Confidence Is Starting To Wane
A report from Banking Exchange. “Did you know that a tad over one out of five home sales typically don’t appear on federal anti-money-laundering radar? That’s because they are ‘all-cash’ deals—that is, purchases involving no lender financing—and thus not covered by any of the mainstream BSA/AML programs administered by FinCEN and federal banking regulators. ‘Currently, if a real estate transaction takes place without a mortgage issued by a bank or a mortgage broker, then none of the parties involved in the transaction are subject to AML program requirements,’ Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network, said in a speech at the ACAMs AML and Financial Crimes Conference.”
“If you saw a fancy Manhattan condo tower with most windows dark at night, you might think either that the occupants were very ‘green’ or that a bunch of units hadn’t been sold yet. Given her professional experience, it’s fair to say that Shasky Calvery wouldn’t necessarily take such a benign view. The FinCEN director formerly prosecuted organized crime cases, especially Russian mob matters. Money laundering investigations were part of this, and often authorities suspected that properties were purchased with the proceeds of crime.”
“The exception at this time is in two jurisdictions identified in special Geographical Targeting Orders issued by FinCEN in January 2016, effective March 1. Shasky Calvery said reports concerning covered transactions in the Miami-Dade Counties and Manhattan County have just begun to come in. ‘We welcome this interest from real estate professionals and journalists,’ she said. ‘But do I worry about the culture in certain segments of the real estate industry? Yes, I do. It was troubling to read that some legal and real estate experts mobilized immediately after the GTOs were announced to provide suggestions about ways to evade the reporting requirements. We all know that criminals seek the path of least resistance.’”
The Real Deal on New York. “Dolly Lenz appeared on CNBC’s ‘Squawk Box’ to give her take on Manhattan’s softening high-end residential market. And while far from bearish on Manhattan’s prospects at large, her insights don’t bode well for the barons of Billionaires’ Row. ‘If we’re looking at Billionaires’ Row, it’s in trouble – too much product,’ Lenz said of 57th Street in Midtown.”
“Lenz added that when it comes to the Manhattan residential market, ‘Confidence is key, and I’m seeing confidence start to wane.’ She noted factors ranging from ‘Prices [that] are too high’ to lingering concerns over the state of the economy. What does that mean for the market, and property values, moving forward? ‘Flat in normal areas where there’s some demand, [and] down where they’re overbuilt,’ she said.”
The Sun Sentinel in Florida. “After two years, construction is complete at 1200 The Ocean, and now the developer is offering discounts of up to $100,000 to sell the final 11 residences in the 18-unit luxury condominium in Hillsboro Beach. Peter Zalewski, principal of the CondoVultures.com consulting firm, said buyer incentives are more common at condos in Miami-Dade County, where there’s an oversupply of units. ‘Incentives in the six-figure range suggest the developer is trying to juice the pot to get units to [sell],’ Zalewski said.”
“Condo sales have slowed recently across South Florida, and some market followers say the luxury segment especially could struggle in the months ahead. ‘We’ve built so many, and it’s going to slow down,’ said Howard Elfman, president of the Greater Fort Lauderdale Realtors.”
The Houston Chronicle in Texas. “A development firm that had plans to build a gleaming office tower on a prime site in Midtown has shifted gears. It’s now considering other options, like leasing the property to a restaurateur or retailer, or perhaps developing condos there. Senterra Real Estate Group was unable to prelease a good portion of the proposed building, a requirement it had before moving forward with construction, said Neil Tofsky, chairman and CEO.”
“With oil below $40 a barrel, Houston’s office market is struggling. ‘People are projecting we’re going to have 10 million square feet later this year of sublease space. I think the 15-year average is probably around 4 million square feet,’ Tofsky said.”
From Chicago Business in Illinois. “Single-family home values in a vast majority of the Chicago area were lower in December than they were a full decade earlier, another sign that the region’s housing market is sleepwalking more than waking up, according to CoreLogic. Though home values have been rising for several years, they ended 2015 down from December 2005 levels in 195 of 219 Chicago-area ZIP codes. ‘Until a year and a half ago, Chicago’s rates of home price appreciation were comparable with the rest of the US,’ said David Stiff, principal economist at CoreLogic. But since early 2015, ‘Chicago has slowed down significantly,’ he said, suggesting that the area’s slow job growth has been a drag on the housing market’s recovery.”
“At the end of the list are 25 ZIP codes where values closed out 2015 at least 25 percent below where they had been 10 years earlier. They include ZIP code 60804 in Cicero, which was down almost 40 percent, and ZIPs 60406 in Blue Island and 60629 in the city’s Marquette Park and Chicago Lawn neighborhoods, down more than 37 percent. In ZIP 60085 in Waukegan, prices are off more than 35 percent. Last week, a two-bedroom bungalow on Elmwood Avenue in 60085 sold for $75,000, or 45 percent less than the $137,000 it sold for in April 2005.”
“Mike Culat, the Re/Max Advantage agent who sold the house, attributed the deep discount to ‘the economics of Waukegan. The problem it’s been facing is jobs. That’s had a huge impact.’”
The New Jersey Advance. “Geraldo Rivera, whose waterfront Edgewater compound has been on the market for nearly a year, chopped the price a second time Tuesday. It’s now listed at $2.88 million, down nearly $1 million from his original asking price. Rivera bought a Manhattan condo last year for $5.6 million before putting the Edgewater compound on the market in May for $3.75 million. In July, he dropped the price to $2.95 million. It’s still the second priciest listing in Edgewater, right after a $3.475 million home a couple of houses away from Rivera.”
Cover your eyes jingle:
‘DA’s Office: Real estate fraud still runs rampant in Santa Clara County’
Call your lawyer Jingle_Fraud.
“Huang said the unit has expanded its workforce and now has three prosecutors, 1.5 paralegals, five to seven investigators and one coordinator.”
WTF, 1.5 paralegals… part time?
‘Q+A: How Henderson is tackling its squatter problem’
‘It’s not the only part of the Las Vegas Valley grappling with squatters. Metro Police said they received at least 4,458 squatter-related service calls in Las Vegas and unincorporated Clark County last year, up 24 percent from 2014, 69 percent from 2013 and 169 percent from 2012.’
‘The valley’s squatter problem stems in large part from the foreclosures, layoffs and other financial woes that pummeled the region during the recession. Waves of residents lost their homes to lenders or simply abandoned them, emptying houses valleywide.’
‘The housing market has improved the past few years, but it’s still bogged down by high rates of underwater borrowers and foreclosures, as well as thousands of empty properties, letting squatters occupy homes in low-income, affluent and middle-class areas alike.’
“Q: Councilwoman March, did you ever come across squatters at the Lied Institute when doing market research? Did it ever come up?’
‘March: I don’t think that was as big of an issue then. My tenure there was from 1996 to 2009, so I left at the start of the economic downturn. This is really something that’s tied to the downturn.’
‘This is really something that’s tied to the downturn’
So this hasn’t happened before. I wonder what’s different?
‘Zombie mortgages‘ still haunt evicted home owners in Cleveland
‘When I went to a sheriff’s auction in Cleveland City Hall back in December, four-bedroom wooden houses on the east side, just a short drive from Lake Erie, were being passed in for as little as $US334 — because there were no bidders.’
‘That same day you could also have picked up your dream home on the more salubrious west side for just a few thousand dollars — less than it takes to buy a second-hand car.’
‘Thousands of families who owned their own homes have been forced out by the banks, because they can’t afford to repay their loans. And as a result, some 20,000 homes in the city - many of them grand, old wooden structures dating from the late 1800s - have been abandoned and fallen into disrepair.’
‘Often the thieves move in the same day the owners move out, stripping out the copper, aluminium, lead and anything else of value. “Everything is gone, including the kitchen sink,” former Cuyahoga County treasurer Jim Rokakis tells me as he shows me around a 19th century duplex that is about to be demolished. “The cabinets have gone, the light fixtures have been taken. I’m surprised the aluminium window frame is still there.”
‘And now the big banks and mortgage lenders, who caused so much of this grief, are at it again.’
‘With many homes in Cleveland virtually worthless, the banks are now walking away from properties they have lent money on. As a result, what are known as ‘zombie mortgages’ are coming back to haunt their owners, even after they’ve been forced onto the street.’
‘The banks often refuse to foreclose (and take back title to the home) because they don’t want to pay for repairs that may be necessary to comply with Cleveland’s strict building code, or stump up $US10,000 to knock the house down.’
“We regularly see in (the Housing) Court owners who thought they lost the property,” Judge Ray Pianka tells me resignedly. “They may have filed for bankruptcy and their attorney told them ‘Well, you now have a fresh start, you can go on with your life’. But the mortgage company has to pick that mortgage and foreclose on it… [but] they don’t want that property, so they just walk away from the mortgage.”
‘Meanwhile, the banks who are responsible for so much of the pain have got off scot-free. And the US Government, which could do much to relieve it, is reluctant to help.’
Bloomberg political article published today notes that Cleveland’s population now down to 396,000, this from almost a million at its population peak.
So it’s the Detroit of Ohio, basically.
Created by globalists.
From last Fridays post:
Comment by Ben Jones
2016-04-08
Danielle DiMartino Booth makes an interesting point in the last link:
‘The movement between regions will be catalyzed by demographics, according to the JLL study, which notes there will be more people over the age of 55 by 2050 than there were inhabitants on earth in 1950.’
“This demographic impact will have a profound effect on real estate investment strategies with the amount of private equity capital targeting direct real estate set to increase by over 500 percent, much of it driven by increasing institutional allocations looking at higher yielding opportunities.”
‘Did you notice something implicit in JLL’s argument? It would seem lower for longer will remain the mantra for the foreseeable future, which suggests frothier markets and subpar growth will continue. The most interesting tidbit comes down to who will be doing the investing, that is private equity.’
‘As it were, private equity “dry powder” directed specifically to real estate investments rang in the New Year at record levels. There is now $231 billion in dry powder available just for properties in the United States after $107 billion was raised in 2015.’
‘For being six years into a recovery in commercial real estate, investors certainly remain enthusiastic, especially public pensions. Pensions have allocated some $207 billion to private equity funds since late 2012. Increasingly, allocations have targeted real estate funds with March of this year providing a perfect example of the merriment surrounding this asset class. Here’s a wee sampling with special notations if the real estate fund is of a particular bent:
Texas Teachers: $500 million
State of Oregon’s Pension: $300 million
Pennsylvania Public School Employers: $307 million
Ohio Workers Compensation Bureau: $125 million
State of Minnesota’s Pension: $100 million (distressed); $100 million (opportunistic)
State of Maine Pension: $50 million
State of New Jersey: $200 million (commercial)
State of Kansas: $50 million
Texas Municipal: $375 million
“Pensions’ chronic underfunding has prompted them to stretch to achieve unrealistic return targets,” New Albion Partners’ Brian Reynolds explained. Reynolds has been keeping a running tally of these allocations and is quick to point out that leverage is often needed to hit the bogeys, which are 7.5 percent or more. Bear that in mind when you consider the money being shoveled into these funds.’
‘It really comes down to size, that is, of the pension system. In the early 1980s, pension liabilities amounted to about 50 percent of gross domestic product (GDP); today they are 100 percent of GDP. “Because of their growth, their investment flows have led to asset bubbles that have generated permanent losses,” Reynolds added.’
‘Pensions flocked to hedge funds but that strategy blew up after Long Term Asset Management nearly took down the financial system. This strategy was followed by wholesale herding into commodities, which we all know ended is disaster.’
‘The catch is the rate-of-return bogeys have barely budged despite Baby Boomers moving increasingly closer to retirement suggesting some risk should be taken off the table. (Rather than keeping you in suspense, it’s nearly an impossible feat to lower return targets. Less in assumed returns means states and municipalities have to pony up more money they don’t happen to have on hand. The State of Connecticut has reached the point where it is now taking a stab at taxing Yale’s endowment in a desperate attempt to top off its underfunded pensions.)’
‘No matter how you slice it, most public pensions face a dire set of circumstances, which begs the question: Just what are they to do?’
‘Reynolds’ reply: “They have turned to the last remaining asset class with high expected rates of return – commercial real estate. It’s as simple as that.”
‘Perhaps pensioners should begin praying the JLL report pans out. With commercial real estate prices declining in January for the first time since 2010, the latest data available, and investors balking at rich valuations, it just might take a miracle to keep profitable prospects alive.’
http://thehousingbubbleblog.com/?p=9602
‘If you saw a fancy Manhattan condo tower with most windows dark at night, you might think either that the occupants were very ‘green’ or that a bunch of units hadn’t been sold yet. Given her professional experience, it’s fair to say that Shasky Calvery wouldn’t necessarily take such a benign view. The FinCEN director formerly prosecuted organized crime cases, especially Russian mob matters. Money laundering investigations were part of this, and often authorities suspected that properties were purchased with the proceeds of crime’
‘People are projecting we’re going to have 10 million square feet later this year of sublease space. I think the 15-year average is probably around 4 million square feet’
‘her insights don’t bode well for the barons of Billionaires’ Row. ‘If we’re looking at Billionaires’ Row, it’s in trouble – too much product,’ Lenz said of 57th Street in Midtown’
It’s a good thing our pensions are being bet on such solid ground.
‘private equity “dry powder” directed specifically to real estate investments rang in the New Year at record levels. There is now $231 billion in dry powder available just for properties in the United States after $107 billion was raised in 2015.’
‘For being six years into a recovery in commercial real estate, investors certainly remain enthusiastic, especially public pensions’
It’s April and there is now twice as much money piling into commercial real estate as last year, which was a boom. What could go wrong?
http://thehousingbubbleblog.com/?p=9573
‘A recent report by the Office of the Comptroller of the Currency, a federal agency that regulates the nation’s banks, warns that declines in mortgage underwriting standards are mirroring pre-crisis trends.
‘Underwriting standards eased at a significant number of banks for the three-year period from 2013 through 2015,’ the report said. ‘This trend reflects broad trends similar to those experienced from 2005 through 2007, before the most recent financial crisis.’ Not since 2006, it noted, have lenders taken on so much credit risk, and it says the hazard will continue to grow this year: ‘Examiners expect the level of credit risk to increase over the next 12 months.’
‘A large chunk of the risk is coming from first-time home buyers with shaky credit and so-called ‘rebound’ buyers who previously defaulted on home loans. The demand from otherwise uncreditworthy home buyers ‘is driving home prices up faster than incomes and inflation,’ noted Edward Pinto, co-director of AEI’s International Center on Housing Risk in Washington.’
‘This is especially true in hot spots like California, where subprime-mortgage lenders offering interest-only loans with no FICO-score requirements are cropping up from the ashes of Countrywide Financial, the bankrupt subprime giant.’
‘In another sign housing is overheating, home ‘flipping’ is red hot again and hitting levels not seen since just prior to the mortgage meltdown. Nationwide, almost 180,000 homes were sold and then resold last year — the highest level since 2007. In fact, according to RealtyTrac, flipping in a dozen metro areas — including New York, Los Angeles, San Diego, Miami and Jacksonville, Fla. — exceeded peaks set in 2005.’
‘Like the last bubble, this one is fueled by artificial demand from government-induced lax lending standards and accommodative interest rates set by the Federal Reserve. Today’s relaxation in mortgage-underwriting standards is largely a function of government housing-policy changes at FHA, Fannie Mae and Freddie Mac, which dominate the nation’s mortgage activity. As in the last easy-credit cycle, we are seeing ‘the promotion of policy to push firms to seek riskier products to promote growth,’ Wells Fargo Chief Economist John Silvia said.’
‘All three agencies have slashed down-payment and other requirements under pressure from Obama regulators, who include, most significantly, former Congressional Black Caucus leader and Obama appointee Mel Watt, head of the new Federal Housing Finance Agency, which now controls Fannie Mae and Freddie Mac.’
‘Last year, Fannie Mae launched a new subprime-mortgage product called HomeReady that caters to recent immigrants with weak credit and limited income. The new loan program, which offers ‘income flexibility,’ allows borrowers for the first time to bundle income from roommates and relatives to meet qualifications for income. They only have to put 3% down, and can use gifts from nonprofit groups to subsidize their down payments.’
‘There is no limit on the number of non-borrower household members who can be present on a single transaction,’ Fannie advises originators. And even then there is ’documentation flexibility,’ a frightening echo of last decade’s ‘no-doc loans.’
‘You don’t have to show personal financial independence. You can be maxed out on credit cards and even live in government-subsidized housing. Just as long as you round up enough income-earners and pool finances to help meet a debt-to-income ratio of up to 50%. And you don’t need good credit. ‘If the borrower’s credit score is less than the minimum credit score required,’ Fannie tells loan underwriters, ‘the lender may develop an acceptable nontraditional credit profile’ that takes into consideration timely payments on electricity bills and car insurance — and even gym dues — in lieu of payments on credit cards and loans.’
‘Under HomeReady, you can even qualify for a ‘cash-out refinance’ of your mortgage, a type of loan that led to over-leveraging and a wave of defaults during the mortgage crisis.’
‘Why would Fannie offer the same kinds of poorly underwritten loans that forced it into bankruptcy? Because HomeReady aligns ‘with our housing goals’ set by Watt, it says in its HomeReady literature. It’s all part of a government campaign to ease access to home loans for recent Hispanic immigrants — including those living here illegally. In fact, HomeReady caters to illegal immigrants by allowing borrowers to waive Social Security documentation.’
‘Watt, who as a congressman once demanded Freddie Mac back loans for welfare recipients in his North Carolina district, has instructed Fannie and Freddie to come up with ‘alternative credit-scoring models’ to FICO and approve more home buyers. ‘We have the pedal to the metal’ on adopting a new model, Watt said.’
Boy this HomeReady is something: PDF!
https://www.fanniemae.com/content/faq/homeready-faqs.pdf
https://www.fanniemae.com/singlefamily/homeready
‘no minimum contribution required from the borrower’s own funds’
Every paragraph is a tweak to shoe-horn borrowers into a loan, or let the banks off, which is the same thing.
97% cash-out refinancing. See, this is all about getting people into houses. Of course, if they are refinancing they already own a loan, but let’s pretend shall we?
Why did Fannie Mae change the income eligibility from 100 percent to 80 percent of area median income (AMI)?
What is a non-occupant borrower(s)?
‘What research data does Fannie Mae have to support the
extended-household income flexibility?’
‘Extended-household living arrangements are more common among underserved populations, including low- to moderate-income, minority, and immigrant households.’
‘We believe this first-in-the-industry flexibility not only provides access to mortgage credit for additional creditworthy borrowers, but may also provide a meaningful marketing opportunity for many lenders.’
‘Non-borrowers may be relatives or non-relatives. Non-borrowers must sign a statement of intent to reside with the borrower for a minimum of 12 months.’
‘Must a non-borrower household member document a certain history of prior shared residency to be eligible?’
‘No. HomeReady does not require any prior history of shared residency for a non-borrower household member.’
Here’s a question: how are the sad pandas gonna try and pin this disaster on the 1%ers?
‘Because non-borrower household members are not borrowers on the loan, these requirements, including determination and documentation of legal residency, do not apply to the non-borrower household member.’
‘Is there any benefit to the existence of non-borrower household income if the borrower’s DTI ratio is 45 percent or less?’
‘Does the non-borrower household member’s income need to be documented in those cases?’
‘Consideration of the existence of non-borrower household member as a compensating factor is only applied when the borrower’s DTI is greater than 45 percent to 50 percent. If the borrower’s DTI is 45 percent or less, there is no benefit to the existence of the non-borrower household member’s income. In these cases, the non-borrower household member’s income does not need to be documented and no additional information is required.’
I don’t know if you noticed, but the government IS the 1%.
Ah, and the punch line:
‘Are there limits on the percentage of HomeReady loans that can be delivered into an MBS pool or against a whole loan commitment?’
‘No. There is no limit on the percentage of HomeReady loans that can be delivered.’
‘the government IS the 1%’
OK, there’s one. Next?
It’s basically the government acting as mommy and daddy co-signing for jr.
Wait a minute! Now are you telling me the gubbermint isn’t looking out for these low income people? We’re going to have to have rio and mike chime in here, because they’ve been telling us another story.
Can you name anyone making these decisions that is not in the 1%, or are you just going to ignore the question and talk about something else?
‘making these decisions that is not in the 1%’
Mel Watt.
Who are the 1 percent? - The Washington Post
https://www.washingtonpost.com/…1…/gIQAn4JDQL…The Washington Post
Oct 6, 2011 - Average wealth of the top 1 percent was almost $14 million in 2009
He’s not even close:
Based on congressional financial disclosure forms and calculations made available by OpenSecrets.org, Watt’s net worth as of 2012 was estimated between $444,041 and $1,414,000. That averages to $929,020.50, which is lower than the average net worth of Democratic representatives in 2012 of $5,700,168.36.
https://ballotpedia.org/Melvin_Watt
My god, you’re right! The filthy prole! How DO these people find their way into government?
Smarten up Anklepants.
“It’s a good thing our pensions are being bet on such solid ground.”
This dude at Yahoo! News says pensions are fine and the USA is worth $99 Trillion:
http://finance.yahoo.com/news/america-is-rich-extremely-wealthy-not-poor-201627319.html#
“state and local government has a positive net worth because assets such as buildings, equipment, pension funds, and currency exceeds liabilities such as municipal debt and pension obligations.”
Ben - this….via david stockman / zerohedge……
http://davidstockmanscontracorner.com/canary-on-the-midtown-towers-nyc-luxury-condo-market-on-the-brink/
worthless.incompetent.government.
It’s easy to see how Janet Yeltsin fits it like a glove……. while tripping over ant hills.
“Condo sales have slowed recently across South Florida, and some market followers say the luxury segment especially could struggle in the months ahead. ‘We’ve built so many, and it’s going to slow down,’ said Howard Elfman, president of the Greater Fort Lauderdale Realtors.”
Throw in a Tesla and a burger and I’ll sign.
I remember in 2011 when I lived in Tampa you could buy a near new condo in many places for under $20,000. I forgot the dollar figure where the property taxes were exempt but it was pretty close. Someone told me of a community of new condos like that. The problem is they had a mold issue.
I bought a condo in West Palm Beach for $18,900 in February of 2011. I sold in March of 2012 for $28,100 and thought I was doing quite well…especially since I lived there for a year!
Well, 6 months later it changed hands again for $52,500 and now units are selling for $79K+. I feel foolish for selling though I’m grateful for the gain…
Thanks for the specu-flipper notification.
Where, exactly? I can envision a couple of neighborhoods where that might have been the case for older units, but that’s still very much on the low side, even at the bottom.
How is $20k for a 20 year old condo “on the low side”?
Figure 1000sq ft or $20/sq. You’re not getting any dirt with it, you’re paying fees every month ontop of the transaction price. Besides…. condo construction brand new is down in the $30/sq ft range.
This was in the New Tampa area. I don’t remember the specifics but it was between I-75 and where LA Fitness is off of a side street.
That makes some sense — I recall an article about condo issues in New Tampa.
I remember the first development out there, it was like the middle of nowhere. Then the whole area tumbled headlong into the suburban sprawl black hole, complete with suffocating traffic, office parks, strip malls, chain casual dining, and gated communities. Some of the stop lights on Bruce B. Downs Boulevard are four minutes long, and take two or three light cycles to traverse.
About 15 years ago the then-Mayor of Tampa moved out there, and then moved back closer to town because he tired of the commute.
Ah yes. I forgot that name. I lived right off of BBD and had a very nice 2 bedroom townhouse I rented for $925 per month - everything deluxe. I had the AC on to where it was so cold I had to wear a sweatshirt to stay warm 9 months of the year. Utilities were included in rent. Very quiet apartment too. Within half a mile of that movie theater. And I think the grocery store real close but across that busy road is SweetBay. Publix is further on toward LA Fitness.
Out West by the Turnpike.
“In July, he dropped the price to $2.95 million. It’s still the second priciest listing in Edgewater, right after a $3.475 million home a couple of houses away from Rivera.”
If you throw in Al Capone’s vault I’ll make an offer.
What kind of moving van will they need to move his giant Fox News ego out?
Whatever it is, I hope they take the walls and flooring along with the furniture and the ego.
“Where to Buy: Price-to-Rent Ratio in 76 US Cities”
https://smartasset.com/mortgage/price-to-rent-ratio-in-us-cities
San Fran leads the list with a ratio of 45.88. Detroit is at the bottom of the list with a ratio of 6.27.
So that means the ratio in San Fran is 7.2 times the ratio of Detroit.
“San Fran leads the list with a ratio of 45.88…”
We usually talk in terms of monthly rent, so the ratio in SF is 458.8 times rent.
A house in SF is not an investment.
The real interesting figure is the monthly PITIM (including maintenance) versus rent in each city. I want to keep my square footage to a minimal, 1,000. I think for instance it is cheaper to be a loan owner in Chandler, Az, than to rent there.
I took my renter’s insurance with the same company I have car insurance. With the multiple policy discount, the renter’s insurance was almost free.
My renter’s insurance at my California apartment is optional. In Arizona it’s required. I buy it anyway. Irvine apartments are in huge single buildings and that’s what I have against them. All it takes is one person to carelessly start a fire.
When I moved from Norfolk to Northern VA my renters insurance went down, so I took the extra savings and upped the amount on the policy. Pinball machines are in their own bubble and the price to replace mine has gone up quite a bit.
“for instance it is cheaper to be a loan owner in Chandler”
Maybe, but then you’re stuck in Chandler.
“I think for instance it is cheaper to be a loan owner in Chandler, Az, than to rent there.”
Not aymore. Its bubbled out again here too.
ZILLOW
publicly traded and their predictions never line up
you enter their portal 2 ways and both always have different answers !
they often have no predictions in oily areas.
However their transaction data is very accurate as it is reported directly from MLS and municipal assessor agencies.
I do agree their forecasting is flawed. Frequently they forecast increasing prices when in fact prices are falling.
Historical Price-to-Rent Ratio
v- National and city price-to-rent ratios have risen and fallen over the years depending on the state of the housing market. In the years before the housing crisis, as the housing market heated up, the national ratio rose from 22.73 (in 2005) to 24.50 (in 2007). Then, however, after the real estate market turned, as home prices fell and rentals grew more expensive, the ratio began to fall, dipping below 20 in 2011, down to the current rate of 19.21.
used to be 15 and 12 before fme.fre etc……………
Those ratios also apply before mortgage interest rates dropped from 10% to 4%.
$149K mortgage at 9% –> PI = $1200
$250K mortgage at 4% –> PI = $1200
That is, house prices can skyrocket while barely affecting the howmuchamonth. But low interest rates and high prices favor everyone except middle-income renters, so low rates and high prices are what we’re getting.
what we’re getting
You overpaid by at least $200,000. That’s what you’re getting.
Now double it to account for taxes, insurance and depreciation.
Now double it to account for taxes, insurance and depreciation.
and punch yourself in the eye.
Jake is a sad dog.
Ah but the local property tax collected has allowed the local governments to over pay future worker retirements.
Gov In my country can retire at age 55 w 75% of pay
Something to think about …
I did a Wiki on Lakewood, CA (the town where I live) and I learned that as of the 2010 census Lakewood has 19,131 owner occupied housing units.
I then did a Zillow on Lakewood and learned that (according to Zillow) there are 85 homes currently for sale in Lakewood.
So, whatever decisions that end up being agreed to by the buyers and sellers of these 85 houses that are now offered up for sale will go into deciding the equity values of the total number of owner occupied housing units - whether for sale or not - which is a number that is 19,131.
Boiling this statement down a bit: Whatever price that is agreed to by the sale of one house in Lakewood will affect the equity value of 224 other owner occupied housing units that also are located in Lakewood.
Now right there is a lot of leverage. Moving on …
If a person can commit to buying a house with a three-percent down payment then every dollar he decides to commit to a down payment will act to control $33.33 of a house’s price. If he agrees to throw in another, say thousand dollars, into making a down payment then he will be able to allow the price of the house to be lifted up by $33,333.33. That’s for the house that he is buying.
But this decision he makes for the house he is buying - one house out of a total of 85 that are for sale - goes into the computation that determines the equity value for the entire number of comparable houses that simply exist - exist whether they are for sale or not (and most likely they are not).
So we are looking at two types of leverage here:
1. One type of leverage has to do with the number of comps. In this case there are 19,131 houses in existence and 85 of them are for sale. This means that whatever happens to the value of these 85 houses affects the values of 19,131 houses. This is true if all the houses are comparable to each other (which may be and probably is a stretch but this exercise is meant to illustrate a point and not much more.)
2. Another type of leverage if financial leverage whereby a small down payment can go a long way in determining the agreed-to price - a price that does not have to actually be paid but only has to be committed to be paid, promised to be paid.
So here we have an interesting situation: The decisions of a few can affect the welfare of the many, and in this case the decisions of a very, very few can affect the welfare of many of the many.
FWIW, and all that.
Playing with these figures a bit more …
If three extra dollars of a down payment commitment will allow the price of a house to be lifted by one-hundred dollars, and if the lifting of the price of one house will lift the value (the equity value) of 19,131 comparable houses then these three extra dollars of a down payment commitment for this one house will produce a total of $1,913,100 of equity wealth for all the houses, all 19,131 of them.
Magic!
at 3% they can walk away- and will
Smelly Mel Watt
“at 3% they can walk away- and will”
But until this day arrives the financial miracle will endure.
If the tax assessor can extract his cut from the increase of housing prices and if the David Lereah disciples will do their thing and extract some hefty chunks of their newly generated equity then all sorts of financial burdens can be magically lifted.
Three percent down, three percent down can perform some amazing miracles.
I mentioned this the other day: If three percent of the agreed-to-price is the commitment price and this agreed-to-price becomes the official price, the “going price”, then this is the price that the tax assessor uses, and Zillow uses, and everyone else uses. This is the price that gets logged into the records as The Official Price.
So, what happens if the down payment, the three percent of the total price of the house, is the only payment made toward paying for the house? What happens to the price of the house if there no other payments, no monthly payments, no monthly payments at all?
The answer: Nothing happens to the price of the house, the Official Price Of The House; The Official Price Of The House remains unchanged. This means the elevated values of the comps do the same, they remain unchanged. This means the ability of the tax assessor to extract some extra dough remains unchanged, the opportunities that the David Lereah disciples get in extracting some equity remains unchanged. Everything that relates to the new Official Price remains unchanged.
In the hypothetical example above, three extra dollars of extra down payment money could go into creating $1,913,100 of equity wealth that would stay in existence as long as the Official Price Of The House stayed in existence or until a sale of another comparable house was made at another price - possibly an even higher price using another three percent down payment.
Take into account:
-85 is a very small sample size for 19,000 plus houses.
-Agents have been known to cherry pick the data to show higher comps. Remember these are the people who say your house increase by 50K for doing 20k worth of updates.
-The biggest dismissal of data are short sales and foreclosure sales. Does it matter who sold the house? According to Suzzanne when she ‘does her research’ it does.
“-85 is a very small sample size for 19,000 plus houses.”
This may be true but if the Zillow number of 85 houses for sale is in fact the total number of houses that are for sale (and I have no way to determine if it is or isn’t) then the prices that these 85 houses sell for will set the values of the all the houses they are comparable to.
The small sample size of 85 can only be increase if more houses are put up for sale, but if more houses are not put up for sale then this small sample of 85 houses, as small as it is, will, in fact, be a true representative example of what housing prices are going for.
According to Zillow, 812 homes sold in Lakewood in the prior 12 months. Days on market must be pretty short.
BS. Zillow doesn’t publish gross transaction volumes but here’s what we did find.
Lakewood, CA Housing Demand Plummets 14% YoY
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
I went back and visited Zillow and Zillow told me that Lakewood house prices jumped up from about $466,000 from February of last year to about $503,000 as of February of this year. This is a jump of about $37,000 over a period of one year, a jump of about 7.9% over a period of one year.
You say 812 homes were sold over this period of time (or close to this period of time). The action of buying and selling these 812 homes produced a price rise - a rise in value - of $37,000, not only for these 812 homes in Lakewood that were sold but also for all the homes in Lakewood, whether they were sold or not.
There are 19,131 owner occupied housing units in Lakewood. The sale of the 812 homes last year pumped up the values of these homes. The precise amount of this pumping is unknown but the best guess is that the amount is something like $37,000 per house. Since there are 19,131 owner occupied houses in existence in Lakewood and each of these houses probably had the value of their equity pumped by $37,000 it follows that there was probably $707,847,000 of equity produced, equity produced by the actions of people - strangers - who for whatever reason had access to money and had a desire to pay higher prices for houses than what were previously paid.
These people do not have to actually fork over some hefty chunks of money in order to buy a high-priced house or to push the price of a high-price housed even higher, they only need to commit to forking over these hefty chunks of money, and this commitment, at present, only costs them three percent (3%) of the price of the high-priced house.
Three percent! A three percent commitment to buying a house will support the full price of a house. The full price paid in buying a house will be reflected in the values of the comps. If the three percent commitment that goes into buying 812 houses produces a gain over the spread of one year of $37,000 then this three percent commitment to these 812 houses created out of thin air $37,000 for all the comparable houses. If there are 19,131 comparable houses then there was a $707,847,000 of an increase in equity value for all of these houses.
So, really, just how much money would it take in the form of 3 percent down payments would it take to create out of thin air an amount of equity that equals $707,847,000?
Remember, the three percent down payment isn’t needed for all the houses that are in Lakewood, it is only needed for the ones that are for sale. Last year the number of house that were sold out of a pool of 19,131 existing houses was 812, or about 4.2 percent.
You only need to buy 4.2 percent of the houses (because that’s all that were sold) to push up prices and you only needed 3 percent down as commitments to buying this 4.2 percent of houses that were sold.
Apple has 5.5 Billion shares outstanding.
Average volume is approximately 30 million shares.
So, the opinion of the market trading 0.5% of the company effects the other 99.5% of the market.
Sentiment matters in the short term.
Fundamental value matters in the long term.
What’s the old addage, in the short term the stock market is a voting machine, in the long-term, it’s a weighing machine?
I think you can delete the word “stock”.
“So, the opinion of the market trading 0.5% of the company effects the other 99.5% of the market.”
A difference here between stocks and houses is the financial leverage: With Apple the leverage (last I heard) can be fifty-percent - fifty percent of the price paid as a down payment, fifty percent of the price to be paid later (maybe).
With houses the leverage is three percent - three percent of the price as a down payment, ninety-seven percent to of the price to be paid later (maybe).
“With houses the leverage is three percent”
I misspoke: With houses the leverage is 33.3 percent if a three percent down payment is used.
Damn, misspoke again: With houses the leverage is thirty-three to one.
One dollar down will control thirty-three dollars and thirty-three cents of the price.
Another difference between stocks and houses is the forced selling if the price drops.
With stocks if the price drops below the margin maintenance price then either you have to come up with more money or else the stockbroker will sell out the stock. This forced selling - this event - will act to further depress prices.
With houses if the price drops then … so what?
“So what?” may be answered by “But the buyer may stop making his monthly payments”. Again, so what? So what on an immediate timeframe (but not necessarily on a long-term timeframe).
Consider: What happens to the price of a house if the homebuyer stops making his monthly payments? Does the price of the house immediately fall? No? Then what happens to the price of the house?
Answer: Nothing, nothing happens to the price of the house.
How interesting all this has become …
With only three percent of the price of a house I can control the price of the entire house.
By controlling the price of one entire house I can control (or at least have a say) in what the equity values will be for an entire town or maybe even a city.
And once I exert this control I can decide to change my mind and not make any further commitments to the house in the form of house payments but nevertheless I will be able to continue to live in the house because an eviction will not be an event but instead is will be the beginning of a process, a process that can be extended way, way far out into the future.
Plus whatever control I exerted regarding prices due to my three percent commitment to buying the house remains intact; Whatever increases in other people equity - increases in other people’s wealth - that I helped to create remains intact.
If anyone were to sit down and dream up a world such as this for everyone to live in and accept as normal then I believe he would have a tough sell on his hands. But nevertheless this appears to describe the world that we live in.
Yes, but the pricing mechanism is the same…a tiny percentage of the homes effects the lion’s share of the market.
AND, in many of the markets that are the craziest (SF, NYC, etc.), 3% loans don’t come into play really at all. Most loans are jumbo originations, many of which require a 25-30% down.
And margin loans usually require in the range of 30% down (30% equity requirement).
Lakewood is the most boring town in California:
http://www.movoto.com/blog/top-ten/most-boring-places-in-california/
Of course Richard Blade’s club is right up the street if you like tatted fats that never listened to Richard Blade or anything “New Wave.”
college was not like this when i went…
Greek Week events altered after members painted “Build the Wall”
http://www.thepostathens.com/news/greek-week-schedule-changed-due-to-pro-trump-graffiti/article_4bf109aa-fffa-11e5-8de1-63d953025693.html
Ah frat boys: serving the community with boorish vandalism.
Obama “forgives” student debt for 400,000 deadbeats, meaning American taxpayers will be assuming responsibility for those debts.
http://www.zerohedge.com/news/2016-04-12/it-begins-obama-forgives-student-debt-400000-americans
What did these students major in?
How many of them attended state funded public universities?
What is the payroll of non-teaching administrative staff, deans, provosts, et cetera at these state funded universities?
I’m guessing 95% of them are Democrat entitlement voters.
I worked for the business college for 4 semesters as a graduate research assistant. The amount of administrative bloat there was uncalculable.
Teaching students was secondary to increasing departmental budgets.
Obama claims that people with disabilities have a “right” to have their debts forgiven. So every land whale at Wal-Mart with some obesity-related “disability” can now have their debts foisted onto the taxpayers?
http://www.marketwatch.com/story/why-obama-is-forgiving-the-student-loans-of-nearly-400000-people-2016-04-12
The DNC’s Dependency Voter bloc grows in leaps and bounds, while producers and taxpayers have no voice in the system.
The Department of Education will send letters to 387,000 people they’ve identified as being eligible for a total and permanent disability discharge, a designation that allows federal student loan borrowers who can’t work because of a disability to have their loans forgiven. The borrowers identified by the Department won’t have to go through the typical application process for receiving a disability discharge, which requires sending in documented proof of their disability. Instead, the borrower will simply have to sign and return the completed application enclosed in the letter.
It’s a very small change in policy.
Cloward-Piven is real.
No doubt. We’re crashing every system six ways to Sunday. Pensions, healthcare, Obamaphones, education, Medicare, Social Security . . . you name it.
I was visiting my local post office yesterday, waiting for the one guy running the front counter, with 25 people waiting in line, to come over and open the passport office, which is a locked door behind which is a cubicle-walled-off area and a desk with some chairs.
Finally, 35 minutes late, he abandons the front counter (leaving customer service to other workers, moving at the speed of zombies, who all looked like they were special-needs adults) and comes over to help us.
My wife was miffed about having to wait, with our two typically-impatient kids. But I knew better. The ‘now accepting applications’ sign on the front door said it all. So the job market in my area must be pretty good if they can’t even find workers for the post office - in poorer areas, those are THE JOBS to have and people fight for them.
And this is on a normal day. How is government going to help you when things go bonkers? Good luck with that. It’s quite frightening when you really think about it. The Amish, Mennonites, and so on that are self-sufficient will do just fine. The rest of us?
Horse and buggy life always whips the high fructose lifestyle.
FWIW, I have had positive experiences with the local Post Office. As for passports, I renew via mail. When my wife got her first one after naturalizing, she went to the Passport office in Denver.
now do you see why my idea of treating your degree as an asset starts to make sense.
these people maybe disabled, but many still could get a job and earn money with their degree..
if they are truly disabled then taking away/cancelling their college degree wont matter anymore.
now do you see why my idea of treating your degree as an asset starts to make sense.
It makes no sense. A degree is not transferable. I can’t purchase a degree from a down on his luck Harvard grad and claim I went to Harvard. As an asset, it has no value. Can you borrow against it, using it as collateral? No, you cannot.
A degree is not a asset. Giving your degree back for student loan forgiveness is pointless. The bank can’t resell your degree to cover the loan nor can it repossess the knowledge and skills you acquired while at school, however puny they might be.
it is an asset….try applying or getting a job without one. so many companies demand you have one especially government.
i just never will support bankruptcy or forgiveness and you keep your degree, let the employer decide if he wants to hire a deadbeat.
You’re still wrong. Assets can be bought and sold. Degrees cannot, and thus they have no monetary value; hence they are not assets.
Sure, a degree can help you get a job, but so do many other things: knowledge, skills, connections, personality, looks, being a member of a protected class, etc. None of those are assets.
Freight volumes don’t lie - China’s economy is in deep trouble.
http://wolfstreet.com/2016/04/12/china-rail-freight-volume-plunges-2016-2015-economy-even-in-deeper-trouble/
Any coal miners who followed their union’s guidance and voted for hope ‘n change are getting a well-deserved shafting.
http://www.marketwatch.com/investing/stock/btu?mod=MW_story_quote
The sheeple must learn to embrace their oligarch-sponsored fundamental transformation.
http://www.zerohedge.com/news/2016-04-12/george-soros-warns-europe-absorb-500k-refugees-costing-34bn-or-risk-existential-thre
The Keynesian fraudsters at our central banks are only creating more systemic risks and imbalances with their deranged NIPR policies.
http://wolfstreet.com/2016/04/13/negative-interest-rate-absurdity-nirp-reverse-yankees/
How’s that hope ‘n change working out for ya, lower-income ‘Muricans?
http://www.breitbart.com/big-government/2016/04/12/crime-soars-non-whites-worried/
Alexandria County, VA Housing Market Craters; Prices Plunge 13% YoY Countywide
http://www.zillow.com/alexandria-city-county-va/home-values/
More unheeded warnings for the Establishment’s co-opted economists and prognosicators to ignore when they bleat their now-standard “Nobody saw it coming” disclaimer after the next economic crash.
http://www.zerohedge.com/news/2016-04-13/peter-thiel-says-everything-overvalued-public-equities-houses-government-bonds
The “stupidity of American voters” in the words of Obamacare architect Jonathan Gruber, is coming back to bite them as ‘Muricans flee expensive Obamacare programs.
http://libertyblitzkrieg.com/2016/04/12/sales-of-short-term-health-plans-soar-as-americans-flee-expensive-obamacare/
Our NEA indocrination mills are excelling in their mission of turning out half-educated dolts and precious snowflakes incapable of critical thinking or being productive members of society - in other words, the perfect Democrat lifetime dependency voters. Mission accomplished….
http://www.marketwatch.com/story/how-high-schools-are-failing-those-who-earn-a-diploma-2016-04-13
Just more than one-quarter of students who took the ACT college entrance exam this year scored high enough in math, reading, English and science to be considered ready for college or a career, data released Wednesday showed.
That figure masks large gaps between student groups — with 43 percent of Asians, but only 5 percent of African Americans — demonstrating college readiness in all four subjects.
The ACT is a competitor of the SAT and is now the most popular college entrance exam in the country, with about 1.8 million graduating seniors taking the test this year. That number accounts for about 54 percent of the nation’s graduating seniors and was an increase from 1.67 million in 2012.
Overall performance on the ACT has remained virtually unchanged since 2009, with the average score falling slightly this year, from 21.1 to 20.9 out of a possible 36 points. The stagnation raises questions about how well schools are preparing students for future success.
Here in the Centennial state, all HS students, college bound or not, take the ACT. The same is true in Illinois, Michigan, Kentucky, Tennessee and Wyoming; which helps explain why so many takers fare so poorly.
Do the school districts pay the ACT people for that?
I think Denver pays for it, and that they don’t pay full freight.
It’s a lame assumption on Raymond’s part that only kids ready for college are capable of being productive citizens. Only about 1 out of 5 jobs require a bachelor’s degree.
Zillow says the rent on my house should be $2,400 a month. That’s a rate of $28,800 a year.
I am in the 25% tax bracket for federal taxes and a 10% tax bracket for state taxes. My payroll tax (Social Security, Medicare, SDI, etc) is just a bit below 10%. So, total all this up and my tax bracket for wage-earned income above the income of what I already earn is about 45%. This means that in order to clear one dollar of additional income after all taxes are paid I will have to earn about $1.82.
Hence, if I actually had to pay rent for the house I am living in (according to what Zillow says I should be paying) then I would have to earn an extra $52,416 of earned income a year in order to be able to clear, after taxes, the $24,800 that I would need in order to pay the rent for the house I am now living in if I were a renter instead of an owner. Trust me, if this were really the case then this would not happen.
When I look at the lines on Zillow’s chart of home prices in Lakewood the line for my house closely matches the lines for the average home price hence I am going to assume that the rents for the average home in Lakewood are comparable to the rent for what I would have to pay if I were a renter.
Wiki says the “Medium Household Income” for Lakewood for the years 2009 - 2013 is $77,786. If the people who are home owners and homebuyers were to have to actually pay out in rent what I would pay out if rent if I were a renter then they, too, would have to pay out a very hefty chunk of after-tax earned income. I believe that if this were really and truly the case then this, as it would be in my case, would not happen. I do not know exactly what would happen - what rents would end up being paid out - but I do not believe it would be anywhere close to an after tax amount of $28,000.
But the people who compute the nations GDP assume that this is what these people will do and they use these rent figures that they assume would be paid if home owners and homebuyers were really and truly paying out rent and these figures, what they term as “imputed income”, are part of what goes into the computation of GDP.
IMO this is screwy and misleading but nevertheless, there it is.
I made a computational error: The amount of extra money I would need to earn before taxes to pay my annual rent would be $45,136 and not $52,416.
This does not change the fact that if this was the amount of extra money that I would need to earn in order to pay the rent that Zillow says I would need to pay then this amount would not be paid, at least it would not paid by me. And I doubt this is the amount of money that other people would pay.
Yet still half the cost of buying it at current grossly inflated asking prices of resale housing.
I will have to earn about $1.82 to net a dollar”
Scary thing is I think the taxes will go up. I think a time will come when almost all pay will go to taxes. Its going to be very clever people who survive with any extra spending money in the future.
feel the burn
I am in the 25% tax bracket for federal taxes and a 10% tax bracket for state taxes. My payroll tax (Social Security, Medicare, SDI, etc) is just a bit below 10%. So, total all this up and my tax bracket for wage-earned income above the income of what I already earn is about 45%
You should deduct your state taxes when you do your federal taxes. If you did that, 25, 10, and 10 wouldn’t total up to 45%.
It’s obvious what he needs to do……
Move to Kansas, the tax-free Utopia.*
*(As long as you can find a job that pays the same. Or if self employed, enough customers who have any disposable income. And leave the kids behind, if you have any. Unless you are able to find a place to buy/rent in the Blue Valley or Olathe school districts)
Here in TABORland, state income tax is a flat 4.63% of whatever is on line 43 of your form 1040.
So, it’s 42.5% (you save 2.5% on your Feds) instead of 45%.
The math will look very similar.
Murica!
http://www.theburningplatform.com/2016/04/13/like-getting-blood-from-a-squirrel/
House auction in one of the top ten safest communities in California. I “Zillow” looked at the “recently sold” houses in the area and they are around $500k.
1 El Vado Dr
Rancho Santa Margarita, CA 92688
3 beds · 2.5 baths · 1,242 sqft
FOR SALE
$155,000
Zestimate®: $622,124
Est. Mortgage: $762/mo
Get pre-approved
This home is a great investor opportunity. It will be sold on Monday, April, 18. The price displayed is the Opening Bid amount of $155,000. Occupant status varies and buyer assumes responsibility of occupancy. It will be sold “As Is” under the direction and supervision of the Private Selling Officer defined in the judgment. Auction.com will be conducting the live auction. For more information, please visit Auction.com. *APID2138959*
FACTS
Lot: 2,613 sqft
Single Family
Built in 1997
Days on Zillow: 14 days on Zillow
Views since listing: 2,306
All time views: 2,473
13 shoppers saved this home
Last sold: Jan 1998 for $160,500
Price/sqft: $125
FEATURES
Parking: 410 sqft garage
Auction price starts at $155k, which is below the $160k that it sold for in 1998. I figure it will be a bidding war and the buyer will snap it up for $300k.
A woman I work with bought a house win her husband in Lake Forest by auction. They got theirs for under $300k.
…and spend 2 hrs a day in your car commuting to Irvine for work. too many rats in a cage in the OC. The Persian and Chinese are taking it over.
“…and spend 2 hrs a day in your car commuting to Irvine for work. too many rats in a cage in the OC. The Persian and Chinese are taking it over.”
You should have looked at Google maps before you wrote about that silly commuting time.
20 minutes.
Having that toll road probably helps a lot with the commute. How much does it cost?
Using the toll roads 241 and 133 would probably cost a total of $15 a day for one-time usage. But there may be a discount for regular commuters. I seldom use the toll roads myself. It takes me 20 minutes to get to work. Using the toll roads, it takes 16 minutes. Also I notice I-5 is very smooth if I start my day later, 9:00 am to 7pm and leave the office at 7pm.
work till 7pm - how lucky, but the only way to avoid traffic. The 5 is a nightmare.
You of course realize that saying “The 5″ identifies you as a Californian, right?
Reminds me of the SNL skit ‘The Californians’ every time that I hear it!
Didn’t realize it. But the 5 is also in Oregon and Washington.
$5,000,000,000,000 in 2016:
http://www.marketwatch.com/story/americans-pay-more-in-taxes-than-for-housing-food-clothes-combined-2016-04-13
libertarian billionaire Peter Thiel says everything is overvalued: equities, houses, government bonds.
http://www.zerohedge.com/news/2016-04-13/peter-thiel-says-everything-overvalued-public-equities-houses-government-bonds
Got cash and bitcoin?
“Got cash and bitcoin?”
I’m with you on the cash part but as for the bitcoin part I’ll pass.
Cash and cash flow. A good-paying job is a nifty way to get some nifty cash flow.
It used to be that a good ROI was a nifty way to get some nifty cash flow and it still is if you can get it, get a good ROI, but since good ROIs are a bit scarce a good-paying job wins by default.
It wasn’t always this way: It wasn’t all that long ago that otherwise intelligent people were quiting their jobs in droves because they then bought into the idea that whatever asset they had - a house, stocks, whatever - earned more money in the form of a ROI then they were earning at their jobs so they did what lots of people did at the time - they quit their jobs.
And now that their jobs are gone and their ROIs are gone they are a bit stuck for cash, and an environment where people are a bit stuck for cash allows a bit of cash to go a long ways.
They quit or they retired, retired early. IMO retiring early is a form quiting.
The horror stories are beginning to emerge. Ten or so years ago lots of people I knew were retiring from their good-paying cushy jobs at the age of 62 and immediately they jumped into collecting their Social Security AND they cashed out their pension instead of taking their pension in the form of an annuity.
They took a hosing on their Social Security income and they took a hosing on their pension cash out because after just a few years their pension cash out went - poof! So now, only ten years later, they are financially stuck.
Luckily for some of them they were to able to do a reverse mortgage.
(sarc)
No dollar escapes.
At least one guy I knew took the pension cash out instead of the annuity and then he turned this cashed-out money over to a financial advisor for handling and this financial advisor then put this cashed-out money into an annuity.
The end result was an annuity that paid out a lot less than what the original pension annuity would have paid out.
My dad has a pension, which he did NOT cash out. He knows people who did, they bought a car, went on vacation, and put the rest into a basic savings account, earning next to nothing–and now crying poor.
In the meantime, my dad has no debt, a pension, a 401k, taxable savings, and travels several months a year without selling any assets.
Financial literacy and discipline are the best things to teach your kids–it’s the difference between crying poor later in life, and doing whatever you want.
put the rest into a basic savings account, earning next to nothing–and now crying poor.”
They need to read boogleheads and the 3 fund plan
From the first article:
“That’s because they are ‘all-cash’ deals—that is, purchases involving no lender financing—and thus not covered by any of the mainstream BSA/AML programs administered by FinCEN and federal banking regulators.”
Let’s review, shall we?
Withdrawing cash-money from your checking account in $100 bills ==> you should be flagged as a hoarder, money launderer, or terrorist.
Paying for a $2.5 M f**king floating box of air with a suitcase containing 25,000 $100 bills ==> not subject to any banking regulations or flags for wrongdoing.
Sometimes I hate this effing country.
“Withdrawing cash-money from your checking account in $100 bills ==> you should be flagged as a hoarder, money launderer, or terrorist”
A terrorist who takes his girlfriend out to a nice dinner once a week and pays cash.
It’s none of the government’s business whether you use cash or not. Why stop at that $100 figure? Why don’t you say $20, or $5? Put a flag on everything?
Statist.
Bill, I’m sorry I didn’t see this sooner.
This is not *my* opinion. I was referring to recent articles (some linked on HBB) describing central government’s attempt to prevent regular people from withdrawing cash in $100 bills from ATMs (or similar actions).
Consider the possibility that wired funds or a certified check are sometimes called “cash” when there is no loan involved.
Not possibility…reality…they define it in the same statement:
“‘all-cash’ deals—that is, purchases involving no lender financing”
“All-cash” means no loan.
“All-cash” does NOT mean a suitcase full of money.
We once had a potential investor ask if they could invest cash with us. Our initial reaction was “of course, what else would you be investing?”, until we realized he meant $20, $50, and $100 bills.
No thank you. We decided helping a guy launder his money wasn’t something that we wanted to put on our resume.
Yep….and if you are pulled over and carrying a substantial amount of cash the police can seize it despite zero real evidence of any criminal connection AND sometimes keep it even if charges are never brought let alone a conviction obtained…scary stuff.
http://www.cnn.com/2015/01/21/us/asset-seizures/
I like your thinking about jobs. I think you mentioned it first awhile back that it takes a lot of investment income and average annual gain just for someone to match his own salary plus compensation. I’m actually at that point where my investment income and average annual gain on my stock funds match my salary and compensation.
I’m learning how to use a software tool for networking and server-side applications. You are never too old to learn a new skill. This software skill is hot in Irvine, Phoenix, and all over. It will keep me useful in this company and it’s On-The-Job training. My company is big on this.
So far as cashing pensions out the circumstances have been different since QE was enacted, for many plans the cashout amount is inversely related to the prime rate…so because of this when I retired early in mid 2012 I opted to cashout and the amount was waaay more than it would have been if interest rates were normal. Rolled the money into an IRA and it has done well so far, will not need to tap it for years and have been living on 401K money in the meantime (which you can do without penalty if you retire at 55 vs 59.5 for IRA funds)
Another consideration is the solvency of the given pension fund and/or if it is insured by the PBGC…from what I’ve read a few more big pension fund failures will likely make the PBGC itself insolvent.
Anyway, not a simple matter or an easy decision, but FWIW nearly 4 years later have no regrets over cashing out my pension.
I was totally unaware that you can withdraw from your 401k without penalty at 55. I’ll try to keep that in mind. As long as Buddha keeps me alive I will postpone retirement til past 59 and a half.
FWIW you can actually do that anytime during the year you turn 55 but from what I’ve read some companies screw the paperwork up if you retire before your birthday…so I retired in mid 2012 a week after I turned 55 and had no problems.
Tampa, FL Housing Market Caves; Prices Dive 5% YoY As Speculators Slash
http://www.movoto.com/tampa-fl/market-trends/
PHEW!!!!! Dr. Dimon sez no recession for this year!
That was a close one. Carry on.
http://money.cnn.com/2016/04/13/investing/jpmorgan-first-quarter-earnings-oil-loans/index.html
San Francisco, CA Housing Market Craters; Prices Plummet 7% YoY As Housing Inventory Balloons Statewide
http://www.zillow.com/san-francisco-ca/home-values/
ChiComs rule against gay marriage:
http://www.usatoday.com/story/news/world/2016/04/13/judge-rules-against-couple-china-gay-marriage-case/82970876/
So, when are the SJWs gonna start boycotting China? Will they give up their made in China consumer goods?
Housing, Rockstar, housing.
Stick with the data my friend. Stick with the data.
Novato, CA Housing Prices Crater 13% YoY As Mortgage Delinquencies Skyrocket
http://www.zillow.com/novato-ca/home-values/
8005 Rothdell Trl is vacant land in Los Angeles, CA 90046. This 584 square foot vacant land is a 971 square foot lot and features 1 bedroom and 1 bathroom.
I see a TeePee but bathroom ?? The tree ?
https://www.redfin.com/CA/Los-Angeles/8005-Rothdell-Trl-90046/home/7125550
Drive by there on the way home from work. I’ll have to go investigate…
Coppell, TX Housing Market Caves; YoY Gains Evaporate As Prices Plunge QoQ
http://www.zillow.com/coppell-tx/home-values/
I can always tell when things are going full retard in SO. CA. again. Family there falls off the communication radar and sends holiday gift directly through Amazon. Facetime events are rarer and often pine of the latest gadgets there kids got…ipads…fitbits and the next vacation they are taking.
We’re there again folks.
Another giant falls victim to unserviceable debt.
Peabody Coal. RIP
http://finance.yahoo.com/news/peabody-worlds-top-private-coal-061823090.html
think of all the doctors losing their black lung patients. not fair!
That’s alright. I’ve got a fleet of oil burners with drivers that love to roll coal ready to do some crop dustin.
The doctors will appreciate that.
Irrelevant.
Just one of many to come.
The grim reaper arrives you can’t roll the debt over anymore.
When I calculate what I’m worth I never include my cars or house.
They are expenses really
If I were neck deep in a life time of debt and losses on a depreciating asset like a house I’d want to ignore it too.
Which would incite much rage since people *feel* as though they have a net worth in such things.
The real test of an honest personal financial is whether you include an offset for future tax liability when you liquidate assets.
In your case it would be a thorough honest accounting. It’s something you havent the fortitude to accomplish.
“Stunning Photos Of Huge Oil Supertanker Lines Forming World’s Biggest Traffic Jam”
http://www.zerohedge.com/news/2016-04-13/stunning-photos-huge-oil-supertanker-lines-forming-worlds-biggest-traffic-jam
The globe awash in crude as demand for oil craters yet the price fixing and market rigging continues.
The unwinding of a gigantic Ponzi is a bumpy ride.
shorting China is not paying so well….
Jake and Combo - this…..
https://confoundedinterest23.wordpress.com/2016/04/07/all-aboard-rail-car-loadings-yoy-falls-12-35-worst-since-great-recession/
Combo -
Jake beat me to it in re to the oil tanker storage issue we were batting around yesterday - that zerohedge post pretty well sums it all up - esp. those caught short in the contango?
“The Chart Proving That China’s Trade Data Has Never Been This Fake”
http://www.zerohedge.com/news/2016-04-13/stunning-chart-proving-chinas-trade-data-has-never-been-fake
Question: Why they ask are millionaires heading out of Chicago?
Response - The place is a toilet sh*t hole - that’s why!!
http://theeconomiccollapseblog.com/archives/why-are-thousands-of-millionaires-fleeing-chicago-and-other-major-cities-around-the-world
Froggy’s in Highland Park is a nice place to eat. Not nice enough I’d want to live there.
George Carlin on individualists.
http://www.theburningplatform.com/2016/04/13/no-i-in-team/
http://www.nationalpost.com/m/wp/blog.html?b=news.nationalpost.com/news/world/san-francisco-evicts-man-renting-a-400-per-month-wooden-box-in-his-friends-living-room