A World Of Pure Fiat Money And Discretion
It’s Friday desk clearing time for this blogger. “A string of super-tall, super-luxury buildings have sprung up and are still in development changing the city skyscape forever. ‘We have never seen anything like this before,’ said Alex Herrera, director of technical services at The New York Landmarks Conservancy. Herrera calls mega towers ‘ghost ships’ — bought as investments by international billionaires, who visit only a couple of weeks a year. ‘It’s definitely changing our skyline and it’s certainly changing the character of 57th Street, which used to be a very quaint street of art galleries and piano stores,’ said Herrera. ‘Now, it’s a street of billionaires who don’t really live there.’”
“Octavio Nuiry, Managing Editor of the RealtyTrac Housing News Report writes that while foreclosure activity continues to wane there is a ‘tetrad’ of housing landmines that could threaten the housing recovery and trigger a surge in defaults, repossessions, and short sales. The tetrad consists of defaults in loan modifications done under the Home Affordable Modification Program, Home Equity Line resets, and remaining underwater borrowers and non-performing loans. The article states, ‘The foreclosure crisis hasn’t receded, it was intentionally delayed by government manipulation. The can was kicked down the road. And next year, foreclosure activity could spike again.’”
“And now, Nuiry says, the chickens are coming home to roost. The RealtyTrac article concludes with the statement ‘Indeed, the collapse of the U.S. residential real estate market is happening again right before our eyes in slow motion.’”
“The number of foreclosure petitions in Massachusetts grew for the seventh straight month in September. Foreclosure petitions rose 68 percent from September 2013, according to a report from The Warren Group. The spike is not concerning, said Cassidy Murphy, editorial director of The Warren Group. ‘Most of what is happening right now is people clearing out their backlogs of what they didn’t do,’ Murphy said.”
“Although Polk County’s housing market is showing steady signs of recovery, troublesome properties that real estate professionals call zombie foreclosures continue to be a problem here. The latest figures from RealtyTrac show there were nearly 1,300 such houses in Polk during the third quarter of 2014. Tampa, Orlando and Jacksonville have it even worse, and Florida leads the country with an astounding 35,913 empty, undead homes.”
“Jamie Sites rents a home in Lakeland, two doors down from an abandoned two-story house that resembles something from a horror movie. A home she owns and is trying to sell is located directly behind the crumbling heap. ‘The people who come to look at our house, when the real estate agent takes them out back and they see that, they’re like ‘Oh my gosh,?’ Sites said. ‘It’s horrible. It’s just so bad.’”
“In a region still stung by foreclosures, Henderson officials launched a foreclosure registry to monitor homes that are abandoned or at risk of becoming so. If foreclosures are any indication, there have likely been thousands, if not tens of thousands, of abandoned properties in recent years. Some 33 percent of Las Vegas-area homes that are in the foreclosure process — but not yet bank-owned — have been vacated by the owners, according to RealtyTrac. The rate nationally is 18 percent.”
“As it stands, an estimated 5,000 homes in Henderson are in some stage of the foreclosure process, said Keith Paul, spokesman for Henderson city government. Residents often flee their home because they can’t afford the mortgage. While gone, their financial woes only worsen with unpaid taxes, mortgage penalties, HOA dues and other fees, Windermere Prestige Properties agent Keith Lynam said. ‘There’s no way they’re coming back,’ he said.”
“According to Zillow, prices for single-family homes in the Danbury region have declined by more than 1.5 percent for the year. Most experts use the word ‘challenging’ to describe the current residential real estate market, noting that a shadow inventory of foreclosed properties continues to be a drag on pricing and sales. ‘The spring season was a little busy, but things really dropped off in June,’ said Paul Scalzo, the president of Scalzo Group. ‘We are just going through a correction. There is still a lot of shadow inventory in the market that we need to work through before prices can begin to rebound again.’”
“Paul Singer’s Elliott Management Corp. said optimism on U.S. growth is misguided as economic data understate inflation and overstate growth, and central bank policies of the past six years aren’t sustainable. ‘Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth,’ Elliott wrote. ‘The inflation that has infected asset prices is not to be ignored just because the middle-class spending bucket is not rising in price at the same rates as high-end real estate, stocks, bonds, art and other things that benefit from’ quantitative easing, Elliott wrote.”
“The latest Geneva Report indicates that global debt increased from 174% to 212% of GDP during 2008-2013. The biggest increases were largely in the developing economies led by China, which saw its debt rise from 72% to 217% of GDP during that period. This ratio is quickly approaching those of other countries — 257% for countries using the euro, 264% for the US, and 411% for Japan. Inequality is getting so serious that it prompted prominent economists to take up the issue. Janet Yellen, chairman of the Board of Governors of the Federal Reserve System, called increasing inequality un-American and warned that it would do great harm. As her agency does not deal with this area of economics, she provided no specific policy prescriptions besides general suggestions in the areas of improving support for education.”
“In Yellen’s speech, she points to ‘the high value Americans have traditionally placed on equality of opportunity.’ She also recognizes that ’some variation in outcomes arguably contributes to economic growth because it creates incentives to work hard, get an education, save, invest and undertake risk.’ However, Yellen warns that ‘inequality of outcomes can exacerbate inequality of opportunity, thereby perpetuating a trend of increasing inequality.’”
“As the head of the world’s most powerful central bank, Yellen is silent about the Fed’s own role in increasing inequality by inflating returns for high-income households through ultra-low rates that have encouraged risk-taking and propped up asset prices, while discouraging saving and capital investment. Today monetary policy has no rudder; there is no monetary rule to guide policymakers. We live in a world of pure fiat money and, in the case of the Fed, pure discretion. That environment breeds uncertainty and ignores the limits of monetary policy.”
“As Janet Yellen was preparing to take over the Federal Reserve, she got some advice from the departing chairman, Ben Bernanke: Keep in mind that ‘Congress is our boss.’ Republican control of the Senate could mean Richard Shelby of Alabama, who turned from Fed supporter to critic during the financial crisis, would lead the Senate Banking Committee, which oversees the central bank.”
“Shelby voted against Yellen’s nomination as vice chair in 2010 and as chair last year. In both cases, he cited ‘deep concerns about Dr. Yellen’s Keynesian bias toward inflation as a member of the Federal Open Market Committee’ as well as ‘her poor record of bank regulation’ as president of the San Francisco Fed from 2004 to 2010.”
“The Fed last month announced an end to its third round of quantitative easing, while maintaining its pledge to keep interest rates low for a ‘considerable time.’ ‘In both time and money, QE has overstayed its welcome by years and by trillions,’ House Financial Services Committee Chairman Jeb Hensarling, a Texas Republican, said in a statement. ‘Loose monetary policy before the crisis inflated the housing bubble and six years of QE may have just inflated the next bubble.’”
‘Foreclosure filings - the start of the legal process that can lead to the loss of a property - totaled 160 in October, according to a report released Monday by the El Paso County Public Trustee’s Office. That’s a one-quarter percent increase from the same month last year and a nearly 43 percent jump from September, the report showed.’
‘Public Trustee Tom Mowle said in his monthly report, however, that he wants to wait and see November numbers before drawing any conclusions about the direction of the local foreclosure picture. Previously, he said he expected this year’s foreclosure total to decline from 2013.’
‘Eighteen percent of Arizona homes are seriously underwater in value giving the state the ninth worst rate in the U.S., according to new numbers from RealtyTrac. The real estate research firm ’s third quarter numbers show Nevada has the worst underwater rate with 31 percent home valued far less than outstanding mortgages. Florida is next with 28 percent of homes underwater followed by Illinois (26 percent) and Michigan (25 percent).’
‘Arizona is tied for ninth worst in the U.S. with Connecticut. The national average is 15 percent.’
‘When it comes to local markets, Las Vegas has the highest underwater water rate at 34 percent, tied with Lakeland, Florida.’
‘Short sales have dwindled in Orlando during recent years, and yet the region had a greater share of the bargain-priced sales during the third quarter than almost any U.S. city, a new study shows.’
‘More than one in every 10 home sales in the four-county metropolitan area during the third quarter was a short sale, according to RealtyTrac. Only Las Vegas, Lakeland and Fort Myers had higher rates than Orlando’s in the report on the top 100 U.S. metro areas.’
‘Median prices in the core Orlando area have increased from less than $100,000 three years ago to almost $170,000 last month.’
‘Thousands of homes in South Florida have been left abandoned amid foreclosure lawsuits. A study by RealtyTrac found the tri-county region ranks second among all U.S. metropolitan areas for “zombie foreclosures” – that is, when the homes are vacant during the foreclosure process. It counted 9,869 zombie foreclosures in South Florida as of the third quarter, behind only New York City, with 13,366.’
“Seriously underwater” is defined as underwater by 25 percent or more. Az is 18 percent and the National Avg is 15 percent.
Think about that. Even after the recent pump up. It.will.end.in.disaster. Soon.
I wonder when I hear these underwater stats, are they factoring in the 8-10% that sellers typically pay in to closing? Probably not.
DIscount the current estimated sales prices by the seller closing costs, and see what the percentages look like then.
what % of houses were underwater in the 50’s & 60’s
then the gov got into the mort biz
Govt’s been in the mort biz since the 1930s, pal.
However, things changed after the Community Reinvestment Act went into force.
the CRA was big in this last cycle! if you say so you’re a racis.
I was thinking about this cycle stuff the other day while reading about a developer saying he had missed the cycle in California. Housing cycles don’t last two years. It’s too short. IMO, this is more proof what we are seeing is a part of the same bubble.
Fundamental-based cycle: 10 years up, 10 years down…
Housing Bubble cycle: 17 years up (1991-2007), four years of financial collapse (2008-2011), three years of QE3-manipulated price reflation (2012-2014), LOOK OUT BELOW!!!!!!!!!!!!!!!!!!
Price probably peaked in many markets in the fall of 2013. That’s why I say two years. There’s no way this is a typical cycle.
‘The national average is 15 percent.’
At the bottom of the market I wonder what the national average was.
“The article states, ‘The foreclosure crisis hasn’t receded, it was intentionally delayed by government manipulation. The can was kicked down the road.”
Ever tried to hide a house? Now try to hide tens of millions of them.
“According to Zillow, prices for single-family homes in the Danbury region have declined by more than 1.5 percent for the year.
It’s strange how this is somehow noteworthy considering houses are depreciating assets anyways. That’s what housing does… it depreciates and the price falls under normal conditions.
‘It was going to be an apartment complex, but it was turned into condos but they didn’t sell. Now it’s finally back to being fully apartments. Lantern Square and Kendall Lakes were built side by side almost a decade ago as apartments. But the 212-unit Lantern Square was switched to condos as that market boomed.’
‘But the boom didn’t last and only 70 units sold, according to Ralph Bekkevold, an attorney with Greenberg Traurig, an international law firm with an office in Miami, which represents the owner 22 Lantern LLC. The rest of the units were rented out. “The developer didn’t like that, the people who had purchased the units didn’t like it,” he said.’
‘Meanwhile, prices kept falling. While the condos had started out in the $200s, they fell as low as $60,000, he said.’
‘So about 18 months ago, 22 Lantern started buying back those 70 units. It recently got them all back and Greenberg Traurig negotiated an $18.1 million refinance loan for the project. Now all 400 units — 212 in Lantern Square and 188 in Kendall Lakes — are owned by 22 Lantern and will be kept as apartments.’
“The owner was thrilled to do this,” Bekkevold said. “A fractured condominium project, with some owned and some rented, drops the overall value of a property significantly lower than a fully owned project or a full apartment complex.”
Thanks again for continuing to research and post all this data Ben….
+1
+1
A related Florida story on how specuvestors can gain control of a condo complex and force individual owners to sell.
http://www.tampabay.com/news/politics/legislature/condo-owners-being-forced-out-look-to-legislators-for-help/2197714
“Nevada’s second-largest city this week launched a foreclosure registry at registerhenderson.com to monitor homes that are abandoned or at risk of becoming so.
“Properties to be tracked include single-family homes, townhouses, condominiums and multi-family buildings with up to four units. Owners must register a property — and pay a fee to do so — if it has an unresolved notice of default or other foreclosure filing on record with the Clark County Recorder’s Office.
“The city is charging $200 for new registrations and $50 to update an entry with new information. Registration must be renewed annually, also for $200, if the property remains distressed.”
Bahahahahahahahaha … read on for some further belly laughs …
“Residents often flee their home because they can’t afford the mortgage. While gone, their financial woes only worsen with unpaid taxes, mortgage penalties, HOA dues and other fees, Windermere Prestige Properties agent Keith Lynam said.”
Bahahahahaha … so the residents flee because they can not or will not pay their bills so the city’s response is to lay upon them some more bills that can not or will not be paid.
Bahahahahahahahahahahahahahahahahahahahahahahahahaha …
I still remember driving into Las Vegas on Hwy. 95, rounding the top of the hill, and seeing mile after mile of tightly packed condos in Henderson. It’s a sight to behold. Pretty ceramic roofs slowly baking in the sun. I wonder how long it will take the bill collectors to track down all the runaway mortgage slaves? You can run, but you can’t hide….
Scale that up a few hundred times and you have California.
You can run, but you can’t hide
You can if you leave the country. Of course, for most gringos, who only speak English and who do not have foreign citizenship, that isn’t an option.
I wonder how many shiny new pickup trucks and white Chevy Express vans “self-deported” themselves away from their 7-year easy money loans after all the construction jobs dried up in 2009.
Probably ZERO considering the illegals that found work in the trades worked for nothing and had nothing anyways.
You didn’t need nothing to get a 0% apr 72 month loan on a 2009 silverado…
Sure you do. SS card, credit history, legal ID, permanent address, etc.
It’s merely another one of Donks space shots.
“As Janet Yellen was preparing to take over the Federal Reserve, she got some advice from the departing chairman, Ben Bernanke: Keep in mind that ‘Congress is our boss.’”
Bahahahahahahahahahahahahaha … the jokes write themselves.
Yeah…Goldman Sachs owns Congress, and the Fed is the monkey to Goldman’s organ grinder.
“Today monetary policy has no rudder; there is no monetary rule to guide policymakers. We live in a world of pure fiat money and, in the case of the Fed, pure discretion. That environment breeds uncertainty and ignores the limits of monetary policy.”
Limits to monetary policy? There are limits to monetary policy?
Bahahahahahahahahahaha … I just love this blog.
“We live in a world of pure fiat money.”
Yeah, that’s worth $250K.
…a cool quarter mill!
And you two jokers will never experience the pleasure of having it.
Keep renting HA. I enjoy your money.
And it’s not nearly enough to cover your losses.
‘An increase of property listings is opening up a seller’s market that has dominated the Coachella Valley market, housing reports show. “Now that the summer is over, people always wait until October,” said Kevin Stern, president of Town Real Estate in Palm Springs. “The market is getting a lot of new inventory, and it’s much more competitive.”
‘There were 2,355 single-family homes in the active inventory, a 7 percent year-over-year increase, according to the California Desert Association of Realtors.’
‘Rapid appreciation has slowed significantly in the desert. Big price jumps had previously priced many buyers out the market and raised concerns about housing affordability while median household incomes remained stagnant.’
‘The median price increased a mere 2 percent year-over-year, a sharp difference from the double-digit growth reported early in the year.’
‘For single-family homes, the median price didn’t just taper. The price was $371,000 in September, a 2 percent drop from the same month a year ago, according to CDAR. “I’m starting to see some price reductions on properties that have been on the market,” Stern said. “People were overzealous, being a little aggressive.”
‘A 119-acre development planned for Richmond is headed to auction Monday amid sluggish sales of new single and multi-family units in subdivisions throughout McHenry County. Chicago-based Rick Levin & Associates Inc. plans to auction the vacant mixed-use Stone Oak Crossing property for NorStates Bank with an opening bid of $750,000. The property was bought in 2004 for $2.35 million. Developers had sought to build 91 single-family homes, 109 town homes and retail space around a golf course on the property.’
“There is little, if any, residential or commercial potential today or in the foreseeable future for the Stone Oak Crossing development as planned,” according to a residential market analysis of the property.’
‘Many residential development projects went bust or were put on hold when the housing crisis hit and remain dormant. Homebuilders have re-started marketing efforts in some McHenry County developments, but sales have been slow, even in more populated suburban areas closer to jobs and transportation hubs, according to the Tracy Cross & Associates report.’
‘The report said there was “no potential” in the next “several years” for selling attached development such as town homes, duplexes and condominiums in the Richmond market based on sales rates and price points of other residential developments in the area. The report similarly ruled out single-family development based on the pace of sales and prices of homes in Ryland’s Ashton Pointe development in Crystal Lake, William Ryan’s The Enclave at Fox Trails in Cary and DR Horton’s Running Brook Farm in Johnsburg. It said demand for commercial property in the Richmond area was “extremely shallow,” noting only two commercial sales in the village in the past six years.’
“It’s a lot cheaper to buy right now than it is to build,” said Casey Meyers, president of the Heartland Realtor Organization Board of Directors and managing broker for the Woodstock office of Berkshire Hathaway Starck Real Estate.’
‘Southern Nevada real estate agents say the area’s median home price dipped below $200,000 in October. The Greater Las Vegas Association of Realtors reported Thursday that median home prices were down 1.3 percent from September, but up 8.1 percent from the same time a year ago.’
‘Association chief Heidi Kasama says it’s no surprise that home prices are declining and sales are slowing as the holidays draw nearer. She says sales and prices might go down even further through the winter months.’
‘Phil and Amy Mickelson are selling their Rancho Santa Fe, Calif., mansion, which could be yours for a listing-low price of $5.99 million. The 9,176 square-foot, five bedroom, six-and-a-half bath property is back on the market after previous sale attempts in 2008 ($12.2 million) and 2013 ($6.5 million). It appears that even professional golfers are not immune to a sliding housing market as a result of the recession.’
‘The 4.55-acre estate, which boasts a pool, olive trees, exercise room, a chef’s kitchen, open-beam truss ceiling living rooms, a juice bar and, of course, a putting green, has been home to Lefty and his wife since 2001. And today, you can own it for just about $50,000 more than what they paid for it 13 years ago.’
‘It is not clear if Mickelson, a San Diego native, plans to leave California. In January 2013, Mickelson complained about how much money he loses in taxes each year. California taxes income over $1 million at 13.3 percent, the highest marginal tax rate in the United States.’
“There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state, and it doesn’t work for me right now,” Mickelson said.’
Hmmm…
‘just about $50,000 more than what they paid for it 13 years ago’
…. and still overpriced by 75%.
Zillow estimates $5,499,000.
5111 El Mirlo, Rancho Santa Fe, CA 92067
There are a lot of homes for sale around him and values have dropped 1% in the last 30 days.
HA is wrong, it won’t go to $1,500,000, but it does appear to be overpriced at $6,000,000
Care to wager on that one J._Fraud?
“There are a lot of homes for sale around him and values have dropped 1% in the last 30 days.”
That’s a very bad sign for several reasons:
1) A vanishing small number of San Diego households can afford to pay north of $1m for a home, and far fewer can afford to pay over $5m;
2) Anyone who could afford to buy the place is already comfortably housed;
3) The all-cash foreign investors seem to have left the building.
So good luck with the sale!
Almost forgot:
4) All those many other homes for sale around him are only available to a vanishingly small share of San Diego households.
They’ve only been trying to sell it since April 2008. I’m sure they will find some sucker willing to pay their wishing price any day now!
Price History
Date Event Price $/sqft Source
11/04/14 Listed for sale $5,999,950-7.6% $653 Willis Allen R…
03/26/14 Listing removed $6,495,000 $707 Willis Allen R…
08/28/13 Price change $6,495,000-7.1% $707 Willis Allen R…
05/15/13 Price change $6,995,000-1.4% $762 Willis Allen R…
01/19/12 Listed for sale $7,095,000-1.4% $773 Agent
06/17/11 Listing removed $7,199,000 $784 Prudential Cal…
03/20/11 Price change $7,199,000-20.0% $784 Prudential Cal…
01/08/10 Listed for sale $8,995,000-26.4% $980 Prudential Cal…
04/13/09 Listing removed $12,225,876 $1,332 Number1Expert
04/09/08 Listed for sale $12,225,876+105% $1,332 Number1Expert
01/19/01 Sold $5,950,000+417% $648 Public Record
06/24/99 Sold $1,150,000 $125 Public Record
$6,000,000 at 5% interest = $300,000/year or $25,000/month. Add another $7,000/month for taxes, insurance and maintenance and you are at $32,000/month to own (all in including an opportunity return on equity)
He could have rented this one for $15,000/mon
http://www.realtor.com/realestateandhomes-detail/7141-Encelia-Dr_La-Jolla_CA_92037_M18909-74092?row=5&source=web
and saved himself $2,340,000 in cash!
‘It is not clear if Mickelson, a San Diego native, plans to leave California ??
Well, its only not clear if you are blind…He’s going to Florida…He saves $130,000. for every 1-mil he makes…Kind of a no brainer…
‘just about $50,000 more than what they paid for it 13 years ago’
I wonder how many years it will take them to sell at that $50,000 premium?
‘Shelli and Jeff Hananel thought buying a time share would be an affordable way to show their two young daughters the world. The Sherman Oaks couple didn’t know booking a room during the holidays would prove nearly impossible or that annual maintenance fees would be so high.’
‘When they eventually tried to sell their underused vacation package on the Internet, they found hundreds of owners trying to give their time shares away for free. They realized they were never going to find a buyer.’
‘Desperate to free themselves of the hundreds of dollars in annual fees all owners are contractually obligated to pay, the Hananels paid a transfer company in Torrance to find them a buyer. The transfer company that persuaded them to fork over $3,750 is operated by Cindy and David MacMillan, who run time share transfer operations that resort owners say is bilking the industry out of tens, if not hundreds, of millions of dollars.’
‘The MacMillans, who said they have facilitated more than 120,000 time share transfers, see themselves as modern day Robin Hoods, providing relief for struggling owners misled by unscrupulous resort developers. “I’m not the con artist here, it’s the time share industry — they’re the crooks,” David MacMillan said in an interview.’
‘His wife, Cindy, agreed. “If it weren’t for us,” she said, “people wouldn’t have any way of getting out of their time shares.”
‘For those looking to buy a home in Santa Cruz County, the selection is skimpier than ever. But there’s a new investor afoot, buying homes to rehab them for sale and donating part of the proceeds to charities.’
‘The September median price, the midpoint of what sold, was $665,000 versus $725,000 in July, according to Gary Gangnes of Real Options Realty, who tracks the numbers.’
‘The new investor in Santa Cruz County is Charity Rehabbers LLC, headed by John Paiva, who lives in Gilroy. He started in the San Francisco Bay Area four years ago, juggling this new venture with his job as a finance executive at Cisco and family time with his wife and young son. Last year, he quit his day job so he could focus on real estate rehabs.
“This is something I love to do,” he said, explaining how part of the proceeds go to charities supporting U.S. troops, children and animals.”It’s our way of giving back,” Paiva said.’
‘In September, he bought 119 Pryce St., Santa Cruz, a small Victorian with a big back yard near Highway 1 in September for $400,000. He expects renovations to take 45 days once he gets city permits and to put the house on the market around Jan 1. He estimates the asking price will be less than $600,000.’
119 Pryce St., Santa Cruz
A philanthropic flipper, that is a new one…wonder what the “portion” of the proceeds is donated to charity. FWIW my brother runs a soup kitchen a few blocks from that house and business is booming.
‘An aging population is getting some of the blame for projections that housing demand will slump in Halifax in 2015 and rebound only slightly in 2016. “We see the direct link between people exiting home ownership – empty nesters, single person households – and moving into an apartment,” said CMHC Atlantic Business Centre senior market analyst Guillaume Neault.’
‘Neault said Halifax is also suffering from an excess inventory of newly-built unsold homes, which in turn can be blamed on a stalled economy. “In Halifax especially over the past four or five years, we have seen very little employment growth,” he said. “So this becomes somewhat challenging to have a vibrant housing market or at least a market for new housing if job creation isn’t there.”
Wait for it…
‘He said the Halifax market experienced a boom from 2003 to 2007, when sales volume and price growth was above average.’
This speaks directly to what occurred 1998-2008. This was the period of the great boomer retirement trend. It’s over now.
‘If you’re getting paid $100 next year, and you discount it at 10 percent, then it’s worth $90 today. However, it’s worth $98 if you discount at 2 percent. For reference the 10-year Treasury rate is 2.3%, though investors may demand a premium to this.’
‘The rate of interest has been falling for over three decades, which means the calculated present value of assets has been rising.’
‘The math is simple. Anyone with a calculator can tell if an asset price is out of range based on its cash flows, such as earnings or rents. That’s not why the Fed can’t spot bubbles.’
‘The Fed’s problem is that the calculation depends on a rate of interest that it heavily influences. Its analysis is therefore circular and self-fulfilling. It’s like taking a picture of a painting. Of course the two images match, but what does it prove?’
‘Asset prices rise in value when the interest rate falls. Therefore, we need to know if the interest rate is right. The Fed can no more see that, than you can feel your own body temperature.’
‘The Fed can’t see the forest for the trees. Or perhaps I should say: it can’t see the bubbles for the soapy water in its eyes.’
‘Recently, the International Monetary Fund announced that based on purchasing power parity calculations, China’s 2014 gross domestic product will be $17.6 trillion, surpassing the U.S. GDP of $17.4 trillion.’
‘China’s expert commentary says that these estimates are “not even close,” and the media thus released special reports that “Although China’s economy has been called ‘No.1,’ China’s GDP per capita is 50 years behind (US’s GDP per capita)”. The Chinese reports said they were “rectifying misunderstandings.”
‘China refused the title of “No.1″ because it knows itself clearly.’
‘On April 30, the World Bank released a report predicting China would become the No. 1 economic power in the world. However, China also declined to accept this title of No. 1.’
‘Bejing’s refusal to accept the title of No. 1 shows its knowledge of the endless counterfeits in the country’s statistical data.’
‘The families in the highest 1 percent owned over 1/3 of China’s assets, while households in the lower 25 percent owned only about 1 percent of the country’s total assets. Another set of data confirms the reality that China’s wealth is overly concentrated. The “Wealth-X and UBS Billionaire Census 2014″ reported that there are 152 individuals in China with net assets surpassing US$1 billion, second only to the United States.’
‘But the reality is cruel: This one extremity consists of the billionaires ranking 2nd in the world, while at the other extremity are the 200 million impoverished individuals who spend an average of US$1 per day and 468 million people in China who spend less than US$2 per day.’
‘Since a long time ago, economic growth in China has relied on the “troika” of foreign trade, investments, and domestic demand. At the present stage, China is in the process of losing its status as the world factory. Foreign trade is suffering severely, and although it warms up again every now and then, the long-term trend is a decline.’
‘Investments stem from three areas: the government (including to government-owned businesses), the private sector, and foreign sources. Government investment is slowing and foreign businessmen are similarly decreasing investments towards China.’
‘The rich in China are utilizing credit card accounts, offshore banking institutions, and foreign investments to transfer capital overseas, rendering the restrictions on maximum currency exchange completely useless. Capital is endlessly flowing outwards from China, which ultimately forced China’s government to initiate a plan to fight money laundering in July.’
‘Any market that only relies on the government and the wealthy for support definitely cannot flourish. For example, China’s real estate market completely depends on the support of these two sectors and is entirely separated from the true spending abilities and demands of the Chinese people, ultimately creating a major economic bubble.’
‘In a society with serious distribution disparities, various kinds of intense conflicts and abnormalities will appear. Even if it enjoys short-term economic prosperity, it will be difficult to preserve.’
At the present stage, China is in the process of losing its status as the world factory.
I’m not sure I’d go that far. Just because their exports aren’t growing as fast as in the past doesn’t mean that they’ve stopped being the world’s factory.
It does when your GPD gets slashed by 50%.
“the amount of coal & water power and oil and natural gas per capita only reaching 50 percent and 7 percent of the world’s average level respectively. In addition, the amount of arable land per capita is only 30 percent of the world’s average.
China’s government now admits the ecological crisis and the solid trend of worsening pollution in the water, land, and air. For example, 349 million mu (approximately 57.5 million acres), which takes up 19.4 percent of China’s total arable land, have been severely polluted.”
The China miracle may have created a bunch of Ponzi billionaires, but otherwise looks like a train wreck.
‘China is wasting money and manpower by demolishing buildings and public projects long before they reach the ends of their designed service lives, report Zheng Jinran in Beijing and Xu Jingxi in Guangzhou.’
‘Liu Huilian never imagined that the grand, green square, which seemed the perfect place for her small hotel, would be demolished just four years after it was built and become a giant construction site that would ruin her business.’
‘Liu opened her 40-room hotel in a street near the corner just before the work on the square started in 2009. Now, the demolition of the green space has left her confused and frustrated. “What a waste of resources, destroying an almost-new square,” she said, “Also, the fence around the construction site is only 3 meters from my door, and the noise has driven my guests away.”
‘The government’s announcement raised many eyebrows because media reports stated that the plan for the subway extension had originally been announced in 2007, two years before work began on the Chenjiaci project. “Why didn’t the government notice the plan to extend the subway before it spent so much money on the green square?” asked 50-year-old Deng Ruixiang, who has lived in the area for 20 years.’
‘A recent report published by the China Academy of Building Research, the largest institution in the domestic construction industry, estimated that buildings with a combined average floor space of 460 million square meters have been demolished every year since the start of the 12th Five-Year Plan (2011-15). It also said that about 460 billion yuan has been wasted annually by tearing down buildings long before they reach their expiration dates.’
‘The report, which was sent to the Ministry of Housing and Urban-Rural Development, also noted that 46 percent of the buildings were demolished for reasons of commercial interest, or because of poor urban planning or bad management. In addition, 7 percent of them were razed because they were local government vanity projects that had limited public functions. “In total, 90 percent of early demolitions were unreasonable,” said Yin Bo, a professor at the academy and one of the authors of the report.’
‘The problem is that the line between public and private interests is blurred, and it’s difficult to determine which projects serve which interest, said Li Xiaoping, who also worked on the academy’s report.’
‘China is wasting money and manpower by demolishing buildings and public projects long before they reach the ends of their designed service lives, report Zheng Jinran in Beijing and Xu Jingxi in Guangzhou.’
Tearing up buildings then rebuilding them sounds like a great Keynesian economic stimulus program!
The 500 million Chinese that live on less than $2 a day probably really appreciate it.
The Lorax is shaking his head…
A video:
‘Banks not moving forward on housing foreclosures? Nov. 06, 2014 - 2:03 - Cabanillas & Associates’ Chris Cabanillas explains why banks are not moving forward on housing foreclosures.’
Lawyer solution: give them the house.
Leave it to lia
wyers to come up with that.‘A large chunk of buyers are still paying for homes in all cash — but the price discounts they get for doing that are drying up. And if this trend continues, we may be headed for another housing bubble, one expert reveals.’
‘Perhaps even more troubling, as Blomquist notes, is that this trend “indicates home prices don’t have much headroom to increase going forward.” Indeed, while there’s still an advantage to paying cash, the discount is historically quite low — at least when you look at data since 2001 — and trending downward.’
“If we see that discount number go positive and become a premium, it’s a strong indication we may be back in a housing bubble again,” he notes.’
“we may be headed for another housing bubble, one expert reveals…”
So, it’s not a bubble until after it’s gone! Being an expert is hard.
“…..‘It’s definitely changing our skyline and it’s certainly changing the character of 57th Street, which used to be a very quaint street of art galleries and piano stores,’ said Herrera….”
I find this curious. 57th is quaint? I guess it is all relative.
‘Fannie Mae and Freddie Mac reported sharply lower profits but still earned enough for a combined $6.8 billion payment to the U.S. Treasury, as the mortgage-finance companies also cited the potential for a thaw in home-loan access.’
‘Both companies said the decline in net earnings doesn’t signal problems with their underlying businesses. Rather, the weaker results stemmed mainly from issues related to slower home-price appreciation, which allowed the companies to decrease their reserves less quickly, and changes in interest rates.’
‘During conference calls Thursday with reporters, both companies gave early indications that an October agreement with lenders could lead to expanded mortgage access. The agreement, reached with the companies and their regulator, the Federal Housing Finance Agency, clarifies some of the penalties lenders could face for making loans that end up not meeting the companies’ standards.’
‘Fannie Mae Chief Executive Timothy J. Mayopoulos said in an interview that some lenders, including large ones, have told him “that they will definitely proceed to make the kinds of loans that we want—to more fully deliver to our full credit box” while others expressed continuing concerns about litigation.’
‘In October, FHFA chief Mel Watt, Fannie and Freddie announced that the companies would soon begin to guarantee some loans on homes with down payments of as little as 3%, something that Fannie Mae had largely abandoned last year and that Freddie had not pursued for several years.’
‘The regulator has yet to finalize details of the low-down-payment programs. Freddie Mac CEO Don Layton said that his company planned to open the guarantees to a broad spectrum of borrowers, rather than limit it to a certain subset.’
‘Since announcing the low-down-payment programs, the companies have come under some criticism that they might be beginning to move toward some of the lending practices that led to large losses during the crisis. Mr. Mayopoulos said that those concerns are largely unfounded. “I’m not surprised that people are asking the questions. … We wouldn’t offer this product if we thought that it could imperil the taxpayers or put us in a position where we couldn’t be profitable,” he said.’
‘Fannie posted net income of $3.9 billion in the third period, down 55% from the same period a year ago. Freddie’s net income was $2.1 billion in the third quarter, down 93% from a year ago.’
This is interesting:
‘the weaker results stemmed mainly from issues related to slower home-price appreciation, which allowed the companies to decrease their reserves less quickly, and changes in interest rates’
Sounds like a lot of their “profits” were accounting book entries. Jeebus, what a joke this economy is.
Wow. Admitting it almost as plain as day. They can’t fix the inequality of opportunity, so they’re trying to fix the equality of the outcomes. This is it in a nutshell. People who don’t work hard, don’t get an education, don’t save and don’t invest should be able to have a house, too.
She’s babbling on about things that have nothing to do with her desired outcomes for you or me. She works for the bank.
Yellen works for the .1% that Thomas Jefferson warned the new Republic to exercise eternal vigilance against.
Labor Force Participation Rate Sits At 1977 Levels
http://data.bls.gov/timeseries/LNS11300000
“‘It’s definitely changing our skyline and it’s certainly changing the character of 57th Street, which used to be a very quaint street of art galleries and piano stores,’ said Herrera. ‘Now, it’s a street of billionaires who don’t really live there.’”
Future generations will look back in amazement at how much societal wealth was wasted on the oligarchs’ empty monuments to financial excess.
wealth was wasted on the oligarchs’ empty monuments to financial excess ??
You mean something like this;
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&uact=8&ved=0CDwQqQIwBg&url=http%3A%2F%2Fmoney.cnn.com%2F2014%2F11%2F06%2Freal_estate%2Fmost-expensive-listing%2Findex.html&ei=VN5cVIbfO4ywPLGugeAG&usg=AFQjCNEWj_bkfqP3BetLMKfT-Fa-D8JVSg&sig2=YAP8nKAQ3p5EdSWtNl7R0Q&bvm=bv.79184187,d.ZWU
‘Once in a while we get to thinking that we’re finally inured to the insanity of San Francisco’s real estate market. And then we come across a property like 1448 Kearny St.This 330-square-foot cottage just sold for more than three-quarters of a million dollars — nearly $100,000 more than the owner was asking. It had been listed at $679,000 but sold at $765,000.’
‘Sure — it’s a teardown, right? Land value. Makes sense. Yeah, that’s what we thought. But the lot is 766 square feet (about 28 by 28 feet), according to public records. And the house on the lot is one of only about 100 remaining earthquake shacks, built more than a century ago to house refugees of the 1906 San Francisco earthquake.’
‘Still, it was recently renovated by the artist who owned it, and it is on Telegraph Hill. And heck, it looks positively cheap next to the $1.5 million, 328-square-foot London flat we recently wrote about.’
Again with the “gee wiz, would you look at that” kind of reporting. Housing bubbles aren’t cute or amusing. Eventually, it’ll be “mommy, make it stop” and “we can’t expect people to pay back that money”.
More like “mommy make ______ stop”. (fill in the blank with housing analyst, ben jones, zillow, etc)
Let’s review something that’s important. Years ago, when I went to visit a bunch of HBBers, I has something happen I didn’t expect. I would talk with a person who told me timeline of events that always lead to an “ah-ha” moment about the bubble. A moment or event that made them think, “something’s wrong.”
It is wrong, as in, dangerous. Like a drunk guy running around with scissors. I can point to any number of stories like this all over the world. Sure, Istanbul should be as expensive as London. Mumbai deserves to be more expensive than London. This tiny old shack is worth $750k, because it’s the bay area dummy!
No, no and no. It’s a bubble! And it’s wrong, and somebody is going to get hurt. This was posted in yesterdays comments:
‘When Francisco Nieto and Mirella Rangel sold their house near Mills College this year, they wound up in a limbo of homelessness that’s snagged many move-up buyers in the Bay Area’s overheated real estate market.’
‘For six months, from February to August, they lived like nomads, staying with friends and then hop-scotching from one Airbnb rental to the next while managing the sale of their two-bedroom home and struggling to find a larger one they liked and could afford.’
“We were gathering all our clothes and packing the car up every Sunday,” Rangel said. “Everybody had one duffle bag, and there was one duffle bag for Tupperware, olive oil, sugar — everything. We had to carry it with us, in two cars, and move to the next place and do it again the following Sunday.”
‘The family is now happily settling into their 3-bedroom home in the upper Rockridge section of Oakland, purchased for $850,000. They beat out a cash offer by agreeing to let the owners stay in the house for a month while they looked for a home to buy.’
“We said, “We’ve been living out of a suitcase for all these months, what’s one more month?’ That is what got us the house,” Nieto said.’
Too many of us have lost our capacity to see that something is wrong. I don’t know why; has it gone on so long reality escapes us? Are we numb to the phoney money washing around the world? IMO, you can never forget what a bubble really is; insanity. Mass insanity. Not the kind that puts you in a straight jacket, but insanity nonetheless. It seems like everyone is doing it, so it can’t be crazy, right? The media thinks it’s fun, the government is encouraging it. Heck, it’s mainstream! Plus, those people who aren’t buying it, they’re cranky bitter renters. They’re just jealous.
One last thing; this insanity also explains the reactions when reality begins to intrude. Shock, disbelief, anger, finger pointing. Because it is a painful thing to admit you were a greedy dumb ass.
‘We said, “We’ve been living out of a suitcase for all these months, what’s one more month?’ That is what got us the house,” Nieto said.’
Seems like the guy completely lost all perspective.
“Shock, disbelief, anger, finger pointing.”
It’s been a while since we had a discussion here of the Housing Bubble Stages of Grief. I have a feeling it won’t be too far into the future when they start cropping up more frequently again.
“Mass insanity. Not the kind that puts you in a straight jacket, but insanity nonetheless. It seems like everyone is doing it, so it can’t be crazy, right? The media thinks it’s fun, the government is encouraging it. Heck, it’s mainstream!”
“this insanity”
You can see it but you can’t explain it. An old guy I used to know spent most of his life caring for a manic/depressive spouse. He had spent a long time trying to understand “insanity”. One of the things I remember him saying was “you cannot use logic to explain an illogical situation.”
In my own reflections of caring for this woman’s daughter for several decades, I learned about “enabling”. Mania has its boundaries; reality and consequences. The caregiver can fall into the role of enabler by holding the boundaries out beyond their normal limits, postponing consequences or absorbing them by proxy. Instead of helping the maniac toward health, they actually do harm by facilitating the mania. They may even think themselves right, noble or saintly in so doing. The consequences remain even if out of sight and they do eventually present themselves with crushing force, and will sweep the mania and the enabler away without mercy.
The enabler of our society’s mania is easy credit. It’s not actually the cause of the mania, but is the facilitator of it’s expansion beyond normal limits.
Just my thoughts.
“…caring for this woman’s daughter for several decades…”
Your ex!?
I have to thank you for some very engaging and insightful posts this week. (I could wax nostalgic on codependency issues of my own, but won’t…)
+1.
“Too many of us have lost our capacity to see that something is wrong.”
Ive thought alot about this in order to reconcile my good fortune versus the hard times so many in my own family, friends and acquaintances have endured over the last 30 years. It really has to do with hope. That hope sustains them and they cling to anything that reinforces that hope no matter how farcical it is. And it’s almost always a moon shot notion they hear on TV, more endless promises by politicians, a MLM scheme or some other empty opportunity. I’ve listened to them talk and make excuses for what we know is ethically wrong at a very minimum. For them, it’s a shot at something, anything. It’s at this point the goal posts get shifted, distorted rationalizations are stated and the slippery slope gets steeper and reality fades into the rear view mirror.
These lofty promises made by those who speak for the system are a counterfeit. They never materialize and they’re there to replace what was taken by those in power. I think someone here said “the system betrayed us”. That is the simple ugly truth.
The greedy dumbasses have dominated the playing field since 2008, thanks to the Fed.
This has been going on since the beginning of time. Are you suggesting it can be stopped?
‘The Federal Reserve wants to give you some good news: Interest rates could rise in 2015!’
‘That was the message from two of the central bank’s top officials, Chair Janet Yellen and New York Fed President William Dudley, during remarks Friday at an economics conference in France. The event was focused on the future of central banking, and both officials tried to accentuate the positive.’
‘The Fed has been scaling back its support for the economy over the past year, ending its roughly $3 trillion bond-buying program last month. Now it is seriously considering when to raise its target for interest rates, which have been at zero since the 2008 financial crisis. In her prepared speech, Yellen emphasized that the moves are a sign of a stronger recovery — not, as some critics suggest, a reflection of a Fed out of firepower.’
“The normalization of monetary policy will be an important sign that economic conditions more generally are finally emerging from the shadow of the Great Recession,” Yellen said.’
‘Dudley made the same point in his prepared remarks, reiterating that he expects the first increase in rates to occur “sometime next year” if the economy continues to progress as forecast. “For the United States, the start of the normalization of U.S. monetary policy will be a very welcome development,” he said. “It will indicate that the U.S. economy has made great strides in healing itself from the damage caused by the U.S. housing boom and bust and the financial crisis.”
‘It seems an obvious point: The ultimate goal of the Fed’s easy-money policies of the past six years has been to foster a stronger economy. So it’s only logical that these actions would stop once the recovery reached escape velocity. Mission accomplished.’
‘Loose monetary policy before the crisis inflated the housing bubble and six years of QE may have just inflated the next bubble.’
Ya think!?
“…Tampa, Orlando and Jacksonville have it even worse, and Florida leads the country with an astounding 35,913 empty, undead homes.”
This is complete and utter bullshit. There are easily over 35,000 zombie foreclosures in Seminole, Orange and Osceola counties alone. EASILY. There are easily over 35,000 in Miami-Dade alone. EASILY. When the tide fully recedes and the magnitude of this fraud is exposed, it will be truly epic.
the number 6 months ago was 300,000 in FL btw =a year of sales
Which was likely double that amount or more. It’s only what they’re willing to admit.
A million in FL, 4 million in CA, a million in WA and OR adds up very quickly.
I have been an appraiser in Central Florida for about 45 years and I have been a faithful reader here since Ben began the effort. My commercial training lead me to conclude that this blog was on the mark and that the world was going to change residential world and as a result the commercial impact was soon to follow. I also became a review appraiser for the past few years and have reviewed thousands of residential reports over the past 10 years or so.
I am sure most of you are well aware of the issues that confront us to include AMC’s that charge huge fees and then disburse less than half to the people in the field of appraising.
These Appraisal Management Companies hold the purse and the sword over the people who work for them. We are clearly seeing the pressures to hit the number are back. If an appraiser does not he will be warned and then blacklisted. Once on that list he cannot get E and O insurance so cannot work for anyone. The banks don’t point the gun at you but it is out there held by one of the hit men known as AMC’s in collusion with the bank and the E and O providers. Pressure comes in many forms.
The essence of my post is this. Every aspect of what got us in the past is now visible in the market. The so called bubble is and has been with us all along. I am convinced that DC promised these hedge funds a certain return regardless of what occurred in the market. Now with the Republicans in charge in Congress it is going to be hard for the bagmen to get the dough for those guarantees so I suspect that the “Funds” are planning a Dunkirk epoch. Watch Fl as we have this incredible backlog of shadow inventory, and it is there as I have driven thousands of projects over the past few years and seen for myself.
I expect things to follow this path. The first sign of increased court activity, foreclosures, there will be a flurry of cancelled leases in the housing owned by the hedgies. Along with that MLS numbers will rise dramatically on inventory. Following that expect prices to begin to plummet and court dockets will balloon with new filings. Days on the market will skyrocket. Based on the new dicta from Washington we appraisers will be forced to report this transition and we MUST as we have what is known as a UAD which is loaded with statistics from the past 6 and 12 months. At that point the Feds will do away with the UAD, my guess, or lending will stop.
It is in the legislation that there are absolute stops built in based upon a sampling of data. This cannot be manipulated as it is extracted form actual data. When the S**T hits the fan the joke is none of us will have jobs or we will get a whole new set of FNMA forms.
The next few months will be quite fluid but I expect the demon will be clearly visible by Spring or early summer. By fall next year there will be full retreat on all fronts and half finished projects will once again sit. The banks will run, developers fold their tents, sellers will give up and walk away on many upside down homes, and I will be analyzing appraisals for PMI companies trying to get out of paying off by showing poor appraisals.
The grabber is this. I predict the fall of prices will be unprecedented and plunge housing into an abyss that none of us will live to see brought back to 2010 levels. I am selling my house and moving to a boat. They are already in the tank.
If you think 2010 prices is the bottom, you’re in for the surprise of your life.
I think maybe you read that too fast. He thinks the market will never climb back up to those prices in our lifetimes once the collapse happens.
He said:
“I predict the fall of prices will be unprecedented and plunge housing into an abyss that none of us will live to see brought back to 2010 levels.”
He isn’t saying that 2010 prices are the bottom. He’s saying that after they collapse that we won’t live to see them get back up to 2010 levels.
oops.
Kewl!
We look forward to you reporting back as things progress. Be sure to stock up on the popcorn when you move to the boat.
Post of the week, if not the year!
Seriously!?
I could see a Republican Congress take measures to restore normalcy to home prices that Democrats wouldn’t. Should be an interesting two years ahead!
“I have been an appraiser in Central Florida for about 45 years and I have been a faithful reader here since Ben began the effort.”
Welcome aboard, and thanks for your honesty.
I think the bigger problem in Central FL is the large number of apartment complexes being built right now. They will be competing with the mom-n-pop landlords (and also the large Hedge fund ones) driving down rents for years. The past couple years were an aberration of rising rents.
Now with the Republicans in charge in Congress it is going to be hard for the bagmen to get the dough for those guarantees so I suspect that the “Funds” are planning a Dunkirk epoch.
While I think your hypothesis is plausible - and thank you for posting it - I fail to see how having the GOP wing of the Republicrat Duopoly “in charge of Congress” will alter anything. Goldman Sachs, JP Morgan, et al are still in charge of Congress, and will raise their pimp hand to bitch-slap anyone who challenges the crony capitalist status quo. So what exactly are you thinking will change?
ill go one step further i predicted that since the fed or fannie cannot sell a million homes to the Chinese….they will do it by allowing the purchase of hedge funds or buying the home aggregators like american homes for rent….the MSM would not have a clue of what is happening.
http://finance.yahoo.com/q?s=AMH
——I am convinced that DC promised these hedge funds a certain return regardless of what occurred in the market. Now with the Republicans in charge
The inmates running the asylum I say:
http://blogs.wsj.com/economics/2014/11/07/realtors-more-bullish-on-new-home-sales-than-builders/?mod=WSJBlog
Yun is a bonafide moron.
Yun is the canary in the coal mine. When he espouses positivity grab your O2 tank and head for the surface. Yun is nothing more than a shill.
Yellen states that “some” inequality of outcome is ok and then goes on to say…
‘inequality of outcomes can exacerbate inequality of opportunity, thereby perpetuating a trend of increasing inequality.’”
Better stated….
Inequality of malarkey, can exacerbate malarkey, therby perpetuating a trend of increasing malarkey.
Opportunity can not exist if some beaurocrat is presiding over and ready to use central power to destroy the success or level of outcome, such as interest on savings, stock values, real estate etc.
Imagine playing monopoly and having a central banker position in the game with an infinate supply of monopoly money constantly trying keep the outcome equal by changing the rules to favor different players based on the whims of the bankers social and political mood at the time, but making sure that the bank always won.
As to the boat it is a 40 foot Trawler and I traded a Harley Davidson for it. It is a 1977 boat and needs work but the twin diesels are in great shape as is the hull. The only issues are leaks around the ports which is pretty much the norm. I moved to the west coast so my territory widened but then I have worked throughout central Fl. My life has been the Gulf coast since I was a kid so I am finally living my dream. I decided to do this one day at the age of 8.(65 now) I was a cadet at Admiral Farragut down the way so I got my seamanship skills there and a stint in the Marine Corps topped it off. I guess you could say it is in my DNA at this point. For anyone interested in getting off the housing whirlygig it is really great. For first mate I recommend a Boston Terrier as mine is loving it. Noone mentioned I misspelled APPRAISER in my name. Thanks for that. Will definitely share what I see.
That’s great J! I live aboard in the Finger Lakes, most of the year. A Brittany is my deck hand. I’ve had that three score behind me for a while too.
Now seriously, they don’t let Marines operate boats, do they? Not the way my dad told it. He was in the Night Fighters.
No Blue Sky they teach Marines how to protect the boat. Got that covered as well.
As a Marine Brat, I have that somewhat covered as well.
If I am awake anyway. Some years ago I was boarded by some drunken teens in an affluent park near the capital of Canada. It was quick and quiet. My First Mate, awake, felt the boat move slightly, as if by a wake. They did not attempt to enter the cabin. In the morning, my boat was grounded in the reeds down river and two Jerry cans of gas for the generator gone. A baseball cap and some footprints on deck remained. I spent the next morning with a constable filling out a report and him giving me a ride to Canadian Tire to buy two gas cans.
He lamented the state of the idle young rich kids and the rules that prevent honest people from defending themselves. It’s a shame that one cannot be armed, he said. I told him that I was required by law to carry a flare gun and had it at the ready. If I had been awake somebody would have gotten their shorts lit up and he might be spending his morning filling out an entirely different kind of report. He laughed, a lot.
‘Institutional investors are buying fewer homes. And those still active are shifting their focus to markets where lower-end inventory is still available, said real estate data firm RealtyTrac.’
‘American Homes 4 Rent recently picked up 1,372 homes in Arizona, California, Florida and Nevada by acquiring Beazer Pre-Owned Rental Homes.’
‘Cash sales helped drive up the U.S. median home price 38% over the last two and a half years, Blomquist noted. As institutional investors and other cash buyers shy away from home purchases, first-time and move-up buyers “will need to increasingly fill in the missing puzzle pieces to maintain the momentum of the housing recovery,” he added.’
‘That may still be a challenge, at least for first-timers. In an annual survey released earlier this week, the National Association of Realtors said the share of first-time buyers fell to the lowest point since 1987.’
These buyers “need” to take up the slack, now that the investors drove prices up? Or do the investors need it? Oh whatever, I’m sure it’ll work itself out.
Oh dear, what’s this?
‘Private-equity giant Blackstone Group, which began actively buying homes in 2012 and still had been on RealtyTrac’s radar screen in recent quarters, was absent from its Q3 institutional buyer list.’
“Blackstone Group…was absent”
Pimp the bounce, sell the bonds, sell the cream off the top, thanks, goodbye. It’s a very short term business plan. These houses are going to be dumped back on the market.
Indeed they will. In Orange County Fl we have around 30,000 houses in Bank warehousing and couple that with the billion or so Blackstone spent on other houses, add in all the new construction and slowing market I figure we have all we can handle for 2-3 years if rates do not climb out. That is one big “if”.
The resets are also upon us as well as maturing heloc’s which are being called in. I should also add that there is suffering underway economically from all quarters just based upon general discussions I have had with people. I had one guy ask me when the top would occur so he could sell. I said, “June 2012″. Whoops.
California is in far far worse condition in terms of excess empty inventory and underwater home-debtors.
Why would move-up and first-time buyers want to buy now if the smart money is dumping their holdings? Wouldn’t it be wiser to wait for entry into the Ownership Society until the next price trough?
That is my plan, competing with these *!@#$#@ locusts was virtually impossible in 2011/2012, they fueled a roughly 60% runup in the meantime where I live (northern Calif.) and buying would be foolish now. May give buying a shot again if prices drop back to 2011 levels but am renting more or less happily in the meantime. There must be many others who retreated to the sidelines in disgust…
‘There is a good combination of events brewing, which lead Jim Cramer to believe that the housing market is finally making a comeback. Finally! The poor housing market has been one sad story. The group is represented by XHB, the home builder ETF, has been one of the worst performing sectors in the market. It’s pretty pathetic. “But now I see two signs that this group is about to join the bullish party: A thaw in lending, and lower gasoline prices,” said the “Mad Money” host. First, Fannie Mae is making it easier for banks to lend money. Woo hoo!’
“Sure, there will be more defaults. But frankly, that’s the price of returning to a stronger and more realistic housing market,” said Cramer.’
Only a math-challenged moron would entertain the fantasy that $500 a year in gasoline cost savings will suddenly enable student debt strapped millenials to afford $500K starter homes.
Um, yeah…here’s Cramer, aka Jojo the Clown, telling bagholders not to pull their money from Bear Stearns which was “just fine” shortly before it plunged from $62 a share to two dollars a share. Listen to this Wall Street tout at your own peril.
https://www.youtube.com/watch?v=V9EbPxTm5_s
Anyone who invests based on Cramer’s advice deserves to lose a fortune.
‘A paradigm shift is expected to be witnessed in the way workplaces operate over the next 15 years, making nearly 50 per cent of occupations existing today redundant by 2025, a report has said. Artificial intelligence will transform businesses and the work that people do. Process work, customer work and vast swathes of middle management will simply disappear, it said.’
‘The report titled ‘Fast Forward 2030: The Future of Work and the Workplace’ has been prepared by realty consulting firm CBRE and China-based Genesis, a property developer, after interviewing 220 experts, business leaders and young people from Asia, Europe and North America.’
“Nearly 50 per cent of occupations today will no longer exist in 2025. New jobs will require creative intelligence, social and emotional intelligence and ability to leverage artificial intelligence. Those jobs will be immensely more fulfilling than today’s jobs,” the report said.’
‘Workspaces with row of desks will become completely redundant, not because they are not fit for purpose, but simply because that purpose no longer exists, it said.’
‘By 2030, a majority of real estate transactions may be made online. And most of them will be made using real time marketplaces, the report noted.’
“Real estate traditionally changes slowly but these new emerging aggregators could revolutionise the market, allowing tenants and many types of building owners in cities to contribute wasted and unused space back into an eco-system of available space,” Magazine said.’
“Nearly 50 per cent of occupations today will no longer exist in 2025. New jobs will require creative intelligence, social and emotional intelligence and ability to leverage artificial intelligence. Those jobs will be immensely more fulfilling than today’s jobs,” the report said.’
They’ve been saying stuff like this for a long time. While I do believe that change will come, I think it will happen more slowly and gradually than stated here.
Also, just because something can be automated doesn’t mean that it will be. It’s happening in corporate America because it saves money. But other areas are more entrenched. Most people have come to believe that you can’t sell a house without the MLS and a Realtor, and thus they will continue to use them. In Fort Collins there is a realtor brokerage called “The Group”. The common wisdom in the Fort is that if you don’t list with “The Group” that your house will take longer to sell, or not sell at all.
AI is also fought tooth and nail by the AMA. Even if AI’s and autonomous robots could do a better job than doctors or nurses, the AMA will make sure that they are never “legal”.
I am writing here because in the short time I have read and submitted response or links and reading the stories - I know you guys get it.
My take on everything debt - it is all bogus and all fiat with no desire to see it paid back by the vast horde in America. It is all a big fat game of the last one holding the bag as it were and from what I have been learning my cynicism about it all grows with each passing day. I want to preface this by saying that I must not belong in this world - when it comes to finance, mortgages, loans etc. it is all upside down to me. No need to send the suicide squad guys - I am just utterly dismayed at how bad the business climate has become in this world. It is all upside down from what any rational human being could wish to operate in.
I am learning more and more that what makes sense to a credit transaction agency, bank or finance outfit makes absolutely no sense in the world of real linda where I operate. I would have thought that the less debt you have the better risk you are - well according ‘Mr. Banker’ with whom I spoke this morning this is not likely the case. Seems that the bottom line is - the more debt you have the better your liklihood of obtaining more debt.
In the past I paid cash for my cars - no loans for me thank you - did the latest finance to help my son start to build ‘credit’. WHAT a BIG A$$ mistake this was on my part. So…herewith my story of credit despair and an attempt to repair my score….
Long story but as a result of a dealer auto finance agreement last summer I find that my credit score is impaired - seems the agency finance ‘guru’ decided to shop loans - this resulted in near 15 hard hits on my credit report and this was done without my full knowledge - I understand now this is common practice. Had I known I would have gone to my credit union and gotten a pre-approved loan with no hits on my report. Lesson learned the hard way. My bad.
I come to understand that these hard inquiries last up to 2 years - now mind you NO BUSINESS has been transacted with 14 of the 15 agencies contacted. But the report remains like toe fungus and I am finding it very difficult to get proper response from agencies to get the ‘non business’ retracted from my report. Who does business like this - I mean really?!!!
Many rules have apparently changed alot from what I am hearing because of Dodd Frank - and don’t get me started on those two!!!
Transunion et. al. said I need to contact the finance agencies individually to obtain a retraction letter - this again when no business was transacted with them at all. Letters were sent out two weeks ago.
Been getting letters from some that I contacted and now they say to go back to the auto agency to get the retraction letters sent to them by the auto agency with me cc’d on each to then send to the credit agencies with a cover letter requesting retraction from my report. YIKES!!!
What a nasty web this is and makes me wonder about the folks so affectionately called ‘debt donks’ on this site who have NO IDEA this is being done. And the sad thing- it doesn’t seem to matter - there is always some banker dude out there chomping on a cigar looking for the next victim to be led to slaughter. I admit I made a mistake in trusting this finance guy unknowingly thinking he had one agency that he would be dealing with NOT 15 for heaven’s sake.
So….I am now in week 4 of learning about my mistake or non-mistake as it were and still no improvement. “Mr. Banker” said to me today that it takes time and all of them may not accept the retraction request.
On a final note - I wanted to take one of the few credit cards I have and cancel the account - Mr. Banker tells me that if I do that it will impair my credit score even more. That request will take 7 years to be obliterated from my record. Who the hell does business like this!!???
Bottom line - will it be the red pill or the blue one?
Out.
OK, toe nail fungus is easily cured by smearing Vicks Vaporub on the nail daily.
“Helping” your son go into debt is an oxymoron!
“Inequality is getting so serious that it prompted prominent economists to take up the issue. Janet Yellen, chairman of the Board of Governors of the Federal Reserve System, called increasing inequality un-American and warned that it would do great harm. As her agency does not deal with this area of economics, she provided no specific policy prescriptions besides general suggestions in the areas of improving support for education.”
They may not get involved with remedying inequality, but it seems hard to argue that quantitative easing didn’t contribute to it. Wealth effects disproportionately land in the pockets of the wealthy.
I read these comments, and here is my opinion.
First of all, the US, Europe, and Japan are insolvent. The public and private debt levels are too high.
One would think this spells deflation. However, the FED, BOJ, and ECB are willing to do whatever it takes to not let deflation occur. Together, they will work together and do whatever level of QE it takes to stop deflation.
In my opinion, this means inflation is in the cards. We will have an inflationary recession, perhaps high inflation. Hard to bet against coastal SoCal real estate under this scenario. I urge all to rethink their theory that real estate will fall. The central banks will do what ever it takes to make inflation happen. Do not fight the world’s central banks. I am going along with the central banks, and I am fully invested in coastal California single family homes.
There is a serious flaw in your logic, which is that avoiding deflation requires preventing a decline in the general price level. There is no reason SoCal real estate can’t become affordable again relative to local incomes and rents while deflation is avoided.
P.S. Trying to guess what “jt” stands for: It isn’t perhaps “Joshua Tree”?
And you’re underwater already. Prices are falling across CA.
“Do not fight the world’s central banks…”
Sorry you are in the debt elevator.
Think of it this way. The developed world is insolvent. Debt levels are far too high. This should cause deflation and real estate prices should be falling for many years. This is where you guy are at, and also where I would be at …
But, we have a number of central banks who operate on behalf of politicians who will do anything to stay in power. So, the central banks are printing and printing more. That is why we are seeing home prices rise.
As wrong as this is, that is the way it is. I feel this will end very badly. Part of that bad ending will be inflation … and perhaps an economic earthquake. The generation just being born through high school are in for a lot of pain
Housing prices are falling my friend.
Encinitas, CA Sale Prices Plummet 9% YoY on Cratering Housing Demand
http://www.zillow.com/encinitas-ca/home-values/
Think of it this way. The developed world is insolvent. Debt levels are far too high. This should cause deflation and real estate prices should be falling for many years. This is where you guy are at, and also where I would be at …
But, we have a number of central banks who operate on behalf of politicians who will do anything to stay in power. So, the central banks are printing and printing more. That is why we are seeing home prices rise.
While the printing presses won’t be able to save real estate, you will, in the long run, be paying more for food, energy, healthcare, etc. AKA “the essentials” or “needs”.
JT-”fully invested” I pray you are kidding. Fully invested in any one asset class is just plain foolish.
First of all, the US, Europe, and Japan are insolvent. The public and private debt levels are too high.
As long as they can service the debt, all is good, at least as far as Mr. Banker is concerned.