The Housing Bubble

Day 2-

To Our Blog Liar “Rio”:

Post up a phone pic of your “ocean” or a simple scene in “brazil”. Make sure you got your middle finger in the picture so we understand clearly that it’s you.

Show us “Rio”

Realtors are liars.

Suck ‘em in, shake ‘em out.

For example, take a look at American Homes 4 Rent (AMH):

Their business plan: Buy houses cheap and rent ‘em out. The problem is, the more houses they buy the higher go the prices, which means at some point the rents will not pencil out a good enough return that will justify the higher prices.

Not that that they are doing all that well at this point. Go here and you’ll see that their profit margin sucks (it’s a minus 68.42%) and their operating margin also sucks (it’s a minus 89.23%):

http://finance.yahoo.com/q/ks?s=AMH+Key+Statistics

So, who would want to buy into such a money-losing deal? Go here for an answer:

http://finance.yahoo.com/q/mh?s=AMH+Major+Holders

Check out the largest holder, the one that owns 45,171,894 shares of AMH, an enormous pool of OPM that is called “Alaska Permanent Fund Corp”.

Go here for a description of Alaska Permanent Fund Corp:

http://en.wikipedia.org/wiki/Alaska_Permanent_Fund_Corporation

This is a huge pool of easy money, of oil money, looking for a return. IMHO easy money is treated a bit differently than money that is tough to get, its care and handling is a lot looser, and IMHO this maybe explains why so much of this easy money has been plunked down on AMH - or maybe it has something to do with some palms being greased somewhere (think Birmingham, Alabama).

Anyhow, something that is interesting to watch during what are becoming Interesting Times. FWIW.

Politico - Department of Defense’s revolving door in full swing:

“Hundreds of Defense Department officials requested ethics opinions from the government over the past two years as they retired from the military and sought jobs with private companies or organizations.

The ethics opinions are required for certain current and recently retired officials, including those involved in procurement decisions, before they’re allowed to take new jobs with defense companies.

The Defense Department released a database of the ethics opinions to the watchdog group Citizens for Responsibility and Ethics in Washington, which had sued the department to get it. CREW provided an early copy of the database exclusively to POLITICO.

It sheds new light on an ongoing arrangement in which defense companies dangle lucrative job opportunities in front of Pentagon officials who manage millions — sometimes billions — of dollars in government contracts.

As a result, many officials leave the department with specific landing spots in mind.

“The moral of the story is the revolving door is alive and well,” said CREW Executive Director Melanie Sloan. “Top DoD officials understand the inner workings of the Pentagon — and particularly how the Pentagon makes contracting decisions.”

Of the 379 officials covered in the database, 84 percent listed specific companies or organizations they had in mind as their post-military landing spots, according to CREW’s analysis. The release of the database marks the first time such information has been made public.

In the database, 13 outgoing or newly retired officials listed Lockheed Martin, the world’s largest defense contractor, as a prospective employer. Seven listed Boeing, eight listed General Dynamics, 10 listed Raytheon and 13 listed Northrop Grumman.”

http://www.politico.com/story/2013/10/department-of-defenses-revolving-door-in-full-swing-98813.html?hp=r17

If you take on mortgage debt at current massively inflated housing prices, you’ll enslave yourself for the rest of your life.

“Debt is bondage.”~ Suze Orman, May 11, 2013

Don’t Be A Debt Donkey®

Shiller: “Home Equity Isn’t A Place To Put Your Money”

http://www.bloomberg.com/news/2013-10-16/shiller-s-lesson-housing-was-never-a-great-investment.html

Why?

Because houses are depreciating assets that result in loss every.single.time.

Remember…. “equity” is a fallacy. It doesn’t exist.

I ran across something that is interesting:

“Estimates of the number of slaves today range from 12 million to 27 million.”

http://en.wikipedia.org/wiki/Modern_day_slavery

10/24/2013: “Bank of America to eliminate up to 4,200 mortgage jobs”

http://www.reuters.com/article/2013/10/24/us-bankofamerica-layoffs-idUSBRE99N1JR20131024

At Bank of America, the third largest U.S. mortgage lender, about 1,200 employees were notified this week that they would be terminated. Most were full-time workers in the division that processes new mortgages, a spokesman said.</b.

Can you say, “Housing demand is at 14 year lows and falling”?

So, when a five year Deadbeat turns into a two year Vampire they become “Boomerang buyers”, and why?

“Because they can, said Daren Blomquist, a vice president at the Irvine, Calif.-based RealtyTrac.”

“They are accustomed to living there for free without any consequence,” Blomquist said.

After foreclosure, former home buyers back in the market

Article by: JIM BUCHTA , Star Tribune
August 4, 2013 - 4:35 PM

“Boomerang buyers” — former homeowners who have gone through a foreclosure, short sale or bankruptcy — are restoring their credit ratings, getting mortgage approval and hitting the streets in pursuit of homeownership in Minnesota and across the country.

Already, one in 10 home buyers this year has gone through a foreclosure or short sale, more than double the rate in 2012, according to John Burns, a national research firm on the housing industry. Boomerang buyers are emerging at even greater numbers in communities hardest-hit by the housing collapse, including Phoenix, where one in five sales will involve a buyer who had to give up his home.

“People are starting to find out that they can get back into homeownership, and they’re rebuilding their life, credit and equity,” said Rebecca Brown, an agent for Re/Max Results in Maple Grove.

Jennifer Piper and Jerry Kempenich, for example, lost their St. Paul home in foreclosure after Kempenich was twice laid off, and they were unable to sell the house, which was worth $100,000 less than they paid.

Though the couple kept current on their bills, they believed their days of homeownership were over.

“We thought [that] from now on we’re going to be renters and paying someone else’s mortgage,” Piper said.

For three years, they have been pinching pennies and cutting back on vacations. Their jobs are stable, and they have saved enough money for a substantial down payment. That led to the couple getting preapproved for an FHA mortgage.

“It astounded me that we were eligible,” Piper said, noting that she and her husband are eager to buy now.

Real estate agents see boomerang buyers as an expanding, untapped market that is motivated to regain what was lost and often better qualified because of what they have learned when they lost their homes.

Chris Fellerman, an agent for Edina Realty, said 10 to 15 percent of his current buyer pool has been through some serious financial hardship, including foreclosure. “It’s a vibrant sector of the market today,” he said.

http://www.startribune.com/housing/218242631.html - 264k -

Real-estate market haunted by ‘vampire’ foreclosures

October 17, 2013

Vampire foreclosures are homes that have gone through the court proceedings and are bank-owned but are still occupied by their previous owners. Nationwide, 47 percent of bank-owned homes are still occupied by their previous owners.

Just in time for Halloween, Realty­Trac has issued a new report on “vampire” foreclosures.

Vampire foreclosures are defined as homes that have gone through the court proceedings and are bank- owned but are still occupied by their previous owners.

Why would the previous owners still live in them? Because they can, said Daren Blomquist, a vice president at the Irvine, Calif.-based RealtyTrac.

“They are accustomed to living there for free without any consequence,” Blomquist said. “And up until recently, the banks have not had a huge motivation to kick them out because home prices were not increasing and the banks had so many properties they were dealing with.”

http://seattletimes.com/html/businesstechnology/2022069361_vampiretenantsxml.html - 93k -

When the punch bowl gets taken away, it’s gonna get fuqin ugly.

TheHill dot com: “National Security Agency leaker Edward Snowden on Thursday disputed Sen. Dianne Feinstein’s (D-Calif.) claim that the government’s phone record collection program is not “surveillance.”

“Today, no telephone in America makes a call without leaving a record with the NSA. Today, no internet transaction enters or leaves America without passing through the NSA’s hands,” Snowden said in a statement Thursday.

“Our representatives in Congress tell us this is not surveillance. They’re wrong.”

Prelude to Disaster: The Coming Instantaneous Collapse of Obamacare Services

Mac Slavo
SHTFplan.com
October 25, 2013

There is no doubt that President Obama’s health care system promises to fundamentally transform America. It’s been touted as the saving grace of the working class.

But how feasible is it really?

We know it’s essentially a wealth redistribution scheme that takes money from one group of people in the form of forced tax payments, only to shift that money into the pockets of those who didn’t earn it in the form of government subsidies to their health care premiums.

But like all universal programs, the promise of free anything only works so long as you don’t run out of other people’s money.

That being said, a basic analysis of how Obamacare premiums work across the spectrum of America’s wide ranging socio-economic population suggests that it’s dead on arrival.

Once the forced mandates take hold one of two outcomes become inevitable, as noted by The Market Ticker, whose Karl Denninger took a detailed look at the government’s county-by-county premium data.

The consequences of implementation will be disastrous.

Either the Obamacare system itself collapses under its own weight, or the U.S. economy falls apart because of the extreme burden being hoisted on those who are responsible for paying the bill.

Either way, we’re looking at an almost instantaneous collapse of one or the other.

It’s an exercise in basic arithmetic that those who failed to read the bill before passing it should have considered prior to pushing this on the American people by way of a new stealth tax… unless of course the further impoverishment of America is their ultimate goal.

There are several very interesting statistical facts that come from this.

First, if you’re “27″, the average premium is $266.20/month or $3,194.40 per year. How many 27 year olds have an extra $3,200 to spend on this? Remember, this is the price that virtually every uninsured 27 year old must be willing — and able — to cough up in order to prevent the model this system is predicated on from collapsing.

If those 27 year olds don’t show up, and they won’t, then the system collapses instantly. If they do show up because the government threatens them with fines the economy collapses as $3,200 a year exceeds the average 27 year old’s disposable personal income after mandatory expenses (e.g. food, shelter, etc.) Remember, there are always exceptions but these premiums are averages and over large pools of people the statistical averages are what matters — not the ends of the barbell.

It gets better. The “average” 50 year old premium, again, for single coverage, is $452.87, or $5,434.44/year. How many 50 year olds will find that attractive compared against what they’re paying now? Probably more of them, especially if they’re already sick. But how about the healthy ones?

Note two things as well on this account — these premiums are for non-smokers (smoker premiums are grossly surcharged with reports being 2x the above) and they do not account for anyone other than one person. If you are a single parent with kids (rather common) the premium on average is $610.23/month or about $7,300, and if you’re a couple it’s $647.86 (again, $7,774 annually.)

Now let’s look at the government’s own claims. First, the CPI index claims that health insurance is 0.656% of the family budget. What percentage of couples make $1.185 million a year? Why do I ask? Because that’s the alleged median income for a couple if you believe the government’s CPI numbers.

Yeah, right.

Next, while some people will get “tax credits” to offset these costs all that does is lard it up on the federal budget, because someone else has to pay that bill. In other words this is the true cost that will come out of your hide one way or another — either directly by paying, indirectly by taxation, or indirectly by destruction of your purchasing power.

Next, note that this is the “50 year old” premium but you have to be 65 to qualify for Medicare. The price will rise each year after 50 that you happen to be and there are already reports that if you’re 59 these premiums are understated by half. How many couples who are 59 and cannot qualify for Medicare yet have not $7,700 a year of extra money laying around but north of $15,000?

That’s what I thought.

Full Analysis at Market Ticker

The whole idea is predicated on the notion that you can indefinitely take from Peter to pay Paul.

But eventually Peter is going to run out of money and not be able to foot the bill, or he’ll simply refuse to buy into the scheme altogether.

Like everything else government, the new health care initiative will be a complete and utter failure.

The basic principles of mathematics will prove this to be true in coming months and years.

As Denninger notes, America will be “strangled and expire economically as a direct consequence” of the marriage of the State and Health Care industry.

The die has been cast.

Army Halts Program That Labeled Christians Radical Extremists

Briefings characterized conservatives as terror threat

Paul Joseph Watson
Infowars.com
October 25, 2013

The Secretary of the Army has halted training programs that characterize conservatives as radical extremists in light of numerous media reports which highlighted how recruits were being taught that Christians were to be considered “domestic hate groups.”

“On several occasions over the past few months, media accounts have highlighted instances of Army instructors supplementing programs of instruction and including information or material that is inaccurate, objectionable and otherwise inconsistent with current Army policy,” Army Sec. John McHugh wrote to military leaders in a memorandum obtained by Fox News’ Todd Starnes.

McHugh has “directed that Army leaders cease all briefings, command presentations or training on the subject of extremist organizations or activities until that program of instruction and training has been created and disseminated.”

As we reported yesterday, Fort Hood soldiers were told that Christians, Tea Party supporters and anti-abortion activists were a radical terror threat, enemies of America, and that anyone found to be supporting these groups would be subject to discipline under the Uniform Code of Military Justice.

Earlier this month, it also emerged that several dozen active duty and reserve troops at Camp Shelby in Mississippi were taught that the American Family Association, a well-respected Christian ministry, was a “domestic hate group,” prompting five Congressmen to complaint that the, “mislabeling of a Christian organization reflects what appears to be a troubling trend of religious intolerance in the military.”

The halt of such training programs has been announced despite claims by Fort Hood that the training program, during which it was also suggested that Christians who protest against abortion were planning to bomb family planning clinics, did not include such information.

As we have profusely documented, the problem of Christians and other conservative groups being demonized as extremists and terrorists is not just confined to the U.S. Military.

A 2011 study funded by the Department of Homeland Security also characterized Americans who are “suspicious of centralized federal authority,” and “reverent of individual liberty” as “extreme right-wing” terrorists.

Denver Post: “Smog along Colorado’s Front Range is thickening again, exceeding federal standards, and government-backed scientists say the oil and gas boom is partly to blame.

If the industry expands, scientists at a conference this week said, air quality will probably deteriorate.

Smog still is decreasing in major U.S. cities that clamp down on vehicles and industry. But in Colorado, smog levels have increased since 2010, consistently exceeding the federal 75 parts per billion standard for ozone at multiple locations.”

From Zerohedge

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From the Front Lines of Chicago
Tim Knight from Slope of Hope’s picture
10/24/2013

2.) Everything you say about the U.S. economy jibes with my experience as a real estate investor in Chicago. The vast majority of my tenants are low-income (their rents are mostly subsidized by our fine government), but a couple make a decent living and reside in luxury condos downtown. Based on what I’ve seen during the past 5 years that I have been doing this, I completely agree that our financial system is totally, utterly screwed.

No matter what their personal situations or how great their intentions are, all my tenants fall short in some way; they either pay late, not enough, or not at all. And/or they don’t honor their obligations as tenants. ALL of them. You would be amazed by how many sob stories I hear on a daily basis.

Please keep in mind that my low-income tenants are not living in ramshackle buildings where they need to huddle in the corner for warmth; no, many live in homes with stainless steel appliances, granite countertops, and whirlpools (this is how investors attract renters in this area these days, after paying close to nothing for the properties themselves). Mind you, some of these are people pay NOTHING in rent every month.

They also pay almost nothing for food, utilities, and medical care. Yet despite having pets, flat screen TVs, cable, and gas-guzzling cars, they somehow can’t afford the $395 move-in fee (I don’t require a security deposit in order to avoid a potential lawsuit, which would result from not following the Chicago Landlord/Tenant Ordinance precisely and which many shark lawyers would happily take on) or light bulbs or mousetraps or batteries for the smoke detectors.

If they agree to maintain the yard, they expect you to provide a mower. Signed leases mean nothing to them. Nothing. They don’t seem to care who provides the resources which allow them to stay home all day waiting for their government checks to arrive in the mail. They don’t seem to think about the many, many, many people out there just like them, creating this unbelievably huge, unsustainable economic imbalance. They have mastered the art of throwing tantrums and threats until they get what they want, and they seem perfectly content contributing nothing more than carbon dioxide and votes for their favorite democratic Presidential candidate on Election Day. And of course, their favorite democratic Presidential candidate is happy to indulge them.

This is a real product “poo-pourri” and this commercial is hilarious. This BYU student is from Scotland originally.
http://www.poopourri.com/t/2013-10-21/girls-dont-poop-poopourri-com/#.Ump6hezn_oZ

Parents dot com: “A new study conducted by Satoshi Kanazawa at the London School of Economics claims to prove that women with higher IQs are less likely to get pregnant and have children. The findings showed that for every 15 points a woman’s IQ increases, she is 25 percent less likely to want a baby. Even with controls for education and economics, the results were the same: Smarter women chose not to get pregnant and not have kids.”

Half of foreclosed homes in New Jersey have ‘vampires’ living in them

By Tom De Poto/The Star-Ledger The Star-Ledger
on October 03, 2013 at 11:14 AM

One of every two New Jersey homes that has gone through foreclosure and is now owned by a bank still has its previous owners living there.

At least one real estate tracking firm finds it a little scary, calling them “vampire” homes.

RealtyTrac reported nearly 4,300 homes in New Jersey are now owned by a bank, and half of them are occupied by the former owner. Nationwide, 47 percent of foreclosed homes still have homeowners inside.

Cape May and Hudson counties have the most “vampires” living there, at 82 percent and 79 percent respectively, according to RealtyTrac. By comparison, Camden (69 percent), Gloucester (64 percent) and Somerset (62 percent) counties have the highest percentage of foreclosed homes that have been vacated.

The real estate tracking company also looked at “zombie foreclosures,” in which the home is in pre-foreclosure status but the owners have already moved out.

The “zombie” survey found nearly 42,000 homes in New Jersey are in the foreclosure pipeline, and nearly 14,000, or 17 percent, have no one living there. The national average is 20 percent.

http://www.nj.com/business/index.ssf/2013/10/half_of_foreclosed_homes_in_ne.html - 88k -

Feds confiscate investigative reporter’s confidential files during raid

Alex Pappas Political Reporter
(obviously not a Feinstein approved Political Reporter)
1:51 AM 10/25/2013

A veteran Washington D.C. investigative journalist says the Department of Homeland Security confiscated a stack of her confidential files during a raid of her home in August — leading her to fear that a number of her sources inside the federal government have now been exposed.

In an interview with The Daily Caller, journalist Audrey Hudson revealed that the Department of Homeland Security and Maryland State Police were involved in a predawn raid of her Shady Side, Md. home on Aug. 6. Hudson is a former Washington Times reporter and current freelance reporter.

A search warrant obtained by TheDC indicates that the August raid allowed law enforcement to search for firearms inside her home.

The document notes that her husband, Paul Flanagan, was found guilty in 1986 to resisting arrest in Prince George’s County. The warrant called for police to search the residence they share and seize all weapons and ammunition because he is prohibited under the law from possessing firearms.

But without Hudson’s knowledge, the agents also confiscated a batch of documents that contained information about sources inside the Department of Homeland Security and the Transportation Security Administration, she said.

Outraged over the seizure, Hudson is now speaking out. She said no subpoena for the notes was presented during the raid and argues the confiscation was outside of the search warrant’s parameter.

“They took my notes without my knowledge and without legal authority to do so,” Hudson said this week. “The search warrant they presented said nothing about walking out of here with a single sheet of paper.”

She provided TheDC with a photo showing the stack of file folders in a bag marked “evidence/property.”

On Thursday, a spokesman for the Maryland State Police declined to address any specifics about the search.

“Due to the ongoing criminal investigation and the potential for pending criminal charges at the state and/or federal level, the Maryland State Police will not discuss specific information about this investigation at this time,” spokesman Greg Shipley said in a statement to TheDC.

At about 4:30 a.m. on Aug. 6, Hudson said officers dressed in full body armor presented a search warrant to enter the home she shares on the bay with her husband. She estimates that at least seven officers took part in the raid.

After the search began, Hudson said she was asked by an investigator with the Coast Guard Investigative Service if she was the same Audrey Hudson who had written a series of critical stories about air marshals for The Washington Times over the last decade. The Coast Guard operates under the Department of Homeland Security.

http://www.freerepublic.com/focus/news/3083445/posts?page=5 -

tj must have slept in today, as myriad ACA posts are nowhere to be seen.

Excuse me, there is an armored car in my driveway, my house is surrounded and there is some guy dressed in full body armor knocking on my door. I’ll be right back.

A Nation of Deadbeats….

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Deceleration Nation: 50% Of Defaulters Live In Homes Rent-free While 49% Of Americans On The Dole
Confounded Interest | 10/24/2013 | Anthony B. Sanders

According to data released Tuesday by the Census Bureau, 49.2 percent of Americans received benefits from one or more government programs in the fourth quarter of 2011.

And, of course, When Obamacare is fully implemented on Jan. 1, 2014, Americans earning up to 400 percent of the poverty level will qualify for a federal subsidy to buy health insurance.

Speaking of more and more people of the government dole, RealtyTrac estimates that 47% of the nation’s foreclosed homes are currently occupied. The percentage actually tops 60% in some hot housing markets, like Miami and Los Angeles. Those still living in repossessed homes include both former owners and renters. Either way, their time in the homes is mortgage and rent free.

Real median household income is lower than it was in 2000.

As our economy decelerates, expect to see more households on government benefits. Unless we run out of money.

The mindset of liberals/progressives.

There is not a problem that can’t be solved with bigger and bigger government and higher ans higher taxes…

And our children will wonder how we ended up like Greece

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Harry Reid: ‘Everybody … Willing to Pay More’ Taxes
The Weekly Standard | Oct 24, 2013 | DANIEL HALPER

Senate majority leader Harry Reid says that “Everybody” is “willing to pay more” taxes. He said so in an interview with a Nevada Public Radio host.

“The only people who feel there shouldn’t be more coming in to the federal government from the rich people are the Republicans in the Congress,” Reid told the radio host, according to Roll Call. “Everybody else, including the rich people, are willing to pay more. They want to pay more.”

“You keep talking about Medicare and Social Security. Get something else in your brain. Stop talking about that. That is not going to happen this time. There is not going to be a grand bargain,” Reid said.

Earthquake-risk buildings list requested by city of Los Angeles -10/25/2013

LOS ANGELES (KABC) — The city of Los Angeles formally requested a list of some 1,500 buildings that could be at risk of collapsing in an earthquake.
The database of at-risk buildings was created by researchers at University of California, Berkeley.
Those researchers have previously refused to hand over the database saying they fear it would be used to point out specific buildings and lead to lawsuits.
The city has a voluntary program for retro-fitting such at-risk buildings, but stopped short of mandating it due to pressure from property owners who complained about the costs.

This is interesting. This is a whole lot of private and public money. The taxpayer will get hit up. We always do. Worth following, imho.

“Get what you can get for your house today because it’s going to be much less tomorrow for many years to come.”

No question. Especially if you were suckered into buying a house from 1998-current.

“Why buy now what you can rent for half the monthly cost?”

Good point. Then buyer later when prices roll back to early 1990’s levels.

Wuz getting into my car to leave work when a colleague who pulled out just ahead of me pulled back into a nearby spot with her engine idling and stopped to chat. For reasons beyond my comprehension, some people think I know something they don’t about housing.

She and her hubby are purchasing an SD condo and locked in rates in early October (for a finance charge) at a local lender; they plan to close mid-November. Since they locked in, rates have dropped. Her understanding was that the lock protected them against rate increases, but if rates fell, they could costlessly get the lower rate so long as it was before closing. So rates have decreased, perhaps in part due to the shock and awe effect of the government shutdown on the economy, but when my friend asked whether their payments would drop, she was informed that it would cost them another finance charge to get it. Is this a scam, or standard practice?

On another note, I asked her why she was buying now, and she was not interested in talking much about it, except to say that their monthly payment will be much cheaper than current rent on a comparable place. She didn’t seem to want to hear my opinion that rising rates going forward may lead to negative home equity wealth effects, so I didn’t bother to offer it.