The Dramas Continue To Grow More Absurd
Readers suggested a topic on the growing insanity. “Is the plan on to mint the trillion dollar platinum coin? Is the stock market bull too full of testosterone for his own good? Can low mortgage rates last indefinitely? Is the real estate market in your area experiencing a healthy rebound, as in double-digit price increases? The ‘buyer has to agree to feed the squirrels’ era is back in Coastal California housing markets. Maybe this time is different, but the last time buyers found themselves needing to woo sellers with gushing letters of interest was shortly before the greatest real estate crash in the history of the U.S. And believe it or not, this was just a few short years ago (circa 2006)!”
A reply, “The Dramas continue to grow more and more absurd. Perhaps it can be taken as a warning that we are overdue for a Reality Check.”
Another added, “We’ll be fine as long as we believe our lies.”
And another, “What we really need is confidence.”
And finally, “Just remember. It’s not a lie if you believe it.”
The Wall Street Journal. “Can I Buy Your House, Pretty Please? With inventory tight and prices rising, buyers in competitive markets like Silicon Valley and Seattle are returning to a boom-era tactic: writing heartfelt letters to sellers explaining why they should win the house. Signing with a paw print.”
“How to craft a perfect pitch letter:
DO
* Describe specific features you like about the house and its neighborhood
* Include cute photos of your kids and pets along with their names
* Summarize financial details of the offer, such as your down payment, contingencies, expected timetable and lender’s name
* Cite professional or personal experiences that you have in common with seller
* Keep the letter concise
* Mention the length of your house hunt and the hard work that went into saving up a down payment
* Ask your real-estate agent to review your final draft
DON’T
* Use an identical template for every offer
* Over-compliment sellers, because they’ll worry they priced their homes too low.”
The Aucklander. “Pressure looks likely to stay on house prices in the year ahead, particularly in Auckland, experts say. Peter Thompson, managing director of Auckland’s biggest agency, Barfoot & Thompson, expects a bit of a holiday lull then a quick pickup. ‘While we may see some easing of average prices during the Christmas/New Year period, during the prime summer trading months of February and March average prices are likely to return to the low $600,000s.’”
“Hayden Duncan, chief executive of New Zealand’s biggest agency network, Harcourts, says lack of new supply and pent-up pressure will keep prices high. ‘The outlook for the country is one of an environment with continued low interest rates and housing stocks remaining tight,’ he said. ‘With limited building planned, particularly in Auckland, it will have the impact of fuelling on-going price increases. If you are pondering on what the best time to buy is, it’s now.’”
The Vancouver Observer. “For quite some time, many in the media have been predicting doom and gloom for Vancouver’s real estate market. The predictions are for a flood of new listings and falling demand; the reality, though, is it’s just not that bad. Sellers in Vancouver are sitting on a significant amount of equity (value in the home after subtracting the mortgage balance). Many property owners who have been trying to sell have decided to take their properties off the market to wait for better market conditions. They are doing this because they can.”
“What all this means for buyers and sellers is that the Vancouver real estate market is softening gradually. Buyers are able to negotiate a far better deal than they could have 6-18 months ago. Sellers are able to get their property sold, though it may take longer and they may have to concede a bit more in negotiations than in previous markets. Sorry doom and gloomers, the market is just not crashing.”
From CTV News. “Vancouver condos have lowered housing price averages in the city, according to a new Royal LePage real estate survey. But those waiting for Vancouver’s real estate bubble to burst shouldn’t hold their breath. ‘Buyers are waiting for that big decrease to happen but I think if they’re going to keep waiting for that, chances are they aren’t going to see it,’ said Todd Talbot, realtor and host of W Network’s Love It or List It Vancouver.”
“That’s because industry experts say some sellers aren’t interested in making significant price reductions, and are taking their homes off the market. ‘They don’t have to sell,’ said Brendon Ogmundson, an economist with the BC Real Estate Association. ‘You don’t find a lot of extra listings unless people need to sell quickly because of some financial catastrophe, and that simply isn’t in the cards, so what we’re going to see is normal demand and supply dynamics.’”
Comments from the CTV article:
‘Wow ‘Condos lowering Vancouver home prices: survey’ done by whom? oh it is the robbers trying gain up on uneducated buyers and sellers to improve surveyors pockets. Look at your brothers from the South… How the normal family can afford to live in Van? If you pay for kids education and not sending them to the burger flippers school, you can afford only rent. Our salaries not increased together with babbled RE market.’
‘Ever since the bubble article hit the cover of Mcleans mag the real estate spin machine has been trying to hit back hard. Interesting that all the “experts” are in business here.’
‘I`m sorry but do journalists even THINK about these storiesÉ Hello, it`s Royal Lepage trying to boost the condo market since their inflated and fake housing market froze.’
‘I own a condo. I’d rather rent it out for $1600 per month than sell it. Equity-wise I did very well but at this juncture even if I sold it at a 3.5% reduction I still built a massive profit over the past 10 years. This is my home and even though I would walk away with a couple of sacks of money and join the few who are waiting for a crash I would have 2 issues with that - #1. The crash will not happen. It’s been talked about for 10 years. #2. This is my home. In 10 years I’ll be done paying for it. I’ll have $260 per month strata fees and that’s it! Where in any metropolis would you find living expense of $260 per month anywhere? Even in New York and Toronto condo’s come with hefty strata fees of $400 to $1000 per month. I’m tickled pink. This is as close to winning the lottery I will come.’
“The crash will not happen. It’s been talked about for 10 years.”
Stopped-clock predictions never come to pass.
‘even though I would walk away with a couple of sacks of money and join the few who are waiting for a crash’
Join “the few” huh? This person doesn’t even own any real estate.
‘I’m tickled pink. This is as close to winning the lottery I will come.’
You don’t win the lottery unless you cash in the ticket.
This could be an interesting story for the Freakonomics guys to investigate.
Judge approves exhumation of Chicago lottery winner’s body in mysterious cyanide death probe
By Associated Press, Published: January 11
CHICAGO — A judge Friday granted prosecutors permission to exhume the body of a Chicago lottery winner who was fatally poisoned with cyanide just as he was about to collect his $425,000 payout.
…
Family quarrels add intrigue to lotto winner death
Published January 12, 2013
Associated Press
Urooj Khan, 46, of Chicago’s West Rogers Park neighborhood, posing with a winning lottery ticket. (AP Photo/Illinois Lottery)
In the week since news surfaced that a Chicago man was poisoned to death with cyanide just before he was to collect a lottery payout, surprising details about his convoluted family saga have trickled out daily.
Urooj Khan’s widow and siblings fought for months over the businessman’s estate, including the lottery check. His father-in-law owed tens of thousands of dollars in taxes. His 17-year-old daughter from a previous marriage had moved out of her stepmom’s home and into his sister’s after his death. Then his ex-wife came forward, announcing in anguish that she hadn’t seen her daughter in more than a decade and hadn’t even known she was still in the U.S.
The slowly emerging family backstory and ever-expanding cast of characters have added layers of intrigue to a baffling case in which authorities have revealed little and everyone is wondering: Whodunit?
The victim’s relatives hint at family squabbles. And Khan’s wife, Shabana Ansari, has endured clutches of reporters outside the family home and business, asking even whether it was a lamb or beef curry dinner she made for Khan on the night he died.
“She’s just as curious as anyone else to get to the bottom of what caused her husband’s death,” said Al-Haroon Husain, who is representing Ansari in the case that will divide up Khan’s estate, including the $425,000 in lottery winnings.
Ansari and other relatives have denied any role in his death and expressed a desire to learn the truth.
…
Well, I guess I’m still priced out forever.
Realtor™ version: “It’s not a lie if your client believes it.”
You can’t spell ” believe” without a “lie”.
I’m awestruck at how successful the Fed was in reflating the mania.
Sadly, the next time it collapses, the demographic picture in the U.S. will look far uglier, as far more of the wealth base will have moved on to Geezerville or beyond the vail, i.e. out of the mainstream residential housing market, leaving a potential buyer pool primarily comprised of younger Americans burdened by heavy student debt loads and years of marginal employment with no savings to show for the effort.
Hopefully we can pull through the difficult period ahead with a combination of myriad all-cash Chinese investors snapping up U.S. residential properties right and left, together with a steady supply of low-interest, low-downpayment, federally-guaranteed GSE and FHA lending to people with little income and lots of household debt.
‘how successful the Fed was in reflating the mania’
I don’t think the mania ever went away. Apart from a few places, it’s not a real surge to new highs like Australia, New Zealand, China and Canada saw. It looks mostly like wild speculation, typical California stupidity about financial matters, but most of all, press hype.
This is an important thing to point out here about the media: let’s say the WSJ hears about some people writing letters to sellers. They have choices; do they cover it (is it even important), and if they do, how? And we see, they go all in: every “do and don’t” is a form of validating this behavior.
Here’s the point: back in 2005, the WSJ ran front page glory articles about the greatness of Angelo Mozilo. (They’ve scrubbed these from the web, BTW.) Forward a couple of years and they lamented the lack of scrutiny given to subprime lenders, etc. Tisk tisk, as they wagged their fingers at this party or group.
Bull#hit, WSJ. You were just as guilty as anyone and now you’re back at it. Not one quote from an observer that says, “writing letters like this is nuts.” Or “you know, that’s a lot of money to borrow.” Not a shred of balance or caution. Like the Mercury News article; “Buy Buy Buy!”
“If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re mis-informed.” - Mark Twain
“They’ve scrubbed these from the web, BTW.”
That’s one way to make your editorial staff look smart through the lens of the rear-view mirror.
And this is one of my key concerns about the internet era: Without a written record, it may become far easier to whitewash history.
I’m reminded of a self-conducted research project I engaged in many years ago, which was to read some Wall Street articles from shortly after the Great Crash of October 1929. The upshot: As of early 1930, the Wall Street Journal editors hadn’t the slightest clue that the U.S. had entered the Great Depression.
As of early 1930, the Wall Street Journal editors hadn’t the slightest clue that the U.S. had entered the Great Depression.
My readings of the history of that time led me to believe it was not obvious at that time. By March 1933, when all US banks had been closed for days, a Great Depression was undeniable.
WSJ used the term ‘crony capitalism’ in one of its headlines just a few weeks ago.
“By March 1933, when all US banks had been closed for days, a Great Depression was undeniable.”
Note that FDR had just taken office at the point when the Great Depression was undeniable.
Perhaps economic historians will date the onset of the present episode to the onset of the Great Recession in December 2007, on GWB’s watch, or even back to December 2006, when subprime subsidence was undeniable?
My personal date for the onset of the Great Recession was 8/10/2007 when I sold all my stock holdings & converted to cash equivalents.
This winter I am learning to weld mild steel.
My company’s 401k fiduciary (or whatchamacallit) changed from Merrill Lynch to Charles Schwab on January 1 2009 so I have no historical data on my performance in that 401k in 2007. But I just checked and my average annual gain as of today and since January 1 2009 is 14.6%. My allocation is about 67% large U.S. growth, 9% small U.S. value, and 24% international. World money printing is the reason. How can one trust fiat currency for 100% asset? I have 9% of it as my asset. It is handy only for short term but I would otherwise miss out on growth.
I would otherwise miss out on growth.
Yup, that’s what happened to me. I did not go back and figure what the loss/gain ratio was. I am happier with less uncertainty and feel better doing as little business as possible with
organized crimeWall Street.Bill — I’m with you. The trick to investing success these days is to figure out which assets classes the Fed’s policies are going to inflate and park your money there.
For instance, I was able to earn over 10% in 2012 on the monies I dumped into REIT funds early in the year when I learned about the Fed’s plan to reflate the housing market.
“Don’t fight the Fed” holds true now for investors more than ever!
The U.S. has been in a stock market depression since 2000. Compare the indices of 1929 through 1941 with the last twelve years. The market is going nowhere. BUT in either case people who invested in the valleys of the market plunges still increased their net worth at the end. Having annual income, even if it meant multiple jobs, from 1929 to 1953, would have allowed an investor to keep buying stocks and reinvest the dividends. Those who invested everything in stocks in October 1929 , I mean move from 100% cash to 100% of the Dow index that month were screwed. In reality, many people bought and held stocks for more than ten years prior to the first GD. Realistically, many investors who dollar cost averaged in the sideways market since 2000 have lower cost bases than the NAVs of their funds. Pundits still do not understand what “company assets” means. It means something real. Stock indices will never go to zero. This is why being 100% cash is folly.
“Having annual income, even if it meant multiple jobs, from 1929 to 1953, would have allowed an investor to keep buying stocks and reinvest the dividends.”
That’s what my grandpa did. And even though he died in 1953, his widow was able to survive off his investment portfolio for another 40 years.
I lost my December bet, but the inflation in stock prices just these first few trading days of the year were enough for a couple of new economy cars if I so desired to cash in. You are right. Play the Bernanke game by being mostly in stocks. Zero interest rates will be with us through at least 2015.
The significance of historic events may not be all that obvious to people caught up in it. For a minute or so, my uncle thought Japanese planes approaching his air field were there on a social visit.
In 10 years the HBB archives to this date will probably have meanings much different than those we might assign today. If the archives survive, that is.
If the archives survive, that is ??
Oh they will survive alright…You will be able to read them on your Kindel Fire…
You will be able to read them on your Kindel Fire…
Only if you keep several spares in one or more Faraday cages. Word to the wise.
‘If the archives survive’
Well, they are backed up daily and I lease the servers directly. Unlike when somebody at Google erased my blogspot blogs one night in 2005, I have a little control over the data now.
“Unlike when somebody at Google erased my blogspot blogs one night in 2005, I have a little control over the data now.”
REIC cyber-warfare?
REIC cyber-terrorism…
Well, they are backed up daily and I lease the servers directly. Unlike when somebody at Google erased my blogspot blogs one night in 2005, I have a little control over the data now.
But cloud computing is the future. And we all know we can trust our precious data to strangers.
But cloud computing is the future. And we all know we can trust our precious data to strangers.”
Thats not what marketing told us, companies now want all this on site I think he meant banks? can’t remember he talks so fast.
We have always been at war with Eastasia.
So says WSJ, the Winston Smith Journal.
“And this is one of my key concerns about the internet era: Without a written record, it may become far easier to whitewash history.”
Not that Google isn’t capable of whitewashing history, but its newspaper archive project was amazing and could have served as a buffer against whitewashing. (I presume that the WSJ print version also had the Angelo Mozilo headline that Ben mentioned. Unfortunately, Google dropped the project. To quote the article I’m linking to, “No one is totally sure why Google chose to shut down the project.”
I suppose it could have ended up being a very expensive project, but Google is known for riding those out if they seem worthy.
http://www.theatlantic.com/technology/archive/2011/05/google-shuts-down-newspaper-archive-project/239239/
“If you are pondering on what the best time to buy is, it’s now.”
Where have I heard that line before?
Speaking of absurd: Developer pitches $1B commonwealth for Belle Isle [part of Detroit]
Looking at the bright side, an island would be easier for oligarchs to defend from starving masses yearning for 3 hots and a cot.
Check out the amazing graph with the article I post below.
Huge Regional Price Shifts In Houses Over The Past 15 Years
By Matthew Yglesias
Posted Wednesday, Jan. 9, 2013, at 10:21 AM ET
Whenever I do “rent is too damn high” talks, I always get questions about the housing bubble. Like aren’t these high prices you’re talking about just a bubble issue? Or what do you mean San Diego is expensive, don’t you know we had a giant real estate crash?
The St Louis Federal Reserve Bank just published a great research survey on this subject that pulls together everything we know on this and the answer is basically “no.” House prices went up the most during the boom period in coastal areas, and house prices fell the most during the bust in the areas that had the biggest boom. But if you take a 15 year perspective, you can see huge price shifts net of the boom and bust that pointed in different directions in different places. Looking at the 19 Case-Shiller markets, you see that we’ve had double digit inflation-adjusted increases in house prices in the Washington, Los Angeles, New York, San Diego, Boston, San Francisco, Denver, Seattle, and Miami metro areas. Prices have falled a lot in Detroit, Las Vegas, Atlanta, and Cleveland. Portland, Tampa, Minneapolis, Phoenix, Chicago, and Charlotte have shown only modest changes.
This change has been large and rather sudden and it’s been easy to miss the signal for the boom and bust noise. Consequently, I think a lot of people don’t really understand it. Manhattan’s been more expensive than Kansas City for a long time, but there’s been a genuine generational shift in the cost of buying a home in the New York area—not just in Manhattan, not just in the cool part of Brooklyn, but systematically across the metropolitan area—that reflects a huge decline in the real incomes of newcomers and a huge transfer of wealth to people who bought real estate in the eighties or nineties.
…
Thanks Pbear…I enjoyed the chart and the viewer comments after…
Couple of observations from the comments…First, one poster said this;
Texas restricts public access to land-sales records. If I’m not mistaken it’s the only state that does so. As a result, many urban price surveys exclude Dallas and Houston….
Maybe Ben can answer this…Is this true Ben ??
Then this from someone living in the San Francisco area;
Seeing this after having recently returned to the bay area. While not “wealthy” pers our family makes good money and we’ve saved enough for 20% down but still are priced out once bidding wars take place on a property. Seeing a lot of irrational exuberance in the bay area housing market lately. Real estate agents and home builders are acting in a way eerily similar to the time right before the bubble burst. We’ve decided to hold back and rent.
‘Texas restricts public access to land-sales records’
I’ve never heard that.
Texas restricts access to the price, but all other information is available.
By looking up the property on the county appraisal district website, price can be determined pretty closely.
“But if you take a 15 year perspective, you can see huge price shifts net of the boom and bust that pointed in different directions in different places. Looking at the 19 Case-Shiller markets, you see that we’ve had double digit inflation-adjusted increases in house prices in the Washington, Los Angeles, New York, San Diego, Boston, San Francisco, Denver, Seattle, and Miami metro areas. Prices have falled a lot in Detroit, Las Vegas, Atlanta, and Cleveland. Portland, Tampa, Minneapolis, Phoenix, Chicago, and Charlotte have shown only modest changes.”
Given the duration and magnitude of the massive U.S. coastal bubble, I am guessing it will take a couple of decades for it to revert to the mean.
That’s why I am delighted that the all-cash Chinese and Canadian investors are stepping up to buy at the peak, as the blowback to the U.S. economy will be dampened if foreign real estate investors absorb the losses.
One of the comments to the article from a Brooklyn couple: “we simply can’t afford what our parents could because our housing costs are 80% higher than they were a generation ago.”
I see the same thing here in Boston. People who bought in the 1980s in an area close to Boston before it was gentrified paid $50,000 for old Victorian homes that would now sell for well over a million. But not only are the places more expensive, buyers are no longer getting the whole house, but a piece of it as a condo. I think if this were taken into account, housing increases would be even higher on the graphs.
Many of those places at the top of the graph have very wealthy people who are legal residents of low tax states and spend less than 183 days in the “blue” cities such as NYC, San Francisco, L.A (Westwood, Malibu, Pacific Palisades) and San Diego.
In the link posted a few weeks back about the exodus from California, there is a quote by a state official that California is not losing its rich people, movie stars and Silicon Valley entrepreneurs. That may be true, but there are many ways these very wealthy people lower their tax rates to less than the rates of the middle class who are fleeing California. They have top tax accountants and tax lawyers who make sure of that. It is an illusion to sucker people into enduring more suffering. State politicians with limited terms want it that way.
I intend to vacation in a Pacific coast state less than 183 days a year at some point while residing in Arizona. 2016 is the latest year I will travel frequently for business. At age 57 I would prefer more rest and more hours of free time than spending at airports. it seems Oregon is very affordable. But I would also take into consideration a cheap central California city such as my native Fresno where I still have relatives. The bonus is that the central valley gets very few earthquakes. There are plenty of cheap places in California where I can escape Phoenix heat.
Today is a day for absurd dramas, 1215 PM EST today:
Riot Breaks Out At Housing Assistance Event In Metro Detroit
Dregs of humanity behaving like the dregs of humanity? Well butter my butt and call me a biscuit!
January 9, 2013, 8:00 am2 Comments
The Great Dissenters
By BINYAMIN APPELBAUM
My article about Jeffrey Lacker on Wednesday mentions that he is the third member of the Federal Reserve’s Open Market Committee to dissent at least eight times in a single year.
So who were the other two?
One instance is quite recent. In 2010, Thomas M. Hoenig, then president of the Federal Reserve Bank of Kansas City, dissented at eight straight meetings. His reasons were similar to Mr. Lacker’s – concern that the aggressive efforts to stimulate the economy would undermine the stability of financial markets and loosen the Fed’s control of inflation.
Mr. Hoenig gave an interesting defense of dissenting, whatever the reasons, in a speech early the year after.
“A deliberative body does not gain credibility by concealing dissent when decision making is most difficult,” he said. “In fact, credibility is sacrificed as those on the outside realize that unanimity – difficult in any environment – simply may not be a reasonable expectation when the path ahead is the most confounding.”
The other instance dates back to 1980, when Henry C. Wallich, a Fed governor, dissented nine times because he felt that the central bank under Chairman Paul Volcker was not moving fast enough to bring inflation under control.
“Like burglary, inflation is an extralegal form of redistribution,” Mr. Wallich once wrote, according to his obituary. ”Unfortunately, many economists share with politicians the habit of always regarding inflation as the lesser of any alternative evils.”
He did not, however, dissent at every meeting that year. And according to William Greider’s “Secrets of the Temple,” he did not share Mr. Hoenig’s sense of purpose.
“It is not a pleasant thing to have to keep dissenting,” he quotes Mr. Wallich as saying. “It makes one quite useless. To be a constant dissenter is a fruitless thing.”
The MSM likes to paint dissenters like Lacker and Hoenig as some kind of kooks, when in fact they are among the few in high places with the guts to speak their mind on the ongoing theater of the absurd playing out at the Fed.
Got Fed-funded correlation and flattened risk premiums?
Investing
1/08/2013 @ 2:45PM
Fed Levitating Bond Prices Same Way Zero Percent Down Levitated Home Prices
Charles Biderman, Contributor
Bubbles are a popular way of describing unsustainable high prices. Stocks and bonds are at bubble levels just the way housing values were before they collapsed in the last decade.
Bond prices are as high as they can get, since interest rates are about as low as they can get. As interest rates started going down in 2008 bond prices went up.
And as interest rates stay down, the best and safest corporate use of free cash flow is to shrink the overall amount of shares, rather then making anything resembling a risky investment. So more cash and less shares in the hands of the institutions that own 80% of all U.S. stock has meant ever rising stock prices.
Up until the past four years, stock and bond prices traded in some sort of relationship to the underlying economy, to corporate earnings growth, stuff like that. All that matters now is that central banks keep buying back bonds from banks and that the banks use the newly printed money they get from the government to keep buying enough new government bonds to keep the game going.
How else can the U.S. government keep funding a $100 billion monthly deficit? Banks currently have $1.3 trillion on deposit with the Fed. Where did the banks get that $1.3 trillion? The Fed printed that money and used it to buy bank loans and bonds.
What did the banks do with that money? They gave $1.3 trillion back to the Fed. What is the Fed doing now with that cash? The Fed is now TWISTing $40 billion monthly into 10 year- mortgages. It is also printing another $40 billion per month to buy treasuries back from the banks—at a nice profit to the banks. The banks now have $40 billion more each month to fund the U.S. deficit. And all this at virtually zero interest rates!
Before 2007 the government created an artificial housing and economic bubble by encouraging home buying through a combination of 0% down payments and allowing below-market interest rate mortgages. Now to boost the markets, the Fed is giving banks newly printed money and the banks have used the money to buy newly issued government bonds. Is there a difference between the two in terms of ultimate negative effects on the economy. There is no difference as far as I can see.
…
If you want to know why I put zero credibility on Zillow™ or any other online home value calculator, look no further than the listing I am about to post below this comment.
To orient your thinking, ponder whether the value of a home could conceivably increase from $3.3 million (April 2012) to $33.6 million (November 2012) over the span of seven short months. Only a Realtor™ on crack would buy into this nonsense.
Are there really people out there who are both rich enough and stupid enough to fall for this kind of scam listing?
I suppose if you had a $40 million coin lying around that you didn’t really need, this purchase might make sense as an all-cash investment.
5992 Calle Camposeco, RANCHO SANTA FE, CA 92067
For Sale: $40,000,000
Zestimate®: $33,572,942
Est. Mortgage:
$140,781/mo
See current rates on Zillow
Bedrooms:7 beds
Bathrooms:8.5 baths
Single Family:30,898 sq ft
Lot:1,697,968 sq ft
Year Built:1996
“Are there really people out there who are both rich enough and stupid enough to fall for this kind of scam listing?”
If the federal reserve and the treasury hadn’t interfered with the economy’s 2008 correction where do you think these folks would be today?
“1,697,968 sq ft”
1,697,968 sq ft / (43,560 sq ft / acre) = 39 acres
That’s a lot of Rancho Santa Fe land!
Nice house. I wonder how big of a staff it takes to keep it up? A few maids and gardeners I suppose, plus maybe a handy man to fix things?
How do you price something like that? There can’t possibly be any meaningful comps.
The other part of Zillow’s nonsense which you have to love is that they show the value of the home steadily declining from a peak of $9.4 million (April 2006) to a trough of $3.3 million (April 2012) before mysteriously rocketing up into the stratosphere through the remainder of 2012. And none of the recent comps have sold for anything approaching the $40 million price tag.
Liars, damned liars, and Realtors™…
I still look at zillow as a resource to look at neighborhoods as a whole. I especially look at the yellow house icons. You get the idea of the comps. For individual house prices I do not have faith. I am interested in the 85266, 85268, 85259, and 85048/85044 zips in that order. Still have my own rule of not spending more than one sixth of my net worth on my primary residence. But that may have to change in three years!
“For individual house prices I do not have faith.”
It seems like they make up the numbers, and if the seller lists the home at ten times its market value, Zillow™ is right there with them in fantasy land.
Foreclosure backlog is back
Circuit Court Judge Lee Haworth presides during hearings at the Judge Lynn N. Silvertooth Judicial Center this month.
STAFF PHOTO / ELAINE LITHERLAND
By Josh Salman
Published: Friday, January 11, 2013 at 3:14 p.m.
Last Modified: Friday, January 11, 2013 at 3:14 p.m.
Gregory Montwill spent almost a year battling to successfully beat a foreclosure — or so he thinks.
In March 2010, the 55-year-old financial consultant received a default notice on a $300,000 Bank of America equity line. In jeopardy of losing his Siesta Key dream home, Montwill did not go quietly.
He cried fraud on the bank’s handling of the case, and when Bank of America could not produce the necessary paperwork to proceed, the lender voluntarily dismissed the foreclosure.
“How do you defend yourself?” Montwill said. “The average person doesn’t stand a chance.”
Montwill does not know when — or if — his case will be re-filed by the bank.
Despite gains in housing markets throughout Florida, courts are once again being flooded with foreclosures at a ferocious pace. In the past year, lenders have taken more and more Southwest Florida homeowners into court to settle foreclosures that, like Montwill’s, were tossed during the peak of the crisis.
The result are judicial systems statewide that are overloaded with a new backlog of cases, according to a Herald-Tribune review of records.
Experts warn the logjam could soon stymie the residential rebound that reignited Southwest Florida’s housing market in 2012.
That is because among the foreclosures that cleared the court system in 2012, nearly half were dismissed without a final judgment — raising concerns throughout Florida courts that have been unable to progress as they had hoped.
…
Foreclosure backlog is back
You better believe it’s back because it never left. And it’s enlarging rapidly.
He cried fraud on the bank’s handling of the case, and when Bank of America could not produce the necessary paperwork to proceed, the lender voluntarily dismissed the foreclosure.
“How do you defend yourself?” Montwill said. “The average person doesn’t stand a chance.”
Cried fraud on the bank’s handling of the case? Either Montwill was making the proper payments on the HELOC or he wasn’t. Of course no mention of that in the article.
Punishing austerity or votes? Why the euro zone bond rally cannot last
ERIC REGULY
ROME — The Globe and Mail
Published Friday, Jan. 11 2013, 7:09 PM EST
Last updated Saturday, Jan. 12 2013, 10:47 AM EST
If I were the owner of sovereign Greek, Spanish, Italian, Irish and Portuguese bonds, maybe even French bonds, I would be nervous. My twitchy feeling would not make a lot of sense to bond investors like hedge fund manager Dan Loeb, whose 2012 bets of rising bond values made fortunes.
Indeed, going long on allegedly dud bonds issued by allegedly bankrupt or near-bankrupt countries turned out to be one of the savviest moves of the entire financial crisis as Mario Draghi, president of the European Central Bank, made good on his promise to do “whatever it takes” to spare the euro from historical footnote status.
So what’s wrong with these soaring sovereign angels? Austerity. National budget deficits are not disappearing; some countries, like Spain, are blowing their deficit-reduction targets. The blown targets will naturally trigger more demands for austerity in a region that is in recession and suffering record unemployment.
But the 17-country euro zone, and the wider European Union, cannot suffer much more austerity before the streets explode in mass rage, as they have in Athens, Rome, Barcelona, Madrid and Lisbon. At times, Athens turned to a war zone.
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‘The trillion-dollar coin isn’t going to save the day. The U.S. Treasury says it won’t mint the coin as a way of escaping the debt-ceiling crisis. The Federal Reserve also nixed the plan.’
‘Even though the platinum coin idea started as something of a joke, it caught on in the blogosphere and gained some notable supporters such as Nobel Prize-winning economist Paul Krugman.’
http://www.latimes.com/business/money/la-fi-mo-trillion-coin-20130112,0,7251551.story
There’s that comedian Krugman again. He’s the head of the Dada School of Economics. So while we are talking about the absurd, and previously un-thinkable being considered as policy, why don’t we really shake things up Washington DC style?
First off; all of this is to be done by Executive Order. Whose EO, I don’t care because yours or mine is just as constitutional as the President’s. It an EXECUTIVE Order, get it? So don’t give me any of that rights/constitution crap.
Krugman will be in charge of the “Newt Gingrich Moon Colony” mint, where ONLY trillion dollar coins will be produced. (Note to female employees: the NGMC does not recognize Earth marriages, and men can have as many consorts as Space Commander Gingrich does. Again, no questions. this is War dammit, and War is hell. Just ask SC Gingrich’s ex wives.) At this post, Mr Krugman will be in charge of funding the imaginary space alien defense program. This will result in many trillion dollar coins being returned to Earth, thereby solving our current crisis.
Also, everybody is to give me, Ben Jones, all guns. I don’t want any back talk on this; hand them over. Also the President and Ben Jones will have armed guards for life. If I get any back talk, there will be a drone dispatched to shoot one of those big blow-upy things at the back-talkers house. Then when the ambulance shows up, another blow-upy thing will kill them too.
OK, have I forgotten anything? Oh yeah, I’ll be buying all your mortgage notes, using my ample supply of trillion dollar coins. So send in your interest payments payable to me personally. Unless you are Muslim; in which case you are now a slave. That’s right; slavery is back, and I don’t want any back talk! Or you know what will blow up you know who.
“I’ll be buying all your mortgage notes, using my ample supply of trillion dollar coins.”
Why waste your precious platinum? I recommend instead using electronic printing press money, which would be far less costly.
They aren’t platinum. It’s Krugmanite, easily mined on the Moon. Of course, we then fill in the mines. This will continue until the crisis passes, at which point we’ll leave the mine pits open, to ensure the wealth of future generations.
I suggest the economics profession set out to update their theory of money. They are collectively stuck in the outdated notion that money represents a store of value, a medium of exchange, a unit of account or a standard of deferred payment.
But in the electronic printing press era, where new money can be created with a keystroke on one of the Fed’s computers and instantaneously transmitted to investment banks all over the planet, it has morphed into a license to spend and consume resources which is granted and allocated by the Fed’s top-down policy decisions. How does the old theory of money apply in the electronic printing press era?
Leave it to Matt Groenig’s genius to come up with one of the most brilliant also-ran financial proposals in U.S. financial history. Homer Simpson for chief economist!
Abram Brown, Forbes Staff
I write about today’s market and tomorrow’s investments.
1/13/2013 @ 9:00AM
$1 Trillion Platinum Coin: Yes, It Really Originated In A ‘Simpsons’ Episode
Sunday mornings represent prime time for political dicussions. Let’s limit ours to silly policy, platinum and The Simpsons.
First off, let’s get this out of the way: The $1 trillion platinum coin will not happen. “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” says a Treasury spokesman.
Now, speculation and chatter swirled for weeks about the possibility, and more importantly, the fiscal feasibility, behind the trillion-dollar coin. Some very smart folks—right down to a former U.S. mint chief—suggested the Treasury could take advantage of a loophole, mint a $1 trillion platinum coin and ship it to the Federal Reserve. In theory it would then allow the U.S. to keep paying its bills, even though the country surpassed its $16.4 trillion debt limit. Another solution: Perhaps the government can issue IOU’s that we redeem at our local Wells Fargo or Bank of America.
The coin thing sounded great, though, right? Well, it sounded a bit far-fetched…even more so when you consider that fiscal theorem originated in Los Angeles, not Washington D.C. It is, in fact, ripped right from the halcyon days of the late 1990s—when Butterfinger BB’s still existed, and The Simpsons was in its ninth season. In that stretch of episodes, there was one called The Trouble With Trillion, an amusing romp that alluded to Stark Trek and included Fidel Castro.
Here’s a succinct episode synopsis from Ed Yardeni, a widely followed economist, that my colleague, Chris Helman, unsurfaced for us from a Yardeni client note:
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Groening (sorry for the typo!)
As the HBB’s resident legal experts might point out, the Simpson’s episode is irrelevant to the discussion, as it involved a $1t bill, not a platinum coin.
Well….
It may be constitutional. The Const. Art. I Sec. 8 para 5 says Congress may “coin Money, regulate the Value thereof, and of foreign Coin…”
it’s the states that are barred. Art. I Sec. 10 para. 1 says “No State shall…make anything but gold and silver Coin a Tender in Payment of Debts…”.
So the Feds can mint a Platinum coin but the States can’t.
Right.
What I meant is that the Simpsons episode involved a $1 trillion bill (paper money), not coinage.
Congress’s constitutional authority to “coin” a $1 trillion note is suggested by the passage you quoted. But it doesn’t say the Treasury (executive branch) or the Fed can do so on their own volition.
‘It may be constitutional.’
The Homer Simpson Executive Order (HSEO) signed on last weeks episode (’Homer Goes to Prep School ‘ http://epguides.com/Simpsons/) clearly states the constitution has been suspended until further notice. I say clearly, meaning it’s classified and you’ll have to take my word for it.
“Bull#hit, WSJ. You were just as guilty as anyone and now you’re back at it. Not one quote from an observer that says, “writing letters like this is nuts.” Or “you know, that’s a lot of money to borrow.” Not a shred of balance or caution. Like the Mercury News article; “Buy Buy Buy!”
Analysts who review a stock or bond disclose their fund’s ownership of said stock or bond. I wish the same were required of RE media coverage. I wonder how many of these WSJ writers are HomeDebtors themselves, with a vested interest in pumping the market.
Same type of breathless coverage is happening in our local newspapers and TV news. Low interest rates!! Prices up!! Bidding Wars!!
The fix is in.
Check out the fact checking I did in today’s Bits Bucket on the developer-owned UT-San Diego’s current $2m+ home sale fluff piece. It’s a tedious and onerous duty to correct MSM reporters on their misleading home sales reports, but somebody has to do it.
Isn’t the news that Calpers is going long Chinese real estate pretty much the kiss of death for the asset class?
Why China’s Real Estate Makes Perfect Sense
Housing-Market / China Housing Market Jan 12, 2013 - 07:11 AM
By: InvestmentContrarian
George Leong writes: China is beginning to show renewed growth. The country is driving stimulus spending and easy monetary policy to get its economy back on track and drive consumers to spend.
And while there has been talk of an asset bubble in China’s housing market, my view is that the short-term risk is high, but there’s also excellent long-term growth potential in the Chinese housing market.
Investment in the country’s housing market surged 61.7% from January to November, according to the National Bureau of Statistics in China.
The conditions bode well for the country’s housing market. Consider that there are over 300 million middle-class consumers in China, and as a group, they are hungry for a lifestyle like we have in the West. Real estate investments are a key goal for the Chinese.
Standard & Poor’s analysts believe the housing market in China is stabilizing with buyers returning while home prices are stabilizing.
Moreover, in an ironic twist at a time when California’s housing market is struggling, the state’s California Public Employees’ Retirement System (CalPers), a pension fund, announced it would be investing about $530 million in two new China real estate funds managed by ARA Asset Management, which is positive longer-term.
To play China’s housing market, you can take the more conservative approach and buy the Guggenheim China Real Estate (NYSEArca/TAO) exchange-traded fund (ETF) with a year-to-date return of 58.8% as of December 30, 2012. The fund holds mainly large value-oriented Chinese real state stocks.
To take a more speculative and potentially higher return opportunity, an emerging small-cap Chinese real estate company that I like longer-term is Xinyuan Real Estate Co., Ltd. (NYSE/XIN), which has a current share price of $3.36 and a market cap of $242 million.
Xinyuan is approaching its 52-week high of $3.95, set on April 3, 2012, and has outperformed the S&P 500 over the past 52 weeks.
Xinyuan buys land and develops large-scale, high-quality residential real estate projects that are targeted toward the growing middle class in China’s tier II cities. The company looks for cities that are large and growing, with developed urban areas and an established housing market.
Targeted cities have above-average gross domestic product (GDP) growth and population growth. These cities currently comprise strategically selected tier II cities, including Hefei, Jinan, Kunshan, Suzhou, Zhengzhou, Chengdu, and Xuzhou. The combined population of these cities is over 34.5 million people, according to Xinyuan.
Projects include multi-layer apartment buildings, sub-high-rise apartment buildings, high-rise apartment buildings, retail outlets, leisure and health facilities, kindergartens, and schools.
And in perhaps a test of the U.S. housing market, Xinyuan acquired a development site in New York City for $54.2 million via its U.S. development unit, XIN Development Group International.
Annual sales grew sequentially in each year over the past nine years. Sales grew from $12.8 million in 2002 to nearly $688 million in 2011. Xinyuan has been profitable in seven of the last 10 years, including increases in the last three years.
So, while housing may still be relatively cheap in Florida, there are also unique opportunities in China.
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