April 2, 2016

An Artificially Produced Scarcity

A weekend topic on Australia, starting with the Sydney Morning Herald. “Sydney’s housing affordability crisis is being artificially inflated by up to 90,000 properties standing empty in some of the city’s most desirable suburbs, experts say. Vacant properties were among the ‘perverse outcomes’ of tax incentives that encouraged some investors to favour capital growth over rental returns, according to the analysis by the UNSW’s City Futures Research Centre. ‘Leaving housing empty is both profitable and subsidised by government,’ researchers Bill Randolph and Laurence Troy said. ‘This is taxation lunacy and a national scandal.’”

“The results suggested property investors in some of Sydney’s most sought-after areas were focusing on growing the value of their properties, with losses offset by tax incentives such as negative gearing and capital gains concessions. This could leave investors indifferent to whether the dwellings were occupied, Dr Troy and Professor Randolph said. ‘If you choose to accept that there is a housing shortage in Sydney, then the sheer scale and location of these figures strongly suggest that this is an artificially produced scarcity,’ they said.”

“Chris Johnson, the chief executive of developer lobby group the Urban Taskforce, said the Census findings likely reflected the fact that those at the higher end of the market had the luxury of keeping their property empty for part of the time. ‘The supply issue is actually about affordability,’ he said. ‘You can well say there are a whole lot of $2 million apartments that aren’t fully used at the moment …but people just don’t have the money to be able to move into that sort of apartment.’”

The Daily Telegraph. “ABS figures show that Sydney took over the mantle from Melbourne as the leading capital for apartment developments with 35,538 approvals recorded over 2015 compared to 33,023. Across Sydney, Melbourne and Brisbane this year alone, almost 45,000 apartments are due for completion and settlement by the end of 2016 according to figures from planning consultancy MacroPlan Dimasi. Next year the amount is set to jump even further.”

“But for Melbourne the tables are starting to turn. Figures out today from WBP Property Group show that off-the-plan units in the Victorian capital have fallen about 11per cent in the first year between their original purchase and pre-settlement valuations. ‘There’s an apartment boom but where is the foundation? If we look at supply and demand a year ago, apartments were in demand mainly because of the investor boom and many owner-occupiers were priced out of purchasing a family home. What I want to know is — are we building the right course for the right horse?’ said Douglas Driscoll CEO of real estate group Starr Partners, which operates in Sydney’s western suburbs.”

From Radio Australia. “Formerly rampant south-east Australian real estate markets are losing steam, while mining states keep struggling, the latest home price index has confirmed. Sydney has slowed down from breakneck annual growth approaching 20 per cent to a more modest 7.4 per cent, with further deceleration likely. Australia’s most populous city is suffering from a 19.2 per cent surge in the number of homes for sale, increasing choice for buyers, while listings are up 8.5 per cent nationally over the past year.”

“Melbourne is now the fastest growing capital at 9.8 per cent annual growth, although its over-supplied apartment sector is showing strain. ‘Nearly 20 per cent, or one-fifth, of all Melbourne inner-city apartments are reselling at a gross loss, meaning they’re selling at a price lower than what the owners paid for them,’ observed CoreLogic RP Data head of research Tim Lawless. ‘So we are seeing a few cracks appearing in the inner-city apartment market, which I think we can safely attribute to the fact that we are seeing a lot of new housing, particularly high density housing supply, coming into the Melbourne inner-city.’”

From Manly Daily. “One in ten homes on the northern beaches is empty, fuelling fears that large chunks of the area will resemble a ghost town. Some areas are worse than others, with Avalon-Palm Beach topping the list with 20 per cent of homes unoccupied. This is followed by Bayview-Elanora Heights with 16 per cent of homes ­unoccupied and Manly-Fairlight with 14 per cent empty, University of NSW researchers reveal.”

“Associate Dr Laurence Troy said there was a definite trend for owners to sit on an empty property and wait for the capital growth, rather than make an ­immediate income from rent. ‘There is not a great incentive to rent them (the expensive empty properties),’ he told the Manly Daily.”

“A study in Melbourne last year, which analysed water usage, suggested more than 80,000 properties, or 4.8 per cent of the city’s housing stock, appeared to be unused. The issue of ‘ghost houses’ left empty by often foreign buyers willing to forgo significant rental income has been a cause of controversy, although much data remains anecdotal. Jason Anderson, chief economist with leading property advisory MacroPlan Dimasi, has estimated that a further 10,000 new homes will be purchased and left empty by Chinese buyers over the next five years.”

The West Australian. “The extent of the challenge faced by post-boom WA is beginning to emerge in the Pilbara, with empty homes, big debts and taxpayer-funded white elephants. More than 140 Housing Authority homes are vacant in Karratha — 114 of which are set aside for State Government employees but no longer required. And fears are growing in Port Hedland that showpiece Royalties for Regions projects could fall into disrepair or be bulldozed after the local council admitted it had concerns about its ability to fund their upkeep. Population figures released yesterday reveal the Pilbara’s first population fall since the mining boom began, losing 445 people in the past year.”

“Real Estate Institute of WA figures show the median house price in Port Hedland is $599,000 – less than half of its 2013 peak of $1,222,500. Property owners faced similar losses in Karratha, where the rolling median house price has dropped from $815,000 in 2011 to $400,000.”

“Last week in Parliament, shadow housing minister Fran Logan called on Treasurer Mike Nahan to launch a financial audit into the ‘wasteful use of taxpayers’ money’ on housing projects in the Pilbara. Mr Logan said the amount of waste on high-end property development in the Pilbara was ‘just extraordinary.’ ‘Anyone who tries to say this reckless waste can be justified is completely out of touch, especially when the government is cutting nurses and doctors from our hospitals and they have failed to address the public housing waitlist,’ Mr Logan said.”

From Bloomberg. “Just as China’s industrialization helped reshape Australia’s economy, the Asian giant’s pivot toward consumer-led growth is challenging Down Under anew. Central bank Governor Glenn Stevens acknowledged last week it’s impossible to know how China’s transition will unfold given nothing on the scale has been tried before, signaling elevated risks ahead for the developed world’s most China-dependent economy.”

“‘The Australian economy at the moment is being buoyed by the confidence that comes from extraordinarily low interest rates driving up asset prices,’ said Andrew Charlton, director of consultancy AlphaBeta in Sydney and one-time adviser to former Prime Minister Kevin Rudd. The subsequent housing boom and wealth creation ‘have been temporary policy stimulus holding up what will be a long-term negative impact of the changing Chinese economy on Australia.’”

“The tourism boom from China’s cashed up visitors won’t be enough to fill the gap left by the commodity slump, argues Andrew Batson, an economist at GaveKal Dragonomics in Hong Kong. ‘Australia’s resilience in the face of the mining bust does not actually owe much to a surge of new demand from Chinese consumers,’ he said. ‘To put it simply, Australia dealt with the end of the Chinese housing boom by unleashing a housing boom of its own.’”




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130 Comments »

Comment by Ben Jones
2016-04-02 03:00:28

‘The apartment market shakeout has begun with national apartment sales falling by 10.6 per cent for the month of February, according to figures released by the Housing Industry Association (HIA). The HIA is pessimistic about the housing market overall, with chief economist Harley Dale calling an early stage in the downturn. “Stage one of a down cycle in new home building will be moderate, but signs of a sharper contraction in subsequent stages may emerge as the year progresses,” he said.’

‘While overall house sales are weak, the real worry is the apartment market, where construction has been at record levels. “Sales have fallen from recent highs that we’ve never been anywhere near before,” Mr Dale told The New Daily. “There is a big backlog (of recently or soon-to-be completed apartments) in the cycle.’

It’s always funny to hear this:

‘Sales have fallen from recent highs that we’ve never been anywhere near before’

Like the guy in Manhattan recently, who said something like, “we’ve just been through the biggest boom I’ve seen in my 30 years in the business” and proceeds to tell us how people are bailing on everything from lux condos to antiques to Picaso’s.

BTW, check out the West Australian article, if for the photos only.

Comment by Ben Jones
2016-04-02 09:35:14

‘Melbourne Apartments Losing 11.5 percent in First Year’

‘In a recent study, property valuation outfit WBP Property Group looked at the value of fourteen apartments located throughout Central Melbourne which were purchased off the plan within a year of their sale date. As reported by the Australian Financial Review, the average valuation came in 11.5 percent of $68,000 lower compared with the original purchase price.’

‘The company says this is raising concerns that many buyers may not have the capacity to meet their financial commitments on apartments at the time of settlement. The latest research comes amid ongoing levels of concern about a likely correction in the market following a massive period of building activity around a number of major capitals in Australia amid a tightening of credit in response to stricter lending guidelines being imposed by the Australian Prudential Regulatory Authority.’

‘BIS Shrapnel said it expected an overall housing oversupply to emerge next year across a number of markets, with Melbourne expected to be in oversupply by 21,900 dwellings (mostly apartments) and markets in Perth and Brisbane to be oversupplied by 9,000 and 6,400 respectively.’

‘Part of the reason for this revolves around the massive volumes of new stock which are set to come on to the market amid record breaking levels of building activity.’

‘At the same time, BIS managing director Robert Mellor said, demand drivers are in decline as net overseas migration levels have halved from a peak of 300,000 at the beginning of the mining boom to an expected 150,000 this year and investor demand had eased.’

See rental watch, wouldn’t it have been better if they just cut back on the credit and speculation instead of trying to build their way out of the bubble?

Comment by Ben Jones
2016-04-02 09:40:47

‘A major myth that permeates the recent debate on housing affordability is that the present level of housing supply is not meeting demand. Scarcity of housing, we are repeatedly told, is driving up prices. The same voices simplistically suggest, reduce the barriers caused by planners and housing supply will respond, bringing affordability back into the market.’

‘But more reasoned voices can be heard above the clamour, focussing on the perverse effects of our highly skewed housing taxation and subsidy system, as well as a complete lack of a national housing policy framework to support affordable housing. Nevertheless, throughout this debate there is little recognition of the broader shifts in housing stock, tenure and housing opportunity that these policies have created.’

‘At the last census there were nearly 120,000 empty dwelling in the greater Sydney region alone, representing nearly one fifth of the projected new housing demand to be met by 2031, or equivalent to nearly five years of projected dwelling need. When this is combined with under-utilised dwellings, such as those let out as short-term accommodation, the total number of dwellings reaches 230,000 in Sydney, and 238,000 in Melbourne.’

 
 
Comment by Puggs
2016-04-02 15:17:00

One last phat rout of greed before the whole sucka goes down.

 
 
Comment by Jake
2016-04-02 03:57:16

“Realtor Sentenced For Mail Fraud”

http://www.bradenton.com/homes/article69429502.html

 
Comment by Senior Housing Analyst
2016-04-02 04:03:27

Pawleys Island, SC Housing Prices Collapse 22% YoY As Coastal And Vacation Property Values Implode

http://www.zillow.com/pawleys-island-sc/home-values/

 
Comment by Combotechie
2016-04-02 04:30:00

“The results suggested property investors in some of Sydney’s most sought-after areas were focusing on growing the value of their properties, with losses offset by tax incentives such as negative gearing and capital gains concessions.”

Let’s change a word here in order to possibly seek a better understanding of what is going on; Let’s change the word “value” to the word “price”.

“The results suggested property investors in some of Sydney’s most sought-after areas were focusing on growing the price of their properties, with losses offset by tax incentives such as negative gearing and capital gains concessions.”

There, now it makes a bit more sense; Investors were focusing on growing the price of their properties.

But “growing the price” is not something that owners do, growing the price is what buyers do, and buyers do this because there is an incentive for them to do so, an incentive for them to push up prices.

Next paragraph …

“This could leave investors indifferent to whether the dwellings were occupied, Dr Troy and Professor Randolph said.”

So instead of “build them and they will come” its “build them and we won’t care if they come or not”. The incentive is with building them, what happens with them afterward is unimportant - except when it comes to the price, the incentive is to grow the price.

Weird in a rational economic world but not so weird in the economic world we now get to live in.

Comment by Combotechie
2016-04-02 04:42:33

Reminds me of Beanie Babies and Cabbage Patch dolls; These things weren’t bought for kids to play with, they were bought as investments. They may have started out as things to buy for kids to play with but when prices got out of hand the reason for buying morphed into something else.

Same with these apartments, they may have started out being built for people to live in but as prices got out of hand the reason morphed into something else.

Comment by Oddfellow
2016-04-02 05:16:54

as prices got out of hand the reason morphed into something else

Kind of like gold?

 
 
Comment by Bill, just South of Irvine
2016-04-02 08:09:37

The cost of upkeep on an empty house does not fall significantly. In cold climates pipes could freeze and burst. Landscape must be maintained. Pests must be dealt with. Taxes and insurance must also be paid. Utilities. Water levels in the toilets must be maintained. These are periodic costs and the owners are gambling that if you build it they will come. World population is way too high, with landfills eventually going to compete for space with housing developments. At some point the house price grows too slow that the expense ratio (recurring costs) makes it a poor place to park your money. I cannot imagine more than five years anywhere that this is a sound strategy. Especially with the QE long in the tooth in all developed nations. I am not sure about government bonds in Australia, but in the USA the short term securities have noticeably risen from their low point. If you graph five years of 52-week bills and two year notes you will see it. Every .25 increase in yield means a lower potential gain of an empty house. I can imagine Irvine, with a huge Chinese population would see some empty house situations soon. It is a sign that the market is peaked.

Quality of life improves when towns grow into cities with infrastructures such as higher education and advanced medical facilities. Irvine is such a model. But in later stages the overpopulation makes the city grimy, carcinogenic. And only pockets of housing bubbles here and there remain.

 
 
Comment by Overbanked
2016-04-02 04:41:06

Comment by Shekels
2016-04-01 06:55:04

Millennials are worthless:

Comment by The Central Scrutinizer
2016-04-01 10:38:47

FAOMs are worth even less.

………………………………….

What is “FAOM”?

Comment by The Central Scrutinizer
2016-04-02 08:49:39

Fat Angry Old Man…. The mortal enemy of the SJW.

Comment by muhFeelins
2016-04-02 09:41:46

Yes, older males are worth less? Ahahhahhahaha.

Comment by palmetto
2016-04-02 09:56:39

“muhFeelins”

Priceless. Here’s a song to go along with your handle:

Feelings by Morris Albert:

https://www.youtube.com/watch?v=6-oHYYaw9jA

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Comment by palmetto
2016-04-02 09:53:36

That’s not nice. I’m telling Dad.

Comment by The Central Scrutinizer
2016-04-02 10:25:19

Way to reinforce the patriarchy! You should be telling non-gender specific caregiver.

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Comment by Combotechie
2016-04-02 05:23:04

Q. Is GDP a measurement of actual production or is it a measure of price?

If you asked an oil man about the production of oil pumped from his oil well would his answer be in the form of barrels per day or would it be in the form of income per day?

What if you asked a GDP bean counter the same question, what would his answer be?

If the production of barrels per day increased but the price per barrel decreased and this price decrease more than offset the volume increase then did production as measured by GDP increase or did it decrease?

If the measurement of GDP decreased even though the production of oil increased then the measurement of GDP is, at root, a measurement of price rather than a measurement of actual production. And if this is true then one way - one easy way - to get the GDP numbers up is to get prices up.

Comment by Oddfellow
2016-04-02 05:28:30

How would you measure production on a national level without using prices? A very long list of everything produced?

Comment by Professor Bear
2016-04-02 06:21:38

Just add up all the beans, I guess?

One pencil = one Tesla automobile = one Boeing jetliner = …

Or maybe not…

 
Comment by Combotechie
2016-04-02 07:38:14

“How would you measure production on a national level without using prices? A very long list of everything produced?”

You probably can’t and this is probably why price is used.

But using price because it is the best thing to use does not necessarily mean using price will produce an accurate result. But apparently the world operates as if it does.

Comment by Professor Bear
2016-04-02 09:23:11

“But using price because it is the best thing to use does not necessarily mean using price will produce an accurate result.”

Accurate compared to what?

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Comment by Combotechie
2016-04-02 10:20:29

“Accurate compared to what?”

Accurate to what it pretends to be measuring. It pretends to be measuring production but what it is actually measuring is more closely related to prices than it is to actual production - production as measured by factors other than by price.

As related to the example I used elsewhere, an oil company can increase its production of oil and it can go broke while doing so.

 
Comment by Professor Bear
2016-04-02 10:22:24

“It pretends to be measuring production but what it is actually measuring is more closely related to prices than it is to actual production…”

No. Read the above-linked references, then imagine what happens if you hold prices constant and let output vary, and perhaps you will recognize your misconception.

 
Comment by Combotechie
2016-04-02 10:51:47

The production of income my house generated went up by $288 last month. This is the same house I occupied the previous month but the previous month I got to occupy it for $288 less.

Actually its occupation cost in real terms did not change at all but its contribution to GDP in imputed terms did.

Or, another way to look at it, the production (which is what GDP measures) generated by my house in real world measurement terms did not really change at all but in GDP measurement terms it did.

 
Comment by Combotechie
2016-04-02 10:54:32

The change in production my house underwent last month was a change in price and nothing more.

 
Comment by Professor Bear
2016-04-02 10:54:51

“The production of income my house generated went up by $288 last month. This is the same house I occupied the previous month but the previous month I got to occupy it for $288 less.”

I have to assume this is nominal, not real…unless the bean counters have really thrown honest accounting out the window.

 
Comment by Combotechie
2016-04-02 10:58:50

The addition to GDP that resulted from the change in production that my house underwent was also due to a change in price.

Hence the change of production that went into the computation of GDP was a function of a change in price.

 
Comment by Combotechie
2016-04-02 11:09:44

“I have to assume this is nominal, not real…unless the bean counters have really thrown honest accounting out the window.”

Why are you assuming this is nominal? These numbers are actual Zillow numbers. If Zillow is to houses as the Kelly Blue Book is to automobiles then these numbers are very real - real in an imputed world but not at all real is a spendable world.

But nevertheless they are real enough to be counted as “production”, real enough to be counted as GDP.

 
Comment by Prime_Is_Contained
2016-04-02 11:32:53

unless the bean counters have really thrown honest accounting out the window.

Did you really manage to type that with a straight face—considering that FASB is _still_ not fully back in effect?

 
Comment by Professor Bear
2016-04-02 12:36:58

“Why are you assuming this is nominal?”

I’m not necessarily assuming it, given the large amount of artistic license in the accounting field these days. But I submit that at least in principle, an increase in imputed rent should not show up as an increase in real GDP, unless your house was somehow upgraded to provide a higher quality stream of housing services than it provided previously.

Same house, same contribution to real GDP as before; seems pretty straightforward!

 
Comment by Combotechie
2016-04-02 14:02:54

“I’m not necessarily assuming it, given the large amount of artistic license in the accounting field these days. But I submit that at least in principle, an increase in imputed rent should not show up as an increase in real GDP, unless your house was somehow upgraded to provide a higher quality stream of housing services than it provided previously.

“Same house, same contribution to real GDP as before; seems pretty straightforward!”

Here …

“The most important category is “imputed rent” for owner-occupied housing: If you live in your own house, you are assumed to pay rent to yourself, which is part of GDP. No kidding! In the US, “rent for housing” is part of “services consumed”, and makes up 10 % of GDP.”

Miscellaneous economic ramblings: GDP Imputations
miscellaneous-economic-ramblings.blogspot.com

 
Comment by Combotechie
 
Comment by Combotechie
2016-04-02 14:14:29

If imputed rents increase then GDP also increases. This increase in GDP is a function of the of price of the rent, not a function of what had been done to the house itself.

 
Comment by Combotechie
2016-04-02 14:19:19

BTW, the link is worth a read, as are the follow-up posts.

 
Comment by Oddfellow
2016-04-02 14:41:03

If a landlord owns a house and rents it out, should the rent be counted in the GDP?

 
Comment by Professor Bear
2016-04-02 15:25:05

Still not clear whether increase in GDP due to own-price imputed rent increase goes in to real GDP or just the Implicit Price Deflator component of nominal GDP. If real GDP increased, that would appear to reflect accounting malpractice.

 
Comment by Professor Bear
2016-04-02 23:14:29

“If a landlord owns a house and rents it out, should the rent be counted in the GDP?”

Was the house counted in GDP when it was built? If yes, then wouldn’t counting the flow of housing services (whether in the form of imputed or actual rent) constitute double-counting?

 
 
 
 
Comment by Combotechie
2016-04-02 05:40:11

My imputed rent (as measured by Zillow) increased by ninety dollars last week. This ninety dollar increase increased the nation’s GDP by ninety dollars.

This imputed rent - this “income” - isn’t something that I can use to buy anything with but nevertheless it went right into the computation of GDP and is counted exactly the same as actual income is counted.

(Yeah? So what?)

My point is all this attention paid to GDP is … is pointless.

It is amusing though, especially when they compute GDP and include decimal points. The GDP bean counters (as an old joke goes) include decimal points with their calculations in order to demonstrate to the world that they have a sense of humor.

Comment by Oddfellow
2016-04-02 05:49:09

My point is all this attention paid to GDP is … is pointless.

It’s pointless because you think imputed rent being counted is wrong? What part of “gross” are you having trouble with? Should we quit measuring gross profits, gross revenue?

Is gross too gross to be measured?

Comment by Professor Bear
2016-04-02 06:17:55

It seems like Combo may not be aware of the distinction between nominal GDP, which reflects both output and price changes through time, and real GDP, which is supposed to measure changes in output at fixed (”real dollar”) prices.

So in his example, an increase in imputed rent would (presumably) show up as an increase in nominal but not real GDP, as a rent increase reflects price inflation rather than a change in the real value of the flow of services from the house he owns.

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Comment by Combotechie
2016-04-02 09:14:57

“It seems like Combo may not be aware of the distinction between nominal GDP, which reflects both output and price changes through time, and real GDP, which is supposed to measure changes in output at fixed (”real dollar”) prices.

“So in his example, an increase in imputed rent would (presumably) show up as an increase in nominal but not real GDP, as a rent increase reflects price inflation rather than a change in the real value of the flow of services from the house he owns.”

My imputed rent income went up by $288 over the past thirty days while my more tangible and spendable wage income did not move at all. So if the increase in imputed rent reflected an increase in inflation then that means my actual and earned wage income took a real inflation hit, and this means my prosperity as measured by imputed rent income held steady or possibly even increased while my actual and spendable income decreased.

So it follows that the numbers that show a growth in GDP do not reflect the real world as I live it - a real world of declining buying power - but instead if reflects a nominal world of phantom imputed income.

Taken to an extreme (an exaggeration I am taking in order to make a point) I can enjoy the vast number of benefits numerous imputed rent increases present to me at the very same time I that am starving to death.

 
Comment by Combotechie
2016-04-02 09:30:33

And to further develop this thought I will go past the idea of imputed rent in my case and jump on over and take a look at the very real and very tangible rent others have to pay, actually have to pay.

If Zillow says my imaginary rent went up $288 then that is because the real rents for actual renters of comparable houses went up by $288. Since my wages did not increase it is a good assumption theirs did not either. So the economic forces that would drive me to starvation in my imaginary imputed example as described above would in fact, in reality, drive the renters to starvation in their real and very unimaginable world if these conditions were carried out far enough. But nevertheless these happenings would not be reflected in the GDP calculations because imputed numbers and real world numbers count the same.

 
Comment by Professor Bear
2016-04-02 09:34:46

“…that means my actual and earned wage income took a real inflation hit…”

As a California renter watching my rent go up year-in, year-out for the same thirty-year-old home, I can attest this is steadily happening.

“I can enjoy the vast number of benefits numerous imputed rent increases present to me at the very same time I that am starving to death.”

And that is apparently happening to lots of American households as well (fortunately not ours, due to several different lines of occupation between the two work horses).

 
Comment by Overbanked
2016-04-02 09:43:31

Maybe the issue is not the measurement of nominal GDP, but rather the measurement of CPI or whatever the figure used to get “real” GDP.

 
Comment by Professor Bear
2016-04-02 09:54:55

“I can enjoy the vast number of benefits numerous imputed rent increases present to me at the very same time I that am starving to death.”

Only if you belong to the Ownership Society. Rentership Society members can eat cake if they are hungry.

U.S.
Many More Americans Seen Spending More Than Half Their Income on Rent
By Victoria Bekiempis On 9/21/15 at 3:01 AM
In Washington, D.C., luxury housing and shops are replacing inexpensive housing on the Seventh Street corridor.
Jonathan Ernst/ Reuters

By 2025, nearly 15 million U.S. households will devote more than half of their income to rent, a new report projects.

That would be an increase from the 11.8 million households paying more than 50 percent of their income on rent in 2015, according to the report, “Projecting Trends in Severely Cost-Burdened Renters: 2015-2025,” by Harvard University’s Joint Center for Housing Studies (JCHS) and Enterprise Community Partners Inc.

Rent is considered “affordable” if it totals some 30 percent or less of one’s income, explains Andrew Jakabovics, senior director for policy development and research at Enterprise. Renters who spend between 30 percent and 50 percent of their income on rent are considered “moderately” rent-burdened. Renters who spend more than 50 percent of their income on rent are considered “severely” rent-burdened.

Using U.S. Census data and Harvard’s household growth projections, the results suggest “that even if trends in incomes and rents turn more favorable, a variety of demographic forces—including the rapid growth of minority and senior populations—will exert continued upward pressure on the number of severely cost-burdened renters.”

 
Comment by Professor Bear
2016-04-02 09:57:43

‘…whatever the figure used to get “real” GDP…’

https://en.wikipedia.org/wiki/GDP_deflator

 
 
 
Comment by Ol'Bubba
2016-04-02 06:51:58

“This imputed rent - this “income” - isn’t something that I can use to buy anything with but nevertheless it went right into the computation of GDP and is counted exactly the same as actual income is counted.”

If you take the imputed rent and subtract out your carrying costs (PITI, maintenance, etc), then divide by your net equity (value less debt) the result would be your “investment” return.

In other words, the amount by which the imputed rent exceeds your cost of occupancy could be conceptualized as a return on the net capital (equity) you have tied up in your home.

Of course, if one has little or no equity and is living beyond their means, then the long term prognosis is not good.

Comment by Combotechie
2016-04-02 07:22:02

I just now did a Zillow on my house and Zillow said the comprable rent is now $2,495 a month, up $288 over the past thirty days.

So Zillow gave me a $288 raise in imputed rent. I should be so lucky that my boss would do the same for me. But he didn’t.

But nevertheless the GDP numbers have increased by $288 if the Zillow numbers are accepted by the GDP bean counters as legit. Unspendeable as these $288 dollars are as far as I am concerned they count the same when it comes to computing GDP.

I think this as being a bit strange and I am surprised that you guys apparantly don’t.

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Comment by Professor Bear
2016-04-02 09:59:59

The part that I find strange is how the CPI shows inflation as benign, while rents (implicit or otherwise) are going up like a rocket. How can upwards of 30% of the consumption basket experience rampant inflation without it showing up in a consumer price measure?

 
Comment by Professor Bear
2016-04-02 10:16:23

Is the Fed’s housing price reflation scheme working as intended?

National Rental report shows rents nationwide and in San Diego continue to rise
Posted 10:37 PM, April 1, 2016, by Maria Arcega-Dunn

SAN DIEGO - It comes as no surprise but across the country the cost of rent has increased almost 3 percent since last year San Diego is not exception.

According to a Rentonomics 2016 National Apartment List Rent Report - nationwide, rents have risen significantly over the past year and continue to go up. San diego is shown as 11th highest on that list of most cost burdened renters. And as home prices and the cost of rent continue to climb, working-class families are struggling to keep pace, and many are slipping into poverty.

“This is basically everything I own yeah… Not the low class, not the high class, I’m the middle class… and there is no remedy for me.”

For this homeless woman - who did not want to be identified, for fear of losing her job… the reality is much harsher than many people realize.

“If I’m living check to check… how am I supposed to pay anything?”

Last year she says she came to San Diego after she was offered a promotion at work. After relocating she found herself unable to afford a down payment for rent.

And like many, she is highly educated, works a full time job but she’s also paying down a significant school loan debt, has a car payment, pays gas for her vehicle, food and medical costs associated with her epilepsy. And since she has no place to live, she also pays child support for her son. Following her divorce she found herself financially devastated with no savings and living out of her car.

“I’m going to be 30 years old for all the education that I have, and how much I’ve accomplished for my age, I feel that this shouldn’t be happening.”

According to a study released by the Public Policy Institute of California, housing affordability is strongly associated with the level of homelessness. In San Diego County, more than one in five residents, or about 23 percent of the population, lived in poverty the report—which looked at a variety of living costs, including filling up the gas tank on the way to work, food and healthcare. On average rent is costing people 75 percent or more of what they get paid.

“I just want a stable place to stay that I can go home to. I can bring my son, I haven’t been able to have my son over for over a year…”

She says her co-workers and boss don’t know about her living situation.

“It’s embarrassing. It’s really embarrassing…but everybody knows you can’t afford a place out here.”

This woman lives in her car in a nearby big box store parking lot with many others in the same situation. She does not qualify for section 8 or other rental assistance because she makes too much. San Diego does not have rent control so unless one receives government assistance, rent can be raised at any time.

 
Comment by Professor Bear
2016-04-02 10:24:57

“In San Diego County, more than one in five residents, or about 23 percent of the population, lived in poverty…”

That’s close to one in four San Diegans living in poverty. Ouch!

 
Comment by The Central Scrutinizer
2016-04-02 10:29:57

“How can upwards of 30% of the consumption basket experience rampant inflation without it showing up in a consumer price measure?”

The chocolate ration has always been 10 grams.

 
Comment by Ben Jones
2016-04-02 10:47:53

‘close to one in four San Diegans living in poverty’

Them’s fighting’ words for some. It’s unpossible for there to be anything but prosperity and happiness because it’s close to the ocean.

 
Comment by Professor Bear
2016-04-02 10:52:58

“Them’s fighting’ words for some.”

I presume them ’some’ have never spent much time here. If you drive around town a bit, it is hard to miss the large numbers of street people and beggars. They are ubiquitous.

 
Comment by The Central Scrutinizer
2016-04-02 11:19:36

If you stick to Del Mar, everything is suburban stucco paradise!

 
Comment by Professor Bear
2016-04-02 12:39:45

I work just south of Del Mar, and face a daily choice of whether to pay or to avoid the panhandlers begging at every stoplight.

 
Comment by The Central Scrutinizer
2016-04-02 14:44:38

There are no panhandlers in the shadow of Mitt Romney’s Mormon Disneyland.

 
Comment by Eddie89
2016-04-04 10:34:10

Just moved to San Diego 3 years ago. Renting a house because buying the same house in the current neighborhood would cost more than the rent. So, waiting until house prices correct, because they are simply way, way overvalued due to cheap money policies, Chinese cash buyers, investors, flippers, etc.

Luckily the place we’re renting has not seen a rent increase for the past 2 years, so we’ll keep renewing the lease as long as the rent amount remains stable and we’ll keep adding to our savings acct.

 
 
 
 
Comment by Professor Bear
2016-04-02 06:01:10

Do you know the difference between nominal and real GDP? There is a lot of effort put into removing price from measures of production.

 
Comment by Professor Bear
2016-04-02 06:04:32

“What if you asked a GDP bean counter the same question, what would his answer be?”

Definitely barrels per day. Price only comes into the picture when constructing measures of aggregate production.

Comment by Jake
2016-04-02 06:09:03

Correct.

Estimated production rates drive all else.

 
Comment by Combotechie
2016-04-02 06:56:23

“GDP attempts to measure the “use” economy, i.e., the value of finished goods and services ready to be used by consumers, business and government. GDP is similar to the “bottom line” (earnings) of an accounting statement, which determined the “value added” or the value of final use. GO is an estimate of the “make” economy, i.e., the monetary value of sales at all stages of production. Thus, GO is similar to the “top line” (revenues or sales) of an accounting statement. GDP and GO are not mutually exclusive, but are complementary ways of examining the state of an economy.”

“the monetary value of sales at all stages of production.”

Monetary sale is a function of price.

Comment by Combotechie
2016-04-02 06:57:39

Source = Wikipedia.

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Comment by Combotechie
2016-04-02 07:04:24

“Monetary sale is a function of price.”

Make that: “The monetary value of sales is a function of price.”

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Comment by Jake
2016-04-02 07:44:17

Correct. But there are no sales when the prices are massively inflated. Case in point; Housing.

 
Comment by Professor Bear
2016-04-02 10:08:00

“The monetary value of sales is a function of price.”

But if you use the same price in period 1 and period 2, the resulting production index measures the change in production between the two periods.

Suggested reading:

http://www.britannica.com/topic/Paasche-index

http://www.britannica.com/topic/Laspeyres-index

http://mathworld.wolfram.com/FisherIndex.html

http://mathworld.wolfram.com/IndexNumber.html

 
Comment by Professor Bear
2016-04-02 10:20:36

P.S. As stated in the above articles, the indexes measure price change holding quantities fixed (like the CPI or other price index).

If you hold the prices constant and let the quantities vary, you get a GDP-type production index.

 
 
Comment by Blue Skye
2016-04-02 07:45:25

“the monetary value of sales at all stages of production…”

Seems like a rather useless number.

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Comment by Combotechie
2016-04-02 07:48:46

“Seems like a rather useless number.” = My point.

But nevertheless it is anointed with powers of great significance.

 
Comment by Oddfellow
2016-04-02 07:56:43

Seems like a rather useless number.

Isn’t that what’s used to determine VAT?

 
Comment by shendi
2016-04-02 08:31:49

Which is why they have started adding “made up value” to the GDP such as the time cost that songwriters spent in putting together a song, because the “GDP is not growing” fast enough.

As originally thought out, the GDP probably made sense. Now that is corrupted by adding sketchy “production”. Probably in the near future they will add a production price for the time parents spend in raising kids.

 
Comment by Overbanked
2016-04-02 09:47:51

“Which is why they have started adding “made up value” to the GDP such as the time cost that songwriters spent in putting together a song”

Please elaborate. I’ve never heard this before.

 
 
 
 
 
Comment by Jake
2016-04-02 05:26:53

“We’re Exiting The Eye Of The Giant Financial Hurricane”

http://www.zerohedge.com/news/2016-04-01/doug-casey-warns-were-exiting-eye-giant-financial-hurricane

‘It’s going to be much more severe, different, and longer lasting than what we saw in 2008 and 2009.’

Comment by muhFeelings
2016-04-02 06:43:17

You can’t shoot heroin forever.

Comment by Professor Bear
2016-04-02 10:29:36

There are synthetic opioids in case you run out of heroin.

Opioid Epidemic Sparks HIV Outbreak In Tiny Indiana Town

March 31, 2016 4:27 PM ET
Heard on All Things Considered
Kelly McEvers

Last spring, Austin, Ind., was at the center of an HIV outbreak linked to intravenous use of the opioid painkiller Opana. In one house in Austin, a man addicted to Opana says he didn’t think he would get HIV through sharing needles. The town’s only full-time doctor is trying to encourage people to get help, but many people have yet to be tested.

Comment by The Central Scrutinizer
2016-04-02 21:01:01

” he didn’t think he would get HIV through sharing needles.”

Only happens if you share needles with gays. He must have been sharing with a secret gay.

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Comment by Bill, just South of Irvine
2016-04-02 07:29:37

I admire Doug Casey, but I think he is way off when he tells you to have your precious metals overseas and that you should get out of the USA.

 
Comment by Blue Skye
2016-04-02 07:46:31

2008 was like driving off a cliff and getting hung up on the guard rail.

 
 
Comment by Professor Bear
2016-04-02 05:55:32

Why are governmentarians so keen on policies that lead to thousands or even millions of housing units sitting empty? Given housing needs of the citizenry, this seems like a massive misallocation of scarce resources.

Comment by Oddfellow
2016-04-02 06:20:43

Congress won’t provide any money for infrastructure or the like, so the housing industry ends up being the jobs creator, since congress will allow easy money to be provided for it.

Comment by Jake
2016-04-02 08:35:03

Now that’s an over the top Lolaism right there Lola.

Comment by Oddfellow
2016-04-02 09:18:40

Thanks. I always know I’ve made a good point when you shout Lola.

It’s your version of “uncle”.

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Comment by Jake
2016-04-02 11:08:28

Lola….. When have u made a good point ever?

 
Comment by phony scandals
2016-04-02 18:14:29

“Lola….. When have u made a good point ever?”

I remember that song.

http://www.youtube.com/watch?v=zWzy5q_M5Ho - 265k -

 
 
 
Comment by Raymond K Hessel
2016-04-02 09:13:44

Sure, we need to steer fat contracts to politically well-connected construction companies, with kickbacks aplenty to corrupt Democrat (redundant) municipal and party officials.

Comment by taxpayers
2016-04-02 10:47:45

Is there a gop city outside of Utah?

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Comment by jerzdebil
2016-04-02 10:20:56

I see another Krugman sez the country needs moar trains to nowhere!

 
 
Comment by Neuromance
2016-04-02 09:42:54

One suspicion that I have is that there are actually plenty of units, even in cities with extreme price inflation, but the supply of affordable units is dwindling, leading to the illusion of supply shortage. I suspect that there are plenty of speculative transactions.

I don’t know if this is true, but seeing cities with declining populations and increasing house prices leads me to believe there is more speculative activity than initially meets the eye.

Comment by Ben Jones
2016-04-02 12:37:04

Peter Schiff wrote an interesting list of speculators in 2005. It included all sorts of categories I had never thought of. Have you ever seen a photo from one of these Australian auctions? Dozens of people. How could so many people want any one house on the same day? They actually have very good numbers on speculators there because of the tax filings. There are many thousands of people with negative returns siting on empty and rented houses. Schiff certainly would have called them speculators because they were in it for the price growth, not the (negative) rental returns. Same with Blackstone etc. Were they really paying over asking price to end up with a 5% return, or less? They could get that in corporate bonds.

 
Comment by Oddfellow
2016-04-02 14:56:24

there is more speculative activity than initially meets the eye.

I still don’t understand the implication that such speculative activity is bad. Is there something special or different about real estate that makes speculating in it wrong? Isn’t that just the market at work?

Comment by Ben Jones
2016-04-02 17:00:22

‘I still don’t understand the implication that such speculative activity is bad’

Do you not remember the millions of foreclosures? The financial panic? The trillions lost? The recession? You’ve got mom and pop, using a bunch of leverage, with an illiquid asset. They may not even be aware of the bigger picture. Maybe they just qualified for a loan. Read about the Illinois couple in the desk clearing post.

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Comment by Oddfellow
2016-04-02 17:21:38

Haven’t people always speculated on real estate?

 
Comment by Ben Jones
2016-04-02 17:24:38

That’s fine for business people, but we’ve seen what happens when ordinary households are involved.

 
Comment by Professor Bear
2016-04-02 23:16:10

“Maybe they just qualified for a loan.”

And if so, it’s 100% certain they decided to buy.

 
 
 
 
Comment by aNYCdj
2016-04-02 12:56:30

is the only hope to get a job in a hospital even though you might get psychically sick by dealing with sick people, or bite the bullet and maybe take one for 7-11 ?

 
 
Comment by Raymond K Hessel
2016-04-02 07:17:13

When will the Fed’s Ponzi markets implode under the weight of their own fraud and fictitious valuations?

http://www.theburningplatform.com/2016/03/30/worst-case-scenario-73-down-from-here/

Comment by muhFeelins
2016-04-02 09:50:06

It will be timed for maximum Boomer. Fresh this month on Netflix:

This installment of “American Masters” profiles 19 influential members of the baby-boom generation, born every year between 1946 and 1964.
dir. Timothy Greenfield-Sanders 82 minutes Apr 01, 2016 28 h

 
 
Comment by phony scandals
2016-04-02 08:23:41

Part-timers ‘account for labor-force surge’

“Newly employed” workers have found part-time work with mediocre pay

Marketwatch - April 1, 2016

The number of able-bodied Americans entering the labor force has surged since last fall.

But in a marked change from earlier in the recovery, more of them are finding jobs right away instead of just looking for work.

What’s going on? It’s hard to say for sure, but circumstantial evidence in the latest U.S. jobs report suggests many of these newly employed workers have found part-time work with mediocre pay.

The participation rate hit a two-year high of 63% in March, climbing from a 38-year low of 62.4% in September, the government said Friday. A person is considered part of the labor force if he finds or job or is actively searching for on

Comment by Shekels
Comment by phony scandals
2016-04-02 10:34:52

Now that you mention race.

Comment by The Central Scrutinizer
2016-04-01 11:44:18

“Fat, unskilled, incapable of critical thinking… the new white.”

I don’t know why Russ doesn’t like Jane Sanders.

Comment by Shekels
2016-04-02 11:21:10

Cloward Piven is real.

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Comment by The Central Scrutinizer
2016-04-02 11:55:51

That one liner appears to have caused significant trauma.

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Comment by phony scandals
2016-04-02 12:30:21

Why do you hate Jane Sanders?

 
Comment by The Central Scrutinizer
2016-04-02 12:41:25

I don’t know or care who Jane Sanders is… or any other of the inhabitants of your deranged political mental puppet show. I’m sure she eats babies boiled in the blood of kittycats or some damn thing.

Why don’t you dream up a big Godzilla puppet to devour her, if she disturbs you so much?

 
Comment by phony scandals
2016-04-02 13:43:18

Play it Sam.

 
 
 
Comment by MightyMike
2016-04-02 11:03:44

Didn’t you link to something yesterday that said that white men were having the slowest employment recovery?

Comment by Professor Bear
2016-04-02 12:45:15

14 percent unemployment among white men in their prime working years (ages 25-54) seems pretty grim!

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Comment by Professor Bear
2016-04-02 12:46:44

U.S. Economy
The White-Guy Jobs Deficit
April 1, 2016 11:51 AM EST
By Mark Whitehouse

Anyone wondering why so many white, middle-aged men are drawn to anti-establishment rhetoric of the Donald Trump variety should take a look at the latest jobs report: They’re still having a hard time getting back to work.

Broadly, the employment report for March suggests that the U.S. economy is growing at a steady pace. Nonfarm employers added an estimated 215,000 jobs, bringing the three-month average to 209,000, more than enough to compensate for natural growth in the labor force. The unemployment rate rose a bit to 5 percent, but for a desirable reason: More people were in the job market, a prerequisite for being counted as unemployed. An increase in hourly average earnings more than reversed the previous month’s decline, fueling hopes that demand for labor will finally translate into better pay.

By some measures, though, people in their prime working years have a long way to go to recoup the losses of the 2007-09 recession — and white men are further behind than most. On average over the three months through March, a nonseasonally adjusted 86 percent of white men between the ages of 25 and 54 were employed, 2.3 percentage points (or about 1.1 million jobs) short of the average level in the 10 years before the recession. That’s a larger shortfall than any other group — including black men, whose employment-to-population ratio stood 2.1 percentage points, or 156,000 jobs, short of its pre-recession level (though their baseline was much higher).

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Comment by phony scandals
2016-04-02 14:28:42

“Anyone wondering why so many white, middle-aged men are drawn to anti-establishment rhetoric of the Donald Trump variety”

The White-Guy Jobs Deficit
April 1, 2016 11:51 AM EST
By Mark Whitehouse

“To be sure, the extra 1.1 million out-of-work white guys aren’t necessarily the same people showing up at Trump rallies.”

 
Comment by muhFeelins
2016-04-02 14:40:32

So this whole article and stupid theory is the .2 percent difference? Maybe come up some more compelling data.

 
 
 
 
 
Comment by LuckyOz
2016-04-02 08:36:35

Housing bubbles are always built on the illusion of scarcity Outside of perhaps Hong Kong, there really is no scarcity of housing availability anywhere in the world. Eventually the speculators pick stop renting out their investments, since the rental yields are so low, why bother.
Sydney also has a crisis at the other end of the market;
http://www.luckyoz.com/new-york-tokyo-homes-cheaper-sydney-slum-mount-druitt/

Comment by Combotechie
2016-04-02 08:59:11

“Housing bubbles are always built on the illusion of scarcity.”

I think housing bubbles are built on the availability of money - money that maybe belongs to somebody else but nevertheless is available to the buyers, or rather is available to those who commit themselves to become buyers.

Buying something and committing - promising - to buy something are two quite different things: One requires money and the other requires access to money.

If a dummy wants to spend his own money to buy something that is way overpriced then he will be able to do this until the money he owns is exhausted. But if the dummy is not using his own money but is using somebody else’s money then the limitation of what he is able to buy and prices he able to pay is extended out to as far as his access to money is extended out. If there are no limits to the amount of money a dummy can get access to then there will be no limit to the dumb prices houses can fetch.

Comment by Neuromance
2016-04-02 09:45:14

Combotechie: If a dummy wants to spend his own money to buy something that is way overpriced then he will be able to do this until the money he owns is exhausted. But if the dummy is not using his own money but is using somebody else’s money

And that other dummy’s money is the government.

I heard it put, by someone in the IT portion of the industry, that the mortgage market today is matching up GSE money to borrowers.

 
Comment by Professor Bear
2016-04-02 10:39:31

“If there are no limits to the amount of money a dummy can get access to then there will be no limit to the dumb prices houses can fetch.”

Yep.

We learned nothing from the last financial crisis. The housing market is set to collapse, again, and a key culprit, again, is artificial demand created by government policies.

For starters, mortgage-software firm Ellie Mae reports that the average FICO credit score of an approved home loan plunged to 719 in January (the latest month for which data is available) from 731 a year earlier, and well below 2011’s peak of 750.

It’s a dangerous sign lenders are loosening underwriting standards. Lower FICO scores correlate with higher risk of loan default.

The Federal Housing Administration is a big reason for falling credit scores. So are Fannie Mae and Freddie Mac. The government housing agencies have slashed credit requirements under pressure from the Obama administration — like the Clinton administration before it — to qualify more immigrants and minorities with low incomes and “less-than-perfect credit.”

Meanwhile, home lenders are approving more debt-strapped borrowers. According to Ellie Mae, applicants approved for mortgages in January had an average household debt-to-income ratio of 39%, up from 2012’s annual average of 34%. Borrower debt loads have been creeping higher each year since 2012, when Ellie Mae first started tracking such data.

Comment by taxpayers
2016-04-02 10:54:19

Hilary will create more gov agencies for housing etc
More bigger go c on the way

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Comment by Raymond K Hessel
2016-04-02 09:17:32

Will Yellen the Felon be able to levitate our Ponzi markets to new highs? I don’t think so.

http://wolfstreet.com/2016/04/01/think-the-market-will-reach-a-new-high-heres-why-we-dont/

Comment by palmetto
2016-04-02 09:32:56

Exposed - How Two Janet Yellen Phone Calls Saved The World

http://www.zerohedge.com/news/2016-04-01/inside-janet-yellens-diary-stunning-discovery-two-phone-calls-saved-world

this is all anyone needs to know. When things start to crash, Yellen, Carney and Draghi to the rescue. It’s so blatant.

Comment by Professor Bear
2016-04-02 10:51:44

Is targeting financial asset prices part of the Fed’s mandate now?

Comment by Justme
2016-04-02 15:00:48

I think assflation (asset inflation) has ALWAYS been the most important and *unspoken* mandate of the Fed. The Fed does not give a rat’s pattootie about their official mandates (inflation and unemployment). The y just use the offical mandates as excuses to enact the *real* mandates.

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Comment by Ben Jones
2016-04-02 09:51:23

‘Australia’s resilience in the face of the mining bust does not actually owe much to a surge of new demand from Chinese consumers…To put it simply, Australia dealt with the end of the Chinese housing boom by unleashing a housing boom of its own.’

We’ve gone down so many chicken or the egg situations it’s hard to keep track. The mining bust came after the mining boom which was the result of China and other central banks going QE crazy and stupid low interest rates for 8 years, which was all done because of the bubble and crash caused by easy money and only slightly less stupid interest rates before that.

Maybe we should just get off this destructive roller coaster.

 
Comment by Shekels
2016-04-02 09:54:59

Linked from Drudge — Blue collar voters: trade is killing us

http://www.mcclatchydc.com/news/politics-government/election/article69551672.html

 
Comment by Ben Jones
2016-04-02 10:07:16

‘Real Estate Institute of WA figures show the median house price in Port Hedland is $599,000 – less than half of its 2013 peak of $1,222,500. Property owners faced similar losses in Karratha, where the rolling median house price has dropped from $815,000 in 2011 to $400,000′

400k is a lot of money.

Comment by The Central Scrutinizer
2016-04-02 11:56:59

It’s in Austrailian dollars, so it isn’t really real.

 
Comment by Bill, just South of Irvine
2016-04-02 16:04:07

It’s certainly an impressive amount. I think a lot of people are jaded by these bubbles. The ones who are not jaded are down $415k. Who will bail them out? Because I am sure they will be bailed.

Comment by The Central Scrutinizer
2016-04-02 16:57:37

They aren’t down 415k, the bank is. And the government will bail out the banks. And the banks will use that money to buy up housing and rent it back to people at a rate they can just barely afford.

Just like happened here.

Comment by The Selfish Hoarder
2016-04-02 17:46:54

When you say “the government will bail out the banks” you really mean the government will issue new fiat.

By the way, I think taxes have not gone up much for anyone, even with the 2012 Obama taxes on the rich. An extra 3% on long term capital gains (whoopie).

So the money printing is the real deal for western “democracies” high on Keynes.

This is why they should completely abolish all taxes and just print out money to bail out the Defense, bail out crack moms, bail out effed buyers, finance government.

But then precious metal prices would go way up.

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Comment by The Central Scrutinizer
2016-04-02 17:54:29

Millions are employed in squabbling over taxes… what would they do?

 
 
 
 
 
 
Comment by Puggs
2016-04-02 18:43:05

Debt is soooooooooooooooooo dumb!! But it’s especially dumb when spent on a depreciating liability!

 
Comment by Professor Bear
2016-04-02 23:27:10

Quote of the week:

“It’s like taking a wagon full of nitroglycerine across the prairie. It’s great if you get to the mountains and blow them up for gold. But it’s pretty unpredictable.”

 
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