The Housing Bubble

Seattle, WA Housing Inventory Balloons As Demand Dives 9% YoY; First Yearly Decline Since 2011

http://files.zillowstatic.com/research/public/Metro/Metro_Turnover_AllHomes.csv

Nevada Housing Demand Craters 22%YoY; Sinks To 2001 Level

http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv

We finally completed installing our solar system last week.

It is a 5 kWh system with 18 panels (and “optimizers”) with a current inverter in the garage. Our total cost was under $12,000. Third party bids were between $17,500 and $18,500, but we purchased the system components directly and installed it ourselves. We have generated 28 kWh/day during the three days of full operation.

There is 30% federal tax credit, so the final cost will be under $8,000 and we will “zero out” our $1,200/year electrical bill and have about 2,000 kWh extra to use for additional purposes (electric car?). We are now waiting for PG&E to approve our net electrical metering (NEM) application.

We could not be happier with the result. It is about a 15% ROI on cost and about a 9.98% ROI when we amortize the system over 25 years! It is hard to find that kind of Return on Investment today and it is “tax free”!

I read a great article by someone about sears yesterday. They said every year sears stays open they bleed off equity from shareholders. Like I was saying about my trip to kmart the other day. Place was dead and lots of employees wandering around.

Shareholders will be the bagholders.

With interest rates sleighted to stay indefinitely low and the labor market improving by leaps and bounds, Wall Street stock market investors must be experiencing paroxysms of joy for now.

I think all the Nanny State shills on this blog are off on flex-Friday plans.

this is a drudge report link and was not written by real journalists

http://www.breitbart.com/Breitbart-TV/2014/09/18/Sessions-America-is-Not-an-Oligarchy-Where-The-Masters-of-the-Universe-Decide-Immigration-Law

because breeders gonna breed

http://news.yahoo.com/world-population-may-hit-11-billion-2100-211340940.html

No-brainer money making strategy for anyone who makes their living by investing:

When the Fed sells Treasurys but hangs on to MBS, the spread will widen, pushing down the value of Treasurys relative to MBS.

Market Pulse
Richmond Fed’s Lacker says he objects to plan not to sell MBS
Published: Sept 19, 2014 8:03 a.m. ET
By Steve Goldstein
D.C. bureau chief

WASHINGTON (MarketWatch) — Richmond Fed President Jeffrey Lacker on Friday said he objects to the Federal Reserve’s plan not to sell mortgage-backed securities from its balance sheet when it comes time to normalize policy. “I believe this approach unnecessarily prolongs our interference in the allocation of credit. The Fed’s MBS holdings may put downward pressure on mortgage rates, compared to holding an equivalent amount of Treasury securities, but if so, then other borrowers would likely face higher interest rates,” he said.
…

This Sunday Peyton will destroy the Fleahawks 45-10

http://blogs.denverpost.com/broncos/2014/09/18/peyton-manning-big-fan-colorados-marijuana-laws/29779/

And with 50% off all Denver area Papa John’s orders the day after the Broncos win, this Monday I will consume three orders of cheese sticks and three large pepperoni pizzas, lest I starve through the bye week until this undefeated season resumes on October 5

Median income stagnant since 2010?

http://www.bizjournals.com/denver/blog/finance_etc/2014/09/denver-median-income-stagnant-since-2010-men-make.html

There is no “pent-up demand” for $500,000 starter homes

Not today, not tomorrow, not ever

EVER

File this under millennials are broke @ss loosers

http://www.bloomberg.com/news/2014-09-19/mom-and-dad-banks-step-up-aid-to-first-time-home-buyers.html

So instead of renting for less than half the cost of buying, these kidz throw their parents’ money down the toilet on overpriced rotting shacks

“Without them, the recovery’s not sustainable”

There is no recovery, you LIAR

One for X-GSfixr: excellent video from a smoke-filled cabin on a passenger airliner (A320) which had to make an emergency landing Thursday morning due to some sort of massive engine failure:

http://www.usatoday.com/story/news/nation/2014/09/19/jet-blue-flight/15873611/

The FIRE sector is not your friend, it’s your competitor, in most if not all FIRE-related transactions.

What has started to concern me in recent years is the breakdown of that system of checks and balances. The facade of the system still exists, but it’s being undermined by money in politics. So when politicians go to shake down big donors, they wind up becoming their lapdogs as well. Both master and lapdog. If you don’t play - pay them protection money - it’s not going to go well for you. If you do - you give up some cash and get legal protection and favors.

Washington Authority Sells First Public Utility Century Bonds
By Elizabeth Campbell Jul 10, 2014 5:55 PM ET
Bloomberg

The District of Columbia Water & Sewer Authority sold $350 million of taxable bonds to be repaid in 100 years, marking the first issuance of century bonds by a U.S. public utility.

The authority increased the deal by $50 million from its original $300 million offering, and moved the sale date from next week to today, said Mark Kim, DC Water’s chief financial officer. Orders were placed for about $1.1 billion, and buyers included insurance companies and pensions, he said.

The structure of this transaction offered a lot to the market,” Kim said in a telephone interview. “It was a very highly rated credit coming into this space in very favorable market conditions.”

http://www.bloomberg.com/news/2014-07-10/washington-authority-sells-first-public-utility-century-bonds.html

Banks are squealing about how they’re being squeezed. Getting rid of free checking for one thing and slapping on more subtle fees. The audacity is amazing. Here are organizations which have had at least hundreds of billions firehosed at them, have their own central bank looking out for their welfare and they’ve still got their hands out clutching for more pretending they’re being squeezed by ever more regulation (i.e. their ability to be openly fraudulent is being somewhat constrained).

Audacity. But, hey, I guess it paid off in 2008 when they helped cause the financial crisis with bad debt, and plagued the world economy with bad debt. A Goldman Sachs CEO and Tim “Not a regulator” Geithner along with The Bernank crafted the bailouts and the policy regime since.

An individual is going to pay a higher price for shoplifting a 150 dollar cart full of groceries than these FIRE executives paid for stealing billions.

kondo-hotel not such a good idea……. who knew?

http://ny.curbed.com/archives/2014/09/17/trump_soho_heads_to_foreclosure_due_to_unsellable_condos.php

“Liberalism is a luxury for those insulated from it by wealth and privilege.” -Thomas Lifson, The American Thinker

Where the Middle Class Goes to Die: In progressive Manhattan, inequality is maxed out.
National Review | 09/19/2014 | Kevin D. Williamson

A new report being released today by the Census Bureau finds that Manhattan has the highest level of income inequality in the United States. That is not entirely surprising, though it would also not have been surprising if it had been San Francisco or another progressive fiefdom. For all the rhetoric about wicked 1 percenters and inequality, progressivism is a luxury good, and progressive-dominated enclaves are generally pretty okay places to live if you have a fair amount of money, but sort of stink if you’re in the middle or at the lower end of the earnings curve.

Because most Americans experience New York City as tourists or in television shows and movies, it is easy to forget that the hometown of Wall Street and a very large population of obnoxious celebrities is a poor city: New York City is not only poorer than the New York State average, its median household income is, in absolute dollar terms, lower than that of such dramatically less expensive areas as Austin, Texas, or Cleveland County, Okla., where the typical household income is a few thousand dollars a year more than in New York City but the typical house costs less than a third of what the typical New York City home costs — and 17 percent of what the average Manhattan home costs. (And it’s a house, not a two-room coop.)

What is particularly salient about the progressive governance of places such as New York City and San Francisco is not the income inequality coincident with it — which has many causes, only some of which are directly related to public policy — but the myriad ways in which misgovernment makes these cities such hostile places to live for people of relatively modest means.

The most obvious issue is the cost of housing, which for New Yorkers is about four times what it is for Texans. Housing prices are a function of supply and demand, and demand for New York City housing is relatively high, a fact that probably does not have very much to do with public policy. I have lived in New York City for some time, and I have never met anybody who says he moved here because it is so well governed.

On the other hand, supply is highly restricted, and that is a direct consequence of bad public policy, an economic reality that is obvious even to such sympathetic progressives as Matt Yglesias, who sensibly notes that limitations on the number of new housing units in places such as Washington, D.C., biases construction toward high-priced luxury homes, while hostile zoning codes in places such as San Francisco prevent markets from responding to demand and lead to “deliberately underutilized” mass-transit arteries. In New York City, housing prices are kept artificially high by draconian restrictions on new construction, rent control and the less aggressive “rent stabilization,” political interference with development financing, onerous union rules that drive up construction prices, byzantine regulation that imposes enormous compliance costs, and more. Even in a city in which four of the five boroughs are located on islands, there are vast tracts of underused real estate, the development of which could alleviate housing expenses for the middle class and the poor.

There is also the problem of the 13th month’s rent in New York City.

If you earn the median income of $52,223 in New York City and you live within the city limits — not just in Manhattan but in the distant Bronx and Staten Island, too — you pay the city nearly $1,800 a year in additional income tax for the privilege. You can basically forget about owning a home — the median house price in the city is more than a half a million dollars — but renting won’t be easy, either: Applying New York landlords’ prevailing 40-times-the-rent rule, you can afford about $1,300 a month; not impossible if you’re single, but a substantial challenge for a family. But in any case, you’ll be paying a 13th month’s rent and change to the city for the privilege of residing within its boundaries. Assuming you are single, taxes and rent would consume between 50 percent and 60 percent of your income. Move to Houston, and you’d get a $3,000-a-year discount before even accounting for the lower cost of housing.

Government guaranteeing the availability of easy, low/no-obligation education loans without being able to discharge these loan in a simple bankruptcy has single-handedly ruined higher education.

Time To Stop The Sob Stories About Student Loan Debt
Forbes | 09/19/2014 | Jeffrey Dorfman

The New York Times informed its readers last week that there are now two million people over 60 years old that still have student loan debt, with an average loan balance of $21,000. To put this report in context, those two million seniors represent only three percent of all people in that age bracket and the average balance of $21,000 is only 78 percent of the size of the average car loan ($27,000). Assumedly many more than three percent of Americans over the age of 60 have car loans, yet nobody thinks that is a crisis.

Earlier this summer, The New York Times also implied that student loan debt is blocking younger Americans from buying homes. In reality, as the Times admits later in their article, the rate at which young people are buying homes is simply returning to its previous level because today’s young can see that the twenty-five year real estate bubble is over and there is no need to rush into home ownership.

Similarly, back in the spring, The New York Times told us a series of sob stories about recent graduates buried under crushing burdens of student loan debt. While the media seem endlessly able to find stories of students with six-figure student loan debts and little in the way of job prospects with which to pay off those debts, such cases are far from common.

Research by Beth Akers and Matthew Chingos at The Brookings Institution revealed much about the student loan debt reality. While the average student loan balance is $29,000, that is only for the minority of people with any student loans (36 percent of those between 20 and 40). In other words, most young people have no student loan debt. Also, the average balance is greatly inflated by the presence of a few people with large balances. In fact, only four percent of households headed by people between 20 and 40 years old have student loan debt of over $36,000 per person and two-thirds of those have a graduate degree to show for that debt.

Further, the median student loan balance (meaning half the people owe more and half owe less) is only $8,500, again only for those who have any student loans at all. That implies that about 82 percent of households headed by those between 20 and 40 owe less than $8,500 in student loans (including those who owe nothing). If we assume that those with graduate degrees can generally handle their student loan debt, then Akers and Chingos’ numbers imply there are likely only about 250,000 households with high loan balances who we should expect to have problems paying back their loans. Certainly such a number is not zero, but it is hardly a crisis.

According to TransUnion, the mortgage delinquency rate stands at 3.5 percent. This is higher than the rate of student loan borrowers who seem to have debt levels likely to cause problems. So why is the default rate on student loans so much higher (14.7 percent)? The answer seems to be not that student loan debt is so high as much as it is that borrowers simply choose not to prioritize payment of their student loans.

If one simply stops paying student loans, the federal government can seize your tax refund (if you are owed one) and might eventually take part of your paycheck (or government benefit check), but many borrowers apparently do not see such actions as likely. Thus, they would rather pay their mortgage, their car loan (delinquency rate of 0.95 percent), their credit cards (delinquency rate of 1.16 percent), or simply spend money on more enjoyable items than their student loans.

New York City is expensive because of progressive policies? Maybe it’s expensive because its progressive policies make people want to live there.

Don’t look now, but the bond market yield curve is trying hard to invert against a backdrop of unprecedented intervention.

Dallas-Fort Worth is ranked as one of the best markets in the country to sell a house, according to a new study.

Zillow Inc. said the D-FW area is the fourth best place in the country for home sellers

“Sellers in the Bay Area, Seattle and Dallas have the most negotiating power, with final sale prices largely at or above asking,” Zillow’s report says.

http://bizbeatblog.dallasnews.com/2014/09/new-report-d-fw-top-market-for-home-sellers.html/

Ultra-low rates are tempting commodities price fixers to store oil off-market at sea. It’s pretty funny how the MSM takes illegal price fixing for granted these days.

Of course, the collusion may well backfire, as a product glut against a backdrop of weak demand suggests falling prices for the foreseeable future. And on that note, I am soon off to CostCo to snap me up some discounted gasoline.

Commodities
Oil-Price Quirk Sends Crude Out to Sea
Companies, Traders Stash Oil to Capitalize on Rare Split
By Christian Berthelsen and Cassie Werber
Updated Sept. 18, 2014 7:28 p.m. ET
Sinopec leased the 3.2 million-barrel supertanker TI Europe, above, to hold crude in storage, and plans to pick up more cargoes in the coming days. Euronav

Big oil companies and traders are stashing millions of barrels of crude on massive tankers bobbing in the ocean, in a bid to profit from a quirk in oil markets.

Instead of moving crude from one port to another, a growing number of tankers are serving as floating warehouses for companies including Sinopec Ltd. and Vitol Group, according to people with knowledge of their operations. Other companies such as Mercuria Energy Group are using the tankers to haul crude to on-shore storage facilities, these people said.

In a rare split, crude is cheaper in the spot market than in the futures market, where bets are made on where prices will be in the months ahead. By buying physical stocks of oil and immediately selling futures, traders can lock in a profit.

The storage trade isn’t without its pitfalls. If interest rates or storage costs rapidly increase, the costs of the trade could eclipse the money earned from the future sale. Also, some traders say the window to put on the trade could close if demand picks up while supplies wane. The risks were on display Thursday when a late move narrowed the price gap between contracts for near-month delivery and the following month to below the level needed for the strategy to be profitable.

The tankers, weighing as much as 550,000 tons and stretching up to 1,300 feet long, store the oil until the trade is unwound. So do land-based storage facilities, which are filling up as well.

The amount of oil tied up in the strategy has risen to between 25 million and 50 million barrels of crude from almost zero as of April, oil-market traders and analysts estimate, based on trading and ship-chartering data. That amount represents more than one to two days’ worth of U.S. demand.

More than 70 million barrels were stored as part of the trade in April 2009, the last time spot prices stayed below futures prices for a sustained period, according to Energy Aspects, a London-based research and consulting firm.

The spike in oil being stored on the high seas has caught the attention of many investors, who say it is the hallmark of a global supply glut and signals that oil prices—already at two-year lows—are likely to keep falling.

“It shows that there’s oversupply in the market due to weak demand,” said Amrita Sen, an analyst with Energy Aspects.
…

Bulletin First Alibaba shares trade on NYSE at $92.70 »

Encore
A blog about living in and planning for retirement
Dismal Fed data on retirement saving
September 18, 2014, 2:14 PM ET
By Alicia H. Munnell
The Fed depicts gloomy times for boomers with 401(k)s and IRAs.

The Federal Reserve has just released the 2013 Survey of Consumer Finances (SCF), a triennial survey of a nationally representative sample of U.S. households, which collects detailed data on their assets, liabilities, and demo­graphic characteristics. It is considered the gold standard of information on income and wealth.

Overall, this year’s report is very discouraging. For American households, both median income and median wealth have declined since 2010.

But retirement is our game, so we turned immediately to combined 401(k)/IRA balances – particularly for those approaching retirement. The great advantage of the SCF is that it provides information not only on 401(k) balances, much of which is available from financial-services firms, but also on household holdings in IRAs. While 401(k) plans serve as the gateway for retirement saving, more than half of the money collected now resides in IRAs. The relevant question is how much do households hold in these two sources combined.

Candidly, I had already drafted an Issue Brief on the assumption that the positive developments of the last few years – a recovering economy, strong stock performance, and the continuing maturation of the 401(k) system – would have pushed combined 401(k)/IRA holdings considerably higher than the $120,000 reported for 2010. (This figure differs from the value of “retirement accounts” presented by the Fed because it pertains only to those households that are working and have a 401(k) plan; those that are not working or only have an IRA are excluded.)

The new numbers are both surprising and discouraging – particularly for those approaching retirement (as my completed Issue Brief reflects). The SCF shows for households age 55-64 a surprising decline in 401(k)/IRA balances, from a median of $120,000 in 2010 to $111,000 in 2013. Savings of $111,000 will only provide roughly $500 per month in income; and since that amount is not indexed for inflation, its purchasing power will decline over time. The only bright spot in the numbers is a significant increase in holdings for households age 45-54.
…

ooooh, oooh, look @ silver below $18/ troy ounce.

‘four in 10 family dollar shoppers have a household income of less than $25,000′

http://www.businessinsider.com/dollar-store-shopper-demographics-2014-9

a nation of broke @ss loosers

Another Day another Yellin:
This fiscal tyrant is just out of her mind - where are the folks gonna save when costs continue to escalate for the vast majority of them? Get outta the DEE CEE Bubble dome there Yellin and drive 100 miles west and see how the folks are livin!!!

http://www.washingtonpost.com/politics/yellen-says-us-families-need-to-boost-savings/2014/09/18/3155aaf4-3f32-11e4-a430-b82a3e67b762_story.html

ILLANNOY!!!

http://www.illinoispolicy.org/illinois-workforce-hits-new-low-in-august-and-its-not-because-of-retirements/

But the final solution is Zeke Emmanuel’s design behind Obummercare - Who died and made him G*d?
http://www.breitbart.com/Big-Government/2014/09/18/Obamacare-creator-die-75

Ben, you asked recently how much of the newer delinquencies were from new loans vs. old.

Take a look at page 8 of this presentation:

http://www.bkfs.com/CorporateInformation/NewsRoom/MortgageMonitor/201407/MortgageMonitorJuly2014.pdf

80% of the 90+ day delinquencies are from 2008 or earlier loans.

Also note page 5–new delinquencies are back to pre-crash levels (consistentwith page 8).

Apparently, Apple’s creepy idea of spamming 500 million iTunes users with a crappy album from a has-been group of corporate wankers has backfired.

http://www.independent.co.uk/arts-entertainment/music/features/free-u2-album-how-the-most-generous-giveaway-in-music-history-turned-into-a-pr-disaster-9745028.html

Goldman Sachs ripped off yet another “client” (muppet) - Libyan dictator Qaddaffi - which might help explain the urgency of the latter’s overthrow and the devolution of Libya into anarchy at the hands of Islamist militias.

http://www.independent.co.uk/news/business/news/exclusive-goldman-sachs-fights-back-against-libya-over-gadaffiera-ripoff-claims-9745109.html

Admitting That Gun Control Doesn’t Work, D.C. Mayor Calls For More Gun Control

by Brian Anderson | Downtrend | September 19, 2014

The great thing about arguing gun control with leftist ninnies is that you don’t have to argue at all; they talk themselves into a corner leaving us pro-2A types free to sit back and laugh.

Yesterday at a Navy Yard shooting memorial Washington DC Mayor Vincent Gray made an impassioned speech about the need for more gun control, all the while providing proof that tough gun laws do nothing to reduce crime.

“Residents of our city lost friends and neighbors; they lost mothers and fathers; they lost colleagues and they lost fellow church members,” said Gray.

But how can this be? Washington DC has some of the strictest gun control laws in the nation. Until recently, handguns were completely banned and the carrying of firearms was prohibited. If gun control laws work, wouldn’t DC be the safest place in the country?

The Sheep Have Bleated

Political thinking has trained people to believe in the 51% principle

by Butler Shaffer | LewRockwell.com | September 19, 2014

I once read that “Scotland has more sheep than people,” and the quadrupeds stampeded to the polls to vote against the proposition that they liberate themselves from their historic enclosure. “Independence is a b-a-a-a-d idea,” many were heard to say.

The campaign against the proposition recited the lemming mantra, “together is better.” Taken literally, the oft-heard phrase “no thanks to independence” carries the message “dependency is preferable to the sense of responsibility that is implicit in liberty.” That 55% of the voters could be so terrified of their independence is a reflection of how years of conditioning in the virtues of subservience produce the herd mindset.

The mainstream media informed us that David Cameron was greatly pleased by the outcome. It is the nature of politics that this statement is true. Political thinking has trained people to believe in the 51% principle: no idea is worthwhile unless 51% of the public believes in it. But imagine a man with nine children, and four of them dislike the father so much that they want to vote to have all siblings leave home. The vote is held and, by a 5 to 4 margin, the pro-big daddy side wins. Would any loving psychologically-healthy man consider this to be a great personal victory?

Opponents of this measure were quick to announce that the question of Scottish independence has been settled, “once and for all,” words that mean “when we get the outcome we want, the issue can never be brought up again.”

All-in-all, the outcome of this vote was a referendum on the ageless choice people must make between individual liberty and collective security. That 45% of my Scot relatives made the choice for liberation is not only encouraging, but a sign of the greater movement by which men and women are working to end the destructive nature of politically-directed society. As for the 55% naysayers, they can return to the quietude of their pen, to await whatever fate their duly-elected Judas-sheep has planned for them.

Paying for a mortgage? Life’s too short.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11109153/The-average-working-life-isnt-long-enough-to-pay-for-a-house.html

we were going to write an article about the regions of fema, but out editor got a phone call from someone in washington telling us to kill the article

Inspired by Scotland: Quarter of Americans want their states to secede from US
Published time: September 19, 2014 17:29
Reuters/Kevin Lamarque

Scotland may not have followed in Sir William Wallace’s footsteps to free itself from its English bonds, but that hasn’t stopped nearly a quarter of Americans from a little bravehearted hope of their states seceding from the US.

A Reuters/Ipsos poll sought to see if Thursday’s Scottish independence referendum ‒ which failed ‒ inspired Americans to dream of secession from the United States. According to the results, 23.9 percent of those surveyed either strongly supported or tended to support the idea of their state breaking away from the union.

Both Democrats and Republicans supported the idea of severing ties with the federal government, though the Grand Old Party (along with residents from the West and Southwest) was more in favor of secession than Dems and Northeasterners.
…

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