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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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Given an ongoing recession-level official unemployment rate of 9.6% and net outmigration of 3.4 million people over the past two decades, what exactly keeps California’s housing market propped up on a permanently high plateau?
Though California claims only 12 percent of the U.S. citizenry inside its borders (38 m CA out of 314 m US), we claim 33 pct of those in poverty. No wonder I feel so poor!
David Davenport, Contributor
I look deeper at the policies behind the headlines.
Op/Ed
4/11/2013 @ 8:00AM
As Jerry Brown Touts California In China, Its Citizens Pack Their Bags
BEIJING, CHINA - APRIL 10: California Governor Jerry Brown (R) shakes hands with China Minister of Commerce Gao Hucheng before a meeting at the Ministry of Commerce on April 10, 2013 in Beijing, China. Brown is in China in an effort to secure Chinese investment in his state of California. (Image credit: Getty Images via @daylife)
While Governor Jerry Brown is in China touting the state’s rebound and recovery, many Californians are busy packing their bags for a move to Texas, Nevada or Arizona. Why? Because it appears that the once-Golden State may finally be overpriced, underperforming and ungovernable.
Is it possible that one state has managed to top every 50-state category on the following shameful list?
* Highest taxes (gasoline, sales and top bracket of income taxes)
* Lowest bond rating
* Highest poverty rate (at 23.5%, the home of 1/3 of those in poverty in U.S.)
* Highest unemployment rate (tied with Mississippi and Nevada at 9.6%)
* Highest energy costs
* Worst state to do business (as judged by Chief Executive magazine 8 years running)
* Most cities going bankrupt
* Prison system so poorly run it has been taken over by a federal judge
…
Although there is argument about this, there shouldn’t be: people are leaving the state. The data shows that there has been a net out-migration from California to other states since 1990, balanced for awhile by immigration from other countries. But by 2005 that had eroded, too, with birth rates in the state also dropping at an incredible rate. Over the past two decades, a net 3.4 million people have left the state. And this is before the 2013 increase in income tax rates which prompted even liberal TV talker Bill Maher to complain that “it’s outrageous what we (millionaires) are paying” in taxes, “over 50%,” warning “liberals, you could actually lose me.”
…
Former president Jimmy Carter once said, “Whatever starts in California unfortunately has an inclination to spread.” And that is being encouraged by Jerry Brown and others. Incredibly columnist Paul Krugman recently pointed to California as a blue state governance success. Do you really want this to spread to your state? I think not. The more powerful message is where people are going when they leave states like California and New York, two states ranked among the “least free” in a recent study by the Mercatus Institute. They are going to red states where, according to Mercatus, there is greater individual freedom, less government regulation and lower taxes. Earth to Jerry Brown: California, you have a problem.
They are going to red states
But where are they going in those red states? To the blue liberal cities- like Austin and Boulder- where the jobs are.
And they will turn those states blue, too. They already are doing so.
And they will turn those states blue, too ??
Texas maybe next….
Nevada is the first state that will go purple. Californians will vote for politicians who will implement a state income tax “but it will only be a permanent 1%” sooner or later. If left unchecked It will grow to just under California’s 10% and Nevada will be destroyed by the progressive cancer.
The limit to the progressive cancer is that government power cannot go stronger forever. Thomas Jefferson will prove right that a revolution will limit the government power. Just read the first paragraph of the Declaration of Independence.
I saw an interesting study that studied mitgration patterns in/out of CA based on income levels. Long story short, while there was outmigration overall, for income levels of over $200k, there was actually inmigration.
In any event, when you are trying to evaluate how much shelter you need to keep people under a roof, what matters is how many people there are. In that regard, CA has gone from about 30 million people in 1990 to about 38 million people in 2012.
That’s 8 million more people. We built 2.5 million homes during from 1990-2010 (and didn’t add much more in 2011/2012, perhaps another 100k max). That’s less than 1 home per 3 people. That’s well below the national average, and not enough.
The answer is supply/demand imbalance combined with good climate.
Long story short, while there was outmigration overall, for income levels of over $200k, there was actually inmigration.
Doesn’t surprise me. I have studied migration patterns from cities and rural areas. Not a political statement, but one thing is clear that the progressive governments in big cities are forcing poor and minorities out of the big cities. They just can’t afford to live there anymore.
They just can’t afford to live there anymore.
Liberal cities attract the tech companies, whose jobs pay well and drive up prices of RE, which drives out the poor- to the exurbs. (Where they can get a vinyl cr@pshack for…$65 sq ft, right, Mr. Builder?)
Try $50/sq ft for new construction anywhere in the country. That would put your seismic death trap somewhere down around 30-$35/sqft.
Let me guess…. you paid a massively inflated price for it like all the other suckers.
“liberal cities attract high tech”
True point based on observation. However in my experience the majority of engineers are not socialists and hate taxes. I figure five percent carry a jar of gasoline and love taxes. I know some extreme so-called “progressive” engineers.
In Chandler, Arizona, there is a growing “high tech corridor” where companies such as Intel are expanding.
High tech engineers who had enough of the nanny state might make less money in Arizona, but I know many who my client company tried to lure to California but refused to leave Arizona. In two cases, they worked in L.A. only less than a year. These were engineers from the Phoenix office the client closed. When company bonuses and matching 401k was distributed, they quit and returned to Phoenix. White conservative males.
“jar of gasoline” - jar of vasoline.
“In any event, when you are trying to evaluate how much shelter you need to keep people under a roof, what matters is how many people there are.”
Incomes and budget constraints dictate what said people have available to pay for shelter. When people don’t have enough money to pay astronomical housing prices, the options are to crowd more people under the same roof (e.g. young adults living with their parents) or, at the extreme poverty margin, to live homeless. A confluence of stagnant incomes, high unemployment and poverty rates, and artificially inflated housing prices adds up to less units of shelter demanded, not more. Except for investment demand, which has been a driving force in North American coastal zone housing at historically unprecedented levels since the recent years of the mania.
Or you crowd more and more people into rentals (who pool resources to pay the high rents), leaving ownership only to the highest earners.
Are incomes stagnant for the highest earners in CA?
Are unemployment rates high for the best educated in CA?
CA has about a 54% ownership rate, and among the worse overcrowding in the country.
And with 4 MILLION excess, underwater, delinquent or defaulted properties in California, there is no reason for inflated prices.
It is not what people want that determines the price of things, it is what they can pay for.
“…what they can pay for.”
AKA budget constraints…
You need both. Desire and ability.
When you are adding 100k (or less) new for-sale homes each year, with a renter population of California’s (about 5.5 million households), you are talking about the ability and desires of less than the top 10% of renter households…the highest income renters are those being added to the ownership pool.
With respect to ability generally (as defined by affordability), the ability for people to own in CA has rarely been better.
It has been sentiment over the past couple of years that has been the biggest headwind, not affordability…that is shifting.
Now the supply/demand imbalance is dominating the situation in California.
You’re a liar.
Affordability is at near record lows in CA and demand is at 17 year lows.
The losses associated with buying a house in CA has never been greater.
“Affordability is at near record lows in CA”
You’re delusional. Record lows were in 2005/2006, when prices were higher, interest rates were higher, and incomes were lower.
Affordability is actually better than it was during the last trough in the mid 1990’s.
And I nearly forgot Prop 13, which allows people with little/no income to remain in homes that (if reassessed to current market), would have forced them to sell and move to cheaper digs YEARS ago–which would have increased the supply of homes in the most desirable areas.
Whether you think a world without Prop 13 is “just”, an unintended consequence of having Prop 13 is that it restricts supply in some locations as compared to other states.
Example. My great aunt, who’s husband (and main source of income) died decades before she passed (in her mid-90’s), lived in an old house in old Palo Alto, that she could not have afforded if she was forced to pay taxes based on the then current values.
Similar story with landlords who own houses in Old PA (for a LONG time)…if they were marked to market on reassessment, they couldn’t charge enough rent for it to make sense as a rental.
Proposition 13 is the only justification for old timers to stay in California. If they also have gold bullion, savings bonds, and AAA municipal bonds, perhaps Roth IRAs, they would be happy enough to die there.
I know an elderly couple who live a half mile west of my apartment in L.A., very conservative, yes they bitch and moan about liberals, but they have the southern California optimism. They love it there and could not understand why people go elsewhere.
A surfer I work with is a Republican who is a California worshipper, as if it is some sort of heaven and will only leave if he cannot otherwise find work. He’s never lived in a red state. He hates guns and does not understand why I “need guns.” I had that same attitude before I moved to Arizona in the mid nineties. Now I am of the opinion that if you do not use your bill of rights, you will lose them.
Have you hugged your AR15 today?
How far will the gold crash go before it stops?
And is Mrs. Watanabe driving the action?
Gold - Electronic (COMEX) Jun 2013
Market open $1,536.30
Change -28.60 -1.83%
Volume 114,652
Apr 12, 2013 9:29 a.m.
Previous close $1,564.90
Day low $1,526
Day high $1,564
Open: $1,560.30
52 week low $1,526
52 week high $1,803
“I’m melting!”
Gold - Electronic (COMEX) Jun 2013
$1,502.50
Change -62.40 -3.99%
Volume 314,721
Apr 12, 2013, 2:25 p.m.
Previous close $ 1,564.90
Day low $1,492
Day high $1,564
Open: $1,560.30
52 week low $1,492
52 week high $1,803
“I’m melting!”
I’m buying!
Try not to catch a falling knife…
It’s called dollar cost averaging.
DCA only works in one direction.
You could have DCA’d yourself into massive losses over a two-decade period by steadily buying Japanese stocks from 1989 straight on through the ensuing crash.
DCA doesn’t work under all market conditions, especially those where the crash lasts until after you are dead.
Rumors of the death of a several thousands of years old currency are just…rumors.
The biggest losers are those who are staying with the fiat currency bubble. Left unchecked, a loaf of bread will cost $100 at sme point.
Is the two percent payroll tax hike that was passed at the eleventh hour on New Year’s Eve 2012 starting to take a serious bite out of consumer spending?
no 110 million working age americans are out of work.
Good point.
And one thing seems for sure: This deflationary collapse in consumer demand is anything but a reason for gold bugs to be bullish. It’s inflationary pressures that normally drive gold prices skyward, but this time it’s different, due to quantitative easing to reduce the risk of GDII happening.
“the risk of GDII happening….”
How do you cover up a train wreck?
You paper it over.
There is very little correlation between gold and inflation. That is a myth. Gold is purchased in unsettling times by those concerned with economic uncertainty. As this economy recovers, gold will continue to fall.
Gold is purchased in unsettling times by those concerned with economic uncertainty.
If that were true, wouldn’t gold have gone up a lot more in 2008 than it did? There was LOT of uncertainty at the time—witness the VIX.
Take Gold’s last peak in 1979…about $800…if you go to the BLS CPI calculator, it would take it to a bit over $2,500 today.
Gold isn’t as good a measure of price levels over time as other hard assets. Gold is a very emotional item.
If you think Gold goes up with price levels over time, just take a look at the long-term spot price of gold…it sure doesn’t look like it rises with price levels…
http://goldprice.org/gold-price-history.html
Just wait until all the extraordinary factors which currently support gold (e.g. QE3 punch bowl) no longer are in place. You ain’t seen nothing yet…
April 11, 2013, 12:02 p.m. EDT
Why gold and silver are in the dumps
By Nigam Arora
Over the last month, if one could simply watch the news but not know the price of gold and silver, the logical conclusion would have been that this is the glory time for precious metals. After all, from every direction, news was coming that should have driven precious metals higher.
The Bank of Japan got a new chief who started running printing presses faster than Bernanke. Cyprus came close to confiscation of bank deposits, by taxing the deposits. Central banks bought $3 billion worth of gold in the first two months of 2013. North Korea threatened to fire nuclear missiles at U.S. targets.
Based on all of this news, gold should have gone to new highs, but instead gold and silver are in the dumps.
There are outflows from the popular SPDR Gold Trust (GLD -1.77%) and iShares Silver Trust (SLV -1.00%). Gold and silver miners have been hard hit. Several components of popular miner ETFs Market Vectors ETF Trust Market Vectors Gold Miners (GDX -3.39%) and Market Vectors Junior Gold Miners (ETF GDXJ -4.79%) have been hovering near recent lows.
…
Now south of $1500/oz with no bottom in sight…
There has never been a better time to NOT be a gold bug!
But the gold bugs are buying at these bargain prices!
Where is the Plunge Protection Team for gold?! I can’t recall a 5 percent crash in ANYTHING since the flash crash day in May a couple of years ago…
Gold - Electronic (COMEX) Jun 2013
$1,486.40
Change -78.50 -5.02%
Volume 335,629
Apr 12, 2013 3:30 p.m.
It is starting to look tempting… maybe at 1200
It is pretty funny, when the price of something goes up, everyone says BUY! When it goes down, it is ridiculed.
There is nothing better for your wallet than a deflationary spiral.
Let the spiral proceed.
I’d even consider buying some at $1200, but we just paid our taxes…
The way I have done it is to budget how much of precious metals to buy: buy enough to where it reaches ten percent of my asset allocation. Then stop buying and hold for awhile. Cycles keep cycling. For two or three years my asset allocation was above ten percent, so I sold some off. Last year stock prices started looking too expensive so I sold some off. Might sell off more this year. And I started buying gold again to try to recover my balance. Figure at some point this Fall I will have too much in precious metals. Either meals prices will pop or the stock bubble will deflate big time. Or both.
Goldageddon!!!!!!!!!!
P.S. Goldman’s call was way off…way too conservative!
P.P.S. Gold dropped 5% today, not 4% as the MW headline states. With gold dropping so far so fast, can the U.S. residential real estate echo bubble be long to follow?
Bulletin Stocks’ four-day run ends Friday; Nasdaq paces weekly gains, up 2.8%
April 12, 2013, 2:43 p.m. EDT
Gold sinks 4%, logs lowest close since July 2011
Technical selling, recent price forecast cuts weigh; silver drops 5%
By Myra P. Saefong and Carla Mozee, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures closed with a loss of 4% on Friday to settle at their lowest level in 21 months, as recent cuts to price forecasts continued to hurt sentiment, prompting investors to lose confidence in gold as a safe-haven investment.
Gold for June delivery (GCM3 -4.95%) dropped $63.50, or 4.1%, to settle at $1,501.40 an ounce on the Comex division of the New York Mercantile Exchange, after a dipping to a low of $1,491.40. It fell 4.7% for the week.
“Give credit where credit is due — to Goldman Sachs, for a masterful sell raid on gold,” said Gene Arensberg, editor of the Got Gold Report. Goldman Sachs cut to its gold forecast for 2013 this week to $1,545 an ounce, down from a prior forecast of $1,610.
“Without Goldman’s very public call to short gold when it was most vulnerable, there is no way gold would have broken down today,” said Arensberg.
…
If the gold price collapses, it means the credit machine could be breaking down. Things will be unpleasant. Unless you live on a boat.
Unless you live on a boat.
The greatest depreciating asset known to man? With the highest maintenance costs?
ALL manmade items depreciate. ALL of them.
Especially Pimp Watch……he is so stuck in 2007 with his housing views….. as to be valueless
ALL manmade items.
Still dropping after hours!
GCM3 1,486.30, -78.60, -5.02%
From bubble to bottomless pit, overnight:
Gold - Electronic (COMEX) Jun 2013
$1,476.10
Change -$88.80 -5.67%
Volume 352,248
Apr 12, 2013, 5:14 p.m.
Previous close $1,564.90
Day low $1,476
Day high $1,564
Open: $1,560.30
52 week low $1,476
52 week high $1,803
PRECIOUS-Gold sinks into bear market on institutional exodus
Analysis & Opinion
Gold teeters on edge of bigger falls
Fri Apr 12, 2013 4:35pm EDT
(Updates with additional quotes, details; adds NEW YORK to dateline with new byline)
* ETF outflows, Cyprus gold sales spook market
* Japanese bond investors selling also behind sinking prices
* Bullion takes silver, commodities lower
By Clara Denina and Barani Krishnan
LONDON/NEW YORK, April 12 (Reuters) - Gold sank almost 5 percent into bear territory on Friday as institutional investors fled bullion in favor of other safe-haven assets amid concerns about central bank sales and souring sentiment.
The breadth of the sell-off will underline some expectations that gold’s meteoric rally may be coming to an end after 12 years of gains.
The relentless selling sent gold below $1,500 an ounce for the first time since July 2011, and put the market on track for its worst weekly performance since December 2011.
Bullion has soared by more than five times due to its status as a safe-haven investment in troubled times and fears of inflation while the Federal Reserve has embarked on its aggressive stimulus program.
On Friday, an unexpected contraction in U.S. retail sales, which hurt stocks and supported the dollar on Friday, added to pressures building in the course of the week from several factors, including a draft plan for Cyprus to sell bullion and outflows from exchange-traded gold funds.
“The scale of the decline has been absolutely breathtaking. We tried to rally and that just didn’t get anywhere … there hasn’t been any downside support, it’s like a knife through butter,” Societe Generale analyst Robin Bhar said.
The pace of the sell-off appeared tied to volatility in the price of Japanese government bonds, which has forced certain holders to sell other assets to meet the risk modeling of their investment portfolios.
“The economic sensitive commodities - energy, industrial metals - have been signaling weakness for the past two months, and you could see that many investors are now reassessing global growth prospects,” said Jeffrey Sherman, a commodities portfolio manager at DoubleLine Capital LP in Los Angeles.
Gold hit a low of $1,484.30, down 4.85 percent and was heading for a 6-percent decline this week, in its biggest weekly drop since December 2011. It was down some 23 percent below the record peak hit in September 2011 at $1,920.30. Bonds rallied on Friday.
…
However platinum American Eagles in all sizes are ALL SOLD OUT STILL. At my Los Angeles dealer. ETFs and institutional short term thinkers might be exiting mortals, as you say, but private coin buying of physical metals continues briskly. The bubble is in representational gold, ETFs, not physical ownership. Let the big players continue manipulating. BTW, the printing press of the Fed still prints toilet paper.
Ben, would you consider a weekly gun control discussion that gets bumped up periodically? That way the bits bucket could concentrate on real estate and economic news.
Yes, I have a scroll bar and I’ll use it if necessary - just a humble suggestion.
It creates work.
An edict from the blog owner works better.
Good point…whatever is easiest works for me (or nothing — I have no problem skipping over the gun club subthreads…)
I second the request. I have nothing for or against the NRA or people who feel safer with an arsenal of assault weapons in their basement. It simply doesn’t interest me and seems quite unrelated to the housing bubble or economics.
If Ben says the topic doesn’t belong here, we will abide.
And note that the article we posted in today’s bits is the top story on Washington Post dot com, not some random Drudge link. And the subtitle to which is “Rapid growth of suburbs in gun-friendly states pushes politicians toward more centrist views of voters in subdivisions.”
Rapid growth of suburbs? Is that housing related enough for the bits bucket?
It certainly is.
If it’s big in the news, it’s gonna get talked about on the blogs, including this one.
The presidential election, climate change, gay marriage.
This too shall pass.
Is that housing related enough for the bits bucket ??
Besides…The Bits was created for the broad format…If we ban gun talk next irrelevant blather ban could be RAL…
seems quite unrelated to the housing bubble or economics.
Washington —
I would say there’s a connection between the housing bubble and the gun control debate.
I would say there’s a connection between the housing bubble and the gun control debate.
So the connection is that they raise emotionally-heated issues merely to distract the public from the looting of the public treasury that is still occurring?
I could buy that… It dovetails nicely with DWTS.
I saw the phrase “off topic” in the intro to every bits bucket. So what are you saying?
It was just another off topic post…
April 12, 2013, 9:24 a.m. EDT
Retail sales post biggest drop in 9 months
Spending falls by 0.4% in March as most stores take a hit
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — Americans spent less at gasoline stations and most other stores in March, as retail sales posted the biggest decline in nine months.
The decline in sales — the biggest since last June — might be a sign that higher taxes and slower job creation are taking a bite out of the economy. A cold snap in March might also have limited sales for some retail items such as clothing.
Retail sales in the U.S. fell 0.4% last month after a revised 1.0% gain in February, the Commerce Department said Friday. That was below the MarketWatch forecast of a 0.1% decline.
U.S. stock futures (SPM3 -0.38%) extended losses after the report.
Sales for January were also revised to show a 0.1% drop instead of a 0.2% increase, suggesting that first-quarter growth might not be as strong as forecast. The U.S. is estimated to have grown 3.0% in the first quarter, according to the latest MarketWatch estimate.
The drop in retail sales is the latest in a string of reports, including last week’s disappointing employment number for March, signaling the U.S. economy has cooled off again.
The “recent data suggest that the economy took a step backward in March after coming out of the gates reasonably strongly to start the year,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
Sales fell the sharpest at gasoline stations, down 2.2% in the month, as the price at the pump declined. The average cost of regular gas fell from $3.72 a gallon to around $3.57 in March, according to government figures.
Falling sales at gas stations are a good thing for consumers because it gives them more to spend on other items aside from basic necessities. Yet Americans also reduced purchases at many other stores.
…
Is Congress legally allowed to trade stocks on inside information?
Fed Leak Should Raise Questions Not Accusations
By Caroline Baum Apr 11, 2013 10:27 AM PT
If conspiracy theorists were hoping to score points with the early e-mail distribution of the Federal Reserve minutes yesterday, they had better look elsewhere.
Brian Gross, a member of the Fed’s “congressional liaison staff” (i.e. a lobbyist), e-mailed a copy of the minutes from the March 19-20 meeting to his contact list at 2 p.m. on April 9, Bloomberg News reported. The minutes were scheduled to be released at 2 p.m. yesterday.
…
yes
YES, and you already knew that.
The Golden Rule: Them’s that gots the gold, they makes the rules.
How do you think the current macro economy of the US will affect the positive trend in the real estate market over the next 6 months?
Investors buying up SFH to rent out = no rent increases
I think the future is renter nation and eventually the government will control on the margin mid to low cost housing through section 8 vouchers.
Rich and upper middle class will live behind gates
Rich and upper middle class will live behind gates ??
In many ways they already do…
The “macro economy”……
The macro economy is all about borrowing, isn’t it? The short term effects of borrowing should be positive, don’t you think?
A discussion on when will this barrage of bad economic news, crony capitalism, money printing, gun bans, QE to infinity, unemployment, RE price focused American govt come to its senses?
I am mentally fatigued by all this aren’t you?
I am mentally fatigued by all this aren’t you?
IT was extremely mentally and emotionally exhausting when I felt like I had to make major life decisions based on how everything was going to play out: ie, where was I going to live and should I rent or buy.
For better or worse, we made our decision and love where we live and the feeling of stability we now have (which we never had as renters), so my ongoing interest is now purely intellectual, and, less fraught.
And your “feeling of stability” is a cover for the deep, rotten and corrupt reality that you made a financial error from which you’ll never recover.
Stability for most of us is a prison cell of debt. Most would not leave if the door is left open. Predictability is valued above freedom. Mow the grass. Give half your pay to Uncle and the other half to the bank. Be secure. It owns you.
I’ve known plenty a boat to own their caretaker until the money just isn’t there any more.
I’ve known plenty a boat to own their caretaker until the money just isn’t there any more.
What I just said. To live on a boat and ridicule the costs of any other abode is laughable. Laughable.
There is simply no other type of dwelling that depreciates faster and requires more maintenance than a boat.
Except a yacht.
Sloth, you have no clue about boats and the truth is not in you.
There is simply no other type of dwelling that depreciates faster and requires more maintenance than a boat.
The depreciation curve is steep for some boats, but older ones can depreciate very little if they are maintained.
Maintenance is definitely an ongoing expense, just as it is with a house—but it is not nearly as significant as you suggest; I know guys who put new bottom paint on their boat every couple of years, and don’t have to spend too much more than that.
And considering that moorage is WAY cheaper than your average rental, you can cover a lot of maintenance with the difference.
A boat, big enough to live on, on the water, especially on salt water, requires at least one hour of maintenance a day. You can choose not to do it, but your boat will depreciate/disintegrate even faster.
There is absolutely no way you can get by just by repainting the bottom every couple of years. I’m going to tell that to some boat owners I know though. They could use a chuckle.
The depreciation curve is steep for some boats, but older ones can depreciate very little if they are maintained.
Maintaining older boats takes even more time and money, though I agree that, just like houses, they don’t make them as good as they used to. But a wooden boat, with a teak deck and brass fittings and all that cool stuff you find on an older boat = major maintenance.
But a wooden boat, with a teak deck and brass fittings and all that cool stuff you find on an older boat = major maintenance.
Oh, you’re talking about THOSE kinds of boats!
Yes, I am in full agreement: those boats require massive upkeep and maintenance.
I was thinking of older fiberglass boats. There is much less to rot. It won’t look as pretty as it would if it were washed and waxed regularly, but it won’t disintegrate either.
They don’t little to no teak; they don’t have any brass; they are primarily fiberglass and stainless or chrome.
Stability for most of us is a prison cell of debt. Most would not leave if the door is left open.
I jimmied that lock and high-tailed it out a _long_ time ago…
Mental fatigue is a pretty good description. I want to give up reading the newspaper because it fills me with such pessimism that I don’t want to take any chances in life.
You’ve a good point hack. One should spend way more time listening to what the birds are singing about than what the abusive drama queen press is pawning.
Man’s maturity: When he can exercise a healthy level of realistic pessimism without become depressed or bitter or giving up on taking chances in life.
After half a century of learning experiences, I am finally getting close to maturity…
I have devolved!
Why don’t we discuss how this Economic whatever debacle you want to call it is affecting us, our neighbor’s, business associates and friends? I can tell you first hand that there isn’t a day that goes by that I don’t hear some sort f a sob story. I am hearing more guys in their 40’s 50’s and 60’s that have heart palpitations, depression, and silence. I conduct seminars and meetings that last 2 days and sometimes don’t see people smile for 2 days when they are sitting in extravagant hotels and eating fancy lunches. Their postures are hunched over with sadness over their faces. I know the underlining cause which comes out in conversations but I am too timid to bring it out in the open.
America is worried and there is a white elephant in their lives.
don’t see people smile for 2 days when they are sitting in extravagant hotels and eating fancy lunches. Their postures are hunched over with sadness over their faces.
Welcome to upstate NY. It’s been that way for 30 years.
Actually we have a problem holding seminars in Upstate NY as the airline tickets are too expensive for people who are attending. So we make it easier for people to fly into Philadelphia, Logan, Newark, Baltimore, Kennedy, Orlando etc. The people attending are middle age family guys with college degrees and 20 plus years of work experience.
Btw are you from Upstate.
Future of housing Renter nation ahead ?
“The root of the problem is in the mortgage business, which Whalen thinks peaked in Q4 of last year. With lingering suits, Basel III requirements and Dodd-Frank all swirling around the miasma of the banking system, financial institutions may not be certain what they’re going to look like in the intermediate term, but they aren’t about to test their lending boundaries.
Loan originations have seen sizable improvements of late, but there’s only so many Americans both looking to buy a new home and able to secure the loans at the headline rates. “If you’re below a 700 FICO you can’t get a mortgage today,” says Whalen.
Unfortunately a relatively low percentage of Americans fit the bill, leaving both the banks and would-be buyers in the lurch. When banks can’t lend to nearly 40% of those in the market, Whalen says a pick-up in housing isn’t sustainable.”
By Jeff Macke | Breakout – 1 hour 45 minutes ago
..
When banks can’t lend to nearly 40% of those in the market, Whalen says a pick-up in housing isn’t sustainable.”
I guess prices are just going to have to fall to reasonable levels huh…..
This is the text of an email I was forwarded today. seems like 2006 @ll over again
April 11, 2013 – Scottsdale, AZ
Greetings! It’s been a beautiful spring day here in AZ - for those of you not here enjoying it right now – it’s 82°F as I write this at 6 p.m. tonite. (I’m still wearing a sweater.) Along with the great weather report, I thought I’d share some great, up-to-the-minute information.
http://www.scenicreflections.com/files/Bursting_Bubble_Wallpaper_ye1m9.JPGToday I had a client who is thinking about upsizing to a larger home tell me that a friend of hers in another town had warned her of impending doom and another forthcoming housing bubble here in the Valley. I reassured her this isn’t the case and told her I get asked this question all the time. I thought I’d also check and see what the most reliable source I know has to say about it. Turns out Mike Orr, Director of the Real Estate Center at the W P Carey School of Business at Arizona State University, wrote this TODAY in his daily observations for The Cromford Report, which he also produces, providing the most current statistics and information regarding the Valley’s real estate market. I don’t want to burst anyone’s bubble, but THIS is the information you should know.
From Mike Orr:
April 11 - It’s hard not to notice the plethora of silly articles suggesting the Greater Phoenix housing market is in another bubble, or that prices are soon going to fall. There are a variety of theories but they can all be seen as bogus when examined carefully.
Ten reasons why there is NOT a bubble in Phoenix housing right now:
The population of Maricopa and Pinal Counties is growing much faster than the housing stock - this is fundamental, yet is hardly ever mentioned. (Note from Cari – currently about 4.3 million in the metropolitan area).
Prices are being driven up by a chronic lack of supply, not by excess demand. Demand is close to normal. Bubbles always have excessive demand from foolish trend followers.
Prices are still at the same level as 9 years ago. They still have a lot of room to increase yet.
Most buyers are putting their own money in with cash or large deposits, not borrowing it all from foolish lenders as in 2004 and 2005.
Lenders are still being ultra cautious. Demand could increase if they ease up.
Investors are mostly buying to rent and filling their homes quickly with tenants - if and when these landlords sell it is a neutral event for the market - one extra home becomes available and one extra family needs a home to live in.
If investors started to sell off the small number of empty rentals it would slightly improve our market balance, not create a glut of supply.
There are several major long term obstacles for developers trying to increase the supply of new homes. Shortage of labor and affordable, accessible land are just the first two.
We have a low vacancy rate both in homes for rent and for sale. Multiple generations and even multiple families are sharing single homes.
No bubble has ever occurred in the same market twice in the same generation. However after a recent bubble everyone is hyper-sensitive to every price increase and numerous false cries of “bubble” are par for the course.
Given the unprecedented imbalance we now have between population growth and new home building, we have several years of rising prices in front of us. How fast and how high they rise I cannot tell, but the idea that prices could fall significantly in the near term because of excess supply is foolish. The only circumstance that could unravel things is a sudden collapse in demand caused by people leaving Central Arizona in droves. Far more likely is a surge in demand from both people and companies deciding to migrate from California. Compared to most of California, housing in Central Arizona is still ridiculously affordable even if interest rates were to double.
Nobody has a good track record of predicting mortgage interest rates, but in any case multiple studies have shown no significant statistical correlation between homes prices and interest rates. So when interest rates eventually rise, as they surely must one day, this is as likely to increase demand as it is to decrease it. This event would definitely decrease affordability, but we note that one of the times of highest demand (February 2005) was also a time of very low affordability. In fact large numbers of people signing up for mortgages they could not afford was the key characteristic of the February 2005 market.
Mike Orr
Director of Real Estate
ASU W. P. Carey School of Business
In 2012 Mike Orr was appointed Director of the Real Estate Center at the W P Carey School of Business at Arizona State University.
Orr left the computer industry and California to focus on Arizona real estate in 2002. He obtained an Arizona real estate license in 2005 and started studying real estate statistics the same year. Orr partnered with ARMLS and the Information Market LLC in
2008 to create the Cromford Report (www.cromfordreport.com), which provides daily real estate market insight for realtors and investors covering the Greater Phoenix residential market.Orr holds a masters degree in mathematics from the University of Oxford in England and spent 31 years in the computer industry, working for IBM, Amdahl, Splash Technology and the Santa Cruz Operation.
‘Nough said? Can we put the bubble to bed – for a while at least?
“No bubble has ever occurred in the same market twice in the same generation.”
How many Realtor™ lies can you cram into one diatribe?
“No bubble has ever occurred in the same market twice in the same generation.”
That reminds me of how everyone (including BB) kept saying that there had never been a _national_ housing bubble, only regional ones…
Of course, we also used to say here on the HBB that a bubble had never been successfully re-inflated. Do we still believe that?
Of course, we also used to say here on the HBB that a bubble had never been successfully re-inflated. Do we still believe that?
I guess it depends on how you define “successfully”, but yeah…I never thought they would be willing to destroy to much to do it. So yes…you CAN reflate a bubble if you’re willing to destroy the currency and enslave the population to do it.
Don’t trust a single word he says.
Has anyone else experienced a disconnect this year between their tax bill and their ability to pay it?
My case is probably unusual; to the unpleasant experience of the effect of ending the 2% payroll tax reduction on my take-home pay, my self-employed wife had one of her best years ever last year, which inflicted the unintended consequence of jacking up our highly onerous self-employment tax to unprecedented levels. Let’s just say that we will eventually be good for the money, and I finally am at the point where I plan to increase my bi-weekly federal withholding tax to avoid a similar situation next April.
But I am guessing a fair number of others are finding the 2% payroll tax reduction rollback has left them a bit short this April; comments?
Sorry you are going through this PB. I have a pretty big tax hit this year, because I did some extravagant things, but I set the tax money aside. If you spousal unit is creating tax liability, consider taking it out of her income? Just saying…..
No worries — we’ll be fine; just going through a temporary “liquidity crunch” with no bailout authority available to give us a ZIRP loan, though the I.R.S.’s rates aren’t that steep on a short-term loan. And we do have our memories of our own recent moments of extravagance to help make the current cash crunch seem worth the pain.
It just doesn’t seem right that despite the fact that we are collectively working as hard as at any time in over two decades of marriage, we nonetheless find ourselves barely able to make ends meet, especially when it comes time to pay our onerous tax bill, which doesn’t even provide the full story, as entitlements are taxes and sales are taxed separately. Realizing that we are working this hard with so little left to show for it when upwards of one third of the labor force is flat out on its back seems somehow perverse. That said, after having been in the unemployed labor pool in the past, I would rather work too much than too little.
Yeah I made some extravagant financial decisions in 2012 and for the first time paid the AMT. 2013 will be less.
How does making extravagant financial decisions put you into AMT? Did you buy an expensive car and depreciate it?
I had losses so I get a refund and pay no taxes. I do owe the fabulous state of california, 25.00 in june!
I don’t know how it worked. But the new thing I did was sell company stock and had both qualified compensation and disqualified compensation. My Second half tax on my conversion to Roth Shouldnt have been the culprit because my first half tax did not get me to AMT for the 2011 tax year. So I assume it was my realized gains.
I get hit with AMT every year, and I don’t play games…I think it’s because of the amount of CA state taxes we pay.
My net tax i ended up paying to California for 2012 is under $300. They will give me a $4900 refund, due to 1) tax credit for paying Arizona state income tax and 2) the non-resident state does not tax your conversion to a Roth. Politically this was a shot in the arm for me, since I cannot stand Jerry Brown.
If you had the money you’ve paid into federal taxes for fiscal 2011 to disperse to the federal government at your discretion, where would you direct it?
Retraining of the workforce. Programs designed to match the unemployed with the opportunities of today.
New Hampshire has an interesting model…the state continues to pay unemployment while companies take on an intern (unpaid) to try to train them for open positions.
When I last heard of the success rates, something like 60% of those taken in as unpaid intern were offered full time positions. I don’t know if the number has gone up or down since then.
Yes, there is the potential for abuse, but companies wouldn’t get away with abusing the program for long, and the companies are not getting away scott free, they have to utilize their own employees time to train the “unpaid intern”.
I’m sure that there are other models out there, but if my $ were to go to anything, it would be to help get the unemployed back to work by helping them get the skills that current employers demand.
I’d like to establish a pilot program that paid women receiving public assistance an additional 15% of their benefit if they opted for monitored long-term birth-control implants, IUD, or tubal ligation. (With an eye toward making bc mandatory for all such recipients within the next ten years.)
I’ll second that.
receiving public assistance an additional 15% of their benefit if they opted for monitored long-term birth-control implants, IUD, or tubal ligation.
I think we could go higher than 15%, if you consider the cost savings of not having additional children.
How about we tier it based on the BC effectiveness?
Of course, there will be a public hue and cry and you will be accused of trampling on their reproductive rights…
Incentives are not restrictions. If you choose to get/stay pregnant while on public assistance, you lose the bonus.
Of course this would require that birth control and abortion be available on demand (and at low or no cost) as a matter of public health/social policy.
What a question! Practically whatever government does, private industry can do better and less expensively.
I generally agree, however, what about things that practically WON’T be done by private industry? There are few examples, but one pretty important one:
New classes of antibiotics
Biological fact is that the more you use an antibiotic, the more likely it is that a new superbug becomes resistant….as such, if you are the lucky inventor of the best new antibiotic out there, you get the pleasure of being the LAST line of defense, not the FIRST line (like with other drugs). Where is the private industry incentive to develop a new antibiotic? There is a clear public good/need, but no incentives for private industry to make it happen.
Now, you can probably do it without government research, but you probably do need some changes to the existing incentive structure. I would probably give a “bonus” transferrable patent extension for new antibiotics…so, if you create a new class of antibiotic, you get an extra decade of sales for some other hit that you have in your drug portfolio (or you can sell the right to someone who has the hit drug).
You’d see private research skyrocket in the area of antibiotics.