The Housing Bubble

no sir

2014 will be the year of loosening credit to get more buyers n the game.

And with FNMA yanking price supports by $100k on both coasts, it should be a good year for falling housing prices.

properly maintained, a house can provide a life time of benis including:

free equity from market fluctuations
shelter
stability
a place to raise a child
opportunity for sweat equity
something to pass on to the kids
a chance to feel important in society

A stock can give you a shot at an increased price.

That is why so many people love real estate.

But always remember, houses depreciate rapidly.

You are correct.

azdude02, I know you’re just needling us, but new regulations are about to go into effect re: mortgages. Conditions will not be loosening. They may not continue to tighten and they may not tighten enough to drive out people who should not buy homes… but the idea that they will become loose like the mid-00s again is ridiculous.

But please, carry on with your trolling. I suspect the board will be slow this week, with it behing between the holidays and all.

free equity from market fluctuations

Put another way: it can provide a hedge against inflation.

However, if you choose to borrow out the difference between your previous mortgage debt, as it is slowly reduced by inflation, and the current inflation-adjusted valuation (this difference is what you call “equity”), then you are really just choosing to take on more debt. Any fool can take on more debt—right up until they can’t.

What inflation?

What inflation?

You still seem to be under the mistaken impression that the Dollar Index is a good metric for measuring inflation; it is not. The DXY measures only the relative value of the dollar vs a basket of foreign currencies.

If there were inflation only in the US and not in the rest of the world, then interest rates would go up here relative to there, causing the dollar to gain in value relative to other currencies, and the DXY would spike up. However, that is not the same thing as measuring inflation—if inflation rages everywhere, and rates go up everywhere, there will be no such effect, and it will fail to indicate the raging inflation.

Note also that the DXY was trending DOWN during the 70’s while inflation was increasing dramatically in the US, and it only spiked up after 1980 as Volcker cranked up rates and got inflation under control.

Your so-called inflation indicator is no such thing; you are mistaking cause and effect.

Who said anything about the .dxy? You seem to think that price fixing is inflation.

Why is that?

Who said anything about the .dxy?

Every time that we discuss inflation, you bring up the DXY as your proof that there is no inflation; this has happened many times.

If that is not your supporting evidence this go-around, what do you offer instead in support of your argument?

I don’t need to substantiate anything. You need a fundamental understanding of what inflation is.

You need a fundamental understanding of what inflation is.

ditto.

Get going.

ditto.

care to tell us what it is?

care to tell us what it is?

Funny how you always ask someone else to do this, and are unwilling to do it yourself.

But sure, I’ll bite; how about this for a definition:

Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time.

The flip-side of the coin is that it can be equally-well viewed as a persistent decrease in the purchasing power of a unit-value of currency over a period of time.

bzzzzzzzzzzzt. WRONG.

Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time.

ok. although the federal reserve has now changed its definition of inflation. (incorrectly i believe)

paraphrased azdude said: [home ownership is a way to have] free equity from market fluctuations.

you said: “Put another way: it can provide a hedge against inflation.”

how does this square with your definition above? are you now claiming that house pricing is moving with general price levels? because if it isn’t, it can’t be a good hedge against inflation.

bzzzzzzzzzzzt. WRONG.

Ok, your turn to give a definition, then.

Inflation begins in wages and ends in price of materials, services, commodities and finished products.

Does a bottleneck in the production of ___ translate into inflation? Of course not.

Do price supports of ___ translate into inflation? No.

Do price ceilings better known as price controls ____ translate into deflation? No.

There’s three examples of market distortions you’re all conflating and confusing with *inflation*. They’re not the same.

*LEARN the difference*

*LEARN the difference*

yep, those are three good examples of what price inflation/deflation isn’t.

ok. although the federal reserve has now changed its definition of inflation. (incorrectly i believe)

Can you clarify what you believe the Fed changed their definition to be, and what is incorrect about it in your view?

are you now claiming that house pricing is moving with general price levels? because if it isn’t, it can’t be a good hedge against inflation.

Yes. I believe that Shiller’s house-price data shows pretty clearly that over multiple centuries, house prices have tended to move with general price levels–e.g. the rate of inflation; that argues pretty strongly that housing can be a hedge against inflation.

There’s three examples of market distortions you’re all conflating and confusing with *inflation*.

No, you are merely arguing against your own straw-men. None of those three things is something that I would call inflation. None of them meet my definition—a GENERAL, PERSISTENT increase in prices. General means wide-spread, across virtually all prices. Persistent means that the increase is maintained over a long period of time.

A bottleneck in production of a particular good or service? Not inflation, as it will only affect the price of that one particular good or service, and probably only for a very limited span of time as well. In other words, neither a general nor a persistent increase. The increase in price in this case is a useful market signal to producers that they may want to increase production.

A price-support for a particular good or service? Definitely distortionary, but also definitely not inflation, as it will only affect the price of that particular good or service—and thus not generally affecting all prices. This example is not even a useful market signal, as the subsidy will merely be harvested by one of the market participants, most likely all of the producers.

A price-control/price-ceiling for a particular good or service?
Again distorting of the economy, but again definitely not inflation, as it will only affect that particular good or service. It will not affect the general price level of all goods and services. This example is particularly harmful to the economy, as it not only removes the market signal and any incentive for producers to respond—but in many cases gives them a perverse incentive to reduce production of a good or service that is in demand and limited in supply.

Any other straw-men that you would like to prop up, HA?

And again—still waiting for your definition. You cannot define inflation by exclusion, by propping up many things that are not inflation.

Can you clarify what you believe the Fed changed their definition to be

formerly is was: rocoGPL
now revised as: rorocoGPL

and what is incorrect about it in your view?

you figure it out.

I believe that Shiller’s house-price data shows pretty clearly that over multiple centuries

so you’re gonna live multiple centuries so it can all even out? tulips even out over multiple centuries too. by your logic, it would have been ok to buy them during the mania, after all they’ll revert to normal eventually.

“None of them meet my definition—a GENERAL, PERSISTENT increase in prices. General means wide-spread, across virtually all prices. Persistent means that the increase is maintained over a long period of time.”

Because that isn’t the definition of inflation.

Learn the definition.

you figure it out.

Thank you for sharing your abundant information and wisdom so freely and generously!

by your logic, it would have been ok to buy them [tulips] during the mania, after all they’ll revert to normal eventually.

Note that I am a renter—and have been since 2003 when I spotted the bubble—so clearly you have misunderstood what I was saying. And nice straw-man, btw, since I did not say anything even close to that.

Shiller’s data shows that housing tracks inflation very closely over almost every short window of time; it does not normally take a long time-frame to track it. Since we are currently in a bubble, though this is one of the few, rare windows of time when that is not the case. And that is precisely why I won’t buy.

Because that isn’t the definition of inflation.

Again: care to offer your definition?

It’s easy to take pokes at another’s definition from the cheap-seats, without offering any alternatives for consideration…

Thank you for sharing your abundant information and wisdom so freely and generously!

thank you for being the pig at the table that’s always willing to eat.

Shiller’s data shows that housing tracks inflation very closely over almost every short window of time; it does not normally take a long time-frame to track it. Since we are currently in a bubble, though this is one of the few, rare windows of time when that is not the case. And that is precisely why I won’t buy.

yet after all this blather you still apparently think home equity is a good shelter from inflation.

yet after all this blather you still apparently think home equity is a good shelter from inflation.

You really need to work on your reading comprehension skills; I said precisely the OPPOSITE of what you wrote above.

In fact, I pointed out that azdude was MISTAKING the effects of inflation for appreciation.

House equity isn’t a good hedge against inflation; house ownership may act as a hedge against inflation, as it is a non-trivial real asset likely to track the rate of inflation per Shiller, and also likely leveraged, with the associated debt being paid back with cheaper deflated dollars over a long period of time.

here’s what azdude wrote:

“properly maintained, a house can provide a life time of benis including:

free equity from market fluctuations”

then you put “free equity from market fluctuations” in italics and wrote.. “Put another way: it can provide a hedge against inflation.”

what else can this mean except you agree with him?

then you write..

“However, if you choose to borrow out the difference between your previous mortgage debt, as it is slowly reduced by inflation, and the current inflation-adjusted valuation (this difference is what you call “equity”), then you are really just choosing to take on more debt. Any fool can take on more debt—right up until they can’t.”

the ‘however, if’ is a qualifier. he didn’t mention taking out a loan on the equity. it looks to me like he was just saying it’s a safe place to keep value, and you were agreeing with him.

if you meant something different, then maybe instead of me focusing on my comprehension skills, you should be focusing on your writing skills.

if you meant something different, then maybe instead of me focusing on my comprehension skills, you should be focusing on your writing skills.

Or maybe both. Sorry if I wasn’t clear; let me try again:

I was trying to point out that what azdude was calling “free equity” is typically non-existent (in normal markets, when housing goes up at the rate of inflation).

It might LOOK like you got some free equity, as the nominal value of your house goes up due to the intentional deterioration of the dollar’s value by the Fed. However, that equity is a phantom. You are really just looking at the delta between the mortgage amount (locked in at time of purchase, in nominal dollars), and the subsequent inflation-adjusted house value (as the house tends to increase in value at the rate of inflation).

And if you actually try to tap that phantom equity, you are really just taking on more debt. Any fool can do that, and most do.

Did it make more sense that time?

I explained it already… you didn’t like the explanation.

Got learn the definition on your own.

“free equity” is typically non-existent (in normal markets, when housing goes up at the rate of inflation).

true.

You are really just looking at the delta between the mortgage amount (locked in at time of purchase, in nominal dollars), and the subsequent inflation-adjusted house value (as the house tends to increase in value at the rate of inflation).

agreed.

And if you actually try to tap that phantom equity, you are really just taking on more debt. Any fool can do that, and most do.

yes.

Did it make more sense that time?

yes.

just want to add that all the above is predicated on ‘normal markets’ which we don’t have right now.

the united states is in a stagflationary depression. unless you are in the top 15 percent of incomes, there is unlikely any future for you.

just want to add that all the above is predicated on ‘normal markets’ which we don’t have right now.

Yes, agreed.

“And with FNMA yanking price supports by $100k on both coasts…”

I never did see any attempt by leaders to justify a policy which forces federal taxpayers in Flyover Country to help coastal millionaires enrich themselves through buying McMansions for over $500K.

Is there any basis for this policy, or is it just because the PTB say so?

I know…. everyone wishes I were wrong but the reality is something different.

put a topping on it!!!!

‘put a topping on it!!!’

lol

how many billions did countrywide mortgage cost the taxpayer?

Keeping banks solvent, yes,

Actually, I disagree with that characterization.

It is in their mandate to keep banks _liquid_—e.g. by acting as lender of last resort, they can help turn illiquid positions into liquid positions quite readily, thus helping avoid the borrow-short/lend-long banking liquidity trap and related bank failures.

Also, in their role as regulator, they should be ensuring that banks behave responsibly, which should keep them solvent. If properly regulated, the banks would have no need for the Fed to attempt to boost their earnings, as they apparently did by starting to pay interest on excess reserves.

The Fed appears to have entirely neglected their regulatory role, resulting in a need for them to go way further than otherwise would have been necessary to keep liquidity in the system.

Given reports that folks in many places have lived four+ years w/o making a mortgage payment, are you suggesting it’s not already happening?

well that’s true but I’m actually talking about getting help with mortgage payments on a zero down home.

They have to find a way to get the next round of buyers up to the plate.

“They have to find a way to get the next round of buyers up to the plate.”

Should be a piece of cake. All they have to do is reinvent subprime lending, but this time absorb the losses through government subsidies.

It doesn’t seem to be working considering housing demand is at 1997 levels and falling.

well that’s true but I’m actually talking about getting help with mortgage payments on a zero down home.

Isn’t that what the MID is? Especially in expensive places like Cali?

No mis-read, that is correct. We had / will have a pretty robust policy. The one we switched to has lower premiums and lower out of pocket.

Like I said, we have a ton of pre-existing, cancer, GI disorders, etc. We can’t take any chances.

What do the employees do if they have a problem that isn’t covered by the specialties of those 4 doctors or if they have to go to a hospital or get a test?

From the lame excuse department, now we know why Obamacare will only sign-up 2/3 of the estimate made by the WH for 2013: http://www.nationalreview.com/corner/367203/dem-rep-obamacare-enrollment-low-because-people-think-law-repealed-andrew-johnson

I hear ya. OTOH, back in 2001, we were on an HMO and I went to my primary’s office for something or other. The waiting room was SRO and some poor guy came in sweating and heaving and flopped on the floor, his head lolling all over the place. He was pretty much ignored by the front desk personnel, who ushered the pharma salespeople right on in.

Eventually he crawled outside, vomited and passed out. That got the doctor’s attention, turns out the guy had a heart attack, so the doc called an ambulance that came and took him to..wait for it…a hospital emergency room! Ta-dah!

That’s what “Urgent Care” centers are for. They’re ER’s for non life threatening issues, without illegals. A year ago my wife almost cut her fingertip completely off with an X-acto knife. I took her to an Urgent Care center and they attended to her minutes after we filled out the paperwork. The copay was $40 (yes, we have what would now be called a “platinum plan”).

They fingertip was stitched and it healed. My wife says that there’s little numbness on the fingertip, but she was warned that might happen. The worst case was that the fingertip would die and fall off.

Yeah, if you or a loved needs non-life threatening emergency care, the last place you want to go is a public hospital emergency room ??

Ours is a “State of The Art” facility….

That does not mean you will see a doctor in a timely manner since they will still need to deal with the life threating emergencies first.

Dan - right. We left and went to a private hospital (that will only stabilize and transfer uninsured) and we walked right in to the admitting nurse.

Public hospitals are often state of the art since they are frequently teaching hospitals. Parkland in Dallas has a world class trauma center and if I were in a terrible accident in that area, then it’d be a good place to go. If I broke my arm on the other hand, no thanks.

“That’s what “Urgent Care” centers are for. They’re ER’s for non life threatening issues, without illegals”

Good point. I think maybe a lot of folks don’t quite get the concept of Urgent Care. The ex had a similar situation some years ago, broken glass sliced the right hand while washing dishes in the kitchen sink. Got it cleaned out, closed with butterfly stitches. Left a scar, but healed up fine.

“That’s what “Urgent Care” centers are for. They’re ER’s for non life threatening issues, without illegals. ”

Yep. That’s pretty much my primary care physician. The one I go to has a $105 flat fee to see a doctor. Average wait is 15 minutes. And it’s open until 10pm 7 days a week. Can’t beat it.

Watching the game drunk is a whole different experience than stoned. Errrr…so I’ve been told.

Errrr…so I’ve been told.

I believe you

I certainly do not believe they are losers. Many are very brave and are of above average intelligence. However, I think that the policy is a lot like the charge of the light brigade a waste of life due to a flawed military strategy.

They’re not above average. They can barely spell their names. Secretary of State John F. Kerry said so. And he would never lie about something so important.

http://www.civmilblog.com/2011/10/education-level-of-american-military.html

I stand by my statement.

No, no, no. I have been told my my liberal betters than soldiers are nothing but toothless redneck hicks with a 4th grade education. And they’re smart n’ stuff so they must be right.

Actually, what I’ve found, having worked alongside a lot of younger Veterans, is that this is an extremely entitled group. They expect free healthcare (TRICARE, nearly free), they expect preference for jobs (which they get, hugely, in the federal government), they expect to have car registrations fees waived (check, hence the reason why there are sooo many Veteran plates now out there, some states which do indeed waive fees), they expect enlistment bonuses (some $70k-100k for enlisted personnel, none typically for officers), they expect free schooling (which they get, of course), and they expect annual pay raises (which, in contrast to the civilian federal sector, they get).

All this under the banner of “I served…gimmie, gimmie, gimmie”. Actually quite nauseating. Contrast that to Vietnam vets, who had none of these entitlements and were forced to go over there and were treated like dung by our own people, my respect definitely goes to the Vets of old rather than those from the Sandbox.

30 years of mortgage slavery that are result in massive losses sounds like a nightmare to normal people.

Are you Amy Hoax’s boyfriend?

free equity is part of the american dream.

Houses depreciate even when they’re maintained.

Agreed—but when the currency that you are measuring the house value in decreases in value at a rate faster than the depreciation of the house, then the _nominal_ value (NOT real value) can still appear to go up.

That makes azdude mistakenly believe that he has “appreciation”.

US currency hasn’t “decreased in value at a faster rate”.

It sure did in the ’70s!

Because wages were rising rapidly.

*THINK*

Because wages were rising rapidly.

Again, you are confusing cause and effect. Wages were rising rapidly because workers demanded more _because_ the currency was diminishing in value.

No my friend. You’re confused.

Labor had leverage and overused the leverage. The conditions today are exactly the same yet they can’t leverage, thus there is no inflation.

LEARN the difference between inflation and price fixing.

The conditions today are exactly the same

The conditions today are exactly the same? I want some of what you are smoking.

You would think he would stand in line for a good pat down.

Hillary/Booker are not representative of blacks, gays, women, etc.

Both are consummate insiders, grads of Yale Law, etc. Everything K Street loves.

Not unless he comes out of the closet first. He can’t be nominated while in the closet - - too many variables

Hillary hasn’t come out of the closet.

I’m waiting for slithers him/herself to come clean.

“Hillary/Booker are not representative of blacks, gays, women, etc.

Both are consummate insiders, grads of Yale Law, etc. Everything K Street loves.”

So is Barrack H. Didn’t stop him. Democrats aren’t very bright. They just like shiny new objects….in 2016 the shiny new object will be gay man / lesbian woman ticket. And they’ll win in a landslide.

You’ve got a crush on Obysmal….. you can tell us Slithers.

“Hillary hasn’t come out of the closet.”

As what?

For every $2,000 spent on maintenance, you get $1,000 of appreciation.

No my friend.

Houses depreciate rapidly. The losses to depreciation are offset by massive maintenance costs….. CHA CHING

Got losses?

azdude02 is Darryl? Or someone else just trying to needle us, right?

He can’t be serious with his constant reference to homes ALWAYS appreciating with maintenance? There is no reason that a home should “appreciate” in the traditional sense of the word. Of course they can go up if they are located in areas with scarce land or tough building codes (SF, NYC areas)… but that’s really more about markets and laws than it is about any intrinsic appreciation.

funny trolls

“For every $2,000 spent on maintenance, you get $1,000 of appreciation.”

And $5000 in tax savings thanks to the property tax and interest deduction. We always conveniently seem to forget about that little piece of the puzzle.

Nice try Slithers.

MID is hopefully going away in the relatively near future. It’s a useless hand out to realtards. And only someone who overspends on a house (and is therefore unable to pay it down/off early) collects a lot of MID. Most people do not have enough mortgage interest to make itemizing worth it. It’s a benefit that goes to the people buying very expensive houses, many of whom are vastly overpaying.

“MID is hopefully going away in the relatively near future. ”

LOL.

4 years from now, the MID will be gone. You can wager on it.

I don’t anticipate the MID going away. At best, you may see a piecemeal reduction of MID by limiting it to primary residences or to a certain total mortgage amount, with existing mortgages grandfathered in. That will knock out most of the actual tax breaks while leaving the bulk American Dream intact.

Shanahan was just canned. Whatever. I used to like football but now it’s all contracts, commercials, and concussions.

“MID is hopefully going away in the relatively near future ??

Only in the face of complete tax reform which I could not see until at the earliest 2017….

The legislation has already been drafted.

“It’s a benefit that goes to the people buying very expensive houses, many of whom are vastly overpaying.”

It’s a benefit that goes to evil rich people in high brackets, true. But so what? Only evil rich people pay any taxes to begin with.
And it’s not going away. It may be scaled down with some max like $1M. But it is never going away.

And the property tax deduction is never going away either. For many people they pay more in property than interest. Ever look at property taxes in NJ? $10K a year is common for a middle class house. That’s $2800 tax savings alone.

“4 years from now, the MID will be gone. You can wager on it.”

Just like you can build a house for $55/sq ft? In fantasyland anything’s possible I suppose.

And we prove it 52 weeks a year Slithers.

Now direct your attention back to the topic: The MID. The legislation to scale down MID has already been drafted. You might not like that reality but it’s reality nonetheless.

“the legislation to scale down MID has already been drafted.”

OH NO!! Legislation has been drafted. You realize legislation is drafted every year to abolish the IRS as well? There;s a better chance of that happening than getting rid of MID and property tax deduction. But you keep on dreaming if it makes you sleep better at night.

Rescinding the IRS doesn’t make it through committee and onto the house floor like the MID has.

Say bye bye to the MID Slithers.

I wish I could live in the Fantasyworld that is HA’s brain…it would be fascinating.

You merely wish what I communicate to you is false…. but it’s not.

You know the saying Slithers….. wish in one hand and $hit in the other and see which one fills up faster.

Yawn. Rescinding Obamacare DID make it through committee and onto the House Floor — over 40 times.

Congress may take the MID away from the rich, but from the middle class — that dog won’t hunt.

90% of middleclass debt donkeys don’t pay enough in interest or property taxes to take it so it’s a distinction without a difference. Those that do pay that much are hopelessly in debt. Another distinction without a difference.

90% of middleclass debt donkeys don’t pay enough in interest or property taxes to take it so it’s a distinction without a difference.

No, the difference is that they THINK they took the deduction, as they have insufficient lower-math skills to realize that they end up with almost nothing more than the standard deduction.

In other words, the difference is that the FEEL better for having the mistaken impression that they took the MID.

Sad, really.

And somehow or other millions of people didn’t die of hunger.

Maybe because we had an economy with many more good jobs at that time?

Whhaaaa? During the evil Reagan years? That can’t be. I have been assured multiple times by my liberal betters that the 80s were the worstest economic period ever. And yet, somehow even under those depressionesque circumstances, people managed to get by with 13 weeks of UI benefits.

Today it’s 99 weeks and even that isn’t enough for the free s**t army.

And yet, somehow even under those depressionesque circumstances, people managed to get by with 13 weeks of UI benefits.

Sure, there were economic hard times back then (I remember the Misery Index coming into vogue)—but that was long before we off-shored our entire manufacturing base, and all of the jobs with it.

People with less education have many many fewer options these days.

You can’t have it both ways. Either the 80s were horrible or they weren’t. If 13 weeks was good enough for the awful horrible Reagan years why isn’t it good enough for the booming spectacular economy of Obama’s years?

yes but back then everyone knew that factory jobs were undesirable, and no one wanted to work at the mill like dad did. well except if you decided you needed to work.

Whhaaaa? During the evil Reagan years?

Lola must still be hungover to not bite on this.

Passed out and hungover an alley in rio with his pants around his ankles.

Oof.

+1 Lets see their teeth; interviewer, crack a funny one.

GREAT way to avoid the meth-heads!!

Speaking of cars:
http://finance.yahoo.com/news/why-wont-driving-electric-car-174700076.html

GM does make crap.

Not according to Consumer Reports. Per CR, GM is now “middle of the road”, about the same as some Japanese brands (not Toyota), and much better than Nissan. The GMC brand was ranked in the top third, comparable to Honda, which has tumbled lately.

http://science.howstuffworks.com/water-boarding1.htm

Now understand I think that the use of any enhanced interrogation method should be strictly limited and what we did in Iraq was both shameful and counterproductive. Here are my requirements for its use:
1. You must be 100% certain that it is only used on terrorists. A person is not a terrorist just because he fires on the U.S military, he could legitimately think of himself as a freedom fighter fighting a foreign occupation. Thus, only when we are 100% certain we are dealing with someone that attacks and purposely kills innocents should it even be considered. Anyone we torture and his family, and that is quite extended family in the Middle East, are going to become our enemy if we torture an innocent person.
2. There must be no way to obtain the information in a timely fashion through bribes etc. A cooperating person is much more valuable than a tortured person.
3. Exigent circumstances can and should be considered, say if we know a bomb has been planted at a school but don’t know which school, or if the person is a very high level terrorist target that would know of numerous active plots.
4. It should never be inflicted for the sake of punishment, just to save lives.
5. It must be strictly regulated and only specialists should engage in it under clear orders and with a clear review process in place to document what methods were used and any results, so the policy can be refined.

I believe they still have heat in the ship so I believe so. But I read the beer is running low so they should be leaving soon since the hard liquor cannot be far behind.

just funnin’ with ya Dan.

the polar bear die off was krap too. i read that there are many more polar bears now than there were 25 years ago (or something close to 25).

http://www.krdo.com/news/sister-of-crew-member-stranded-on-ship-in-antarctica-speaks-to-krdo/-/417220/23687986/-/6p2v1g/-/index.html

They are probably being forced to drink Budweiser, so keep them in your prayers. It is almost like drinking your own pis* to survive.

much of the debt is owed to ourselves

The debt “owed to ourselves” is just an accounting gimmick, perfect for tracking how much we are sticking it to future generations.

BOHICA!