Bits Bucket for May 8, 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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first again today
I would appreciate if experts here can share/give some advice to me. I have been looking to buy a house in south NJ for last 7 years but did not / do not want to pay bubble prices. To me a house is shelter and not an investment. I am not good doing investment and am doing ok and perhaps I would club myself into upper 5 to 10 % of the population. I am going to put 20% down payment.
I have 2 areas near my place where I want to buy.
First area has been developed around 10 yrs. back and is sort of well planned and has many houses/communities. The area is peaceful and crime free. I rent near by at this time and I like the place. Current price avg in this area is around 250K for 3bed/2bath houses. I am leaning towards this area because I like it and also there is conformity in the houses. Here is the google map link for this area.
https://maps.google.com/maps?ll=39.834592,-75.108376&spn=0.009639,0.013797&t=h&z=16&layer=t&lci=com.panoramio.all,com.google.webcams,weather
The second area also is in the same town and is being developed now but the area does not seem to be as planned as the first one and the areas around are not as similar to as that is being developed. But these are new construnctions which are priced similar to the first area which is around 10 yrs old. New construnction and everything new is attractive to me ( except for the fact that some folks here would say that many new construnctions are crap and I get that but that is secondary at this point to me). Google map link to this area is
https://maps.google.com/maps?ll=39.808421,-75.126894&spn=0.004821,0.006899&t=h&z=17&lci=com.panoramio.all,com.google.webcams,weather
Please help me if you can, to comeup with reasoning which area I should go for.
If quality of construction is secondary for you at this point, then you aren’t ready to buy a house. Keep renting.
imaadesi
Having bought in PUDs (with HOAs) twice, and recently buying in a less fancy neighborhood w/o an HOA, I say go for the one that may not have the snob appeal, but you can do your thing without a committee dictating your life. The totalitarian thing isn’t my flavor.
In reality, our modest but well maintained neighborhood has a Father Knows Best aesthetics to it, and it’s actually nicer than our our former PUD neighborhoods because people are left to use their imaginations.
We’ve paid assessments for teenager vandalism at the Club House area, so remember that community BS costs money and the HOA fees always go up. Lots of people sucking off the HOA budget. And whatever you decide, get a reserves data point for the HOA. Many are broke right now due to non-pymt of dues.
If you’re a conformist, an HOA might just be your flavor.
Also beware of HOAs with pools. They’re money pits and can a HUGE liability issue.
” I do not want to pay bubble prices.”
Then don’t. Rent. Rent is half the cost of buying at current massively inflated asking prices of resale housing.
” I do not want to pay bubble prices.”
Of course you do. You are willing to borrow $200K to make it happen. Over paying with money you don’t have is what drives our economy.
Do not buy with an HOA!
Prioritize quality construction over quantity of rooms/sq ft and especially over appearance.
There is still a lot of land in South Jersey, it is not like central or north jersey. Some nice places. Take your time and find something nice, no need to rush! Good luck.
I should’ve said “alot” of land.
Sorry, RAL.
Just to be the devil’s advocate in favor of HOAs, I’ve lived in several neighborhoods with them and they’ve all been great. Very few HOAs are the oppressive, control-everything busybodies you see in some news stories. In my current neighborhood, here are some examples of where the HOA would get involved: grass 2 feet tall, appliances in the front yard, erecting chain link fence, unplated car parked in the street for more than 30 days, raising hogs or chickens. Those loose guidelines are good for me, so I enjoy an HOA. Plus, the pool, tennis courts, and playground are nice also. Just ask some homeowners in your potential neighborhood. If the HOA is relaxed, you’re good. If not, don’t move there.
An HOA is like any other club. Control freaks tend to displace rational volunteers. You should want to be controlled or want to be in control to join an HOA.
^ This.
Again, not in any HOA I’ve ever lived in. My current one has a difficult time finding people to serve on the board, all we get is reluctant volunteers who are the opposite of control freaks.
Ahhh, control freaks. The cause of, and solution to, all of life’s problems.
An HOA is like any other club. Control freaks tend to displace rational volunteers. You should want to be controlled or want to be in control to join an HOA.
The same thing played out my neighborhood association. And then things changed.
Happened during our annual meeting earlier this year. Yours Truly confronted the President for Life. She got so angry that she quit on the spot and adjourned the meeting.
The VP, a very nice man who’s NOT a control freak, is now the prez. The new VP is 29 years old, which is almost unheard of in a Tucson neighborhood association.
Secretary? Well, if our current Secretary, who’s friends with the former P4L, ever decides to come to meetings, she still has the job. If not, it will go to Yours Truly, who is already serving as Propaganda Minister. (I send out Neighborly News Updates and other forms of communication.)
So, take heart. You can un-seat the control freaks.
When a metalhead with a pit bull collection moves in next door to you and opens a Harley repair shop in his driveway, you’ll be glad you have an HOA. Quality over quantity on the construction. And talk to at least three sets of neighbors before you commit a penny.
That said, it’s a stoopid time to buy, and your “first” bit is really lame.
raising hogs or chickens
In my experience chickens (egg laying hens, not roosters or meat birds) are a lot quieter than most dogs, and I have yet to step in chicken poop while walking down the street. Give me a neighbor quietly raising eggs over a neighbor with a pooping yapper any day.
Not familiar with people raising hogs in the city…you’ve actually seen this? Raising hogs on a farm (I have done it) is hard enough.
I’m with you on the superiority of chickens over yapping dogs! Unfortunately my suburb does not allow people to raise chickens. Yet. There is a dedicated group of people working to change that. First they have to convince the PTB that chickens are cool, upscale and suited to the affluent image the town wants to maintain.
In reality, it’s a dump. Just like every other town.
Roosters are VERY noisy.
Kenilworth, IL is definitely not a dump.
They’re ALL dumps. You’ve been brainwashed to believe “it’s different” there.
It doesn’t take brainwashing to know that some locations are slightly better than others. You really can’t see some glaring differences between, say, Kenilworth IL and Compton? Or Greenwich CT and Detroit?
OK, you got me, they’re all just dumps.
Roosters are VERY noisy.
Agreed. That’s why they’re illegal in Tucson.
Joe, please don’t let RAL get under your skin. He’s full of himself.
BTW, I don’t live in Kenilworth but in a town next door. Most towns have the occasional dumpy property. Even Kenilworth!!!!!
The people I know who keep chickens (up north near the Wisconsin border) like to rent-a-rooster when needed to keep their “girls” happy.
And it’s not different there either. It’s a dump.
rent-a-rooster
If it floats, flies, or fʊcks, rent it!
“Roosters are VERY noisy.”
^^This².
I once made the unfortunate decision to adopt a beautiful rooster from a co-worker. He had been pecking at a lot of the hens, and she needed to find him a new home. I realized my mistake the very first morning when I woke up to him clearing his throat with a few understated “cockadoodledoos”, followed by an eardrum shattering rendition which would make a deaf man wince- AT 3AM. I quickly shuttled him off to another unsuspecting do-gooder.
‘a few understated “cockadoodledoos”, followed by an eardrum shattering rendition which would make a deaf man wince- AT 3AM’
He was in a new home and wanted to let everyone know he had arrived.
It is kinda surprising how loud these little birds can be. I lived next to a rooster (no hens) in San Marcos TX. He was sort of lazy; some mornings he wouldn’t make a sound. Others he would go off; 2:30-3AM. But never like I’ve heard some other roosters blast it out.
“Roosters are VERY noisy.”
…..but the hens just won’t fight!!!! Where’s the sport in that?
Give me a neighbor quietly raising eggs over a neighbor with a pooping yapper any day.
Same here. I’ve taken neighbors to City Court over their noisy dogs. I’ve also threatened lawsuits in a couple of other cases.
Chickens? It’s possible to have a quiet flock. Nearby neighbors have one, and their chickens are BELOVED around here.
Yeah, but you let one chicken in, and you KNOW those sidewalks are gonna get covered. Besides, people might walk the chickens without a leash. This kind of chaos cannot be allowed.
And then before you know it, you have dogs and cats living together…..
Our former HOA dictated what color white of your shutters or mini blinds faced the street. The BOD changed hands to a mini Nazi group and it got so bad it was a factor in us selling. We’re not garage door open people, driveway parking lot, or noisy types. Our homes are pristine in & out.
HOA’s aren’t for everybody.
perkonkrusts
We haven’t lived in an HOA that wasn’t oppressive. I rather live around a few “undesirables” and their bad taste, then live in an HOA neighborhood. You like vanilla and I like chocolate.
“You like vanilla and I like chocolate.”
That’s a fair summary. My point isn’t that all HOAs are great, it’s that someone shouldn’t necessarily turn away from a home purchase simply because an HOA exists. Some discussion with neighbors will reveal whether or not the HOA is relaxed or overbearing. Another idea is to read the actual guidelines and ask yourself if you think you may disagree with any of them. If you disagree with the guidelines, don’t move there. If all the guidelines seem fine to you, then you have very little to worry about.
HOAs can change their mind about anything at any time. Most people don’t have the time or will to attend/vote at HOA meetings, so you can end up with some really unreasonable rules. Don’t we already have enough laws on the books without adding extra ones from an HOA? At least government laws are harder to change.
Shockingly, city zoning laws in my city would take care of virtually all those things without requiring an HOA.
Chain link fences up to 36″ (I forget the exact height) are allowed, sadly. You still won’t find them in front yeards in most areas though. And where you find them, you generally wouldn’t want to live.
Why the hate for chain link?
Matches the vinyl siding?
Why the hate for chain link?
I have neighbors who are slowly turning their 6-foot chain link fence into an art display. It’s really cool. (And so are they.)
I kind of like our original 95-year-old Craftsman chain link fence on our 95-year old Craftsman house and guest house in a preservation district of a dedicated historic area.
Obviously, some are ignorant, prejudiced, or just stupid!
Raising chickens? I have two sets of neighbors doing just that. In one case, the flock is out where everyone can see them, and believe-you-me, they’re quite the attraction.
We like those chickens a lot more than the barking dogs and the feral cats.
Regular local government can take care of appliances in the front yard, tall grass, etc…
…or move in, sieze control of the HOA in a brazen coup, then rule over your neighbors with an iron fist!
question for experts here
I am a democrat or you can call me liberal. Obama and democrats are spineless and have not done anything other than words to make liberals feels that they are for them including not doing anything about wall street thiefs, social security or medicare. Atleast republicans are clear (for those who know a little bit about economy) what they want to do about economy. so sort of they are more true, so why not just support folks who are more true. It does not affect me.
Or nay be I am too weak to fight and just give up liberal ideas.
or you could give up on both ’sides’ and have your own ideas
that’s good for one’s vanity, but there is strength in numbers.
Just like sheep.
Number like 1%
oops, hit a nerve.
Join the resistance!
Both of our parties are morally bankrupt. They are also 2 sides of the same coin, disagreeing on some wedge issues but within a fairly narrow range in terms of overall approach.
“Both of our parties are morally bankrupt.”
+1 According to Noam Chomsky the Democrats and Republicans are merely two factions of the Business party.
A two headed snake=D&R
You sure you want to support people only because they are true to their cause. We could do some historical name dropping on people who were very true to their causes.
The “spineless” Dems boils down to about 8-10 Senators.
And are you sure that this “does not affect you?”
I assume by historical figures you mean zealots/nuts.
Another group of historical figures one might consider would be the Framers. I strongly feel the Framers would hate both parties. The more prominent ones would dislike the idea of parties (”factions” as they would say) altogether.
i was once a republican and said the same thing during the second bush administration. have not voted for a republican since. i have been hoping the obama administration’s adherence to the status quo (economic/monetary policy) would have the same effect on many liberals.
i have also said that both the original Tea Party and Occupy Wall Street movements had a common theme that was lost once the two party’s were able exploit them. I wish wayard liberals and conservatives would re-kindle that fervor.
I was once a Republican when I first registered early in the Bush43 Presidency. LOL, oops.
I think there are a lot of other ex Republicans here including goon squad and Prof Bear maybe?
I think there are a lot of other ex Republicans here including goon squad and Prof Bear maybe?
I registered R for quite a while and then went L for a little while and am now I. But my consistent distaste for the Ds would probably have most on the left still thinking of me as R.
i tell folks i am a plain bellied sneetch.
been registered republican since i moved to colorado in 2009
that is shocking
we worked as a page for the statehouse democrat caucus while an undergrad at football factory state university, that was fun
Was an R for a long time. Now I’m an I.
I was raised by conservative Republicans who were/are staunch environmentalists. And I used to be a Democrat.
My voting history starting at 18 years old goes: Bush 1, Bush 1, Dole, Bush 2, Kerry, Obama. I was absolutely disgusted with Bush after his first term, and I am absolutely disgusted with Obama after his first term. I am done with both parties.
“i have also said that both the original Tea Party and Occupy Wall Street movements had a common theme that was lost once the two party’s were able exploit them. I wish wayard liberals and conservatives would re-kindle that fervor.”
It’s not dormant, just ignored by MSM, who is just as guilty as Wall St. for our mess.
Lose the duopoly party religion and forge a path which reflects your own ideals.
A political atheist here.
Stick a fork in the D&R
formulas of sheep herding.
This gal is done.
Am I the only one getting deja vu? Prices rising in the absence of wage increases. Standards on loans dropping. Flipper share of the market growing. Low interest rates pushing investors searching for risk, such as bundled mortgages.
It’s almost as if nothing changed after the crash.
like cramer said, housing is the economy now.
We get to trade houses back and forth and then let the taxpayers eat losses when market crashes.
Housing and healthcare. Wonder what would happen to the trade deficit it healthcare cost were cut in half? I guess that could free up more cash for housing.
healthcare is way overpriced and they did nothing to fix that. I think they will make it worse.
How much worse can it get? The government is releasing the first ever study of typical hospital charges today. I might have missed it but I didn’t see any mention of health outcomes.
“For the first time, the federal government will release the prices that hospitals charge for the 100 most common inpatient procedures. Until now, these charges have been closely held by facilities that see a competitive advantage in shielding their fees from competitors. What the numbers reveal is a health-care system with tremendous, seemingly random variation in the costs of services.”
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/08/one-hospital-charges-8000-another-38000/
Some highlights:
Heart attack with four stents and major complications
Average cost
Average reimbursement
$166,174
$27,397
$89,027
$33,129
Intestine procedures with major complications
Average cost
Average reimbursement
$248,105
$44,794
$185,927
$73,455
Permanent pacemaker implant
Average cost
Average reimbursement
$127,038
$20,836
$66,030
$28,668
Clearly those charging less will need to raise their prices so the next report will show how ‘fair’ healthcare has become under Obamacare.
why do you think they want to fix any of the following:
Healthcare cost
Tuition cost
Housing cost
i wonder what percentage of GDP relates to those areas…cut all of those cost so J6P can use the extra dsiposale income to buy more useless crap from China and other imports?
that health care is only 18 percent of usa gdp isn’t enough, it should be at least 30 percent, that’ll show those socialists who’s number one
WOT?
Capitalist are not driven by financial incentives to increase revenue??
‘In Saint Augustine, Fla., one hospital typically billed nearly $40,000 to remove a gallbladder using minimally invasive surgery, while one in Orange Park, Fla., charged $91,000.’
http://finance.yahoo.com/news/hospital-billing-varies-wildly-government-040107840.html
This is just like housing. The weather is MUCH better in Orange Park.
About six years ago I switched to Mexican dentist for much the same reason. Typical american dentist charge for a root canal + crown cost $1200-$1500 - My last trip to Mexico cost $700 and that included hotel, fuel, food and dental work. While I did have to drive 500 miles and take time off from work I would note that the american dentist require at least 3 or 4 trips to do the same procedure.
In Saint Augustine, Fla., one hospital typically billed nearly $40,000 to remove a gallbladder using minimally invasive surgery, while one in Orange Park, Fla., charged $91,000
Mine was removed at an outpatient clinic. IIRC it was under $10000.
“About six years ago I switched to Mexican dentist for much the same reason. Typical american dentist charge for a root canal + crown cost $1200-$1500 - My last trip to Mexico cost $700 and that included hotel, fuel, food and dental work. While I did have to drive 500 miles and take time off from work I would note that the american dentist require at least 3 or 4 trips to do the same procedure.”
HUH? I had a root canal and crown done recently. Total cost $2400. Insurance covered $1100. The whole procedure took 2 2 hours and I watched a movie the whole time. The dentist I go to makes her own crowns in house. 3 or 4 trips is about 30 years out of date.
First, I don’t have dental insurance so maybe you should see what your dentist would charge for a all-cash deal so we could compare apples to apples. Second, maybe 5% of dentist have in-house labs.
Most dental root canals consist of at least 3 visits.
1 to do the exam, cleaning and x-ray.
2 perform root canal with temporary crown. Most dentist prescribe antibiotics and pain killers which require a side trip to the drug store.
3 final visit to cement crown.
In Mexico along the Texas boarder there is a thriving business for medical tourist complete with chartered planes and buses with hotel special rates.
http://www.dentaldepartures.com/mexico-dentists/
I forgot to mention I loaded up on duty free goodies like name brand pharmaceuticals, pet supplies, liquor and some of the most comfortable custom boots I have ever had.
Los Algodones? Along with the freshest and
tastiest shrimp tacos.
Thanks for the info, Bluestar. I have a busted dental crown and a near-four figure replacement quote from a Tucson dentist.
Ouch. I think I’ll head down Mexico way.
A close friend is already doing that, and he highly recommends his dentist in Agua Prieta, Sonora. Said dentist is listed in the Dental Departures directory that’s mentioned above.
1. All cash is cheaper than insurance rates. Doctors/dentists give a discount when it’s all cash. Hospitals too.
2. You’re counting the initial exam as a visit? OK. Then you have an initial exam as well, did you not? Or did you just decide to drive 500 miles to Mexico on the off chance you may need a root canal?
3. The thing about cheap 3rd World medicine is….it’s cheap for a reason. When all goes well, great. When there are complications, good luck to you. And good luck suing your doctor/dentist when they royally f**k up and you’re left with years of pain and suffering as a result.. The risk isn’t worth saving a few bucks. But each to their own I suppose.
“1. All cash is cheaper than insurance rates. Doctors/dentists give a discount when it’s all cash. Hospitals too.”
Our dentist is a member of several dental plans, and they audit his records to be sure their plan members get a better rate than others including cash customers. This practice should be illegal, IMHO.
1) Insurance companies make money because they know they rarely pay out more than they collect in premiums over time. Did you know that you can buy dental plans in Mexico for a fraction of what the rigged American system charges?
Let me add that it is nearly impossible to get a cash quote from most doctors and hospitals (see story above).
2) Yes I knew that my cracked tooth was going to require a root canal. I will use a local dentist to do a full exam if the source of the problem isn’t obvious.
3) I only buy name brand drugs with official seals and lot numbers. Most large pharmaceutical companies like Pfizer, Alcon, and J&J manufacture in Mexico, Canada and Europe to sell in America. The laws in Obamacare were written to prevent you and me from taking advantage of those lower costs.
And finally let me remind you I live in Texas, the state with the most restrictive malpractice laws in the nation.
” Since 2003, Texas has enforced a strict cap on damages awarded through medical malpractice cases. Texas is one example of how tort reforms hurt the public and strengthen the insurance industry. A recent report on the changes that have occurred in post-reform Texas suggests that tort reform is a failure.
Today, medical malpractice damages in Texas are capped at $250,000 for physicians and at $250,000 for hospitals. The cap has not changed since restrictions on jury awards and frivolous lawsuits were implemented in 2003. The only favorable effects were a 50 percent decrease in the malpractice premiums that physicians pay and a 70 percent decrease in payments issued by insurance companies. Texas still has a higher-than-average number of malpractice claims per resident.”
http://www.jdsupra.com/legalnews/tx-attempt-at-medical-malpractice-tort-r-69412/
Wrong, Joey.
Physicians who subscribe to Blue Cross/Anthem’s PPO or any major insurance plan (de facto mandated if you want hospital privileges in CA.) are contractually PROHIBITED from charging any less than the insurance company’s negotiated fee.
Cash won’t get you a discount with any plan-affiliated MD.
It’s almost as if nothing changed after the crash.
Except that 50% of these new purchases are cash, 75% of mortgage originations are refinances, and on-the-market inventory is low. I don’t get this at all.
“New purchases” is more accurately used house purchases. Demand for new houses is at a multigenerational low. It’s the Big Weekend at Bernies.
By “new” purchases, I meant purchases circa 2012-2013, as compared to the “old” 2005-2006 bubble.
The old bubble was largely about ARM’s and pick-a-pays. This one appears to be largely about cash. However this new bubblet plays out, I don’t see it playing out in the same way.
All bubbles play out in the same way. This cannot be a new bubble IMO, because the expansion of the actual Bubble hasn’t come anywhere near correcting. A dead cat bounce, or a few, are expected. Corrections are bouncy, as in a flight of staris.
“It’s almost as if nothing changed after the crash.”<
Oh it’s worse than that. Nothing has changed since the S&L disaster except the amount of money.
“Oh it’s worse than that. Nothing has changed since the S&L disaster except the amount of money.”
And add this time around, NO ONE went to jail.
Not true. Just the big guys on Wall St didn’t got to jail.
Everyone below them is getting busted left and right.
But the instigators themselves?
I never would have thought it possible, but this is a rebubble.
Heard from a friend today whose wife is in the mortgage brokerage business…apparently a very high percentage of borrowers today (he noted 90%) were people who lost their home in the crash (blemished credit). The quote that I wrote down is that lenders are getting creative again.
Not good.
‘lenders are getting creative again’
ObamaLoan!
Do high levels of home ownership hurt the employment picture? Interesting blog… http://m.washingtonpost.com/blogs/wonkblog/wp/2013/05/07/study-high-levels-of-homeownership-can-kill-the-job-market/
A wrote from that blog entry i linked to about home ownership and unemployment:
” Now here’s the interesting part: Blanchflower and Oswald aren’targuing that the owners of homes themselves are disproportionately unemployed. (In fact, homeowners tend to make out okay.) Instead, the authors argue that homeownership has a much broader — and negative — impact on the labor market as a whole.”
Nothing is worse than having an underwater albatross around your neck when the best labor market opportunities lie in another city. You can’t sell, and is unlikely to pencil out over the long run as an absentee-rental, either.
They’re actually saying something quite different, which is why the blog is worth a read. They’re saying that people who own homes in an area are more likely to take jobs from others. They also touch on the idea that MID is a subsidy and therefore helps home owners avoid taxes that would otherwise be put into the economy via government expenditure.
In the discussion/comments, people also raise the point that renters don’t get the MID but their landlords quite often do. So even if a landlord rents a house at zero profit during the year, he often gets a nice fat tax benefit as a “reward” for having a mortgage.
Tax revenues are a very limited constraint to the government’s ability to spend. Why worry about that nonsense when you can just borrow directly from a central banking authority?
They also touch on the idea that MID is a subsidy and therefore helps home owners avoid taxes that would otherwise be put into the economy via government expenditure.
Given that your average J6P spends every penny he makes and then some, I’d say that money is already being put into the economy.
What an original concept! The MID is spending that might otherwise be spent on something more productive! Give that man a Nobel in something!
Yes, people who don’t have a mortgage do not get the MID. And people who do have a mortgage do get the MID, I would guarantee it is more frequently than “quite often.”
And check this out: landlords get a deduction for depreciation of the building. They also get a deduction for the property taxes, insurance, repairs, gardening, etc. It’s a win win win situation.
@chili - In the context of how “home ownership contributes to unemployment”, sorry but I don’t hear people talking about that. In our society we almost never hear that there are costs to promoting home ownership. And to the extent we do hear it, we never hear the very tangible costs like high unemployment or rents being too high bc landlords capture the benefits. Even your average college graduate (which is like 25% of Americans) can’t get these ideas through their head.
And yes, deductions and tax benefits are a gratuitous subsidy to landlords. I benefit from this yet point it out because I don’t think the American electorate will ever cause their representatives to change the system. Call me a cynic.
Whenever removing tax loopholes or deductions are discussed, right wing think tanks paint it as “class warfare”. Lulz. Tax loopholes/deductions are not a bug in the system, they are a features.
Why is it a gratuitous subsidy to landlords? Renting out property is a business. All businesses get to deduct their expenses. You recommending that we switch to a corporate “income” tax based on gross revenues, not profits? Because I don’t think too many people are going to get behind you on that.
‘Tax loopholes/deductions are not a bug in the system, they are a features’
Most discussion on tax code is so politicized, it makes no sense. For instance, big corporate taxes are taxed twice. Stick it to the man! What happens? Few pay dividends so as to avoid that, so the only way to reward investors is to grow the stock price. Voila - merger and acquisition. Doesn’t really add anything to the economy, results in layoffs and off-shoring, detracts from innovation, but what the heck. We sure stuck it to the man!
Polly, to be more precise, to the extent we allow any MID at all, we should limit it to fairly small amounts. Most of the MIDs are used by a) people who own multiple homes b) people who own very expensive homes, and c) landlords.
We don’t *really* have a MID becomes it helps J6P buy a house to raise a family, that’s just how politicians sell it to the masses. We have MID in the tax code because it benefits banks and because it benefits people who own alot of properties.
When I say gratuitous, I’m pointing out that a nontrivial amount of people have mortgages simply because they can deduct the interest, thus lowering their cost of ownership/capital and increasing their leverage. Now that mortgage rates are pretty low (seemingly will stay there for at least a while) perhaps this will change. But when rates were 6-8% just a decade ago, the gov’t was losing a lot of revenue that went to subsidize people who do not need it. I don’t mean people who own a duplex and rent out the other half, I mean people who buy out and rent houses because it’s a tax favored investment. It’s not like this people need the subsidy.
The landlord deduction ISN’T the MID. It is the deduction of a business expense. All businesses get to deduct their expenses. The deduction that people who live in their houses use is one of the few deductions for interest paid on a personal expense that is left in the tax code. Whan I was very little, I remember my mother telling me that she was paying off all our credit card balances 1) because it was a good thing to do AND 2) because the interest wasn’t going to be deductible anymore. Now, I had no idea what she was talking about at the time, but I remember the conversation.
You could elminate the MID entirely and landlords would still get to deduct their interest.
So again, I ask you: are you advocating changing things so that all businesses pay taxes based on their gross revenue rather than profits? Because that is a very good way to kill most start-ups. Or do you just want to make that change for landlords? Or just for the people who don’t need the subsidy that you talk about?
Yatchs with bathrooms qualify for MID.
“Yatchs with bathrooms qualify for MID.”
Easy to tell that you have never owned a “yacht.”
@Polly, I guess the question is why costs associated with obtaining leverage on an asset are considered expenses? If you simply own the asset differently (ie. without leverage), you can still have all the other costs of ownership being deductible.
The real story is that there is an inherent desire from all sides to avoid debt-deflation, which is why the MID deduction will stay in place, as will interest deductibility for using debt in ANY business, not just limited to real estate owners.
One guess I have about this is that houses suck up more income than do rentals, in the immediate term. Both in PITI and maintenance. Thus leading to a less heterogeneous economy, and one more focused on debt service (which doesn’t benefit the local economy) and home maintenance goods and tasks.
buy a house today, it will be much more valuable soon.
Hmmmm… Off our meds again, are we?
can the powers that be keep asset prices high forever?
Nothing is forever.
Nothing is forever.
Everything is forever when one dies.
Collapsing housing demand?
It’s on the menu.
stocks and homes will take you to the glory land
isnt that my line?
Is anyone sufficiently foolish to have cash sitting on the sidelines at this point, when stocks and real estate are both rallying as though there is no tomorrow? The “sell in May, go away” dynamic is not working this year, so why not throw caution to the wind, go all-in, and laugh your way to the bank on your stellar investment gains?
But then again…
JOURNAL REPORT: WEALTH MANAGEMENT
Updated May 2, 2013, 3:57 p.m. ET
Has Cash Been Holding Your Stock Fund Back? It Could Pay Off Later.
By CHANA R. SCHOENBERGER
Is cash in a stock fund’s portfolio trash or treasure?
How an investor answers can depend on whether stocks are rising or falling. So far this year, with stocks surging and the Dow Jones Industrial Average blowing past its pre-financial-crisis high in April, having cash on the sidelines hasn’t been a winning move for equity fund managers.
But for those who expect the market to turn—or who want to be ready even if they think that day is a long way off—having a pile of cash on hand can be a big bonus when stocks are plunging and share prices are cheap.
Fund managers will always disagree on whether it’s better to stay fully invested in the market, and so catch the upswings in addition to the downdrafts, or to build up cash reserves for those times when buying opportunities arise.
But one thing market professionals agree on is that investors should always know a fund’s position on this issue and make conscious choices about which style is right for them. One of the worst things investors can do for their portfolio is to switch from one strategy to the other at the wrong time.
…
cash is trash. You have to be in assets that appreciate under massive money printing. just remember to get out before it all crashes like last time.
“…just remember to get out before it all crashes like last time.”
Great suggestion! Will you post a warning here when it is time to get out, lest any HBB readers forget to run for cover?
bulls make money
bear make money
hogs get slaughtered
I cant make that choice for you. Take your profits while the gettings good is all im saying.
Yeah! Buy low, sell high. Easy peasy!*
* Note: Not easy peasy.
“Pigs get fat, but hogs get slaughtered”.
whirled peas
Bumper sticker sighting: “Forget the peas. Visualize using your turn signal.”
Why is it that some people can never get satisfied, no matter how fantastic the stock market’s recent performance has been? It’s as though they have rain clouds hanging over their heads which follow them around.
From Vegas, Roubini says look out for a big market crash
May 8, 2013, 4:50 AM
Stocks aren’t in bubble territory, but they could be headed for a big crash.
So says Nouriel Roubini, economics professor at New York University, who is known for his pessimistic outlooks. According to CNBC, he made the comments at a private dinner event in Las Vegas, when he said a “huge rally in risk assets” over the next two years could be setting markets up for a major selloff.
Roubini said there is a “huge gap between sentiment on Wall Street and the main street,” and that the U.S. economy itself remains weak. Roubini appears to be in town for the SkyBridge Alternative Conference, which runs from May 7 to 10. Other big names headlining the meeting include John Paulson, who has been seen in the headlines recently for the big hits his $500 million Gold Fund has been taking. (Read about what’s been happening to Paulson’s fund and what it means for gold.)
…
“who is known for his pessimistic outlooks”
they always say something like this when they talk about roubini.
do they ever say this about anyone (krugman perhaps)?
“who is known for his optimistic outlooks”…
If you gather enough broken clocks together, then at any one time at least one of them is bound to be right. I suspect that this is the only reason that economists as a whole are still employed.
Economists - the modern equivalent of witch doctors.
If you gather enough fools and talk them into buying houses, you can reflate an echo bubble before the mania reaches the point of final collapse.
Only if those fools have 3.5% down and 48% DTI!
Roubini said there is a “huge gap between sentiment on Wall Street and the main street,” and that the U.S. economy itself remains weak.
What Roubini said.
The real economy is more like the NASDAQ, which is just pokey-pokin’ along.
He thinks stock prices might go down in THE NEXT TWO YEARS???
May 8, 2013, 7:25 a.m. EDT
The last bear on Wall Street
By John Nyaradi
As the stock market continues to rally, many investors wonder when the Department of the Interior will start granting endangered species protection to Wall Street bears. Or, are any bears still living at all?
It seems that everyone on Wall Street is a bull today as the S&P 500 (SPX -0.19%) and Dow Jones Industrial Average (DJIA -0.21%) have settled into a predictable routine of “another day, another record,” despite the steady stream of negative macro economic data.
Bears, now virtually extinct, were hoping instead for a feast as the poor economic reports came pouring in over recent days:
1. April nonfarm payrolls — a mediocre 165,000 payroll jobs added which was celebrated as a huge win by markets last week.
2. ISM nonmanufacturing report showed a decline to 53.1, broadly missing expectations.
3. April manufacturing ISM report posted a drop to 50.7 from 51.3 in March. Because 50 is the threshold which distinguishes contraction from expansion, the April manufacturing PMI fell to just barely within the expansionary range.
4. Euro-zone manufacturing PMI for April declined to 46.7 from 46.8 in March while euro-zone retail sales declined by 0.1% in March. For the 27-nation European Union, March retail sales fell by 0.2%,
5. Euro-zone unemployment came in at 12.1% in March.
6. April’s HSBC China Composite PMI (which covers both manufacturing and services) declined to 51.1 from 53.5 in March, indicating the weakest rate of expansion since last October. Hong Kong’s PMI also settled into contractionary territory at 49.9, down from 50.5 in March.
Despite all the bad economic news, Wall Street bears look positively cadaverous as financial markets levitate higher and seemingly disconnect from the real economy. This disconnect is generating an expanding discussion, and even a name, “The Great Disconnect,” which has followed “The Great Recession,” as Wall Street’s fortunes look decidedly different from those on Main Street.
…
What’s happening is that each piece of bad economic news is being interpreted as a precursor to more central bank intervention in the economy, in the form of money printing and continued ZIRP. We are becoming a Third World country in many ways, but stock and housing markets don’t reflect that fact at all. This is not a good time to be a young person.
I’m going to suggest a weekend topic: what happens, politically, economically, and socially, when this bubble bursts?
“This is not a good time to be a young person.”
Ya think?
Money Matters
Planning for a boomerang child? Six keys to consider
May 8, 2013
By LUCAS BUCL
With a sluggish economy and a tight job market, more kids than ever moving back in with mom and dad. The intent is most often to help the young adult get on their feet, find a job, or savemoney so they can launch successfully.
A recent Pew Research Center survey found that 29% of 25-34 year olds have lived with one of their parents in recent years. Like executing a successful financial plan, setting clear expectations and having good communication are critical to success.
Here are six keys to making these arrangements work.
…
I recall an article I read a while back about a guy who was a famous “bear” prior to the troubles in the 70’s. He got all sorts of speaking engagements, and tons of press…he might even have written a book.
In any event, after the worst was over, and he started to get more positive on the outlook, he stopped getting phone calls.
No one buys a newspaper if the headline is “All is Well”.
Everyone buys a newspaper if the headline is “We are on the Precipice of Collapse”.
Everyone is talking about how the stock market is going like gangbusters, including cab drivers, hair dressers and shoe-shine boys.
6 gut checks before the stock market’s opening bell
May 8, 2013, 6:50 AM
By Shawn Langlois
Good morning.
Sir Alex Ferguson once said, “It’s getting tickly now — squeaky-bum time, I call it.” The retiring Manchester United (MANU -2.77%) manager was talking about soccer, of course, but he could have just as easily been referring to this market.
The Dow just blew through 15,000 for the first time, while hardly anybody even notices the S&P’s daily assault on the record books anymore. Tuesdays are even getting into the act, having notched their 17th straight rally. We need someone to put this in perspective, right Josh Brown?
…
I hope you can find a chair when the music stops.
i never got out of my chair.
http://finance.yahoo.com/q/bc?s=%5EN225+Basic+Chart&t=2y
Check out the NIKKEI
That’s amazing, especially in light of the established fact that quantitative easing has no effect whatsoever on stock prices.
so much money so few assets what to do ?
May is too early to sell this year. Wait until June instead to stop dancing.
May 6, 2013, 11:56 a.m. EDT
Sell in June for the market swoon?
By Avi Gilburt
We are now moving into a target region that I provided over a year ago when we were trading within the 1250-1300 region. While I was not positioned long in the S&P 500 for the move this week, I have said before that I am willing to sit out this rally, unless a low-risk entry developed, as the downside now seems to be of greater risk than missing some of the upside. However, I do not see the top as being in place just yet, and it may take several more weeks until this wave is completed.
…
cnbc viewership is at 8 year lows and dropping like a rock. I guess mom and pop got burned real bad last time around. when will we get another engineered recession so wall street can pick up assets cheap and them start the propoganda machine all over?
It’s a shame that mom and pop are sitting out this rally, as it represents the best chance yet to rebuild all the wealth they lost in the Fall 2008 financial crash and ensuing recession.
Come on in, folks, the water is just right!
the biggest question I ask myself when buying an asset is, Do I see value?
Do you see any value out there in stocks?
Dont get caught up in the mania and media spin.
Be aware it is there and dont let these conartists get your money again.
“Come on in, folks, the water is just right!”
And don’t pay attention to those fish, er sharks. Hehe.
And come on in now after the runup has already occurred.
Fish are friends, not food
However, I do not see the top as being in place just yet, and it may take several more weeks until this wave is completed.”
“another tale told by an idiot”
…full of sound and fury…signifying nothing.
yea thats it !!
these technical guys are really out there with the charts and waves months and stars etc
May 8, 2013, 8:31 a.m. EDT
Sell in May, but when should you buy?
Commentary: Stock market has a cure for the summertime blues
By John Prestbo
NEW YORK (MarketWatch) — One problem with that catchy old adage, “Sell in May and go away,” is that it doesn’t tell you when to come back.
The answer, it turns out, is October.
At least, that’s the message from an analysis of the Dow Jones Industrial Average over its 117-year history. (The Dow’s birthday is May 26.) A few other possibly helpful details are revealed as well.
…
Is anyone sufficiently foolish to have cash sitting on the sidelines at this point, when stocks and real estate are both rallying as though there is no tomorrow?
You mean besides the 72 million workers who don’t have the money in the first place?
Right. I’m talking about the 10% (20%?) who have a portfolio to allocate.
Here’s the harder question Whac…what do you do if the positions you hold are SO low basis that selling triggers a big tax bill?
I hold a couple of REITs that I bought at very close to their lows ($2-$4 per share). They are now trading at almost $20. Long term, I’m comfortable with the kind of real estate they hold, and comfortable that 10-years from now I’ll be happy I own them.
However, at the moment, I think they are a bit ahead of themselves in terms of valuation–they should be lower based on the CURRENT rents they collect.
There COULD be a correction in their price in the next 24 months. Perhaps that correction could be 10-30% (more?). However, the REITs are now showing good increases in rents for new leases, and annual dividend increases, and perhaps they just keep going up.
So, let’s say I’m more bearish, thinking that there is a 60-75% chance of some correction in the next 24 months (which I am), but because of my basis, I’ll pay 25-30% of any proceeds that I get to the Feds/State if I sell today…what do you do?
It seems clear that I just grit my teeth and ride it out, even though values falling seems likely, but not as likely as paying an equal or greater amount of taxes if I sell.
The tax code is progressive. Making more money is always more lucrative.
You might look into giving the shares to charity. You get to deduct the appreciated amount. If I thought you needed money I’d mention Charitable remainder trusts but I’m guessing you don’t.
That’s actually a good reason not to sell today, but keep those particular shares for later donation.
I’m not yet in a position where I’m in high charitable-donation mode–I like the dividends the stocks generate, and I have kids to raise/keep healthy/educate. In the meantime, I’m focused on trying to build capital in a way that would protect against inflation (in the event it does come), so owning the REITs fit the bill.
Sounds like the ECB is about to follow the Fed’s lead in another central bank foray into asset-backed securities purchases for economic stimulus purposes.
May 8, 2013, 5:45 a.m. EDT
ECB looks to buy bad loans: report
By Sara Sjolin
LONDON (MarketWatch) — The European Central Bank could soon be buying bad loans from struggling southern European nations in an effort to spur lending to businesses, German newspaper Die Welt reported on Wednesday, citing central bank sources. The report said the ECB wants to bring the market for asset-backed securities back on track to allow banks to pass on some of the credit risk to other investors. In addition to encouraging a revival of the asset-backed securities market, the ECB’s Governing Council is also discussing if the central bank could buy some of the securities itself, according to Die Welt. ECB President Mario Draghi said earlier in the week that the bank is ready to take more easing action if needed.
…
I better not sell my Banco Santander shares just yet then, but like many of the other posters on this blog I’m quite suspicious of this Endless Spring of Blooming Stock Prices. Frost happens!
And here is a conundrum for you: The longer the Eternal Sunshine of the Spotless Stock Market Bloom continues, the more greater fools get sucked in from the sidelines, adding ever more critical mass to the ever-more-ludicrous overvaluation which will eventually trigger the next crash.
http://finance.yahoo.com/news/feds-credibility-tested-inflation-drifts-050452057.html
‘ With the inflation rate about half of the Federal Reserve’s 2.0 percent target, the central bank is facing a major test and some experts wonder whether it will eventually need to ramp up its already aggressive bond buying program.’
Don’t you love how the media frames things? Experts wonder. It isn’t asked, why keep doing something that hasn’t worked? Maybe the whole Fed theory of how these things interact is flawed?
Real inflation on items americans buy is way more than 2%.
Tuition
healthcare
car prices
food
gasoline
insurance
services such as mechanical work on car
Who are they kidding?
I think they are well beyond caring whether or not we buy the bogus inflation numbers. It’s their story and they’re sticking with it.
It also gives Corporate America a great excuse to not offer pay increases.
It also gives Corporate America a great excuse to not offer pay increases.”
Our raises were turned into RSU’s divided in 3 parts
A formula was used to figure out how many Restricted stocks we get baised on current stock price and last 3 months stock price or was it last 3 months of last years stock price? Divided into 3 parts vesting in thirds during the year. A fraction sold at grant date to pay for taxes.
I think ?
Then we can only sell in certain windows after earnings.
When the stock was sold at grant date to pay for taxes it was one price then later when I sold it at open window time it was another price, I now have capital gains ( lucky it could have gone the other way ) above grant date price. I think ? Thats no big deal I think if its a gain and just income but if its a lose and I want to offset gains it could be pretty werid.
See how easy managment makes my life ?
Instead of doing my job I will spend many hours figuring this out, many hours..
Let me find my violin…
MIT has a project where they try to accurately identify the inflation rate.
It’s the “Billion Prices Project”: http://bpp.mit.edu/usa/
Low to moderate Inflation makes the individual poorer. How that is supposed to spur spending is unclear to me. High inflation will lead to a flight from currency however.
Businesses? They spend money when there is an opportunity to increase profits. Otherwise, they just slowly get poorer too. The theory that they’ll just spend, spend spend because of (low to moderate) inflation and absent profit-increasing build-out opportunities doesn’t make sense.
Inflation doesn’t work as simply as you think.
Car costs $20K in 2012.
Car costs $21K in 2013.
So inflation for cars is 5%. Right? Wrong.
If the car in 2013 has more “stuff” in it for $21K than the $20K care had last year, then it’s not 5% inflation. It could be 4%, it could be 0% it could be negative inflation. Suppose the 2013 model has heated seats standard while last year’s model had heated seats as a $500 option. Well, then the real inflation is only 2.5% since you paid $1000 more but got $500 more worth of product.
This is how it works with computers. The real inflation rate for computers is always negative since the computing power gained year over year is worth more than the nominal price increase. Today’s $500 laptop is the equivalent of a $3000 laptop from just a few years ago in terms of processing power.
So yes prices can seem to be increasing while inflation is not.
As for gas, average price nationwide is $3.50 these days. In 2007 average price nationwide was around $3.00. That works out to around 2.5% yearly inflation (compounded) over the past 6 years. Not exactly the Weimar Republic.
The FED can’t fix the problem, they can blow bubbles, but all that wealth is being concentrated. Demand for manufactured goods continues to fall. Real wages are falling especially when higher gas, tuition,insurance costs and more fees from the states continue to crush the middle class. We won’t see improvement until the world powers decide to decrease unemployment and drive up wages. No country in a global economy can do this alone as money will just flow out of the country, so either countries will do this and throw up trade barriers or there will be some global agreement. If not you will see the middle class continue to shrink.
So long as the stock and housing markets keep improving the way they have all year so far, I am miss your point. Why do the real-world economic concerns you raise matter, so long as investors are making stellar stock and housing market equity wealth gains?
We won’t see improvement until the world powers decide to decrease unemployment and drive up wages
To drive up wages, they have to drive up anything else for years.
wages for middle class and lower are the last piece in the food chain.
Maybe the Federal Reserve cannot counteract the deflationary forces that result when slavery is introduced to a capitalist economy.
Bilderberg Group Dominates Bloomberg Billionaires Index
04 January 2013
Records of Bilderberg Group participant lists are usually smuggled out from within the organisation by insiders and / or are published in their ‘official’ website (Many names are missing from their official list of attendees).
Ever since the Bilderberg Group was founded, very few records of the organisations agenda have ever been publicized. In fact, since 1954, there has been a media blackout on Bilderberg Group reporting.
Only recently have Activists been successful in forcing the main-stream media to report on Bilderberg Group meetings.
The following tables reveal official Bilderberg Group members who have been listed on the Bloomberg Billionaires Index.
Rank Name Estimated Net Worth Bilderberg Group Attendance (Year)
2 Bill Gates $63.4 Billion 2010
4 Warren Buffett $49.8 Billion 2009
8 Larry Ellison $40.7 Billion 1999
9 Bernard Arnault $29.8 Billion 1992
20 Jeff Bezos $24.1 Billion 2011
26 George Soros $21.6 Billion 1999
So why should we be worried about the Bilderberg Group? THE primary concern with the activities of the Bilderberg Group is not the fact that the global elite are meeting with heads of states and government officials (That’s never going to end), it’s the fact that they meet in secret, behind closed doors without any record of what was discussed and or agreed.
Why did John Kerry (Appointed by President Obama as the next Secretary of State), Mark Carney (Newly appointed Governor of the Bank of England), Henry Kissinger, John Micklethwait (Editor-in-Chief, The Economist) and Robert Zoellick (President, The World Bank Group) have to meet in secret in 2012 (Chantilly, Virginia, USA)?
What were they talking about? What was their agenda? What promises were made (why and to whom were they made)?
Between 1954 and 2009, coverage of the Bilderberg Group was virtually non-existent. Considering the power and influence that Bilderberg Group members have at their disposal, who knows precisely how the Bilderberg Group has influenced the world we live in.
If you have never heard if the Bilderberg Group, the following resources are available:
•http://www.theglobalistreport.com/bilderberg-group-facts/•http://en.wikipedia.org/wiki/Bilderberg_Group•http://www.theglobalistreport.com/bilderberg-group-main-stream-media/•http://www.bilderbergmeetings.org•http://www.globalresearch.ca/the-true-story-of-the-bilderberg-group-and-what-they-may-be-planning-now/13808
http://truththeory.com/2013/01/04/bilderberg-group-dominates-bloomberg-billionaires-index/ - 90k -
Federal Reserve Charmain Ben Bernanke at Bilderberg 2008 …
http://www.youtube.com/watch?v=LfgGm2QEzyQ - 202k - Cached - Similar pages
Jun 7, 2008
We Are Change Chicago Destroys Ben Bernanke - YouTube
http://www.youtube.com/watch?v=AVjIQllKRgs - 218k - Cached - Similar pages
Jun 10, 2009
Ben Bernanke Confronted on Secret Federal Reserve Bailouts …
http://www.youtube.com/watch?v=EMY70En6ud4 - 246k - Cached - Similar pages
Nov 21, 2012
I was wondering yesterday about why Larry Ellison is buying so much beachfront property in places like Malibu. He certainly isn’t wholesale buying Mansions in places like Arkansas or Kentucky. He also isn’t doing that in more economically viable places like Dallas or Houston.
He obviously must believe that it’s going to appreciate, but why?
A thought crossed my mind: The current economic trend is for the nation’s and the world’s wealth to flow to the top. And while the middle class is taking it on the chin, there are more billionaires and millionaires than ever, and this trend is almost certain to continue into the indefinite future.
So I’m guessing that he’s planning on selling these Malibu properties to the new members of his zillionaire club, at a a hefty profit. Of course, that would imply that they want a house in Malibu as opposed to somewhere else. Then again, if you’re a billionaire, you can easily afford several high priced properties.
Why would they? Malibu prices have fallen 45% and they’re still massively inflated..
Just look at the DC housing market for proof of your theory.
The big boys don’t play poker blind. They have a pretty good idea about who’s holding what cards. That’s one reason they got to be big boys in the first place.
The big boys don’t play poker blind.
That crossed my mind. In the article Ellison describes owning lots of mansions and fixing them up as a hobby, but somehow I don’t buy it.
As to why Malibu vs other beach front areas, a few thoughts come to mind:
1) Glamor. Your neighbors will include Hollywood celebs.
2) No hurricanes
3) Mild weather. No sweltering heat, humidity or bugs.
4) Location. Some might consider being in metro LA a plus.
He is going to bulldoze them.
And while the middle class is taking it on the chin, there are more billionaires and millionaires than ever, and this trend is almost certain to continue into the indefinite future.’
Yes I think so.
If they want the properties, then why don’t they buy them themselves? Not like they’re lacking in cash. Or is this a way for them to funnel $$ from the rich friends to Ellison, tax free?
Not sure. Maybe he’s banking on future Mark Zuckerberg like zillionaires?
Ellison has proven to be a pretty savvy guy. He bought Sun Microsystems when everyone had given it up for dead. It’s now a profitable part of Oracle’s portfolio.
He’s buying them up so he can own his own private beach in Malibu. He already owns islands elsewhere….
Rich persons don’t actually live in their numerous homes, they share them out with people in their circles. Malibu is a plum locale, proximal to Hollywood and LA, and the sort of spot where celebrities and international politicos seeking close-in seclusion can set up for a few months during filming, plotting, recuperation, etc. (There is a Mossad presence there, btw.
The surprise for Ellison is that one good high tide coupled with one good cloudburst, and Carbon Beach and anything on it disappears. Literally. (There is a Mossad presence there, btw.)
‘his own private beach in Malibu. He already owns islands elsewhere’
Maybe he’s going for real life version of The Lost.
The surprise for Ellison is that one good high tide coupled with one good cloudburst, and Carbon Beach and anything on it disappears. Literally.
So he collects his insurance and rebuilds?
Rebuilds on what?
You can’t dump sand onto water without a breakfront. And the coastal commission is one of the last few populist vestiges of the first Jerry Brown administration.
Just how close are these houses to the water? I ask because I’ve lived in San Diego and never saw flooded beach side houses that didn’t get rebuilt.
The one I have been in had an elevator to get down to the beach. Lot of stairs.
“Rich persons don’t actually live in their numerous homes, they share them out with people in their circles.”
+1 I think Roman Polanski was “borrowing” Jack Nicholson’s place when he decided to perform his hat-trick.
He probably just bought one for each cat.
Bilderberg 2012: Global Leaders Gather For Shadowy Conference At Virginia Hotel (UPDATED)
Posted: 05/31/2012 1:01 pm Updated: 06/01/2012 12:03 pm
UPDATED, 11:24 a.m.: The meeting’s gotten less secretive. The Bilderberg website now lists the 2012 Bilderberg Meeting participants. Among them are Keith B. Alexander from the National Security Agency, H.R.H. Prince Philippe of Belgium, Harvard professor Niall Ferguson, China’s Vice Minister of Foreign Affairs Ying Fu, Russian chess grandmaster and activist Garry Kasparov, Massachusetts Senator John Kerry, President of the Environmental Defense Fund Fred Krupp and entrepreneur Peter Thiel. See the whole list here.
http://www.huffingtonpost.com/2012/05/31/bilderberg-2012-global-le_n_1558788.html - 175k - Cached
Long time Bilderberg man.
Kissinger: Before the Freedom of Information Act, I used to say at
meetings, “The illegal we do immediately; the unconstitutional takes a little longer.” [laughter] But since the Freedom of Information Act, I’m afraid to say things like that.
http://wikileaks.org/plusd/cables/P860114-1573_MC_b.html - 91k -
“Why buy a house today at these massively inflated prices? Buy later after prices crater for 65% less.”
“Realtor faces charges in Aurora home burglary”
http://beaconnews.suntimes.com/news/crime/17887341-418/realtor-charged-in-home-burglary.html
My, but those Realtors ARE a trustworthy bunch, aren’t they?!?
Considering the first thing out of their lying mouths is “we have an offer on it” when you make an inquiry about a house, you know what kind of corrupt monsters you’re dealing with.
Do they have any idea how many sales they lose because of this favorite lie of theirs?
Do they have any idea how many sales they lose because of this favorite lie of theirs?
Probably not…but it might be less than the number of sales they make specifically by successfully creating a sense of urgency. It would seem that for every liar there are a bevy of folks that love to be lied to. There’s a certain synergy to it. On a hot day maybe it feels good to get sheared. The cold night is a problem for another time.
Good point.
My best advice is when dealing with a realtor is give him your best left hook and call the cops to report a financial crime.
I have simmering low level of disdain for how politics and business “work” together in this country. But sometimes, even I am taken aback. For example, it was reported the other day that Carrie Underwood would now be singing the Sunday Night Football theme. So I looked up Carrie Underwood. And discovered something called the “Ag Gag” Bill:
“Underwood, a longtime animal activist, spoke out with disapproval regarding the “Ag Gag bill” last week–a measure that would require anyone recording images of animal abuse to submit unedited footage or photos to law enforcement within 48 hours.
Leading animal-rights groups adamantly oppose this bill, saying the short deadline will compromise investigations into farming cruelty cases; as well as have potentially dangerous impact on labor issues, food safety, and First Amendment rights.”
– http://music.yahoo.com/blogs/our-country/politically-active-carrie-underwood-won-t-stick-singing-154950087.html
How is that bill anything but harassment of people filming animal abuse?
Then shortly thereafter I read about a foreclosure law passed in Colorado, which again seemed to be written by politicians servings their paymasters, instead of the voters:
“At issue is a provision in state law that allows lawyers to assert that their client, typically a bank, has the right to foreclose on a property even though they might not have the original mortgage paperwork to prove it.”
(Warning: Lots of annoying popups) http://www.denverpost.com/breakingnews/ci_23184955/federal-judge-questions-constitutionality-colorado-foreclosure-law#ixzz2SdANf9rh
Really? You don’t need the paperwork to prove you have the right to the house in order to foreclose? Really?
I look at other societies and see that the people create the society in which they live. I suppose as long as political corruption manages to walk a fine line and keep only screwing a minority of likely voters, the politicians will stay in power.
Overall Housing Demand Continues To Crater
http://picpaste.com/pics/3ca612d5960e95a22c95af80f88cb3dc.1368031304.png
Cratering housing demand is what happens when housing prices are grossly inflated.
Damn.
But don’t shoot the messenger.
Home Prices Show Biggest Rise in 7 Years - The Fiscal Times
The Fiscal Times-May 7, 2013
U.S. home prices rose in March, marking the biggest annual increase in seven years, in the latest sign of strength for the recovering housing …
Flipping Homes to Increase as Prices Rise
GlobeSt.com-May 7, 2013
To create the list, RealtyTrac looked at more than 600 metro areas nationwide where flips of single-family homes occurred in 2012. A flip was …
ADP Jobs drop; home prices rise
WRAL.com-May 2, 2013
The continued improvement in prices across the nation is a welcomed sight for most in housing as the annual rise is the strongest number we …
GOING UP: Home prices rise locally, nationally
Prescott Daily Courier-May 4, 2013
U.S. home prices rose 9.3 percent in February compared with a year ago - the most in about seven years - and the quad-city area followed …
Birmingham home prices rise in March
Birmingham Business Journal-by Ryan Poe-21 hours ago
Home prices in metro Birmingham rose in March, compared to March 2012, bucking a statewide downward trend, according to a new report.
CoreLogic: Jacksonville sees 4% rise in home prices in March
Business Journal-21 hours ago
Colorado has 10th highest year - over - year increase in home prices
Denver Post-May 7, 2013
CoreLogic: Dallas-area home prices up 7.6 percent in March
Blog
-Dallas Morning News (blog)-May 7, 2013
Las Vegas Home Prices Rise in April
KLAS-TV-5 hours ago
The median price of a home sold last month reached $167,000 - an increase of 3.7 percent from March and 30.6 percent from 2012. “Like most …
SJ homes up 20.7%; state growth is second in nation
Stockton Record-9 hours ago
Core Logic, a real estate data provider, said Tuesday that annual home prices have now increased for 13 straight months. Prices are rising in …
Home prices rise, sales fall in Buffalo market
Business First of Buffalo-22 hours ago
Inventory continues to shrink as home prices rise in the Buffalo Niagara region. That said, sales for March declined by 3.9 percent from the …
socalTech.com
Are moguls leading the charge in Malibu home buying? Home …
Los Angeles Times-by Lauren Beale-May 6, 2013
Last year, 259 single-family homes sold at a median price of $2.035 million. That was a 23.3% price increase from 2011. Condos also caught …
Survey: Over 50% of Americans Expect Home Prices to Rise
Wall Street Journal (blog)-May 7, 2013
“For the first time in the survey’s three-year history, the majority of Americans surveyed now expect home prices to increase,” said Doug Duncan …
Charlotte region sees 7% rise in year-over-year home …
Charlotte Business Journal (blog)-14 hours ago
Home prices for the Charlotte area, including distressed sales, increased 7 percent in March compared with the same time last year, according …
Not Just Investors : Local Job Growth Also Supporting Home Price …
Forbes-20 hours ago
But investors aren’t the only reason why home prices are on the rise — not even close. In fact, nine of the 10 markets with the biggest price …
UK Home Prices Rise in April on Low Levels of Mortgage Payments …
IBTimes.co.uk-6 hours ago
In the three months ending in April, home prices rose by 2% year-on-year, the highest rise since September 2010. Three-month value rose …
Home price rise continues to pick up speed
CNNMoney-Apr 30, 2013
The pace of home price increases continued to accelerate in February, according to a reading Tuesday that showed the biggest gain since …
Why the Fast Rise in Home Prices Doesn’t Equal a Bubble
AOL Real Estate (blog)-May 1, 2013
A fast rise in U.S. home prices has some in the housing market murmuring the dreaded “B” word. New numbers out Monday only add to that …
Housing demand is cratering at 17 year lows and inventory is skyrocketing.
Let housing demand crater, then buy later for 65% less.
buy later for 65% less
Got a date for when this will happen? An upper bound even?
Realtard,
Got a date for when it won’t happen?
Unpossible! Housing Analyst assures me that all these articles are liar-filled. These people have actually already lost “alot” of money. “Alot”.
NAR certainly is. Right?;)
Sorry, I don’t understand what you’re saying here.
I notice above you weren’t able to come up with a date; I figured you wouldn’t be able to. Who’s Realtard and why bring him into the conversation? Is he the foil you invent when you’re backed into a corner, wallowing in your baby poo?
Fight, fight!
This blog is getting good again. I can’t wait until prices get realllllllly inflated. This blog will once again be the poo-slinging fun-fest that it was in 2006
This blog is getting good again.
Inquisitive…what was your alias in 2006?
Nothing like a corrupt realtor running from his corrupt self.
KEEEEEEEEEEEEEYRAAAAAAAAAAAAAAAAAAAAAAAASH!!!
What was that?!
You know that house you made the mistake of buying? Well the value of it just fell through the floor leaving a smoldering moon-crater.
Beware reading public. Beware.
Try to keep your various screen names straight.
You usually post the “craaaater” and “key-rassshh” posts from your RAL screen name. Housing Analyst moniker usually posts different things.
The squad can’t all be here. Vacations are in order.
every day is a vacation when you rent
RAL lives rent free inside your skull.
RAL lives rent free inside your skull.
Yeah, but it’s dark and cramped in there.
Speaking of empty skulls….
Why the sequester hasn’t weighed on jobs growth – so far
May 8, 2013, 12:49 PM
There was some puzzlement – and gloating, in some camps – that payrolls expanded by a solid 165,000 in April. What happened to all the bad effects supposedly coming our way from the sequester that was triggered on March 1?
…
Turns out cutting $80B of govt spending out of a $15T GDP economy isn’t so earth shattering after all, despite the end of the world scenarios predicted by Obama and Co.
You know what else won’t be earth shattering? Cutting another $80B next year and then anotehr $100B the year after that and $1500B the year after that and so forth for the next 10 years until the budget is balanced.
The sequester has proven to Americans that govt spending can be achieved without millions of people dying on the streets as a result.
$1500B s/b $150B
Close enough for govt work…
Because it’s barely been a month.
Because not everybody is being sequestered.
Because some of the sequester is being passed off on contractors.
Because gov worker housing can actually afford a 10% pay cut because
1. They cut down on some other expense.
2. They are only one income in a two-income household.
3. They are older gov workers who bought the house 10-15 years ago for a much lower and constant PITI. Heck, even a refinance from 7% to 4% is enough to make up for a pay cut.
4. Gov workers are a little more frugal. They tend to save their pay raises instead of ramping up spending. Also helps to have a constant PITI.
5. They’re debt junkies that sustain massive losses on rapidly depreciating houses because they paid too much.
Behold the handwriting on the wall, America:
Matthew Lynn’s London Eye Archives
May 8, 2013, 8:31 a.m. EDT
Stodgy Netherlands is nation that’ll blow up euro
Commentary: Overindebted Dutch heading deeper into recession
By Matthew Lynn
LONDON (MarketWatch) — Which euro-zone country is most deeply in debt? The profligate Greeks, with their generous state-funded pensions? The Cypriots and their banks stuffed with dodgy Russian money? The recession-hit Spaniards or the boom-and-bust Irish?
None of the above. Actually, it is the sober, responsible Dutch.
Consumer debt in the Netherlands has hit 250% of available income, one of the highest levels in the world. In Spain, by comparison, it has never gone above 125%.
The Netherlands has turned into one of the most heavily indebted countries in the world. It has slumped into recession and shows very little sign of coming out of it. The euro crisis has been dragging on for three years now but so far has only infected the peripheral nations within the single currency. But the Netherlands is a core member of both the euro and the European Union. If it can’t survive in the euro zone, then the game really will be up.
Holland has always been one of the most prosperous and stable nations with Europe — and one of the most pro-EU. It was a founding member of the union, and it was among the most enthusiastic supporters of the launch of the single currency. With a rich, export-oriented economy, and plenty of successful multinational companies, it had much to gain, one would suppose, from the creation of the single economy that was meant to come into being once the euro was successfully launched.
But instead it has started to play out a depressingly familiar script. It is blowing up in exactly the same way that Ireland, Greece and Portugal did — except on a slightly longer fuse.
Low interest rates, set mainly to benefit the German economy, and lots of cheap capital led to a property boom and an explosion of debt. From the launch of the single currency to the peak of the market, Dutch house prices doubled, making it one of the most overheated markets in the world.
Now that has crashed spectacularly. House prices are falling as fast as they did in Florida when the American housing boom turned sour. Prices are now 16.6% lower than they were at the peak of the bubble in 2008. The National Association of Estate Agents predicts another 7% drop this year. Unless you bought your home back in the last century, it will now be worth less than you paid for it — and even worse, probably less than you borrowed on it as well.
As a result, the Dutch are now sinking under a tide of debt. At more than 250%, household debt is even higher than in Ireland and 2 ½ times the level in Greece. Already one bank was rescued by the government, and with house prices still collapsing there may well be more to come. The Dutch banks have 650 billion euros outstanding on real estate that is rapidly falling in value — and if there is one thing we know for sure about the financial markets it is that when the property markets collapse, the financial system is not far behind.
…
I wonder if that Dutch guy will come back and start posting on this blog again. What was his handle again? DutchNZinNetherlands? Something along those lines.
His handle was nhz.
He is too preoccupied with tallying his real estate investment losses to post here any more.
It’s not April 1st. (fools day) again? Does anybody remember the previous hoax ‘cold fusion’? Well here is an inventor that claims he has a solar panel that can produce electricity at just .02 cents a watt. If his invention proves real this will turn the world upside down.
Patent filing claims solar energy ‘breakthrough’
http://www.miamiherald.com/2013/05/08/3387126/patent-filing-claims-solar-energy.html
“The key, he said, is his trap’s ability to absorb nearly 100 percent of the sunshine that hits it, while allowing only a tiny percentage of energy to escape, even at ultra-high temperatures.”
“..electricity at just .02 cents a watt..”
article says 2 cents per kilowatt-hour production. Watt is a measure of power not energy.
Correct, I misread that. Still that’s a pretty big claim since the current price of wholesale electricity is .06 per KWH as required by ERCOT. This is in Texas too (in the heart of Gas country). Texas just raised the cap for peak load prices earlier this year.
“The Public Utility Commission of Texas (PUC) in 2012 increased the system-wide offer cap, the highest price at which power can be offered into the market, to $4,500 per megawatt-hour (MWh) in August 2012, with annual incremental increases scheduled up to $9,000 in summer 2015. The cap will go up to $5,000 per MWh this summer.”
As a side note I have generated nearly 14 megawatts with my solar array over the last year. I uploaded over 1 MWH to the grid more than I used. If I could store my excess electricity in a large capacitor or high discharge battery I could pay off my complete system in 2-3 years!
“Correct, I misread that. Still that’s a pretty big claim since the current price of wholesale electricity is .06 per KWH as required by ERCOT. This is in Texas too (in the heart of Gas country). Texas just raised the cap for peak load prices earlier this year.”
FWIW, our baseline residential power rate is $0.04242/kW-hr up in eastern Washington’s Columbia River hydro-electric complex.
With all the smart money dumping Treasurys to rotate into stocks and real estate, who besides the Fed is buying these days?
ft dot com
May 8, 2013 7:34 pm
University endowments trim holdings in US Treasuries
By Henny Sender in New York
Some of the smartest money in America is getting out of US government debt.
Many university endowments have scaled back their holdings of Treasury securities from as much as 30 per cent in 2008-09 to zero in some cases, say people familiar with their investment strategies.
The sell-off reflects a big change in the way fund managers view US government debt. The traditional attraction of Treasuries for US investors was that they were certain to be repaid. But with interest rates at such low levels, investors worry that bond prices could fall dramatically.
“Treasuries were a core holding,” said one university fund manager. “Now everyone is holding less than 5 per cent.”
The fear on campuses is that universities, which profited in recent years from the rally in Treasury prices, could be caught flat-footed by a reversal of the Federal Reserve’s low interest-rate policy.
“If you think you can change allocations quarter by quarter, and you believe rates will be low for longer, and you think you can make a quick switch, then maybe it is OK,” the university fund manager said. “But that isn’t the way we invest. Today government bonds should come with a warning about interest rate risk.”
Princeton’s $17bn endowment has converted its Treasury holdings to cash, according to published reports. Duke’s $5.5bn endowment has also shifted from Treasuries to US stocks with high dividends and emerging market equities, a person familiar with the university fund said.
Last week, Cornell’s $5bn endowment decided to reduce its investments in Treasury securities to just over 3 per cent of assets.
As of June last year, Yale’s $19bn endowment had only 4 per cent of its holdings in Treasuries. “Yale is not particularly attracted to fixed income assets as they have the lowest expected returns of the seven asset classes that make up the endowment,” the university’s fund said in its annual report.
…
Well the low interest rates suggest someone is buying.
Interesting Princeton is going to cash.
I marvel at those that believe rising rates are coming, and that high dividend paying stocks and other stocks will save them. If higher rates come stocks are going to get crushed.
“If higher rates come stocks are going to get crushed.”
That’s why I don’t believe higher rates are coming any time soon, which suggests the Great Rotation out of bonds to avoid higher rates might look foolish after several more years of really low rates.
Does anyone else find it fascinating that we have one asset class, Treasury bonds, which the smartest guys in the room are shunning, while others, stocks and real estate, which everyone in their right minds is piling into?
What could this portend? (I’m envisioning a small boat wherein all the passengers are racing for one end, even though it appears their collective weight may be enough to capsize the vessel…)
Comment by “Uncle Fed, why won’t you love ME?”
2013-05-07 11:10:07
The Fed said last year that they would start losing money this year, right? If this happens, then they will not be able to continue buying MBS.
Why would losing money mean anything to the Fed, much less force them to stop buying MBS? They can manufacture up however many dollars of profits they need to balance out any losses.
There it is. Don’t confuse their PR with reality.
Ignore the gloomsters. There has never been a better time to buy stocks, even in China…
Caixin Online Archives
May 8, 2013, 11:50 p.m. EDT
Heeding the roar of China bears
BEIJING (Caixin Online) — Global opinion on China’s economic prospects appears to have soured of late. Credit ratings agency Fitch downgraded the country’s long-term local-currency rating from AA– to A+ last month, followed by Moody’s lowering the country’s credit outlook from “positive” to “stable.”
Meanwhile, JPMorgan Chase has advised cutting Chinese stock holdings and, just last week, a prominent article in The Wall Street Journal argued that China was due for a “1997-style crisis.”
…