Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Posted By: Ben Jones @ 2:35 am
Hi all, I’m in Europe at the moment, and thought I’d post a few local housing anecdotes for an on-the-ground perspective.
1) There is construction EVERYWHERE in every city I have passed through. Apartment building renovations, new hotels, shopping streets, infrastructure. All you see are cranes, scaffolding and empty lots where old buildings have been torn down to make way for new ones.
2) Several people have mentioned the terrible housing shortage in [whatever city they live in]. When going past a new €4 billion train station/housing development in central Europe, the taxi driver said, “there will be new housing for young people, because there are not enough apartments for them. Rents are going up and the young can’t afford to live here. They need more apartments.”
Exactly the same narrative as NYC, London, Denver, wherever. This reminded me of what Ben has been saying for a while: we’re supposed to believe that suddenly, there is massive shortage of housing in every major and minor city across the globe??? But people here are buying into it hook, line and sinker.
3) A local told me there is a lot of construction in the suburbs too, replacing low-density houses with medium-density apt complexes. All this suburban expansion reminds me of the exurb development of the last bubble in the US. The suburban construction appears to be limited to the more upscale neighborhoods though, and the apartments skewed to the luxury market, which is not at all useful to the local populations.
3) Stories are flying around of Russians knocking on front doors with suitcases full of cash, trying buy a house on the spot even if it’s not for sale. Many real estate ads in windows are also printed in Russian and listed at a significant mark-up.
Anecdotal evidence of course, but all of this says to me that when the housing bust finally comes to the EU, it’s going to be epic. The amount of malinvestment is truly staggering; the amount of construction far worse than the US bubble heyday in construction hotspots like Las Vegas or Miami.
And three more vignettes, not exactly about housing but related:
4) A local student told me he pays €20 a semester to attend his 4-year university. As student debt is always cited as a reason why young people in the US aren’t buying starter homes, this difference is probably worth considering - €160 vs. $160,000 for a degree. Of course the student can expect to intern until he’s well past 30, so he may have no debt but he also has no income. Basically, neither the EU nor the US graduate will be buying housing any time soon.
5) Stayed briefly in an airbnb flat, and the owner’s story was of note because it is probably increasingly common - she downsized from a big family apt to 3 smaller apts: 1 for her, 1 for her college kids (who also rent the spare room to roommates), 1 to rent out short term. The short term rental is a huge amount of effort, one I’m sure she would gladly give up if yields rose on savings accounts enough to compete with the rental apt return. She also says everyone she knows is now trying to rent out their spare room or flat on airbnb, to get extra cash.
6) The amount of inter-EU tourism is mind-blowing. I’m starting to think that the only thing keeping the EU economy afloat is Europeans taking long weekend trips to other European cities. The related services - hotels, short-term apt rentals, restaurants, tours - are all heavily oversubscribed. This must have some effect on local housing, with 2nd home buyers and investors expecting the tourism boom to last forever and prop up property values.
Thanks Ella58….Good on the ground real time information..
Its a world wide phenomenon…Only common denominator is the zero return on Capital and the same seeking higher yields…
We have seen this play out before…The development overshoots the markets ability to absorb the space…Thats why “time & timing” is such a critical factor…If you hit the market early or in the middle of the expansion your usually safe…If you come in late, you usually get your butt handed to you…
On the other hand, in some markets, maybe it won’t have that much disruption even if they come in late…These projects are in very strong hands…I know one developer around here who builds 50 mil + buildings and sometimes they sit empty for many, many years….Principal was quoted saying, “its okay, its built, we own it, someone will lease it sooner or later”…
“zero return on Capital and the same seeking higher yields…”
I guess it’s time to get interest rates back up in the 10-15% range then.
Maybe after a couple of decades of ever-spiraling inflation?
“Its a world wide phenomenon…Only common denominator is the zero return on Capital and the same seeking higher yields…”
The only common denominator is the zero return on SOMEONE ELSE’S capital seeking higher yields.
It may be prudent to stay in cash but if you are handling somebody else’s money and taking a large cut of the money you are handling then staying in cash is not an option for you.
“As long as the music is playing, you’ve got to get up and dance.” - Charles Prince
if you are handling somebody else’s money and taking a large cut of the money you are handling then staying in cash is not an option for you ??
First, nobody gets a “large cut” of anything anymore…If you stay in cash, you won’t be handling anyones money for very long…Why would you pay someone to do something you can do yourself (stay in cash)…
So, its the zero yield, and capital seeking higher yields right now thats driving a lot of development of which Ella58 described which was my point….
Right now these development proforma’s only need to show 5% + - yields to attract capital…Take the treasury rates up to 5% and these proforma’s would need to spin off 8%-9%…
As I suggested, its a world-wide development phenomenon with “one” common denominator…zero yields on cash….
“First, nobody gets a “large cut” of anything anymore.”
Wiki-up “Hedge Fund” and you will read this:
“Fees paid to hedge funds”
“Hedge fund management firms typically charge their funds both a management fee and a performance fee.
“Management fees are calculated as a percentage of the fund’s net asset value and typically range from 1% to 4% per annum, with 2% being standard. They are usually expressed as an annual percentage, but calculated and paid monthly or quarterly. Management fees for hedge funds are designed to cover the operating costs of the manager, whereas the performance fee provides the manager’s profits. However, due to economies of scale the management fee from larger funds can generate a significant part of a manager’s profits, and as a result some fees have been criticized by some public pension funds, such as CalPERS, for being too high.”
The incentive is to perform, staying in cash is not performing hence there is no incentive to stay in cash.
If I were running a hedge fund and I had the ability to swing deals the deal I would like to swing would look something like this:
I would find a market that I could legally corner, such as a neighborhood or two of houses.
I would begin buying up houses at higher and higher prices(using other people’s money, of course). The effect of doing this would puff up the value the funds I managed.
I would then extract my fees from both the value of the funds (which would have increased) AND the INCREASE of the value of the funds.
And I would do this until I couldn’t do it anymore.
Easy money, no?
If the value of the houses in a neighborhood is determined by the value of the comps, and the value of the comps is determined by the latest sale price of a house in the neighborhood, then all one needs to do to increase the value of all the houses in a neighborhood is to pay high prices for the houses in the neighborhood that are for sale.
If your fund owns ten thousand houses in a neighborhood and several of the houses in the neighborhood are put up for sale and you decide to buy them and jump their prices up by, say, fifteen percent then you automatically jump up the VALUES of the ten-thousand houses you already own by something like fifteen percent.
Where are the buyers at that inflated price?
And you will face little opposition when you do this.
If it were stocks or commodities you were trying to corner, trying to pump up the prices, then you would have to overcome the actions of short sellers. But in the world or real estate, at least in these cases, there are no short sellers.
Nor is there opposition from various governmental regulatory bodies because most regulatory bodies have an interest in keeping RE prices elevated.
It has been deemed to be in the national interest to keep RE prices elevated.
“Where are the buyers at that inflated price?”
My hedge fund would be one of them, and anybody else I could suck in.
Remember, I wouldn’t plan to make my money by selling real estate, I would plan to make my money by extracting fees.
They better have a pile of money because there are a herd of excess empty houses out there and they’re going to need to buy every one of them in order to corner the market and influence price.
“I would find a market that I could legally corner, such as a neighborhood or two of houses.”
That wouldn’t work, as prospective buyers could avoid paying your attempted monopoly prices by purchasing for less one or two neighborhoods over.
Now if you had sufficient financial firepower to corner the market on a large swath of an entire metropolitan statistical area, that would be another story.
“If your fund owns ten thousand houses in a neighborhood and several of the houses in the neighborhood are put up for sale and you decide to buy them and jump their prices up by, say, fifteen percent then you automatically jump up the VALUES of the ten-thousand houses you already own by something like fifteen percent.”
That should work great as long as there is always another investor or fund willing and able to make purchases on the same basis in the future.
“Remember, I wouldn’t plan to make my money by selling real estate, I would plan to make my money by extracting fees.”
Don’t forget about the part where you unload shares of your fund on unsuspecting greater fools before the next price crash.
“They better have a pile of money because there are a herd of excess empty houses out there and they’re going to need to buy every one of them in order to corner the market and influence price.”
There may be a pile of excess empty houses but they have to dumped on the market for them to force the prices down but so far they haven’t been.
And as long as they are held back from being dumped they hold their “value” (real or imagined) and as long as these values are held up management fees can be extracted.
Extend and pretend works for not only the lenders, if also works for the extractors of fees that are taken from extended and pretended values.
“That should work great as long as there is always another investor or fund willing and able to make purchases on the same basis in the future.”
“Don’t forget about the part where you unload shares of your fund on unsuspecting greater fools before the next price crash.”
You are not paying attention: I wouldn’t care about whether or not I could sell the houses. I wouldn’t plan to be making money by selling houses, I would plan to be making money by extracting fees.
The ones interested in me selling the houses are the ones who put up the money.
And here is another area whereby my interests and the interests of the owners of the OPM differ:
The more money I manage the greater are my fees. Selling houses and returning money to investors lowers the amount of money I get to manage, and this lowers my fees.
Thus the incentive to me is to keep up my buying and to never become a seller.
Blackstone is a good example of a hedge fund with sufficient financial fire power to execute the strategy to which I allude above:
1. Buy up a large share of the available homes in a metropolitan area at a premium to asking prices in order to drive prices skyward.
2. Line up investors to purchase bonds whose income stream is derived from rental income on the homes you bought.
3. Blackstone will make a bundle, provided it manages to offload all of its rental payment pass-through securities before the next leg down in prices. And since the U.S. government has made a policy commitment to prop up home prices, there is little risk of price decline before Blackstone has offloaded its bonds.
Blackstone Funding Largest U.S. Single-Family Rentals
By John Gittelsohn and Heather Perlberg
Oct 23, 2013 9:31 AM PT
Steve Schwarzman’s Blackstone Group LP (BX) has spent $7.5 billion acquiring 40,000 houses in the past two years to create the largest single-family rental business in the U.S. The private-equity firm is now planning to sell bonds backed by lease payments, the latest step in turning a small business into a mature industry.
Deutsche Bank AG (DBK) may start marketing almost $500 million of the securities as soon as this week, according to a person with knowledge of the transaction. The debt will include a portion with the highest investment grade from at least one ratings company, according to another person. Both asked not to be identified because the deal isn’t public.
Blackstone has led hedge funds, private-equity firms and real estate investment trusts raising about $20 billion to purchase as many as 200,000 homes to rent after prices plunged 35 percent from the 2006 peak. The largest investors, seeking to profit from rebounding prices and rising demand for rentals among millions of Americans who went through foreclosure or can’t qualify for a mortgage, are looking to the bond market for capital to buy more properties and increase returns with borrowed money.
“Securitization is the next step in the evolution of the single-family rental business,” said Rob Bloemker, chief executive officer of investment firm Five Ten Capital LLC, which got a $100 million credit facility from Deutsche Bank in April to buy homes. “It brings consistent and conforming standards to lending, which will help bring larger pools of capital in and get comfortable investing in these types of loans.”
Apparently not considering housing demand has fallen to 20 year lows.
Blackstone’s securitization is a fancy way of saying they borrowed a lot of money. They won’t make a dime by issuing the bonds.
They don’t make any money until they sell the homes and pay off the bonds…OR take the whole thing public, and sell the entity that owns all the homes via an IPO.
It’s like saying that a person who bought a home for cash at $200k, then “made money” by borrowing $100k against it.
The person only makes money if they sell for enough over $200k to cover the cost of sale.
I know one developer around here …
When I say I know, I mean I “know of”….
Look up the name John Sabrato….Then John Arrillaga…Then try the Irvine Company and you will get my drift…
Dang it. I was hoping it was Sterling.
Saw these luxury apartments go up in Waldorf, MD at height of last frenzy. I thought no one could afford them. They filled quickly with section 8 slum makers.
“There is construction EVERYWHERE in every city I have passed through. Apartment building renovations, new hotels, shopping streets, infrastructure. All you see are cranes, scaffolding and empty lots where old buildings have been torn down to make way for new ones.”
Sounds like stimulus on steroids.
Kind of like in HI when I visited a couple of times back in Fall 2006. The joke at the time was that the HI state bird was ‘the crane.’
Wanna by a condo in Greece? Amy has a deal for you!
1. Reintroduce Glass-Steagall Act
2. RICO charges for AIG, Goldman Sachs, JP Morgan, Citigroup and Bank of America for massive and on going mortgage and securities fraud.
3. Fully Audit the Federal Reserve.
4. Clawback of Banker Bonuses that were funded with taxpayer dollars
5. Allow Student Loans to be discharged during bankruptcy proceedings.
6. Overturn Citizens United vs. FEC
7. Repeal Commodity Futures Modernization Act of 2000
8. Repatriate Overseas Corporate Profits and tax at the current rate
9. Treat all Capital Gains as income for tax purposes
10. Ban High Frequency Trading and Quote Stuffing
11. Remove FICA tax cap
12. Reinstate FASB 157
And how is this going to solve the collapsing housing demand and excess empty housing inventory problems?
None of them required if they just Stop money printing and tinkering with rates.
“5. Allow Student Loans to be discharged during bankruptcy proceedings.”
No fugg’n way, Jose. Maybe discharge for amputation, Alzheimer, etc., and of course death.
Yep. Spend all that time and effort indenturing them and you want us to do what?
How about allowing tuition and fees to be discharged in bankruptcy? The student would still be on the hook for living it up in luxury housing.
No fugg’n way, Jose. Maybe discharge for amputation, Alzheimer, etc., and of course death.
In the government student loan program the government does pay off the loan if the borrower dies or becomes permanently disabled. Borrowers have to pay a 2% guarantee fee on every loan to fund those payments. I imagine that payouts for death could be a growing phenomenon. I know a lawyer whose student loans won’t be paid off until he’s 63. He smokes a lot and drinks a lot of beer. It’s possible that he’ll die before paying off the loans.
13. Shutdown fannie, freddie, FHA, Section 8, etc., the works!
The Washington Post
The Post’s View
Fannie and Freddie wind-down opponents wind up misleading ads
By Editorial Board, Published: April 27
NO GOOD DEED goes unpunished. And so it is with bipartisan efforts in the Senate to wind down and replace mortgage guarantors Fannie Mae and Freddie Mac. Senators of both parties are being targeted with TV and radio ads that are flagrantly misleading, even by the low standards of campaign propaganda. Among those being blasted by the ads is Virginia Democrat Mark Warner, a key player on housing finance reform who faces a reelection contest against Republican Ed Gillespie — though our purpose here is not to take sides in that race but rather to pierce the policy fog.
The ads are sponsored by the 60 Plus Association. One says the Fannie-Freddie reform bill threatens “pension and retirement funds” just as “Obamacare” threatened health-insurance policies; while retirees lose, it says, “the federal government will seize all profits.” Another ad claims the bill would “put big banks in charge of housing” and give them “handouts.”
These are pretty gross distortions of the status quo, in which big banks already supply most mortgages, and of a proposal for change that would replace the busted Fannie-Freddie model of implicit, unlimited government backing for securitized mortgages with an explicit, limited federal guarantee that would require private-sector bond issuers to absorb most catastrophic losses. Though not a pure free-market alternative to the previous setup, the bill is at least a compromise that mitigates past structural flaws and has both the Obama administration’s support and a chance of passage.
For all the opponents’ mawkishness about middle-class retirees, the biggest losers from the bill would in fact be a handful of giant hedge funds. Before the government took over Fannie and Freddie at the height of the Great Recession, the entities’ stock was generally privately owned. In the federal bailout, Uncle Sam took 79.9 percent ownership — driving the value of the remaining 20.1 percent almost to zero. Hedge funds snapped up these penny stocks on the off chance that Fannie and Freddie would return to profitability before Congress figured out how to replace them permanently. Now the companies are, indeed, profitable, and the stocks would be worth a lot of money — if not for the fact that the Obama administration meanwhile interpreted federal law to allow the payment of all profits to the Treasury rather than shareholders.
Number 1. Repeal progressivism. Number 2. If you ever have a list of ten or more things to fix the problems which actually progressivism caused (and you don’t know it), you just might…be a progressive.
LOL. Got that right.
Your list of 12 enacted would be an awesome start!
Hope and change…
Elections have consequences.
Desperate for work, college grads become nannies
The Philadelphia Inquirer | May 3, 2014 | Samantha Melamed
Parents have more options as overeducated young people turn to baby-sitting.
Ashley Newhall of Philadelphia has a law degree and a master’s in agricultural law, and she passed the bar in Pennsylvania and New Jersey. These days, she’s working with some extremely demanding and exacting clients.
Most of them are less than 3 years old. Newhall’s primary income source for the past few years has been baby-sitting.
Parents, said Newhall, are “blown away. They’re like, ‘Oh my gosh! You’re the most overeducated nanny I’ve ever had.’ ”
But jobs are scarce, and all that education came with six-figure debt for Newhall, 28. Along with two other jobs, she said, “the nannying is keeping me afloat.”
Newhall may consider her stint in the nursery a detour. But for busy parents, it’s a boon. Parents are enjoying a pool of highly qualified and educated 20-something sitters — some with safety certifications and degrees in early-childhood education — often at the same price as the high-schooler down the street.
“‘Oh my gosh! You’re the most overeducated nanny I’ve ever had.’”
“Oh my gosh! You’re the most overeducated and indentured nanny I’ve ever had.”
Cause and effect: If they weren’t indentured then they probably wouldn’t be your nanny.
Happy Cinco de Mayo!
Disability Policy Fast-Tracks Applicants Who Can’t Speak English
Fox News Insider | May 03 2014 12:00PM
No English? No problem! A little known Social Security policy considers a person’s ability to learn English when determining disability eligibility.
Sen. Jeff Sessions (R-Ala.) sent a letter to Acting Commissioner of the Social Security Administration Carolyn Colvin last week to express concerns about a disability policy that may fast-track Americans who can’t speak English.
The policy allows people to qualify for benefits more quickly if “they are incapable of communicating in English.”
Disability applications have gone up 230 percent in the last decade, according to a report.
Seattle WA Housing Prices Sink 5% YoY On Rising Inventory
pikes peak as seen from the north in the pike national forest, looking south across the hayman fire burn area, 12 years on
Pueblo, CO Housing Price Crater 24% YoY As Demand Collapses
Ever been to Pueblo? It’s like Akron with tumbleweeds.
I’ve never been to Akron. What’s Akron like?
50-100+ year old housing stock, empty factories, vacant lots that used to have factories.
Sounds like any other area in the country.
Someone posted a photograph of a new suburban development outside Denver a few months ago. It appeared to be hundreds of nearly identical houses on tiny little lots with hardly a single tree to be found. That’s out in The West, big sky country, where the deer and the antelope play.
I bet those old houses in Akron have some character and were built on lots that are 1/4 or 1/3 or an acre with trees. On the other hand, it’s possible that the owners are mostly senior citizens who can’t afford the upkeep and the houses are slowly falling apart.
West Akron is nice. I’m referring to the larger swath of the city that is indistinguishable from Cleveland, Toledo, Youngstown, Canton. Just block after block of decay and rot. And yes, they have alot of trees.
Colorado Springs CO Housing Demand Craters 24% YoY As Buyers Exit
Boulder, CO Housing Prices Crater 20% YoY; Demand Crumbles 10%
Fort Collins, CO Housing Demand Plummets 16% YoY; Buyers Exit
Commerce City (Denver) Rental Rates Crater 15.5% YoY As Vacancy Rate Balloons
May the Fourth be with you
Happy Star Wars Day
You’re Thore, I’m tho thore I can hardly pith.
My favorite Norse joke.
I’ve grown to despise all things Star Wars.
I used to like it….when you’d see it maybe once every 8-10 years. Now, I find the franchise revolting.
I hear that cable/satellite now runs numerous installments of Star Wars, Harry Potter, Jurassic Park or Raiders of the Lost Ark every weekend.
How many times can anyone watch any of these? Thirty? Fifty?
They have lost themselves a fan.
I also greatly dislike the growing penchant people have for watching 6-15 episodes of their favorite shows all at once. What’s up with that? Get a freaking life already.
I don’t like the idiotic force and the progressive implications that feelings are much more advantageous than reason. But I like the idea of fighting the empire. The philosophy of being Jedi militia to fight the empire is libertarian.
On the other hand, Star Trek is very authoritarian and a utopian communist society if you think about it. There are ver few hins of private property. Captain Picard’s brother owns a winery, for example.
There’s a station that I pick up OTA that shows old movies. I saw Rollerball a couple of weeks ago and Catch-22 last week. It’s neat when I’m in the mood for TV, but I wonder if they’re getting good ratings.
I also greatly dislike the growing penchant people have for watching 6-15 episodes of their favorite shows all at once. What’s up with that? Get a freaking life already.
It really bothers you that much how people spend their free time? Is that a pleasant sensation for you, or an unpleasant one?
Rollerball? I was watching that via rabbit ears too. It’s odd to think you and I were probably both watching it at the same time.
In California we called it Roller Derby.
And I’ve grown to despise all things LIEberal.
Can’t wait for Romney to run again in 2016, third time’s the charm!
Saw two more houses pop up for sale on Zillow in the small area I’ve got my eye on. The other 8 still haven’t sold. And another interesting thing, recent sales appearing in this area never showed up for sale that I could tell. Maybe zillow is just cruddy, but even though they are usually late with stuff appearing, it usually does show up in a week or two. These houses that recently sold never showed up for sale.
These houses that recently sold never showed up for sale ??
Not sure what your market strength is but It happens a lot in low inventory, heated markets…”Direct unsolicited offers”….Buyer pays the same amount that they would in a listed offering, seller receives the extra proceeds due to no, or greatly reduced brokerage commission…Buyers happy they got the house…Seller is happy because they saved a lot of money…
That strikes me as chicanery, especially in markets where everyone is claiming multiple offers. Why do this ? It seems like you are screwing yourself out of extra dollars, even in the reduced commission scenario.
More Stealtor fraud, no doubt.
It seems like you are screwing yourself out of extra dollars, even in the reduced commission scenario ??
Why do you assume every seller is a stupid idiot and a buyer is trying to get a deal ?? Why can’t the seller evaluate the offer in the context of what they market is saying….The same market data is available to all…Maybe the offer reflects an open market multiple offer price and the seller gets the added value of reduced or no commission…Just offering a possible answer to your off market sale transactions…It happens…
will janet yellen bail out the bankers n the next asset deflation phase? seems like they just print more money to keep the scheme afloat.
Well chit, there goes the cell phone; off to work. Nice day too.
Just think of the money! (Something an orchestra conductor I used to work for on Sundays would always say at our rehearsals…)
Do you want me to read the card?
Everyone Must Sign In
http://www.youtube.com/watch?v=F-t8PngHgWY - 140k -
Michigan House Envy: You won’t believe what you can buy for $7,500 down and no taxes for 15 years
If that’s in the Detroit area, say no more.
The same website also has a headline “A once vibrant neighborhood becomes the site of Steven Utash mob attack”
Number 9. In that case I sell all my stocks. And so will most others. Crash.
Larkspur CA: Listed at $355k, decrepit Larkspur cottage gives new meaning to the phrase ‘historic’
The front steps have collapsed, the wood siding is falling off, the house is in foreclosure, but more than 120 people flocked to a Larkspur home offered for $354,900 in the first five days it was listed. (the city requires that potential buyers sign a waiver before entering because the place is so decrepit.)
And before you start thinking “teardown,” think again. The 876-square-foot cottage at 143 Madrone Ave. was built in 1905 and has a historic resource designation that means it must be preserved in some form.
After 20 years selling distressed properties, “I don’t think I’ve had any property (in) worse (condition),” the listing agent said. This includes the foreclosed Martinez cemetery he sold about 15 years ago.
Bay Area house flippers star in new reality TV series
In an era of rising home prices, making money flipping a house seems like a slam-dunk.
But buying, remodeling and quickly selling a house at a profit is an art practiced successfully by only a few, even as many of us dream that we could do it ourselves.
“People see all this money getting made, but at the end of the day, with the interest you pay, the selling cost and the repair cost, you really need to know what you’re doing.”
Buyers at auctions typically don’t see the inside of a home until they own it, according to Michael Kaufman, a Los Gatos real estate investor who was a contestant with his business partner, Todd Hill.
“We never bought a property without physically laying our eyes on it, but you can’t get inside,” Kaufman said. “Sometimes one might be vacant and you can look in the window, but in most cases you can’t get inside.”
New York Times - Going It Alone
For Sale by Owner in Park Slope: A Steep Learning Curve
“I have always disliked brokers. When my husband and I first set out to buy an apartment in 2004, we felt harassed by the pushy hoverers who chased us with sign-in sheets and referred to closets as “baby nooks.” It seemed their only goal was to create an unwarranted frenzy over each unit as a way of getting some idiot to pay far too much.
In December 2004, we paid far too much for a two-bedroom floor-through in a Park Slope brownstone: $616,000, nearly $100,000 over the asking price. We had lost three other auctions, I had become pregnant and we needed a place to land.
Eight years and one child later, we had outgrown our apartment as well as life in a small co-op. We wanted to adopt a dog, but my fellow board members would not budge on the longstanding no-pet rule. (Oddly, there was no rule prohibiting babies, three of which we’d been blessed to have as neighbors.) So we decided to do an “only in New York” thing: relocate three humans to get an animal. Our plan was to sell, and then rent.”
I tell you over and over again I would not be this close to retirement for another ten years if I married my girlfriend and we had kids and dogs or cats. And I would be relying on social security mainly.
Sad how people favor economic bondage because they want kids or have dogs. I love dogs but I am too mobile. What a sad story those folks are severely debt slaves because they want dogs.
Cats and dogs don’t cost much. If an interest in dogs causes these people to sell and rent, that’ll probably work out well for them. It’s a good time to sell and rent in NYC.
The cost comes from the kind of domicile you need to own or rent to house a pet. My neighbors who recently moved out of their rental home into an apartment learned this lesson, as they had to give away the family dog when they moved.
It amazes me how a pet can constrain the freedom of the owner of that pet. I once had a cat while consulting. I prefer dogs more than cats, but cats are much more independent. I was gone for two days every two weeks 2500 miles away while owning that cat. Even so, she constrained my choices.
Service dogs or cats can’t be discriminated against. A doctors note will get you a lot in this society.
Now you got me started on the type of people who get doctors notes so they can get the handicapped plaque so that they don’t have to get their huge cabooses (cabeese) through the parking lot. Same deal with service dogs. WTF? What a country this is. Full of scammers.
U.S. stocks may be hitting new highs on nearly a daily basis, but many aren’t enjoying the benefits of the rally.
Stock ownership among Americans is at a record low. Just 52% of adults say that they or their spouse own any stocks, either individually or through funds. That’s according to Gallup, which began tracking this in 1998.
The sharpest decline is among middle-income Americans, classified as those earning between $30,000 and $75,000. In 2008, about 66% of middle class Americans owned stocks, compared to just 50% now.
She used to be quite a pretty young thing. All the boys came around to seek her favors, with glib words and pockets stuffed. She’d spend barely a moment fixing up in those days, a little paint, a little powder. Never anything structural. God forbid cleaning a toilet.
Now, pushing 50, the boys don’t come around like before. It takes longer and longer each day to apply those many coats of paint. A nip and tuck only goes so far. It takes more and more money to keep up the facade. More and more time, and time, she felt, was running out.
Sitting on the stool at the end of the almost empty bar, she sees him. He wouldn’t be here if he didn’t want to buy. She strikes a match, lights her cigarette, attracting his attention. She picks up her drink, smiles, and slinks to him, four layers of paint deep, masking the truth, hidden by the dim lighting.
“Hi, I’m Amy, have I got a house for you!”
She buys him a beer…ruh roh!
She gets him some Cheetos and a sandwich!
JOBS! JOBS! JOBS!
“Lots of available jobs — many paying high wages — relatively affordable rents and an appealing lifestyle have U.S. economists touting metro Denver as a prime spot for recent college grads to strike out on their own.
“Go West, young man,” a fabled bit of advice offered when westward expansion was seen as a solution to America’s problems of poverty and unemployment, rings as true today as it did 150 years ago.
Colorado is one of only 16 states that have recovered all the jobs lost during the Great Recession. In 2013, Colorado had the fourth-strongest job growth in the country, Moody’s Analytics economist Nathan Kelley said, and wages are 18 percent higher than the national average.”
Better hurry and snap up a 500K starter home in Highlands Ranch before they’re all gone!
I drove through there yesterday, BARF.
Sedalia is very nice, albeit not commutable unless you work in Highlands Ranch or Littleton.
I’ve been getting job offers by Amazon and Google recruiters for software types through linked in. The Amazon one was today. Working with drones. It is a relocation deal up in Seattle.
No thanks. No to Drones.
I was in a Starbucks this morning for a fresh burnt brew and sausage sandwich. Now Starbucks is teaming with limousine socialist Oprah to sell tea. You see Oprah’s picture in the Starbucks restaurant. I hear Oprah has a book club. I am wondering if you ever see any books by Hayek, Ludwig Von Mises, Pat Buchanon, Murray Rothbard in her book club. Or are there just “progressive” books by the likes of Al Gore?
This got me to thinking of all the big corporate pandering and apologizing to be businesses all these decades. I remember in High school in the 70s reading my dad’s business week magazines and seeing such “progressivism” by corporations in their ads. One example on TV in the 70s for those who haven’t read Business Week back then: the Coca Cola commercial: “I’d like to teach the world to sing in perfect harmony.” today we see “coexist” bumper stickers. Same deal. “Progressivism” is a decades-long disease.
And my own rule is to never invest politically. If I invested politically all I would own would be precious metals, and I don’t consider my stack of physical metals an nvestment. I know stocks do better than metals over the long run and you don’t earn dividends in physical metals.
But by investing in large companies and not patronizing small businesses don’t I sanction the disgusting “progressivism?”
Maybe by looking at it this way: profiting by investing in what the Feds loose money is fattening up: big corporations. I tell you, if housing historically beat stocks, I would be in real estate mainly. But betting with the Fed, does not mean I have to worship the Fed. I would be a fool to be only in cash right now. I don’t want to end up shopping in the dog food aisle for my dinner. And I don’t have to sanction the rigged political system either because I don’t vote.
I invest in severe socialism too: European stocks and Japanese stocks. They have advanced stages of the “progressivism” disease.
Yeah, “I’d like to teach the world to sing in perfect harmony” must have been a pitch for globalism or world government or something.
But what about Mean Joe Green and that jersey he threw to that kid?
Isn’t it interesting how Corporate America, while opposed to higher minimum wages or anything that would other cut into the bottom line, is otherwise very “progressive”.
Oprah might talk like a progressive, but we know that everything she does is about making a buck.
“SEATTLE, April 29, 2014 – Starbucks today launched Teavana® Oprah Chai Tea, which was personally developed by Oprah Winfrey in close collaboration with Teavana’s leading tea teaologist. Oprah’s personal tea passion and the deep expertise of Teavana have resulted in a distinctive blend featuring a bold infusion of cinnamon, ginger, cardamom and cloves, blended with loose-leaf black tea and rooibos. Customers can now enjoy the blend as a handcrafted latte or loose-leaf tea in participating Starbucks stores across the U.S. and Canada. The loose-leaf tea and brewed tea is available in Teavana stores across the U.S. and Canada.”
From what I gather from this Oprah, in this case, isn’t in the tea business, she’s in the endorsement business; Teavana is the one that is in the tea business.
Oprah leant to Tevana her “personal tea passion” and Tevana, using their “deep expertise” came up with a product, a product that will be marketed via Starbucks.
It’s a triple win: Oprah wins because her name is Oprah, and both Tevana and Starbucks win because the companies will end up increasing their sales of tea.
Capitalism at its finest.
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. – Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)
“I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson
… The modern theory of the perpetuation of debt has drenched the earth with blood, and crushed its inhabitants under burdens ever accumulating. -Thomas Jefferson
History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison
If congress has the right under the Constitution to issue paper money, it was given them to use themselves, not to be delegated to individuals or corporations. -Andrew Jackson
The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity. -Abraham Lincoln
Issue of currency should be lodged with the government and be protected from domination by Wall Street. We are opposed to…provisions [which] would place our currency and credit system in private hands. – Theodore Roosevelt
Despite these warnings, Woodrow Wilson signed the 1913 Federal Reserve Act. A few years later he wrote: I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men. -Woodrow Wilson
Years later, reflecting on the major banks’ control in Washington, President Franklin Roosevelt paid this indirect praise to his distant predecessor President Andrew Jackson, who had “killed” the 2nd Bank of the US (an earlier type of the Federal Reserve System). After Jackson’s administration the bankers’ influence was gradually restored and increased, culminating in the passage of the Federal Reserve Act of 1913. Roosevelt knew this history.
The real truth of the matter is,as you and I know, that a financial
element in the large centers has owned the government ever since
the days of Andrew Jackson… -Franklin D. Roosevelt
(in a letter to Colonel House, dated November 21, 1933)
When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” – Napoleon Bonaparte, Emperor of France, 1815
“The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots and the bankers went anew to grab the riches. I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America and use it to systematically corrupt civilization.” Otto von Bismark (1815-1898), German Chancellor, after the Lincoln assassination
“Money plays the largest part in determining the course of history.” Karl Marx writing in the Communist Manifesto (1848).
http://www.themoneymasters.com/the-money-masters/famous-quotations-on-banking/ - 32k
Anna, TX (Dallas suburb) Housing Prices Plunge 8% YoY; Inventory Up
The housing craters are forming…. and there is no stopping them. There is no containing them.
Home > U.S. Economy
(Video) Housing Market Fall Part 2: Another “Enormous Crater”?
The next phase of the real estate market may unfold with stunning speed
By Bob Stokes
Wed, 23 Apr 2014 10:45:00 ET
The housing market is in the process of falling into an enormous crater.
The Elliott Wave Financial Forecast, December 2005
In fact it was the biggest crater since 1933. U.S. home prices peaked in 2006, then took a nosedive during the subprime mortgage meltdown. And eight full years later the housing market is still struggling.
Existing home sales have been trending lower since August, and in March fell to their lowest level in 1-1/2 years (Reuters). Sales of new single-family homes fell 14.5% to an eight-month low.
In Q1 of 2014, nearly one in six U.S. homeowners with mortgages still owe at least 25% more than the property’s estimated market value (RealtyTrac).
What’s more, the National Association of Homebuilders Market Index in February suffered a record 10-point decline; mortgage originations just dropped to a new 18-year low.
These developments in the housing sector are no surprise to subscribers of The Elliott Wave Financial Forecast. The September 2013 issue described a “resumption of the real estate bust,” and offered this chart and commentary:
MORTGAGES: READY TO BUST TO NEW LOWS
My Arizona municipal bond funds, AAZAX and AAZBX, I suspect, have lowered their average duration. Now they average 4.66 years. They are on the conservative side of intermediate term bonds. IIRC a few years ago these were at least 6 years on average.
The management team has been with it for years and have a great track record.
I am thinking they smell the end of low interest rates and are worki g to reduce the risk. So far this year the funds have experienced an inflow for those seeking safety. My NAV is up but my annual income from these bonds has scarcely budged the last three years. Even though I invest $300 per month and reinvest another $600 to $700 income per month.
Obama Administration Launches Plan to Make an “Internet ID” a Reality
May 4, 2014
It appears the status quo may be finally making its moves to getting control over the heretofore free and open internet. As I and many others have noted previously, the internet is one of the most powerful tools humanity has ever devised. It frees information in a way that was simply unimaginable decades ago and empowers each of us to be as informed or uninformed as we desire.
Just last week in my post, Say Goodbye to “Net Neutrality” – New FCC Proposal Will Permit Discrimination of Web Content, I mused that in so-called “first world” countries like the U.S. the illusion of freedom must be maintained even as civil liberties are eroded. Thus censorship must be administered surreptitiously and slowly. The following plan to implement an “Internet ID” will initially only be rolled out as a pilot program in two states (Michigan and Pennsylvania), and will only deal with government services. That said, we can see where all of this is ultimately headed, and the program, called the National Strategy for Trusted Identities in Cyberspace, should be monitored closely going forward.
Vice reported on this a few days ago:
A few years back, the White House had a brilliant idea: Why not create a single, secure online ID that Americans could use to verify their identity across multiple websites, starting with local government services. The New York Times described it at the time as a “driver’s license for the internet.”
Sound convenient? It is. Sound scary? It is.
The vision is to use a system that works similarly to how we conduct the most sensitive forms of online transactions, like applying for a mortgage. It will utilize two-step authentication, say, some combination of an encrypted chip in your phone, a biometric ID, and question about the name of your first cat.
But instead of going through a different combination of steps for each agency website, the same process and ID token would work across all government services: from food stamps and welfare to registering for a fishing license.
The original proposal was quick to point out that this isn’t a federally mandated national ID. But if successful, it could pave the way for an interoperable authentication protocol that works for any website, from your Facebook account to your health insurance company.
To start, there’s the privacy issue. Unsurprisingly, the Electronic Frontier Foundation immediately pointed out the red flags, arguing that the right to anonymous speech in the digital realm is protected under the First Amendment. It called the program “radical,” “concerning,” and pointed out that the plan “makes scant mention of the unprecedented threat such a scheme would pose to privacy and free speech online.”
And the keepers of the identity credentials wouldn’t be the government itself, but a third party organization. When the program was introduced in 2011, banks, technology companies or cellphone service providers were suggested for the role, so theoretically Google or Verizon could have access to a comprehensive profile of who you are that’s shared with every site you visit, as mandated by the government.
Then there’s the problem of putting all your security eggs in one vulnerable basket. If a hacker gets their hands on your cyber ID, they have the keys to everything.
For now, this is all just speculation. The program is just entering a test phase with select state government agencies only (there are currently plans to expand the trial out to 10 more organizations.)
But it’s not far-fetched to think we’re moving toward a standardized way to prove our identity in cyberspace the same way we do offline.
Keep a close eye on this.
This article was posted: Sunday, May 4, 2014 at 8:07 am
May 2, 2014, 11:36 a.m. EDT
3 signs this market is in trouble
By Anthony Mirhaydari
The market has moved into an odd dichotomy.
On one hand, the mega-cap stocks in the Dow Jones Industrial Average (average market capitalization is $126 billion ) just pushed to a new all-time closing high.
But the rest of the market remains in the doldrums.
Consider that the Russell 2000 small caps (average market capitalization of $594 million) remains roughly 6% off of its all-time high. Moreover, the index continues to repeatedly test its 200-day moving average to the downside (five times over the past month), a critical support level that hasn’t been closed below since 2012.
Everyone is under surveillance now, says whistleblower Edward Snowden
theguardian.com, Saturday 3 May 2014 01.27 EDT
“It’s no longer based on the traditional practice of targeted taps based on some individual suspicion of wrongdoing,” he said. “It covers phone calls, emails, texts, search history, what you buy, who your friends are, where you go, who you love.”
Snowden made his comments in a short video that was played before a debate on the proposition that surveillance today is a euphemism for mass surveillance, in Toronto, Canada.
“Colbath said he issued the original order because neither the banks nor the homeowners seem inclined to move the cases either to a final judgment, dismissal or settlement.”
Palm Beach County foreclosure court order relaxed, remains controversial
By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 4:23 p.m. Friday, May 2, 2014
WEST PALM BEACH —
An order meant to speed foreclosure cases through Palm Beach County’s courts was relaxed this week after complaints from homeowner attorneys, but a controversial passage regarding abandoned cases remains.
The amended order from Chief Judge Jeffrey Colbath gives defense attorneys 10 days to schedule a hearing after filing certain motions, instead of five, and removes language from the original directive that would allow a judge to deny a motion without a written order.
But the courts may still rule a case abandoned if no hearing has been set and heard within 90 days from filing a motion such as for an extension of time or to dismiss a case. In fact, Circuit Court Judge Richard Oftedal, who oversees the foreclosure division, penned a blanket order Thursday saying all cases will be considered abandoned 91 days after a motion is filed and if no hearing is held.
“Many such motions have languished for months and years without any attempt or effort on the part of any party to set the matter for hearing,” Colbath’s new order says. “These unresolved motions delay the proceedings and frustrate the timely disposition of foreclosure cases in the Fifteenth Judicial Circuit.”
Royal Palm Beach foreclosure defense attorney Tom Ice had asked the Florida Supreme Court to weigh in on Colbath’s original order, saying the chief judge overstepped his rule-making authority. Ice said he will fight the new order also because it still puts the onus on the homeowner to move cases to resolution and still allows a judge to deem a case abandoned.
“The shifting of responsibility to the defendants to push the banks’ cases forward is such a sea change to the rules and tradition that only the Florida Supreme Court can decide that,” Ice said. “If this were a good idea, then it should be done for all cases, not just foreclosure cases.”
Colbath said he issued the original order because neither the banks nor the homeowners seem inclined to move the cases either to a final judgment, dismissal or settlement.
As of the end of March, Palm Beach County had 16,255 pending foreclosure cases. Statewide, there are about 218,055 foreclosures wending their way through the court system.
1 Comment (not mine)
Posted by Dive4Blood at 10:35 a.m. May. 4, 2014 Report Abuse
Colbath is doing the right things. The deadbeat homeowners, who have lived rent-free and mortgage-free for YEARS don’t want anything to change. The banks, fearful of the costs of their follies, don’t want anything changed. Meanwhile, the rest of us pay for our mortgages and we pay for the sins of the deadbeats living next door to us.
If you tie up court resources you have to be prepared to move forward. Otherwise, get out of the way so other folks can use the courts
Because it’s different there
London sets new record: Unfurnished penthouse sells for $237-million
They’re not making any more Toronto
In Toronto, crazy deals mask a saner underlying market
I was talking to a guy who is always doing extra work for his stepson’s Scout troop. He is a carpenter by trade so he ends up helping a lot of the kids who have less than handy fathers with their projects. He also makes the kid do his share of the work for his own fundraising which according to him is not always the case with some other parents and kids in the troop.
He was informed of this at a meeting last week.
“money raised by the organization must be used for the public good, not to enrich the members personally,”
New policy prohibits individual Scout fundraising accounts
Posted on 20 January 2014 | 31 Comments
“A Scout works to pay his own way and to help others.” This wording, or a version of it, has been in the explanation of “A Scout is Thrifty” in the Scout Law for decades. And while a Scout might have a part-time job in order to earn money for his Scouting activities, many troops have long provided a means by which a Scout can earn money for his troop expenses through fundraising.
Not any more.
The typical arrangement where all or a portion of the profit from the sale of a product such as popcorn or holiday greens, or work done – stadium cleanup, for instance – is credited to a boy’s Scout account has been in almost universal use. Scouting is normally a reasonably-priced activity compared to other youth clubs and teams, but activities like high adventure, Jamboree and NOAC can be a steep obstacle in terms of finance. A way by which a boy can earn the money and reduce the outlay his family is responsible for seems like a perfect way to teach personal responsibility and develop character.
The Internal Revenue Service doesn’t quite see it that way, however.
In a series of rulings, both recent and over the last few years, the IRS has examined the issue of what they term “private benefit” from activities of non-profit organizations (usually called “501(c)(3)” from the section of the IRS code that regulates them). In order to remain eligible for non-profit status, money raised by the organization must be used for the public good, not to enrich the members personally, either in the aggregate or directly attributable to an individual’s portion of the fundraising.
http://www.fmaynard.com/scouting/archives/2511/comment-page-1 - 101k -
Buying a house through a realtor is like going to a drug dealer to get a prescription filled.
Here’s a little beauty from me to youtie.
Magician Selling Drugs To Kids - 1970’s Anti-Drug PSA - YouTube
http://www.youtube.com/watch?v=g_mC6EZ8Jpk - 130k -
Realtors are liars.
Barack Hussein Obama
I think I am an anarchist in some way or just misanthropic. Eliminating minimum wage at this point in American society would send a tsunami shock wave to all the employers that feel they have workers of last resort. I think people would strive a lot more to work for themselves, maybe even bringing manufacturing back. I can just suppose we would not have over-capacity anymore. Oh the horror.
From October 2011 to October 2012 Gold was in a plateau at $1600 per ounce. Now it’s been in a plateau around $1300 for a bit more than a year. In between those two plateaus gold went to $1800.
Not sure what this means but a myopic analysis of the charts (looking only at one year) shows gold to be bursting out of its trend line if it stays around $1300 another six months. To break out of its long term trend, it will have to hold to $1400 spot 24 months or so down the road.
I was getting all giddy seeing silver try to break through and plunge past $19 but no, won’t do it.
Want to get ripped off? Go talk to a Realtor today.
LOLZ ….. so true.
Displaced low wage earners cometh:
You know what I’m hearing more of these days? People selling their houses after about 5-6 years now that they are able to break even or come away with a little extra (far from any big bubble gains) and then saying “well, I didn’t pay rent that whole time, so I made money.” Yes, I have heard this second hand from a couple of different sources.
If I paid rent for the last 5 years and they paid a mortgage of mostly or all interest payments, at the end of 5 years I don’t have my rent and they don’t have their interest paid to the bank. We both had a place to stay. Neither was free. Neither of us have that money in the bank. No one lived rent free.
Another one is “I get the tax write off.” But you also have to pay property taxes and maintenance and the commission. And you only benefit from the write off for amounts paid over the standard deduction anyway (I think about $12 grand for married).
I’m not never in favor of buying, like some try to say everyone here is, but buying when there is a significant chance of losing tens of thousands almost immediately when parabolic price increases revert back is just moronic. If buying and renting are anywhere near a close call financially then it really doesn’t make financial sense to buy then. It’s other intangibles, usually emotional. Go ahead and buy if you want, if you’ve got the money and think the balance of all of the factors, emotions, stability, eventually having a paid off house, etc. tip the balance for you. But don’t crow about it being a good investment or some financial wizardry. It ain’t.
This blog is a great resource. I’d like to see a sidebar with a kind of FAQ, of the top ten shill Stealtor arguments and the rebuttal thereto. Like “you are throwing away money on rent” v. “You are paying interest to the bank mostly in the first few years, so if you move or sell in less than 8-10 years, you are out the same money in interest.”
“I’d like to see a sidebar with a kind of FAQ, of the top ten shill Stealtor arguments and the rebuttal thereto.”
That gives me mental images of the fraudster/realtor infested propaganda site pnet. No way.
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