Bits Bucket for February 27, 2013
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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ECB bond plan in jeopardy as Italy’s voters reject conditions
Italy’s electoral earthquake is “a catastrophe for the euro and the European Union”, according to Luxembourg’s foreign minister, Jean Asselborn.
The verdict was much the same in chancelleries across the eurozone, especially in those countries already starting to feel the first wave of contagion.
“The result touches us all,” said Spain’s foreign minister, Jose Manuel Garcia-Margallo. “It is a jump into the void that bodes well for nobody, neither for Italy, nor for the rest of Europe.”
Almost 57pc of the Italian vote went to parties that have vowed to tear up the EU austerity script. Together they control a majority of senate seats.
The Five Star movement of comedian Beppe Grillo, which won 25pc of the vote, has called for a euro referendum and has a return to the lira as one of its manifesto pledges, while ex-premier Silvio Berlusconi has threatened to pull Italy out of the currency bloc unless the EU switches to a reflation strategy.
Even if the centre-left leader, Pier Luigi Bersani, can put together a “grand coalition” with Mr Berlusconi, there is no going back to the hairshirt regime imposed by Mario Monti’s technocrat government at the EU’s behest over the past 15 months.
http://www.telegraph.co.uk/finance/financialcrisis/9896222/ECB-bond-plan-in-jeopardy-as-Italys-voters-reject-conditions.html
Someone needs to put these uppity Italians back in their box
Who?
I suspect it will be the central bankers
Mario Monti’s technocrat government
Yep. They did a fine job of it last time, quickly and quietly installing Mario Monti’s technocrat government…
What will they do as a second act?
The troika is back in Athens this week and with all eyes on Italy, Greece feels it has little to fear. But important reforms have stalled and the government’s belt-tightening efforts seem paralyzed. Politicians are playing for time and hoping for fresh money.
The troika mission has returned to Greece, but this time things are different. No front page headlines are warning about new painful demands made by Greece’s international creditors, no government officials are pleading for unity in the three-party coalition in support of unpopular measures. And there is no overhanging fear of a long drawn-out process of evaluation, full of innuendos about a catastrophic default or euro-zone exit.
For the moment, Europe is watching developments in Italy. Following the election debacle there, concerns have reawakened that the euro crisis might return. The Greek government, on the other hand, is confident that the inspection started on Monday by the troika — comprised of officials from the European Central Bank (ECB), the European Union and the International Monetary Fund (IMF) — will be over by March 10 and will approve the release of the next two tranches of bailout aid — €2.8 billion in March and a further €6 billion in April. No one seems to fear a repetition of the drama of the previous troika inspection, which lasted a full five months.
http://www.spiegel.de/international/europe/reforms-stall-in-athens-as-troika-considers-next-aid-tranche-for-greece-a-885723.html
I think Greece may well be playing the Italian card; you don’t want us to be a problem while your dealing with Italy.
“The Housing Market “Recovery” Is A Complete Myth”
http://seekingalpha.com/article/1151771-the-housing-market-recovery-is-a-complete-myth
In comparison to the recently reported NAR + new inventory, Mr. Hanson defines and quantifies the shadow inventory of homes at 20-30 million homes.
With 20-30 MILLION excess empty houses, prices have a long way to fall. A very long way to fall.
I think that HBB should define shadow inventory once and for all, so that we can avoid BS like including the many millions of homeowners who are significantly underwater on their mortgage and are thereby prevented from selling in his shadow inventory.
Oh really, did he interview these millions to see if they really wanted or needed to sell? And If they’re living in the house, then those houses aren’t empty are they.
The referenced Hansen article at least gives complete, if delusional, numbers. I broke it down below, but by even the hippiest liberal counting, I see only 10 - 11 million houses which are even close to market. And that still doesn’t mean they’re empty.
http://mhanson.com/archives/980
BrEaKDoWN:
Visible supply
Listed Supply: 2.4 million
Foreclosures: 400K (shouldn’t these be part of the 2.4 million)
Shadow supply
60 days late: 6 million
Short Sales: 600K (shouldn’t these be part of the 2.4 million?)
Modified subprime waiting to re-default: 6 million
Ghost supply of “borrowers/houses”* <– this is where it gets ridiculous. So these numbers aren’t houses, they’re people, i.e. potential borrowers. Now, even renters count as part of the shadow inventory! But let’s look at his crap anyway:
Effective negative equity:* 25 million
Impaired credit**: 28 million borrowers
Legacy Second Liens***: 18 million
Hansen goes on to say that a borrower can be in more than one category. So now he’s allowed to triple count. Even Chicago isn’t that brazen.
————–
*Negative equity are people who can’t pay 6% fees to sell and can’t put $20K down on the next house. In other words, you can have 25% equity and still be “effectively” underwater. By that delusion, 25 million sounds too low.
** C-credit which can’t buy a house outside of FHA. Really, well guess what, they are still buying, using FHA.
***Wait, aren’t these seconds already attached to primary leins which are already attached to a house. This is a useless add-on number.
Miss Craterton,
Your denial of reality speaks for itself.
Her losses will be incalculable.
Oops, I meant 20% down, not $20K down. It’s still crappy numbers.
Hansen goes on to say that a borrower can be in more than one category. So now he’s allowed to triple count. Even Chicago isn’t that brazen.
Yes, once we finally see what constitutes the “30 million home shadow inventory”, one sees why it’s rarely defined by those who like to use the figure.
It’s all there. 30 million of them and they’re not going away.
When I think about “Shadow Supply”, I think about future distressed sales. So, my estimate of current Shadow Supply (his numbers are from 6 months ago):
1. Non-current loans: 5.3 million (Per recent LPS non-current data). This will never get to 0. A reasonable expectation is for it to get to 2.5 million (5% of all loans at some stage of delinquency/foreclosure is pretty “normal”). The excess is 2.8 million.
2. Short Sales: Already included in the 5.3 million as part of the way these are resolved…no bank will approve a short sale for a loan that is current. Addition to the total? 0
3. Modifications: Approximately 4 million of these were done 2010 or prior, and have already been through the bulk of their re-defaults. Per LPS, approximately 50% of all loans in foreclosure are redefaults. Per Fannie, approximately 25% of mods redefault within a year, and another approximately 10% in the next 12 months. Presumably the number that redefault in the third year is less given the trend. There were approximately 1 million mods in 2011, and another million in 2012. So, in addition to the ones that have already redefaulted (and are included in #1 already), we can add another 350k for the 2012 vintage (even though early 2012 mods have already likely been included), and another 100k for the 2011 vintage. Throw in another 550k for those that redefault after 24 months for good measure (a pretty big number given the likely number that were early mods and have already redefaulted, and are either included in #1, or have been flushed from the system).
4. REO: Gotta include it. Don’t have good data on the entire country, but to be conservative, let’s use CA as a proxy (which will have among the higher numbers of REO presumably). CA has total REO of about 60k per Foreclosure Radar, and CA is about 14% of the US market. So, extrapolation puts the entire REO inventory of about 430k…call it 500k. Again, like non-current loans, this will never get to 0, so it is conservative to NOT reduce this number by any amount. 500k represents about 1% of all mortgages…I’d be surprised if this number ever falls much below approximately 0.1%.
#1 + #2 + #3 + #4 = 2.8 million + 0 + 1.0 million + 500k = 4.3 million.
Did I miss a category?
That’s my “Shadow Supply” number.
And, as stated many times before, when you have some quite populous states (FL, NY, NJ) that have 12%-20% non-current loan rates, and many others (CA, AZ, CO) that are 8% and less, this Shadow Supply is not spread evenly across all markets.
Hey… the great Distorter of Truth is bank.
Whatchya say Liar?
RW, nice calculations. One important point….about 80-90% of all these houses are probably occupied!
There is no shadow inventory that is vacant and needing absorption. There is only a game of musical chairs going on right now for price resets. And every day, a chair gets taken away as these defaulted mortgagtes are resolved.
I saw the same denial PW expresses today…… in 2005…only is was from those who believed housing going to go up forever and we could never build enough houses to keep up with demand. They got hung out to dry. Just like PW will. His name says it all “watch”. That seems to be all he can do is watch….as the recovery happens right before his eyes.
JM, There is shadow inventory that is vacant and needing absorption, but most of that is in higher vacancy states and higher vacancy counties…lots of empty and abandoned homes in places like Florida, mired in the foreclosure mess…that is why an acceleration of foreclosures for empty/abandoned homes in Florida will put significant downward pressure on home prices there.
However, I agree with your assessment of high occupancy in CA. From what we have seen here, more than 90% of homes that get foreclosed are NOT empty here.
I agree with the musical chair analogy.
There’s plenty of vacant shadow inventory, in places like Detroit and Flint!
But in my nabe 1.5 miles from Microsoft HQ, inventory is essentially zero due to the still-high demand by way-above-the-median income earners.
Location, location, location . . .
are you saying our government and the MSM are lying to us?
get out of town!
When it comes to housing….. Absolutely. The system needs a steady stream of uninformed people to keep it afloat. Some are even here… right on this blog.
As Ben Jones recently stated, and I’m paraphrasing, You can’t trust any official housing data.
When it comes to housing….. Absolutely.
Beside celebrity gossip, everything you hear in MSM IS A LIE.
that makes me feel a little better that it’s just housing they are lying to me about.
“I think that HBB should define shadow inventory once and for all…”
The whole point of calling it “shadow” inventory is that it is not in plain sight.
It is a safe assumption that people who are underwater, or soon to be underwater or close to default will mostly eventually be cleared out of their houses by life circumstances. It doesn’t matter whether these people one day “buy” again, it matters that there will be dsitressed transactions that will racthet prices down relentlessly, because there are too many houses. 10 million or 30 million doesn’t really change the dynamic. It will still take decades to recover from all the overbuilding and over borrowing.
The whole beauty of the “shadow inventory” concept is that any reasonable person knows there is something to it, yet it is fundamentally undefinable, like God, Santa Claus, the boogie man hiding in your closet, and “California real estate always goes up.”
To give “shadow inventory” a precise and accurately-quantified definition would completely defeat the purpose of the meme.
“10 million or 30 million doesn’t really change the dynamic. It will still take decades to recover from all the overbuilding and over borrowing.”
And that is completely on target. Precision doesn’t matter when you have a massive supply glut which will take decades to work through. This is why I generally tune out Rental Watch’s posts, which hide the gargantuan scale of the problem behind a fixation with precise estimates.
Well, since there are approximately 120 million housing units in the US, a difference between 10m (8%) and 30 (25%) is actually pretty big, and that raw number says nothing about how those units are distributed across the US or what condition they are in.
There are 130+million houses and most of them are on the east and west coasts.
Precision doesn’t matter when you have a massive supply glut which will take decades to work through.
In other words, HBB can spend the next couple of decades pounding how housing “is going” to crater…at some point. And we can choose any number we want for the shadow inventory that “is going” to come and go from the market over 10-20 years. You can use national averages to hide the fact that some of this housing is uncommutable to a job. How much money will people save or lose by renting? You don’t care to calculate; after all, precision doesn’t matter.
And you are the same guys who attack Paul Krugman and Zillow’s estimating system?
“You don’t care to calculate; after all..”
That’s rich Oxy.
I personally have only a very vague idea of how many houses will come on the market in the next “x” years due to default, distress and general mayhem. But I get that it in the 10s of millions. That alone shows what the megatrend is going to be for the next decade at least. On that, you are free to disagree and do all your crappy math out to the sixth decimal place.
I am also of the opinion that there is a reckoning ahead of gross imbalances of all sorts, not the least of which is house prices. For those that put it all on the roulette wheel with borrowed money, that is financial ruin.
Those who don’t like the data I present can choose to ignore it…but don’t call me a liar. The data is the data.
If there is data counter to what I present, I would fully expect people to throw it in my face with sources…so far, I feel even more comfortable in my data-driven views, since the only attacks I get are from those with unsubstantiated numbers.
there is a reckoning ahead of gross imbalances of all sorts….For those that put it all on the roulette wheel with borrowed money, that is financial ruin.
Totally…….For those that put it all on the roulette wheel with borrowed money financial ruin is in the bag - for sure in the bag.
(or the exact opposite if inflation is the ticket)
No one on this blog knows the exact future.
…….don’t call me a liar. The data is the data.
When I don’t like the data I don’t call people a liar.
(I stick my hands over my eyes and sing “la la la la la”.)
“But I get that it in the 10s of millions.”
You must do some calculation to get to that estimate…how do you get there?
Most of what I’ve seen to get up to 10+ million is presumptive of what happens with the HUGE number of underwater borrowers, who at this point have already shown a willingness (and ability) to NOT walk from their underwater loan for what now…5 years?
And if prices rise (as they appear to be doing), how many of these will no longer be underwater? Will the underwater who have already stayed in their homes for 5 years be more or less desirous of walking if prices are rising? The answer is clearly less desirous of walking.
Why haven’t they already walked? Lots of potential reasons:
1. They believe prices will rise;
2. They got a loan modification that will reduce the principal balance over time if they stay current;
3. They got a loan modification that makes their “ownership” cost less than the rent for a similar home;
4. They have a misplaced sense of morality and feel they should abide by their agreement to repay the loan;
5. They like their house/neighborhood, and don’t see the excess cost of their mortgage over what it would be at a reset value as enough to deal with the hassle of moving (potentially different schools for kids, etc.);
6. Others?
It really doesn’t matter. What matters is that for whatever reason, the underwater borrowers that some expect to voluntarily walk over the coming years have clearly demonstrated an unwillingness to do so through the worst of the housing crash.
Perhaps you just expect the underwater to choose to sell once they can? Again, why do people think they will simply dump the properties at any price once they can?
The biggest impact, IMHO, at this point of all the underwater borrowers to to have us settle into a HIGHER than typical non-current loan rate until there are many fewer underwater borrowers.
Why do I say this? Because typically, if a person unwillingly falls behind in their mortgage, they have an option to sell the house in a traditional process to resolve the matter.
However, if you are underwater, this traditional avenue is not possible…so if an underwater borrower loses a job, has an unforseen life change, etc. and can’t make payments, they have no choice but to go through a foreclosure/mod/short sale process–which adds them to the non-current loan pool.
The essential thing that we don’t agree about is that we are in a “recovery”.
The Federal Reserve has already soaked up the paper on some 3 or 4 million houses, and it has hardly affected the market.
Just as a tease: We built over 40 million residential buildings in the years I consider full on credit expansion housing bubble mania. A lot of that is multi unit. Let’s say 60 million units. Something like 3 people to a unit? The population only went up 70 million. Just order of magnitude stuff.
There are 10s of millions of surplus houses.
“There are 10s of millions of surplus houses.”
Do the math state by state on population vs. housing units, and you’ll find significant differences depending on where you are on units per person.
40 million buildings? or 40 million units? Most reported data is on units…And I think you are mistaken on the total numbers.
From March 1972 to today, there were 60 million housing units started.
From June 1984 to today, there were 40 million housing units started.
Each year, approximately 400k units are replaced (old structures, etc.). So, over the 40 years to 1972, probably approximatley 15 million of those units were replacements…
So, from 1972 to today, there was net new construction of approximately 45 million housing units.
Population in 1972 was approximately 210 million.
Today, over 310 million. 100 million people for 45 million housing units, a bit over 2 per housing unit.
Just orders of magnitude, I understand, but I think your orders of magnitude are off.
Something’s goofy in the numbers…housing starts from 1972 to 2013 is noted at 60 million
Increase in total housing stock from that same timeframe (different place in the Census website) is also noted at 60 million.
Implying an annual replacement rate of 0 per year (no homes ever torn down/replaced)…
Something’s goofy there…
Many of the building permits are for multiple family. 3 people per unit is more like what we had before the bubble. No idea on your two 60 million numbers, if they are both apples.
The building permits are not noted by building, but by unit. So, a 5 unit building counts as 5 in the unit count start.
I’ve looked quite extensively at the macro population/housing unit dynamics, and it’s one of the reasons why when we invested in residential land post crash, we focused on CA as opposed to other states. Based on this big picture view, I’m less concerned about overbuilding in places like CA as compared to other states. The whole idea of CA underbuilding was first brought to our attention by an advisor in the 1990s–the problem has been going on for a long time here.
The last time I did the math (a couple of years ago), CA was second only to Utah in number of people per housing unit (ie. higher means more people crammed into each housing unit). I ran the numbers from 1990 to 2011.
In 1990 CA was at 2.72 people per housing unit. The rest of the US (ie. US, ex-CA) was at 2.33.
In 2011, CA was 2.85 people per housing unit. The rest of the US (ie. US, ex-CA) was 2.32.
This is one of the reasons why CA has such low vacancy rates. They’ve built less relative to their population growth than other parts of the country and their population growth. If you wanted to bring California’s ratio in line with rest of the country, you would need to instantly build 3 million units. Conversely, if you needed to bring the rest of the country in line with CA, you would need to destroy a significant multiple of that (CA is 14% of the US…does this mean 20 million to be destroyed?).
You’re a liar
What’s really going on in California
California imposed a new law on banks innocuously called “Homeowners Bill of Rights” which forces banks to switch over to a judicial foreclosure process, which they can opt to do on their own, but takes a year or more to renegotiate contracts and compensation structures for the foreclosure law firms who do all the leg work for the banks. And while those changes are being made… it makes it appear that foreclosures have slowed down dramatically in the state.
The reality?
Defaults (undeclared) are spiraling upward that yet have to pass through the foreclosure pipeline.
The truth?
California is still the highest foreclosure state in sheer volume and percentage.
The low-down?
Resale housing is still massively overpriced as a result of unprecedented interference by individual states and the federal government. The market distortions will be removed and the down draft will continue allowing the market to correct.
If you play with fire, you will get burned.
Rental-
I’m assuming your figures are derived from census data? If so, do they take into account the number of CA households with children who reside alternate weeks in each parent’s house? (Very common in suburban CA divorces.) I’m betting they do, which would skewer your person-per-household figures. The data also encompass a period of anomalous illegal immigration (as in 10 people per dwelling), which for census purposes was still counted as one household.
I’m not calculating people per household (which are only occupied housing units).
I’m calculating people per housing unit (trying to get a measure for people relative to physical shelter).
Population divided by total housing units.
And yes, there is significant overcrowding problems in parts of the state, which can skew upwards the number of people per housing unit. However, if overcrowding (10 in a house) really impacts my numbers to a great extent (making my comments of undersupply overstated), despite my math, you should see at least average vacancy rates.
But you don’t…CA has very low vacancy rates relative to the rest of the US (Census again), which is consistent with undersupply.
Ahh, Pimpy, making sh*t up again…
Here’s the summary of CA’s stupid law.
http://oag.ca.gov/hbor
Banks have had since July 2012 to figure out how to deal with the new law. I’m married to an attorney (who laughed at your assertion that it would take a year to negotiate some sort of arrangement with a lawfirm)…it wouldn’t take long to make new arrangements with attorneys to provide services for judicial processing…it’s not like lenders don’t have to deal with judicial processing in other states…it’s not like lawfirms have never heard of judicial foreclosure processing. They don’t need to recreate the wheel here.
If the law forced lenders to go judicial, you wouldn’t see any non-judicial filings…how then do you explain the non-judicial foreclosure filings in the state after January 1st?
The truth is that CA’s stupid law doesn’t allow dual tracking (ie. can’t pursue a short sale while processing a foreclosure). So, if a short sale is possible and preferable, the lender won’t file the foreclosure.
Here are your friends from TransUnion with the truth about CA delinquency rates:
http://newsroom.transunion.com/press-releases/transunion-national-mortgage-loan-delinquency-rat-984451#.US8KwOsjpEA
They note CA as one of the top year on year declines in delinquency rates, from 7.14% to 5.03% (a level below the US average of 5.19%).
We’ll see in the coming months how the law slows the decline in non-current loan rates in the state.
“…CA has very low vacancy rates relative to the rest of the US (Census again), which is consistent with undersupply….”
Or perhaps it’s consistent with a statistically larger younger demographic that cannot afford to leave its collective room mate? Every (single) young professional (20-30) I know is living with at least one. Building more housing units for them would not in and of itself induce them to move. Lower rents might.
My experience with this generation of young adults is that they are far more group-oriented than the previous two and only a small percentage are married or living with a SO. Perhaps it has to do with so many more of them growing up as single or low-sibling children?
Once again, I appreciate your gonads in posting reasoned counter-argument on this forum. Thanks.
And there you go again…. Lying to the public again.
And the most egregious lie of yours is the fact you suggest a 5%+ foreclosure rate is somehow normal. You’re lying. 5% is 400% higher than the long term trend.
You found a new apologist though. Congratulations you liar.
“Building more housing units for them would not in and of itself induce them to move. Lower rents might.”
You don’t get lower rents without building more.
And RAL, I’ve never said that 5% foreclosure rate is normal. 5% non-current rate (delinquency plus foreclosures) is normal. Of that, “normal” is that approximately 4% are short-term delinquencies (one payment missed–frequently cured), 0.5% are longer-term (on their way to foreclosure), and about 0.5% are in foreclosure.
“It is a safe assumption that people who are underwater, or soon to be underwater or close to default will mostly eventually be cleared out of their houses by life circumstances.”
I’m with you on those close to default. But what does being underwater do? For most, I guess it’s a bummer, but if they bought the house with the intention of living in it a long time, like myself, I don’t see how this affects things. Sure, some might want/need to move, and some might be in economic distress and could use the equity. But not most, imo.
Prices are climbing rapidly in orange county. There is a new bubble in the works. Tried to buy a little condo near csuf for my kids cause rents are ridiculous but already priced out. Cheaper to rent as of today.
“Cheaper to rent as of today.”
You better believe it.
“Cheaper to rent as of today.”
+1 My property taxes, and value, have been declining too.
Minor comedy this morning: While listening to DC news radio, they bring on a semi-regular real estate commentator who was brooding about the sequester and its impact on housing. Host asks him about the state of the DC metro housing market and he says it’s been great! Prices up 8%, sales up 8%, inventory down 30%! Great! The host is delighted and says, let’s keep our fingers crossed that things keep improving.
So, I”m thinking, oh yeah that’s great. People concentrating more of their income in real estate, taking on more debt, making a more homogeneous economy dependent on flipping real estate. And politicians slavering over higher property taxes.
I wanted to call in and say, “How bout those rising gas prices, huh? Pretty great! Also rising food prices, just fantastic! Education, energy, medical care all up, my God, this economy should just be roaring along with all the great price increases for the basics!”
0_o
According to obama in his state of the union address.
A high stock market and even higher housing prices are the best signs of an improving economy…
At the risk of seeming to pile on to one of your “it’s all Obama’s fault” diatribes, you managed to point out an important concern about use and abuse of official economic statistics.
Once upon a time, there probably was a point when statistics such as stock prices or housing prices were meaningful indicators of economic health. But once identified by economists as useful indicators, a strategy developed to take whatever actions were necessary to make those numbers go up, including economic distortion or statistical contortion, as needed.
Which brings us up to the present, with the Fed pouring the monetary equivalent of gasoline onto a bonfire, to ensure those statistical indicators prove that the economy is recovering.
Case in point: Note carefully the URL for the story below says nothing about housing signals (us-stocks-rise-mildly-ahead-of-bernanke-2013-02-27).
Feb. 27, 2013, 10:34 a.m. EST
U.S. stocks rise on positive housing signal
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks on Wednesday added to prior-day gains, with investors cheered by another positive read on housing and as Federal Reserve Chairman Ben Bernanke testified on Capitol Hill.
In an indication the housing market will continue strengthening in 2013, the National Realtors Association reported contracts to purchase previously owned homes rose 4.5% in January.
…
MarketWatch = nothing but pimps and liars, hands down the worst website ever. Where’s Amy Hoak? Lawrence Yun needs some fluffing!
I dunno, they seem to be doing a good job at pimping. If you think that the stock prices are so fragile, why not sell off a bit for the mattress before it all collapses. Bet lotsa people wished they’d done that in 1928.
Bet lotsa people wished they’d done that in 1928.
I already did that in 2007, sold every bit & have no intention of getting back in unless & until rule of law is re-established in the FIRE sector.
But … but … buying a house isn’t an expense, it’s an investment.
(At least this is how buying a house is marketed.)
And if you plunk down money for an investment then you want prices to rise.
If most people (aka voters) owned farms or oil wells then they would be rooting for higher food prices and oil prices. But most people (voters) do not own farms or oil wells, but most people (voters) DO own houses, so these people (voters) have a personal stake in keeping house prices elevated.
And by a strange coincidence (snort) when you save real estate you help save the banks.
Plus there is the matter of tax revenues. If the sheeple can be convinced that rising prices of real estate is a wonderful thing even though these higher prices result in higher taxes for the holder of the higher priced real estate then it is all good.
And by a strange coincidence (snort) when you save real estate you help save the banks.
Funny how that works, isn’t it? And what could POSSIBLY go wrong?
‘If most people (aka voters) owned farms or oil wells then they would be rooting for higher food prices and oil prices.’
The price of things in a large market aren’t determined by what people want. Here’s a question; why doesn’t the US government set the price of oil? They could for a while, but economics has a way of pressuring towards equilibrium.
Is Bernanke saving real estate? Is the leader in China, or Dubai? And if this huge group of people owning houses and wanting them to go up is so powerful, why didn’t it happen in 1950, or 1970? Why now?
Is it possible that instead of housing being “saved”, some economic event is running its course? That many millions of individuals have not lost hope that the tree of prosperity grows to the sky?
I think that’s what is to be watched. It’s not about rent versus buy ratios. People don’t camp out for that. They don’t write love letters for that. They don’t pose as fake Chinese investors for that. A mania is centered around getting rich quick. And then doing it again. It’s based in the stuff between our ears; a struggle between easy riches and not wanting to miss out, unless one can see it’s an illusion.
And if this huge group of people owning houses and wanting them to go up is so powerful, why didn’t it happen in 1950, or 1970? Why now?
Because in 1950 and 1970, people had stable jobs with income, people knew they had pensions coming, nobody put SS or Medicare on the chopping block, prices on everyday items were low because few people had credit cards, and college for Dad or the kids was free cheap or unnecessary. That is, they had other streams of income for working life and for retirement, and didn’t have to depend on appreciation. Also, in 1950 and 1970, housing DID go up, at the rate of inflation.
It is the nucleus of EVERY bubble.
Hey, anyone remember pets.com and boo.com?
I think that’s what is to be watched. It’s not about rent versus buy ratios. People don’t camp out for that. They don’t write love letters for that. They don’t pose as fake Chinese investors for that. A mania is centered around getting rich quick. And then doing it again. It’s based in the stuff between our ears; a struggle between easy riches and not wanting to miss out, unless one can see it’s an illusion.
Keep going…
We had a government HALF the size we have today (as a % of GDP). We had small deficits. Government stayed OUT OF THE MARKETS.
College was affordable. Health care was affordable. Housing was affordable.
FYI - there was NO Medicare. SS was for really poor old folks who managed to live PAST their life expectancy.
Then government got involved. It is only fair. We have to do something…
Because in 1950 and 1970, people had stable jobs with income, people knew they had pensions coming, nobody put SS or Medicare on the chopping block, prices on everyday items were low because few people had credit cards, and college for Dad or the kids was free cheap or unnecessary.
The L vs R debate is nonsense. The day the smart money realized that there are swarms of 3rd world people who will practically work for free is the day that should live in infamy.
The result should have been lower standard of living in USA with cheap houses and less money to consume other stuff. Of course we can’t have that, we are Americans…our houses must be expensive. That’s the thinking that got us in this $hit and we will rot in here for decades.
“Because in 1950 and 1970, people had stable jobs with income, people knew they had pensions coming, nobody put SS or Medicare on the chopping block, prices on everyday items were low because few people had credit cards, and college for Dad or the kids was free cheap or unnecessary. That is, they had other streams of income for working life and for retirement, and didn’t have to depend on appreciation. Also, in 1950 and 1970, housing DID go up, at the rate of inflation.”
I thought you were just a troll so I’ve been having fun with you for a while. But I’m seeing it’s really a religion with you. You must be in really deep.
And here’s a hint for you that might draw you out of that cult thinking of yours. Housing never went up. It was 2x wages, ALWAYS.
so I’ve been having fun with you for a while
So does that mean you’re going to stop “having fun” with me? Pretty please?
You’re our case study.
“Also, in 1950 and 1970, housing DID go up, at the rate of inflation.”
“Housing never went up. It was 2x wages, ALWAYS.”
Aren’t those two statements saying exactly the same thing? That housing prices kept pace with inflation (wage inflation)?
Yes it is. Wages went flat to falling in the early 1990’s. (a light should go off in your head)
I think that’s what is to be watched. It’s not about rent versus buy ratios. People don’t camp out for that. They don’t write love letters for that. They don’t pose as fake Chinese investors for that. A mania is centered around getting rich quick. And then doing it again. It’s based in the stuff between our ears; a struggle between easy riches and not wanting to miss out, unless one can see it’s an illusion ??
One of, if not the best paragraph I have ever seen written by you Ben…
Housing never went up. It was 2x wages, ALWAYS.
2X? Show me a link for your ratio. I’ve seen posters link many times proving that your 2X wages figure is BS. They averaged around 2.7 not 2.
The number of times you’ve pulled unsupported numbers out of your a^$ is incalculable.
The Median Multiple measures the ratio of the median house price to the median annual household income. This measure has historically hovered around a value of 3.0 or less, but in recent years has risen dramatically, especially in markets with severe public policy constraints on land and development wiki
2x ALWAYS.
2x ALWAYS.
Troll.
Except that sfhomowner DID write a fairy love letter in order to stop paying rent…
Except that sfhomowner DID write a fairy love letter in order to stop paying rent…
Well, my kids wrote the letter.
But I still pay every month - I just pay to the bank instead of the landlord. But it works for us because we pay less than we did in rent and the bank doesn’t come around telling us to clean up the garage and we can have as many dogs as we want.
Housing is an expense, no matter how you slice it. If rents craaater in San Francisco, then yeah, we will be screwed.
Since we got 90K in interest free down payment assistance (20K is forgivable and 70K deferred payment for 40 years) the even a large drop in price will not matter, as we have no plan to sell or move.
The garden fairies are still hesitant to reveal themselves, but I know they’re out there, probably digging up the bulbs and harassing the cats when we’re not looking.
we pay less than we did in rent
Impossible.
No one has ever paid less to buy than to rent in the history of man. EVER. Even if you are paying less to buy than to rent you are actually paying more because if your mortgage is less than it costs to rent the amount you are saving over renting is incalculable.
2X….. ALWAYS….. you liar.
You’re our case study.
LOL….But Pimp,
You’re our HEAD case study.
“2x ALWAYS.”
Even with the “split-tail” working?
“…I think that’s what is to be watched. It’s not about rent versus buy ratios. People don’t camp out for that. They don’t write love letters for that. They don’t pose as fake Chinese investors for that. A mania is centered around getting rich quick. And then doing it again. It’s based in the stuff between our ears; a struggle between easy riches and not wanting to miss out, unless one can see it’s an illusion ??”
“One of, if not the best paragraph I have ever seen written by you Ben…”
Agreed. This is just beautifully written, Ben
If most people (aka voters) owned farms or oil wells then they would be rooting for higher food prices and oil prices. But most people (voters) do not own farms or oil wells, but most people (voters) DO own houses, so these people (voters) have a personal stake in keeping house prices elevated.
Uh huh. That’s it in a nutshell.
But perhaps this will change as the home ownership declines, as it already is.
I don’t see how a nation of renters - with a small percentage being landlords - could be advantageous….
Government bubble.
Some people here think I’m full of it when I say that. Some are big government adherents.
Reminder:
“contractors make up 70 percent of the Pentagon’s costs for delivering services”
http://articles.washingtonpost.com/2013-01-14/politics/36343675_1_furloughs-or-other-actions-sequestration-civilian-workforce
delivering services
Wow. If that’s not Orwellian speak, what is?
Self-policing
Reuters - The Pentagon program chief for the F-35 warplane slammed its commercial partners Lockheed Martin (LMT.N) and Pratt & Whitney on Wednesday, accusing them of trying to “squeeze every nickel” out of the U.S. government and failing to see the long-term benefits of the project.
I want them both to start behaving like they want to be around for 40 years,” he added. “I want them to take on some of the risk of this program, I want them to invest in cost reductions, I want them to do the things that will build a better relationship. I’m not getting all that love yet.”
He doesn’t understand that stock holders and CEO’s have no interest in what is best over 40 years. My state is in the process of moving toward this model on schools and other state operations.
Are you sure you can’t see the benefits of fascist corptocracy?
I wanted to call in and say, “How bout those rising gas prices, huh? Pretty great! Also rising food prices, just fantastic! Education, energy, medical care all up, my God, this economy should just be roaring along with all the great price increases for the basics!”
Aw, come on. Make that call. Take one for the HBB Team.
Welcome to the end game of voodoo, er, supply side economics.
1. Canada is in a huge housing bubble.
2. Never, ever invest in ANYTHING with the Trump name on it. Especially real estate.
3. Canadian banks already have a built in TARP.
——————————–
Canada Losing Debt Halo as Bull Market Housing Peaks
Jacqueline Thorpe, Theophilos Argitis & Katia Dmitrieva - Feb 27, 2013 - Bloomberg Markets Magazine
With Toronto on the verge of what turned into a colossal building spree, the 75-year-old retiree bought a C$904,000 ($878,000) one-bedroom suite in the Trump International Hotel & Tower. Eight years later, the 65-story skyscraper is complete, exuding Manhattan-style glamour.
For Crockett, fellow investors and Canadians alike, the glow is fading as home sales tumble, Bloomberg Markets magazine will report in its April issue. They say they’re worried that Canada’s debt-fueled expansion will stall before a global recovery can revive exports — a slowdown that would blemish Bank of Canada Governor Mark Carney’s record just as he begins his new job as head of the Bank of England on July 1.
“If the city is any indication of what’s going on in the country, it’s over-reliant on its housing sector,” Crockett says, pointing out a window of a downtown coffee shop to dozens of cranes swinging across the skyline. “I’m afraid of a condo crash, and then what will happen to all the investments?”
Toronto is awash in real estate. There were 144 skyscrapers under construction in late February, more than in any other city in the world, according to SkyscraperPage.com. Proposals for new condos reached 253,768 units at the end of the fourth quarter, up 10 percent from a year earlier, Toronto-based research firm Urbanation Inc. says. Four luxury hotels, each featuring condos, have opened in the past two years.
The projects keep coming. Frank Gehry, architect of the landmark Guggenheim Museum Bilbao in Spain, plans three towers. The highest, at 85 floors, would be North America’s tallest residential building.
Crockett, who lives in Crozet, France, says he’s losing C$7,000 a month amid the glut. He says his Trump suite, which guests rent through the hotel reservation system, is occupied about a quarter of the time. He’s suing Donald Trump and the developers for C$2.9 million for misrepresenting investment returns. About two dozen other buyers have brought similar cases.
Now, as the former Goldman Sachs Group Inc. banker prepares to cross the Atlantic, Canada’s households are burdened with record debt, and third-quarter growth, at 0.6 percent, was the lowest in a year. Canada is scheduled to report fourth-quarter gross domestic product on Friday, with economists surveyed by Bloomberg News forecasting no change in growth. Moody’s Investors Service weighed in on Jan. 28. It downgraded six banks the WEF had lauded, saying debt and soaring home prices have left Canadians vulnerable to more bad news.
“We basically borrowed our way out of this recession,” Tal says. “Now, it’s payback time. We will be in for a period of long, slow growth.”
Hoda Seraji is experiencing Vancouver’s housing slowdown firsthand. A real estate agent, she took her own family’s two- story house in Canada’s third-largest city off the market after failing to get a single bite for the C$2.39 million home overlooking the Pacific. Cutting the price for the five-bedroom, four-bathroom residence didn’t help.
“Buyers are very skeptical, very hesitant because they think prices may go down,” she says.
The value of mortgages insured by the government’s housing agency swelled 98 percent to $575.8 billion at the end of September from the end of 2006, foisting a growing liability onto taxpayers. Meantime, Canadians became more indebted than Americans in 2011. The ratio of household debt to disposable income has continued to rise, hitting a record 165 percent in the third quarter of 2012, according to Statistics Canada.
Canada is also missing ingredients that made the U.S. market so toxic — subprime borrowers and banks that lent with little diligence. With about 62 percent of mortgages issued by Canadian banks insured by the federal government, the nation’s six big banks are more sheltered from delinquencies than American counterparts.
how are all these canadians getting back and forth from AZ? is it mostly driving or flying?
Who cares? They just put it on the credit card
I find it quite interesting that they will spend that much money commuting to a far distant land to buy a house. that is a hell of a drive to come and hang out for a bit. The cost of flying certainly isnt cheap either.
Day in the sun is a powerful motivation.
Soon it will be one-way bus tickets back to Canada.
And a fire sale of their phoenix investment properties.
I agree… fire sales in Vegas and Florida too.
As to the earlier quote that “Canada is also missing ingredients that made the U.S. market so toxic — subprime borrowers”…
I think most are forgetting that Canada mortgage rates are only guaranteed 5 years. That is (in a nutshell) a suicide loan at its core.
“valuations in some markets were reaching severely unaffordable levels”
Their losses will be incalculable.
And irrecoverable.
And infinite.
Unquestionably
Pimp watch.. I agree with you, but can you stop? It’s annoying. I have to scroll through your crap to read anything relevant.
Please?
Hindenburg - Herbert Morrison “Oh the humanity”
http://www.youtube.com/watch?v=pUVDmXvXcbk
Indubitably.
“Their losses will be incalculable.”
I thought we’d agreed upon 65%.
Canada make’s us down here it FL look like total housing bubble pikers.
When it pops up there (and it will) and starts its massive crash, I can only wonder if it’s going to be another Greece/Iceland situation. The prices are so laughably high and spread across such a large part of the housing inventory, you have to think it could destabilize the entire banking system. Shoot, if it wasn’t Canada, it could destabilize the country.
I’m going to admit, I watch House Hunters, and, whenever they wind up in Canada, my jaw hits the floor for the entire 30 minutes. What are these people thinking?? I often feel that way with RE prices, but Canada is so consistently crazy, I just can’t fathom who would consider buying at those prices.
Also, Canada has to be right up there in the top 10 least populated (or, put another way, most land area per capita) countries in the entire world. And it’s cold and miserable in much of the country for much of the year. I love visiting up there (heading to Banff in a few months; can’t wait) but you’d have to pay me to live in most of the cities profiled on HH year round.
When ever one of my friends talks about moving to Canada I remind them -
Nearly all of Canada is NORTH of North Dakota…
And it’s cold and miserable in much of the country for much of the year.
Except for Black Fly season.
Then it’s hot and miserable.
I’m going to admit, I watch House Hunters, and, whenever they wind up in Canada, my jaw hits the floor for the entire 30 minutes. What are these people thinking??
Again…. they’re selling and you’re watching people who don’t know the value of a dollar. They don’t understand the cost of anything. When you see this, and we’re seeing it everywhere, it’s the best indication of the massive risk in the market which is all driven by credit.
Credit+uninformed people=disaster
Canada? Sure it’s messed up but the HH episodes that have me crying and yelling are the ones set in 3rd world “resort” communities. Who are these willfully blind carpetbaggers who ignore the razor wire, the roof dogs and the abject poverty right out their potential front doors?
Add in the prices for these razor wire, moat and bar secured “castles” and you have the stuff of nightmares. Are these “buyers” real?
Who are these willfully blind carpetbaggers who ignore the razor wire, the roof dogs and the abject poverty right out their potential front doors?
I resemble that remark!
(Actually I don’t…..I didn’t move to Brazil because of carpetbagging real estate reasons. My most carefree days were as a renter anyway)
Who are these willfully blind carpetbaggers who ignore the razor wire, the roof dogs and the abject poverty right out their potential front doors?
I think most Americans have been relatively secure for so long that they have no idea of the implications of those things.
…which is rather amazing as almost ANY town or city in this country has a 3rd world ghetto within short driving distance.
DHS Contractor Apologizes For Selling Shooting Targets of Children
Paul Joseph Watson
February 22, 2013
A company which received $2 million dollars from the DHS has apologized and taken offline “no more hesitation” shooting targets which depicted pregnant women, children, and elderly gun owners in residential settings as “non-traditional threats,” following an online uproar.
The company’s relationship with the DHS, along with thousands of law enforcement agencies, led to fears that the targets could be connected with Homeland Security’s purchase of roughly 2 billion rounds of ammunition over the last year, which many fear is linked to preparations for mass social unrest. As we documented, the LET’s contracts with the DHS were for “training aids” and “paperboard”.
In its apology, posted on the company’s website as well as Facebook, LET acknowledged that the targets were requested by law enforcement agencies.
We apologize for the offensive nature of our “No More Hesitation” products. These products have been taken offline due to the opinions expressed by so many, including members of the law enforcement community.
Although the targets have been taken off the company’s website, it’s unclear whether or not they have been removed from sale entirely.
View the targets that caused the uproar below.
http://www.infowars.com/dhs-contractor-apologizes-for-selling-shooting-targets-of-children/ -
well…isn’t that ironic.
How many paper targets do you think DHS got for $2 million dollars anyway?
Shooting kidz is too messy.
It’s a lot easier to punch a hole in the side of the building, pump it full of tear gas, and burn them alive
Shooting kidz is too messy.
Agree. Droning them is preferable. Ask Obama.
We have to kill the children in order to save them.
Did anyone scroll down and look at the “No More Hesitation” targets? The pregnant extremist girl is in a nursery by herself and Grama extremist is in her kitchen by herself.
Vicki Weaver was holding a baby when they shot her face off for being a terrorist.
http://en.wikipedia.org/wiki/Ruby_Ridge
“Vicki Weaver was holding a baby when they shot her face off for being a terrorist.”
That would be like the “No More Hesitation” target of the young mother holding her daughter`s hand on the playground.
My shooting club would have been busted for that. We could only use very crude shapes for practical shooting contests.
Shooting club I was in (with my father) seldom used anything other than circular targets with the x-ring in the middle. Occasionally, someone would bring a human silhouette, but that was maybe once every few months.
We were target shooters, and my dad was one of the best in the club. In his early eighties, he could still hit the black with iron sights at 100 yards.
he could still hit the black with iron sights at 100 yards.
Aim at the skittles?
Latest on the Calpers/Stockton litigation…I still say its going to the United States Supreme Court with huge ramifications for either side…
http://cl.exct.net/?ju=fe58137977640d7e7612&ls=fe1b1d777d6c017e741275&m=fefc1172766306&l=fed1157376640678&s=fe35157277640d7d711074&jb=ffcf14&t=
What would be the ramifications for either side, in your opinion?
What would be the ramifications for either side, in your opinion ??
Well, its a tug of war between Bond holders and the pension funds…The Pension funds believe they have standing above all others…So, in bankruptcy, they believe they are imune from any hair-cut…Recognize that this IS NOT the case in normal bankruptcy proceeding in the private sector…Pensions are on the table along with everyone else..
Now, the ramifications, in a Supreme Court decision will be this;
If they would rule that government pensions are not imune from the bankruptcy action of cuts, then the bankruptcy route for every municipality throughout the country would see it as a way to get their budgets in line with revenue through the bankruptcy action thereby impacting many millions of retiree’s…
On the other hand, if the high court were to rule that promised pensions do in fact have standing over “all others” then it would send the municipal bond market into chaos particularly for any municipality that was underfunded on the pensions which is likely most…
CalPeers seems to have dug in their heals…Ditto for the Bond holders in Stockton…If one of them blinks, then we may not get the answer to the question…On the other hand, if neither blinks the answer to this question will be forthcoming…
IMO, a decision on this issue would unleash the biggest financial crisis we have faced as a nation…For the benefit of our country, I hope both sides would see that the loser in a supreme court decision would have ramifications that they are not willing to risk…
Actually, the interesting thing about the Stockton BK is that Stockton apparently is NOT trying to squeeze CalPERs…in some of their motions, CalPERs and Stockton attorneys were working hand-in-hand.
A Supreme Court ruling COULD though come into play to determine where in the food chain pensions come in…are they above, below, or equal to bond holders in terms of municipal liabilities…
How does it work for corporations? My understanding is that the pensioners are simply another creditor, and pension contracts have been broken/changed before by BK judges.
Vallejo and San Bernardino took a different approach, and went head-to-head with CalPERs…it is one reason why people think Stockton will get through the process faster (they chose to only battle bondholders). However, if that approach raises too many questions, the strategy could backfire with respect to timing.
Got popcorn?
The fun will begin when the pension funds realize that they are also the bondholders. Truly hoping SCOTUS agrees to hear this one; it would make for compelling court-watching and epic MSM spin.
IMO, a decision on this issue would unleash the biggest financial crisis we have faced as a nation…For the benefit of our country, I hope both sides would see that the loser in a supreme court decision would have ramifications that they are not willing to risk…
But whether done by the SCOTUS or a compromise between the parties, a decision is inevitable no? And if so, what kind of decision could avoid the crisis you fear?
a decision is inevitable no ??
A supreme court decision is not inevitable…When Velejo or it may have been Vacaville went BK and then came to some resolution…Not sure how/what but they came out of BK…
The Stockton case is much bigger in both pension liabilities & Bond’s outstanding….Lot more on the table…
And if so, what kind of decision could avoid the crisis you fear ?
The decision not to go to the supreme court which would then be Case Law that everyone would need to follow…It would be a mess IMO…
“Bankruptcy is the cure,” said another city attorney, Marc Levinson. “If we’re outside of bankruptcy, how do we pay our bills?”
I have said this before.
We are going to have zombie cities in America.
They will still take in millions (and in some cases billions) in tax revenue but yet they will provide not ONE city service.
All that money will go to the public union pensions and benefits. Nothing will be left.
Isn’t bigger and bigger government grand?
But it is only fair. A promise is a promise. It is for the children.
Until everyone leaves or just doesn’t pay taxes. Like Detroit.
“Real Estate market in crisis” (lolz)
Some homeowners are dropping their prices to close a deal.>/i>
http://www.kimatv.com/home/video/Real-Estate-market-in-crisis-192620891.html
Why buy a house when it is finally dawning on house-debtors that prices are grossly inflated? Starve the beast. Buy later, after prices crater for 65% less.
Oh…. You aren’t aware that housing is inflated by 200%+? It is. And we’re proving it every day.
If there really is a new bubble, will the potential gains be Incalculable?
Housing Market Already Shows Signs of a New Bubble
http://www.cnbc.com/id/100435276/Housing_Market_Already_Shows_Signs_of_a_New_Bubble
When housing began to simmer back in 2002, prices were rising around seven percent a year, then eight percent in 2004 and a stunning 12 percent in 2005.
At the time, words like “bubble,” and “unsustainable,” were uttered with every monthly reading. No one had seen home prices soar like that since the mid 1970’s.
Historically, prices nationally rise about three to four percent a year. The market was clearly too hot, and by 2007 it had reversed dramatically, with prices falling nationally for the first time in history.
Fast forward to today and the housing recovery.
Barely a year in, home prices rose over eight percent annually in December, according to a new report from CoreLogic. While still down double digits from their 2006 peak, prices are suddenly soaring again and raising some serious red flags.
Dump that slum-side shanty while you still can still find a buyer for it.
Rio my man! Any Unknown Comic sightings?
Gong Show: The Unknown Comic - YouTube
http://www.youtube.com/watch?v=9BBZVQ4zBcU - 196k -
Any Unknown Comic sightings?
Only about 4-5 months ago. He looked very old and tired.
The Unknown Comic - YouTube: Funny!
Incalculable losses in Virginia:
“Virginia, which relies on U.S. government contracts more than any other state, is already seeing the effects of $85 billion in across-the-board spending reductions set to start on March 1.
Most of the impact in Virginia is linked to planned military cuts — from the Pentagon and some of the nation’s largest defense contractors in Northern Virginia, to the Navy’s biggest East Coast installation in Norfolk to the south. The reductions may eliminate as many as 200,000 jobs in the state in the next decade”
http://mobile.bloomberg.com/news/2013-02-27/virginians-trim-lifestyles-as-budget-cuts-threaten-pay.html
200,000 jobs
Will they vote R again?
“will they vote R again.”
More likely L than D.
“The reductions may eliminate as many as 200,000 jobs in the state in the next decade”
In the newspeak, I assume that means 20,000 fewer jobs will be created than what might otherwise happen, and we’ll multiply by 10 years.
That’s the way the pols all seem to talk about budget “cuts”.
Its’ the way all numbers are fudged.
Bigger is scarier.
a friend of mine who has been late to every investment bubble there has been just signed up for a Facebook account.
get out now!
he hasn’t bought any gold yet though.
Let me guess…. Your Dollar Short/Day Late friend bought a house in 2011 too?
close…bought a 2 bedrom “investment” condo in 2007…interest only loan…that doesn’t cash flow.
he also heloced his house for a huge renovation around the same time.
lost a ton during the dot com as well.
The obvious solution to this is to give Jesse Jackson’s kidz another Anheuser-Busch distributorship. Jesse Jr. will need a job when he gets out of prison.
“White families build wealth faster than black households, a phenomenon economists call the “racial wealth gap”. What explains this growing divide?
The biggest drivers, new research shows, are home ownership and income levels. Tracking 1,700 working-age households from 1984 to 2009, researchers at Brandeis University’s Institute on Assets and Social Policy found that, among households whose wealth grew over the period, the number of years owning a home accounted for nearly 30% of the difference in the relative growth in wealth between white and black families.
Family income accounted for another 20% of the widening gulf in wealth. Other factors include college education, inheritances and unemployment. All told, these five factors accounted for 65% of the increasing wealth gap, researchers said.
In 1984, the median net worth of white families was $90,851 compared with just $5,781 for black families, a gap of $85,070. By 2009, this gap had ballooned to $236,500.”
http://blogs.wsj.com/economics/2013/02/27/what-explains-the-racial-wealth-gap/
We still owe Jesse Jr. 4 mules.
An amusing fiction piece about future USA after the Free Shit Army gets their gibs muh dat:
http://westernrifleshooters.wordpress.com/2013/02/17/con-con-con-2/
if you like the Western Rifle story you should read the book “Flashback”
Am radio is only heard between cities in no man’s land as you approach the city its all NPR
God what statistical BS.
Wealth is driven by # of years in the house, # years in the house is driven by how young you bought the house, how young you bought the house is driven by income, income is driven by jobs, jobs is driven by education, and education is driven by the wealth of the parents. Housing is the end of the chain, not the beginning.
According to the 2013 Car Affordability Study by Interest.com, only in Washington, D.C., could the typical household swing the payments, the median income there running $86,680 a year. At the other extreme, Tampa was at the bottom of the 25 large cities included in the study, with a median household income of $43,832.
The study looked at a variety of household expenses, such as food and housing, and when it comes to purchasing a new vehicle, it considered more than just the basic purchase price, down payment and monthly note, factoring in such essentials as taxes and insurance.
Bottom line? A buyer in the capital can purchase a car with a sticker price of $31,940, slightly more than the new vehicle average for the 2013 model year and about what it would cost for a mid-range Ford Fusion sedan or a stripped-down BMW X1 crossover. The buyer in Tampa? They’ll just barely cover the cost of a basic Kia Rio, with $14,516 to spend.
http://m.nbcnews.com/business/new-cars-increasingly-out-reach-many-americans-1C8573730
Buying new vehicles that depreciate 50+ percent in the first five years = LOOSERS!
In the UK before the crash you used to be able to get a finance deal over three years with a rate of interest of around 7% to 10%. They are now financing the purchase over five years and the loan is 0% interest, even with this you can still find manufactures discounting as much as 40% of recommended retail price.
P.S and no you don’t get a discount for cash, I tried.
Actually, I think it’s now taking even longer than five years for a car to depreciate 50%. More like 7 years.
The cheap economical ones, yes.
“Real estate agents and mortgage brokers have noted the tentative return of the so-called “boomerang buyer” to the market.”
New site helps foreclosed homeowners buy again in fewer than 7 years
by Kim Miller
This entry was posted on Tuesday, February 26th,
2013 at 8:54 am
From the creators of YouWalkAway.com _ a website that promotes ditching underwater mortgages in favor of foreclosure or shorts sale is a new website that says it can help former homeowners who went through a foreclosure buy again.
“Starting right now, this month, there is a big population of people who are starting to fit the timeline of those who can qualify after losing a home a few years ago,” said Skip McDonough in during a July housing forum sponsored by The Palm Beach Post. McDonough is president of Family Mortgage in Jupiter.
While having a foreclosure or short sale on your record was once at least a three- to-seven-year sentence against buying another home, McDonough said the Federal Housing Administration as well as federal mortgage backers Fannie Mae and Freddie Mac have softened those rules.
“For the next few months I believe the largest segment of buyers will be those who believed in the American dream and can now get back into the market,” McDonough said.
http://blogs.palmbeachpost.com/realtime/2013/02/26/new-site-helps-foreclosed-homeowners-buy-anew-in-fewer-than-7-years/ - -
Seven years?
Is that about how often the HELOC financed implants need replaced?
I know several people who have foreclosed, and repurchased in just 3 years. In fact, its to the point where deals are being extended (several weeks) to wait the buyers pass the 3 year window.
FYI- Our government (FHA) will back up a formally foreclosed buyer just 36 months after the foreclosure… OH.. with only 3.5% down.
Notices of proposed furloughs went out to several friends of mine here in DC yesterday. Looks like it would be one furloughed day per week until September, or a 4 day work week resulting in a 20 percent paycut - plus there is still the threat of a government shutdown at the end of March.
It’s about to get different here…….
Hope they bought a house already. It will be slightly difficult now with 20% pay cut. Not impossible, just difficult.
The Fed should offset this by loaning these individuals the amount equivalent to salary lost in furloughs.
It’s about to get different here…….
You better believe it Mister….. like you don’t know.
Living beneath one’s means…
It is a built-in safety net.
Just for the sake of fairness, I would like to say that I agree with bananas wholeheartedly on this statement. Living well below my means makes me feel a lot safer.
That being said, there are a heck of a lot of people around here who live very reasonable life styles and can’t pull back as easily as I can for a variety of reasons (kids and/or stay at home spouse being the most common). It will impact the “wants” industries in this area a lot. Also, my boss is leaving the goverment for another job. One reason he gave (though hardly the only one), was to diversify his family income so they would only have one person in government.
“That being said, there are a heck of a lot of people around here who live very reasonable life styles and can’t pull back as easily as I can for a variety of reasons”
They can’t?
Do you think they paid a grossly inflated price for a rapidly depreciating asset….. say sometime between the years of 1998-2013?
They can walk away and rent for half the monthly debt burden.
The losses in DC will be incalculable.
Some people are not emotionally equipped to walk away from child rearing responsibilities. Hell, it took me over thrity yrears!
They can’t just walk away. Maryland is a recourse state. And a lot of the jobs that will be furloughed are ones in which you can find yourself fired for abandoning your debts.
I’ll let Oxide address whether it is actually possible to rent housing sufficient to contain a family (which is what she was renting) for half the cost of owning. I haven’t even looked inside a house or condo that is for sale since I moved here. The lease on my one bedroom apartment restricts it to only housing two people and is therefore not remotely “family” housing.
Yeah because she’s a real pro at that.
Can you rent and raise a family for half the cost of owning? Short answer: not if you’re comparing apples to apples. That is, a two-income household can’t rent a 3-bed house for 1/2 the PITI on the 3-bed house in the same area.
Now, if you really need to cut your costs in half, you need to take a lifestyle hit. You could elect to move further out and find a distressed owner desperate to rent; but I don’t know if you could get the cost down to 1/2. You could take in another family, which halves the payments (SOP for our guest workers). Or you could move from a 3-bed SFH close in to a 2-bed apartment farther out, or some other combination.
So it’s not impossible [cue The Pimp about 1/2], but it would be very difficult.
You are correct. A sure way to lose a clearance is to have financial issues/troubles.
They can’t just walk away. Maryland is a recourse state. And a lot of the jobs that will be furloughed are ones in which you can find yourself fired for abandoning your debts.
Rent for 50% of the cost. Own and your losses will be incalculable.
Miss Craterton,
You’re using dishonest math again.
Why won’t you use actual expenses? You know why. And we do too.
I hear a harpsichord….
Whoever said there hasn’t been much coverage of sequestration is smoking something. There has been scare mongering on every front. WTF are we supposed to do about it? Just be afraid, very afraid, or what?
Me? I burst into song: “It’s the end of the world as we know it…”
How is that hope and change working out?
—————————–
Are Millennials a “Lost Generation”?
By Nicole Goodkind - Daily Ticker – 2/27/2013
It’s hard out there for a Millennial. While the national unemployment rate has kept firm at 7.9%, the jobless rate for Millennials (or the 80 million Americans born between 1980 and 2000) continues to increase, reaching the alarming rate of 13.1% in January.
But those who do manage to find jobs are also struggling. Young people with high school degrees have seen their inflation-adjusted wages decline by 11.1%; college graduates have seen a smaller, yet significant, decline of 5.4%, according to the Economic Policy Institute.
As a result, Millennials aren’t taking on debt or making economy-boosting purchases. Young people aren’t buying houses or cars and they’re delaying marriage and children. According to The Pew Center, home ownership amongst young people has fallen from 40% in 2007 to only 34% in 2011. 73% of young households owned or leased a car in 2007 compared with only 66% in 2011.
Many have also begun to wonder if college is worth the cost — outstanding student loan debt now tops $1 trillion. In 2011, two-thirds of college seniors graduated with an average of $26,000 in student loan debt.
Millennials aren’t the new homesteaders, they’re not moving in droves to abandoned urban centers like Detroit to farm and start art galleries. This view of young Americans applies largely to those with liberal arts educations and money to fall back on.
Say what you want about the millennials, but they are smart enough NOT to vote for the R party and its wars, lies and deceits back in power.
In D party they rust.
Cueing the NAR-scum to pimp about “pent-up demand” from these broke-ass looser kidz for $350,000 ($500,000 on the coasts) starter homes.
Welcome to the recoveryless recovery.
The future belongs to Lucky Ducky.
They are just helping them get on the “property ladder” and live the American dream!
Cueing the NAR-scum to pimp about “pent-up demand” from these broke-ass looser kidz for $350,000 ($500,000 on the coasts) starter homes.
Boomerang buyers, returning to market after short sale, foreclosure
Posted: 01/24/2013
•By: Matthew Harris
WEST PALM BEACH, Fla. - Bernice Lutchman was determined to be a homeowner.
“Everybody on the outside was telling you, you’ll never be able to own a house again,” Lutchman said.
A few years ago she went through a short sale.
“I had to pay the penalty by renting for about three years.”
During that three years she worked hard to fix her credit.
“It did come with some sacrifice,” Lutchman said.
But she had a team backing her up. First Bernice started working with mortgage consultant Erick Cantele.
http://www.wptv.com/dpp/news/region_c_palm_beach_county/west_palm_beach/boomerang-buyers-returning-to-market-after-short-sale-foreclosure - 77k -
“I had to pay the penalty by renting for about three years.”
During that three years she worked hard to fix her credit.
“It did come with some sacrifice,” Lutchman said.
As spook would say….shaking my head….violently in my case.
Housing’s ‘Boomerang Buyers’ - CNBC
http://video.cnbc.com/gallery/?video=3000149861 - 155k - Cached - Similar pages
4 days ago …
And episode of The Craterton’s?
I’ve been looking at a piece of forested property to purchase. The seller wants approximately $8500/acre for this land that’s in an unincorporated area. The land is steep and it would need 100-200K in improvements before being able to build a house - if one could get approval! Lots with houses on them in this area sell for less than $8500/acre. The guy bought the land in 2007. So here’s the funny part: I know what he paid but I decided to test the waters by giving the listing agent an idea of what I’d be willing to pay for the land if it were improved by the seller. I enjoyed her response:
No. He is not having a 50 percent off sale. ;-). He has to be able to payoff his loan, too.
Good luck with that! It never ceases to amaze me that a person always believes their real estate is worth more than they paid for it regardless of reality.
What’s it worth?
What did it sell for before the fraud began in the late 1990’s? $500 per? maybe 1000 at most?
That’s your answer.
If property taxes are low - he will hold on to it for a long time.
His property taxes are dirt cheap, as is the assessment. I don’t know the details of his loan, but I know he was unable to build on his property because the bank wouldn’t lend to him. One of his loans is for 50K more than the purchase price (how does that happen?!), so he must have large loan carry costs.
He’s a spec builder, too, with a couple of houses on spec.
MV-
We’re seeing a lot of that where I am right now, too. There is the realtor price for rural property, then there is the real one. Your best bet is to by-pass the realtor altogether and deal directly with the long-time property owner who’s given up the dream — or their heirs.
Put a “land wanted” ad in the local newsletter/paper or leave a letter in the closest mailbox to the parcel you’re interested in. The local bar and grill or general store is a great place to start. And never pay more than $2,000 an acre for unimproved property of twenty acres or more, even if some realtor tells you it’s “worth” $250K.
Good luck.
Sadly, he only needs one fool to buy it. If he’s not desparate for cash right now, he can just wait a long time until there is another mania. I wouldn’t want to own an “asset” like land on a steep slope, but if I did I would hold out too, since I am sure there will be another mania at some time in the future. It may take 20 yrs, but I have the time.
What are his carrying costs if he just holds onto the land?
He’ll be in the ground by the time that ever happens.
Remember….. the fundamentals have worsened. We avoided nothing and it’s in front of us still.
We have avoided correcting any of the things that were wrong in 2008.
And some of us were able to make a lot of money in the process of not correcting those things. Well…a few of us anyway.
I don’t know if he’ll be in a pine box by then, but I kind of hope we get another property bubble in 20-30 yrs so I can profit.
Housing is never a “profit”. It’s a loss ALWAYS.
There goes the Starbux business model!
Housing is never a “profit”. It’s a loss ALWAYS.
Totally. Always. For example:
A friend of mine sold his California house in 2007 for 550K more than he paid for it, moved back to Kansas and bought a better 200K house with cash and put 350K in the bank.
Now his Kansas house has dropped to 175K so his 350K in the bank does not negate the fact that he has lost 25K on his Kansas house because “Housing is never a “profit”. It’s a loss ALWAYS.”
(Maybe I should get you to explain the math of his incalculable loss)
And you conveniently lied about his costs….. why would you do that? You’re a liar.
Housing is never a “profit”. It’s a loss always. ALWAYS.
Rio’s story only even pencils out if the guy paid zero for the place.
Rio’s story only even pencils out if the guy paid zero for the place.
The dude made 550K on a house he owned for less than 6 years in CA in which time he paid less per month than to rent. In Kansas he paid less to “own” than to rent and “lost” 25K.
How would it not pencil out? Are you two guys morons? Who do you “work” for? I’ve never seen such narrow minded, biased and ignorant thinking in most my life. Pencil out? What IQ’s do you two have? 98? What is the source of your frustration in life that you sing the same out of pitch tune 24/7?
Housing is never a “profit”. It’s a loss always. ALWAYS.
Pimp, You are funny but have turned whacked.
Always? Not. Not only are you rude and crude, but you’ve come to think like a child. Or, your thinking in falsehood absolutes is moronic for an adult. Always? Have you no self-esteem?
Socrates would laugh at you, rip you a new one and come away thinking you had the reflective ability and the critical thinking ability of a 12 year old.
Dr. Phil would think you were dropped on your head as a baby. You pull your numbers from your a–. And u used to be interesting and not just a parody of strangeness. (And I mean that in the best way)
You’re an established liar.
It’s because your story is exceptionally stupid. He paid for the house, then sold it for more. He spent the more thus and thus. The amount he paid for the house seems to have gone missing. The logical conclusion is that your imaginary friend was an OPM specuvestor posterboy. Retired to Kansas, lol. Knowing when to walk away….
You’re an established liar.
Typical one line B.S. response you have become infamous for. There is no “there” there with you anymore. You are just one-line vapidness. Socrates would laugh at you.
Pimp, you can’t even respond in a coherent, meaningful manner anymore when you are called out for your nothingness. You have no supported numbers, just hot air.
This is a trait of a troll and/or someone who’s lost it. But you are amusing. Your really are. Carry on.
It’s because your story is exceptionally stupid.
No….It’s because your math is (and most of the time is when it conflicts with your biases) exceptionally stupid and/or corrupted by such.
Blue,
You ignore facts, figures and math when they conflict with your very narrow view of the world and your very limited world experiences.
Are you joking? I know dozens of people who have made a ton of money in real estate as well as even more who have lost money, but the latter does not negate the former. Can’t you think and reason past your bias?
‘the latter does not negate the former’
Yes it does because we’re all paying for the housing bubble. Maybe you haven’t noticed all the unemployed, the bail-outs, the poverty. Oh yeah, you don’t even live here.
‘your very narrow view of the world and your very limited world experiences’
You’re on thin ice. Keep it up and you will never post here again. Or better yet, just go away.
your imaginary friend was an OPM specuvestor posterboy
And? And? And my friend made a boatload of money which negates Pimp’s moronic assertion that owning housing is “always a loss”. “Always”? That’s the point. His assertion and your support of thus would not stand up to any Socratic method and in fact wouldn’t even come close. In fact it is a joke that defies history and reality .
Socratic method - A teaching technique in which a teacher does not give information directly but instead asks a series of questions, with the result that the student comes either to the desired knowledge by answering the questions or to a deeper awareness of the limits of knowledge
ALWAYS.
You’re a liar.
Maybe you haven’t noticed all the unemployed, the bail-outs, the poverty.
Sorry Ben,
But as far as the current American economic problem, I don’t think the housing bubble caused that. I think the housing bubble was a failed attempt to ameliorate that. Then it burst as all bubbles do.
IMO, The unemployed, the bail-outs, the poverty were not caused by the housing bubble, they were caused by the massively increasing wealth and income inequality in the USA.
Take the owners offer. Everyone knows you’re a liar. What’s the benefit of staying after multiple invites? Go ahead…. tell us.
But as far as the current American economic problem, I don’t think the housing bubble caused that.
And Ben,
I’m sorry if my overall meaning is lost but I’m misunderstood. I am not a USA housing bull or cheerleader. I have no horse in this race. I am a realist who has seen more bubbles than most but I still value words and what they mean.
“NEVER”, “EVER”, “ALWAYS”, etc. have no place in any market and those absolutes discredit the ideas and positions of those who use those words.
I missed the USA bubble. I’ve never profited from any real-estate (except now just on paper but that could be gone tomorrow) I would not buy a USA home right now just because I thought I would make money because there could be another big leg down. However, I might buy a home where it was the same or less than renting. Why not? Because of anti-housing dogma? I don’t give a darn.
My beef is when people disregard facts, figures and reality because they have a fixed and biased mindset that precludes them from looking at the situation objectively. Calling people “liars” with no basis and constantly making assertions with no basis in facts or data should be called for what it is. It is pure B.S. IMO. Even if that person might be correct by intuition. This should be a debate based on facts and no one should be called “liars” based on opinion.
I look to the USA housing market as I’ve always done, with wonderment, disgust, perplexity and the knowledge that I don’t really know WTF is going to happen next year or in the next decade. I use no “always”, “ever” and “never” in my dialogues because I have no idea (as does anyone) what is going to happen tomorrow. Peace my fellow debaters.
Rio,
Pimp obviously has the imprimatur (literally) of the moderator, so you just have to take it as an eccentricity of the blog — sort of like a logo or a pop-up. Pimp seems to need the rubs, and the pat responses give the character a raison d’etre.
Of COURSE it’s gibberish, and it’s trolling, and it’s juvenile and inane and rude, and clumsy, but the subtext rings true — which is why it gets to stay despite its obvious hyperbole. I really appreciate your commentary here, but you’ve got to keep in mind this is Ben’s blog and he gets to take umbrage at whatever he wishes. Discrediting the underlying message — even in its more egregious forms — isn’t likely to endear you to the guy with his finger on the “delete” button.
So why not just ignore the baiting, masterful (ahem) though it may be? We all know what you’re talking about.
I’m convinced Pimp is an app….
Let me tell you something.
I can and frequently do write paragraph after paragraph and it’s really not the challenging to do so. But where we depart my friend is the content.
This is blog, its’ intent, its’ ‘doctrine’, has never changed. In fact it is stated at the top of the page;
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
The “examination” should have been completed long ago so why are we still inspecting and examining? Well…. the “boom” was never allowed to correct. Here we are with the same raunchy, greedy greedy characters and charades resurrecting the same old falsehoods, therefore the truth is never “examined”. The same false narrative drives the discussion rather than seeking the truth.
You’re not helping getting to the truth in this situation. I made the error of calling another user a troll back a few years go. The truth? That user had the sharpest mind and spoke more truth than I’ve read anywhere. And the most fascinating part about his posts? They were a mere few sentences. Yeah… he had a post-PhD education but didn’t need to post a narrative to demonstrate truth. So I don’t want to repeat that mistake by assigning a name to you that seems to fit like a glove. At least in this situation.
Don’t threaten, ex, do.
I think you know that I, as much as anyone on this board, have appreciated your thoughtful, reasoned commentary over the years. But this brattish name-calling, while perhaps personally satisfying to you on some level, is counterproductive to those of us who are committed to reforming the entrenched corporate stranglehold over our nation’s economy, and post (and refer to) HBB to reach a larger forum.
When influential people in a position to effect change read mindless claptrap– whether racist, recycled MSM talking points, or simplistic taunting — it detracts from our efforts and delegitimizes our arguments. Far from being cute or funny, “PimpWatch” is a community embarrassment that ultimately does far more harm than good to our collective examination.
Whether you agree with various posters’ observations or not, a lazy dismissal only serves to legitimize their point and alienate the outside reader — who might be in a position to propose legislation or vote on an important matter of policy. Please post as though your name were on your comments? It would certainly help elevate the discourse.
Thank you.
-a
I’m not threatening. I didn’t imply or insinuate any threats.
You disparage my means and methods in spite of the fact you know precisely what’s going on here, yet more and more, you appear to be part of the ruse.
Proceed.
1. “…So I don’t want to repeat that mistake by assigning a name to you that seems to fit like a glove….”
2.”…I didn’t imply or insinuate any threats….”
See how that works?
read mindless claptrap– whether racist, recycled MSM talking points, or simplistic taunting — it detracts from our efforts and delegitimizes our arguments
This describes most of the internet, unfortunately.
1. “…So I don’t want to repeat that mistake”
2.”…I didn’t imply or insinuate any threats….”
A mistake is not a synonym for a threat.
See how vocabulary works?
This is the kicker: “He has to be able to payoff his loan, too.”
He’s asking YOU to pay off his loan. Tell them to go pound sand.
Yeah. “Has to”…or…what?
Here is a decent synopsis of what I was talking about last week re: reinsurance and how the “I” in FIRE is just as aggressive as finance or real estate.
http://www.businessweek.com/articles/2013-02-21/a-hedge-fund-tax-dodge-uses-bermuda-reinsurers#r=hpt-ls
Some day I will do my multi-paragraph riff on exactly why the insurance bought by “small businesses” (wealthy individuals insuring “key people”) is so different than the “little people insurance” sold to J6P. Unfortunately I have work to do today [insert sad face].
John Paulson (legally) launders $450 million? YAWN!
If this was real “news” it would be on Breitbart or in the Washington Times.
I feel like a Communist for even mentioning how this is done. It is the God-given right of the “bootstrappers” to do this, so long as their checks to Paul Ryan and Eric Cantor don’t bounce. Heck, someone who can pull this off makes an ideal candidate for the Presidency. I’m shocked it took until 2012 for one of these guys to get a nomination.
The key quote about this sham:
“Simply basing a hedge fund in Bermuda or another tax haven would not provide the same advantage, because the fund would incur IRS penalties on what the agency calls “passive foreign investment companies.” The IRS doesn’t penalize earnings from insurance companies, which it considers “active” businesses. To qualify as active and avoid the penalty, firms can’t have a pool of capital far greater than what they need to back the insurance they sell, according to the IRS. The agency has never specified how much is too much. “The $64,000 question is, how big a reserve can you have?” says Robert Cudd, a tax lawyer at Morrison & Foerster in San Francisco. “There’s no easy answer to that.”
The key takeaway idea: It really doesn’t matter whether the investments make or lose money. They only thing these guys want is to ensure that their money gets taxed as capital gains rather than ordinary income. What a joke (or a brilliant idea, if you are into the “job creator” mindset).
“The key takeaway idea: It really doesn’t matter whether the investments make or lose money. They only thing these guys want is to ensure that their money gets taxed as capital gains rather than ordinary income.”
If the investment loses money, then the tax is zero no matter how it is taxed. BTW, isn’t a loss still a loss?
You are missing the point. The point is that what would normally be compensation is re-routed to a reinsurance front. The investors have shares of the reinsurance front, which takes on little risk and has very low expenses (often no full time employees).
When the principals want their money out, they are nonetheless able to take out any money without paying regular income tax. If they make money, they pay capital gains only (15%). If they lose money, they lose some trifling amount (these reinsurance firms are notorious for not taking on much risk). If they lose a few %, that is still vastly better than paying regular income tax. The reinsurance firms serves its purpose by running an end-around on income taxes.
Let me know if I need to flesh this out more. My first job out of LS was in a reinsurance practice group, I can tell you all kinds of shady sh**.
Joe, most folks have no idea the breadth and depth of the money games the rich play and can’t understand it even if they knew.
I don’t have your background, but I HAVE been exploring the dark corners of money for many years.
To badly paraphrase Gandhi: “It is difficult, but not impossible to make a good living as an HONEST businessman, but it is impossible to become rich.”
Measure of US pending home sales rises to highest level in more than 2 ½ years
Published February 27, 2013
Associated Press
WASHINGTON – A measure of the number of Americans who signed contracts to buy homes rose in January from December to the highest level in more than 2 ½ years. The increase suggests sales of previously occupied homes will continue rising in the coming months.
The National Association of Realtors says its seasonally adjusted index for pending home sales rose 4.5 percent last month to 105.9. That’s the highest since April 2010, when a homebuyer’s tax credit was about to expire.
…
Meanwhile, new housing starts are the lowest they have been in at least 50 years.
And housing demand is at 1997 levels…. and falling.
Housing Starts for SFR for the month of January (in 1,000’s)
Average of every January from 1959 to 2013: 60.4
2003: 95.9 (4th Highest January on Record)
2004: 99.5 (3rd Highest January on Record)
2005: 114.3 (2nd Highest January on Record)
2006: 121.0 (Highest January on Record)
2007: 75.4 (12th Highest January on Record)
2008: 48.5 (16th Lowest January on Record)
2009: 22.7 (Lowest January on Record)
2010: 31.7 (4th lowest January on Record)
2011: 26.6 (2nd lowest January on Record)
2012: 33.1 (5th lowest January on Record)
2013: 39.6 (8th lowest January on Record)
Trailing Prior 12 Months of SFR Housing Starts has been increasing every month since November 2011. Currently, the trailing 12 (total starts in the prior 12 months) is 541.1, off the low of 426.1 in November 2011. Average trailing 12 since December 1959 (first 12 months is the entire year of 1959) is 1,047.9.
My (obvious) observations from looking at the data (by the way, from the “Historical Data” section of New Residential Construction website from Census), is that:
1. Housing starts were the highest they have ever been during the bubble years;
2. Crashed to lowest level that they have ever been;
3. Appear to now be rising again off the lows, HOWEVER that trend is young, only a bit over a year old, may not be an unbroken trend upwards, and there is a LONG way to go to get back to the 50-year average (roughly needs to double from current levels).
A deflation causing a shortage after the initial price crash that puts many builders out of business
and now they can’t find cheap labor anymore
I think the new modern supply chain is very fragile, created to maximize profits not for any kind of stability
Do you typically just make this stuff up or do you read from a script?
The artificial inventory squeeze is the housing market equivalent of “cash for clunkers.”
I smell massive losses ahead for greater fools who buy used homes during the artificial inventory shortage.
EARNINGS
Updated February 26, 2013, 7:39 p.m. ET
Builders Fuel Home Sale Rise
Developers Overlook Buyers’ Credit, Cash Problems, Luring Them to Pricier Houses
By ROBBIE WHELAN and CONOR DOUGHERTY
Sales of new homes are surging in the U.S., far outpacing results for less expensive existing homes and creating an unusual disparity in the housing recovery.
The trend partly reflects the small inventory of previously owned homes, now at a 13-year low after investors picked over the long-depressed market. But the strong sales of new homes also show how the nation’s home builders have mastered the art of selling, even to cash-poor buyers or those with spotty credit histories.
New-home sales jumped 28.9% in January from a year earlier to the highest annual sales pace in four years, according to data released Tuesday by the Commerce Department. Sales of previously owned homes rose 9.1%. The disparate selling pace exists even though a typical new home costs 37% more than one already built, the widest price gap since the figures started being tracked in 1968, according to an analysis of home prices by Barclays Capital.
In the past two years, more home builders have offered to pay closing costs and arrange home loans through in-house mortgage operations. They have hosted free credit-counseling sessions for buyers with bad credit scores, and made heavy use of government-backed mortgage programs that allow buyers to get a home with little or no down payment.
The result is that for many buyers, it has become far easier to buy a new home than an existing one. “It’s as if people were going to the car dealership and realizing that there aren’t any used junkers left, so they’re buying these shiny new SUVs,” said Ivy Zelman, an independent housing analyst.
In some cases, that means buyers are ending up paying more than they expected for a house, raising worries that some buyers are biting off more than they can chew.
…
“The result is that for many buyers, it has become far easier to buy a new home than an existing one”
It’s certainly less costly. Are you dumb enough to buy a 20 year old house for $150/square foot or smart enough to pay less than half of that for a new one?
“The result is that for many buyers, it has become far easier to buy a new home than an existing one”
You can buy brand new spec homes around my area cheaper than used because many owners extracted HELOC cash, and now they’re upside-down.
If you go to the car dealer and all the used inventory is just as or more than expensive than the new inventory of course you’re going to buy new. If I’m going to buy something with a few hard years on it I better get a serious discount. At least 65%.
Hope and Change
“Federal immigration officials have released hundreds of detainees from detention centers around the country in recent days in a highly unusual effort to save money as Automatic budget cuts loom in Washington, officials said Tuesday.
“It’s abhorrent that President Obama is releasing criminals into our communities to promote his political agenda on sequestration,” said (Representative Robert) Goodlatte (R-VA).
http://mobile.nytimes.com/2013/02/27/us/immigrants-released-ahead-of-automatic-budget-cuts.xml
The Washington Times also reports on this topic that upon release, the detainees each receive an Obamaphone, a SNAP card with a $5,000 balance, and a new Cadillac Escalade.
Who pegs gold at $1600/oz?
And when is price fixing legal?
Feb. 27, 2013, 10:35 a.m. EST
Gold pulls back but holds above $1,600
By Myra P. Saefong and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures pulled back on Wednesday, holding above $1,600 an ounce, with investors taking a breather a day after pushing the precious metal to its biggest one-day gain so far this year.
…
If somebody really is trying to prop up gold at $1600, they are failing miserably.
Marketwatch dot com
Gold (COMEX) Apr 2013
COMEX: GCJ3 close
$1,593.60
Change -21.90 -1.36%
Volume 167,812
Feb 27, 2013 3:03 p.m.
Who pegs gold at $1600/oz?
The same people who pegged gold at $250/oz. (just a lot more of them)
I was talking about a short-term peg, but your presumptive point that long-term pegs in precious metals inevitably fail is taken.
Mr Market is shrugging off sequester fears. Is this because the sequester is not going to happen, or because Wall Street traders don’t think it will have any economic impact if it does?
Or is it just a reflection of typical denial on the street?
How often have any of these breathlessly reported crises actually had a major impact? I figure people are just playing the odds.
I think it’s the Italy election and Mr. Gono on TV last 2 days.
The market is all about the latest and the greatest news/rumors. Italy had a “successful” bonds this morning and Mr Gono has been saying “right” stuff.
If markets were going to panic over the sequester, wouldn’t they already have done so?
The sequester starts Friday — and then what happens?
“Is it time for markets to panic?” and other key questions hang in the balance as cuts look certain.
The magnitude of the sequester impact I’ve seen is a hit to approximately 0.5% of GDP growth.
We’ll see what the Q1 growth number is…I think I heard somewhere that lots of government spending was brought forward into Q3 (before the election), and so the drop in Q4 was temporary.
If we are at a run rate of, say 2%, the sequester would supposedly drop that to about 1.5%.
Housing is supposedly beginning to cause improvements to GDP as well (see the steady increase in housing starts).
My personal opinion on the matter?
People are starting to ignore the cries of “wolf!” from the MSM and the Political Punditry Circus.
Got illegals?
Detained immigrants released; officials cite sequester cuts
By Kathleen Hennessey
February 26, 2013, 1:47 p.m.
WASHINGTON — Immigration and Customs Enforcement officials have released “several hundred” immigrants from deportation centers across the country, saying the move is an effort to cut costs ahead of budget cuts due to hit later this week.
Announcing the news Tuesday, ICE officials said that the immigrants were released under supervision and continue to face deportation. After reviewing hundreds of cases, those released were considered low-risk and “noncriminal,” officials said.
…
Just more Hope and Change from the Community Organizer in Chief.
Forward
Love it. It must be Obama’s little firing shot on R party about the Se-Questa.
Next in line rapists and murderers.
Next in line rapists
They can be released since they didn’t commit “legitimate” rapes.
“umm..that’s therapist…mr. connery”.
“That’s wot I said, Alex.”
Generally, states pay to incarcerate rapists and murderers so, no, cuts to federal line items won’t impact that. Might impact buying equipment for the guards. Sometimes law enforcement can get money for equipment from DHS, though prison guards wouldn’t be the most likely.
sequester the steets will never be safe again
and your losses will be massive
You can be sure the bubble is back when foreign investors are once again “snapping up” real estate!
World
Chinese Buyers Snapping Up U.S. Real Estate
Chinese buyers are pouring more money into the U.S. real-estate market. Sotheby’s Angela Wong tells the WSJ’s Deborah Kan who these Chinese property buyers are and where their money is going.
2/26/2013 11:03:07 PM3:38
A friend recently started RE agenting with a Sotheby’s office in the San Diego area.
She’d LOVE to meet some of these snapper-uppers. Because, from what I gather, her fledgling real estate career isn’t exactly roaring along.
Chinese buyers flock to Chinese RE agents to buy houses. Maybe your friend needs a crash course in Mandarin.
in Santa Clara CA they are headquarters of at many high tech white collar 12 hour days plus weekends sweat shops
more H1B !! lazy US citizen engineers are not working the 60+ hours per week required to siphon profits to top managment 500K per year in RSU’s
I *really* hope projects like this don’t get cut from the budget…
http://www.businessweek.com/videos/2013-02-21/littoral-combat-ship-is-like-klingon-bird-of-prey#r=read
(New Navy attack ships that cost more than $500MM each)
US Court of Appeals for the 9th Circuit overturns lower court decision and clarifies definition of “piracy” - PDF
It is a pity legal thinking of this quality has not been applied to laws and regulations governing the FIRE sector.
Environmentalist pirates are a menace to others and to themselves…
And bankster pirates crash world economies.
Kozinski is a very colorful judge. I’m pretty sure he was caught with tons of porn on his work computer/website a while back. Good judge. Just “colorful”.
“It is a pity legal thinking of this quality has not been applied to laws and regulations governing the FIRE sector.”
It was at one time.
I am baffled by today’s news that says positive housing data has lifted the Dow by 200 points today. It seems like a whole downward leg of the housing bust never materialized. So did we truly hit the bottom a year ago, or is there another shoe waiting to drop thus leaving the true bottom of the debacle somewhere in the murky future.
Questions.
Questions.
We’ve come a VERY long way since the day when trolls came on the HBB to insist that Wall Street had no interest in Main Street U.S. housing!
Is it safe to say the sequester fix is in? At least markets seem to assume so.
Feb. 27, 2013, 10:22 a.m. EST
Sequester won’t last, won’t derail economy
Commentary: Once a pessimist, Shapiro has turned optimistic
By Al Lewis
DENVER (MarketWatch) — Economics policy guru Robert J. Shapiro walked into the White House in 2010: “They said, ‘We think we’re really recovering.’ And I said, “Don’t believe it.’”
Extraordinary economic stimuli created the illusion of a recovery, he explained. Consumers and businesses were still loaded with debt and still reeling from losses after the 2008 financial crisis.
“Three times we’ve had the economy look like it’s coming back and then it stalled out,” Shapiro said in a telephone interview.
These disappointments came in 2010, 2011 and yet again in 2012, when the economy surprisingly contracted in the fourth quarter. Despite that downturn, there’s even more talk of recovery in 2013, but this time Shapiro isn’t shouting it down.
“I was a pessimist for years,” he said. “Now, I’m an optimist.”
…
WSJ/NBC poll: Republican support fizzling
WSJ’s Neil King has details of the latest WSJ/NBC News poll showing growing support for President Obama’s policies and waning support for congressional Republicans. Photo: Getty Images.
Another day to sell into the run-up. I will regret it when the Dow hits 15,000 later this fall…..lol/sarcasm…
Seriously though, does not bother me too much going from equity allocation to trash cash in my IRA right now because I have a hunch there is gonna be some need to raise cash out of this market for many players.
pennys had some wonderful earnings. BTFD
‘BTFD’
lol
Bernanke Says Fed May Decide Not to Sell Securities
By Caroline Salas Gage & Joshua Zumbrun - Feb 27, 2013 11:47 AM PT
Federal Reserve Chairman Ben S. Bernanke said the central bank may decide to hold bonds on its $3.1 trillion balance sheet to maturity as part of a review of its strategy for an exit from record monetary easing.
Bernanke told lawmakers in Washington today that he expects to revisit “sometime soon” an exit plan that policy makers outlined in June 2011.
Under that plan, the Fed would cease reinvesting some or all principal payments from its securities, revise its interest- rate outlook, raise the federal funds rate and then start selling housing debt to eliminate it from the central bank’s portfolio in three to five years.
“The one thing we could do differently” is “hold some of the securities a little longer,” Bernanke said in response to questions from members of the House Financial Services Committee. “We could even let them just run off.”
…
So much for the (false) theory that the Fed will some day need to unwind their positions.
‘The Federal Reserve’s massive annual profit, which it turns over to the Treasury, is likely to dwindle and may even disappear entirely in a few years. A relatively new accounting rule would allow the Fed to pay for its operations and make interest payments basically on credit, deferring its losses and paying them off later in profitable years.’
‘The situation could easily become a public relations nightmare, though — especially in the current political environment. “We’re in a period where the attacks on the Federal Reserve system are the worst I’ve seen in 40 years,” said Frederic Mishkin, a former Fed governor who is now a professor at Columbia University. “In any year where the Fed is not giving remittances back to the Treasury, this is going to come up big time in Congress,” he added.’
‘St. Louis Fed President James Bullard also calls it a “recipe for political problems.” During the same period that the Fed will incur losses, the government will be paying billions of dollars in interest to foreign governments.’
http://www.hartfordbusiness.com/apps/pbcs.dll/article?AID=/20130222/NEWS02/130229927
‘Bob Eisenbeis, a former Atlanta Fed economist now at Cumberland Advisors…discussion about Fed “profits” is inherently deceptive. He explains in a research note: ‘That Fed remittances are considered profits is a total misrepresentation and a fiction. The Fed is part of the government and is not a private-sector, profit-making entity. (The Federal Reserve Banks are quasi-public, but the Board of Governors is a government agency, and the system’s debts are guaranteed by the government.)’
‘The Fed purchases Treasury debt from the public, paying for that debt with deposits it creates by a stroke of the pen. Looking at the Fed’s portfolio of securities from the perspective of the nation’s consolidated balance sheet, we see that one form of government debt (Treasury debt) is taken out of circulation and replaced with another form of government debt (Federal Reserve liabilities).’
‘In effect, Treasury debt is taken out of circulation and is now owned by the government. It just happens to be the debt is on the books of the Fed and not the Treasury, but that is simply an accounting artifact and effectively the debt has been retired. The Treasury pays the Fed interest, which is an intra-governmental transfer of funds. From the funds received from Treasury, the Fed extracts both its operating expenses and contributions to capital, makes the required 6% dividend payment to member banks, and remits the remainder back to the Treasury.’
http://blogs.reuters.com/macroscope/2013/02/20/the-fallacy-of-fed-profits-and-losses/
We’ve become a complete ponzi economy.
“We’ve become a complete ponzi economy.”
Is this something new, or is this pretty much how it has worked since the day when Ponzi was scamming his investors?
Its been a few years since I was on here and I’m sure none of you remember me anyway and not sure if any of the folks that were on here while I was are even here anymore.
But long story short, we bought a year ago. This is in the Bay Area which as well all know is nutty. We got a good rate and the payment is about the same as we paid in rent. I think for us it was a good choice. Keep in mind I was on this blog for years dating wayyyy back to even the early days of the bubble.
My advice for folks is to do what financially makes sense for you.
Well, look who’s back! Long time, no post, jetson_boy!
‘we bought a year ago’
Bought what?
Bought what?
30 years of oppressively large payments on a rapidly depreciating house from which he’ll never recover.
‘30 years of oppressively large payments’
Are you suggesting he didn’t actually have the money and borrowed it, in which case the lender really owns it until he pays them for it?
Indeed and by doing so he doubled the cost…… and the loss.
What, a 4.25-hour-old post and nobody has commented on how calculable jetson_boys losses will (or won’t) be? Slackers.
(good to see you post, jetson.)
Here’s something kind of strange: I was looking at Blackstone Group financials, and saw in the quarterly cash flow statements that capital expenditures for the past year ending 9/30/12 totaled about $38 million. I realize they could have subsidiaries or something, but this doesn’t look like the spending spree we read about in the media:
http://finance.yahoo.com/q/cf?s=BX
That is 1 million houses in Detroit!
Tuesday, February 26, 2013
Billionaires for Austerity: With Cuts Looming, Wall Street Roots of “Fix the Debt” Campaign Exposed
With $85 billion across-the-board spending cuts, known as “the sequestration,” set to take effect this Friday, a new investigation reveals how billionaire investors, such as Peter Peterson, have helped reshape the national debate on the economy, the debt and social spending. Between 2007 and 2011, Peterson personally contributed nearly $500 million to his Peter G. Peterson Foundation to push Congress to cut Social Security, Medicare and Medicaid — while providing tax breaks for corporations and the wealthy. Peterson’s main platform has been the Campaign to Fix the Debt. While the campaign is portrayed as a citizen-led effort, critics say the campaign is a front for business groups. The campaign has direct ties to GE, JPMorgan Chase, Morgan Stanley and Goldman Sachs. Peterson is the former chair and CEO of Lehman Brothers and co-founder of the private equity firm, The Blackstone Group. For more, we speak to John Nichols of The Nation and Lisa Graves of the Center for Media and Democracy. [includes rush transcript].
I don’t know anything about about this group, but with all the fretting in DC, I have to remind myself; they aren’t cutting ANYTHING! It’s just a reduction in planned increases. (And Democracy Now used to cover the housing bubble and affordable housing. Now they do the typical poor FB stories). Back to the budget:
‘About half of the $85 billion sequester cuts will come from defense spending. But only about half of those spending cuts - $44 billion - will happen in fiscal year 2013. So we’re looking at an immediate cut in planned defense spending of something on the order of $20 billion.’
‘In any case, should the sequester cuts happen, they come after Defense’s base budget - which doesn’t include war spending, a variety of Homeland Security bits, and other supplemental expenditures - rose by 40 percent over the past decade or so, from $397 billion in 2001 to around $550 billion this year. Because military personnel is exempted from the sequester (as is war funding and a bunch of other stuff), there’s no reason to sweat our preparedness over such trims.’
‘And, as the Congressional Budget Office notes in its recent budget outlook document, outlays subject to budget cap limits are expected to increase from $518 billion in 2014 to $576 billion in 2021. Over the same time frame, total defense spending (which includes war spending), will jump 14 percent, rom $593 billion to $679 billion’
‘The Fiscal Times notes that last Friday (the traditional day to dump bad news), the Pentagon announced that it was grounding its F-35 fighter jets, which were approved during the Clinton administration (look it up kids). Fiscal Times reports: ‘This was the second time in two months the plane has been taken out of service….after this latest failure, the problems with the F-35 are simply too numerous to ignore.’
‘Equally impossible to ignore is the $1.5 trillion price tag for one of the biggest failures in Pentagon history. $1.5 trillion is the cost of operating the air craft for 55 years, an amount that has been consistently increased as the program drags on. It’s the most expensive weapons system the Pentagon has ever commissioned. And as problems mount, there are growing concerns that the F-35 will never fly a combat mission.’
‘The Pentagon ordered nearly 2,500 planes for $382 billion, or fifty percent more than the original cost. As the price soared, the Pentagon in 2010 deemed the program “too big to fail.” Yet it continues to fall short. Recent engine troubles are just the latest in a series of mechanical failures. A pilot was killed when oxygen to the cabin was cut off. The aircraft are running too hot, limiting their ability to operate in warm environments.’
‘The original delivery date was supposed to be 2010. Then it was delayed until 2012. Now, it’s not expected to be in service until 2019. And there’s this kicker: “If the F-35 order is filled, DOD will have 15 times as many planes as China.” And 20 times as many as Russia.’
‘So that’s the Pentagon culture, ladies and gents. Willing to bitch and moan and drag its heels over its share of sequester cuts - and willing to go to the mat to protect a non-functioning, over-budget, and tactically outdated fighter jet. If Defense can’t complete its mission to protect America after March 1, it’s not because of a rounding error taken out of its budget. It’s because of leadership that has never learned how to gets its priorities straight.’
http://reason.com/blog/2013/02/26/pentagon-frets-billions-in-sequester-cut
I’ve mentioned recently how the roads in N AZ are crumbling, including the interstate. I mean, it’s really bad; axle busting bad. Well the local government finally took notice! While crews run around shoveling black stuff in the holes, the “leaders” across N AZ have decided to propose an increase in sales taxes. We really don’t have a choice. Flagstaff is said to need $50 million just to get back to normal conditions, and the tax increases won’t even get to that.
So every time I go to the store or get gas, I’ll pony up a little bit more. But I’ll wonder about that magical land; Washington (it sounds magical huh? When it roll off the tongue). Washington, where money grows on trees and the roads are all nice and the cars new and shiny. (I know, I saw it with my own eyes). Washington, where the slightest suggestion of doing with, well, I can’t say less can I? The slightest suggestion of doing with not so much more, will bring every television station to a live report. Every web page will refresh by the minute; what about Washington?!!! What ever will they do? How can we stop this abomination?
What’s about to happen, if sequestration goes through as planned, is war debt, pension costs and bailouts will be shifted on to the federal work force, without ever mentioning that war debt, entitlements, bailouts and Bush tax cuts are what blew a monstrous hole in the federal budget over the past decade.
As you suggest, the sequestration will be a drop in the budget compared to the actual magnitude of the problem. I look at the whole ordeal as bitter Republican Congressmen getting even at Obama for winning the 2012 election, as the federal workforce staffs the executive agencies which Obama overseas.
Some folks may recall I recommended a book here once or twice called Getting to Yes, about negotiating strategy. One of the key concepts presented in the book is the BATNA (best alternative to a negotiated agreement). With an approval rating hovering around 15 percent, Congress has less to lose in sequester negotiations than does the far more popular president. With nothing to lose, they can play hardball and hope that in the worst case scenario, of a sequester that triggers a recession, fading U.S. voter memories and general stupidity will later enable them to blame a second dip of the Great Recession on Obama.
Political payback is a b!tch.
+1 Ben.
Wasn’t that Ron Paul’s deficit solution? Just freeze the budget until the deficit is gone?
If you look at their balance sheet, you’ll see their long-term investments go up by $1.4 billion from the June to September quarter.
How bout some reggae music?
Bob Marley Buffalo Soldier - YouTube
http://www.youtube.com/watch?v=BCCTTy4oDuM - 210k -
Boomerang buyer, deadbeat rasta
There was a short sale soldier in the heart of America
Stolen from Angelo, brought to Bank of America
Refied on arrival, refied for survival
I mean it when I analyze the stench
To me it makes a lot of sense
How the deadbeat Trump was the Boomerang buyer
Loaned by Countrywide, sold to Bank America
Refied on arrival, refied for survival
Said he was a Boomerang buyer, deadbeat soldier
Boomerang buyer in the heart of America
If you know your history
Then you would know where you’re coming from
Then you wouldn’t have to ask me
How did he get another loan?
He`s just a Boomerang buyer in the heart of America
Loaned by Countrywide, sold to Bank America
Said he was Refied on arrival, refied for survival
Said he was a Boomerang buyer, loaned by Bank America
Dreadie, woy yoy yoy, woy yoy-yoy yoy
Woy yoy yoy yoy, yoy yoy-yoy yoy
Woy yoy yoy, woy yoy-yoy yoy
Woy yoy yoy yoy, yoy yoy-yoy yoy
Financial Times
February 27, 2013 2:10 pm
Washington nerves jangle at sequestration
By James Politi and Nicole Mortimer in Washington
It is the middle of lunch break on Monday, but no one is queueing at the Basil Thyme Food Truck at L’Enfant Plaza in southwest Washington.
Surrounded by drab grey-and-white federal buildings, Brian Farrell, the 39-year-old owner of the mobile restaurant, denies that his customer base of federal workers is turning away from his $11 gourmet lasagnes. Rather, he pins the blame on sequestration – the automatic spending cuts worth $85bn over the next six months that will kick in on Friday.
“That is a sign people are concerned,” Mr Farrell says. “I had a customer today tell me, ‘I think I might get canned.’ Then she said, ‘Well I might not get canned, but furloughed for sure’,” he adds.
With no deal in sight in a gridlocked Congress, nervousness about the looming government spending reductions is mounting across America. But the US capital and its surrounding region is sequestration’s ground zero, where the angst is most palpable and the pain will be most acute.
The region comprising the District of Columbia and neighbouring Maryland and Virginia is the most heavily dependent in the country on US government outlays. According to the Pew Center on the States, 19.7 per cent of economic output in DC, Maryland and Virginia comes from federal spending on procurement, wages and salaries, compared with the national average of 5.3 per cent.
Hawaii, Alaska and New Mexico trail just behind as the states that would suffer most from the cuts, according to 2010 data. On the opposite end of the spectrum are Delaware, Minnesota and New York – where federal spending is least dominant.
“If I was the governor of the Commonwealth of Virginia, I’d probably be freaked out,” said Scott Walker, the Republican governor of Wisconsin, where federal spending accounts for just 4.6 per cent of economic output, as he attended meetings of the National Governors Association last weekend.
…
its all a show. The cuts are a joke.
Are you saying there will be no cuts?
I have no idea where this circus will take us. Even if there are cuts they wont be enough to get us on the right fiscal path.
Maybe you should buy some pennies stock and all your problems will go way?
“I had a customer today tell me, ‘I think I might get canned.’ Then she said, ‘Well I might not get canned, but furloughed for sure’,” he adds.
Welcome to our world. Of course, even with Damocles’ Sword hanging over our heads, we are expected to buy houses, cars and other pricey goods, on credit, and be good little consumers.
…and pay fees on fees while retail turns more and more into a rental market instead of an ownership one.
Did you know that you can rent college course textbooks now?
For the same price you could buy them not so long ago, right?
Yup. The ones I saw were all $100-$200 to buy, $50-75 to rent.
The markets are definitely pricing in a near-term resolution to the sequester.
Stocks surge as Dow sets fresh 5-year high
Adam Shell, USA TODAY6:50p.m. EST February 27, 2013
NEW YORK — Start chilling the Champagne. The Dow Jones industrial average is charging higher again after a brief bout of weakness and is within 89 points of hitting a fresh all-time high.
The Dow shot up 175 points Wednesday to 14,075.37, after a 116-point surge Tuesday. The back-to-back triple-digit gains mark a new bull market high. It also erases Monday’s 216-point loss, which was sparked by renewed political fears in Europe. The powerful blue-chip stock rebound puts on hold — at least for now — any talk of a price correction, which had been gaining traction on Wall Street.
The Dow’s record high was 14,164.53 on Oct. 9, 2007.
The Dow’s two-day surge was driven by a combination of factors:
• More market-friendly talk from Federal Reserve Chairman Ben Bernanke.
• A sense that the eurozone wouldn’t unravel despite political gridlock in debt-strapped Italy after Monday’s elections.
• And a growing belief that the economic recovery in the U.S. would not be snuffed out even if $85 billion in automatic spending cuts start to kick in March 1 barring an 11th-hour fix by Congress, says Carmine Grigoli, chief investment strategist at Mizuho Securities USA.
With recent headwinds receding, the bull found new life as reasons to take profits dwindled.
“There isn’t a clock on bull markets,” says Grigoli. “Bulls don’t die of old age. Bull markets die when the fundamentals and (business conditions) shift and change and worsen. But nothing has changed in the fundamental environment that argues for a more conservative stance on the stock market in the short term.”
…
they have to get retail in the market to unload some stock.
“It is the middle of lunch break on Monday, but no one is queueing at the Basil Thyme Food Truck at L’Enfant Plaza in southwest Washington.”
Well, geeh, not to be a hard arse, but maybe it’s time we got back to a reality based economy/society. More brown baggin’ ahead.
“…denies that his customer base of federal workers is turning away from his $11 gourmet lasagnes. Rather, he pins the blame on sequestration…”
Um, isn’t that the same thing? Methinks Brian is in denial himself.
And BTW, WTF are people doing buying $11 “gourmet” lasagnes for lunch? This guy solely has taxpayers to thank for his business.
Not that EVERY person is doing it for EVERY meal but, at that rate:
$11 * 3 meals/day * 22 business days/month = $726 on food/month…for one person.
Sorry, this is where the part of me that is fiscally conservative comes out swingin’
If you don’t want to be known as a liar, don’t lie. It really is that simple.
Ok, you DO look fat in that dress.
Feb. 27, 2013, 6:31 a.m. EST
Debunking the myth of the 8% return
By Wade Pfau
One of the very basic staples of personal finance is the idea that by starting to save when young, one can become very wealthy watching their investments multiply over time. I surely agree that starting to save young is ideal, but a lot of the personal-finance literature can take things way too far. It is common to see return assumptions of 8% or higher when showing basic examples about the power of compound interest. Surely, if someone can earn 8%, planning for retirement becomes a lot easier. But let’s break this assumption down.
The 8% number is apparently derived from U.S. historical data. Using historical averages is pretty popular both for savings and for studying safe withdrawal rates in retirement. One key resource about the historical data is Morningstar and Ibbotson Associates SBBI database. From it, we can learn that the S&P 500 on average since 1926 earned an 11.8% annual return, while intermediate-term government bonds earned 5.5% on average. However, these are not the numbers we should be using.
…
However, these are not the numbers we should be using.
the correct number is -65% ?
“Debunking the myth of the 8% return”
Don’t CalPERS and CalSTRS use 8% so their books balance?