The Rapid Transition From Glut To Scarcity
It’s Friday desk clearing time for this blogger. “Under the scheme announced by finance minister George Osborne last week, people will be able to buy new-build homes worth up to 600,000 pounds with only a 5 percent deposit, covering the rest with an interest-free loan for five years, open to all, not just first-time buyers. The government will also guarantee 130 billion pounds of mortgages from next year for three years, allowing banks to lend to buyers who don’t have big deposits to put down. Fathom Consulting, along with several others, argue that Osborne’s new scheme will only serve to raise house prices and put the government on the line for any future decline in prices.”
“‘This is effectively a policy to allow sub-prime lending,’ said Fathom’s Philip Lachowycz.”
“It is remarkable that here we are in 2013, and not a day goes by without another headline regarding the return of subprime lending. Just yesterday, you have a headline that the Obama administration is pushing for banks to loosen their mortgage lending standards. I have a news flash for the Obama administration: the US government backed mortgage entities such as the FHA will already underwrite almost any person with a pulse. All it takes is a downpayment of 3.5% and a credit score of 580 and you can get an FHA loan. How much more loose do the mortgage standards need to be?”
“Until the President, Congress, and the Federal Reserve come to grips with the real world impact of their policies it is just a matter of time before the lemmings lead us off the cliff again.”
“Monetary policy took market focus Thursday after the Bank of Japan said it would amp up its bond-buying program in an effort to stimulate growth that has not come despite two decades of similar effort. The BoJ measures resemble a similar program by the U.S. Federal Reserve , which has taken its balance sheet past $3 trillion as it has bought government debt in an effort to flood liquidity into the markets and reduce unemployment while stoking inflation.”
“‘Rather than step back and ask why (the measures have not succeeded), they just go deeper and deeper,’ Pimco’s Mohamed El-Erian told CNBC. ‘The question is, will they finally succeed in transitioning from assisted growth to real growth, or will it end in tears.’”
“A report from Arizona State University’s W.P. Carey School of Business said the median price for single-family homes in the greater Phoenix area rose 36.5 percent from last year. Confidence is important with the burst housing bubble still fresh in peoples’ minds, said economist Michael Orr, author of the report. But another housing-driven economic boom is not likely, ‘as long as we don’t let it run out of control again,’ Orr said.”
“‘That rarely happens, and that is unlikely to happen again in the foreseeable future,’ he said. ‘That’s probably not something we will be subject to again in the next 20 years, not until all the people who remember it have died out.’”
“As soon as it hit the market, the four-bedroom Sea Cliff home inspired a bidding war, with the top two prospective buyers both offering well above the multimillion-dollar listing price, in cash. In today’s fevered real estate market, that’s no longer unusual. But there was a twist: Both bidders were located in China, and both made their big-bucks offers without ever setting foot in the house. One of them ended up buying the house for $3.1 million, substantially above its $2.8 million list price.”
“‘At first, I was really, really surprised and kind of suspicious,’ said Nina Hatvany of Pacific Union, the listing agent. ‘I was concerned that they hadn’t seen the property. After all, they might not like it when they saw it. I said to the sellers, ‘This seems like a new buyer profile. You might as well take it.’”
“Lynne and Brandon’s Scott’s house-hunting story sounds like something out of the housing bubble of 2006. They got in a bidding war. Then a house came on the market in the Clarkson Woods subdivision in Chesterfield, where houses sell in the $275,000 to $325,000 range. So the Scotts wrote an offer for the house before they could see the inside, contingent on their approval once they visited.”
“‘This house popped up in a neighborhood we were happy with. We knew it would go fast. We would look at a house and they would instantly have an offer. I felt like, oh my gosh, we have to move fast,’ said Lynne Scott.”
“They wrote a letter to the owners, saying how much they liked the house, and included pictures drawn by their little girls. They got the house — at $13,000 over the asking price, and after they dropped the requirement of a professional inspection.”
“Nick Grandy loves his newly-built home in Noblesville. After moving in a few weeks ago, he’s just getting settled. He’s not the only one. ‘Just since we moved in, I think nine houses behind us have popped up,’ Grandy said.”
“Central Indiana building permits are up 40 percent so far this year — double the increase this time last year. February alone saw a 30 percent improvement. Alan Goldsticker, president of Ryland Homes of Indiana, said he hasn’t seen sales like this in seven years. ‘These are all sold homes,’ he said, pointing to a row of homes under construction. ‘We basically ran out of lots and we’re getting started developing the next section.’”
“In 1995, Allan and Karin Hoegg were mortgage-free. But no more: today their Vancouver home is a valuable source of income as they plan for full retirement. Mr. Hoegg says when their son and daughter-in-law wanted to buy a house, they took out a variable-rate mortgage so they could help them out. To cover the mortgage payments, they rent out a suite in the home to students.”
“The couple also established a home line of credit that allows them to free up cash for investment purposes when they need it. ‘It gives you maximum flexibility and you can pay it any time you want without penalty,’ he says. ‘It’s dead easy.’”
“Rob Regan-Pollock, senior mortgage consultant says. ‘If for some reason you can’t meet your monthly expenses, a line of credit on your home can be a very good buffer. The interest rates are low. It’s also quite sustainable, since your home will often appreciate in value more than the amount of debt being drawn down against it.’”
“A year and a half after he put it on the market, former Chicago Cub Carlos Zambrano’s six-bedroom, five-bath River Forest home sold for $675,000, which is 56 percent of what he had paid for it seven years earlier. He bought the River Forest house for $1.19 million in July 2006, according to the Cook County Recorder of Deeds. Only a year and a half after buying in River Forest, Zambrano bought again. In January 2008, I reported that he had paid $2.66 million for another six-bedroom house in Lakeview.”
“Later in 2012, he put the Lakeview home on the market asking $2.395 million—a 10 percent loss—but took it back off the market at the end of the year.”
“He didn’t put the River Forest house on the market until August 2011. At that time, he was already asking for a loss, listing the home for $969,000, or 80 percent of what he had paid. The River Forest property came down in price several times and changed agents twice. It wasn’t actively listed from September 2012 until December, when Weichert Realtors/Nickel Group got the listing and cut the asking price to $829,000. The ultimate selling price took 19 percent off even that deeply reduced ask.”
“National news reports trumpet the rising demand for housing, and the rapid transition from glut to scarcity. Treasure Valley is facing a serious shortage of affordable homes, with prices skyrocketing, and the problem is far broader. Fifty percent of Idaho’s residents cannot afford to buy an average-priced home in their community, and one out of five cannot afford rent.”
“At Neighborhood Housing Services, which I lead, we see the challenges in Treasure Valley first-hand. It’s comforting for many to see property values rising again. But, as they do, we must remember our fellow citizens for whom it is not good news. Those citizens, whom we try to help every day, are typically hard-working contributing members of our community, who just need an affordable home.”
” I have a news flash for the Obama administration: the US government backed mortgage entities such as the FHA will already underwrite almost any person with a pulse. All it takes is a downpayment of 3.5% and a credit score of 580 and you can get an FHA loan”
Just last week someone on here was crowing about how hard it was to get an FHA loan and how their standards were so high. Guess not.
“Fathom Consulting, along with several others, argue that Osborne’s new scheme will only serve to raise house prices and put the government on the line for any future decline in prices.”
“‘This is effectively a policy to allow sub-prime lending,’ said Fathom’s Philip Lachowycz.”
The UK housing reflation plan sounds much like the U.S. plan.
The entire world is trying to make the bubble prices “stick.” It will not work.
No it won’t. Nor will the paid consultants dominate this blog.
“…paid consultants who dominate this blog.”
Perhaps it’s high time to change your handle to Prostitute Watch?
Obama Regime Wants to Bring Back Subprime Mortgages
April 04, 2013
RUSH: I had this story in the stack yesterday, and I didn’t get to it. The Washington Post had a story that Obama wants to reignite the subprime mortgage program. I kid you not. The regime, according to the Washington Post, is engaged in an effort to make more home loans available to people with weaker credit. It’s the subprime mortgage. It’s because the economy is recovering. It’s because the housing market is rebounding. I mean, that’s what they say. Obama wants to make, again, home loans available to people who really are at great risk for not being able to pay the mortgage.
It’s an effort that regime officials say “will help power the economic recovery.” I’m telling you, you’re hearing right. According to the Washington Post, the regime wants to make available home mortgages to people who can’t afford them again, in order to help power the economic recovery. Now, we got some unemployment numbers today, and the new applications for unemployment compensation skyrocketed. They exceeded all the expectations. It was like 385,000. Now, for me, I am beyond the week-to-week reports now. They don’t matter anymore, 335,000, 350, 385,000, whatever, all I know is that this economy is not producing jobs. It certainly isn’t producing careers. I don’t know what economic recovery people see out there. I wish there were one, don’t misunderstand. God, how I wish there was one. But there isn’t.
Would somebody explain to me how making available mortgage money to people that can’t pay it back powers anything?
…
I couldn’t locate yesterday’s WaPo article about subprime lending. Maybe I was using the wrong search terms (e.g. “subprime”). If you saw it or can find it, please post.
http://m.washingtonpost.com/business/economy/obama-administration-pushes-banks-to-make-home-loans-to-people-with-weaker-credit/2013/04/02/a8b4370c-9aef-11e2-a941-a19bce7af755_story.html
For black Americans, financial damage from subprime implosion is likely to last
By Ylan Q. Mui,July 08, 2012
Ida Mae and Clyde Whitley had basically everything go wrong for them. Ida Mae had a credit score of 696 and had never owned a home until 2006, when the couple got swept up in the worst parts of the housing bubble. In a lawsuit, they say they worked with a mortgage broker who falsified their income and other financial documents in order to approve them for a home they could not afford. In addition, the value of the home was falsely inflated by an appraiser who was working with the mortgage company.
The implosion of the subprime lending market has left a scar on the finances of black Americans — one that not only has wiped out a generation of economic progress but could leave them at a financial disadvantage for decades.
At issue are the largely invisible but profoundly influential three-digit credit scores that help determine who can buy a car, finance a college education or own a home. The scores are based on consumers’ financial history and suffer when they fall behind on their bills.
For blacks, the picture since the recession has been particularly grim. They disproportionately held subprime mortgages during the housing boom and are facing foreclosure in outsize numbers. That is raising fears among consumer advocates, academics and federal regulators that the credit scores of black Americans have been systematically damaged, haunting their financial futures.
…
I’ve tried to explain over the years just how the subprime explosion was reported as it happened. For instance, when Countrywide would lower standards it was widely reported on what a good thing it was. (Later we learned from the trial that Mozilo would get pissed because some subprime shop had done it first and was threatening to take some of his “market share”. So he would join in the “race to the bottom”.)
How about this latest proposal:
http://www.washingtonpost.com/business/economy/obama-administration-pushes-banks-to-make-home-loans-to-people-with-weaker-credit/2013/04/02/a8b4370c-9aef-11e2-a941-a19bce7af755_story.html
‘President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind…’
See, he just wants the poor to get in on the action! And how about this:
‘Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.’
We not only don’t prosecute white collar criminals, we encourage them to make bad loans! As I’ve said before, while posters here go on about how naughty the banksters were years ago, we’ve got a made-in-DC disaster growing ahead of us.
Why do politicians favor policies that destroy the financial stability of low-income households?
Why do politicians favor policies that destroy the financial stability of low-income households?
It helps them get re-elected. Barney Frank was a good example of that.
Democrat “affordable housing” plan:
1. Encourage low-income families with bad credit ratings to borrow gargantuan sums of federally-guaranteed money so they can buy homes at prices they otherwise could not afford.
2. When millions of said families get foreclosed, blame lenders and pass a “Save-our-homes” bailout measure to force lenders to bail them out.
3. Use federal tax dollars to pay off lenders on homes that went into foreclosure.
4. Collect all those votes of the people you helped. And blame republicans for all the evil they have cause by not caring.
Audio of Romney’s “gifts” comments:
http://www.youtube.com/watch?v=W6hQdmFmORA
“4. Collect all those votes of the people you helped.”
My impression is that although po folks don’t vote much, well-heeled bleeding heart liberal Democrats do…
We not only don’t prosecute white collar criminals, we encourage them to make bad loans!
Meanwhile the very few white collar criminals that we have tossed into the pokey, we want to let them off easy:
Just when I thought it couldn’t get any worse.
At least him and Ken Lays widow got to keep all thier ill-gotten gains.
Andrew Fastow was let out of prison early as well.
Sometimes I wonder what employees of the Justice Department talk about when they have a work meeting. Do they really think the last 12+ years have embodied “justice” in any way? That their actions in a professional capacity truly have served the public? The name of the agency is becoming something out of Orwell. At least (to the best of my knowledge) they aren’t watching porn like was happening at the SEC. But I think both agencies need to be rebuilt from scratch.
I saw a “pro/con” discussion on CNBC regarding this. “Con” was a former Fannie exec, and “pro” was some left-leaning guy (I’ll call him “other”).
The Other guy was trying to say that the administration was trying to get lenders to provide loans to “average Americans” who aren’t able to get a loan today.
The Fannie exec noted that the AVERAGE FICO score in the US is 720, and that a FICO score of 620 (the low end of who Obama wants to “help”) was not “average”. He went on to say that if a 720 is average, it’s a “C” grade…a 620 is a “D”.
These folks shouldn’t get a loan. Certainly not a loan with essentially $0 down.
“These folks shouldn’t get a loan. Certainly not a loan with essentially $0 down.”
Agreed, and I don’t know that Obama’s ranting about it will make one bit of difference. Which leads me to believe he’s just throwing this out there for political reasons. He can say, “look, Dems care, unlike these other guys”. I don’t know for sure, but it just seems too wacky to be taken seriously.
You make it sound like what he says doesn’t have an impact. For years on this blog, people have been pointing to how prior administrations were part of the bubble problem, since they pushed lenders to provide debt to people with lower credit scores.
How is this any different?
From the Washington Post story:
1. “Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.”
2. “Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.”
3. “Administration officials say they are looking only to allay unnecessary hesitation among banks and encourage safe lending to borrowers who have the financial wherewithal to pay.”
If they default, don’t worry about it, you won’t be held liable…feel free to use some SUBJECTIVE judgement, and you shouldn’t hesitate, because, heck, everything’s great–go, go, go.
This is more than a passing comment.
“How is this any different?”
It’s not. Obama has been saying the same thing for years now. Maybe it’s more newsworthy now since “housing is up”.
Unless there’s some serious arm twisting going on, I see it having a small effect at best.
At what point will liberal Democrats own up to the horrendous financial damage their racist policies have inflicted on the very groups there policies were intended to help?
Does anyone have statistics on how much the Obama administration pays public relations staff to cover up the damage which Democrat-supported government-sponsored subprime lending has inflicted on low-income and minority households in America? Judging by the appearance of things, it must be a hefty sum…
Stephanie Condon /
CBS News/ February 29, 2012, 4:03 PM
Bipartisan senators launch inquiry into Obama’s PR spending
Sen. Rob Portman, R-Ohio, is launching an investigation with Sen. Claire McCaskill, D-Mo., into the Obama administration’s public relations spending.
Citing reports of “questionable” uses of taxpayer funds, Republican Sen. Rob Portman of Ohio this week launched an investigation into the Obama administration’s public relations and advertising expenses.
Portman launched the investigation in conjunction with Democratic Sen. Claire McCaskill, the top Democrat in a government oversight subpanel in the Senate’s Homeland Security and Governmental Affairs Committee. Portman is the top Republican in the subpanel.
Portman and McCaskill sent letters to 11 federal agencies requesting information regarding all contracts they’ve entered into since October 1, 2008, relating to public relations, publicity, advertising, communications or other related services.
“Over the past three years, we have seen some reports of questionable uses of taxpayer dollars on public relations to promote the administration’s agenda,” Portman said in a statement to Hotsheet. “This subcommittee investigation will dig deeper and fulfill our responsibility to police waste and abuse in the federal government.”
…
Welcome to the obama housing bubble v2.0
Hope and Change…
Yes we can…
Forward…
And it only took an extra $6 Trillion of deficit spending that our kids will have to pay back.
But what could go wrong with the government borrowing 46 cents of every dollar it spends?
Goddamm labor unions.
BWAHahhAHAHAAHAHAHAHAHAHAAAAAAAAAAAAAAAAAA!!!!!!!!!!!!!!!
I wonder… The PTB have now amassed enough wealth to buy up all the housing for rentals and turn J6P into permarenters. We’ve already seen that with the hedge fund bulk purchases. The now elderly are living 20 years rent free, but in 10 years, today’s 50 year olds might be paying 20 years of rent. That’s even more wealth concentration. Maybe this is the Obama admin’s last ditch effort for J6P to buy houses and at least secure some type of retirement. Not that it’s going to work.
I know. You debt-junkies got it made! Underwater and sinking.
Here is a great idea for debt junkies with underwater mortgages to help make ends meet:
RENT OUT YOUR HOME AS A HALFWAY HOUSE!
Though this story didn’t mention government subsidies, the story utterly reeks of them!
Renting homes to recovering addicts, for a profit
David McNew/Getty Images
A neighborhood in San Bernardino County, Calif. A growing number of U.S. homeowners are renting rooms to recovering addicts and turning their properties into so-called ‘sober homes.’ It’s a hot but sketchy new real estate market.
by Sarah Gross
Marketplace for Friday, April 5, 2013
A sober home is exactly what it sounds like. It’s a place people can go when they first come out of rehab. Somewhere to live, drug- and alcohol-free. Residents take drug tests, attend 12-step meetings and have curfews to keep them on the straight and narrow.
Realtor Brian Wall says sober homes have become a lucrative business for him. A single sale can net him up to $40,000. He says the perfect sober house has lots of bedrooms, and is far away from nosy neighbors. That’s because these homes can turn into overcrowded boarding houses that no one wants to live next to.
Like a rundown house I visited in the San Fernando Valley. More than 20 men live in the home, and they share just one bathroom with no door. The owner of the property refused to do an interview, but one of the residents reluctantly showed me around.
Tenants say even the garage was being used as a bedroom. There were bunkbeds to sleep a dozen men but there was no heat, running water or electricity. When I went to see for myself, the house manager demanded I leave.
Despite the appalling conditions, a bed here still costs as much as $500. When the house is full, the owner can net over $10,000 a month. Realtor Brian Wall says this kind of money is attracting people to the sober home business.
“If I’m not doing it to make money, then why am I doing it?” Wall says. “If I’m doing it for passion, that’s great, but that doesn’t help me open up 10 houses.”
…
Or not.
Long Island News
Sober Houses under fire after heroin overdose
Thursday, April 04, 2013
Josh Einiger
LONG ISLAND (WABC) — Sober Houses where people go to supposedly ‘clean up’ are under fire after a Long Island man died from a heroin overdose in one of these facilities.
It’s been two years since Kelly O’Neill lost her son.
“I do not know how people move on, I just can’t picture it,” she said.
Billy Devito, among the alarming numbers of Long Islanders, addicted to pain pills. In and out of rehab, he wound up, at a so-called sober living home in Patchogue, where he was anything but sober, eventually overdosing, on heroin.
“It’s horrible. It’s lonely, it’s absolutely horrible I can’t explain it. Your soul is like, it’s beyond your heart shattered and it’s beyond an empty soul. It’s beyond it,” adds O’Neill.
The state paid for Billy to stay here, where he was supposed to pursue outpatient drug counseling.
…
The number of substance abusers in this country is truly frightening.
Given the level of delusional talk, I’d say there are a few right here on this blog.
We’ve already seen that with the hedge fund bulk purchases.
The hedge funds will be fleeing this market once there is a better return to be had elsewhere.
Don’t count on them holding long-term.
The biggest investors (Blackstone, Colony, American Homes 4 Rent), are more private equity than hedge funds. Colony is buying through a subsidiary of their public entity, American Homes 4 Rent is filing their S-1 within a month or two, and it wouldn’t surprise me if Blackstone follows suit.
I see this as an emerging REIT class.
I see this as an emerging REIT class.
You may be right about that—but note that that is a mechanism for floating shares and getting their own private equity money out of the game.
In other words, don’t count on them being in the game long-term, as they will try to structure and sell their interest to someone else.
I think they’ll keep buying as long as they can sell the REIT up the food chain without holding any of the risk themselves, or sell the rental stream for bonds, or whatever “financial products” they invent in those glass office buildings. Somebody will buy those bond-things until the money suddenly simply doesn’t come in, and they can’t hide it anymore.
This is the stuff that going to turn the US into Greece, not Social Security.
“I think”
No you don’t. You BS.
Keep dreaming.
How do Democrats routinely get away with BLATANTLY RACIST policies, even though racial discrimination was outlawed in the 1960s?
Obama: Let’s Start a New Financial Crisis
April 5, 2013 By John Perazzo
File this under “Unbelievable.” We now learn from the Washington Post that the Obama administration, in its relentless quest for “social justice,” is pushing banks to make more loans to people with weak credit ratings. It seems that Obama and his “economic advisers” have concluded that the current “housing rebound” is “leaving too many people behind”—most notably, undercapitalized first-time homebuyers and nonwhite minorities with low credit scores. To remedy this putative disaster, the administration wants banks to rely less on the time-tested, race-neutral lending criteria that have served as reliable barometers of credit-worthiness since time immemorial—income, net worth, credit history, etc. Instead, banks should “use more subjective judgment in determining whether to offer a loan” because, as Obama’s Federal Housing Administration (FHA) commissioner puts it, “there are lots of creditworthy borrowers … all the way down the credit-score spectrum.” And hey, if this policy ultimately causes borrowers to default on their loans, that’s no big deal. “Taxpayer-backed programs”—including those offered by the FHA—will magnanimously pick up the tab.
No, you aren’t in a time warp. This article wasn’t written ten years ago, before the housing-market crisis plunged the American economy into the proverbial sewer. Difficult as it may be to believe, the current president of the United States is actually prescribing precisely the same practice—government policies pressuring banks to lend money to unqualified applicants—that caused the crisis in the first place.
Let that sink in for a moment.
These types of government policies initially emerged the mid-1970s, when “progressive” Democrats in Congress began a campaign to help low-income minorities become homeowners. This led to the passage, in 1977, of the Community Reinvestment Act (CRA), a mandate for banks to make special efforts to seek out and lend to borrowers of meager means. Founded on the premise that government intervention is necessary to counteract the fundamentally racist and inequitable nature of American society and the free market, the CRA was eventually transformed from an outreach effort into a strict quota system by the Clinton administration. Under the new arrangement, if a bank failed to meet its quota for loans to low-income minorities, it ran the risk of getting a low CRA rating from the FDIC. This, in turn, could derail the bank’s efforts to expand, relocate, merge, etc. From a practical standpoint, then, banks had no recourse but to drastically lower their standards on down-payments and underwriting, and to approve many loans even to borrowers with weak credit credentials. As Hoover Institution Fellow Thomas Sowell explains, this led to “skyrocketing rates of mortgage delinquencies and defaults,” and the rest is history.
The CRA was by no means the only mechanism designed by government to impose lending quotas on financial institutions. For instance, the Department of Housing and Urban Development (HUD) developed rules encouraging lenders to dramatically hike their loan-approval rates for minority applicants and began bringing legal actions against mortgage bankers who failed to do so, regardless of the reason. This, too, caused lenders to lower their down-payment and income requirements.
Moreover, HUD pressured the government-sponsored enterprises Fannie Mae and Freddie Mac, the two largest sources of housing finance in the United States, to earmark a steeply rising number of their own loans for low-income borrowers. Many of these were subprime mortgages—loans characterized by higher interest rates and less favorable terms in order to compensate lenders for the high credit risk they were incurring.
Additional pressure toward this end was applied by community organizations like the pro-socialist ACORN. By accusing banks—however frivolously or unjustly—of having engaged in racially discriminatory lending practices that violated the mandates of the CRA, these groups commonly sued banks to prevent them from expanding or merging as they wished. Barack Obama, ACORN’s staunch ally, was strongly in favor of this practice. Indeed, in a 1994 class-action lawsuit against Citibank, Obama represented ACORN in demanding more favorable terms for subprime homebuyer mortgages. After four years of being dragged through the mud, a beleaguered Citibank—anxious to put an end to the incessant smears (charging racism) that Obama and his fellow litigators were hurling in its direction (to say nothing of its mounting legal bills)—agreed to settle the case.
Forbes magazine puts it bluntly: “Obama has been a staunch supporter of the CRA throughout his public life.” In other words, he has long advocated the very policies that already have reduced the real-estate market to rubble. And now he is actively pushing those very same practices again. The reason for this is not difficult to comprehend: The president of the United States is a socialist ideologue who reveres big-government interventionism and deplores the free market. For good measure, he also happens to be an economic illiterate who, in his pontifications about fiscal matters, has all the credibility of a pre-Copernican stargazer explaining precisely how the sun revolves around the earth.
That article on Phoenix also quotes another source saying “values” have only gone up 10 to 15 percent. Don’t tell me the difference is all because of those being “single family homes.” Reality is it is all BS cherry picking manipulated stats by the REIC owned researchers.
Also a bit of hedging mealy mouthism here in this article on the volume. They already know its awful for this year compared to normal. Heck the spring selling season ends in about two more months and has been going on since january. Those on the ground already have the data about whether there is some actual rebound rather than just investors who swooped in and bought at real low prices a year or more ago. Phoenix has about 2 more months to sell, then it becomes 140 degrees again.
‘manipulated stats by the REIC owned researchers’
Yeah, what is it about Arizona and these imbedded university ‘real estate schools’? As long as I’ve had this blog, the press sits at the feet of these ‘economists’ and takes their words as sacred script.
‘another housing-driven economic boom is not likely, ‘as long as we don’t let it run out of control again,’ Orr said. ‘That rarely happens, and that is unlikely to happen again in the foreseeable future,’ he said. ‘That’s probably not something we will be subject to again in the next 20 years, not until all the people who remember it have died out.’
This guy is saying we have one of these bubbles every 20 years. There has never been a housing bubble like this in history.
‘another housing-driven economic boom is not likely”
This was my thought a couple years ago. Now I don’t know what to think.
And with it comes a greater collapse of epic proportions.
‘another housing-driven economic boom is not likely’
This is a loaded statement. Housing doesn’t create jobs, it’s the other way around. Any economic activity from a bubble is temporary and misallocates capital. Draining resources from productive, sustainable uses hurts the economy in the long run.
Remember the discussions we’ve had of why the central banks fuel bubbles; to mask economic weakness. IMO, that’s is what this is all about.
“This guy is saying we have one of these bubbles every 20 years.”
I hate to defend him, but that’s not what he’s saying. Quoting, “That’s probably not something we will be subject to again in the next 20 years, not until all the people who remember it have died out.” He didn’t say it would happen in 20 years, just that it *wouldn’t* happen within 20 years. He only vaguely dates it by saying that everyone who remembers it has to die out first. That will take a lot more than 20 years.
And if you click thru to the actual report it shows sales volume down year over year by about 10-15 percent eyeballing the graph. Nothing to see here, move along.
And that’s the crux of the biscuit….
Housing demand isn’t just down YoY. It’s down to levels not seen since 1997 across the country. Every single city, town and state. And that’s where the conversation begins and ends.
It’s down to levels not seen since 1997 across the country.
+1, PW. 1997-level demand is where we are at right now. The data on this is clear.
(I’ll even provide a link if anyone wants it.
There seems to be an assumption that sales=demand. I think that is a faulty assumption.
Are sales at levels not seen since 1997? Yes.
With the reported number of multiple bidding situations, I’m not sure I’d make the leap to conclude that demand is at a low level.
And there seems to be an assumption by a few that you’re truthful. You’re not. You’re liar.
Sales=demand ALWAYS
“Sales=demand ALWAYS”
Tell this to the next restaurant that sells out of their special.
How about the next “hot” toy that sells out at Christmas.
How about the person who can’t get a ticket to the SuperBowl/concert/whatever.
I was at the doctor recently for one of our kids, and we needed to delay a vaccination because there was no supply.
These are ALL circumstances where there is demand, but no supply, and thus no sale.
Sales does not always equal demand.
There seems to be an assumption that sales=demand. I think that is a faulty assumption.
RW, I’d be curious to hear why you think this is faulty.
The Econ 101 supply-demand chart is based on the theory that price, and sales volume, are both determined by the point at which the supply-curve and demand-curve intersect.
Now clearly we have reduced supply at the moment. But that is not the same as the “zero supply” examples that you give.
Current pricing (which seems ridiculous to many here), and current volume (which is at 1997 levels) are both determined by the current demand-curve and the current supply-curve (low as it might be).
That does not mean that the demand-curve wouldn’t change if there were a different amount of inventory available—I’m sure it would. But that’s not “current demand”.
There are 25 MILLION excess empty houses. We don’t have to worry about “selling out” of houses anytime soon.
(Housing Demand to 1997 level) that’s where the conversation begins and ends.
(if you ignore the supply) What is the supply?
How many millions of excess empty houses are there in the US?
You can say it….. go on now boy.
How many millions of excess empty houses are there in the US?
Who cares. It’s rigged. You know it’s rigged.
What is the supply of homes for sale? It’s like diamonds. There are plenty of “excess” diamonds in the vaults of those who control the diamond market.
But if the excess diamonds are not for sale, the price of diamonds stays high.
I have no dog in the USA housing market. I hope prices DO come down because someday “I’ll be back”.
Ohhhhh…. it’s rigged. Really?
“…They wrote a letter to the owners, saying how much they liked the house, and included pictures drawn by their little girls…”
Anything about feeding the squirrels?
In a couple of years, they’ll be eating the squirrels.
In a couple of years, they’ll be eating the squirrels. Or they discover the “squirrels” have hairless tails & have moved inside the house.
In a few years the squirrels will have a higher net worth than the “owners”
These repeats of circa-2005 behavior, by people, banks and political and cultural institutions, are deeply discouraging. Apparently we didn’t fail big enough five years ago. The consequence is that the next failure will be too big, utterly destroying the innocent as well as the guilty.
It takes a broken people not to learn from their mistakes.
Sad, but very true.
We live in an instant gratification culture.
It seems our cultures timelines are measured in minutes, not years.
What would it take to reverse this trend?
I think we’re going to find out.
Another Subprime Idea from Obama
Diane Katz
April 4, 2013 at 1:31 pm
The Obama Administration is reportedly pushing banks to increase mortgage lending to people with relatively weak credit in hopes of boosting home sales. But the very same policy under Presidents Clinton and Bush contributed mightily to the housing bubble that ultimately devastated millions of families in mortgage default.
Credit is indeed tight—a predicament that’s exacerbated by the President’s tax and regulatory policies. Reforms to those policies are needed to prompt housing-sector growth.
Home sales have improved in the past year—but there was no place to go except up. The rebound is largely confined to rental-property investments and established homeowners with exemplary credit. Home sales to younger, first-time buyers—those necessary to a healthy market—remain scant.
Bankers’ current caution is understandable. High unemployment, tepid economic growth, and punishing tax and regulatory burdens have made lending particularly risky and costly.
Nor are borrowers banging on bankers’ doors. Currently, only 58.6 percent of U.S. adults are working, a number that has barely changed since 2009. Young adults have been disproportionately affected. Indeed, the number of individuals age 18 to 30 living with parents or relatives has increased by more than one million above typical levels in recent years, according to research by the Federal Reserve.
…
“A report from Arizona State University’s W.P. Carey School of Business said the median price for single-family homes in the greater Phoenix area rose 36.5 percent from last year.
…
But another housing-driven economic boom is not likely, ‘as long as we don’t let it run out of control again,’ Orr said.”
Got mania?
Michael Orr is a long established NAR proxy and liar.
As a public safety measure, I think everyone should be required to spend two years ripping the arms off of RealTards and beating them to death with the wet ends as part of their terms of service in a debt-prevention corps.
Who could object to debt prevention?
Yeah it seems like only a few months ago we were struggling to reduce the price enough even to get a showing - now we can’t find any homes for sale!
The Chinese buy wives the same way:
The Price of Marriage in China
In Joy City, Ms. Yang gave instructions to her eight-scout team, one of six squads the company was deploying in three cities for one Shanghai millionaire. This client had provided a list of requirements for his future wife, including her age (22 to 26), skin color (“white as porcelain”) and sexual history (yes, a virgin).
“These millionaires are very picky, you know?” Ms. Yang said. “Nobody can ever be perfect enough.” Still, the potential reward for Ms. Yang is huge: The love hunter who finds the client’s eventual choice will receive a bonus of more than $30,000, around five times the average annual salary in this line of work.
I
http://www.nytimes.com/2013/03/10/business/in-a-changing-china-new-matchmaking-markets.html?pagewanted=all&_r=0
But I thought only whites can be racists…
skin color (“white as porcelain”)
How is that racist ?
http://www.jessejackson.org/
At that rate the “love hunter” would have to find acceptable wives for several picky millionaires to be able to afford an apartment in Shanghai.
From that article:
_____________________/
Ms. Yu is another kind of love hunter: a parent seeking a spouse for an adult child in the so-called marriage markets that have popped up in parks across the city. Long rows of graying men and women sat in front of signs listing their children’s qualifications. Hundreds of others trudged by, stopping occasionally to make an inquiry.
…
In the four years she has been seeking a wife for her son, Zhao Yong, there have been only a handful of prospects. Even so, when a woman in a green plastic visor paused to scan her sign that day, Ms. Yu put on a bright smile and told of her son’s fine character and good looks. The woman asked: “Does he own an apartment in Beijing?” Ms. Yu’s smile wilted, and the woman moved on.
The woman asked: “Does he own an apartment in Beijing?”
Gold-digger!!
““Under the scheme announced by finance minister George Osborne last week, people will be able to buy new-build homes worth up to 600,000 pounds with only a 5 percent deposit, covering the rest with an interest-free loan for five years, open to all, not just first-time buyers. The government will also guarantee 130 billion pounds of mortgages from next year for three years, allowing banks to lend to buyers who don’t have big deposits to put down. Fathom Consulting, along with several others, argue that Osborne’s new scheme will only serve to raise house prices and put the government on the line for any future decline in prices.”
“‘This is effectively a policy to allow sub-prime lending,’ said Fathom’s Philip Lachowycz.”
Government guarantees of private debt is simply a welfare scheme for the financial sector.
As a general principle, one should refuse to make an offer on any property represented by a RealTard®. Surrendering to a criminal monopoly by participating in their scam is an act of collaboration.
I am beginning to believe I will never be able to buy anything. I have waited 8 years, seeing how this would play out and it seems we are back to another bubble era mania. I am sickened by what has happened to our country and I see no hope as long as the government and the banksters continue to run us into the ground.
Just look for a rental owned by Blackstone, and trash the shit out of it.
“I have waited 8 years”
Why ?
Go ahead…. you two carry on with this ruse.
Lying realtors.
Who are you referring to as a lying realtor? Not me. I hate realtards.
“Who are you referring to as a lying realtor? Not me. I hate realtards.”
Unfortunately, your story about waiting 8 years for naught sounds to PW’s ears like, “darn, I should have bought while I could, now I’m priced out forever”. You must therefore be a lying realtard!
“‘That rarely happens, and that is unlikely to happen again in the foreseeable future,’ he said. ‘That’s probably not something we will be subject to again in the next 20 years, not until all the people who remember it have died out.’”
Let’s see. We had a bi-coastal housing bubble with as much or more excess pricing (but over a smaller area) from 1983 to 1987. And then the big one from 2003 to 2007.
If does seem like a 20-year cycle, doesn’t it?
Real estate operates in cycles, but they are typically much shorter than 20 years. So what’s the difference between bubbles and cycles? One would be a parabolic blast to the peak.
‘over a smaller area’
This isn’t a minor detail. Were speculators roaming from California into Oklahoma and New Mexico (to name two) in the 80’s? As I’ve mentioned before, a man in Sedona told me in the summer of 2005 that his house was rising $10,000 a month. When I asked him how much longer he thought that could go on, he paused and then said “forever.” That’s a bubble. About the same time, a Sedona builder I knew finished a house and left town on a Friday. Because he wasn’t around to let potential buyers inside, a couple from California looked through the windows and offered $950,000 before he got back on Monday. Again, that’s a bubble, not a cycle. Remember the late night TV ads promoting $500,000 houses in Arkansas? Florida condos being flipped four times before the project was cancelled? Did you see the 60 Minutes show on China recently? I don’t think that happened 20 years ago.
I think a big problem is information flow.
When you can look up “values” of homes every day/week/month on Zillow, or wherever, it becomes just another stock ticker symbol, which feeds into the mania.
Growing up, there was never discussion of this…people found out what their home was “worth”, when other homes sold in the neighborhood, or they got an appraisal to refinance their home. This might be as frequently as every 6 months if you are in a market with lots of homes, or perhaps once every few years.
“Were speculators roaming from California into Oklahoma and New Mexico (to name two) in the 80’s?”
No, and maybe that explains the smaller area part. The idea of owning a house for an investment in another part of the country is new and, in my view, insane. Real estate is not a passive investment, and travel isn’t cost free.
But the parabolic blast was there in the Northeast in the 1980s. As was everyone saying we needed to buy before the price reached heights we could never afford.
And on that topic, the Chinese haven’t just built ghost cities in China. They built one in Angola too. Has anyone here been to Luanda recently?
http://www.youtube.com/watch?v=V8HyDGCNxpo
/) ‘) ;(