The Housing Bubble

Did you order turkey and mash potatoes…..because I bet that is what everyone else was eating………at home. Post Thanksgiving restaurant traffic is not likely to generate wait times.

It does appear that restaurant traffic in the Sierra Foothills above Sacramento is growing steadily. The Burrito Index for lunchtime traffic around the office is very strong. We don’t go out to dinner very often, so I can’t comment on the Dinner Plate Index!

Their diners have been too busy shopping at WalMart.

Walked right into Cheesesteak Factory…No wait although it was only 4:30….

Not far away is an Applebee’s. It used to be a Chili’s, and a TGI Friday before that. Each time the outdoor sign and the decor changed, but the staff and the food remained the same.

I cant understand why people eat at Applebees, Chilis, Marie Calendars, Cocos, Dennys, TGIF, Chevys and these Sysco chain places. The food is less than average at best. Usually overcooked and bland. Is it just the 2 for $20 thing?
I would rather have a delicious $8 burrito from a local place. To each his own.

Outback does have a good cheeseburger and kids menu.

A zillow link proves nothing Jingle_Fraud.

+1000

Here’s the thing.

I took a depreciation on some farm buildings many years ago, and I’m pretty sure the “useful life” of them was longer than 10 years. I’m not sure what the rules are for rental investment properties, but 10% per year?

Wouldn’t this depreciation deduction be recovered on the tax return in the year of sale, making it void?

I am not sure this is a real example.

Comment by Housing Analyst
2014-11-30 07:20:48

A zillow link proves nothing……

…in his own words…..

Comment by Housing Analyst
2014-11-30 07:20:48

A zillow link proves nothing…….

HA-lariousness! As he said just a few minutes ago…..

Comment by Housing Analyst
2014-11-30 07:20:48

“…A zillow link proves nothing…..”

HA,
I wouldn’t be so sure of that. Deflation is not lower prices but lower spending ie the velocity of money decreases. Yes, things get cheaper but as prices drop, this effects businesses in that less products or services are bought which leads to decreased profits, layoffs and ultimately closures and bankruptcy.
In other words, what good is a lower price if you don’t have a job and the money to pay it?

Just a thought.

Pete

A reference to another pie in the sky claim by DepreciationDave/Jingle_Fraud I presume?

It’s 12. Please log on to Kahn Academy for lesson in subtraction!

People who live in O’side, like me, really want to move to encinitas!
I am thankful for the ocean breezes and the quiet neighborhood but Im not going to spend 624k for an 1800 sq that was built in 83!

This is fun:
______________________________________________________
Comment by Housing Analyst
2014-11-30 07:20:48

“…A zillow link proves nothing…..”
______________________________________________________

I could not agree with HA more! He is finally correct about something!

Encinitas? Oh my.

Encinitas, CA Sale Prices Plunge 10% YoY

http://www.zillow.com/encinitas-ca/home-values/

NY Times Journalist Posts Darren Wilson’s Address; Guess What Her Day Looked Like Yesterday?

By Steve Straub -

In a ironic twist of fate New York Times journalist Julie Bosman, who published Darren Wilson’s home address, is now getting threatening messages and unexplained food deliveries after her address was widely reported across social media. As you might expect she now wants police protection.

Via GotNews:

The New York Times journalist who published Darren Wilson’s home address wants police protection and has been calling the police nonstop, Gotnews.com has learned.

Julie Bosman “keeps calling the 020th District station complaining about people harassing and threatening her,” our source told us. She’s also “complaining about numerous food deliveries being sent to her residence.”

Gotnews.com published Julie Bosman’s address after she published the address of Officer Darren Wilson and his new wife. This move by the New York Times was widely criticized by journalists across the political spectrum.

There was no reason for her or the New York Times to publish Officer Wilson’s street address, it added nothing to the story and only served to endanger Wilson, his new wife, and neighbors.

I don’t condone violence and oppose those threatening violence, however the food deliveries are hilarious and hopefully serve to deter journalists and media organizations from endangering the lives of police officers and other innocent people they dislike by publishing their home address. It works both ways…

http://www.thefederalistpapers.org/…sons-address-guess-what-her-day-looked-like-yesterday - 207k -

bummer. While I think ‘never’ being able to sell the gold somewhat invalidates the purpose of a central bank holding gold, I was hoping to see a country vote for sound money.

That was easy to predict.

But the nice thing is that they even considered it. And also the same with Scottish secession. Those events are very good news. People all over the world are continuing to agitate against oppression and draining the energy of big government.

I just checked early this morning with my limit orders and my buys of large miners and junior minors are getting very very close. I would not be surprised if my orders get filled before the end of this year. Could even be this week. Those are the GDX and GDXJ ETFs.

Must be time for another leg down in gold prices.

Metals Stocks
Gold is ‘effectively shiny Bitcoin’: Citigroup’s Buiter
Published: Nov 27, 2014 11:04 a.m. ET
Analyst: No central bank should hold any gold reserves
Bloomberg
You’d be crazy to hold gold. Citi’s Willem Buiter says Swiss vote is nuts
By Barbara Kollmeyer
Markets reporter

MADRID (MarketWatch)—A six-thousand year old bubble, ”shiny Bitcoin,” and something that no self-respecting central bank should hold in reserves ever.

That was Citigroup analysts, laying into gold in a note that came out a day ahead of Thanksgiving, as the investment bank opened the debate on gold’s value ahead of a crucial decision by Switzerland on whether the central bank should more than double its gold holdings.

The “Save Our Swiss Gold” campaign aims to force the Swiss National Bank to hold a fifth of its assets in gold within five years and prohibit the bank from selling gold in the future, as well as repatriate any gold overseas. Organizers accuse the bank of mismanaging the nation’s wealth property.

While gold bugs are hoping for a “yes” vote, most analysts don’t see that happening. December gold (GCZ4, -2.01%) which traded around $1 lower to $1,195.60 an ounce on Thursday in electronic trading, with U.S. physical markets closed for Thanksgiving Day, has seen a choppy year, which has left prices more or less flat.

In the note, Citi’s global chief economist, Willem Buiter, said the Swiss vote doesn’t even make sense. “Requiring a central bank to put 20% of its balance sheet in any single commodity, even if that commodity had meaningful intrinsic value, represents a highly unorthodox and risky investment strategy…” he said.

And it’s also a custodial risk—holding all of a nation’s physical assets in one place and preventing the SNB from ever selling gold again would in short make those holdings worthless, he added.

Another reason central banks shouldn’t be dropping a chunk of reserves into gold? The price is volatile. The below chart shows gold on a nominal basis, which show its money values in different years, and real value, which adjusts for price levels in those years. As far as real prices are concerned, if someone had held on to gold in 1971 and held it up to 2013, the annual real return would be 4.3%, said Buiter. “Reasonable given the riskiness of the asset.”
…

Metals Stocks
Gold, silver suffer fresh slam after Swiss vote result
Published: Nov 30, 2014 9:44 p.m. ET
Silver futures tumble 4.5%; other metals also hit hard
By Shawn Langlois
Markets reporter

LOS ANGELES (MarketWatch) — Gold and sliver prices dropped sharply in feverish electronic trade on Monday after voters in Switzerland rejected a measure that would have required the Swiss National Bank to ramp up its gold reserves to 20% of its holdings, up from 8%.

By late Monday morning in East Asia, Comex gold for December delivery (GCZ4, -2.12%) was down $26, or 2.2%, at $1,149.20 an ounce in what looked to be the start of a turbulent week for the metal.

December silver (SIZ4, -4.32%) was hit even harder, dumping 69 cents, or 4.5%, to $14.80 an ounce.

The result of the Swiss referendum did not come as much of a surprise, yet traders who were perhaps hoping for a “yes” vote took the opportunity to cut their losses. The Swiss central bank currently holds 1,040 metric tons of gold, and it would have had to buy another 1,500 tons for about 60 billion Swiss francs ($62 billion) to meet the 20% level, according to analyst estimates.

Adam Button of Forexlive.com said that while the market had been prepared for a “no” victory, the divide between the two sides was surprising and is probably what’s driving the selloff, according to Kitco News.

“I think the issue in Switzerland is dead and buried. It shows that among the public, the appetite for gold as a reserves asset may not be as strong as we think,” he said. “It shows that more people support 21st century monetary policy. I think this is a rejection [of the idea] that gold is ultimate reserve.”
…

Here is the real problem: a housing shortage.

“”We have 21,000 people on our housing waiting list, 1,800 families in temporary accommodation, and 1,300 families who are severely overcrowded,” Mr Bennett had continued……”

They need to let the home builders build housing.

Scripting a narrative

This is exactly what I mean when I post about real journalists scripting a narrative

The Illinois pension one is funny, and probably true.

What the hell else we going to do with the reminence of the Bush war machine ?? May as well give them to the police force…Nothing has been right since that SOB was elected…He divided this country so badly that we still have not recovered…

Fema Center, Region X, good day.

Region VIII

Montana had to use out-of-state comps

Seems like a reasonable reason to protest. Economies/value/demand — the things that affect valuation — differ wildly across geographic regions. Eg, a house that would be $200k 15 miles from downtown Austin, TX, would be $600k 15 miles outside of Seattle.

If there is a joke here, it’s that he’s trying to sell a place for $59.5 mil that his own appraiser assesses at 9.8 mil. No public enemy #1 deflation here! It’s all good.

I suspect that the provisions in the assessors tax code allow the appraise to use replacement cost as a indicator of value when you have such a unique property…Going out of state seems a bit odd but I guess it could be used in conjunction with replacement cost…

The fact that the owner “over-built” I am not sure is a strong argument again given the uniqueness of location and size…I suspect the assessor will be the winner in this one…

Now, on the other hand, if the owner can make the argument, and substantiate the facts that this house cost him $55. per square foot land, materials, labor & profit then he may win his case…

“when you go and build a mansion in a Red State and they actually want you to pay taxes. LOL”

A Californian with lots of money, trying to avoid taxes… odds are pretty strong he’s as blue as they come.

So does this mean that the North Dakota economic miracle is over?

Who cares? That Patriots and Packers are playing today.

I bought a another flatscreen. My goal is one in every room of my appreciating adobe thx to uncle fed printing lots of promissory notes.

Got equity?

Two possible causes:

1) People have no money

2) People are waiting for the retailers to cry uncle and lower prices on
stuff even more in an attempt to get sales

“Let’s hope the drought in California is finally ended at least temporarily.”

California’s unsustainable water crisis
http://www.youtube.com/watch?v=ZP-_T8tuYkc

IIRC, roughly 70% of the U.S. economy is driven by consumerism.

she’ll get a life pension

Comment by phony scandals
2014-11-30 18:02:39

IRS scrutiny went beyond Tea Party, targeting of conservative groups broader than thought - Published May 13, 2013
foxnews.com/politics/2013/05/13/irs-scrutiny-went-beyond-tea-party-criteria-broader-than-thought/

Yowza

“Bright and early now. Ya hear?”

You betcha!

Craig Stephen’s This Week in China
Opinion: China plays big role in oil’s slide
Published: Nov 30, 2014 10:20 p.m. ET
By Craig Stephen
Columnist
Bloomberg

HONG KONG (MarketWatch) — All eyes have been on OPEC after its failure to agree to a production cut triggered the latest dramatic slide in the price of crude oil.

But if you want to understand why the demand side of oil has been unraveling — and why it could continue — look no further than China.

Opinion over the state of the world’s second-largest economy is typically divided between whether it is merely undergoing a rebalancing or a more painful slowdown after years of excessive credit growth.

But if the industrial commodities that have fed China’s prodigious economic rise are taken as a guide, there is little need for debate: There has already been a hard landing, as all the prices of these resources have collapsed to multi-year lows.

Now oil is falling in line as it too adjusts to a world where China is no longer bidding prices ever higher. Granted, oil is different from steel, iron ore and coal, where China is the world’s largest consumer (The U.S. still consumes almost twice as much oil as China). Yet Chinese demand is still pivotal.

China became the dominant source of growth in crude-oil demand as it joined the world economy in recent decades. Indeed, Société Générale comments China’s opening to world trade was responsible for lifting the oil price from around $20 a barrel to around $100. This price move approximately correlates with China joining the World Trade Organization at the beginning of the last decade, a period in which the nation, by itself, added the equivalent of Japanese and U.K. total oil consumption.

The oil market is unlikely to find another country, or even a continent, that can take over this degree of heavy lifting in demand growth.

Meanwhile, longer-term forecasts that China can maintain anything close to its recent pace of growth increasingly look misplaced.

Until recently, many economists had assumed that it was only a matter of time before China’s appetite for oil would surpass that of the U.S. But there are a number of reasons to question such bullish forecasts.

For one, we can expect the Chinese investment cycle to be in for a prolonged adjustment as it digests past excesses. There is widespread evidence of industrial overcapacity, and last week researchers at China’s National Development Commission became the latest to highlight this issue. In a new report, they estimated $6.8 trillion of “ineffective investment” had been wasted.

There are other signs that China’s thirst for oil is coming up against capacity constraints. After surpassing the U.S. as the biggest automobile market in the world in 2010, recent years have seen traffic jams and pollution become recurring problems. This has forced authorities to use administrative measures to rein in growth.

We should also expect China’s future demand for oil to be more price-sensitive. In the past, demand appeared inelastic as growth continued even as crude prices reached triple-digits. But this period coincided with state-funded industry being the dominant driver, whereas demand for gasoline for cars can be expected to be dependent on the income growth of the middle class.

Already China’s diminished oil appetite is showing up in various data. According to BP’s annual Statistical Review of World Energy released last June, the U.S. outpaced China’s growth in 2013 oil consumption, the first time it’s done so since 1999. The International Energy Agency has moved to lower its annual forecast for Chinese oil demand five times so far this year, last pegging growth at 2.3% for the current year.

Not surprisingly then, China’s ability to continue its historic role as a source of oil demand is increasingly in doubt. According to Platts, China’s oil import demand rose 2.9%, year-over-year, in October, yet it was down 2.5% versus September. They also described an “unprecedented development,” in which China became a net oil exporter in October, as imports dropped 22% and exports surged 30% to a record high. China could now become a net exporter of oil going forward.
…

China’s slowdown hits iron-ore prices
Published: Nov 30, 2014 5:23 p.m. ET
By John W. Miller

China’s hunger for minerals to build skyscrapers, cars and bridges produced a decadelong surge in the price and production of key commodities.

Now, exporting nations are feeling the hit as the China-fueled boom slows.

Topping the list are big commodity players Australia and Brazil, but also smaller resource-rich countries, such as Guinea, Indonesia and Mongolia, where minerals make up a disproportionate share of the economy and employment.

In countries specializing in crucial commodities, such as iron ore and coal, sluggish demand and falling commodity prices are reducing government tax revenue, increasing trade deficits and affecting currency values.

The Australian dollar reached a four-year low in November against the U.S. dollar due in part to sliding raw-material prices and slowing Chinese demand growth for those commodities.

J.P. Morgan this month cut its forecast for 2015 Australian economic growth to 2.8% from 3.3%, and Brazil recently halved its own growth forecast for 2014 to 0.9% from 1.8%. Mining profits as a share of the economy in both countries more than doubled during the past 15 years, according to the World Bank.

The longer-term impact of a collapse in commodity prices could be even more profound, hurting the economies of producing countries and boosting buying power in Western consumer economies.

“The impact of oversupply could be a mess,” says Lourenco Goncalves, CEO of Cliffs Natural Resources Inc., a midsize miner that laid off workers in Australia.

Meanwhile, the biggest mining companies say they are still committed to plans to keep topping production records.

Rio Tinto PLC and BHP Billiton Ltd. have been shipping cargoes from Australia’s remote northwest at record rates.

For smaller countries, the growing dependence on mining is even more apparent. In Guinea, the share of mining profits as a percentage of GDP more than tripled to 18.3% between 2000 and 2012, the latest data available, according to the World Bank. And in Mongolia, it nearly doubled to 11.9%.

At this point, no country can absorb China’s slack, although executives at mining companies, such as BHP Billiton, still hope India may help absorb new production. Still, China is expected to set the tone for the next decade.

No commodity has been as China-dependent as iron ore, and for good reason: China makes half of the world’s steel, and 98% of iron ore goes into steel production. China imports two-thirds of the 1.2 billion tons of iron ore traded annually on seaborne markets.

Far more countries have come to feed at the China trough: In 2003, eight nations exported more than 10 million tons of iron ore. Last year, nearly twice as many–15 countries–did so.

Australia, the world’s top iron-ore exporter, sends 80% of its iron ore–worth $67 billion last year–to China, and Brazil sends half its production of the mineral there. In recent years, mining companies in those countries have ramped up production, employment and investment in railroads and ports anticipating that China’s steel industry would increase production and need more iron ore.

Instead, during the first eight months of the year, Chinese steel consumption fell 0.3% to 500 million tons–the first such decline in 14 years. “The country is settling into a slower steel consumption pattern, more typical of modern, developed Western economies,” says Daniel Rohr, an analyst at Morningstar Inc.
…

Futures Movers
Oil suffers fresh heavy losses, with outlook unclear
Published: Dec 1, 2014 12:35 a.m. ET
Bloomberg
By Michael Kitchen
Asia editor

LOS ANGELES (MarketWatch) — U.S. crude-oil futures spiraled further down in electronic trade late Sunday, with the most-active January 2015 contract (CLF5, -2.48%) breaking below the $65-a-barrel handle to hit $64.48 during East Asian market hours.

The drop represented an almost 2.5% fall from the New York Mercantile Exchange settlement Friday, when the contract had plunged 10% after the Organization of the Petroleum Exporting Countries failed to agree to an output cut.

The market’s disappointment over OPEC’s decision to keep production at its current levels — seen by some as a move to maintain the bloc’s market share — may have heightened after United Arab Emirates’ Oil Minister Suhail Mohamed Faraj Al-Mazrouei said OPEC had no target price it would seek to defend.

“The market will dictate the right sustainable and stable price, and we are not targeting or setting a specific price,” Al-Mazrouei wrote on Twitter, according to a Wall Street Journal report Saturday.

With Nymex oil extending its decline, Dow Jones Newswires technical analysis put the next main support at $64.24, the “reaction low” of May 20, 2010. A breach below that level would set up possible downside at the psychological boundary of $60.00, the news agency said.

Meanwhile, Nymex crude’s London-traded rival benchmark, Brent crude (LCOF5, -2.51%) lost 2.7% to $68.24 a barrel in electronic trade, extending its 3.4% retreat Friday.

Analysts offered differing views as to oil’s outlook. Among the optimists, Tokyo-based independent investment adviser Itsuo Toshima said that as the OPEC meeting and its fallout passes, the selling will stop.

“Now may be the climax of selling. From now on, ahead of the Christmas holidays, market sentiment will likely arise creating the conditions where futures short sellers are easily induced to unwind their positions,” Toshima said in commentary for the Nikkei Asian Review entitled “Crude oil’s speculator-driven plunge below $70 unlikely to last.”

On the other hand, MarketWatch columnist Craig Stephen cited analysis suggesting a prolonged weakness for crude, due to the fall-off in Chinese demand. China’s appetite for oil is coming up against capacity constraints, Stephen wrote, including slimming demand for fossil fuels as the Chinese government seeks to rein in pollution.
…

ft dot com
Global Market Overview
Last updated: December 1, 2014 6:08 am
Gold and silver extend price falls
Patrick McGee in Hong Kong

Monday 06:00 GMT. Falling commodity prices dominated market action on Monday as oil extended a sharp decline for a sixth day, gold tumbled further and silver touched a five-year low.

European stocks are due to fall about 0.4 per cent at the open while US futures suggest the S&P 500 will slip 7 points to 2,060.5.

The price of Brent crude fell 1.7 per cent on Monday to $68.40 per barrel. Last week the price fell 12.7 per cent, with most of the losses coming after Opec kept its production ceiling unchanged at 30m barrels of oil a day despite a glut of supply.

The implication for Asian markets is mixed. Analysts at ANZ note a lower oil price is positive for the trade balance of most Asian economies, “but this has come partly on slowing global growth, a negative for Asia’s exporters”.

In Japan, a big importer of oil, the Nikkei 225 rose 0.7 per cent. Information technology and healthcare stocks are the leading sectors, while energy shares fell 1.6 per cent.

Down under, Australia’s energy sector lost a further 6 per cent while the materials sector fell nearly 4 per cent. Those losses have pushed the S&P/ASX 200 down 2 per cent to a six-week low.

“Oil prices will remain a key driver of global markets, especially rates markets,” said analysts at Crédit Agricole. “The risk is that any adjustment on the supply side takes time and that prices continue to fall in the meantime, weighing on inflation and bond yields.”

After new data showed inflation stayed benign in Australia last month, the government’s benchmark 10-year bond yield fell below 3 per cent for the first time in more than two years. The yield has fallen 75 basis points since a recent peak in mid-September, as oil prices have plunged.

Meanwhile, the gold price dropped another 1.3 per cent to a three-week low of $1,152 per ounce after Swiss voters rejected a referendum proposal that would have forced the country’s central bank to hold 20 per cent of its assets in gold it cannot sell.

The price of silver fell as much as 6.8 per cent early on Monday, extending last week’s 6 per cent slide to $14.42 per ounce, its lowest since February 2010. It has since pared losses and is changing hands at $14.90.

The falling price coincides with renewed strength for the US dollar.
…

As you enjoy the spectacle of collapsing commodities prices, don’t forget the Fed’s critical role in ending quantitative easing, one of the most massive asset price inflation programs in history.