The Housing Bubble

teabillies

Cultural relativist bedwetter libtards.

Flat earthers.

Just smart enough to be dangerous to themselves and others.

Who are the barbarians today?

The 47%… when their .gov handouts, benefits, and largess are cut, they’ll be rioting and looting and generally barbaric behavior. Got firearms?

Oh, wait, firearms are below the ruling class. They show a distinct lack of “control”, as I recall someone posting recently. And they’re associated with “Teabillies”, so they must be bad. We’ll see how that mindset works out… probably about as well as it’s working out for Assad in Syria. I hear he has lots of “control”.

Did I just hear a dog whistle?

Justice For Trayvon™ will be achieved by looting Foot Locker.

“Who are the barbarians today?”

I see 2 groups of people.

The first own guns and think the government is out to get them.

The second own guns and are involved in the drug trade or some other illegal activity and belong to a gang.

Disclaimer: These two sets do not include all gun owners.

Open question: Are there any barbarians that are not gun owners? Banksters don’t qualify, because they buy the government. They have a vested interest in seeing the current state of affairs continue.

If they work for the government do they count as barbarians? Or does that eliminate them by definition no matter how barbaric they may be?

Who are the barbarians today?

The 47%… when their .gov handouts, benefits, and largess are cut,

No, the barbarians are Jack Welch, Carly Fiorina, and their greedy brethren who outsourced and insourced jobs. You know, the jobs that the 47% used to have.

‘Who are the barbarians today?’

This is easy. Historically, if a power wanted to invade some place, a place where they could enslave or generally oppress the people, take their land and resources, they were called barbarians. The barbarians of the day are in Iran, Syria and Africa.

Open question: Are there any barbarians that are not gun owners?

(raises hand tentatively)

Apparently the US is speeding up the cycle of civilization rot.

Information Age. Once it starts crumbling, collapse will be swift.

Information, atomic, jet, space age.

It deosn’t get any faster than that.

Yes, everything social and technical happens at an accelerated rate these days. It makes the rat race look like a stroll in the park.

My dream doesn’t include slaving for 30 years under the burden of debt. It is so unnecessary to join the herd of sheep.

ohhh Blue…..

I wanna house, just like the house, that married dear ole dad.

You forget that you will always need a roof over your head and will need to work to pay for that your entire life. Even if you buy your house outright, the gov’t still charges a lower “rent” in the form of property tax that you still need to pay. Life has it’s burdens..

too funny dj!

mathguy, I’ve never heard property taxes as an argument for the debt hampster lifestyle before! The “you’ve got to live somewhere” one is pretty familiar though.

“Comment by Urbanachiever”

Welcome aboard!

Agree. I took Latin in high school, and the teacher didn’t say anything about sandal-shiners in the Roman army hooking up the Centurians with e*trade.

nsa datacenter
http://www.wired.com/threatlevel/2012/03/ff_nsadatacenter/

Greetings, inch. Given the state of our gobmin, the NSA data center doesn’t scare me. Our fine blogger Ben gave me (and others here on the board) a good dose of reality on that.

Don’t leave me in the dark. What was the take away on Ben’s and other brainiacs opinions?

Generally speaking, incompetence on the idiocracy level.

Thanks for the link, inch. For the anti-totalitarians among us this development is sobering indeed. Already thinking of alternate scenarios….

Does the concept of prices going up and down within a narrow range, without breaking out of that range, for a period of four years resonate at all with you? Have you actually looked at the Case Shiller graph or just parroting an NAR headline?

Blue,

The liars are hard at work with their BS here and everywhere.

I’m not suggesting that there is NO reliable information. I’m suggesting that the ranges are so wide that you may as well use Zillow. Due to the different states of repair and add-ons, houses in my nabe have sold for mean +/-10%, i.e. a 20% range. And that range is due only to the house. The lot size, schools, and commute are very similar. You may as well use Zillow as well as comps. In fact you may as well throw darts.

But that’s for my mish-mash older burb where houses are wildly different from each other. For cookie-cutter zero lot-lines or for condos, the comps range of course is much narrower… as is the Zestimate.

Even in a condo building, there can be some range depending on the direction of the windows (how much light you get in the winter, views, noise), how high up you are, when the kitchen was last redone, etc. At my parents’ retirement place, there was a special assessment to do something to fix a construction defect in all the roofs. The development got financing for everyone who wanted to take it which was most of them. My parents got a better deal from their home equity loan, so they did it that way. During the time the financing is outstanding, a lot of the places have extra monthly carrying costs that attach to the unit. My parents’ unit doesn’t. Right there you have a variation in what the value should be. Does it make much difference over all since my parents would have to pay of the HELOC if they sold? No, of course not. But it would does make apparently identical units not as comparable as you would think.

“Due to the different states of repair and add-ons, houses in my nabe have sold for mean +/-10%, i.e. a 20% range.”

Maybe Zillow is more accurate for DC area housing than for San Diego. I’ve seen +/- 50% for homes priced north of $1m.

There was a corner store in the hood (the Mission, before it was hip and expensive) that put speakers outside blasting classical music.

It worked. The guys quit hanging around the front of the store.

I think that store now sells baguette, fresh brewed kombucha, and artisanal bread.

That story helps bolster the case for piping in classical music at malls instead of hip hop.

But we all know that merchants covet the “young” demographic.

I wonder if that will change since they’re all broke and up to their eyeballs in student loan debt.

I love our Pravda-ized media complex. Boy, are they EVER trying to suppress the news on incidents of this nature. It’s “teens” doing this stuff, yeah, like it’s a bunch of bobby-soxers in poodle skirts swooning en masse over some cute boy band.

But they needed 50, yes, FIFTY cop cars to get this under control.

Palmy, the real reason for describing these thugs as “youths” or “teens” in the media is that some group (led by the Rev. Jesse Jackson, perhaps?) will howl about discrimination, racial profiling etc. and file a lawsuit if they tell it like it is. Absolutely everyone knows what is not being said. Silence speaks volumes.

“Social Justice” will not be achieved until Jesse scores another Anheuser-Busch distributorship for his kidz.

All this BS “behvioral science” isn’t going to do much good if people don’t have the cash to insulate attics or crawlspaces or upgrade the windows. Ridicule “cash for caulkers” if you will, but at least it did something tangible.

Which is what I’m dealing with right now. I’m trying to get certified as a green business in Tucson. The insulation/caulking parts cost money that I don’t have right now.

“Dad, I am cold”

“Put on a sweater”

That’s my wife’s line nowadays…

Your home’s best energy-saving device is still the on-off switch. Use it.

Dad was similarly a pioneer in cost-saving home energy efficiency. He lectured any of us who turned up the thermostat too high in winter or down too low in summer.

You guys had A/C when you were a kid? When I was a kid in the 60’s in SoCal, only rich people had A/C in their houses. Today, everyone has A/C.

Well, we put central A/C in our home in eastern WA (similar climate to inland CA) in 1968, and it’s still working on its original freon charge too! Man was it a shock to go from triple-digits outside to 70 degrees inside though.

All of our rental units had swamp coolers, however (it was one of my jobs as a kid to get them functional in the spring and to winterize them in the fall).

“Man was it a shock to go from triple-digits outside to 70 degrees inside though.”

+1 I’m out in the Columbia Basin in Ephrata, and there’s maybe six weeks of temperate weather all year. Otherwise it’s too hot or cold.

I would add:

Programmable Thermostat (turns down the heat when you are not home - some automatically by a movement sensor)

Maintain and clean HVAC regularly

Replacement of key windows or doors. Especially if gaps exists, loss of E value or face primary wind direction.

I laugh at those who spend $50,000 on a a solar or geo system.

They will never, ever make their money back - even with insane government tax breaks.

And you could have saved more money with the simple fixes.

“Replacement of key windows or doors. Especially if gaps exists, loss of E value or face primary wind direction.”

We did that with a 15′, a 12′ and a 6′ slider in our new home. It made a remarkable difference. The 1960’s single paynes were energy suckers.

Good additional suggestions, 2banana.

2banana-

I bought a Nest Thermostat for my house…I’m a fan…not an evangelist, mind you, but a fan (I don’t see how anyone who has kids has a regular enough schedule to make the “learning” features all that great).

But, detecting that you are out of the house to turn off…cool.

Even better is the link to your smartphone…if you forget to turn off your heat before you leave, you can turn off heat remotely. And when you are coming back to town, if you are gone for an extended period, you can turn on before you get home to warm up the house above 50 degrees (just utilized this when coming back from vacation).

Also, smarter utilization of the fan…cool–it will continue to use the fan to blow hot/cool air even after the furnace/AC has shut down, to not lose that residual heating/cooling.

I’m willing to wager that I’ll make back the $250 pricetag within a couple of years, max.

One week without AC, let alone electricity, and 80% of America would shrivel up and die.

I scoff at your candyarse thermostats and HVACs. A quick cold shower/bath in the summer and a nap on the passenger seat of the parked-in-the-sun car in the winter. Puzzys.

And for eco-stinginess, my mother (still) makes me look like a piker. Try three kids having to use the same tub of bathwater. Dishes washed in one sink and rinsed in another sink of water — despite a perfectly functional dishwasher sitting empty. She even had a room full of used paper bags, used wrapping paper and ribbon, used styrofoam cups– for heavens sake. Turn the heat on in winter? Forget it. And the button jars….

This was a woman married to a successful doctor.

So droids are going to:

Do your laundry, ironing, folding etc.?
Cook meals and clean the kitchen?
Pick up stuff and put it away?
Weed the yard?

Meet George Jetson!

I LOVE my roomba. And washing machine. And dishwasher.

Bring on the robots!

Brazil is one of my all time favorite films. Not all the automation worked very well, and he included government torture, false flag bombings.

+1. Great flick.

‘to collect and sell our household consumption information’

That’s already happening. These new electric meters can tell when you get home, how late you stay up, etc. And this data is being collected. What about those preferred shopping cards at the grocery store? Do you think anything is happening with that information?

But heck, why worry? After all, every single email, text, blog comment, and phone call is being recorded and stored in giant databases. We can trust the government with all this, right? Otherwise, people would stand up and demand the privacy guaranteed by law. Wouldn’t they?

I’d be flattered that somebody found my drivel interesting enough to spy on.

‘I’d be flattered that somebody found my drivel interesting enough to spy on.’

Oh, you’re right. I for one welcome our government overlords. Like I said, we can trust the government, otherwise average people might grow a backbone and insist on the Bill of Rights being enforced. As it is, as long as we keep our discussions down to mindless drivel, we’ve got nothing to worry about. How about those Kardashians?

But…but…the terraists! Who will save us from the terraists?

Interesting. I’ve used x10 devices at work and am capable of doing what you are talking about, but find myself totally unmotivated to do it. It’s interesting to me that other people find it quite motivating and perhaps even entertaining.

I get 90% of that with motion/light sensor lights and a programmable thermostat, with minimal programming.

Or you could just open/close a window….

I’d like my shower head to be hooked up to a thermostat.
Products like this have been on the market for a long time. I’ve been using one at home for 20 years. Set the temp you like, and your shower water will stay very close to that. If the incoming cold water pressure shuts off, so will your shower, saving you from getting scorched. In more normal ops, the volume of the shower flow will change, but the temp will not.

You missed the sprinker system. If you could automate to water the exact perfect amount for each zone and nothing more, then you’d save a lot of water and a not exactly small amount of money.

I’ve played with Mr House, but X10 switches are not very good in my opinion and a mix of ardudino and X10 is more time than my wife will let me spend on piddly projects.

X10s are still around? And they haven’t improved?

Sheesh. How do they stay in business?

(first saw these about 20 years ago)

X10s are still around? And they haven’t improved?

——-
No, they are still stymied by the fact that the current travels over electrical circuits which need to be built in a certain way to be reliable, and they are ’stateless’ in that the module can’t tell if they are on or off. It just sends a signal to do the opposite of the current state.

Once wifi and standard controllers (ambient temp, time, etc) are small enough to fit in standard electrical boxes and cheap enough for that to be a legit ask not a pricey upgrade, home automation will really take off.

They also need APIs since Creston/infineon whomever don’t make software that works with each other’s products.

“and they are ’stateless’ in that the module can’t tell if they are on or off. It just sends a signal to do the opposite of the current state.”

that’s actually not true, the solution to the “missed code” problem is simply to send everything three (or more) times.

Its a stateful protocol by your definition in that there is an “on” and “off” code. Its stateless in the TCP vs UDP sense in that there used to be no feedback. Send and hope.

Toward the end of my X10 experiments they started to sell interrogatable devices which when appropriately poked would transmit their status back. So a smart enough system could set, test, set again if necessary. Those devices as I recall cost more than Insteon, which actually does work with a stateful protocol that resends at least 3 times until it gets an ack, and also is faster and larger address space. So I dropped X10 like a hot potatoe and have used insteon since then. They had a little capacitor problem or whatever around 2007 or so which was legendary but post that era they’re pretty good devices.

Probably a lot of cash in that retirement fund ready to be liberated and “put to work”.

Exactly. Lesson number 1 of the beginning of the corporate-takeover era was don’t have well-funded pension funds or the like. That was like wearing a huge diamond ring in the ghetto.

And the USPS is probably the Hope Diamond.

Instead we get this bastardized health care monstrosity that is neither free-market based nor completely socialized.

+10 we agree!

But this is what is known as a “public-private partnership.” Private sector always finds a way to capture any profit from the deal, while the taxpayer get the branchy end of the Joshua tree.

On the Post Office, I don’t see what’s wrong with less-frequent delivery… isn’t that how it happened a hundred years ago anyway. I guess rural residents could choose between either 3-day a week delivery or, if they want mail every day, they could get a post-office box at the nearest town larger than X population.

the branchy end of the Joshua tree

That’s almost Oly-class poetry there.

+1

On the Post Office, I don’t see what’s wrong with less-frequent delivery… isn’t that how it happened a hundred years ago anyway.
200 years ago, the recipient of a letter had to pay the carrier 25 cents to get delivery. This was at a time when an acre of land cost $1.25. Mail could take a couple of months to get from Connecticut to Ohio, assuming the postman didn’t get scalped by the Indians. Those were the good old days.

The half cent is the smallest denomination of United States coin ever minted. First authorized by the Coinage Act of 1792 on April 2, 1792,[1] the coin was produced in the United States from 1793 to 1857. The half-cent piece was made of 100% copper and was valued at five milles, or one two-hundredth of a dollar

http://en.wikipedia.org/wiki/Half_cent_%28United_States_coin%29

No, this is just an example of what happens when you have a contract and it takes a long time to find out that one of the clauses of that contract was violated.

The rule was there when they were sponsoring the team, they just didn’t know about the cheating.

There are laws limiting the time in which you can get caught breaking various types of criminal laws. A contract might have a similar limitation, but it doesn’t have to.

I’m not talking about that part of this theater, but the fact that 7 years of tests didn’t show anything.

7 years in a ROW.

How DID that happen? How COULD it happen?

And the ONLY thing they could get after all these was a very questionable witness and STILL no real science.

I’m no Lance fan, but I know fish when I smell it.

“How DID that happen? How COULD it happen?”

Timing. Also IIRC some blood was stored and the tests developed for the cutting-edge PEDs he was using came along later.

Also Tyler Hamilton was not the only witness, though maybe the most persistent.

…oh, and I was a Lance fan…and he admitted to it anyway, on Oprah, or so I hear.

Bullcrap. A quick Google shows thousands of prosecutions, just not the masterminds.

Been doing my part to help this go viral:

Elizabeth Warren’s first grilling of regulators is a YouTube hit

1500 bankers went to jail in the S&L scandal.

Oh, you think that was a period of ‘free market’ banking? With FDIC insurance and the like?

I think you mean better-regulated banking, not free market banking. It was quite the opposite of free market.

I’m willing to pay a little extra for clean fresh food.

The reason for the need for food inspections is in part the size and breadth of the food supply chain and the industrialization of food production.

If you buy local meat, poultry, fish and produce, not as much need for the government inspections. Heck, I know plenty of guys who hunt deer and have the carcasses turned into sausage by their local butcher. Think the Feds need to inspect that? Nope. Have my hunter friends ever gotten sick off of bad venison sausage? Nope…

My point is the Feds are threatening to shut down “essential services”. Well, guess what Feds? I don’t consider most of what you do “essential”. And that’s the whole point of the sequester…

The problem is, you will be paying the same price for horsemeat as you are for USDA prime.

Are you set up to lab test every package of hamburger to see if it has horse/deer/dog meat in it? Yeah, I didn’t think so.

Here’s the problem. The cheaters/skuzzballs will undercut the legit businesses, and put them out of business, before John Q Public every catches on. And once they control the market, the skuzzballs will have all of the money they need to buy off whoever they need to buy off the keep their operation running.

My family has taken wild game to local butchers and done it themselves…ended up doing it themselves only for about the last 30 years due to suspicion that what they were getting back wasn’t the same thing they took in.

But anyway, getting rid of the inspections doesn’t seem like a good way to try to force people to go back to local food production even if you think that would be best. I consider it an essential service in today’s world. There are probably lots of other areas that I would agree with you on, though.

Are you set up to lab test every package of hamburger to see if it has horse/deer/dog meat in it?

The government isn’t set up to do that currently. It also didn’t help the current EU issue with horsemeat in the beef supply chain and I’m sure the EU had plenty of inspectors working. Are you advocating for more money to .gov for more food inspections?

Here’s the problem. The cheaters/skuzzballs will undercut the legit businesses, and put them out of business

Then stop buying crap food produced on an industrial scale and start buying more local. You can pay more for your local sourced food and keep your local providers working or you can give more money to the government to babysit large corporations who might try and screw you. Take your pick.

“Think the Feds need to inspect that?”

Hate to spoil your point, but butchers are inspected/certified by the FDA and/or DOA.

But thanks for once again highlighting the wet-dream of the Randian/Death-to-government train of thought. Which is believing we will be better off living a 19th century lifestyle.

There won’t be a lot of people around to maintain any of this high tech infrastructure, like transportation, the internet, you-name-it, if 90% of the citizenry has to revert to the farmer/hunter/gatherer lifestyle.

I, for one, think deer meat sucks. If it was any good, why do most guys I know have to turn it into jerky or sausage?

X-Gs could you elaborate on this? I thought the local butcher shops, even in vons/albertsons were under the regulation of the local county health and agricultrure dpeartments… when did the feds get involved there? Also, why does it need to be federal instead of county?

As there is two feet of snow on the ground, it’s gonna be hard to do any gardening.

And if everyone had to procure their animal protein by hunting, the local population of deer and turkeys would all be culled by now. I suppose I could fry up some guinea pigs, like they do in Peru, and had some gold dust to pay for them.

Yeah, sure, but I should have stocked up for the winter, you say? Okay, then cut my income by $15K….the amount I made on my part-time contract work last year.

Or find a wife who is good at canning, cooking raccoons, and making clothes by hand. Good-freaking luck with that.

All you guys need to sit down at the dinner table tonight, and tell the little women: “Honey, we’re going to simplify our lives….you need to quit the job that you went to college to get, and learn canning, butchering, making bread at home, doing laundry using a washboard, tending to the critters, and learning how to hitch the horses to a buggy. And don’t forget, Hobby Lobby has a class on rendering animal fat into candles and lamp oil. We’ll need to know how to do that too, once the whales are hunted close to extinction again….”

Lay that speech on the little woman tonight, and get back with us tomorrow with the replies……

The 21st century has sucked so far, but everything I know/read tells me I’m better off than if I had lived in the late 19th century.

I, for one, think deer meat sucks. If it was any good, why do most guys I know have to turn it into jerky or sausage?

It helps if the back yard is an 80 acre corn field. Deer raised on corn are pretty good and can be used for about anything you’d use beef for. Deer that work for a living, maybe not so much. All I know for sure is that Pronghorn antelope that get by on sagebrush can be horrible. Elk from the mountains are kind of tough once they’re more than a couple of years old, but are OK. Kind of like your description of deer or maybe a little better.

The 21st century has sucked so far, but everything I know/read tells me I’m better off than if I had lived in the late 19th century.

Buying more locally sourced food does not mean you need to spend you entire day (or your wife) hunting, canning, and preparing. You have a local butcher? Where does the butcher get his beef?

If I want fresh seafood, I can go to the seafood market right next to the docks in New Bedford or the big box grocery store. Guess who buys right off the boats in New Bedford and guess who buys frozen seafood from distributors sourced globally? And don’t tell me the Feds need to inspect the local seafood store, because they don’t and they aren’t. That’s a local health and safety inspection, not an FDA inspection…

Hell, we get eggs from my aunt and uncle who have chickens… they have more eggs than they know what to do with. Doesn’t require any more effort for us to pick up eggs from family than it does to buy them at the grocery store.

When you get right down to it, all of this talk about going back to the 19th Century was of doing business, is code-talk for “Get rid of the 47%’s support apparatus, and the 47% will magically disappear” train of thought.

IOW, a sanitized, code-worded, media-friendly plan to despose of the “worthless breeders/eaters”; for those who don’t have the sack to advocate in public the full “Lebensraum/Pack them on ice floes, and tow them out to sea” plan.

Yeah, we’ll put all of them in their place. Those that can find some way to support themselves can and will. Go ahead and kill the minimum wage while your at it…….no sense paying anyone any more than they are economically “worth” (by whoever is appointed to decide this……..business?”).

Gonna be hard to get employees, when the cost of getting to work exceeds the pay, which is close to what is happening in a lot of places out here in Flyover.

The rest? Well give it six months, and the problem will take care of itself.

Just do it at the beginning of winter, when the plan will be the most effective, and the cold will keep the smell down.

Someone need to write a novel about what happens when the oligarchs/kleptocrats force the 47% into becoming societies of hunters/gatherers/Plains Indians and/or Mongol tribesman, when all of the land and animals are corporate owned, or killed off at a tactical move. Especially when the “Indians” are “tech-saavy” Indians.

See the future. Visit Nigeria.

X-GSfixr, I just don’t see what you’re talking about. At no point in the history of the United States were we like Nigeria. At no point in time were people dying in the streets and stinking up the place because nobody cared and people were left to rot. We were never societies of hunters/gatherers/Plains Indians and/or Mongol tribesman, when all of the land and animals are corporate owned, or killed off at a tactical move. This all sounds like hyperbole - the same kind the government keeps trotting out to go with their self-made crises: “The world’s gonna end if you don’t do this thing now”. You might have some good points but they get lost in the forest…

By the way, if anybody comes up with sanitized, media-friendly code words, it’s the left…

I do support regulators who monitor the food supply. I wouldn’t want to go back to the 19th century either.

But here’s one data point I’d like to get some information on: The sequester is not actually a spending decrease. It’s a reduction in the yearly increase in spending. So next year, the government is spending more. But not as much more as it would have.

Is that true? The answer, according to US News and World Report, is yes.

If so, then there is a lot of theater going on here, for both parties playing to their bases.

We were exposed to the theater when the Sequester was originally agreed to. CBS News noted that a majority of members of both parties voted for the 2011 Budget Control Act.

That was theater. They voted for the cuts but their cover story was that because they couldn’t agree, they’d put together a hyper-partisan group of politicians (the “Supercommittee”) who would then be more likely to undo the Sequester under penalty of the cuts they really don’t want (wink wink) going through.

Right.

Both sides are furiously trying to gain political advantage here, with the frothing Democrats in the MSM and the frothing Republicans on AM talk radio. Money is how politicians gain power and prestige and privilege. No politicians wants to limit his or her power.

More and more I’m thinking it’s theater.

Of course, it’s laudable that they try to reduce the government debt. But… with the Fed flexing it’s muscle, testing out the limits of its currency printing operations via unsterilized bond buys, it might be kind of moot.

At no point in the history of the United States were we like Nigeria. At no point in time were people dying in the streets and stinking up the place because nobody cared and people were left to rot.

That may be true. Nevertheless, the typical American family had a much lower standard living 100 years ago. Just to take one example, there were a number of diseases that killed children under the age of five. Talk to Americans today, and most people would agree that the death of a child is probably the greatest tragedy that a parent could experience. In the 19th century and the early 20th century, it was not at all uncommon.

the typical American family had a much lower standard living 100 years ago. Just to take one example, there were a number of diseases that killed children under the age of five. Talk to Americans today, and most people would agree that the death of a child is probably the greatest tragedy that a parent could experience. In the 19th century and the early 20th century, it was not at all uncommon.

I don’t think anybody was saying (I certainly wasn’t) that going back to the 19th Century way of doing business would mean that we also throw away all the scientific achievements and drugs and medicines, etc. that have been developed. This is just more hyperbole along the lines of “the world will end”.

“Buy local, it will solve everything.”

And how will you know it’s really local, without inspections, etc?

Makes it hard to get a sandwich out of town, too.

I don’t hear anyone complaining about their stock investments…

Do you even hear yourself?

The 1%ers thank you for your support.

I don’t hear anyone complaining about their stock investments…

I don’t hear anyone complaining about their stock investments…
I stopped doing that in 2007.

The 1%ers thank you for your support.

Whoa! Did you just say that?

There’s hope for you yet, tovarish.

Did the market go up or not? Are you losing money like you did in 2007-2009?

Everyone knows I’m the first to point out the stock market is rigged, gamed and tilted.

But I have yet to hear anybody say they are currently losing money.

I heard an investor on CNBC comment that the best performing stock market in the world over the past several years was Zimbabwe…but that now your entire portfolio will only buy 3 eggs…

now your entire portfolio will only buy 3 eggs…
But that’s really good, compared to a portfolio that can only buy a single mopane worm.

Thanks for posting that. I notice they have a whole section in the article labeled “The illusion of low inventory”.

“When you analyze the critical variables underlying the housing market…”

Like ability to make PITI each month? Draconian.

Nothing like poor analysis to exaggerate the problem…

Looking at Mark Hanson’s analysis (from a link in the article):

Let’s take his first number of 11.6 million in shadow inventory to work through (not his “ghost” inventory):

“1) 60-days late or in Foreclosure – 5 to 6 million units

2) short sales – 600k annually

3) modified legacy loans – 6 million (I call mods “new-vintage, higher-leverage, worse-than-Subprime loans). Mods redefault at a faster pace than legacy Subprime loans defaulted in 2006 to 2008. Once loans are modified everybody forgets that these borrowers remain more risky than legacy subprime borrowers…they simply forget about them. But with respect to default and short sale volume, this is an extremely important cohort track closely month to month.”

Now the reality.

1. “Normal” is approximately 2.5 million non-current. The most recent “non-current” count was 5.3 million total, so the excess was 2.8 million to work through, not 5-6 million. Hanson implies that ALL 5-6 million are shadow inventory. As said over, and over, and over again, the number of non-current loans won’t get anywhere close to 0, even in a robust market.

2. 600 short sales per year. Does he think that the 600k short sales are coming from borrowers who are current? No lender is going to approve a short sale if the borrower is still current. Adding anything here is double counting from #1.

Still at 2.8 million.

3. 6 million modified loans. Approximately 4 million of these loans were modified in 2010 and earlier, and have already re-defaulted (ie. included in the non-current loan count above, or were already short sold/foreclosed). Fannie Mae notes that 65% of their modifications from 24 months prior are still performing (implying a 35% default rate within 2 years). A full 25-30% of modifications redefault within 12 months, so what you are really looking at are how many modifications have happened in the last year, since 25-30% default in year one, and another 5-10% in year 2 (ie. the action is with the recent modifications). There were less than 1 million mods in 2012. I don’t know what the total additional defaults should be included for the future, but it sure ain’t 6 million (since most early mods have already redefaulated, many mid-aftermath mods are already included in the 5.3 million non-current loans, and many later mods that included principal reduction never will redefault).

Could it be another 1 million? Over time? Maybe. Another 2 million (key word being “another”)? That could be a stretch.

So, his 11.6 million of shadow inventory to potentially clear the market is more like 3.8 million–and, as I’ve said many times they aren’t evenly spread throughout the US. Some markets will be done within the next year…others will take YEARS beyond even his projection.

Not that anyone is reading this anymore, but per LPS, approximately 50% of all foreclosures are REPEAT foreclosures, which stands to reason that approximately 50% of the excess non-current loans (ie. 50% of 2.8MM, or 1.4MM) are from re-defaulted modifications.

Which makes sense from a magnitude perspective.

So, add the redefaults that need to happen from the newest year or two of modifications (10% more for mods greater than 1 year, and 25% for newest mods), and you get another ~350,000 loans that need to re-default that aren’t already included in the non-current loan pool.

His 11.6MM of shadow inventory is more like 3.2 million…even when taking into account re-defaulting loan modifications.

North.

Hoboken, Pier A.