Bits Bucket for October 9, 2014
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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East Sacramento, CA Sale Prices Dive 8% YoY
http://www.zillow.com/east-sacramento-sacramento-ca/home-values/
East Sacramento? Jingle Fraud is going down the donkey crater, LOLZ
Greater Sacramento has never had the wages to support these inflated home prices. Also their summers are hot and humid, and fog settles over the region for three months during the winter. The people with ability and taste live in the Sierra-Nevada foothills; Shingle Springs and Folsom come to mind. To the west it’s Davis.
Yep….Auburn area also…
What? Here is the first sentence from your link:
The median home value in East Sacramento is $430,100. East Sacramento home values have gone up 4.1% over the past year and Zillow predicts they will rise 2.2% within the next year.
HA thinks up is down. No wonder he seems so confused all the time…….
Great post….HA, Ha, ha, ha, ha…….
Data J._Fraud data. Stick with the data.
OK.
$23,500/year cash flow. $15,400/year principal reduction. $6,200/year in tax shelter benefits.
There is some nice data. Getting my year end numbers buttoned up for the tax man.
No no J._Fraud. The data. Falling housing prices. Not your $90k water meter nonsense.
Southlake, TX (Dallas) Sale Prices Plunge 10% YoY; Housing Demand Sinks
http://www.zillow.com/or-97221/home-values/
Olympia, WA Sale Prices Crater 5% YoY As Inventory Balloons
http://www.zillow.com/olympia-wa/home-values/
“Home Equity Lines of Credit Jump 21 Percent Through First Half of 2014″
I’ve already seen this movie.
It ends with people saying they were forced to take out the home equity loans to get their wife a boob job and go on expensive vacations, not paying the loans back when the house value drops below what they borrowed, living in the house for years after they stop paying and something called too big to fail banks being bailed out.
Home Equity Lines of Credit Jump 21 Percent Through First Half of 2014 but Still 76 Percent Below 2006 Peak
SOURCE: RealtyTrac
RealtyTrac
October 09, 2014 00:01 ET
HELOC Share of Total Loans at Highest Level Since 2008; Biggest Jumps in Inland California, Las Vegas, Cincinnati, Phoenix
IRVINE, CA–(Marketwired - Oct 9, 2014) - RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its first-ever U.S. Home Equity Line of Credit Trends Report, which found that in the 12 months ending in June 2014 a total of 797,865 Home Equity Lines of Credit (HELOCs) were originated nationwide, up 20.6 percent from a year ago and the highest level since the 12 months ending in June 2009.
The report also shows HELOC originations accounted for 15.4 percent of all loan originations nationwide during the first eight months of 2014, the highest percentage since 2008.
“This recent rise in HELOC originations indicates that an increasing number of homeowners are gaining confidence in the strength of the housing recovery and, more importantly, have regained much of their home equity lost during the housing crisis,” said Daren Blomquist. “Nearly 10 million homeowners nationwide, representing 19 percent of all homeowners with a mortgage, now have at least 50 percent equity in their homes, according to RealtyTrac data. Meanwhile the percentage of homeowners with severe negative equity has decreased from 29 percent in the second quarter of 2012 to 17 percent in the second quarter of this year.
“The rise in HELOCs also reflects a natural evolution for a lending industry looking for products they can offer to homeowners who have already refinanced their first position loan into a low fixed rate,” Blomquist added. “A HELOC enables homeowners to leverage additional equity they may have gained since refinancing while still preserving the rock-bottom interest rate on their first position loan.”
http://www.marketwired.com/…cent-through-first-half-2014-but-still-76-percent-1956031.htm - 69k -
I don’t think it’s a coincidence that my local paper also has a piece today on this subject, complete with the same Blomquist quote. Somehow, HELOCs at the top of a bubble are being portrayed as a smart, sunny positive. We are a foolish people and we will get what we deserve, although I am heartened by the comments to the article, which include “The spin is mind-numbing” and “Is this article meant to be training on how to increase your chances for foreclosure?” and “How is accruing more debt a good thing?”
“Tampa Bay homeowners are once again tapping into the equity in their homes, a sign of an improving housing market and greater confidence in the economy.
In the 12 months ended in June, nearly 60 percent more home equity lines of credit, or HELOCs, originated in the bay area compared with the previous 12 months, according to the housing data source RealtyTrac.
…
‘The recent rise in HELOC originations indicates that an increasing number of homeowners are gaining confidence in the strength of the housing recovery and, more importantly, have regained much of their home equity lost during the housing crisis,’ RealtyTrac vice president Daren Blomquist said in a statement.”
http://tinyurl.com/ob72qqq
“HELOC Share of Total Loans at Highest Level Since 2008″
+1 Yep, the recovery is underway.
they are wisely investing in cars w 8 yr loans
A brilliant consumer would tap into his home equity and pay cash for that new BMW. It just makes good common sense.
Actually, yes, he would. As we saw in 2006, the first to fall were the most leveraged. If you HELOCed up in 2006, complete with new Suburban and boat, and walked away in 2007, the FHFA was willing to give you a new loan in 2011 with 3% down again, so you could just rinse and repeat. I guess now is the time to replace both the Suburban and boat.
And then default on the home only to live rent-free forever!
London housing bubble bursting?
http://www.telegraph.co.uk/finance/economics/11149882/Has-the-London-house-price-bubble-burst.html
Russia’s economy in a tail-spin. Didn’t the 1998 global financial crisis include a Russian default?
http://www.businessinsider.com/russian-economy-is-crumbling-2014-10
That’s the one that the geniuses at LTCM couldn’t foresee, despite bragging that the firm not only couldn’t fail in this universe, but couldn’t fail in several universes.
I think our hubris has increased since that time.
So has the number of tbtf firms.
Just look at whats happened to the ruble and what their central bank is doing to try and support it…Couple that with break even cost of oil @ $90. per barrel puts them in deep doo doo….
No one could see the oil price crash coming!
It seems like oil prices had been defying gravity a bit based on the supply numbers over the prior quarters…oil prices seem to finally be reflecting the additional supply.
Candidly, I was pretty surprised they hadn’t fallen previously.
Fed watching is the only game in town.
Wsj dot com
October 9, 2014 6:52 PM
U.S. Stocks Rally After Fed Minutes
FOMC Minutes Point to Caution on Interest Rates
By
Alexandra Scaggs
,
Chris Dieterich
and
Min Zeng
Financial markets gave investors a case of whiplash Wednesday, as stocks and bonds surged and the dollar fell on news that suggested the Federal Reserve may move more cautiously raising interest rates.
The rally, which took stocks to their biggest gains of the year on heavy trading, reversed a 273-point selloff Tuesday sparked by worries about an economic slowdown in Europe.
…
Suck ‘em in, shake ‘em out.
Here is the latest on the Stockton Bankruptcy duel at the OK corral between the creditors & unions…Starting to get a little heady…
Excerpt;
Bankruptcy judge Christopher Klein ruled last week that the unusual legal protections enjoyed by California pensions, which make it virtually impossible to cut the costs of a pension plan in the Golden State, did not apply in bankruptcy court. Stockton city officials and lawyers were livid. They had planned a reorganization sharply cutting what some creditors…
Linky;
http://www.city-journal.org/2014/cjc1008sm.html
IMO, this along with detroit and others waiting in the wings is one of the biggest issues facing our country with ultimate ramifications that I am quite sure none of us can get our arms around…Sooner or later, some municipal union/pension fund OR some group of creditors are going to take this all the way to the supreme court..
When that day comes, and it will come, it will fracture the foundations of one or the other….
The long saga of Stockton’s decline dramatizes the inefficiency and illogic of union-dominated, monopolistic, government-labor markets. California laws and court rulings provided Stockton workers with extraordinary protections for some benefits, including one of the nation’s most generous pension plans. When Stockton couldn’t cut its labor costs fast enough, it engaged in destructive rounds of layoffs because, ironically, the one thing you can do when all else fails is fire people. City residents and laid-off city workers were the losers.
Now Stockton has a chance to reach more solid financial footing thanks to Judge Klein’s ruling and a painful two-year sojourn through bankruptcy. But it’s not clear that city officials have learned their fiscal lessons.
Stockton City officials and lawyers were livid ?
Shouldn’t they be happy ?
“Shouldn’t they be happy ?”
Not if it’s their pension on the chopping block as well.
No - they are in insane public union goon pension system and don’t want to give that up.
And it is for the children…
I’m guessing the SCOTUS would side with the common man on pensions and tell 2banana’s employer and other members of the 0.1% class that their high risk gambling activities in subprime municipal debt failed to pay off.
Just a hunch…
even FDR warned of ps unions
they got 95.5% in Detroit private sector bond holders are getting ??? 20% ?
Common man = insane public unions who bankrupt cities/states but are 14/20 top all time campaign money contributors (and give it all to democrats)
Common man not equal to the taxpayers who have to pay for it
other members of the 0.1% class that their high risk gambling activities in subprime municipal debt failed to pay off ??
1% ers ?? Hell, its likely some pension fund that bought the municipal debt…Go figure…
Anyway, Creditors take the haircut alone and unions/pensions stay whole ?? That fly’s right in the face of the Federal Bankruptcy laws which trump state law…
Like I said, the decision either way is going to shake fracture the foundations of either….Go one way, and you can kiss municipal finance as we know it today goodbye…Go the other way, and you have millions of pensioners with a haircut AND
collective bargaining contracts go in the “round-file”….
Its going to take awhile because many municipalities will blink just like Vallejo did but sooner or later one of the two (I suspect it will be creditors) will take it to the Supremos…Then the SWHTF….
Public pensions really need to be calculated on “last five years of base pay” rather than the gamed-up union version of “last three years of base pay plus over-time.”
I’m guessing the SCOTUS would side with the common man on pensions
The same SCOTUS that authorized the seizure of privately held gold, invalidation of “gold clauses” in contracts, and the imprisonment of American citizens for their ethnic origins? That SCOTUS?
I wouldn’t count on it. They are just as like to find some emanation of a penumbra that will authorize courts to
steallevy taxes on thebagholderscommon man to fund stupidly-promised public pension plans.Interest rates are to the DOW as Peyton Manning had been to the Colts. When he was up, they went to Superbowls. When he was down, they were like “Playoffs? Who said anything about playoffs?” The fundamentals of the team could go hang.
The Fed crushed the delicate flower of America’s free market economy with a QE3 sledgehammer, sold to the public as the only way to save the planet from financial Armageddon.
Good luck at ever bringing the flower back from the dead.
The only defensive position is to stay out of debt and accumulate cash.
What if the central banker defensive position is to continuously weaken the currency in order to stave off deflation?
That will accelerate the inevitable considering they crush demand by doing what they’re doing.
That’s why you need to accumulate cash AND precious metals. You have to use the exact opposite of cash to balance out the risk. Precious metals is just another currency - but its distinction is that it’s not fiat.
Stocks!
But, while the big players can frictionlessly buy and sell stocks, instantaneously turning them into currency as needed, for the individual citizen in a 401k, who dutifully has money pulled out of his paycheck for it, that person has a much, much harder time converting his winnings into cash. The last time I tried it, back in 2011, it took nearly a month.
So, you know who the bagholder will be (as always).
If individual 401K holders could frictionlessly sell stocks for cash, there would be a much different market.
Another data point on the question of “Just what exactly is a stock?”
Letters to the Editor
The Economist
6 September 2014
Institutional investors (commonly referred to as shareholders) in publicly traded corporations under Anglo-American jurisdictions are in many fundamental respects different from the shareholders of private and untraded corporations.
They do not and cannot, because of limited liability, own the assets of the corporation. Schumpeter could do worse than read the judgment of the House of Lords in Salomon v Salomon (1897) which starts the ball rolling.
The corporation owns its assets and the board manages these assets. The only thing the shareholders own is a conditional claim on the profits of the corporation, depending ultimately on the board as to what dividend, if any, the corporation declares. The only ultimate sanction they have is to sell and buy elsewhere.
http://www.economist.com/news/letters/21615480-letters-editor
I recently saw an article on how more robust “poison pills” are being adopted and legislation might follow. This prevents anyone trying to amass a large amount of stock from being able to take over the company. I found that interesting.
Also, with executives being paid in stock options (which would focus a company on buoying stock prices), it’s just a way to obfuscate the total compensation. If that stopped being lucrative, another similarly opaque way would be found to extract cash from the company and deliver it to the executives.
Humans are willing to value logical constructs. But some logical constructs are more durable and valuable than others.
The only thing the shareholders own is a conditional claim on the profits of the corporation, depending ultimately on the board as to what dividend, if any, the corporation declares.
True. The thing that keeps the shareholders from being left empty is that those boards on the corporations would essentially be slitting their own throats by betraying the shareholders. In essence, the voluntary agreement (not on the contract) is what keeps the shareholders owning and buying. Imagine a fledgling stock exchange where the companies do not know the “unwritten rules of engagement” that 200 year old exchanges follow. The shareholders would demand higher premiums of some sort in that case. Maybe higher dividends for the higher risk.
There are a lot of big corporations that don’t pay any dividends at all.
The shareholders do ALSO have option of voting out the board and voting in a new board. So their only remedy is not to just sell, but also to raise shareholder resolutions and vote.
“the central banker defensive…”
The bankers can lend money to each other all they want, that doesn’t put money in circulation. You need a population willing to go on a borrowing spree, and we’re just about exhausted playing that game.
Just for fun I calculated my % of cash to precious metals. Cash being bank accounts, brokerage accounts, credit unions, and T-bills. Metals - the physical form. I think I have it about right. 51% cash and 49% precious metals.
A year ago I was pounding the table about not wanting to realize gains while I work in California. But I heard the arguments by some people long ago that suppose you do very well in a stock and you bag the gains in California, but you wait until you no longer work in California and that stock price tumbled? Then you could have been better off bagging the gains and paying the capital gains.
Well I applied that this year. I am no longer shy about selling my biggest gainers. I sell at any whim now. The only groaner is the calculation of the taxes for the Turbo Tax next year.
Thinking that now my percentage of net worth in stocks and stock mutual funds is 58.
Now all I need is 20 acres of Nebraska farmland, an old farmhouse and a good storm cellar.
“Now all I need is 20 acres of Nebraska farmland,…”
Are you willing to wait out the farmland bubble for the fire sale prices that will be available once it pops?
The Fed crushed the delicate flower of America’s free market economy with a QE3 sledgehammer, sold to the public as the only way to save the planet from financial Armageddon.
That’s an odd theory. The so-called free market economy survived wars, depressions and so forth but was crushed by a (not very large) decline in long-term interest rates.
No - it was crushed a massive government, insane regulations and higher and higher taxes…
When did that happen?
US stock futures are down big time. Try not to catch yourself a falling knife.
PS History shows a strong correlation between stock and housing prices. If you buy a home now, you may never recover from your losses.
Don’t look now, but oil prices are tanking. Must suck to have all your wealth tied up in an oil currency like rubles.
“Must suck to have all your wealth tied up in an oil currency like rubles.”
Bingo! Payback for Putin, no? Except it’s a bit of a dangerous game, considering there’s supposed to be a rough winter on tap for Europe.
‘On a recent weekday afternoon, the meeting rooms and dorms were empty, with just one welding class breaking the silence on the Fairbanks Pipeline Training Center Trust’s sprawling 63-acre campus.’
‘To make matters worse, the government tax dollars that built and sustained the complex are also in danger, amid pressure to cut spending in both Juneau, the state capital, and Washington. Not surprisingly, fears over what comes next are rising for residents, who saw the training center as the embodiment of their hopes for high-paying pipeline jobs.’
“There’s a lot of uncertainty out there,” said Jim Sampson, a former borough mayor and labor leader who is director of the training center. “You can feel it in the community and see it in the for-sale signs on the houses.”
http://www.nytimes.com/2014/10/09/us/as-energy-boom-ends-a-political-identity-crisis.html?_r=0
They need to re-elect Sarah Palin; she and her witch-doctor can will the economy into expansion.
They need to re-elect Sarah Palin ??
She is a quitter and a celebrity now…Quite sure they do not want a Redux…
Sarah Palin, like John McCain, is a Wall Street fluffer and AIPAC marionette. To the McCain Mutants who voted for this joke of a candidate: is THIS the finger you’d trust on The Button?
http://www.theguardian.com/us-news/2014/oct/09/sarah-palin-family-drunken-brawl-police-report
Comment by Avocado
2014-10-08 15:58:32
If every citizen in the USA watched Stewart just once a week, the country would be in better shape.
Comment by Anonymous
2014-10-08 20:06:37
Word.
……………………………………………………………………
You have got to be kidding me. :foreheadslap:
The guy is a partisan hack. He may speak “truth to power” but he only really speaks “truth to half the power”, that half being the half that isn’t on the far left. The guy is singing to the choir, and the choir is convinced they’re smarter than the rest of us because of it.
The left has humor because it’s not allowed to show anger in this culture. The right has anger because it’s just not funny.
Good point. Is there even one good comedian who can be called a conservative? The conservative brain is so full of right wing slogans and phony outrage against the “takers” that they don’t know how to laugh.
Old age, maleness and white skin can lead to osteoporosis of the funny bone.
Not sure if there is one. Dennis Miller is often pointed to. I don’t know enough about him.
I would say George Carlin had a great left libertarian streak in him. George Carlin was my hero (in case no one knew).
Anyone who knows the cultural makeup of Hollywood would avoid voicing conservative ideas. After all, one wouldn’t want to bite the hand that feeds.
Occasionally there are those outed as conservatives in the entertainment industry and it creates quite a stir.
Jay Leno?
Some say that’s why there was the big hurry to get him off the Tonight Show.
I like Bill Burr. He uses f#@k as punctuation (it’s a little much) but he is funny and seems very conservative.
Bill Burr - John Lennon, Chuck Berry, and Yoko Ono Performance
Some on the right also haven an annoying habit of wearing stupidity as a badge of pride (not to suggest they are as dumb as they pretend).
I don’t know. I know of a bunch of clueless people who cling to partisanship and rarely question what the political elite of their party says. For instance, the Romney fanatics who strongly oppose Obamacare keep forgetting that RomneyCare was the model for Obamacare. And who in my state of Arizona keeps voting for the a$$clown RINO McCain?
I am heartened to see that at least nobody tried to suggest he wasn’t a leftist partisan hack. If more people watched him we’d be better indoctrinated, not better off.
Borrow your way to success …
Bahahahahahahahahahahaha
http://www.zerohedge.com/news/2014-10-08/18-sobering-facts-about-unprecedented-student-loan-debt-crisis-us
I like this saying: “If you don’t like the price of education consider the price of ignorance (or something like this)”.
This saying gets the dotted line signed, which is all that matters (to me, at least).
Bahahahahahahahahahahahahahahahahahahahahahahahahaha
Now that’s fawkin priceless!
Hope and Change
Wall Street Journal - St. Louis Police Officer Fatally Shoots Man
Incident Sparks Protest Echoing Those in Nearby Ferguson, MO
http://online.wsj.com/articles/st-louis-police-officer-fatally-shoots-man-during-chase-1412842266
Forward
Linked from Google News, this is really confusing
http://www.ibtimes.com/antarctic-sea-ice-cover-all-time-high-arctic-ice-continues-melt-1702089
Antarctic sea ice at all time high?
Arctic ice melting?
Forward
And on the subject of warmist warming, article about campaign finance in the 2014 election
http://www.bloomberg.com/politics/articles/2014-10-09/the-koch-brothers-shift-millions-into-new-superpac
So happy I don’t watch TeeVee and don’t have to see all these commercials
Media doesn’t explain science very well. More ice off of Antarctica is consistent with warming because the freshwater glacier ice melts into the ocean, lowering the salinity. As salinity falls the freezing point goes up and it freezes easier. The Arctic ice cap is seawater, no freshwater, so there is no “ice water” effect. It’s just melting.
The salinity hasn’t changed. Like the guy from NASA said, it just depends on which way the wind blows.
Well-established in multiple peer-reviewed studies that salinity has fallen dramatically.
http://www.antarctica.gov.au/news/2012/latest-southern-ocean-research-shows-continuing-deep-ocean-change
So what is your conclusion from the crony reviewed stuff? All salinity is local? Why didn’t the guy at NASA know what you know? If you melted all the glaciers on the planet (except Antarctica because it is really cold there) how much would the freezing point of the oceans change? What is the salinity of ocean ice? Is it the same at the salt water it froze from? You are hooked into real science, you should be able to help us out here.
Denver Business Journal - 1 in 4 millennials trust ‘no one’ with their money, Fidelity survey finds
Article highlight:
“Women tend to be less confident than their male counterparts, with 19 percent of millennial men saying they never worry about their financial security, whereas only 2 percent of women said the same.”
http://m.bizjournals.com/denver/blog/finance_etc/2014/10/fidelity-survey-finds-1-in-4-millennials-trust-no.html
The institution of marriage is dead in this country, young men are wising up and realizing they don’t want to be the beta wallet for the post-wall cc rider who catches baby rabies. And Bill in Los Angeles = WIN.
Truth.
This society is in a heap of trouble when you consider the combining of an inevitable decline of the U.S. empire with the decline in marriage among those with the western values. The decline of marriage is inevitable due to a decline in trust between men and women and the divorce laws which are stacked against men.
Here’s a novel idea: Let couples be free to make agreements with each other on what part of their wealth and future earnings is NOT the other’s, and what part is socialized between them. There should be three accounts with a financial adviser. Hers, his, and “theirs.” Why does it have to be so complicated? And leave an attorney out.
+1
And see also the book “Men on Strike” by Dr. Helen Smith
Right there with you Selfish Hoarder. Get government out of marriage altogether. Let consenting adults make their own arrangements - whether it be man/woman, same-sex, multiple partners, etc. They can create whatever contract they want between themselves.
Government marriage is actually the state making the contract for you and picking the winner and loser.
This is speculation but I think without any marriage contract and with each partner having his own title to his own property, there would be far fewer painful separations when the separation happens. Just in Phoenix yesterday a 52 year old couple died - they were just divorced and the man shot his ex wife and turned the gun on himself. Their 14 year old daughter discovered the bodies.
Moreover, I am for doing away with monogamy so that each partner would be free to see others of the opposite sex, even if it’s only platonic. I know a couple like that. They are older boomers and have an open “marriage.”
There is too much emotional investment in one person. If that one person becomes cruel and hellish to you, you feel betrayed and feel as if you lost your best friend, then you’d be questioning yourself and kicking yourself about the betrayal. You feel lonely when someone you trusted the most with your personal life turns against you. Maybe that is part of what goes on in the heads of those nuts to do the murder-suicides.
A society with a majority of childless singles, or never married single parents:
http://www.salon.com/2014/07/31/is_marriage_becoming_obsolete_for_millennials_partner/
Um…HELLO! Even tail end boomers had to bounce from job to job - that spells job I-N-S-E-C-U-R-I-T-Y and constant relocation. Not a stable environment to start a family. And yes most companies tossed out pensions when I started working.
Wow: This is not the only time Mexico surprises me. It’s possible for a second/third world to be more advanced in some areas than developed countries - although as the quote below says, it’s a proposal, not a done deal:
Umm…Holy cow! This was proposed in Canada way back in 1973
http://tinyurl.com/o36vu7l
Was seeming very reasonable. Wut happened?
?
Oh well it’s because my Joshua Tree extension fooled me somehow into thinking I put a post of a html in. Somehow it blanked the post. The html link is below - the one about housing about to collapse.
my Joshua Tree extension fooled me somehow into thinking I put a post of a html in. Somehow it blanked the post
What a piece of crap it is!
Can you file a bug/email me details of what happened? Is it that you hit the “link” button and added the URL, but didn’t have any text inside of the anchor tags?
I do not have your email address. Don’t knock yourself. Here is what I did. I hit the “Link” button, pasted the URL into the text box, then I guess I hit the “add comment” button. I am attempting this below. The tak is what I saw. I’m wondering if maybe it’s a backslash at the end but no .htm or .html with it?
Okay I just did the “Preview” and the space above is a space and should be the link!
Without your tags the line is as follows - you can try it yourself in “preview” and see nothing shows:
http://www.againstcronycapitalism.org/2014/10/is-housing-in-serious-trouble-again-uh-oh/
In case you are wondering, I did post a reply here. It included a html link. I think I posted it within an hour from here. Not sure what’s going on. But I hit the “link” button, and if you try to “preview” what you placed into the text box for the URL you see nothing.
I’m using v2.3.1 of the HBB Joshua Tree Extension
I totally agree. totally.
From the AgainstCronyCapitalism link I posted “Is Housing in Serious Trouble?” (and will appear shortly):
The author nailed it. It really is that fundamental. And it’s going to be painful.
http://www.againstcronycapitalism.org/2014/10/is-housing-in-serious-trouble-again-uh-oh/
Here’s what I don’t get:
In reading the link that the article was based on (http://www.advisorperspectives.com/newsletters14/40-homeprices3.php), the author notes the reduced number of distressed sales in CA as evidence that the banks are holding back inventory.
However, this is illogical–if they were trying to hold back inventory, wouldn’t they have done it in 2009-2011 while prices were coming down? This is when the banks sold the most.
Also, wouldn’t holding back REO result in more and more REO ending up in the hands of the banks? Property Radar’s own data shows the amount of REO continually declining.
Additionally, other sources show levels of delinquency also falling in CA and AZ during that same timeframe.
So, is the reason for fewer distressed sales in AZ and CA:
1. That banks decided to sell more in 2009-2011, when prices were declining, and then sell less and less when prices were rising? (I’d fire the guy with that strategy if I was trying to manipulate the market in my favor) or
2. That there was simply less distress? (as corroborated by data from the same source–Property Radar, and consistent with falling non-current loan rates–per Black Knight Financial Services)
Clearly the commentary about increasing inventory and decreasing sales is germane to the story, and should not be discounted.
The “reason” there are fewer distressed sales in CA is quite simple. They’re holding the excess empty and defaulted inventory off the market to continue the price fixing scheme.
That’s it. Simple. But it will be painful.
I thought the world would end if we let housing prices drop? How are people going to make money if they can’t flip houses?
That link is really reposting from another link. It has the full story and you get to page 3. Page 1 and 2 on the other link are chock full of charts to show how the USA is on the verge of a new RE depression. Maybe this time the crony capitalists will let the market finally happen.
“let the market work”
HBB keeps forgetting that “the market” is currently tilted heavily in favor of banks and hedge funds and investors who have already skimmed cash from Main Street or possess the means to borrow cash from the Fed and use that cash to buy the houseing while Main Street will simply not be able to compete. “Letting the market work” will result will in a nation of joe6packs paying ever-increasing rent to hedge funds and investors until the day they die. And they aren’t going to be nice landlords like the ones that the Prof writes out a check to each month. I’ve explained this before, as has Jack McCabe. Is this what you guys want?
How is it possible that people with ever decreasing earnings will gladly pay ever increasing rents to really mean landlords? Some kind of renter’s prison? Sounds like mania talk.
More mathematically possible is that falling house prices will crush these “investors”, along with the individuals who borrowed long to buy a house in the last ten years.
They will pay the rent by shacking up several families to a dwelling, as they did in the early 1900’s. They will curtail other expenses and use the credit card more. There is still some capacity to do that. And yes, they will put up with “mean” landlords in order to find a location near a bus line. And yes they need the bus because car money is lost to rent.
But if these renters can’t afford to rent, then what makes you think they can afford to buy a house even at lower prices? No matter how much joe6pack can offer on a house, the investors will ALWAYS be able to offer a higher price. Whether that is a $200K level or $250K level doesn’t change the comparison.
I still don’t think that house prices will fall enough to crush investors that bought before mid-2012. Investors can still cash flow at those prices.
^ LOL
You are a bonafide space shot.
“They will pay the rent by shacking up several families to a dwelling”
Thus making several other dwellings entirely empty of tenants. Rocket science I guess.
There are already 10s of million too many houses. Families shacking up in 1900, you are making up stuff.
Seriously, what’s to stop someone like me putting tab A into slot B and making a $20K house? Hint, an impact driver really helps. I’ve lived the past some years in a dwelling that cost $10K. I don’t take the bus to work, I take the internet. So, your $500K ($300K whatever) loan for insurance against the zombie landlord just makes me shudder.
It’s The Donk’s same rusty delusion. Strange it is.
The Donk’s same rusty delusion.
Gotta love it.
Article about the poors in Orlando notes that Orlando “has the lowest median pay among the 50 most-populous American metropolitan areas”
http://www.bloomberg.com/news/2014-10-08/no-disney-fun-for-orlando-workers-as-poverty-nears-20-.html
That’s unpossible, 2brony told us that the South is an economic utopia, LOLZ
What do you expect from a Mickey Mouse economy?
Blog monitors and sentiment steerers are worthless wastes of money.
What’s Jim Rogers buying? Not gold. Not at all
http://articles.economictimes.indiatimes.com/2014-10-07/news/54735530_1_india-s-interest-rates-narendra-modi
India stock index, Russia stock index, the US Dollar, among others.
Interesting that he won’t buy gold until it gets below $1000. I’d be leery of buying the Russian stock index right now. Looks like they’re about to trigger a capital flight.
The Russian Parliament Just Passed That Crazy Law Letting The Government Seize Foreign Assets
A bill to allow Russian oligarchs to claim compensation from the state for overseas assets seized under international sanctions has been passed by the country’s parliament.
The bill would also allow the government to seize foreign assets in Russia — a move that will likely cause Western and Asian investors to pull their money and resources out of Russia.
Read more: http://www.businessinsider.com/russian-government-passed-law-allowing-government-to-seize-foreign-assets-2014-10#ixzz3FfOV0L4g
Personally I think that Jim Rogers is not ever going to buy gold again because I strongly doubt it will go below $1000. Its five year low as five years ago at $1027. Five years is a helluva long time in asset classes. The anti hard currency crowd is running out of spears to throw at precious metals, the longer the years go by. Personally I would welcome the PoG to stay this low or go lower for another five years. But my doubts about the bears’ predictions keep me happily exchanging fiat for gold every few months.
As for Russia, I’m not so sure on it. My emerging markets funds are as sector-specific on foreign countries that I will get.
There is nothing magic about “five years”. Five years before that it was $400.
The trouble that may affect gold along with all other investment “things” is the immense overhang of leverage everywhere in the world. Deleveraging will bring liquidation, and everything that can be sold will be sold in bulk.
There magic about five years is that, if you use that time frame, stocks appear to be more overvalued than gold. If you use 10 years instead, you get the opposite result.
janet can print like mad w dollar at highs
>>>>>>>>>>>>> what’s to stop her?
Shocking: A balanced view of housing in an article entitled “5 Mortgage Myths Dispelled.”
I only clicked on it only out of curiosity to see the current NAR sales propaganda. But I was quite surprised to see it wasn’t purely a cheerleading, “Housing is the path to riches” / “Get in on the American Dream” adverts typically masquerading as news.
5 mortgage myths dispelled
By Geoff Williams
Thursday - 10/9/2014, 9:45am ET
wtop.com : DC news radio
If you’re on either end of the spectrum — squeamish about homebuying or ecstatic with no worries whatsoever — here are some misconceptions about mortgages that may bring you to the middle.
Your credit has to be perfect or near-perfect.
You must have a down payment worth 20 percent of the purchase price.
Okay, so far so good - as expected.
A house is a great investment.
Discordant note.
You own the house the moment you get the keys.
Owning a home is the American dream.
Did not expect to see any of these last three. Especially since DC news radio is heavily involved in promoting real estate. Very surprising.
http://wtop.com/1415/3718812/5-mortgage-myths-dispelled
In fact… I can’t remember the last time reading anything less than strongly pro-housing in the MSM. Remember, that the FIRE sector is a big advertiser and business partner. Quite surprising. I wonder what the implications might be, or whether this is a one-off anomaly.
News about bank foreclosures and Fannie may properties in the North East plus many other states. Asset management companies that got started about 3 to 4 years ago now have doubled in size. One company went from 100 employees to over 200 employees in less than 2 years.
There is no clear answer or they won’t give us a clear answer who owns these properties. The asset management companies are hiring inspectors to take inside photos of foreclosed homes and some of them have water flooded in them for years. They are moving forward to remediate these properties this winter. Companies are given 2 days to submit a bid using blue book software.
Now here is the catch. They will accept bids from other contractors but the bid will be awarded according to CRONY CAPTILISM. Plain and simple. The bids are inflated BIG TIME and the jobs will be done very poorly. People who will end up buying these homes will be screwed monetarily and health wise. But the documents showing the work done and clearance testing will be impeccable with made up lies and BS on the documents.
Welcome to getting screwed by your government and owning the American dream.
If they’re using blue book to bid , these places will never sell for what they’ll eventually have in them.
That is just for cleaning. No build back in it.
Holy sufferin. …. Those houses will never sell at the break even point.
10K is not uncommon for a bunch of glorified janitors to charge because the term mold is attached to the house. Most of these companies do not have the expertise or the state licenses to do any kind of demolition. But these little details are being looked over. In most some cases they do not follow epa guidelines. The clearance testing is being done by the same company that is doing the cleanup. Fannie mae requires a third party independent testing for clearing the project. The cleaning companies are faking the clearance tests and paying their friends companies and using their letter heads to provide independent verification. This has been going on in FL for about 3 years now. Same thing is being repeated in the NE now.
Fannie mae does not care who is screwing them as they have been repeatedly told this by me to their top guy.
Senior Housing Symposium -HUD, CPA, DA’s Office Attorney (Fraud targeted towards seniors in real estate and elder abuse) and realturds who specialize in seniors (aka weekend seminar attendee).
My take-away was the CPA was the only objective one on the panel. He said to live in a paid off home, and live modestly, holding on to some repair $ in reserves. He said renting when you’re old is poverty by inflation. He didn’t agree with the Reverse Mortgage gal’s BS. Lots of opposing viewpoints. What a hoot.
If you bought it in the last 15 years, you don’t want to pay it off. Walk away.
This is from yesterday, about Federal pensions:
———
Comment by cactus
2014-10-08 12:30:38
I bet he’s thinking more like this
Taking a $40K pay cut for 10 years so that you can have a $36K pension for 30 years.
Comment by Martin
2014-10-08 15:53:07
Cactus, you are right. I’m starting to apply for Federal jobs now. That itself is going to be hard to get as I’ve heard that one should know someone inside to get in unless my skills are really unique. To get a Fed job will be another uphill task but I’ll keep trying.
—————–
The general formula is 1% per year service * high pay (might be high three?). So the only way to get that $36K pension is to work GS-14 for 30 years. Good luck with that. And it’s mainly a moot question: most of the IT is farmed out to private contractors so you would get the contractor benefits not the Feds.
The advantages of the government are the job security and work schedule, not really the pension. You can do the math, but ISTM that you’re better off decreasing your living expenses than to take a pay cut for a pension.
1. they never get fired- no private sector person can say that
2. they clog the hywy outside my window at 4pm- not working too hard
the si’questor gave them 13? more paid vacation days
that was considered suffering
From what I could tell from my brief stint with the Air Force, government jobs are taken by people that too incompetent to get work anywhere else. They need that pension to babysit them.
I can’t speak for the civilian military, but my little section of gov is staffed with heavily degreed sharp-minded people. Their only “incompetance” is that they are lousy liars.
Thanks Oxide,
I thought about it and read some more. I found that if I save $300K and put in like a Fidelity annuity, I’ll get almost similar amount for 20 years after 65. I don’t want to live beyond 85 and I hope I don’t becoming a problem for others around me.
One other thought I have been having is to get 3 townhomes in the eastern panhandle of WV for like $90K each instead of having the $300K for Fidelity, and then rent them for like $1100 a month. That would give me $3300 a month minus expenses like tax etc., still $2400 a month. This way my principal is safe and hedged for inflation invested in the houses. These houses used to run at 300K at bubble prices and I don’t think would go lower than 80K, all built in the last 5-7 years.
Article on Carmen Segarra.
• Carmen Segarra, the whistleblower of Wall Street
• One Federal Reserve employee’s refusal to play along with a rigged financial game has made her a true modern dissident
The Guardian
5 October 2014
by Gary Younge
The key implications from this exposé are twofold. First, it shows who’s really running the country. The Fed is supposed to be working for the people, not the banks. Goldman is a private institution rescued by public money that has paid billions in settlements after selling dubious products that contributed to a major financial crisis. Segarra is told to show some humility; in reality that is an attribute Goldman would do well to acquire. Instead its chief executive still believes it is doing “God’s work”. So the state genuflects before capital, with those sole task it is to enforce the law deferring to those whose sole task is to make money.
Second, it indicates that America has apparently learned nothing from the financial crisis. As recently as 2012, a Goldman employee wrote on the day he left the company: “I don’t know of any illegal behaviour, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.”
http://www.theguardian.com/commentisfree/2014/oct/05/carmen-segarra-whistleblower-wall-street-federal-reserve
The legal edible mj products available at retail dispensaries here in Denver are really nice. Recommend the Full Melt dark chocolate, it is tasty…
the Kinks - Got To Be Free:
http://www.youtube.com/watch?v=M_M0jDbmPTc
I love dark chocolate and I dislike smoking - particularly since I need lung power for swimming - I might try that “Full Melt dark chocolate” if I get a chance to be in Denver - I flew into Denver early this year for some work related thing but we had the work in Boulder, not Denver.
Okay I’m envious of the libertarian stance of your state on MJ:
http://www.grassstationco.com/#!the-grass-station-edibles/c141q
Here’s one thing I’m proud of about Arizona:
Arizona is the most libertarian state on the guns issue. In fact there is a tactical gun range in my Arizona nabe:
http://www.gunsandammo.com/network-topics/culture-politics-network/best-states-for-gun-owners-2014/
http://www.bloomberg.com/news/2014-10-09/brooklyn-home-prices-reach-record-in-third-quarter.html
http://streeteasy.com/building/the-grand/502
The space, the convenience, low common charges and 17 years left on a twenty-year tax abatement make this a perfect property for buyers and investors
Ahhh yes 20 year tax abatement that go up each year….Talk about a scam, how much a month then increase to price $100-200K
Whatever became of yesterday’s massive stock rally?
Turns out yesterday’s stock market action was nothing more nor less than a massive dead cat bounce. Sell now, or enjoy riding the falling knife to the ground.
Market Snapshot
Dow suffers worst selloff in more than a year
Published: Oct 9, 2014 5:01 p.m. ET
Icahn says market correction is ‘definitely coming.’ But is it already underway?
Volatility is back
By Anora Mahmudova
Reporter
Victor Reklaitis
Markets writer
NEW YORK (MarketWatch) — U.S. stock investors scrambled for the exits on Thursday, sending the Dow Jones Industrial Average down 335 points, its worst one-day point plunge in more than a year.
The S&P 500 (SPX, -2.07%) fell 40.68 points, or 2.1%, to 1,928.21, its biggest one-day percentage drop since April 10. The Dow Jones Industrial Average (DJIA, -1.97%) slid 334.97 points, or 2%, to 16,659.25, marking its fourth drop of more than 300 points this year. The Nasdaq Composite (COMP, -2.02%) fell 90.26 points, or 2.2%, to 4,378.34.
Thursday’s brutal losses came on the heels of a 275-point rally, which marked some of the sharpest gains the market had seen in months. Wednesday’s gain followed a 273-point plunge on Tuesday. Those topsy turvy movements highlight what’s been a frenetic series of trading sessions in the past several months.
As selling intensified, volatility on the S&P 500 as measured by the CBOE VIX (VIX, +24.16%) index jumped 23% to 18.59, the highest level since February. Volatility metrics like the VIX serve as a gauge of current fear in the market.
…
I have no opinion.
I’m probably just deluding myself based on confirmation bias, but I seem to have a reasonably good nose for crashes. For instance, I talked my dad into selling most of his stocks in early 2007, before the onset of the 50% stock market meltdown in 2008-09. Then earlier this year, I was able to convince him to offloading several $100Ks of risky stock mutual funds in exchange for one of those relatively conservative Vanguard Target Retirement funds aimed at the post-65 set, before the onset of the Fall 2014 meltdown, which at least isn’t as bad as the Fall 2008 meltdown — so far!
On the other hand, I claim no insights when it comes to predicting the timing of the next Fed-funded bailout.
Goodnight Region IV
Will this stock market crash soon be followed by a reinvigorated housing crash?
Or is this time different?