The Housing Bubble

Will environmentalists act to declare crab lice an endangered species?

Can Michelle Obama somehow claim credit for this?

I thought that was in The Onion a couple of weeks ago.

I have been saying for years that athletes and actors should have a turnkey Oil City Plan ready to go at a moment’s notice. Done right, a decent OCP doesn’t cost but a quarter-mil. Or at the very least, make sure those grand digs are paid off so you can sell and downsize to a simpler life, as Hulk Hogan (good for him) has been doing.

I mentioned here before (2007-ish) that I lived near Rasheed Wallace’s pad here in Portland. Rasheed Wallace hasn’t played for Portland for 8 years. At that time it had been for sale for a few years. It’s still for sale at more than $2M more than comps and the rumor was that every suggestion to lower the price was refused. Meanwhile, taxes paid on it last year were $43k.

‘Five Injured in Accidental Shootings at Gun Shows on “Gun Appreciation Day”’

Did they fail to have gun-toting guards present at the events where these incidents occurred?

The AP included this unrelated “news” in their coverage of the hundreds of pro-gun, pro-2nd amendment, anti-Obama rallies on Saturday.

Straight out of the coastal elitist talking point playbook (which doesn’t apply to Mayor Bloomberg and Senator Feinstein, they’re like, exempt, or some kind of sh*t).

See also Bloomberg article we posted today about increase in murders in gun-free Chicago.

And remember kidz, when seconds count, the police are only minutes away!

Well, that is about 30 LESS dead and 100 less wounded than in gun-free Chicago where it is almost impossible for a citizen to own a gun legally…

The basic catch-22 with firearms is that the more guns in the hands of the law abiding, the more guns in the hands of the criminals.

I agree laws and platitudes don’t work as criminals are unswayed by them. What would work is reducing the manufacture of these devices.

However, additionally, as we’ve seen with the subway pushings and random stabbings and the like, it is imperative that the maniacally homicidal be identified and institutionalized.

“Five Injured in Accidental Shootings at Gun Shows on “Gun Appreciation Day”

Irony, how does it work?

“Five Injured in Accidental Shootings at Gun Shows on “Gun Appreciation Day””

What is your interest in other people’s business? Why do you look for any excuse to disarm America?

Sounds like a good case for more fruit control.

Probably a turf war between the vegetarians and the fruitarians.

Plus points for alliteration.

Fruit doesn’t dent vehicles. People dent vehicles.

There were a lot more scumbag kids back in the day.

What were the “Smashing Pumpkins” rock group named after anyway?

Orange you glad I didn’t say “knock knock”?

Where do you get pumpkins in January??

Haha!

“How to defend yourself against fruit” (Python skit)

http://www.youtube.com/watch?v=piWCBOsJr-w

Davos Doom Loses to Merkel-Draghi as Euro Defies Roubini
By Simon Kennedy - Jan 20, 2013 5:01 PM MT

Dr. Doom got it wrong.

The parade of economists and investors led by Nouriel Roubini predicting Greece’s ejection by now from the euro zone failed to appreciate the resolve of European policy makers to protect their union and the amount of pain Greeks are willing to stomach.

“People underestimated these factors,” Roubini, chairman of New York-based Roubini Global Economics LLC, said in a telephone call 12 months after predicting Greece’s exit in remarks to the 2012 World Economic Forum’s annual meeting in Davos, Switzerland. A Greek departure “is certainly a less likely event this year, although not a zero probability.”

Joining him in questioning whether the 17-nation euro region was built to last and declaring Greece’s departure imminent, inevitable or in its interest were hedge-fund manager John Paulson, Goldman Sachs Group Inc. President Gary Cohn, Nobel laureates Paul Krugman and Joseph Stiglitz, Pacific Investment Management Co. Chief Executive Officer Mohamed El- Erian, Kenneth Rogoff and Martin Feldstein of Harvard University and Citigroup Inc. chief economist Willem Buiter.

Roubini — who earned his nickname for correctly predicting the 2008 global financial crisis — Cohn, Rogoff and Stiglitz are among the skeptics returning this week to the Alpine conference as investors pull back bets against the euro and signal the worst of the three-year debt crisis has passed.
…

Global Economic Crisis: Europe Slides Deeper into Recession
By Stefan Steinberg
January 17, 2013

According to figures released Monday by the European Union statistics agency, Eurostat, industrial output across the 17 countries of the euro zone fell in November for the third successive month.

The 0.3 percent decline for November was worse than forecast by financial analysts, who had anticipated a slight recovery. Compared to the same month in 2011, industrial production in the euro zone was down by 3.7 percent.

Separate figures released Monday revealed that Europe’s biggest economy, Germany, suffered a sharp contraction in the final quarter of 2012. The German economy, which accounts for 28 percent of all gross domestic product (GDP) in the euro zone, contracted by 0.5 percent. This slashed Germany’s growth rate for all of 2012 to just 0.7 percent, down sharply from the country’s growth rate of 3.0 percent in 2011.

The most significant expression of the economic downturn in Germany is the slump in investment by German companies in plant and machinery. Despite benchmark interest rates close to zero as set by the European Central Bank, investment in plant and machinery fell by 4.1 per cent during 2012. This compares to a 7.3 percent growth in such investment one year earlier.

In line with the latest figures, the German government has cut its forecast for economic growth in 2013 from an already meager 1.0 percent to just 0.4 percent.

The decline in investment in plant and machinery is the clearest indication that German executives expect the contraction in the country’s key economic markets in Europe to continue and deepen. German exports to Europe declined by 2.0 percent in 2012. A full-scale disaster was prevented only by increased German exports to North America, Mexico and the Far East.

Germany’s export industry is also threatened by the rise in the value of the euro, which has gained 8 percent against the US dollar in the past six months. At a meeting of business leaders in Luxembourg at the start of this week, the outgoing head of euro-area finance ministers, Jean-Claude Juncker, expressed concern over the rise in the value of the euro for European exports.

Germany is currently the only major European country to be experiencing even a minimal level of growth. According to figures from the French Central Bank, the continent’s second largest economy, France, barely avoided sinking officially into recession by posting 0.1 growth in the third quarter of 2012. In both the second and fourth quarters the national economy contracted.

Inside the euro zone itself, seven countries are officially in recession, with Greece, Portugal, Spain and Italy mired in deep slumps. Outside the euro zone, Great Britain is expected to slide into a “triple dip” recession in 2013.

The increasingly precarious nature of the European economy is underscored by the situation of one of its key industries—auto. Although some German companies, in particular Volkswagen, were able to expand their sales in some parts of the world, auto markets in Europe are shrinking dramatically. VW sales dropped by 6.5 percent in Western Europe, excluding Germany.
…

America’s economy
The boom this time
Jan 21st 2013, 16:40 by R.A. | WASHINGTON

IT IS a holiday in America and inauguration day (ceremonial, anyway) and as good a time as any for reflection on what might be ahead for the American economy. Bill McBride has two good posts laying out a case for optimism and spotting possible sources of recession. I suppose I’ll add my two cents.

The case for cautious bullishness on the American economy is strong. For the moment, it looks as though America will avoid a damaging fiscal showdown and a major fiscal policy contraction, both of which were considered major threats to the 2013 outlook. This isn’t a sure thing, but the outlook is much better than it was a few months ago. Meanwhile, several key cyclical drags on the economy are in the process of switching to positions of support: state and local spending and investment and residential investment. Foreseeable external threats—euro collapse and a hard Chinese landing—seem less worrying now than they have over the past two years. American households have made significant progress deleveraging. Perhaps most encouragingly, the Federal Reserve continues its evolution toward a policy of explicit “catch-up” toward the pre-crisis path of the price level and/or nominal output level. We’ll have to see exactly what amount of catch-up the Fed is prepared to tolerate, but some is better than none, which is what appeared to be on offer a year or two ago.

As a result, I think it’s reasonable to expect a baseline growth performance this year a bit above trend, close to 3%, which would be a marked acceleration from the 2010-2012 period. Projecting farther into the future is a mug’s game, but I see reasons for optimism. America’s energy industry for one. An end to the adjustment to rapid Chinese industrialisation for another. An immigration reform that makes it easier for workers to move to America, especially those with high skill levels, seems achievable. And underlying technological progress looks healthy relative to the post-1970 trend, if not quite as strong as in the late 1990s. There are headwinds, demographic and fiscal, but also tailwinds.

What about the threats to American growth? As Mr McBride notes, there is always the risk, though small, of a big and unexpected disaster: geopolitical, seismic, climatic, or otherwise. Both more plausible and more foreseeable, though still fairly unlikely, is the possibility of a major policy error or political crisis in Europe or perhaps China. Continuing the move toward greater probabilities takes us to a resource shock: a major supply disruption of oil or some other commodity.

A domestic political mistake is receding as a major economic threat, though it is not gone entirely. A big fiscal shock or a debt-ceiling error that shook financial markets could endanger the current expansion. It would take a substantial shock to push the economy into recession, however.
…

ft dot com
January 21, 2013 11:16 pm
Republicans seek to avoid debt backlash
By Alan Rappeport in Washington

Republicans in the House of Representatives on Monday introduced a bill to extend temporarily the debt limit, avoiding a confrontation with President Barack Obama amid concerns that they would face a backlash for steering the US government towards default.

The House will vote on Wednesday on the bill, which would “ensure complete and timely payment of the obligations of the United States government” until May 19. The Treasury has been using “extraordinary” measures to pay its bills since the $16.4tn debt ceiling was technically reached at the end of last year.

Eric Cantor, House majority leader, signalled last week that Republicans were ready to pass an extension of the debt limit.

“This is the first step to get on the right track, reduce our deficit and get focused on creating better living conditions for our families and children,” Mr Cantor said following a two-day Republican retreat. “It’s time to come together and get to work.”
…

Anyone who believes they understand how the scenario described below leads to a gold rally, please share.

Goldman Forecasts Gold Rally Amid Debt-Ceiling Confrontation
By Glenys Sim - Jan 21, 2013 2:43 AM MT

Gold may climb over the next three months as U.S. lawmakers attempt to tackle the country’s debt ceiling and the world’s largest economy slows, Goldman Sachs Group Inc. said, advising investors to place bets on advances.

“We see current prices as a good entry point to re- establish fresh longs,” analysts Damien Courvalin and Alec Phillips wrote in a Jan. 18 report. The bank reiterated a three- month target of $1,825 an ounce, as well as a forecast for prices to weaken in the second half as the U.S. economy rebounds.

Gold fell 5.5 percent last quarter, the worst performance since 2008, on expectations for a recovery and potential end to central bank stimulus in the U.S. An advance to $1,825 would be consistent with rallies into debt-ceiling decisions, the analysts wrote. Since 1960, Congress has raised or revised the debt limit 79 times, according to the Treasury Department.

“The uncertainty associated with these issues, combined with our economists’ forecast for weak U.S. GDP growth in the first half of 2013 following the negative impact of higher taxes will push gold” to the three-month target, they wrote.

Gold, which rallied for a 12th year in 2012, traded at $1,688.50 an ounce on the Comex at 5:40 p.m. in Singapore. Holdings in exchange-traded products reached a record last month, data compiled by Bloomberg show. Most-active prices last traded above $1,825 an ounce in September 2011.
…

Is there any chance the debt ceiling showdown will get called off this time? If so, by Goldman Sachs’ own logic, would this lead to a gold price crash?

CREDIT MARKETS
January 20, 2013, 12:19 p.m. ET

Money Managers Bet on Debt-Limit Deal
By CYNTHIA LIN

As the U.S. inches closer to its debt limit, some money managers see a buying opportunity in short-end Treasurys.

The debt-ceiling deadline, a point at which the government will run out of money unless lawmakers agree to increase the debt cap, is expected around March 1. Without a deal, there will be disruptions in certain day-to-day government operations and possible delays to bill payments.

Ahead of this, some short-end Treasury bills have sold off sharply.

But money-market fund managers who are allowed to invest only in the safest short-term debt see the drop as a chance to buy. That is because they see the selling as temporary, believing the U.S. government will ultimately sort out its finances.

“We’re really not worried about the U.S. defaulting,” said Joseph D’Angelo, head of money funds at Prudential Fixed Income.

Among the big movers, the Treasury bill maturing on March 7—the first piece of debt to come due after the estimated cutoff date—saw its yield rise as high as 0.12% in the past week from 0.06% the week before. By comparison, there is only a 0.08% rate on three-month bills, the next closest maturity sold by the government.

Believing declines in Treasury bills will be temporary amid the debt-ceiling debate, Mr. D’Angelo says money managers are making sure they have cash to play these swings in coming months. On Friday, news that House Republicans are considering a three-month extension of the ceiling helped bring the March 7 bill yield back down to 0.06%.

But the battle is far from over and money managers may not continue to buy these bills. Money-market funds are highly conservative, and the allure of juicier yields will fade if a debt-ceiling deal comes down to the wire. Barclays warned last week that if the negotiations in Washington stall through mid-February, about 15% of the balances in government-only money funds could leave for bank deposits.

“It’s about investors’ confidence in funds, as well,” said Peter Yi, head of short-term fixed income at Northern Trust, who has kept little exposure to bills due in late February to early March. “If there are specific Treasury bills that have missed maturity dates, that could spark some confidence issues.”
…

Defense is 20% of the federal budget and shrinking
Entitlements is 55% of the federal budget and growing

The US Government borrows 45 cents of every dollar it spends.

Do the math or end up like Greece.

“Obama was confronted in his first term with an inherited recession that drove down most Americans’ incomes. His second term starts with a fight to merely hold the line against the Republican House majority’s push to cut benefits in entitlement programs such as Medicare and Social Security that many Americans rely upon.

Has Obama ever mentioned a lower class? Does one even exist according to his administration?

“Median household income in November was $51,310 — $3,850 lower than when Obama took office in January 2009, according to an analysis of census data by Sentier Research, an economic-consulting firm in Annapolis, Maryland.”

It’s a recession. No surprise.

“Median wages for men between 25 and 64 dropped 19 percent - - to $34,000 a year — from 1971 to 2011, after accounting for inflation.”

That’s more of an issue. It was covered up first by more women in the workforce, so household income kept rising. Then by lost FUTURE income in retirement benefits, which didn’t affect future spending. Then by exploding debt. No hiding from it now.

High school dropouts started getting poorer in the 1970s. It happened to blue collar high school graduates in the “deindustrialization” recession of the early 1980s, and to college gradutes and office workers in the early 1990s recession as automation and outsourcing took hold. In the 2000s only the one percent got ahead. Now it’s the 0.1 percent.

The impact of the decades-long slide in wages was initially cushioned in many families by the increasing number of women who went to work, and later by the home equity that families borrowed against during the run-up in housing prices before the real estate bubble burst

Exactly.

“…median household income in November was $51,310…”

A family of four relying on $51,310 in 2013 in a U.S. metro area is likely struggling to stay alive, hardly middle-class IMHO.

“Obama Promise to Boost Middle Class Already in Peril:”

cool..so he’s finally going to let housing prices crash?

i knew i should have voted for him.

Well, when gun bans don’t work you can always blame the weather…

“Charlie don’t surf!”

“We are either going to make snow angels or we are going to kill people”. - random gang leader

“I came here to build snowmen and kick some ass. And I don’t see any snow on the ground.” -carjacking thug

WTF?

http://www.telegraph.co.uk/comment/9797315/A-forecast-the-Met-Office-hoped-you-wouldnt-see.html

Global warming finally admitting that my estimate that almost 90% of the warming was natural and we might be headed to much colder temperatures.

Where I live is setting new record high temps.

“There’s never been this little snow since the beginning of records in Chicago,

This is very bad for the continuing drought.

“Are y’all renters ? Do you plan renting for the rest of your life?
…
I hear a lot of people complain and complain, but offer little solutions.

Is renting the best to do? Are you planning on renting for the rest of your life?
…”

Where’s Pimp Watch when you need him?

“My mom’s owned her home for over 40 years and it’s been paid off for over 10. She has no ‘mortage’ payments and that seems to work very well for her.

Does her home need repairs? Sure, but most are minor. Houses don’t need roofs and new foundations every year.”

Could the poster (or anyone) kindly explain why this is whatsoever relevant to the buy-or-rent decision today, after home prices went through an epic bubble and collapse, and at a point when low-end inventory has been pretty much all ’snapped up’ in desirable areas by investors and the central bank is pulling out all the stops to artificially reflate housing prices?

Because I’m missing it.

I’m not of much help, as I’m too young and poor to buy a house. However, even if I had the money, I wouldn’t. I plan on living in the less safer, non white areas. I grew up in a small town that was getting very violent, so I’m used to it (although not every run down area is extremely violent). I think if you are older, and have more money (especially a down payment), it might be good to buy in some areas. However, if you are under 30, I think it’s a horrible, horrible idea (in the metros) unless you have a professional degree and make at least 150k family income.

I saw you wanted to buy a condo, I don’t think you should, just because I can imagine condo owners getting fked over. I’m pretty sure condos used to be the option for people who didn’t have kids yet, or who were single, because it was cheaper than a house. I’d much rather rent a room in someone’s house before I bought at today’s prices, especially a condo. But maybe that’s because I’m stubborn and pessimistic. I’m just not seeing any job security for many people right now, so it seems like a bad decision unless you have all cash.

My solution is to rent a room, trailor, or studio and to keep my monthly expenses down as much as possible. But, I’m a minimalist, so I’m sure not everyone wants to be like that.

Brett…

We advise you to buy a condo in Austin. In particular, we suggest you buy the Craterian model. That way you won’t have to expend any effort to dive ever deeper underwater as you’ll already be so far down.

‘I hear a lot of people complain and complain, but offer little solutions.’

This the ‘fork in the road’ version of to buy or not to buy. I have to decide; what do I do? It’s now or never, there’ no going back!

Here’s a different way to pose the question; not to this blogs readers as a group, but as individuals. For you reader, how will it change your life if I buy a condo in downtown Austin?

Myself, I can’t see how it will affect my life. I don’t have to make the payments. Even if you get a government backed loan, one more on top of millions won’t change much. I don’t even feel much concern for you personally, because if it turns out to be a mistake, you’re young and you’ll get over it. We can still go out for margaritas the next time I’m in Austin.

Now see, there’s no pressure. It’s just a decision. If you don’t like the condo, just walk away. That’s what everybody else does.

Once you buy a home in a falling knife real estate market, you are priced in forever.

Renters always have to option to buy later, after prices crater by 65%.

Why wouldn’t anyone in their right mind rent, Brett?

I live in Brooklyn, and bought in 1994 after the first housing bubble — which peaked in 1987 — deflated. I didn’t expect to seen another, but I have.

I had to be a “bitter renter” for seven extra years waiting for prices to return to normal, compared with when we might have bought a house otherise.

We were packed into small apartments, but all those years of extra savings meant a very large downpayment, and a 15 year mortgage that we paid off in 10 (thanks to the stock market bubble, that was the best investment we could make).

The question for us is, where will our kids be able to live since the NY area bubble has yet to fully deflate, and the city is now more expensive than the suburbs?

I owe a lot to this blog and others. I delayed buying a house until a little over a year ago because a small group saw what was happening over a decade ago. I could have overextended myself and joined the party like so many did. instead I waited, and saved. I now own a house in a good neighborhood in SoCal that costs less than three times my income. My payments are affordable and I have a cushion in case I suffer an unexpected job loss. For me, the timing was right. My son was about to go into first grade, for the first time ever, we could afford a house that we genuinely liked and could live in for the rest of our days. At that point, it became less about whether the price goes up or down and more about stability and security. (Rent prices out here have shot up in the last year or two as well.). Our mortgage payment is less than we were paying in rent two years ago. So…no. You take the knowledge that you gain from here and elsewhere. Then apply your own filters and logic, and do the best that you can.

We bought our house in 1990 shortly after I received an offer of a position with a private practice medical group in a nice area north of Chicago. The odds of staying in that area long-term were high. Both my husband and I had good jobs with good benefits, and buying made sense. We paid about twice our annual income at that time for the house. We only had enough in savings to put 10% down. We never moved up to a larger more impressive home, and paid off the 15-year mortgage on our little house in 14 years, after refinancing twice: the first time we put in additional cash to get rid of the PMI and we lowered our interest rate by 2 percentage points. The second time we got rid of the hated property tax escrow (I never trusted the mortgage company to pay the taxes on time) and again lowered the interest rate.

I do not advise you to buy, Brett, because you are young, single, your life situation will probably change at some point, and condos are a bad investment. Plus, where you want to live is hideously overpriced.

I live in a nice house on 5 acres. Total cost: 850/month. Buying it would double my costs, assuming it didn’t depreciate.

Glad to share. I rent. But I am living in Boston temporarily for work. Been here three years. Could be another three. Mabye even five. Long term plan: I’ll buy for cash when I retire (10 years tops though am very tempted to quit now - the beauty of no debt and savings allows such fantasy) Will do a modified oil city plan. Will buy in DC or NY or San Fran but a studio. Minimal monthly cost. Also will probably do some kind of work part time after retirement but not the crazy schedule work load I have now. I am not opposed to owning RE. Just don’t want it to own me.

P.S. I am 51 years old.

P.S.S. Brett I posted a reply the day before yesterday to your previous day’s post.

Is renting the best to do? Are you planning on renting for the rest of your life?

So, it’s government intervention (Fed MBS buying, extremely low interest rates, a barrage of government lenders, the FHA with their 3.5% down loans) propping up the prices of houses. Can they keep it up forever? Probably not.

It’s like having a very wealthy neighbor who likes antiques. I go to an auction and she goes too. She always outbids me. So I keep my money until her appetite lessens or she runs out of cash. In the meantime, my net worth keeps increasing. But eventually, I want to buy antiques as I find it pleasing to own them.

Renting is a substitute for owning. I am on board with buying. If houses were cheaper, I would do so. I look at historic prices and I see massive jumps in the mid 2000s which have not reset. And these are price levels, which came about due to bad lending, which the government is trying to maintain through yet more debt.

Shelter is always a cost. The question is, how much of a cost will it be? Relatively more? Or relatively less.

House prices increased dramatically from the late 70s to the late 2000s due to the ability of the lender to completely shed repayment risk. The system was not sustainable and it imploded and the government put the rest of us on the hook to pay off the bad debt of the deadbeats and foreclosees, to benefit the financial sector. Those who expect such runups in the future are almost certainly mistaken, as there doesn’t seem to be a mechanism to support such a new runup. House prices are directly tied to the amount of debt one can take on.

I’ve seen people who bought houses and lost the house and lost money. I’ve seen renters who kept their powder dry and had their net worth increase. I’m on board with buying. In the long run, with a reasonably priced house, it can be less expensive than renting. But I’m not willing to buy at any cost as that will degrade my standard of living. And ultimately, it’s all about my standard of living.

I rented up until 2011. The house we purchased gives us a lot more than our prior rental (extra space for things like a home office, ability to host family gatherings, etc.). We tried to find a rental that gave us some of these same things, but most such rentals were only available for a shorter lease term than we wanted in order to justify moving (1 year, 18 months)–most were from people temporarily moving out of the area for work.

Given that my primary business is RE investment, I never considered my home purchase decision an investment decision (I have plenty of RE exposure elsewhere).

My main comment for you to consider is this:

Housing is consumed. Do not think of it as an investment.

While it can be a good thing economically to purchase if you intend to live there for a LONG time (like your mom), it can be quite costly if there is a strong possibility that you will either outgrow the space or find yourself in a situation where you need to sell in the near term (less than 10 years).

If the right kind of shelter for our family was the same kind of house we were renting, it is unlikely we would have purchased (we had a very stable landlord/tenant relationship). However, we had expanded our living space into the garage (kids play area), and there was a rodent problem that, despite efforts, wouldn’t go away.

If the kind of place you are thinking about purchasing is roughly the same as the kind of place you are currently renting, the decision is a more pure rent vs. own analysis. I would think long and hard about BOTH whether you want to live in that kind of place for upwards of 10 years, and whether the extra cost of ownership (time, maintenance, etc.) is worth whatever you get out of it (some people place great value upon being able to change their living space without talking to a landlord…I don’t).

From what I’ve heard from your comments, you are thinking of buying based on economics, but are still pretty young, and enjoying the downtown lifestyle. IMHO, the math, while important, should take a backseat to the questions of what kind of shelter you want to occupy currently, and how long you intend to occupy it–if you just want a real estate investment, there are other ways to get that exposure.

If you are concerned about rents rising, consider whether there is a more liquid investment that you can make with your down payment that will act in a similar way to your rents, and thus help defray that additional rent (an apartment REIT, while I don’t like the low yields today, will probably have their dividends go up with rent levels in the US generally). That liquid investment, just like housing, could fall in value during your period of ownership–however, it won’t cost you 6% to get out, and you can sell (all or some) with the click of a mouse.

“Where do members of the housing bubble blog live?”

Brett- I’m in eastern Washington state out in the Columbia Basin. Median houses are roughly 3x median income and slipping albeit slowly. The HELOC wave hit this area hard leaving many used home owners upside-down as the home builders can build brand new spec houses for less. What’s the catch? For starters it’s 24-degrees F outside, and we’ll be frozen until March, and then it’ll be overcast with showers until May, and then it’ll be perfect 70’s for maybe six weeks, and then it’ll be too f***ing HOT until late September.

If you have a functional/technical education you will do fine here, and your spouse can probably stay at home with the kids. Unfortunately about 30% of the total population lives on welfare as a lifestyle, and probably 20% of the manual labor workforce goes on unemployment every winter.

FWIW my house is paid for, and good thing too because our teen aged kids are costing me a fortune, and inflation in everything except income has got me hemmed in tight. I’m debt free, and staying that way too!

> Where do members of the housing bubble blog live?

OK, I’ll play.

I - for lack of a better term - own. Roughly 3K sqft, on half an acre, in what I consider to be a nice suburban neighborhood; house built in 2005. 5 car garage sold me on the place-

My 3.5% (now 14yr) mortgage is well under 2X my gross income. Comps say my property value is approximately 2X the mortgage value; ~%50 equity. I’ve been there 6 years now, re-financed twice. I’ve probably lost $60K on the place- It’s worth a little less than I paid for it, but that gives me no credit for the significant upgrades I’ve made (mostly landscaping the big yard and finishing the basement).

It would cost roughly $2K a month to rent something comparable (but smaller) in this area. 6 years of that is $144K.

With two teenage kids (one about to move out) I’ve been happy to give them a stable neighborhood, set of friends, and school situation.

If I could go back to 2007 and do things over, I would buy the place again. No regrets.

I don’t foresee ever needing a bigger place- if/when I move, it will probably be to someplace smaller.

Mid 40s. Prior military. Rented for 18 years, becoming homeless twice for short periods, before I jumped on an auctioned property 3 years ago. Paid cash, now nobody can throw me out, at least until I can’t even summon up the property taxes (it’s bound to happen in 2013 at this rate). Rusty city near the Great Lakes. If I had been renting still, I’d be homeless again, and probably dead this time.

I will never forgive the middle class and the bankers for their vicious conspiracy during my entire life so far, trying to keep housing so f#$% expensive that it made me either homeless or constantly despondent. I should have known something was terribly wrong with society when some douchebags I worked with in the military were busy trying to buy up property so that renters could then “buy it for them”. In the late 1980s that’s all that people were talking about. Even at age 19-21, I should have known. Expensive housing and big inflation are all my generation has known, all while the Boomer job market was collapsing, producing this constant economic uncertainty. Lots of bills, or no real life at all, combined with sporadic work. It’s a recipe for catastrophe.

Even owning my own home, I’m still in trouble; I’m counting my 15th year of being in economic emergency. All I worry about in life, is money. Really if I wasn’t so strong willed, I’d have taken my own life by now. I know people who have. I’ve buried people younger than me. And I’m still taking that risk that several others have, where they wake up one day and say hello to the cold caress of Mister Cancer; late detection of course, which automatically means its fatal. Without regular access to a family doctor, I can see that people like me are in a high risk category. Overall, I’m sure our lifespans are short. I’m not even sure if I’ll live to collect SS at the minimum age.

I see my life choices being now holding on, capitalizing on extremely low monthly living costs, or just abandoning my investments, even my common property, to become a sad little renter in a major city far away, where there are actually some jobs. Honestly it’s really inertia that keeps me in the first option. I may as well just stay here since it’s at least a form of losing that I understand.

$6 Trillion in deficit spending had to go somewhere.

Looks like it went to paying nice government salaries of youngster wonks who then spend that money on cool places to hand out.

Dang it. Now I’m hungry.

It is ironic how the most liberal and socialist of cities in America have the largest gap in wealth…

But the “elites” they will never fail to lecture the rest of us on what is fair.

Of course, NYC is one of the largest leech city in the world - all the trillion dollar bailouts go there to keep the bankers alive with their million dollar bonuses.

NYC also has some of the highest income taxes (you will pay about 10% combined with NYC and NYC income taxes.).

And then come the INSANE property taxes. Expect a nothing special small house on a postage stamp lot to have at least $20,000/year in property taxes anywhere within 20 miles of NYC. And it does not drop off that much the father out you get.

And I thought $1,200 was a lot of money per month… :/

“Where does a middle-class person live?”

In the outer boroughs, or the outer suburbs. Not in Manhattan, or suburban Westchester, Nassau, or Fairfield Counties, aside from special circumstances of having bought or moved to a rent-regulated location long ago or coming up with some other kind of special deal.

The 2 linked articles are quite amusing. Manhatten has been over priced since 1900.

Do they have strict gun control? If not it could be used as a diversion from the economy as it is used here.

Also Idaho and Arizona. New Hampshire seems to be 12th.

CA in Q2 2011 was 30% (now slightly lower)

http://www.corelogic.com/about-us/news/new-corelogic-data-reveals-q2-negative-equity-declines-in-hardest-hit-markets-and-8-million-negative-equity-borrowers-have-above.aspx

In Q3 2011, CA fell out of the top 5 for the first time since 2009

http://www.corelogic.com/about-us/news/corelogic-third-quarter-2011-negative-equity-data-shows-slight-decline-but-remains-elevated.aspx

Where do you see that CA is rising in number of homes with negative equity?

I agree with all of this but it still doesn’t address the problems we renters face: Lenders understand their plight and how to circumvent it. There is no mechanism forcing them to sell this glut of inventory, what event or events could conceivably change this?

This market is in a stalemate.

Someone posted this in the comments:

http://www.vanillaicerealestate.com/

‘The DIY show, The Vanilla Ice Project, focuses on home improvement and the development of a themed strategy designed to transform the appearance of the mansion. Now you can learn the same strategies that he uses on the show to flip homes for MASSIVE profits!’

“So it’s a good thing the housing sector continues to build up speed.”

It has accelerated to 20 mph thus far.

Consumers are feeling pinched by higher taxes and business investment has been choppy, so it’s a good thing the housing sector continues to build up speed.

The actual buyer of the physical asset is the by-product, like wheat chaff or rice husks, of the real product, the mortgages for the bond markets.

Let’s discuss the release.

There is massive housing inventory held off the market. Its’ release will crush housing prices.

So they won’t release the massive housing inventory all at once.

Those two sentences answer most of the questions that they pose.

The country should be working to try and improve the standard of living for its citizens and not be a colony (again) for the rest of the world’s manufactured goods.

“- Due to globalization, the value of the American worker is declining.”

Wrong right from the start.

American productivity per worker is the highest in the world and has improved decade after decade.

We are being lied, cheated and stolen from. Why? Because we are too damn stupid to know it.

The job will always be more mobile than the worker.

Governments don’t mind importing the work, but the US of A is the only country in the world that allows a free-for-all in the Labor marketplace. Just about every other country (including China) has real restrictions/limitations on Joe Schmoe packing up, moving to Shanghai, and displacing a Chinese worker

The fate of the “top earners” remains to be seen. Some of these people are going to find out that they are not as valuable as they think they are.

The top earners in the US have skills well suited to the new global economy.

BS. Most are just in jobs that pay a lot more than they would anywhere else in the world. Corporate execs, doctors, lawyers, they all make more here than most anywhere else in the world, with no better results.

The Steve Jobs are a tiny minority of the top earners.

- Americans have developed an unrealistic sense of entitlement by twisting the idea of the American Dream into a shopping list for high-end toys.

This is globalist, 1% propaganda jive.

Housing, Decent jobs, Health-care, education, decent hours and a dignified retirement are not “high-end toys”. They are life and have been put out of reach because of massive wealth and income inequality.

Or should everyone get a medal?

You’re damn right most hard working Americans should “get a medal”. That was a big point why America came to be. We were not exceptional because we worked hard. Work hard?? 95% of the world “works hard”.

America was exceptional because we had a system that invested in and rewarded most of the people, and not just the rich.

This Cato Institute propaganda of America’s “unrealistic sense of entitlement” is bull s&!t. Don’t bend over and buy it.

“The top earners in the US have skills well suited to the new global economy.”

And when these “top earners get it wrong” they are able to foist their losses on those without fancy global skills?

Americans of all means live quite well by global standards,

The elite are just angry that they aren’t selling enough suicide nets to make a profit.

Neocon apologists — the masters of grade school kids getting shot by Bushmasters, followed by admonitions to anyone who cares to “mind your own business.”

+1000

Statist Progressives - oyxmoron

The very phrase negates itself.

Posting that link twice does not change the reality that the hard data shows that we are cooler now than we were in 1998, which is contrary to all the predictions of the AGW computer models’ predictions in 1998.

http://happycrow.wordpress.com/2013/01/14/dread-for-the-future-is-it-climate-changes-high-noon-or-its-four-oclock/

Assessed property value for 2012 $94,620

Huh?

Wow, all of that lush landscaping and not too far from the canal systems…hmm wonder if someone is going to purchase themselves 1.6Mil worth of scorpion infestation?

Notice that pickup truck next to the garage, lift kit and rims? This isn’t your grandpa’s kind of depression.

Now THAT is a WHITE house…..

or the screwed over renters who have to pay on time every month to keep a roof over our heads?

He put his hand on Bibles and said he would protect and defend the constitution. I wonder which constitution he was speaking of? The one he called outdated and a “charter of negative liberties”? Food for thought.

they end up at home looking at the four walls, night in and night out, because they don’t want to take the risk of losing their licence.
That rationale seems very doubtful.