joined families nationwide who’ve lost $7 trillion in home equity.”
Ya know….. I see this statement and various of it all over the place. This notion of “equity” as it relates to a fawkin house is absurd. Do you conflate “equity” with a lawnmower? A pair of pants? Hell no. The minor difference? A house is financed. That is the only difference.
If prices weren’t severely inflated by 150-300%, the distraction from reality using the word “equity” wouldn’t exist.
Remaining mortgage balance would be a much better metric for people to measure “how much home I own”. Or, even better, remaining balance divided by average gross income over the past 2-3 yrs. This measure would help people think about how “affordable” their house is or isn’t. But even more broadly, I agree with you–equity is a stupid measure for 99% of people because of the general a**-backwards mindset that Americans must always “trade up”. Empty-nest 50-60 yr olds still seem to be buying McMansions and “fancy” town houses.
Housing keeps banks rich, borrowers poor….. forever.
Selling people on the idea that there’s a pot of gold at the end of the housing rainbow has enticed buyers to take on very heavy debt burdens, offsetting any benefit they would have gotten once they reached the end of the rainbow.
This notion of “equity” as it relates to a fawkin house is absurd. ……A house is financed.
“Equity” is not always absurd. Example:
If someone buys his house outright and recoups his investment in rent savings in 10 years, is not his equity working for him at 6-7% a year even if he only breaks even when he sells his home?
“If someone buys his house outright”
Operative phrase ^^^^^
We’re not talking about cashflowing shelter you own. We’re talking about homedebtors.
Equity is meaningless until one sells their house; at that point it is absolute. Blue sky equity is just a bargaining tool for obtaining money from loan shark banking institutions.
Equity is meaningless until one sells their house
If one has 100% equity and is paying 0 on rent or mortgage month after month, how is that 100% equity meaningless when that equity is freeing one from a monthly payment?
+1 Rio - Our house is paid off. How much peace of mind is it to know we only have to pay for maintenance, insurance and taxes. The rest gets banked. Priceless! (Or not)
You still don’t have the equity in your pocket unless you sell, which was salinasron’s point.
“If one has 100% equity….”
You don’t have equity in the house, it has equity in you.
Brazil is in a bubble. The choice between owning or renting is the choice between overpaying in the short term or overpaying in the long term
You don’t have equity in the house, it has equity in you…..Brazil is in a bubble.
BS. If I were a Republican, you’d say I have equity….. and about 3 times (in bubble dollars) as much as I put in.
Thoreau is lost on you.
Love that line by Thoreau, Blue—was reading that again myself recently. Though it was a farm in his case, IIRC…
Thoreau was a commie.
Henry David Thoreau: Founding Father of American Libertarian Thought
http://mises.org/daily/4562
Oh I just can’t pass this one up. Thoreau: America’s first flower child.
Scientists use Thoreau’s journal notes to track climate change.
http://www.guardian.co.uk/books/2012/mar/14/henry-david-thoreau-climate-change
Flowers now bloom 3 weeks earlier, They concluded that 27% of the species recorded by Thoreau and other botanists were no longer present in Concord at all, and a further 36% of formerly common species were now rare…
True BS, true BS -
Equity is meaningless until one sells their house ??
Yep…
Well not exactly. If you are a small business you may still use your real estate to collateralize a loan. Here’s a deal; I’ll loan you some 5% APR money if I can have the deed to your paid off house as collateral, say like 100 dollars for every $1000 your house is valued based on the county tax assessor or my certified inspector(which ever is lower). Hey isn’t 10 to 1 is the standard fractional bank ratio.
if you voted for Obama in 2008 you proved your not a racist.if you vote for him in 2012,you will prove you are a moron.
2 choices with the same outcome. Both are owned by the same people.
I am not voting for romney.
2 choices with the same outcome. Both are owned by the same people.
BINGO
Well, since the 2 are the “same”, why not vote for Romney and see what might be different.
You’ve already said it doesn’t matter, so you can throw your vote away on Romney and “dis” Obama.
“why not vote for Romney and see what might be different.”
Why not keep things Japanese for four more years? That at least buys all of us some time.
I do not want to fast forward to Grey State.
http://www.youtube.com/watch?v=E8PnkeKmcZw&
I love the smell of currency war in the morning, it smells like….victory!
well said,I lied I will vote for romney.I would vote for charles manson before that bitch obama.
FWIW, I severely dislike Romney and I think he will be harmful for our country, but I would never vote for Charles Manson over him. That would simply be idiotic.
Why waste a vote for either of these crooks when I can vote for real candidates?
Thanks for disclosing your pathetic endorsement of the duopoly Dio.
Same outcome?
Ask the Supreme Court.
And Ann.
Well, of the two candidates who have a chance of winning the Presidency, one brags about his housing price intervention tactics and any resulting price increases. He clearly favors increasing such measures and certainly will continue to implement them to the extent that his executive powers allow.
The other candidate, while normally overly careful in his speaking and not my choice in the primaries, said this:
“There are things you can do to encourage housing. One is, don’t try and stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up. The Obama administration has slow-walked the foreclosure process that has long existed, and as a result, we still have a foreclosure overhang.
“Number two, the credit that was given to first-time home buyers (in President Obama’s stimulus) was insufficient and inadequate to turn around the housing market and was an ineffective idea. It was a bit like the ‘Cash for Clunkers’ program, throwing government money at something which was not market-oriented, did not staunch the decline in home values any more than it (’Cash for Clunkers’) encouraged the auto industry to take off.
“I think the idea of helping people refinance homes to stay in them is one that’s worth further consideration, but I’m not signing on until I find out who’s going to pay and who’s going to get bailed out, and that’s not something which we know all the answers to yet.”
I have to say, even with language about exploring refinance options, saying this stuff to the editorial board of the main newspaper in one of the top 2 or 3 underwater cities in the country strikes me as pretty close to the HBB consensus on these issues. Las Vegas Review-Journal. October 2011.
And he has repeatedly promised not to re-appoint Helicopter Ben. His language has been unambiguous on that topic.
You do realize that Mittens could very well appoint someone worse than Bernanke, right? The Fed gets a ton of political pressure, it’s not like you can tell from someone’s previous credentials how they will perform as Fed chairman. The bigger picture is, will Mittens allow auditing of the Fed? (no) Would he extract the government from issuing and backing debt? (no)
The other big issue is, how can anyone really know what Romney stands for? He changes his position because he thinks (knows?) that the average moronic voter really doesn’t care about details or facts and is easily manipulated.
Hope this helps.
Romney can think what ever he wants, and that’s his personal business, which he is entitled to. However, as the American president he must ultimately work with our venal congress, which is why Obama didn’t accomplish much for main street.
That said, I voted for Gary Johnson.
Very little is posted here about voting for Congress. Most seem preoccupied with voting for the mascot.
is it not the average moronic voter that put Obama in office?
Greenspan is still alive you know.
And no remorse.
well said.
“Many economists argue that the Obama administration’s failure to act more aggressively on housing is the No. 1 reason the recovery has not been quicker or more complete. Obama himself in a recent interview called the effort on housing ‘modest,’ in the course of attacking Romney for having said he would do even less. And so in Florida, on the central economic issue the state faces, Obama finds himself with nothing much to sell.”
WTF? At what point did it become the president’s job to make housing start going up again after the collapse of an epic bubble? (Maybe the problem was that Obama himself suggested he would do this, in one of his State of the Union speeches.)
(Maybe the problem was that Obama himself suggested he would do this, in one of his State of the Union speeches.)……………
Are you kidding?
Obama was going to “heal” the earth and Stop the Oceans rising. The man is a psychophantic, meglomanical fanatic. He really believes he is the reason the sun comes up in the morning.
(President Obama) is a psychophantic, meglomanical fanatic. He really believes he is the reason the sun comes up in the morning.
If only he’d know his place.
“Obama was going to “heal” the earth and Stop the Oceans rising. The man is a psychophantic, meglomanical fanatic. He really believes he is the reason the sun comes up in the morning”
I prescribe a strong dose of turning off Rush Blowhard and Faux news and going out for nice walk instead.
It’s both parties, IMO. I noticed early on that talking heads had painted themselves into a corner on what would happen if the ‘other side’ won.
I don’t know exactly what’s behind this. Is it the bad economy? The numerous partisan media outlets competing with each other to out trash-talk the next?
One thing that is different now; the election cycle never ends. That itself builds and builds the emotions.
It’s got to have something to do with the crumbling of the epic credit expansion/mania. Looking for someone to blame. Still not talking about what we did wrong to get in this place.
Looking for someone to blame….not talking about what we did wrong to get in this place.
IMO the greatest wrong was gutting middle-class jobs to benefit the rich.
IMO, on this issue, the blame falls about 60% on the Republicans and 40% on the Democrats.
Now those on the right might say the problem is a “nanny-state” thing. Partially maybe, but how would a “nanny-state” thing gut our middle-class jobs? By those costs making us “uncompetitive”? Higher import duties protected our competitiveness in the past and they would have today.
The United States was founded on capitalistic economic nationalism and practiced capitalistic economic nationalism until about 30-40 years ago. Now, unbridled “pure greed” capitalism-without-borders has taken over our formerly successful nationalistic capitalism.
Rio said: “Now, unbridled “pure greed” capitalism-without-borders has taken over our formerly successful nationalistic capitalism.”
Yes, and since the foundation principle of private property allows that, then you’d think the middle class in the USA would be adjusting by downsizing their lifestyles, to create a larger margin of savings out their incomes, to self-capitalize themselves for their eventual near abandonment by said borderless capitalists. Capital is all that makes an economy function, however you define “function”.
The US middle class did the exact opposite, however. That’s why they deserve every bad thing that’s happening to them and will continue to happen to them. Bad things happen to stupid, stupid people. That’s one of the rules of the universe acting, and no legislation can overturn it.
Rio said: “Now, unbridled “pure greed” capitalism-without-borders has taken over our formerly successful nationalistic capitalism.”
Yes, and since the foundation principle of private property allows that,
You are ignorant to America’s successful history of practicing economic nationalism. Your misunderstanding of a “foundation principle of private property” ignorantly disregards over 200 years of America protecting the American “private property” of our middle-class jobs base which nurtures American nationalistic capitalism.
amen!
I sure hope housing crashes either way. I voted for Obama because Romney is identical to all of the ivy league/lacrosse jerks I grew up with. They simply can’t handle diversity, and that is pathetic. As for public K12 education, I’m not delusional: both these clowns want those dollars in their constituents pockets.
As for housing, my neighborhood has turned over, as evidenced by the droves of young families trick or treating this year. We like our neighborhood. A lot.
My son is done with day care in six months; my wife and I have good reputations in our careers; we’ve been here for seven years; it took us a long time to find the right area; we’re ready to buy.
I’m not going to make uninformed decision, but I will re-examine buying this summer (when sellers seem most desperate in Florida).
Meanwhile, peeps from Oklahoma, Tennessee, Illinois, Arkansas, Alabama, Georgia, etc. are still piling into my ‘hood.
Muggy,
If I said, “Invest, don’t buy!”, I would likely be crucified.
If I said, “Buy, it’s not an investment!”, I would likely be crucified.
Doubt that housing will crash further, especially in desirable, well-researched areas like those you are considering.
My wife and I have gladly paid property taxes over the past 20 years.
Though childless, we happily pay so our neighbors don’t end up in gangs, or worse. In our hood, they often wind up in Ivy League universities.
Follow your heart. Buy if you think it works for the next 10 years.
Low interest rates but follow local price trends. Best of (intelligence and research a.k.a. luck)!
Time flies, doesn’t it? When I first started frequenting this blog, my son was in daycare. He’s now in 3rd grade. I bought my house the summer in between Kindergarten and 1st grade. As of May, I no longer have to pay Uncle Sam back the $8K I got in stimulus money (which, btw, went right into our economy in the form of a new heat pump and other household repairs).
Good luck with you decision!
Oh yeah. As of this month I’m no longer on the hook for 4k if I dump the doublewide…thanks for the reminder. Too bad options haven’t improved in 3 years.
It’s interesting that the central bank operates like a government unto itself. Which candidate would change the course?
The Economic Outlook and Unconventional Monetary Policy
by Eric S. Rosengren
‘While it is still early to gauge the full impact of the Federal Reserve’s September monetary policy committee decision to begin an open-ended mortgage-backed security purchase program,[1] the program has so far worked as expected. The initial response in financial markets was larger than many expected. Given that our conventional monetary tool, the fed funds rate, has hit its lower bound of zero, we have turned to unconventional monetary policy. By that I mean policy that attempts to affect long-term interest rates directly, via asset purchases,[2] rather than indirectly by setting the short-term interest rate, as in conventional policy.’
‘Unconventional policy has affected financial markets much like movements of conventional policy would have. Our use of unconventional policy tools has led to lower longer-term interest rates; higher equity prices; and, in a peripheral by-product of lower U.S. rates, exchange-rate effects.’
‘By further easing financial conditions, the Fed’s actions appear to be providing additional stimulus to the household sector – as witnessed recently by higher consumer confidence, and increases in purchases of interest-sensitive items such as new homes and cars.’
‘Beyond the U.S. situation, I would also point to Japan’s experience as instructive. As I have pointed out many times, despite having an expanded balance sheet for an extended period, the Japanese continue to struggle with a deflation problem rather than an inflation problem.’
http://www.bos.frb.org/news/speeches/rosengren/2012/110112/index.htm
‘Another asked, “So, Japan has had ZIRP for 20-some years.However, IIRC, they typically run in a mild deflationary environment. ‘
and
‘…the Japanese continue to struggle with a deflation problem rather than an inflation problem.’
Ask the thousands of university grads in their twenties that are working part-time jobs and/or low paying jobs ($6 to $8/hr) how it is working out for them. Food is very expensive for these folks. The only reason it is not a huge problem is that these kids stay with their parents. And most parents - at least the father - has a decent job that he works for long hours and saves the money.
Everything in Japan is more expensive than the US, except housing - maybe because the house size is smaller. TVs, home appliances, transportation, gas, food, clothes are all more expensive. The mainstream media and official sounding news memes always say inflation is low and non-existent, however when you see that the mass of young people coming into the work force have no jobs available and even if there are they are low paying - daily living expenses take all the earned wages - it does sound expensive. Maybe not inflation in real
terms but not deflation either.
How do you say “Lucky Ducky” in Japanese?
How do you say “Lucky Ducky” in Japanese?
Either “Rotsa Ruck” or “So Sorry”
ラッキーダキー
or you could use binbou 貧乏 meaning poor or どんぞく the bottom (of the barrel)
“Which candidate would change the course?”
I don’t think you are serious.
A more fundamental change than these “candidates” is needed.
What will bring that?
A more fundamental change than these “candidates” is needed.
What will bring that?
Your “side” recognizing and then disavowing tried and failed economic policies.
‘I don’t think you are serious.’
I’m trying to do a ‘for sake of argument’ thing here.
‘tried and failed economic policies’
What are the tried and successful policies?
What are the tried and successful policies?
Reasonable tariffs to protect American workers.
A not whacked-out American “religion” bases on propaganda that puts shareholder “value” and money over all else.
A progressive tax and incentive for higher wages that lessen the USA’s current Banana Republic wealth/income inequality.
No “Citizens United”.
I can go on .
What ever happened to owner financing? Up until the 90’s I could always find houses for sale with owner financing but now I never see residential housing where the owner carries the note. If the housing market ever returns to normal the proof will be the re-emergence of the previous owner willing to self-finance the new mortgage.
Does owner financing require that the owner actually own it? As in, no mortgage? If so, that might explain it. Or maybe it’s just been so easy to get a relatively low interest loan, why would there be any need or desire to for the owner to take that risk?
“Does owner financing require that the owner actually own it?”
Own it as in ‘free and clear’? Logic tells me they shouldn’t be able to sell it unless the new buyer is willing to payoff the balance or assume a wrap around mortgage. Back in the 70s-80s-90s yes the owners did generally own them outright. The calculation was back then owners used to get 1 to 1/2 point over the market rate to factor in the possibility of default plus there wasn’t much use of credit scores to lower their risk. If things broke just right and the new owners defaulted after 10 years there was enough interest & principle built up you could afford to do a remodel and sell it again. I actually know people that did this. These days nobody thinks rates will remain at current levels for 30 years so why take the risk of locking in at sub inflation returns.
I bought my house with 10% down (cash) and 10% OWC - the children who inherited the dilapidated and neglected historic Craftsman that now shines like a mirror. In 1987 it was common to get OWC seconds at 10% APR and the PMI penalty I killed after 2 or 3 years of excess paydown on principal.
Worked for me. Is PMI still around? Can anybody get a 10% second at current rates? I’d gladly buy if I can get a 10% second at2%!
I ran across an ownership map of the development next to us, and found that half the houses were owned by the same family. These were built in the mid 90s so my guess is the developer or owner had to sell a lot of them by contract for deed.
It was still floodplain back then so maybe that had something to do with it.
My inlaws put together a few million by financing.
If I had to go by yard signs in the Tampa Area… Romney.
Dear President Romney, I want a cheap house.
Thank you
You can’t really tell by the signs, around here. It seems union workers have been stealing the Romney signs, being so bold as to keep them in their union truck. It made the national news. The way the Liberals are around here (militant and dismissive of all other viewpoints), I’m not surprised in the slightest.
The way the Liberals are around here (militant and dismissive of all other viewpoints)
Amazing…..Just like you!
Amazing…..Just like you!
God save us from the militants of every variety…
Superstorm Sandy’s damage to Romney’s election prospects continues to worsen:
2012 US Presidential Election Winner Takes All Market
Besides a few small towns in New Hampshire the only real vote totals that have been released were just released from Ohio on the early voting totals and so far they are a shocker. Romney has a 90,000 vote lead with over 1.2 million ballots accounted for. Not all the data is in but the present data seems to be as much from the democratic strongholds as from republican areas. It is entirely consistent with Gallup’s view that the electorate is more republican than the polls have been calculating.
So I get up this morning, the day before the election, and I’m sad. I suppose it has to be grief; that something has died, it’s gone, it no longer exists.
Let’s face it; people in this country aren’t special. But what made us a very fortunate bunch was freedom. Freedom that our system of government would defend. Especially from those who would use the government to deprive us of freedom. So sacred was this that it’s been called rights. Sure, there have been times when those rights were violated, but the system to correct those wrongs was there, even if it was not always applied.
As someone who has always stood outside the political mainstream, I found there were people in many parts of the political spectrum who fought to keep this system intact. They saw that whatever our ideological persuasion might be, the basic idea of freedom was more important than party or the temporary enjoyment of power.
Who could doubt that there is an election in process? Look at all the activity, the speeches. Why, these men have raised more money in order to win than any two candidates in history. Surely, this is democracy. But essential to the idea of democratic choice is opposition. After all, a choice between two men isn’t enough. They should represent something; one may have a certain belief and the other challenges it, and vice versa. Let me share this:
‘Left-liberals who have decided that innocent people locked in Obama’s dungeons don’t count as much as beating the Republicans deserve some of the blame, but so do the conservatives who disingenuously or perhaps just ignorantly attack Obama for doing the opposite of what he’s actually done. They say he’s coddling terrorists with due process and being weak on illegal immigrants. None of this is true at all, and the conservatives’ ideological support for the police state will be a problem no matter who is president.’
‘All modern presidents have been terrible on civil liberties. But Obama has done as much to build on his predecessor’s awful record as Bush did to build upon Clinton’s. Meanwhile, these issues of human rights have become non-issues, because left-liberals would rather defend Obama’s presumably great domestic economic policies than criticize him for his kill list, kangaroo courts, and dungeons.’
‘Mitt “double Guantánamo” Romney has no apparent philosophical objection to the Bush-Obama police state, to militarized law enforcement, to a president with truly despotic authority. Neither does Obama.’
One of the main reasons we’ve enjoyed the freedoms we’ve got for so long was checks and balances in the system. Remember those? It was considered so critical to our understanding of why we are free that we were taught the importance of checks and balances when we were children! Maybe that’s what is dieing for me. Over the years, I see congress no longer defending our liberty from the executive branch, nor the presidents from congress. The Supreme Courts have declared legal torture, assassinations, indefinite imprisonment without charge or trial.
And then there was the ultimate check on the power to violate our freedoms; the people, the ballot. But now I don’t see that anymore. Consider this; many people tomorrow will believe the devil incarnate has won the election. Yet the new power of the winner to be judge, jury and executioner was hardly discussed. We’ve witnessed the elimination of a thousand years of legal precedent regarding individual liberties, and it happened without one check or balance to it happening. And I realize now that the final obstacle to tyranny, we the people, won’t stand in the way either.
Maybe we can trust whoever wins tomorrow (and in four years and eight) to not abuse our freedoms. Maybe those interests that gave them hundreds of millions of dollars are benign. But history suggests that might not be the case. And what makes me sad today is that there is nothing, nothing to stop them now if that is what they chose to do.
“We’ve witnessed the elimination of a thousand years of legal precedent regarding individual liberties, and it happened without one check or balance to it happening.”
The loss of civil liberties has always been one consequence of wars. Consider the imprisonment of Japanese Americans in World War II, and the blacklists and black files in the early days of the Cold War.
As it is, Obama wouldn’t dare, wouldn’t dare cut back on the restrictions on civil liberties imposed in the wake of 9/11. The Democrats would be wiped off the electoral map.
So the politicians are still following the people. When the people change their minds, the politicians will have to follow, or else. Ask Richard Nixon.
OK name one country anywhere in the world who have (or had) similar rights/freedoms as we do today and are better off now than they were since 2001? Maybe this freedom/liberty thing is like adapting to climate change, you can’t change the direction the country is going but maybe you can survive and adapt and in a relative sense you are still better off than the those who moan and wail about lost freedoms they never appreciated anyway.
Are you up for a general nation wide labor strike?
Afghanistan?
They didn’t want western style democracy to begin with. I predict as soon as we leave they will declare that day a national holiday.
‘Mitt “double Guantánamo” Romney has no apparent philosophical objection to the Bush-Obama police state, to militarized law enforcement, to a president with truly despotic authority. Neither does Obama.’
Isn’t the prospect of enjoying unbridled empirical power what attracts these guys to run? Why would they ever willingly give away power?
Why did Washington only serve two terms, a tradition followed until FDR?
From most accounts Washington never wanted to be president to begin with. After serving two terms, Washington refused to seek a third, believing that two terms were the most that a president should serve. If he was re-elected he might not have served out his third term anyway as he died 2 years later. Washington passed away quietly at his home, Mount Vernon, on the night of December 14th 1799, at the age of 67, following a brief illness. He was tended to by physicians who employed various medicines and (controversially by latter standards) let his blood… all to no avail.
None of this is true at all, and the conservatives’ ideological support for the police state will be a problem no matter who is president.’
You’re talking right in my ear brother. Their power has been creeping and enlarging for a good 30 years now and I’ve been vocal about it and frankly, fearful of it for just as long. And strangely, the lefties who should be vocal about it go quiet when “their guy” gets elected. And what happens? Even more power is given to the police state/”criminal justice” system…. by “their guy”. Silence. And worse yet, the law-and-order-chain’em-to-the-ground “conservatives” love the concentration of power by the jackboot thugs. “FRY HIM!” they declare. They’re sick, stupid bastards. And they’ll continue to champion police state tactics until it’s one of them who are facing the heavy, weighty backhand of “the system”. Then they have an epiphany but it’s much too late by then. Sick stupid bastards…. that’s right. Stupid people demand “justice” until they’re accused. Then they want leniency.
You mofo’s can mock me all you want when I say we’re an empire. But it’s the truth. It’s all right there. But you’re all willing to ignore it so long as “your guy” gets elected…… dumbasses.
I say we’re an empire……you’re all willing to ignore it so long as “your guy” gets elected…… dumbasses.
It’s not as black or white as you seem to think.
For example:
I think we are an empire and a police state, I speak out and work against it, (in a small way) I want “my guy” to get elected and I am not a dumb-ass.
I’ve voted 3rd party many times but I live in reality, of what is, not a candy-crapping utopian vision of what I want it to be. If “my guy” is only 10% better than the other guy in a tight race, I will vote for “my guy”. That’s the choice I’ve been given in a political system that was not of my making. That’s reality. If you think you can change that reality then do it, but disparaging people who vote Dem or Repub when SCOTUS appointments are on the line or big things are being talked about, is not going to further you cause much.
No Rio… it really is that black and white. And you choose to ignore reality. You’re no more in reality than the the other side.
No Rio… it really is that black and white.
No. I’ve just explained a small part of the reality. There will be 1-2 SCOTUS appointments on the line. This IS reality. It is you who are ignoring it.
Do you want proof you are ignoring this reality?
The proof is either Romney or Obama (No one else) will get to appoint those SCOTUS justices. Now that’s a fact. Those appointment will affect Americans maybe for the next 30 years. The Citizens United case was decided 5-4 by Republican justices. This is fact. This is just one piece of the reality that you are ignoring, not I.
No my friend. You’re ignoring reality. The reality that little will change for anyone.
I wonder how Republicans will react if Obama gets re-elected and then announces that after 28 years of Republican chairmen of the Federal Reserve, which Democratic Presidents have re-appointed out of respect for the independence of the institution, it’s time for a Democrat in that position?
“Presidents have re-appointed out of respect for the independence of the institution, it’s time for a Democrat in that position?”
How about a libertarian?
Greenspan started out as a libertarian and look what happen!!
I don’t think Democrats do anything out of respect for the agency or for their opposition. The ONLY reason to continue to keep any Republican appointee is to be able to deflect blame if anything goes wrong.
Look at the posts here. Obama isn’t responsible for anything, even after 4 years.
HE re-appointed Bernanke. He could have gotten rid of him. He didn’t.
That gives him political cover. BUSH appointed him, so, it’s all Bush’s fault.
“The ONLY reason to continue to keep any Republican appointee is to be able to deflect blame if anything goes wrong.”
Good point. But after total credit market debt, after hanging around 150 percent of GDP for 30 years, soared to almost 400 percent of GDP in the next 30 before starting to collapse, things are going to suck regardless. So all they can do is deflect blame.
Home prices fall in September, the first drop in months
http://www.latimes.com/business/money/la-fi-mo-home-prices-fall-september-corelogic-20121106,0,2469437.story
After six straight months of gains, nationwide home prices fell 0.3% last month from August, tamped down by low prices on distressed properties.
But compared with the same month a year ago, prices for single-family homes are up 5%, according to Irvine-based CoreLogic. That’s the largest boost since July 2006 and the seventh straight year-over-year increase.
Prices in every state except for seven are up from last year, according to the report.
In California, they’re up 6.9%. In the Los Angeles-Long Beach-Glendale area, prices saw a 4.8% surge. They advanced 5.2% in the Riverside-San Bernardino-Ontario region.
But compared with their peak highs in April 2006, statewide prices are down 37.2%.
Quiz: How much do you know about California’s economy?
Arizona led all states in price appreciation in September with an 18.7% upswing, followed by 13.1% in Idaho and 11% in Nevada. Rhode Island prices tumbled the most, sliding 3.5%.
“Quiz: How much do you know about California’s economy?”
Enough to know that I can’t honestly support my family there.