Locusts, Hot Money And Vacant Houses
It’s Friday desk clearing time for this blogger. “Builders are putting up new homes in 33 different communities in the Boulder Valley, said Veronica Precella, chief executive of the Boulder Area Realtor Association. Anthem Highlands homes ranging from 1,900 square feet to 3,200 square are expected to sell for $300,000 to $550,000, said Robyn Asbury, director of sales at Richmond American. The Candelas neighborhood going up in Arvada will feature 4,800-square-foot homes in the $600,000 to $800,000 range, Asbury said. Calmante homes are expected to sell in the ‘low 500s’. Overlook town homes are expected to sell for the ‘high 300s to the low 400s,’ said aul Gortzig, director of sales. ‘We want to price (Calmante and Overlook) in line with what the market is asking for,’ Gortzig said.”
“‘Our homebuyers are finding slim inventories,’ Precella said. ‘Now we’re going to add 20,000 houses to the market.’”
“The supply of homes for sale in the San Fernando Valley increased 21.3 percent from a year earlier in October, but the bump in inventory did little to move the market, the Southland Regional Association of Realtors said. Last month, sales of previously owned houses fell 18 percent to 521 properties, from 635 a year earlier. Sales rose 3.4 percent from 504 in September. The median house price increased 22.4 percent, to $465,000 from $380,000 a year ago, and fell 10.6 percent from $520,000 in October.”
“‘Buyers must accept that deep discount prices are gone, and sellers who ask too high a price will see diminished activity and possibly no multiple offers,’ said Jim Link, the association’s CEO.”
“Across Portland, hundreds of homes—one expert says it could be as many as 1,000—sit vacant in foreclosure limbo. In many cases, the absentee lender doesn’t maintain them, the city isn’t monitoring them, and squatters are moving in. It’s a strange problem to plague a city where vacancy rates are at all-time lows and home prices are soaring. ‘We identified early on that this was going to be the fallout from a massive foreclosure crisis,’ says Angela Martin, executive director of Economic Fairness Oregon. ‘The city wouldn’t have to police it if the owners were taking responsibility. But that hasn’t happened.’”
“Real estate agents say the big cash investors who took over the Las Vegas housing market last year are now leaving. ‘They made their money and right now they’re dumping their product right now, and that is why there is more inventory available,’ Omar Lopez with Cosmopolitan Real Estate said. ‘Now with the inventory going higher, we’re going to see builders offering great incentives.’”
“Julia Lau, a leading Vancouver real estate agent, told me this year that 80 per cent of buyers were mainlanders. Compared to Hong Kong, roiled by talk of locusts and Chinese hot money, there’s been little backlash or even discussion about this phenomenon in Vancouver. Dr David Ley, a geographer at the University of British Columbia, said Chinese migration was ‘undoubtedly’ a driving force at the top end of the market in premier districts. Ley said he was surprised there had been no ‘political pushback’ against the effect that various Canadian immigration schemes had had on Vancouver’s property market.”
“For instance, under the popular investor-class scheme, visas are granted to foreign millionaires prepared to loan C$800,000 to a provincial Canadian government interest-free for five years. Such schemes have attracted 36,892 rich immigrants to British Columbia over the past eight years, of whom 66 per cent were mainland Chinese. With Hongkongers and Taiwanese included, the proportion from China rose to 81 per cent. Nearly all of these millionaire households have settled in Metro Vancouver. The investor visa scheme is so popular that the government last year froze new applications to deal with a backlog.”
“Chinese interest in Australian residential property is booming, with chief executive of McGrath Estate Agents John McGrath describing it as the biggest surge from an offshore market in his 30 years in real estate. ‘In some suburbs 90 per cent of new product will sell to Chinese buyers,’ he said.”
“The most infamous example of absentee owners is the £1.2 billion One Hyde Park development, which was dubbed ‘London’s Mary Celeste’ after it emerged only three of its 85 apartments were used as full-time homes. Shadow housing spokesman Emma Reynolds said too many homes were becoming money-making schemes for rich foreigners who have no intention of living in London. ‘Ideally we would like to stop altogether people using London homes as piggy banks for the world’s wealthy,’ she said. ‘There is a housing crisis in London yet there are about 50,000 empty homes.’”
“While politicians glibly talk about housing the people of New Zealand in new, cheap and cheerful residences that won’t tear bank accounts to shreds, the key thing that’s easy to overlook is the attitude of the construction industry itself. Therefore the latest Ministry of Business, Innovation and Employment (MBIE) report on the construction sector provides some thought-provoking reading.”
“‘Twice as much income for the same amount of work’. In fact one said ‘I never accept any commission for a house under a million dollars.’ Then there is the ‘chief executive of a building firm’ who said that their main driver was providing return for shareholders ‘and we don’t build low cost, affordable homes because they are unprofitable.’ Then there’s another architect: ‘Why would a builder who does three houses a year build a couple of low cost houses? Spend equal amount of time at it…There could be a profit, a modest profit. But it’s too modest and too risky.’”
“Mumbai’s residential property market is in ‘dire circumstances,’ says Knight Frank. The unsold stock of homes in Mumbai has reached 130,000 units and developers have been delaying new launches to focus on selling the existing inventory. To that end, developers have been reducing prices by up to 25 per cent, particularly in the premium segment, it says. ‘Widely believed to be in the midst of an asset price bubble, the cash-strapped Indian real estate landscape today is rife with escalating unsold inventory levels,’ the report said.”
“Norway is moving closer to easing mortgage lending standards as the nation’s deflating property market prompts concern among lawmakers that existing regulations are too tight. Real estate prices, which have doubled over the past decade and touched a record high this year, are now dropping faster than the central bank had predicted. ‘It’s a rather hard landing,’ said Erik Bruce, senior economist at Nordea.”
“Last week, Janet Yellen was asked at her confirmation hearing if the Fed’s unprecedented run of accommodative monetary policies might be leading to a bubble in asset prices. Yellen would do well to acknowledge that the Fed’s current policies may not be working as well as they should. In the immediate aftermath of the financial crisis, quantitative easing made sense as an emergency measure. The emergency is over now, but the practice continues. The most obvious beneficiaries of the Fed’s policies are those who own stocks and other assets: among them, the one per cent of Americans who received ninety-five per cent of the income gains between 2009 and 2012. Despite Yellen’s opinion, there are signs that an asset bubble may indeed be forming: rising home prices, stocks, and subprime car loans among them.”
“Thomas Hoenig, the former head of the Kansas City Fed, who had long voted against interest-rate cuts, explained the current challenge succinctly in the film ‘Money For Nothing: Inside the Federal Reserve’: ‘The United States has consumed more than it’s produced, systematically, for at least a decade. What country, in history, ask yourself, can do that indefinitely, forever?’”
“Across Portland, hundreds of homes - one expert says it could be as many as a thousand - sit vacant in foreclosure limbo. In many cases the absentee lender doesn’t maintain them.”
“Absentee lender”, well I suppose he is talking about me.
Let’s see if I am looking at this correctly: I loan people money to buy a house, they stop making payments, then, after I evict them, I am left with an empty house, one that I the “absentee lender” am supposed to pour money into for maintainence. Which means what was suppose to add money to my wallet ends up subtracting money from my wallet. Yeah, right.
So what am I to do? Well, one thing I can do is not foreclose.
If I can convince the homebuyer (notice I did not use the term “homeowner”) to stay then perhaps he will spend his own money in doing this costly maintenence for me. And just why should he want to do this if he is not a true owner but instead is a stupid FB? Ah, this is where the salesmanship comes into play: Instead of refering to him as being a stupid FB (which he is) I and my buddies in the media will keep on calling him a proud homeowner who deserves to keep his American Dream alive, which means he should be allowed to keep “his” home for himself and for his family.
And I and my media buddies along with various governmental bodies with their HAMP and HARP and other acronym programs will instill within this stupid, hapless FB the eternal hope that eventually all this will work out for him, that because the prices of real estate seem to be rising all around him means that maybe someday, maybe somehow he will emerge from his self-induced financial nightmare intact and that he, after all the pain and suffering he endured and by some miracle, will eventually end up actually owning the house that he is living in.
But there will come a time, a time that works for me, that I will decide to drop the hammer on him and foreclose on his stupid ass and toss him and everything he owns out into the street. And I will do this because … well, because I can.
“If I can convince the homebuyer (notice I did not use the term “homeowner”) to stay then perhaps he will spend his own money in doing this costly maintenence for me. And just why should he want to do this if he is not a true owner but instead is a stupid FB?”
I dunno, it seems like it would be a pretty good deal to stay in a home, not pay the mortgage, and spend a little money doing some basic maintenance. Then save the mortgage money that I’m not paying and get ready to move when Mr Banker gets aorund to foreclosing…if something needed to be fixed that cost a lot of money, just move out.
“I dunno, it seems like it would be a pretty good deal to say in a home, not pay the mortgage, and spend a little money doing some basic maintenence.”
That would work for me; Beats me paying somebody to keep the place fixed up. Also, as long as the FB is living in my house the house strippers won’t descend on my house and rip out everything that is of value. Plus the other houses in the neighborhood of which I carry the papers will keep up their values.
One more consideration: If I do not foreclose and the house is kept occupied and the neighboring houses keep their values as a result then any houses that I have foreclosed on will be easier to sell than otherwise because:
1. The nieghborhood is kept up and,
2. My not foreclosing on a house and putting this foreclosed house on the market adds to the scarcity of houses that will be offered for sale. This scarcity can be used as a marketing tool to keep up and even extend up the prices of houses.
What about property taxes?
What about property taxes ??
Not sure about Oregon but in California the yearly property taxes can default for 5 years before the county assessor can foreclose on the property through a property tax sale…
Taxes? Only the little people pay taxes.
Well we should be approaching that 5 year point here in the next year for many. Could this be a big source of revenue for local governments now that some of these have come up a little bit in price?
Could this be a big source of revenue for local governments ??
Probably not but the compounded penalties & interest due raise a lot of extra revenue on each property…Since they are underwater, the assessor may have had to lower the assessed value also…
One interesting thing that came to mind though…County taxes take priority over recorded notes & deeds of trust…In other words, the existing loans are subordinate to the property taxes…Thats one of the reasons lenders require impounds for taxes…Maybe the main reason
This makes for an interesting state of affairs…Lenders are not foreclosing…However, if it goes outside of five years (at least in my county) then the assessor can foreclose through a property tax sale…This then would force the lender to step in and #1 pay the back taxes & penalties and then bid high enough to cover their loan…
We are on the cusp of that five years after the crash…Maybe we will see increased foreclosure rate by lenders to hold off the property tax man…I know Ben mentioned some time ago that there were lots around him that were being offered for the amount of taxes owed…
Are you seeing property tax sales on property that have loans on them Ben ??
This then would force the lender to step in and #1 pay the back taxes & penalties and then bid high enough to cover their loan…
You’re making a large assumption that they will let the tax foreclosure occur in the first place.
In the one case with which I was intimately familiar, the lender actually paid the taxes on a loan that wasn’t paid for two years; they ended up showing a negative balance in the escrow account, rather than leaving the taxes unpaid because the escrow funds were not sufficient.
‘“Absentee lender”, well I suppose he is talking about me.’
I’m talking about you when I say the city ought to tax your arse to pay for upkeep on the properties you own but don’t maintain. If my blue collar landlords can scrape together the spare change to pay a lawn care service to do yardwork, why can’t deep pocket banks manage to pay their fair share?
Because this wasn’t part of the deal. When I loaned the FB the money to buy the house he was supposed to stay in the house and pay me back to money he borrowed - plus pay me the interest.
I didn’t decide to become the absentee lender, it was the FB who, by his actions, decided that I would become the absentee lender.
Mr. Banker, one thing you haven’t quite let on yet is that the house is just a MacGuffin - a plot tool to bolster the story line, to keep it believable for the masses.
Your money is not the house but in the debt - the “promise to pay”, a logical construct.
And I believe Uncle Sugar (both central bank and the government) will make sure you don’t lose any money on the “promise-to-pay” logical construct. Even if the FB shrugs off the promise-to-pay. They can just print to make you whole. As long as only you are receiving the cash injections, you can still live like it’s 2005.
At this point, even if the MacGuffin crumbles away - it’s no longer important to the story - you have your prize and Uncle Sugar will make sure you get paid in full (of course, you’ll have to give a little something-something to your local politicians to make sure it stays that way. But that goes without saying).
Not part of the deal? Huh?… if he didn’t pay you got the house. It’s in the contract. You don’t like the terms then don’t lend the money - nobody held a gun to your head. You sound testy. Relax…it’s just business.
boulder= medical mj
ever try it ? 2 hits and you’re stoned.
Finally Soma is legal. And frankly, if it got half the pill poppers off whatever Big Pharma got em hooked on, or it’s legality allowed them not to start, whether anti-depression or pain killers or whatever, great.
until you add 2 beers and legally get in a car
?? What do you mean?? If they are driving intoxicated, they should face the consequences??
No, the other guy gets to face the consequences, or at least he gets to share in them.
No different than liquor from that angle.
Or other prescription pills.
‘SINGAPORE: The Housing Development Board (HDB) received 27 cases of hoarding in flats over the past 12 months. Housing Minister Khaw Boon Wan revealed this in a written response to Member of Parliament Lim Biow Chuan, who asked if the government will take action to prevent fire hazards caused by excessive hoarding.’
http://www.channelnewsasia.com/news/singapore/hdb-received-27-hoarding/882994.html
‘Singapore. Ghost town in the making? According to Savills, despite the strong leasing demand, the vacancy rate of private residential units climbed to 6.1% from 5.6% in the previous quarter. This reflected a total of 17,459 vacant private homes island-wide, a significant jump of 10.3% QoQ from 15,833 units in Q2/2013.’
http://sbr.com.sg/residential-property/news/chart-day-vacancy-rate-private-homes-jumped-61-in-3q13
‘More mainland banks have tightened mortgage lending extensions as their annual quotas run out and authorities ramp up restrictions on prices, South China Morning Post reported. A survey of 500 banks in 32 cities by Rong360, a private search engine for financial products, showed that around 17% of mainland banks had stopped extending mortgage loans to buyers of first and second homes this month, with more expected to follow suit by the end of the year. The trend first emerged last month in top-tier cities, and has now spread to 17 cities.’
http://www.chinaeconomicreview.com/chinese-banks-halt-mortgage-lending-limited-quotas
‘The Bank of England moved to head off the risk of a housing bubble in Britain on Thursday, making a surprise announcement that it would put the brakes on a scheme launched last year to help boost mortgage lending. “Given the access to credit for households now … it would no longer be appropriate or necessary for us to have our foot on the accelerator. It’s better to shift into neutral,” BoE Governor Mark Carney said.’
‘Finance minister George Osborne is widely expected to introduce a capital gains tax on foreign-owned property in a half-yearly budget update next week. Osborne, who has made a revival of Britain’s housing market a key part of his economic plans, endorsed the decision.’
http://in.reuters.com/article/2013/11/28/britain-bank-regulation-idINL5N0JD2AC20131128
‘A survey of 500 banks in 32 cities by Rong360, a private search engine for financial products, showed that around 17% of mainland banks had stopped extending mortgage loans to buyers of first and second homes this month, with more expected to follow suit by the end of the year. The trend first emerged last month in top-tier cities, and has now spread to 17 cities.’
Won’t this only worsen China’s Ghost Cities problem?
Ya gotta love the suggestion in the article posted below that it is only a matter of when, not whether, property bubbles in China cities will burst. Fasten your seat belts for a wild ride, folks!
Property bubbles bursting in China’s third- and fourth-tier cities: official
Staff Reporter
2013-10-31 11:54 (GMT+8)
Buildings in Ordos, Inner Mongolia. (Photo/Xinhua)
The property bubbles in China’s third- and fourth-tier cities are bursting, according to an official from the State Council, China’s cabinet.
Li Wei, director of the State Council’s Development Research Center, said that land and housing supply in the first-tier cities is still tight, resulting in a continued increase in housing prices. Land and housing supply in third- and fourth-tier cities, on the other hand, is more than demand. Cities like Wenzhou in China’s eastern Zhejiang province and Ordos, one of the 12 subdivisions in Inner Mongolia, have seen their housing prices slump.
Property bubbles in the first-tier cities continue to balloon, but it is difficult to predict when they will burst, said a Beijing Business Today report.
Figures from the National Bureau of Statistics substantiate the continued property fever.
Data show that property prices in first-tier cities in September rose by more than 20% from the same period last year, while prices in second-tier cities rose by an average of 0.7% and saw a hike of 0.6% in third-tier cities.
Hu Jinhui, vice president of real estate brokerage 5i5j Property Agency, said that China’s housing prices, especially prices in first-tier cities, are still higher than average global prices.
With inadequate demand and blind investment, the property market in quite a few third- and fourth-tier cities is seeing greater supply than demand, resulting in a property price slump.
Given their edge in attracting migrants and industry clusters, the bubble existing in first-tier cities might burst later, but the risks involved cannot not be overlooked.
When the bubble bursts, some cities will become “ghost towns,” and financial revenue will drop sharply, according to a source within the property sector.
A lot of residents were also expected to dump their houses on the property market and banks could seize property that had lost value, impacting the financial system and resulting in a series of chain reactions.
…
‘ Colorado was one of four states that had the highest foreclosure starts between September and October with an increase of 124 percent, according to a report from RealtyTrac.’
‘And in the Denver metro area, foreclosure starts zoomed 183 percent between September and October, according to Brittney Marin, spokeswoman for RealtyTrac.’
http://www.denverpost.com/dnc/ci_24520190/foreclosure-activity-up-from-september-but-still-below
‘Canada’s economy is highly vulnerable to a slowdown in home construction, according to two new reports that highlight the country’s growing dependence on booming real estate markets. Construction now represents 7.1 per cent of Canadian economic output, a sharp increase from the 5.2 per cent in 2000, Fitch Ratings said in a report to be released Tuesday. The high level of employment and individual wealth tied to housing means that a “housing downturn could have serious consequences for the overall economy,” the ratings agency said.’
‘Separately, the country’s mortgage brokers are warning that the market is on the verge of a drop in housing starts – in part because of cooling demand for condos in large urban centres such as Toronto – that will cost thousands of construction jobs.’
“If what’s happening in Toronto is at all representative of the rest of the country, there is a big correction coming in construction starting about now and proceeding through the coming year,” said Will Dunning, chief economist of the Canadian Association of Accredited Mortgage Professionals. “If we see a reduction of 30- or 40- or 50,000 housing starts, we’re talking close to 100,000 jobs directly being impacted, and then ancillary jobs as well.”
http://www.theglobeandmail.com/report-on-business/economy/housing/economy-at-risk-as-demand-cools-for-new-homes/article15499996/
“The supply of homes for sale in the San Fernando Valley increased 21.3 percent from a year earlier in October, but the bump in inventory did little to move the market, the Southland Regional Association of Realtors said. Last month, sales of previously owned houses fell 18 percent to 521 properties, from 635 a year earlier. Sales rose 3.4 percent from 504 in September. The median house price increased 22.4 percent, to $465,000 from $380,000 a year ago, and fell 10.6 percent from $520,000 in October.”
“‘Buyers must accept that deep discount prices are gone, and sellers who ask too high a price will see diminished activity and possibly no multiple offers,’ said Jim Link, the association’s CEO.”
The disconnect in the second paragraph from the first is like the distance from earth to mars.
What I see is a well orchestrated public relations campaign to avoid the discussion of actuall numbers and costs.
Strangely, that is precisely what a few of our own debt-donkeys attempt to deflect attention from.
The median house price increased 22.4 percent, to $465,000 from $380,000 a year ago, and fell 10.6 percent from $520,000 in October.
Median fell 10 % in 1 month? This keeps up for what, two more months at that rate and it then becomes a loss rather than a gain. I don’t think that’s actually going to happen that quickly, but overall a 10 percent MOM drop = oof.
the top 250 brewskis to drown your sorrows away after missing the boat again:
http://beeradvocate.com/lists/top
Realtor Charged With Embezzlement
http://abclocal.go.com/wtvd/story?section=news/local&id=9340374
Realtor Sentenced To 6 Years For Bank Fraud
http://www.heraldtribune.com/article/20131109/ARTICLE/131109604?p=1&tc=pg
“Across Portland, hundreds of homes—one expert says it could be as many as 1,000—sit vacant in foreclosure limbo. In many cases, the absentee lender doesn’t maintain them, the city isn’t monitoring them, and squatters are moving in. … ‘The city wouldn’t have to police it if the owners were taking responsibility. But that hasn’t happened.’”
Is this a case where eminent domain could be used by the city to take possession of abandoned properties? If that goes too far, then how about if they raise a special property tax on the absentee owners to pay for maintenance, with plans to eventually take possession of the owners don’t pony up?
It seems highly unfair to residents in the surrounding area for absentee owners to allow their properties to decline into desuetude.
Also unfair for the lenders who hold the paper backed by these properties that are allowed to decline into desuetude.
As for your idea of eminent domain whereby the city (read taxpayers) take possession of the of the junk some people believe I should be stuck with, well I am all for it.
Oh good — sounds like a win-win, then. And it seems like some cities might be catching on.
Eminent domain to fight foreclosures is divisive
Irvington is the second municipality in the country to declare its intent to use eminent domain to purchase homes in foreclosure, behind Richmond, Calif. (AP Photo/Mel Evans)
The Associated Press
on November 23, 2013 at 1:54 PM
IRVINGTON — Using eminent domain to bail out underwater homeowners won’t fix all Irvington’s problems, but Mayor Wayne Smith thinks anything that can help some residents of his economically struggling township is worth trying.
“It’s not a panacea,” Smith said. “But it looks like it could help some people.”
Irvington is the second municipality in the country to declare its intent to use eminent domain to purchase homes in foreclosure, behind Richmond, Calif. Support for the tactic is gaining traction nationwide in municipalities besieged by foreclosures. Irvington’s neighbor Newark, as well as Brockton, Mass., Chicago, and Yonkers, N.Y., have floated or are studying the idea.
But the practice, which gives municipalities the power to circumvent mortgage contracts, acquire loans from bondholders, write them down and give them back to the bondholders, is controversial. It has drawn zealous opposition from Wall Street, real estate groups and some in Washington.
According to Cornell University law professor Robert C. Hockett, who helped devise the plan, eminent domain works because only government has the power to forcibly sidestep mortgage contracts.
The eminent domain plans focus on so-called private label security mortgages, or ones that are not backed by the U.S. government. And that worries some who believe the use of eminent domain could cause investors not to put money in mortgage-backed securities.
“By investing in this type of security, you risk the potential that a municipality, without anything you have control over, says, ‘It’s OK to take that contract and give it a substantial haircut.’ That’s the risk you take? It’s unquantifiable,” said Tim Cameron, managing director and head of SIFMA’s asset management group. The group represents security firms, banks and asset managers.
…
“…focus on so-called private label security mortgages, or ones that are not backed by the U.S. government.”
If this plan gains traction, we may soon see the U.S. government share of the mortgage market bump up to 100%.
Meanwhile, how is Richmond faring?
Eminent domain plan may force premium on Richmond, Calif., bonds
SAN FRANCISCO Mon Nov 25, 2013 5:44pm EST (reuters)
“Nov 25 (Reuters) - Richmond, California, may need to offer higher yields to lure hesitant investors after a bond sale failed three months ago, the city’s finance director said, citing its plan to use eminent domain to seize mortgages with negative equity.
Richmond tried to sell the debt in August, but underwriter RBC Capital Markets found no buyers after the city discussed its eminent domain plan in its preliminary offer statement.
…Stifel Managing Director James Cervantes said on Monday the negotiated deal would refund bonds for the successor agency to Richmond’s redevelopment agency, and that the debt is backed by tax-increment property tax revenue from properties that have minimal exposure to the eminent domain plan.”
————–
I confess that I don’t quite get what’s going on. It looks like Richmond doesn’t have enough cash to buy the mortgages of the distressed houses. Even if they won eminent domain, they need to pay fair market value. So Richmond tried to sell bonds to raise the money. But the investors knew that the money would go toward the eminent domain plan and effectively dig the investors graves, so they didn’t buy.
I guess Richmond looking for a way to raise money that isn’t connected to the distressed houses.(?) I don’t see how this would fool investors. Money is fungible.
‘Ideally we would like to stop altogether people using London homes as piggy banks for the world’s wealthy,’
Here’s a thought: How about if sovereign states pass laws that make absentee ownership by non-citizens illegal? That would put a fork in the problem pretty quickly, no?
But … but … what about the money flow? You don’t want to cut off the money flow.
Do you mean the money flow that is thwarting so-far unsuccessful efforts to provide affordable housing for people who just want a home to live in?
For people who just want to live in. That is not what affordable housing means.
Housing demand is “stagnant”?
Housing demand is at 1997 levels and cratering once again.
http://4.bp.blogspot.com/-bRiYJITcvYI/UVeQQUlQWaI/AAAAAAAAFk4/NfnlUwpKxOQ/s1600/Mortgage+Applications.jpg
“The most obvious beneficiaries of the Fed’s policies are those who own stocks and other assets: among them, the one per cent of Americans who received ninety-five per cent of the income gains between 2009 and 2012. Despite Yellen’s opinion, there are signs that an asset bubble may indeed be forming: rising home prices, stocks, and subprime car loans among them.”
I think everyone can agree that QE3 is working very well!
…. speaking of vacant houses…
“Housing’s ‘Shadow Inventory’ Still Haunts Banks”
http://news.yahoo.com/housings-shadow-inventory-still-haunts-banks-152949909.html
With tens of millions of excess empty houses and another 35 million additional houses that are just beginning to empty as boomers expire, banks themselves will become haunted houses.
“Mortgage delinquencies take a sharp turn up”
http://www.cnbc.com/id/100914292
And they’ll continue rising for as long as transactions occur at massively inflated prices.
And remember, today’s sale at a massively inflated price is tomorrows default.
Not to harsh on your post-Turkey Day mellow or anything, but that article you just posted is dated 25 July 2013. Does that still qualify as news?
Merely a reminder.
“Housing is a depreciating asset and a loss, always. Your losses are magnified tremendously if you finance it.”
BINGO
Add in prop taxes on that overinflated, depreciating asset and you’re REALLY screwed!!!
Richmond American (National Home Builders)-
When we bought our former luxury view lot McMansion from Ryland Homes, Richmond America had claimed BK on the rival development we almost bought into. I thought they were done with. Interesting. Evidently not a full BK.
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®
It is going to be decades before all of this shakes out.
Rome wasn’t built in a day, and it didn’t fall in a day either. It makes me wonder about the years, say 300-500 AD in Europe, when high school texts go rather quiet. Rome was falling/fallen by then but Arthurian feudalism wasn’t established. What was going on? 200 years of rape and pillage? Maybe that’s what is going on now.
This is extremely unfortunate for those of us who once again missed the boat: http://i.imgur.com/4GIlWoJ.gif
Even so, the powers that be are doing to do everything in our power to help themselves to a portion of our wealth, whether we offer it voluntarily through debt, or whether they debauch the currency via the stealth tax of inflation, or if they find some other scheme. They are clever and relentless but I think their Achilles Heel is that they don’t know when to stop.
“It is going to be decades before all of this shakes out.”
Not at all.
Hang onto your hat cowboy and prepare for the ride of your life.
Oh, but it is. Global markets are just peaking, and their governments are going to play kick the can until the can has disintegrated. It has been over 7 years since many markets here peaked, and we’re nowhere near the end. DECADES.
And the cascade is one exogenous event away.
http://www.theglobeandmail.com/news/world/canada-sells-high-commission-building-in-london/article15654917/
What country, in history, ask yourself, can do that indefinitely, forever?’”
USA can. YOLO!
—Jane Yellin
Hoening is right. The financial crisis was the symptom. Overspending financed by debt (and not just government) is the disease.
Moreover, one source of the spending financed by debt is inequality — people living in the way they are accustomed despite lower incomes for most. Which relates to the average lowest income since 1995.
Hey one percent? Who are you going to sell to? First you lent them the money. They you had the government borrow and spend on their behalf. Now it’s up to the Fed to print money for people to spend.