When Loss Aversion Kicks In
A weekend topic on psychology starting with CBC News in Canada. “What a fabulous buying opportunity. Or is it? After years of sharp price increases, the costs of Calgary houses are finally down nearly four per cent from where they were a year ago. While real estate company statistics show prices and sales continuing to climb across the country, a number of markets have turned, offering Canadians a useful experiment in the behavioural economics of the housing market.”
“About a year and a half ago, I wrote a piece saying that house prices could fall like oil. The point was not to predict a property market crash, it was merely to remind us that the smartest people in the oil industry failed to predict the current tumble in energy prices that now seems so obvious. At the time, the response from many was that a property market crash could not happen, simply because there were so many people waiting to get into the market. As soon as prices declined, those hungry house hunters would respond by snapping up anything that was offered.”
“Housing is considered to be what’s called a ‘lagging indicator,’ meaning that real estate markets only respond long after the economy has started to go sour. And according to Calgary-based behavioural economist Robert Oxoby, that’s at least partly due to something behavioural economists refer to as ‘loss aversion’ by current home owners.”
“Behavioural economists love to point out when conventional market rules are overturned by psychology. Especially when human behaviour makes us act contrary to our own interests. Normally, economic theory tells us that when things get cheaper, we buy more. When things become more expensive, we buy less. In the property market, that often turns upside down.”
“‘There’s a lot of herd behaviour here. We behave like cattle,’ said Oxoby, a professor at the University of Calgary. ‘People see the prices going up, and they go, ‘Oh, shit, I better buy a house now before it gets worse.’”
“It is on the way down when loss aversion kicks in, this time hurting people who want or need to get out of the market. ‘When the value of that house is high, they tend to view that as a gain,’ said Oxoby. Loss aversion makes sellers refuse to sell, preferring instead to wait until house prices bounce back again. The problem arises when that bounce-back fails to happen. And the people it hurts most are those who bought just before the downturn began, when the market was at a peak. ‘So, what happens is as prices start to fall even more, people get trapped with those big assets that they have a lot of debt on but aren’t worth as much anymore,’ said Oxoby.”
“For prospective buyers, suddenly, the challenge is exactly opposite from what it was a few years ago. Instead of being forced to buy before prices become unattainable, they wait, wondering when the market will hit bottom, fearful that further declines will wipe out their down payment and leave them owing more than they own.”
“There is only so much people in other parts of Canada can learn from housing markets devastated by falling energy prices. ‘One of the things that was supporting Alberta home prices was the fact that our incomes were 40 to 50 per cent higher than the rest of Canada, and that’s changing very rapidly,’ said long time investment adviser and real estate guru Hilliard MacBeth.”
“But property owners and prospective buyers elsewhere would be wise to watch and see if, indeed, the plunge is nipped in the bud by bargain hunters or whether prices continue to fall for a while yet.”
From Star News Online in North Carolina. “The Wilmington region was one of three markets in North Carolina and 19 nationwide that saw homes sell for less than owners paid for them, according to a RealtyTrac report. Wilmington owners sold their homes for an average of $10,250 less than what they purchased homes for. Wilmington’s average losses were the second worst in the state after Winston-Salem, which led the country in terms of dollar losses at $12,750, according to the report.”
“The Durham area saw the state’s highest average dollar gains, at $27,750, while San Jose, Calif., saw the highest average gains across the country, at $312,500, the report said. According to the Wilmington Regional Association of Realtors (WRAR), the average sale price in the Wilmington region in March was $246,665. March’s average price was still below pre-recession levels — the average sale price in March 2007 was $260,644.”
“Don Harris, a broker with Intracoastal Realty and president of WRAR, didn’t dispute the RealtyTrac report, but said he believed the report was more of a reflection on the inflated housing bubble market of a decade ago than it was a reflection of today’s housing market. He said that, in 2006 and 2007, housing prices were increasing by 15 or 20 percent annually.”
“‘The market in ‘07 was out of control,’ Harris said. ‘What we’re seeing now is housing prices trending up. We’re seeing locally that the market is robust’ but not out of control.”
Loss aversion is the new black. Irrational Exuberance is so 1996!
If values can become detached from fundamentals and instead become attached to prices then the way to increase values is to increase prices.
Magic!
All it takes for this to happen is to convince a population of lemmings (who have access to money) that the price of a house (or a stock or whatever) is the same as the value of the house and hence an increase in price is an increase in value.
What is it that that Mr. Banker guy says? Dumb ‘em down, and profit?
Dumb down the lemmings and then allow them run loose so they can participate in bidding wars.
No money? No problem. Three-percent down will get you in, and getting you in at a higher price resets the price, resets the price at a higher price and this higher price resets the values.
It resets the values for the house that is sold and it also resets the values for all the comparable houses whether they are for sale or not.
More magic!
But when the market runs out of magic then that pesky fundamental values thing will kick in and values will then jump ship from being determined by prices to being determined by fundamentals.
Combotechie: But when the market runs out of magic then that pesky fundamental values thing will kick in and values will then jump ship from being determined by prices to being determined by fundamentals.
And fundamental value, ISTM, equals “how exactly does it improve the life of the human”.
• When prices are rising, it creates the possibility of being a speculative asset, yielding a net currency profit upon sale. Currency allows people to improve their lives in a myriad ways.
• When prices are falling, the item returns to the value it provides as a result of consuming it.
And this is measured in currency. And currency is a measure of human effort required to obtain that currency. There are 7 billion different measures of effort-to-obtain-currency out there, one for each human. 7 billion meanings for currency.
For Tyco executive Dennis Kozlowski, it took little effort to obtain each individual unit of currency. Hence he was willing to spend 10000 units (dollars) for shower curtains.
For a minimum wage worker moving items in a warehouse, it takes a great deal of effort to obtain a unit of currency.
And buying things with debt obscures that currency-as-a-measure-of-effort that buying with currency all-at-once would provide.
It’s a type of “financial innovation”, which we discussed years ago.
Buying with debt allows the unaffordable due to the price to become affordable due to the breaking up of the price.
Without debt the unaffordable would remain unaffordable and the price would reflect this fact, meaning the price would never rise up above the point of unaffordability.
But with debt the otherwise unaffordable price can be divided up into chunks, affordable chunks, and if each of these chunks of the price is affordable then the total number of these chunks that represent the total price could then be paid for, paid for one at a time.
So what debt does is it changes a buying event into a buying process, a buying process that may stretch out over a period to time that is measured in decades. The buying event is not doable because the price is not affordable; The buying process is doable because the stretch of time allows the price to somehow become affordable. And if a price can be made affordable then the price can rise up way beyond the price of what would otherwise be unaffordable.
But money that is contracted to making a stretch-of-time purchase doable today will not be available to be spent in the future due to today’s contracted commitment (in theory at least).
What we have today is a housing market whereby the commitment to paying a price counts the same as the actual paying of the price. This situation creates some interesting dynamics, one of these dynamics has to do to what can be allowed to happen to the price.
A commitment to paying a price is not the same as paying a price but the commitment to paying the price changes the price in the same way as if the price was actually paid.
If the commitment to paying a price is associated with a down payment then this down payment is all that is needed to change the price at the time of the sale. And once the price is changed at the time of sale this new price becomes the official price, it becomes the going price for that house and it becomes the going price for all the comparable houses.
But the commitment price does not actually have to be paid in order for the official price to change, it only has to be committed to be paid. If the down payment on a house ends up being the only payment on the house then the official price of the house remains the same. Same goes for the prices of the comparable houses, their prices - their values - remains the same.
This makes an interesting dynamic in that the financial pain involved with making a commitment to paying a price is not anywhere close to the financial pain of actually paying a price so the resistance to paying high prices is weakened, and because the resistance to paying high prices is weakened the direction of prices will be upward.
So, prices are set at the margin, and the ability to borrow money can affect prices.
That’s always been the case, right?
Marginal thinking Lola. Study up.
US Housing Demand Plummets To 20 Year Low
http://2.bp.blogspot.com/-yX5B5Hn95bQ/VYC3Wr6ihBI/AAAAAAAAj7I/alOslZa-cK8/s1600/MBAJune172015.PNG
BBBB!
Brick Back Bits Bucket!
Too much work. RageCages are far more effective.
The beatings will continue until morale improves.
Region IV
Here come the Boulder food police:
http://www.thedenverchannel.com/lifestyle/health/boulder-ballot-measure-proposes-tax-on-soda-and-sugary-drinks
“If you like your one third of adult population obese, you can keep your one third of adult population obese”
I see fat people.
Paying for Medicare for tens of millions of obese baby boomers is gonna cost alot of money. Alot of money.
Tax fat people!
If u smoke lots of pot and get depressed do taxpayers pay for your shrink via aca?
I pay enough tax. Likely more in a single month than you in an entire year.
Sure, and Hollywood starlets brawl over you outside your penthouse….
Sounds like you need a better tax adviser…
Rays Rage? Nice.
Mom’s tax on cheetos isn’t really a tax. She just wants you to pay for all the cheetos you eat.
Don’t be a lola
“Tax fat people!”
Tax short people!
Short people got no reason
Short people got no reason
Short people got no reason
To live
They got little hands
And little eyes
And they walk around
Tellin’ great big lies
They got little noses
And tiny little teeth
They wear platform shoes
On their nasty little feet
Well, I don’t want no short people
Don’t want no short people
Don’t want no short people
Round here
Short people are just the same
As you and I
(a fool such as i)
All men are brothers
Until the day they die
(it’s a wonderful world)
Short people got nobody
Short people got nobody
Short people got nobody
To love
They got little baby legs
And they stand so low
You got to pick ‘em up
Just to say hello
They got little cars
That got beep, beep, beep
They got little voices
Goin’ peep, peep, peep
They got grubby little fingers
And dirty little minds
They’re gonna get you every time
Well, I don’t want no short people
Don’t want no short people
Don’t want no short people
’round here
Most jokes have two parts, the set up and the punch line. Here’s an example:
The set up …
“The Denver Post reports that the coalition Healthy Boulder Kids has filed its intentions to pursue the measure, which would require distributors of soda to pay a tax of up to 2 cents per ounce on beverages with at least 5 grams of sugar.”
The punch line …
“Consumers would not pay the proposed tax.”
If you go without added sugar long enough, an apple tastes very sweet and satisfies the loss of your sugar habit. A variety of vegetables every day have a variety of flavors that you start to enjoy. Kind of like a well-written song. The best thing about eating whole foods is your sense of well being is better. Your clothes are looser. You move faster. Careful resistance training of three days a week for an hour a day, with long walks or casual biking every day are important.
Testify, Brother Bill.
WINNING.
And when you stop putting dressing on your salad all the vegetables taste so much better.
I assume you’re not talking about the vegetables who voted for hope ‘n change.
A little balsamic vinegar and extra virgin olive oil won’t hurt, but that is ALL you need. Forget about all the other crap they lard into processed salad dressings.
Soft drinks don’t quench my thirst, water does.
Housing inventory for a basic home is really low in east Ventura County (So Ca). My neighborhood is running $500K-$700K for a basic, nothing special, circa 1967 home. The Ca Homeowner’s Bill Of Rights is why. Why pay for housing, when you can live there for free. The banks are on a leash.
I like it in Valencia, a bit further east. It is kind of like the Mission Viejo area.
Valencia smoggy compared to Ventura co. I used to work there that area got trashed during the Northridge quake.
“My neighborhood is running $500K-$700K for a basic, nothing special, circa 1967 home.”
I couldn’t imagine paying more than $160k for a 3/2 rancher, and it would have to be in restored condition. Hence, SoCal is simply beyond my captivity/pain threshold.
True about the prices. Having lived in a low cost state and California, the cooler climate in California is a big thing for me while he freedom in Arizona is a big thing for me. I’d have to rent a summer cottage in Flagstaff to really not miss the Phoenix weather when I move back.
Caramelized roasted veggies are sweet and delectable, with no need for added sugar. (Posted from Utah, ground zero for consumption of foods with copious amounts of added sugar.)
its also hard to get too fat in NYC, unless you are declared disabled (access-a ride) most every store will deliver which we found out after my car had some major problems. but none of the stores have on line ordering yet, so you still have to get there to pick out your food, or do your laundry
Nearly half of California adults, including one out of every three young adults, have either prediabetes — a precursor to type 2 diabetes — or undiagnosed diabetes, according to a UCLA study released today. The research provides the first analysis and breakdown of California prediabetes rates by county, age and ethnicity, and offers alarming insights into the future of the nation’s diabetes epidemic.
Hook data is to carts,they get thin fast
Less diabetis and carbon
They added a new tax (or increased it on some items…not sure) for confectionary stuff here in Maine. Stuff like granola bars and chocolate baking chips get hit with it now:
http://www.taxrates.com/blog/2015/09/04/maine-sales-tax-changes-january-2016/
Seems like either social engineering/ vice tax or just an easy tax hit on the wallet since the items are not necessity things. You don’t notice the tax on the food bill when it is 10 cents at a time, but the millions of dollars it will rack up, what does that go to?
“‘There’s a lot of herd behaviour here. We behave like cattle,’ said Oxoby, a professor at the University of Calgary. ‘People see the prices going up, and they go, ‘Oh, shit, I better buy a house now before it gets worse.’”
Don’t be a bovine brain. Just say ‘No’ to used home sales people.
“Just say ‘No’ to used home sales people.”
Shut your mouth!
I’ve got a good thing going for me here and I don’t need a mouthy puke such as yourself ruining it.
There there, Mr. Banker. We both know the supply of indescribably stupid sheeple is inexhaustible, as demonstrated by their votes for hope ‘n change or the even more ghastly Establishment GOP “alternatives.” So your “Dumb ‘em down and fleece ‘em” business model remains intact and viable. You’re holding all the cards, my friend.
The cattle of America are filing a class action defamation lawsuit against Mr. Oxoby, point out the FBs who pile in at the peak of a housing bubble are displaying behavior more akin to sheep.
“There’s a lot of herd behaviour here. We behave like cattle,” said Oxoby, a professor at the University of Calgary.
“You are more likely to hear from your buddy that he is on Viagra than that he has credit-card problems,” says Brad Klontz, a financial psychologist who teaches at Creighton University in Omaha, Nebraska, and ministers to individuals with financial issues.
The real 1%.
Guaranteed by the property taxes on your house. Which if you fail to pay no matter how much they are increased another union goon with a gun will come and take it.
Not even a VP at Goldman Sachs has that kind of power.
——-
New housing boss makes $167k on top of $163k pension … in same city
NJ Advance Media for NJ.com | April 19, 2016
Stanley Sanger’s retirement didn’t last long.
Neither did his time away from Union City, where he was born and raised, then worked for 41 years as a teacher, school principal and, not quite finally, as superintendent of schools.
After being credited with leading a turnaround of Union City’s largely working class, urban district, Sanger retired after the 2013-14 school year, intending to live off his $167,000 school pension, and devote more time to his family and his fishing pole.
But then came some unexpected personal demands — which Sanger preferred to keep private — and when the executive director position at the Union City Housing Authority opened up with the retirement of Virgilio Cabello, Sanger applied for the job and got it.
There should be an exemption where if you go back to work, then your pension stops paying out and only starts making payments again if/when you quit that job.
Damn double dippers!
“But property owners and prospective buyers elsewhere would be wise to watch and see if, indeed, the plunge is nipped in the bud by bargain hunters or whether prices continue to fall for a while yet.”
Completely missing from the story is the role of government intervention to prevent home prices from ever fully reverting to pre-mania normalcy.
“Instead of school-yard sandwiches, why would some of the most powerful people on the planet resort to driving house prices up in the shadow of what we just went through?”
Exactly what I was getting at. But I am additionally intrigued by how the economics profession systematically ignores the government’s role in sustaining the mania.
Perhaps some behavioral economist could offer an explanation?
Not everyone is ignoring it:
March 19, 2016
The Promotion Of Policy To Seek Riskier Products
A Saturday post on this recommended editorial in the New York Post, written by Paul Sperry, who is ‘a former Hoover Institution media fellow and author of “The Great American Bank Robbery: The Unauthorized Report About What Really Caused The Great Recession.”
“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.’”
http://thehousingbubbleblog.com/?p=9573
I read a headline the other day saying we live in an age of propaganda. There were plenty of people who said there was a housing bubble. Shiller said it in 2001. Compare how he is treated by the media to Dent, or Keane. Shiller is the go to bubble guy. No one says, “you were crying wolf way early.” Instead, he’s considered the authority on the subject.
This statement that the bubble has been created to make the economy look better is terrifying. Because it involves the idea that this is all we have to fall back on. No Keynes or Friedman or capitalism or socialism. Pure economic heroin, it’s all we have.
Wall Street Veterans Bet on Low-Income Home Buyers
By ALEXANDRA STEVENSON and MATTHEW GOLDSTEIN
Goldman Sachs alumni and others are buying homes that were foreclosed on during the financial crisis and resold to people who didn’t qualify for traditional mortgages.
http://nyti.ms/269zV3q
I didn’t mean to suggest everyone is ignoring the government role in sustaining the mania. I was mainly referring to academic economists, who seem to systematically avoid acknowledging the role of government intervention.
Quite a mess obama is going to leave for a President Trump
—————
Team Obama is setting us up for another housing-market collapse
NY Post | 9 Apr, 2016 | Post Editorial Board
The Obama administration is doing its best to give the nation another mortgage meltdown.
As Paul Sperry recently noted in The Post, Team Obama has pushed mortgage lenders to offer home loans to folks with shaky credit, setting up conditions for another housing-market collapse. Wasn’t the last one bad enough?
Credit scores of approved borrowers, for example, have been trending down, even as their debt levels have grown.
The Federal Housing Administration and government-sponsored “independent” lenders Fannie Mae and Freddie Mac have been demanding lower credit standards — just as the feds did starting under President Bill Clinton, in pursuit of the same “affordable housing” goal.
Some borrowers need only put 3 percent down to get a Fannie Mae loan — even if the downpayment is a gift. Fannie also has started up a new subprime-lending program.
The Obama administration is doing its best to give the nation another mortgage meltdown.
I guess Obummer figures he was served a giant economic sh!t sandwich when he became president, might as well leave a fresh steaming one for his successor.
‘might as well leave a fresh steaming one for his successor’
Wow, such clarity of thought and well mannered too.
I thought we weren’t constrained by political correctness anymore.
You as a libtard are unconstrained by reason or facts.
You as a libtard
You as a repeating robot are too boring to consider. So please chant one of your robot insult lines, Mr. Roboto. One we’ve all heard a thousand times before.
‘I thought we weren’t constrained’
How about applying some thought to the situation? Instead of school-yard sandwiches, why would some of the most powerful people on the planet resort to driving house prices up in the shadow of what we just went through? These are the things I consider. Is it like you said, just make a mess? I can’t imagine that. So why? Why this drip drip of loosening loan standards? The article above has a guy saying “The market in ‘07 was out of control”, yet prices are just a few thousand away from that period.
There must be something really important going on for the government to make these policies. To me it seems very reckless.
“I thought”
I had an old line coach who would have stopped you right there and screamed…
DON’T THINK!!
why would some of the most powerful people on the planet resort to driving house prices up
So they can leave office with a rising economy rather than a recession, which they leave for the next guy. W tried to do it, but the timing was a bit off.
“So they can leave office with a rising economy rather than a recession, which they leave for the next guy. W tried to do it, but the timing was a bit off.”
You’re thinking again.
At this point you would be on the other field by yourself running gassers.
TSC Super Cardio: Gassers - YouTube
http://www.youtube.com/watch?v=2G5_QoAkDDs - 341k -
It was fear of a black president that crashed the economy last time, remember?
Ben Jones: There must be something really important going on for the government to make these policies. To me it seems very reckless.
I think it’s just lucrative for the donors and has no impact on politicians’ re-election chances.
I said years ago that they would only stop when they had to. I didn’t know what form that “had-to” would be, but today I realize it’s through politicians losing their jobs en masse.
The really important thing that goes on is that the big donors are kept profitable which allows them to kick back money to politicians, which helps them remain in office, and provide sinecures for them when they leave.
Perhaps we should ask the people who give folks like the Clintons and the Bernankes suitcases full of money for short stand up comedy gigs. I’m suspecting it isn’t out of pure love and adoration.
‘lucrative for the donors and has no impact on politicians’ re-election chances’
There was a period in 2007 when I was posting about many billions in write-downs every business day. Wall street, insurers, pension funds, it touched almost everything. Bush was mightily blamed. That’s what makes this gambit seem crazy. Do they think it will have a different outcome? We never had to resort to these asset bubbles in prior decades. Japan is the model. Never mind Japan is a rolling 20+ year debacle. The Chinese did the same thing only much bigger. QE, negative interest rates, the distortions are mammoth. I’m really concerned about what’s ahead.
Blue Skye: Perhaps we should ask the people who give folks like the Clintons and the Bernankes suitcases full of money for short stand up comedy gigs. I’m suspecting it isn’t out of pure love and adoration.
The contributions, from what I’ve read, are considered an investment.
Ben, I too am really concerned about what’s ahead.
Real problems are not being addressed (social services, health care, economy, distorted housing, counterfeit printing, race to the bottom on international prices, etc).
We are sitting on a massive revolution with photonics without a clear route already mapped out. Who will win that run?
Automation is really thundering down on us now. Taxes are taking away the capital to drive our realignment. Will we win - or?
Instead of having a focus we are acting like sheep being entertained (and controlled) by a circus of clowns.
“I’m really concerned about what’s ahead.”
Me too.
There will still be 10,000-early boomer retirees per day until 2029, and the workers they are counting on to fund their pension promises are saddled with historically high debt levels and have lived with flat income growth for the past ten years. It’s not going to be pretty.
rms
Another interesting problem to address. When you add to it job losses due to massive automation -
You gotta love the honesty. It’s never about hope and chains. It has always been who can leave the bigger steaming one.
The moral hazard facing any President is the temptation to hyperstimulate the economy while in office, leaving the next guy in line for a crash and mopup operation.
“Some borrowers need only put 3 percent down to get a Fannie Mae loan — even if the downpayment is a gift. Fannie also has started up a new subprime-lending program.”
So each dollar down will support $33.33 dollars of the price. Throw another dollar at the down payment and you get to up the price by another $33.33.
One extra dollar down produces $33.33 of additional price. This means that in a price-equals-value world one additional dollar down will produce $33.33 of additional wealth - additional wealth not only for the house that is being bought but also additional wealth for every house that is comparable to the house that is being bought.
If there are a hundred comparable houses then this extra dollar down will - presto! - it will produce $3,333.33 of additional wealth.
Is this a great country or is it not?
2banana’s Rule.
Don’t buy a house in a place with long term democrat rule with insane public unions and gun control
——————-
Another Chicago Record: 1,000 Gunshot Victims In Shortest Time In Decades
zero hedge - 4/23/2016
In an article earlier this month, we said that “Chicago is disintegrating” amidst soaring gun violence and homicides, in large part due to the deteriorating economic situation. Unfortunately, we now have an update to the state of things in the windy city, and it’s getting uglier.
A 16-year old boy who was shot in the knee marked the 1,000th gunshot victim in Chicago this year, as the city returns to a level of shootings not seen since the 1990’s. This past Wednesday, Chicago reached 1,000 victims months earlier than the previous four years. The number of shooting victims year-to-date is up 66.7% from 2015, and 107% from 2014.
At 1,000 victims, this year’s shooting toll exceeds last year’s total at this point — about 600 victims — by more than 66 percent. At this point in 2014, 483 people had been shot.
Then again, if Obama’s “recovery” continues at this pace, we would not be surprised to see a record homicide year in Chicago soon.
B…b…but Chicago has the strictest gun control laws in the nation. All the libtards assure us this is a gun control issue, not a thug control issue. So this outcome is simply inconceivable!
Cloward-Piven is real.
You nailed it! I have been listening to a lot of NPR lately, you know, the network that coined the term “gun violence”. And they have done two stories on the shootings in Chicago in recent days, and color me shocked, but guess which term NEVER got used in either story? Nope. Not even once.
No mention of Chicago’s gun laws either, since that would completely expose their utter and abject failure.
So, what is NPR’s go-to bad guy for Chicago?
Any guesses?
Oh come on, you know what the answer is . . .
Yes, of course, it is THE POLICE’s fault!!!!
Cloward-Piven is indeed real.
“Normally, economic theory tells us that when things get cheaper, we buy more. When things become more expensive, we buy less. In the property market, that often turns upside down.”
That’s not an economic theory. That’s TWO economic theories. For goods which people expect to entirely consume, people buy based on present price. For good which people expect to sell later, people buy based on perceived future value.
“That’s TWO economic theories.”
When people are able to judge the value of something via fundamentals then its price cannot get too far away from these fundamentals because in such a market the price will rise to a point whereby people will simply not pay it.
But when people are not able to use fundamentals to judge values then they need to use something else, and this something else is usually the price. Such a market will usually chase out most logic-driven buyers and hence the only buyers that will be left in such a market will be the emotion-driven buyers - buyers whose buying decisions are driven by prices and price increases.
If the market is flooded with emotion-driven people (aka lemmings) and the sale goes to the highest bidder then the sale will go to the lemming that is driven the most by his emotions. This is the lemming the sets the going price, the going price that is rising, the rising price that is the attraction that draws other lemmings into the market, draws other lemmings into the bidding process.
Because there is no shortage of lemmings - buyers driven by emotions rather than by logic - the only way to stop the actions of the lemmings is to cut off their access to money.
Or, another way to look at it, if you wanted to get the emotion-driven lemmings to act on their emotions then all you have to do is allow them access to money. And this is what appears to now be the case.
Because there is no shortage of lemmings
I like how you pretend to look at things very logically, while basing a lot of your logic on ridiculous assumptions and generalizations.
Are you suggesting that there is a shortage of lemmings?
‘Or, another way to look at it, if you wanted to get the emotion-driven lemmings to act on their emotions then all you have to do is allow them access to money. And this is what appears to now be the case.’
Almost a parody, but it is real:
https://www.youtube.com/watch?v=QlRm6Y5iVfw
The lower gas prices (down from $4 a few years ago to $2.80 here) don’t make me drive more. They make me save more. It is a great feeling to have not sold any stocks or stock funds the last eight month just to maintain zero debt and normal expenses. But it’s like reaching for the brass ring. Just when I congratulate myself, in December my PCP announced a $2000 annual surcharge on top of my insurance (concierge fees) just for normal Doctor services I used to get just with a copay. That includes complete physical exam and nutritional guidance. So the pub next door and Total wine and my lunchtime food delivery services are wondering what the hell happened to me. When costs go up they force other spending to go down. It’s a battle I am stubbornly going to win.
$2000 just for the privilege of being their patient? Time for a new Dr don’tcha think?
Agreed. But my assumption is that they are all going to be like that. So that is why I am brown bagging lunches and drinking free coffee at work. This latest physician hardly did a thing anyway. The most he’s done was order a EKG, which I was grateful for.
Agreed. But my assumption is that they are all going to be like that’
yea happened to a co-worker. Its why I have Kaiser which has doubled my doctor visits to 20 buck co-pay.
Can’t get away from medical inflation and higher taxes to pay for government pension shortfalls.
The fact that bothers some people is the perception that the debt slaves are enjoying their serfdom and getting away with it. The money printing and bail outs would only bother the people who have skin in the USD. The rest of us have a lot of assets out of that currency and are stacking more. Living below my means and not keeping up with the Jonses draws me snide remarks that life is short. But how many of those people are in debt or depend on continued ZIRP?
Should section 8 renters be allowed to rent to own?
“Should section 8 renters be allowed to rent to own?”
Why would they want to own? They have a good thing going for themselves as it is.
“Why would they want to own?”
Well that was my first thought, but a section 8er posed the question to their landlord this week in Region IV.
It might work for the Section 8er if the rent subsidy he is now getting somehow got converted into helping him out on the payments.
+1… Would want to _give_up_ the subsidy—but if they could convert that into a mortgage-payment subsidy, I bet they would be all over that.
Careful, Combo—you probably just gave Mel a new idea…
Would want
Wouldn’t want.
When we have an unholy alliance between the collectivists and their oligarch masters, all sorts of unsound financial chicanery is possible because taxpayers will backstop any and all banker losses.
Will oil companies be the next recipients of taxpayer bailouts? Go to open secrets dot org to see how many congress critters they rent to own, and the answer is self-evident.
http://www.businessinsider.com/oil-industry-facing-full-blown-cash-crisis-2016-4
How could we stop oil companies from owning congressmen?
Remember when the German sheeple were swooning over Obama, while electing an uber-globalist, Angela Merkel, to “lead” them? Oh my, how the worm has turned. Nothing like a million agents of “fundamental transformation” running around your formerly prosperous and orderly country to wake up the brain-dead.
https://www.yahoo.com/news/trade-deal-foes-plan-major-german-rally-eve-052441697.html
Nothing like a million agents of “fundamental transformation” running around your formerly prosperous and orderly country to wake up the brain-dead.
And for the Germans “order” is everything. There is a “right way” to do things and if if you can’t do them the right way, then you don’t do them at all.
The undisciplined invading hordes (even the ones who don’t rape) must be driving everyone insane with their lack of order and discipline.
“There is a “right way” to do things and if if you can’t do them the right way, then you don’t do them at all.”
Unless you’re Volkswagen.
NIRP is coming, unless the bond vigilantes force the hand of our Keynesian central planners at the Fed. The Oligopoly is running out of tricks to keep the retail investor muppets “invested” in their pump & dump markets.
http://www.businessinsider.com/r-doublelines-gundlach-says-negative-interest-rates-are-a-horror-2016-4
It would seem Italian crime syndicates don’t appreciate the competion flooding onto their shores from Fundamental Transformation.
http://www.dailymail.co.uk/news/article-3546081/Mafia-declares-WAR-migrants-Sicilian-gangster-shoots-innocent-Gambian-head-amid-soaring-levels-migration-Italy-mayor-saying-Sicily-s-capital-no-longer-European.html
We have now officially entered Banana Republic territory. RIP, rule of law.
http://www.zerohedge.com/news/2016-04-23/fbi-may-leak-clinton-email-probe-if-doj-blocking-continues-grassley-warns
When the Fed-induced dollar collapse finally comes around, things are going to get grim indeed.
http://www.321gold.com/editorials/thomas/thomas042316.html
Felons voting for felons. You go, McAuliffe!
BTW, no country, no organization survives this sort of thing. Long hot summer, followed by a short, nasty and brutish end.
He’s looking for that final push to turn Virginia from purple to blue.
Then, with some gerrymandered redistricting, it won’t matter what the people think.
BTW, no country, no organization survives this sort of thing. Long hot summer, followed by a short, nasty and brutish end.
This looks like a prediction that America will be finished this summer. We’ll see in a few months if that happens.
Also, neighboring Maryland just expanded felon voting rights, a measure vetoed by the Republican governor but easily overridden by the overwhelmingly Democratic legislature.
Meanwhile, the 10-year bond keeps ticking higher. This is going to complicate Yellen’s plans to institute NIRP.
http://www.marketwatch.com/investing/Bond/TMUBMUSD10Y?countrycode=BX
It’s pretty obvious the Saudis have a nuke… probably built in the US and given to them in a big bright bow by the Bush family.
Odd how the MSM won’t touch stories like this.
http://www.infowars.com/isis-selling-sex-slaves-to-wealthy-buyers-in-saudi-arabia/
Yeah, Alex Jones has his own reporters running around the Middle East.
Irrelevant.
Remember your meds, Housing Analyst.
You are only allowed one new handle per week.
I’m adding this one to the list.
Except that’s not HA. It’s goon.
No. Apt401 is Rio.
Maybe my memory is failing, but didn’t the China crash already commence last summer? It seems odd to predict what is already underway.
Opinion: Is George Soros right about the coming crash in China?
By Craig Stephen
Published: Apr 22, 2016 12:15 p.m. ET
Let’s take a look under the hood to see where the financial stress is building
…
It seems odd to predict what is already underway.
It’s not odd at all—in fact, it’s the easiest way to be accurate in your predictions.
Point taken…and made by myself right here years ago.
I knew it sounded familiar…
Ft dot com
China Economic Slowdown
China debt load reaches record high as risk to economy mounts
US-style credit crunch or Japan-style grinding malaise seen as increasingly likely
The Guangdong Tower seen in Guangdong Guangzhou, Guangdong Province, China, 18 April 2016. The Canton Fair, officially called the China Import and Export Fair, is the largest trade fair in China. EPA/FREDDY CHAN
April 23, 2016
Gabriel Wildau in Shanghai and Don Weinland in Hong Kong
China’s total debt rose to a record 237 per cent of gross domestic product in the first quarter, far above emerging-market counterparts, raising the risk of a financial crisis or a prolonged slowdown in growth, economists warn.
Beijing has turned to massive lending to boost economic growth, bringing total net debt to Rmb163tn ($25tn) at the end of March, including both domestic and foreign borrowing, according to Financial Times calculations.
Such levels of debt are much higher as a proportion of national income than in other developing economies, although they are comparable to levels in the US and the eurozone.
While the absolute size of China’s debt load is a concern, more worrying is the speed at which it has accumulated — Chinese debt was only 148 per cent of GDP at the end of 2007.
“Every major country with a rapid increase in debt has experienced either a financial crisis or a prolonged slowdown in GDP growth,” Ha Jiming, Goldman Sachs chief investment strategist, wrote in a report this year.
…
Note the article posted above appeared in yesterday’s Financial Times. Not to suggest this is a new story; rather that it is still current news.
“Every major country with a rapid increase in debt has experienced either a financial crisis or a prolonged slowdown in GDP growth,”
I’m sure it’s different in China.
How to get underwater with an all cash purchase of a $35,000 house
NYT this morning:
DETROIT — Many residents of high-cost areas entertain the dream, at least occasionally: Give up the rent or mortgage grind, liquidate assets and start over someplace cheaper, perhaps one that could use a few spirited new residents.
Amy Haimerl and her husband, Karl Kaebnick, fell hard for Detroit and thought they could make their own dream of financial freedom come true when they moved here in 2013. But this is what happened: They put more than $400,000 (including all of their retirement savings) into a 3,000-square-foot, 102-year-old home in the city’s West Village neighborhood that was most recently appraised at just $300,000.
Here is a link to the article and the comments are well worth a look too. (the NYT moderates them unlike many papers so you don’t have to wade through 90% garbage….kind of like reading the comments here with the help of the Joshua Tree extension)
http://www.nytimes.com/2016/04/23/your-money/in-a-big-hole-for-a-detroit-house-but-happy.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=second-column-region®ion=top-news&WT.nav=top-news&_r=0
the problem is that the buyers seem to think that what they buy are things that should be worth more than what they paid for it.
And they don’t realize that when someone thinks that their house is worth less than it was bought for, it does not affect their life.
As an appraiser, years ago, I used to tell the buyers that it should not affect their opinion of the purchase just because I say it is worth less than they want to pay for it.
If they wanted it before I appraised it, why should they not still want that home that they put a deposit on.
they were happy if I was high, and upset if I was low.
Very strange that my opinion should change their view of the decision that they made.
Friends just purchased a home for $550,000 in Rancho Mirage. They felt they got a deal because the sellers paid $650,000 in 2006.
It’s a falling knife in the desert.
A co-worker might finally have a buyer for his Detroit home that was a bank owned repo when he bought it. If the deal closes, fingers crossed, he also has to bring $6k to the closing table. FWIW, he has been renting it out through several shady property management firms, and one tenant went ape on the place when his wife found another pony to ride.
Buying “there” was the biggest mistake of his life, he says.
If you want a home with modest expenses, just as a place to stash your stuff and stay out of the weather, then you hope it is not “worth” too much. Taxes are an expense.
There are certain pockets of Detroit that are very nice and will likely continue to be nice. But they are few and far between.
The long-term viability of Detroit is still in question. Personally, I think they will have to dramatically shrink the city limits, leaving many outer and less-dense neighborhoods in newly-unincorporated areas. This is problematic due to the water and sewer infrastructure, which the city cannot afford to maintain.
I live in an agricultural area of the Columbia Basin. People either have “reverse osmosis” systems, or they buy bottled water. Even the Mexicans buy bottled water… shunning tap water for consumption or cooking. Why the Negros are making such a fuss is beyond me since their SNAP benefit includes bottled water.
their SNAP benefit includes bottled water.
Sure, “includes”—but they’d have less SNAP left over after they purchase it! This way, they’re getting it for free instead.
Just another day in the life of a renter:
http://www.picpaste.com/20160423_110216.jpg
Region VIII
I’m really starting to get worried about the dog.
Dogs can’t ride ski chairlifts phony.
Better not let him see this.
Ski lift Labrador - YouTube
http://www.youtube.com/watch?v=00XzCjnkeHc - 185k -
Maybe that’s really a hungry feral dog that’s stalking Goon around hoping he’ll have an accident on some remote mountaintop.
I just finished a 26 mile round trip biking into Newport Bay and back to my Irvine office. It’s great that the ride seemed shorter and my legs stronger. Nice to be out doing recreation instead of spending an afternoon at Home Depot.
The Miserable Men of Instagram, out shopping with, and waiting for, their wives:
https://www.instagram.com/miserable_men/
Dow 25 on the right column in a peach colored shirt.
That dude is a superstar.
13 and 18 down center column.
Rising stars.
Looks like most of them should be doing push ups, crunches, deadlifts, pull ups, and bucycling instead.
Glendale, CA Housing Market Tanks; Prices Tailspin 11% YoY
http://www.zillow.com/glendale-ca/home-values/
Apparently the country’s 47% can’t find $400 for an emergency.
“The Secret Shame of Middle-Class”
http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/
The Middle-class victims in the Fed’s highly successful War On Savers are quite certainly going to vote Democrat.
Thereby bending over for more oligopoly looting and asset-striping like they did in 2008 and 2012. You can’t fix stupid.
A couple we know lives in a $400K house, but recently when they took their dog to the vet for a minor injury were frantic because they had to borrow $500 from friends and family to cover the vet bill.
My friend’s sister and ex brother in law (who is ex because he died in a motorcycle accident) kept mooching off of my friend, although living in an $800k house. Same friend bailed out another sister of his who was evicted from a mobile home park and bought a house in Fresno for her to live in (and my friend complains of her trashing the place, and “rabbit pellets” all over).
I tried telling him in a kind way to have tough love.
I am content with only renting enough space for me alone to live in, and owning an old car only to get to work. If I do get a nicer car, it will not be mentioned. my nephew turns 40 in two days. He is actually unemployable, in poor health, and has poor hygiene so that no one would want to interview him for a job. He is repulsive, and his younger sister just turned 32. Yep, no jobs. They are beyond stereotypical slackards. My other sisters and I have worried for decades about all this and tried to suggest ways for them to improve. They are all adults, we’ve concluded. We will suffer when their continued poor living conditions and poor decisions will lead to the inevitable tragedy, but there is nothing to do but try to push it out of our minds and try to distance ourselves.
there is nothing to do but try to push it out of our minds and try to distance ourselves.
Letting go is the hardest part. Though from the brief description, it sure sounds like _someone_ must have been enabling them—otherwise, how have they lived for so long without having to do anything productive?
Yeah my sister - their mother is the enabler. But my sister was living off my dad until he died years ago. She tried to sponge off of me and my siblings back then but we said no we don’t have the resources. That is how you do it. So that sister got a job which is very low income. I don’t even know if they withheld social security where she worked. 14 years working and supporting adult children who don’t lift a finger, and then she got in a bus accident last fall. I got her an accident attorney and I was present when the attorney told her to say nothing about the accident to,anyone. I told her that money is just going to be enough to cover her until she is able to work, and the attorney said it could take two years (now about 18 months) before she gets any money if they win the case. She is out of rehab now, and I don’t know how they are getting money for food and shelter. They were evicted from their mobile home. Lots of things they had are gone. Pets too. Things like that don’t teach them a lesson. The sister is hypothyroid ic and I think the oldest is too. Untreated, your mind can be cloudy and you can be sluggish….
“He is repulsive…”
Hopefully ^that prevents reproductive activities.
No question about that. That’s a given.
You can’t stop what’s coming.
The Controllers, from Birmingham, Alabama:
https://en.m.wikipedia.org/wiki/The_Controllers_(R%26B_band)
“You can’t stop what’s coming.”
Amen, brothah! Derivatives bomb detonates in about 4 months.
And this:
http://www.zerohedge.com/news/2016-04-23/guess-whos-front-new-20-trillion-debt-bill
Those who foresaw what was coming and prepared are going to be the new 1%, as well as being targets for the starving sheeple who blindly put their faith in gub’mint to provide for them.
http://survivalcache.com/37-things-you-should-stock-but-probably-arent/
Is signing up lots of low income families for unaffordable subprime mortgages, then later offering them Save Our Homes bailouts at the point when they would otherwise go into default, a part of the Cloward-Piven strategy?
Ft dot com
Prime property
London’s super-rich turn to renting
Top-end trend linked to stamp duty rise and Panama leaks
April 17, 2016
Judith Evans
The UK’s “generation rent” may be priced out of home ownership, but renting is also on the rise among a very different group: London’s super-rich.
After stamp duty increased on expensive homes and prices began falling in the capital’s wealthiest areas, potential buyers of homes worth more than £10m are increasingly opting to become tenants instead.
Agents said uncertainty over the UK’s referendum on EU membership and concerns about the use of offshore companies for property purchases following the Panama Papers leak may add to the shift.
…
At 24:00 Marc Morano: ClimateHustle.org
http://www.youtube.com/watch?v=OjURZafzzSA - 247k - Cached - Similar pages
1 day ago
Apologies if anyone posted this earlier, I just couldn’t pass up this tasty little nugget.
‘Hope everyone pukes on your artisanal treats’: fighting gentrification, LA-style
Hardline tactics succeed in keeping outsiders away from Boyle Heights, the Latino community that is the last holdout to Los Angeles gentrification”
http://www.theguardian.com/us-news/2016/apr/19/los-angeles-la-gentrification-resistance-boyle-heights
In a way, I don’t blame them. But really, what’s the difference between this situation and those of whites who tried to keep minorities out of their neighborhoods back in the day?
They need to secede and build a wall.
No need for a wall here. They’ve already got an effective Border Patrol.
‘This park is for brown people’ and ‘This is not a park for white people. You are white people.’”
The Tan Klan
It’s Sunday and I continue to grow rich! Or, rather, my house continues to make me rich! Or, more accurately, strangers continue to make me rich, or make me think that I am rich. Whatever.
Zillow says that over the past thirty days the value of my house increased by $4,099. I dug two dandelions out of my front yard last week so maybe that’s what did it; My plan is to dig up a couple of more dandelions next week and then take a look at the price change, if any. If there is a change, a positive change, then maybe I am onto something (or maybe I’m just on something).
David Lereah says I should cash this $4,099 out but I think I’ll hold off a wee bit.
You should buy some stocks and watch your wealth change by the minute.
Our rental’s “Zestimate” has reversed course and regained the losses incurred in the last month. Spring buying season, I guess.
There was an attempted burglary at the house next door at 4:30 AM this morning. They tried to break in the window of the garage and the alarm ran them off. This is the same house in which my neighbor woke from a Sunday afternoon nap to see someone standing in the next room a few months ago. I left the lights on overnight in a room that faces the yard and also in the garage. Must have been really tired, I never leave lights on…lucky. This is a shame. I felt safer in the old house in the sketchier neighborhood.
Should have gotten a dog.
“… the alarm ran them off.”
I like the idea of silent alarms. I do not have an alarm on my house but if I did I would like it to be a silent one.
“Should have gotten a dog.”
The guy the block over has a silent dog; He had his dog’s vocal cords deactivated so now it cannot bark. Still bites though. A pit bull.
A barking dog (as will an audible alarm) will run the burglar off but a silent dog won’t; This could make the situation interesting for the burglar.
OTOH the sound of a large dog barking would make for an interesting doorbell.
Humilee babeilee zeebilee boobalee humilee babeilee zeebale bop
I…
….need more coffee
Humilee babeilee zeebilee boobalee humilee babeilee zeebale bop
I ain’t got nobody
David Lee Roth - Just A Gigolo - YouTube
http://www.youtube.com/watch?v=lN-4lX0QyZc - 314k -
4:25
Oh, Ok. I get a kick out of that vid. But does this mean you and the wife are splitsville?
No, we’re fine and d very used to each other.
In fact our 25th wedding anniversary is in 3 days.
Whew, you had me worried there. Anyway, big congrats to you and the missus. A stable marriage is a good thing.
Then again, you may be suffering from Alex Jones overload. Don’t get me wrong, I give the guy huge props for what he’s been doing over the years, but it just annoys the snot outta me when he has an interesting guest on and can’t shut his flapper to let the guy or gal get a few words in edgewise. Not only that, but then he goes off on a million tangents all over the place.
wilmington NC is a high crime area could that account for the falling home prices?
http://www.neighborhoodscout.com/nc/wilmington/crime/
Judge: Building Owner Can Charge Rent Based on Gold Prices
By ANDREW WELSH-HUGGINS, AP LEGAL AFFAIRS WRITER COLUMBUS, Ohio — Apr 23, 2016, 10:49 AM ET
A downtown office building is worth its weight in gold, according to a federal judge who upheld a nearly century-old lease that tied rent to the current price of the metal.
Last month’s ruling means rent paid by the company leasing the Commerce Building from a group of five property owners could jump from $6,000 annually to more than $300,000.
At issue is a so-called “gold clause” included in the original 1919 lease. The provision, common at the time, linked rent to the price of gold to account for inflation, similar to today’s consumer price index.
In 1933, in the midst of the Depression, the gold clauses were prohibited as part of efforts to reform the monetary system, which also included a ban on private ownership of gold from 1934 until 1973.
A 1977 law once again permitted gold clauses in new leasing agreements. That set up debates over interpretations of agreements when new parties entered them and whether an original clause could still be enforced.
http://abcnews.go.com/US/wireStory/judge-building-owner-charge-rent-based-gold-prices-38619852
The coordinated central banker swindles against the 99% are about to take the bilking to the next level with NIRP.
http://www.telegraph.co.uk/business/2016/04/22/interest-rates-could-go-negative-says-bank-of-england-rate-sette/
The DNC is pulling out all the stops to restore voting rights to convicted felons, as this opens up another huge votes-for-entitlements dependency bloc for Democrats, and allows criminals to install one of their own in the Oval Office.
http://www.richmond.com/news/virginia/government-politics/article_771db279-34d6-5a3d-9557-a417a8afb212.html
A rare victory for “investors” against rampant market rigging and manipulation by the big banks, aided and abetted by captured or inept regulators.
http://wolfstreet.com/2016/04/18/mobs-of-angry-investors-fight-market-rigging-maul-deutsche-bank-in-class-action-lawsuit-other-banks-next/
Spain, which is too big to be bailed out, continues its unraveling despite Draghi’s “whatever it takes” and never-ending QE and NIRP.
http://wolfstreet.com/2016/04/24/economic-miracle-in-spain-unravels-brexit-troika/
I love the smell of roasted unicorns and burned venture capitalists in the morning. It smells like…sanity.
http://wolfstreet.com/2016/04/23/9-billion-unicorn-theranos-imploded-blood-tests-sec-doj-investigations/
‘Murica!”
http://www.theburningplatform.com/2016/04/24/100-years-2/
“Federal Reserve Failures” - presentation to the NAR.
http://www.theburningplatform.com/2016/04/24/dr-allan-meltzers-federal-reserve-failures-presentation-at-national-association-of-realtors/
Sunday funnies by TBP. Enjoy!
http://www.theburningplatform.com/2016/04/24/sunday-funnies-109/
Always appreciate it, Ray. Thanks.
Gotta love the King Kong humor!
Anyone who doubts the housing bubble is alive and well in Seattle can look at this listing:
http://www.zillow.com/homedetails/2153-N-63rd-St-Seattle-WA-98103/48717828_zpid/
A short commute to Amazon, FYI.
Built in 1902
Looks like the original paint. It doesn’t have hallways.
For Sale
$739,000
Zestimate®: $813,894
Est. Mortgage
$1,537/mo
You too can borrow 700k for a monthly payment of 1500 yellen bucks.
Wow, that house is a real sh!t-hole!
But compare that with what is available just a handful of blocks away:
https://www.redfin.com/WA/Seattle/5240-Kirkwood-Pl-N-98103/home/304934
which has one bathroom more and is in gorgeous shape…
I suspect the first one is dramatically mispriced—unless the lake proximity is worth a LOT more than I think it is.
None of that should be misconstrued as me disagreeing that there is HUGE bubble in Seattle right now. There is, and it’s insane.
Nice. There will be 10 bidders for this one.
I suspect the first one is dramatically mispriced
On further consideration, they’re probably pricing it as a tear-down; it sits on a 6000-sqft lot, which would likely allow a developer to put in two $1.2M houses.
Doubtful with housing demand at record lows.
Doubtful with housing demand at record lows.
Unfortunately, they are still selling in Seattle. Here are some recent sales from the past month or so:
https://www.redfin.com/WA/Seattle/6715-Fremont-Ave-N-98103/home/301074
https://www.redfin.com/WA/Seattle/7325-18th-Ave-NW-98117/home/165830
https://www.redfin.com/WA/Seattle/5916-Meridian-Ave-N-98103/home/305716
https://www.redfin.com/WA/Seattle/4417-Williams-Ave-W-98199/home/124768
So, not doubtful in the least—these are actual sales, well documented by public record.
20 year lows doesn’t mean zero sales. A few legally questionable transactions means nothing.
“HUGE bubble”
There’s a price bubble with a rapidly shrinking pool of buyers.
Remember….. I can ask $50k for my run down 10 year old Chevy pickup but where is the buyer at that price?
So it is with all depreciating assets like houses.
Prime
Looking at those prices makes the anguish you went through recently very understandable.
Thx, Jeff… Yeah, it was definitely a tough gut-check—wanting to provide a good, stable environment for your family in the face of such insanity can be pretty wrenching.
For Sale
$739,000
Zestimate®: $813,894
Est. Mortgage
$1,537/mo
Strange, Ben: Zillow told me a much higher Est Mortgage for the same house:
Est. Mortgage
$3,278/mo
???
Where is the buyer at that price?
What kind of fraud is required to execute on this crime?
Can it be rented at half the cost of buying it like anywhere else?
interesting why did the taxes more than triple in one year…the owners died and their senior exemption ended?
2013 $5,421 +246% $495,000 -8%
2012 $1,566 +4.9% $538,000 –
interesting why did the taxes more than triple in one year…the owners died and their senior exemption ended?
Yep. Washington State does have a senior exemption, where their assessed value can be frozen.
It says the rent is $220 more a month than the mortgage payment.
Could need some fixing up, though.
Great views.
Are you sure?
2500+ Seattle rentals under $1500/month.
Or would you rather triple your losses with $1500 principal + $1500 taxes, insurance and depreciation and another $1000 loss in interest for a $4500/month rapidly depreciating asset?
Half million dollar views don’t depreciate, and a great room to boot. You won’t find that in a $1500 rental in Seattle.
Place is a steal. Buy buy buy!
2500+…. with a view for 65% less a month.
http://seattle.craigslist.org/search/apa?max_price=1500
Silverdale, WA Housing Market Plummets; Prices Crater 14% YoY As Demand Plunges Statewide
http://www.zillow.com/silverdale-wa/home-values/
Redmond, OR Housing Market Craters; Prices Plunge 19% YoY On Tanking Oregon Housing Market
http://www.movoto.com/redmond-or/market-trends/
https://www.reddit.com/r/simpleliving/comments/4eqrcr/kids_in_the_uk_who_cant_afford_ridiculous_rents/
Absolute Beginner
Thnks for the reddit post.
Quote from reddit —–
“Back in 2000-2003 I was making $90k/year and houses were $350k and I couldn’t take on that mortgage. Now I make $125k/year and houses are $500k and I still can’t see myself taking on a mortgage here. The only way I really see it working is a two income household, pulling in at least $200k/year. Then you could take on a $600k mortgage and if one person lost their job it wouldn’t be a catastrophe. ”
Indeed.
Remember….. Todays sale at a grossly inflated price is tomorrows default.
…. not to mention the fraud charges.
“Back in 2000-2003 I was making…”
If you were a starting center in the NBA or Chelsea Clinton you wouldn’t be able to make yourself worry about money.
Anyone want to lay odds on when rents will really finally hit a top? They’ve been going up fairly strongly in most areas for years, demonstrating the Fed’s ability to debase the currency.
But like most things that go up (think of the post-GFC commodities/resources/farmland), fundamentals should eventually tend to re-assert themselves; mis-pricing results in changes in money flooding in, building excess capacity, and an eventual change in pricing due to that over-capacity.
So, my question for the blog today: are we near, or far, from rents returning from their heady heights?
We’re seeing falling rental rates and housing prices in San Francisco, Manhattan, Seattle and cities around the world in an environment of collapsing demand so there is no need to speculate.
Houston, oil- field North Dakota (higher than San Jose until recently). The glut in Louisiana (see the desk clearing post). I heard from a UHS in Dallas there are signs up offering incentives on apartments there all of a sudden.
Yep, definitely showing up in the boom/bust-fields, Ben.
I was asking more in the context of the rest of the US… Seems like rents shot up everywhere, somewhat after the commodity bubble–and will bust later, assuming that they do.
Not too many oil fields in Massachusetts yet prices are falling statewide there.
I think you’ve been saying that for three or four years—while the data (other than your few cherry-picked points) actually showed prices going up.
Care to cherry-pick a few more noisy data-points to demonstrate your assertion?
Falling prices statewide is what it is.
“Not too many oil fields in Massachusetts yet prices are falling statewide there.”
Please come to Boston
She said “No, would you come home to me”
And she said, “Hey ramblin’ boy now won’t cha settle down
Boston ain’t your kinda town
There ain’t no fracking and there ain’t nobody like me
I’m the number one fan of the man from Tennessee
It shows up as incentives first. We’ve got those in San Francisco/San Jose, Denver, outright falls in Miami and Manhattan.
Falling prices statewide is what it is.
Case-Shiller says otherwise:
https://research.stlouisfed.org/fred2/series/BOXRSA
Data my friend.
Massachussetts Housing Prices Plunge 9% Statewide
http://www.zillow.com/ma/home-values/
Ok, given some data to examine, I’ll agree that that looks like a significant decline. Wow. Wish that would arrive on the left coast.
Note: that’s the lowest reports sales price for March since Mar 2009!
It already has.
Backpedal some more.
Adjusting your opinion based upon the data that you evaluate is not “backpedaling”—it’s actually a sign of intelligence; you should try out the technique sometime.
Data, not opinions my friend.
Glendale, CA Housing Prices Crater 11% YoY
http://www.zillow.com/glendale-ca/home-values/
OK haystacks - then give us some data backing up your fantasy-land construction costs then.
That’s what I thought.
And we post photos of our work.
You simply tap tap tap on a keyboard.
I’ve been following the apartment bubble pretty closely:
‘Exclusive: CAPREIT Buys 1,000-Unit LIHTC Portfolio
Acquisition brings firm’s total LIHTC properties owned to nearly 7,000 units.’
‘CAPREIT has acquired a five-community, 978-unit portfolio of income-restricted properties in the Richmond, Va. area. for $68.5 million. The Rockville, Md.-based private firm now owns nearly 14,000 units, split almost evenly between market-rate and affordable housing communities. CAPREIT plans to add another $3 million in renovations to the five communities, bringing the total cost of the deal closer to $72 million.’
‘Aside from preserving affordable housing in a market starved for it, the company sees some pretty good upside on the bottom line. Many LIHTC properties are operated by smaller firms who manage for occupancy, but leave money on the table in the process—charging below-market tax-credit rents.’
‘Kadish says he often sees smaller operators charge $50 to $90 less than they could. But beyond that, as the multifamily industry in general sees a glut of Class A new construction come online, affordable properties should benefit from a trickle-down of demand.’
“So much of the construction starts now are for the latest and greatest Class Triple-A-Plus,” says Kadish. “Where are our nurses and firefighters and students just graduating out of college going to live?”
‘http://www.housingfinance.com/news/exclusive-capreit-buys-1-000-unit-lihtc-portfolio_o
This Kadish is the real humanitarian, worried about the nurses while he plots to squeeze another 90 bucks out of them. This is generally how this scam works; previous owner has used up most of the deprecation for tax purposes. He sells to someone who then can start depreciating all over again. Takes the 1031 exchange and buys a bigger property, avoiding capital gains. The LIHTC is the biggest scam; it’s calculated using the incomes of everyone in the area, not just the renters. So you end up with rich people getting tax credits on apartments eating up 40-50% of the renters income. That’s the “affordable” housing the government has set up.
This is a wealthy persons game. They pool money into partnerships and run all over the country flipping apartments to each other, avoiding huge amounts of tax on their other incomes and capital gains. Remember the Starwood deal? Loans were backed up by, you guessed it, Mel Watt. It was said at the time, “if the government hadn’t backed the loans it probably wouldn’t have happened.”
Central to this is the D apartments get made into C, etc, rents go up across the board. Land is too expensive to build anything but triple A. Then you get this:
‘as the multifamily industry in general sees a glut of Class A new construction come online, affordable properties should benefit from a trickle-down of demand.’ “So much of the construction starts now are for the latest and greatest Class Triple-A-Plus,” says Kadish.’
The rent thing is tragic, and should be the subject of congressional investigations. Maybe it will after the government has lost a couple trillion on these loans.
The rent thing is tragic, and should be the subject of congressional investigations. Maybe it will after the government has lost a couple trillion on these loans.
Congress is beholden to the same oligarchs that are running these scams, and if the government loses a couple of trillion, Yellen will just print more “stimulus” to cover the bad debts.
In a year we will know. If the rents stay the same then they probably peaked and will tumble for a few years after that.
deetriot a hot market???????”
http://www.freep.com/story/money/real-estate/home-sales/2016/04/23/detroit-downtown-midtown-condominiums-m1-rail-arena/83191622/
In Europe, the resistance against the Oligopoly and its “fundamental transformation” is gaining force.
https://www.yahoo.com/news/austrias-far-leads-presidential-vote-run-off-expected-154905799.html?nhp=1
Are working-class democrats finally getting fed up with voting for criminals and being on the same side as votes-for-entitlements freeloaders?
http://www.duluthnewstribune.com/news/politics/4016904-more-60000-disgruntled-pennsylvania-democrats-switch-parties
… to the party that votes for entitlements for rich people.
There is no escape.
“Real Estate Agent Charged With Theft”
http://www.burlingtoncountytimes.com/news/local/real-estate-agent-charged-with-theft-of-security-deposit-in/article_35dab9a6-0809-11e6-b620-13c101ba4535.html
Goldman Sachs Sees No Indications for Crude Oil Prices to Rise
April 22, 2016 @ 16:56 GMT
The hike in oil prices that could be seen recently has nothing to do with fundamentals, according to analysts at Goldman Sachs. Keeping this in mind, they are expecting a dip in prices in the near future.
In Friday’s report, Goldman’s analysts underlined the lack of stable conditions for rising oil prices. Furthermore, the supply/demand balance will not accommodate a price increase sooner than Q3 2016. Therefore, oil prices could fall in the short term, as the current US production conditions cannot compensate for the growing exports of cheap Iranian crude.
Not only oil, but the recent gains made by metals – gold, silver, iron ore and copper, are also lacking fundamentals, the analysts believe.
According to Goldman Sachs’s forecast, iron ore prices will shrink to $35 per ton by the end of 2016. The current price for a ton of ore stands at $68.7, gaining 30% over the last month.
“The current rally is not sustainable, as we not witnessing growth in steel demand within China that could balance the increase in ore production in Brazil, Australia and other regions,” the experts are saying.
April’s figures for the Thomson Reuters/Core Commodity CRB Index, which is comprised of 19 main types of commodities, are back at December 2015’s highs. In 2016, gold prices have gained 17%, copper prices rose by 16.5%.
In 2016, gold prices have gained 17%, copper prices rose by 16.5%.
Perhaps the market expects more QE?