There’s A Crater Under Every Bubble
Its Friday desk clearing time for this blogger. “With a dire housing crunch squeezing out full-time residents, the Point Reyes Station Village Association and the Community Land Trust of West Marin held a forum to assess the damage and discuss solutions. Startling facts and anecdotes were on hand to illustrate the impacts of a rapidly depleting housing stock, which has tumbled as record-breaking crowds of visitors to West Marin’s natural attractions shack up in vacation rentals. In Marshall, less than a third of the houses are occupied full-time, according to resident and dairy rancher Albert Straus. He slammed county officials for not enforcing zoning rules for Marshall, where zoning is not meant to encourage people ‘to make profits from short-term rentals and business out of permanent residences,’ he said.”
“Land trusts need money to purchase homes dedicated to low-income housing in perpetuity. Rachel Ginis, a panelist and founder of the Corte Madera-based housing nonprofit Lilypad Homes, suggested that money could come from broadening the county’s transient occupancy tax—which levies a monthly fee on registered vacation-rental operators—to include more casual AirBnB-style rentals. ‘People have a bad habit of buying second, third and fourth homes,’ said Ms. Ginis. ‘If they can afford those homes, they can afford a vacancy tax.’”
“Is Airbnb a casual home-sharing service or a commercial rental business posing serious competition for South Florida hotels? Several Miami Beach residents, too, have spoken out against Airbnb. ‘It is so pervasive,’ said Philip Berry, the board president of a 25-unit condo building south of Lincoln Road. ‘I can point out at least 20 buildings in a secure four-block area where this is occurring.’”
“China’s efforts to stem capital flowing out of the country so its economy, and currency, stabilize, may dampen the fast-and-furious pace of investment in U.S. real estate. But as a new report from the Asia Society and Rosen Consulting Group predicts, China’s controls on this capital outflow only stand to temporarily slow — and will hardly stop — the tide of cash streaming to U.S. real estate.”
“The rich are buying homes and luxury apartments, but they’re also investing in funds and partnerships that are buying into commercial projects. There are also uncounted smaller real estate investment projects funded by individuals who pool investors together to buy, say, a handful of budget hotels or several apartment units in a high-rise. ‘That’s going on way below the radar of what can be specifically tracked down and quantified and also from what most people see going on,’ says Arthur Margon, partner at Rosen Consulting Group and an author of the report.”
“Half of central Melbourne’s new apartments are being built and bought by off-shore investors, as the city grapples with what one development industry figure has labelled an ‘unprecedented level of supply.’ And he warned that a slowdown in the property market meant it was harder to sell apartments, and tougher for developers to get a final settlement out of buyers. It has led a prominent housing academic to question whether the city’s apartment boom was being driven by investors who needed a high-end product to park money rather than addressing housing affordability.”
“Melbourne University housing expert Kate Shaw said these investors were ‘generating enormous upward pressure on prices.’ ‘Much of the increase in central city housing supply is high-end investment product – not housing that meets local demand,’ Dr Shaw, an urban geographer, said. ‘How much of this investment stock is fully occupied? Most research suggests very little.’ Dr Shaw said new inner city apartments were failing simultaneously on three fronts: they were not making housing more affordable, not meeting local housing needs, and not curbing urban sprawl. ‘So why exactly are we building them?’ she asked.”
“Standing nearly 600ft high and boasting 50 storeys, it is hard to miss 1 St George Wharf. There are only eight buildings taller in the whole of Britain. It’s the country’s tallest residential skyscraper. There can be no doubt this huge cylindrical edifice is a symbol of how Britain is changing — and, in particular, how successive governments have been far keener to embrace foreign millions than to worry about the interests of their own citizens.”
“Yesterday it was reported in the Guardian newspaper that almost two-thirds of the tower’s 214 apartments are owned by foreigners, and furthermore, by foreigners who seldom bother to live in them. Indeed, these apartments, which have been sold from £600,000 to a staggering £51 million, cannot really be considered homes. They are, above all, investment opportunities for the world’s super-rich, towering over a city which has a notorious shortage of affordable housing. And — surprise, surprise — what also emerged yesterday is that a quarter of the apartments have been bought by companies registered in offshore tax havens.”
“For St George Wharf, the statistics are damning. No fewer than 62 per cent of the 210 apartments where the title deeds are available are believed to be in foreign ownership. Out of a total of 214, no one is registered to vote in the UK in 184 of them.”
“It is a sign of the times that some of my local estate agents don’t look like estate agents. There are no pictures of houses in the windows. Instead, there are arrangements of twigs and some desks. Presumably, one goes into them just to hang out and chat about buying a house in this gallery-type environment. No one needs, I suppose, to see any images. House buying is an abstract concept for so many these days.”
“The air of unreality about these hip house floggers is entirely fitting. House prices are unreal. Ridiculous. Every day there are stories about the insanity of our current housing crisis, but it goes on and on. We laugh at images of what are basically cupboards for sale or rent. We cry or sigh with identification at the tales of young folk who can never really leave home. Except that some are not so young. Fortysomethings are having to move back in with their parents after marital bust-ups or because they no longer manage their own housing costs, the so-called ‘doomerang generation.”
“What does it now mean to be an adult if the old markers of adulthood become out of reach? Levels of home ownership are in decline. We now have a fully fledged caste system delineated by property. This is happening in the US, too. Wages for under-30s are going down.”
“Factors such as delinquencies from the long-struggling oil sector and emerging evidence of weakness in overheated housing markets are placing the Canadian economy at significant risk of a major downturn, according to an analysis. In particular, bad debts from the energy sector and increased competition from online counterparts are forcing Canadian banks to downsize and even retreat altogether from at-risk markets.”
“Writing for CBC News, Don Pittis noted that while the Bank of Canada’s interest rates are still showing an optimistic view of the economy’s prospects, signs of eventual trouble are gradually popping up. ‘The painful bankruptcy of Canadian home builder Urbancorp and pressure for governments to intervene in what many are calling an affordability crisis have some commentators worried that Canadian real estate is at a peak,’ Pittis explained. ‘Despite evidence that real estate is a major driver of jobs and the economy, ominous warnings are easy to dismiss because they have been offered so often. This time, however, we have real evidence that markets outside Vancouver and Toronto have begun to weaken,’ he added.”
“Most worryingly, BoC Governor Stephen Poloz himself said that Canadian real estate is not all that it seems, Pittis noted. ‘There’s a crater under every bubble,’ the analysis quoted the BoC Governor as saying.”
“While artisans prefer Ubud in Bali’s central foothills, serious surfers turn to ‘the Bukit’ to find the waves. Here on Bali’s southern tip, cliffside homes overlooking the ocean go for $3 million to $8 million. It’s only minutes from some of the island’s most famous surfing spots. While prices have been rising steadily since 2004, the real-estate market is in the midst of a correction, as fewer properties have sold since the speculative market rush that ended in 2014, says Eugene Shivnan, a local real-estate agent at Exotiq Property. Upscale homes start at $500,000, though smaller condos can be purchased for around $200,000.”
“Currently on the market for $5.5 million: a cliffside, six-bedroom property that overlooks the Indian Ocean and includes an infinity-edge pool, a large living and dining room and marble floors. ‘Now it’s become a buyers’ market and there are too many listings,’ says Neil Power, owner of real-estate firm Xclusive Property.”
“Leasing activity in Dubai’s residential market tailed off towards the end of the first quarter as landlords proved more willing to negotiate on rents to keep existing tenants in place, according to a report from Asteco Property Consultants. At Jumeirah Lakes Towers, for instance, rents declined by 6 per cent quarter-on-quarter and 12 per cent year-on-year by the end of March. Asteco said that luxury apartments have proven hardest to let and remain vacant for longest, despite significant year-on-year rental declines.”
“Meanwhile, sale prices for apartments remain 5 per cent lower year-on-year, with luxury units experiencing the steepest declines – Jumeirah Beach Residences properties are 18 per cent cheaper than in the first quarter of last year, while Palm Jumeirah homes have fallen in value by 11 per cent and Dubai Marina by 10 per cent.”
“‘People are being more budget-conscious,’ said Julia Knibbs, the UAE associate director of research and consultancy at Asteco. ‘Landlords are realising how important it is to retain tenants rather than risk having a vacant unit and then later having to reduce the rent anyway.’”
Here’s some Australian FB’s:
https://www.youtube.com/watch?v=d4wl6s80o74
I love how the guy who pointed out the obvious insanity of Spain’s housing bubble was declared an “enemy of the state.”
“In a time of universal deceit, telling the truth is a revolutionary act.”
– George Orwell
The most telling part was when they are at the auction. An ordinary house goes for something like 1.2 million Australian pesos. The “winner” is doing a little dance. The man being interviewed is stunned in disbelief. The reporter says, “it’s been like this for 30 years.”
I am also an enemy of any state.
You silly anarchists and your posturing - adorable!
…declared an “enemy of the state.”
Sedition… a capitol offense.
“Were you greedy?”
“Yes!” - Big, ear to ear smile!
Fauxstraila
‘It’s a prime location with water views from every unit, yet only 30% of the 1 Pacific Avenue rooms are occupied. For 12 months the newly built residential block of 20 units have been available to rent, but they have never been filled. It’s something that owners Rob and Sandra Waterson expected coming into the property market in Tannum Sands. And still, they don’t regret their decision.’
“The rentals were down when we decided to build, but so were the development costs,” Mrs Waterson said. “It was a bit of play off, do you build now for cheaper and risk not being at full capacity, or wait until the rents pick back up?”
‘There are still 14 units available, ranging from one to three bedrooms.’
“And still, they don’t regret their decision.’
How does the saying go…those opposed against their will….are of the same opinion still?
“There are also uncounted smaller real estate investment projects funded by individuals who pool investors together to buy, say, a handful of budget hotels or several apartment units in a high-rise.”
1. Borrow trillions of yuan in excess of GDP into existence out of thin air.
2. Use it to pay millions of individuals for building entire cities full of empty, unused structures.
3. Turn a blind eye while these individuals pool their earnings to purchase real estate abroad.
That is quite an interesting economic policy!
Is China on a Path to Debt Ruin?
There’s still a chance to avoid the worst. It depends on how bold the government is willing to be.
By Houze Song, Derek Scissors, Yukon Huang
May 24, 2016 - 3:38 pm
In the first quarter of 2016, Chinese debt rose to 237 percent of GDP — a level comparable to that of the U.S. or the Eurozone and yet much larger than that of most developing economies, according to analysis by The Financial Times. Additionally, China’s ratio of debt to GDP has climbed at rates that many economists say are worryingly fast, rising from 148 percent of GDP at the end of 2007, even as the overall growth rate of China’s economy has slowed.
What does this mean for the health of China’s economy? Is it, as financier George Soros argued at a recent ChinaFile event, a harbinger of a financial meltdown reminiscent of 2008? How much longer can China continue to use the same stimulus tools, and the ballooning credit that comes with them, to postpone a reckoning with the effects of its slowing economic growth? How will China’s current level of debt affect the Chinese government’s efforts to keep economic growth from slowing further in the coming years? And what will it mean if those efforts — toward structural reform — fail to achieve the targets China’s leaders have set for annual growth?
…
Precious metals are the only investment and store of wealth that are not someone else’s liability. Gold is set to soar as the Fed prints away all government and corporate debts and liabilities.
http://investmentresearchdynamics.com/physical-gold-is-money-everything-else-is-someone-elses-liability/
Howard Ruff and the gold bugs were saying exactly the same thing in 1980. It did not happen; even after Reagan turned Carter’s budget surplus into a massive deficit.
You’re noting that There’s A Crater Under Every Bubble.
You’re right.
C.B. You can cherry pick the beginning price of getting into gold. January 1980. $800. September 2011 $1900. Today $1218.
I too, can cherry pick 1972. $35, 2001 $270, 2007 $600.
So your post is as meaningless as mine.
Wish I would have purchased gold in the late 90’s, it was like $200 or so an ounce. Now it’s well over $1,200 an ounce!
Wish in one hand and $hit in the other and see which fills up quicker.
That’s a silly article and a sillier title.
You don’t set your own top market price.
You can sell a doar bill for 49 cents if you wish.
You can sell $1000 gold for $800, and some have been forced to.
You probably can’t sell a dollar bill for 4 bucks, nor 800 gold for 1300.
Tell me how the liabilty of price is yours for gold in any different way than half a hamburfer or the tajmahal.
Fang Nu
“That’s a silly article and a sillier title.”
It’s not meant for enlightenment. Only to engage your attention which it did.
Don’t underestimate vulnerabilities. The lack of potable water will cause land migrations here and abroad in the next twenty years. As yet there is no “Pa.”
‘Despite evidence that real estate is a major driver of jobs and the economy, ominous warnings are easy to dismiss because they have been offered so often. This time, however, we have real evidence that markets outside Vancouver and Toronto have begun to weaken,’
The Boy who Cried
WolfBear‘warnings are easy to dismiss because they have been offered so often’
Like Australia, the conventional wisdom is that they never had a housing bubble. The downturn a few years ago was due to the US bubble. Isn’t that some crazy logic. Their bubbles are much larger than the US bubble ever was.
‘This time, however, we have real evidence that markets outside Vancouver and Toronto have begun to weaken’
Like the Alberta auction a few months ago where a UHS/speculator took a huge haircut? Weaken? Go ask someone in Regina or Cold Lake or Fort McMurray if it’s weak.
Winder if folks in ft Murray were splashing gas around hoping to skip out w a bang
That’s what I wondered too. An awful lot of deeply underwater, insured houses. Some people probably were hoping the fire would come their way.
‘It’s already happened to middle-of-the-road stores across high streets and main streets. Now the world’s biggest luxury stores are starting to shutter outlets. The culprit is the Chinese consumer, who is starting to rein in spending at home and abroad. The effect will be no less severe: expect more closures to come.’
‘Over the past decade, Chinese consumer demand and new store openings together turbo-charged luxury sales. New store space accounted for 55 percent of global luxury revenue growth over the past eight years, according to analysts at Mainfirst. As for Chinese nationals, they powered about two-thirds of luxury market’s growth over the past decade, according to Exane BNP Paribas.’
‘Now both of these forces are running out of steam. Given the slump in Hong Kong and the slowdown in China, stores there are the main focus of attention. Hugo Boss has already announced plans to close 20 of the 131 stores it directly owns on the mainland.’
‘And last week, Richemont, maker of Cartier jewelry and Jaeger-LeCoultre watches, said it was also reviewing its retail network in Hong Kong and Macau. This could include closures, moving to cheaper premises or lease renegotiations.’
‘Indeed, seeking rent reductions is an alternative to outright closure.
Bloomberg Intelligence’s Patrick Wong says rent reductions of as much as 50 percent are possible in some locations in Hong Kong. But demand remains strong for space in premium malls, limiting the scope for discounts.’
‘In mainland China, tenants have most bargaining power in new malls, particularly in second-tier cities, hit by a slump in demand and plentiful new supply, Wong notes.’
‘And here’s another trend that mirrors what is happening on high streets and main streets. As mid-market brands retrench, discount players move in. Pandora is hardly the same as Primark (its jewelry can cost 60 pounds (USD87) rather than six pounds at its less upscale cousin). But the Danish jeweler offers cheaper, more accessible luxury.’
This is a good time to shift money out of US treasuries and into your brokerage and set buy limits at crash prices. I will get a fresh dose of money for bargains starting in July.
And the consequence if you’re wrong?
“And the consequence if you’re wrong?”
I still have the cash in the brokerage if I’m wrong. Because it won’t hit my buy limits if I’m wrong.
Next question?
That’s why cash is king - Market moves up you win, market goes down it’s tyme to buy moar!!
I tend to agree with Hoarder. I sold about 50% of my stock holdings in the last few months at about $17,500. I’m missing the current run up, but I sleep well and if the market tanks, I will buy stocks as they drop. I did keep my oil industry mutual funds and ETFs.
It is a good time to be liquid. There seems to be more downside risk than upside potential.
Been doing exactly that since the last bout of volatility. Ready to feed on the carcass.
Lost Seals And Other Excuses Used by Defaulting Chinese Firms
‘Missing corporate stamps, shuffled assets and disappearing executives have become the hallmarks of debt distress in China. Investors are starting to lose patience.’
‘China Shanshui Cement Group Ltd. said this month it couldn’t distribute interest without its company seal, only for the underwriter to report payment later saying the stamp isn’t needed. Shenyang City Utility Group Co. said it couldn’t publish a repayment statement as the holder of its chop was traveling. China City Construction Holding Group Co.’s bonds slumped to 79 yuan out of 100 yuan face value on May 6 after its controlling shareholder changed. Fosun International Ltd. was among issuers to report lost contact with executives.’
‘A lack of transparency and protections in bond documentation are adding to the angst among investors in China, where a record 10 companies have failed to make payments this year amid the weakest economic growth in a quarter century. This has prompted authorities to tighten regulation and scrutinize underwriters’ due diligence work.’
“The bizarre defaults may discourage foreign investors from entering China’s corporate bond market,” said Wang Ying, a senior analyst at Fitch Ratings in Shanghai. “The internal corporate management of some companies is in chaos. It’s a typical phenomenon at an early stage of a bond market.”
“We have always thought that China onshore investors have lesser protection compared to their offshore peers,” said Edmund Goh, a Kuala Lumpur-based investment manager at Aberdeen Asset Management. “We do not want to be caught in a situation like Baoding Tianwei whereby assets were transferred out of the company without needing bondholders approval.”
“The erratic bond defaults have scared investors,” said Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shenzhen. “They don’t know where to look for the next one to default. You can’t find the answers in companies’ financial books. Those defaulted didn’t necessarily have the worst financials. ”
‘Now we know. The glitzy 50-storey tower that looms over London’s Vauxhall and Pimlico is, as the Guardian revealed yesterday, just a stack of bank deposits. Once dubbed Prescott Tower, after the minister who approved it against all advice, it is virtually empty.’
‘At night, vulgar lighting more suited to a casino cannot conceal the fact that its interior is dark, owned by absent Russians, Nigerians and Chinese. It makes no more contribution to London than a gold bar in a bank vault, but is far more prominent, a great smudge of tainted wealth on the city’s horizon.’
‘In 2003 London’s first elected mayor, Ken Livingstone, was dazzled by a dinner invitation to the Villa Katoushka outside Cannes. His hosts were the titans of London’s property world and he was reportedly soon in thrall to them.’
‘He said he would offer them “the potential to make very good profits” in his new London. He especially wanted tall buildings; the taller the better. The developer Gerald Ronson lauded him for his remarkable “vision”. Tony Pidgley of Berkeley Homes called him “refreshing”.
‘At the time the Tory leader of Wandsworth, Eddie Lister, assailed Livingstone’s obsession with towers as a “one-man dictatorship”. David Cameron’s then cities spokesman, John Gummer, compared Livingstone to Mussolini, and spoke of the towers as “the vulgarity of bigness”.
‘Yet when Cameron came to power, this was all forgotten. In London, property is the most potent lobby. The Tory mayor, Boris Johnson, increased Livingstone’s rate of tower approvals, while Lister gratefully took office as his tall-buildings champion.’
‘Some 80% of the approvals were for luxury flats, chiefly marketed as speculations in east Asia. Johnson’s current legacy to London is 54,000 luxury flats priced at over £1m, about to hit a market that even before the present downturn needed just 4,000 a year. This bubble simply has to burst. The waste of building resources, energy and space, the sheer market-wrecking bad planning, beggars belief.’
‘London has seen nothing yet. A row of giant blocks is about to rise around the Shell Centre behind the National Theatre. The 50-storey cucumber-shaped One Blackfriars is emerging on the bank of the Thames opposite the Embankment. It will intrude on views of the City far more than does the Shard.’
‘The line of the Thames will be marked by a series of jagged broken teeth. Prescott’s tower at Vauxhall is to be joined by two more apartment stacks next door, one even higher.’
‘Next to Battersea power station is a crowded over-development on an almost Hong Kong scale, named Malaysia Square and aimed at the Asian super-rich. Johnson helped sell it in 2014 by actually unveiling the development not in London but in Kuala Lumpur. It will probably go bust and end up as slums. At least the poor may one day live there.’
‘Livingstone and Johnson promoted these towers not because they cared where ordinary Londoners would live, or because they had a coherent vision of how a historic city should look in the 21st century. They knew they were planning “dead” speculations, because plenty of people told them so. They went ahead because powerful men with money and a gift for flattery just asked. It was very British sort of corruption.’
‘The appearance of these structures on the London horizon must rank as the saddest episode in the city’s recent history. We must live with them forever. But we shall not forget their facilitators.’
Ouch. That one stung. Admittedly hilarious, though, that a luxury development in London was named “Malaysia Square” and unveiled in Kuala Lumpur. Go after that dirty money!
Several other cities have been tarnished by mega-towers. There now are several in Buenos Aires, and Jorge Perez, the Miami “condo king,” wants to build more. Bogota soon will have the “Bacata” tower, which is 67 stories and will be Colombia’s tallest building. I’ve been in that neighborhood and it’s a little shaky. An even taller project, the “Torres Atrio,” has been announced.
I have a name for the next super-tall skyscraper in the U.S. It will be called the Yellen Tower.
I could not help but think that these buildings are getting to the tulip mania stage. Flip stuff because there will be a greater fool.
“Half of central Melbourne’s new apartments are being built and bought by off-shore investors, as the city grapples with what one development industry figure has labelled an ‘unprecedented level of supply.’ And he warned that a slowdown in the property market meant it was harder to sell apartments, and tougher for developers to get a final settlement out of buyers. It has led a prominent housing academic to question whether the city’s apartment boom was being driven by investors who needed a high-end product to park money rather than addressing housing affordability.”
It seems extremely wasteful to allocate so much residential investment towards building high-end luxury apartments whose principle purpose is to provide a home for the pirated loot of foreign oligarchs.
‘Planet Hollywood has just introduced its new ph Premiere brand of upscale condo hotels, and the first will be built in the Orlando area. To be developed by Azzurra Development, ph Premiere Resort-Residences Orlando will offer a mix of stylish accommodations and condo-hotel residences encompassing a total of 547 units.’
“We are bringing the sophistication of Manhattan, glamour of Hollywood, passion of Miami and excitement of Las Vegas to Orlando,” said Planet Hollywood International Founder and Chairman Robert Earl. “I am thrilled to grow our lodging business in my home town by establishing this unique concept in a market that we felt was underprovided.”
“We are bringing the sophistication of Manhattan, glamour of Hollywood, passion of Miami and excitement of Las Vegas to Orlando,” said Planet Hollywood International Founder and Chairman Robert Earl.
Tacky, tacky, tacky.
Orlando is one of the tackiest, phoniest cities in the United States. Why don’t you just bring that glamour to Ft. Myers or something? At least there’s a nice beach nearby.
‘The former Morgan Stanley bond trader believed to have lost more money than any single trader in the history of Wall Street has put his Rumson estate on the market for $4.5 million, according to its Zillow.com listing. Howie Hubler’s disastrous bets against risky subprime loans cost Morgan Stanley $9 billion and was chronicled by Michael Lewis in his book about the 2008 financial meltdown “The Big Short.”
‘He paid $4.65 million for the home in 2006, near the peak of the housing bubble. That’s $150,000 more than the current listing price. It’s the eighth most expensive listing in Rumson, according to Zillow. Taxes are $65,754 a year, records show.’
‘Hubler, according to Time, “was a thriving derivatives trader up until his excruciating blunder. From 2004 to 2006, he placed big bets against the U.S. real estate bubble using credit default swaps — complex financial instruments that pool and repackage risky sub-prime mortgages to sell on to investors.’
‘But the economy’s decline happened slower than he expected, and Hubler had to cover his costs by delving even deeper into the CDO business. When the real estate market collapsed in 2008, he was wiped out — nearly taking Morgan Stanley itself with him.” The Observer called him a “subprime villain” and “an unwitting icon of the financial crisis.”
Using other people’s money …
“But the economy’s decline happened slower than he expected, and Hubler had to cover his costs …”
“His costs”, Hubler had to cover “his costs” …
“… by delving even deeper into the CDO business. When the real estate market collapsed in 2008, he was wiped out …
“He” was wiped out.
” — nearly taking Morgan Stanley itself with him.” The Observer called him a “subprime villain” and “an unwitting icon of the financial crisis.”
The best thing about using other people’s money to make some huge bets is you are using other people’s money, bets that would most likely not be made it the money that was used didn’t belong to somebody else.
Funny how that is.
He paid $4.65 million for the home in 2006, near the peak of the housing bubble. That’s $150,000 more than the current listing price.
So the price of this house has recovered to within 3% of peak? This seems rather significant.
One comment says:
“I’ll take it! Can I get a no income verification, negative amortization (pick a payment) 100% LTV ARM?”
Actually no, you may not. You could probably swing the 100% LTV, but be prepared to pay dearly for it in the form of 30 years of fees and PMI. And you’d better prove you have the income to pay full PITI.
The other comments moan about the bad schools in Rumson. Bah. At those wages, why not just hire a governess and be done with it.
‘the current listing price’
I was wondering about that too, Ben. I guess we can keep an eye on it to see if it sells. It sold for $3.6 million in 2000 pre-bubble, so 25% in 15 years may not be unreasonable on inflation alone.
That’s over $5,000 a month in taxes.
How do you get to 25% inflation when there hasn’t been any inflation since the late nineties?
And not a buyer in sight at a fraction of that grossly inflated price which explains this;
Rumson, NJ Housing Prices Crater 15% YoY
http://www.movoto.com/rumson-nj/market-trends/
‘disastrous bets against risky subprime loans’
It’s interesting that the guy was right, just early.
And that he was a goat for being early, while those who ultimately got lucky with the timing, after a period of sweating bullets, were financial geniuses.
That’s right, he was on the cusp of being a famed investor. It was like leaving the Titanic on a lifeboat on April 13.
my dc hood is 8% off peak of 6/1/2005
I haven’t seen any townhouses for sale recently but the last one sold for $40K more than the similar one that sold a few months before. I think that one sold for $80K over purchase price of 2-3 years before (no improvements.)
A lot of Indian families, and I notice on zillow and stuff the Realtors with all the sales themselves are Indian.
I’m thinking of maybe looking to job hop for cash towards end of summer. I found out that some friends are making $160-200K range and I’d like that too.
“but the last one sold for $40K more than the similar one that sold a few months before”
Links.
‘There’s a crater under every bubble,’
CR8R
‘Rapper Juelz Santana reportedly owes $700,000 in back mortgage payments and lawyers’ fees on his condo in Teaneck, NJ, which he recently lost to foreclosure, according to Bossip. The prolific rhymer reportedly hasn’t made a mortgage payment on his $486,000 loan in three years.’
‘Bossip reports that a judge issued a final foreclosure judgment on April 22, and Santana’s 2,300-square-foot condo is set to be sold at a sheriff’s sale. But don’t expect to bid on the condo anytime soon. The Bergen County Sheriff’s Department told us it takes about a year for foreclosure properties to be sold.’
‘Santana isn’t the only rapper with foreclosure woes in New Jersey. Lil’ Kim reportedly has stopped paying the mortgage on her Alpine, NJ, mansion, which is in danger of going into foreclosure again.’
Rappers shirking their financial responsibilities? I am shocked, shocked!
‘A state income tax credit that helped subsidize construction of thousands of living spaces largely in western North Dakota’s oil patch has outlived its usefulness with the downturn in drilling and a prolonged slump in crude prices, the chairmen of the Senate and House taxation committees say.’
“Without a doubt, we need to re-evaluate this,” Sen. Dwight Cook, chairman of the Senate’s Finance and Taxation Committee, told The Associated Press on Wednesday. “Times have drastically changed since we put that in place. It was sold as a crisis and we reacted. The crisis does not exist no more. It’s a different market today.”
‘Approved by the Legislature in 2011, the North Dakota Housing Finance Agency’s low-income housing development program gives individual and business donors a dollar-for-dollar tax credit to subsidize construction of affordable dwellings for the poor and seniors, teachers, law enforcement officers, emergency workers and others whose salaries weren’t near equal to those working for oil-related companies.’
‘Developers were slow to build more apartments when rapid energy development began occurring in earnest in 2007 in western North Dakota, largely because they got stung by the last oil bust in the 1980s. The lack of affordable housing displaced many from the region, and just two years ago, rents in several oil patch communities equaled or exceeded those in New York City and Los Angeles.’
‘But rental prices for the state-subsidized units are now in line with those that are non-subsidized because of hundreds of new apartment units and the nosedive in oil activity, Kline said.’
‘In Williston, the epicenter of the oil patch, rents at some apartment complexes have dropped by as much as two-thirds in the past several months, but are still twice the cost of when the boom began, said Ann Kvande, who works for the city’s economic development group.’
‘In Dickinson, hundreds of rental units have be added over the past few years and rents have dropped by more than half in recent months, city administrator Shawn Kessel said. “We have finally achieved equilibrium,” Kessel said.’
Sounds like they now have affordable housing out the wall.
Wall wall wall wall!
Fraudian* slip?
My cell phone sometimes makes lame spelling corrections.
Meant to say ‘out the wazoo…’
‘Metro Denver home construction revved up in the first quarter, reaching a pace not seen since before the last recession, according to a report from Metrostudy. Builders in metro Denver started 2,413 new homes in the first quarter, up 3 percent from the fourth quarter and 47 percent higher than the first quarter of 2015. New housing starts are running at a pace about 26 percent faster than a year ago, on track to end the year with about 9,869 homes built.’
‘Housing starts in metro Denver, as measured by Metrostudy, are now at their highest level since 2007, and Covert expects the pace to quicken and that builders will complete 10,000 new homes this year.’
‘Builders remain primarily focused on higher-priced properties. Homes priced above $400,000 accounting for about 60 percent of the market, the highest share on record, according to Metrostudy.’
‘The cost of a new home in metro Denver now averages $503,768, which contrasts with an average price of $398,663 for existing homes sold in April, according to the Denver Metro Association of Realtors.’
One of the young guys at the office put an offer on a house this week, but was outbid. There are some nabes in Denver where it’s still frothy.
I told him that wasn’t a bad thing, because we’re in a bubble and all bubbles eventually pop.
He actually agreed and said he’s going to wait for prices to come down.
hope my friend in Loveland gets out alive
I spoke too soon. He left the office early today to see some showings.
now averages $503,768
Denver, home of the $500,000 starter house.
“This sucker could go down” — George W. Bush
You do have to wonder, who are they expecting to buy those $500K houses? That’s like 7x the median HH income in metro Denver. I guess they’re expecting that only the top 25% will be buying. The problem with that is that most of those people already own a place.
But the party isn’t over yet. As I already mentioned here today, a coworker lost a bidding war this week.
“I guess they’re expecting that only the top 25% will be buying. The problem with that is that most of those people already own a place.”
Ah, yes, an issue out of which the concept of “property ladder” was hatched.
The homeownership rate is what, 60%? How many of those 60% have almost no income (retirees who actually paid off their home). So yes, mathematically, the actual buyers are probably only the top 50% of income earners.
And sometimes people enter the top 50% (graduate school, get a promotion, etc.), and sometimes people leave the top 50% (get fired, retire, etc.).
Is it too early in the experiment to conclude that activist central banking is a perfect recipe for financial disasters without limit?
The housing market horror story isn’t over yet
The conventional wisdom on this topic is that lower-income homeowners with subpar credit scores were being pushed out of the housing market by gun-shy lenders wary of new government regulations. They “closed the credit box” to newer borrowers, denying Americans their chance at a home. The Urban Institute estimated in 2014 that 1.2 million borrowers were denied credit from these tighter standards, and a disproportionate number of those were borrowers of color.
First of all, even the Urban Institute admits that the credit box has loosened in the past two years. Just this week, both JPMorgan Chase and Wells Fargo started offering mortgages with a skinny 3 percent down payment.
Second, take a look at this intriguing analysis from Archana Pradhan, an economist with market research firm CoreLogic. Pradhan looks at the data and finds that the problem is not tighter supply of mortgage credit, but weaker demand at the low end. The denial rate for loans is actually lower today than in 2005 and 2006, and the distribution of credit scores for loan applicants has shifted dramatically. Fewer people with poor credit scores are even bothering to apply for a mortgage. “Self-sidelining of cautious/discouraged consumers makes it appear as if credit is tightening,” Pradhan writes.
http://finance.yahoo.com/news/housing-market-horror-story-isn-101500315.html
“Pradhan looks at the data and finds that the problem is not tighter supply of mortgage credit, but weaker demand at the low end. The denial rate for loans is actually lower today than in 2005 and 2006, and the distribution of credit scores for loan applicants has shifted dramatically. Fewer people with poor credit scores are even bothering to apply for a mortgage. “Self-sidelining of cautious/discouraged consumers makes it appear as if credit is tightening,” Pradhan writes.”
That’s interesting…thanks.
‘Even the Urban Institute admits that the credit box has loosened in the past two years. Just this week, both JPMorgan Chase and Wells Fargo started offering mortgages with a skinny 3 percent down payment.’
‘Take a look at this intriguing analysis from Archana Pradhan, an economist with market research firm CoreLogic. Pradhan looks at the data and finds that the problem is not tighter supply of mortgage credit, but weaker demand at the low end. The denial rate for loans is actually lower today than in 2005 and 2006, and the distribution of credit scores for loan applicants has shifted dramatically. Fewer people with poor credit scores are even bothering to apply for a mortgage. “Self-sidelining of cautious/discouraged consumers makes it appear as if credit is tightening,” Pradhan writes.’
‘First of all, people don’t have the money. Wages are starting to grow a bit but have been stagnant for years, and with prices growing, they simply cannot afford a mortgage. This is especially true among millennials; according to the Pew Research Center, for the first time since the 1880s, more young people aged 18-34 are living with a parent than with a spouse or romantic partner.’
‘A decade after the housing bubble started to collapse, people remain shattered by foreclosure or continue to fight for their homes. More than one in three homes valued at $100,000 are still “underwater,” meaning the borrower owes more than the home is worth. The foreclosure fiasco totally crushed families, and would-be buyers reasonably look at that mess and opt out.’
‘Low demand for entry-level or modestly priced homes fuels developer desires to maximize profits by catering to the luxury market, filled with the only people left buying. The whole thing folds on itself, accelerating the trend of wealthy Americans segregating themselves through housing and pulling away from everybody else. The most expensive zip codes in America have seen far greater price appreciation than their lower-income counterparts (this is particularly true when you factor in communities of color, where prices have stalled out the most). And the biggest factor in that price appreciation is higher demand: In higher-income areas, more people bid against one another on properties.’
‘Housing groups could continue to push to “open the credit box” when that isn’t the problem, exposing those vulnerable families willing to buy a home to more risk. And finally, the economy won’t expand as much if residential housing is a mere playground for the rich.’
‘The situation is far worse in the rental markets, where affordability is at a point of crisis. Maybe more construction would help, or maybe regulators can generate more confidence that housing isn’t a trap for the non-rich. Or maybe people just need to have enough money to actually afford a home (which would help fix rental markets, too, by reducing demand). But until we unlock the keys to reversing this, and give everyone a shot at an affordable place to live, we cannot claim that the housing market is on stable footing.’
“Wages are starting to grow a bit but have been stagnant for years”
Cop out and distraction. Wages would have to triple or quadruple in order get to the historic price/income ratio.
Does anyone believe thats going to happen? Of course not.
With the massive excess and growing housing inventory out there, there is only one outcome. Falling prices to dramatically lower and more affordable levels.
Of course, the immediate solution is to rent for half the monthly cost of buying.
Wages are starting to grow a bit but have been stagnant for years
They’ve been saying that for years now. I’m sure next year the pundits will be saying “this year wages will finally go up”.
And no one bothers to jump ship, because they know it’ll be the same story at the next place: no raises, except maybe for “top performers”, and as a newbie you won’t be a top performer.
Well cheer up my friend because demand is collapsing. And collapsing demand leads to Falling prices.
‘When Shannon Quattlebaum and her husband put their Taylors home on the market last month, they thought it would take a few weeks to find a buyer. They planned to go away for the weekend and have their realtor hold a Sunday open house after listing the home on a Friday morning. But almost immediately after the home was listed, Quattlebaum’s phone began “blowing up” with requests to see the house. By Saturday afternoon, they had 11 offers on the three bedroom, two bathroom, ranch-style home.’
“It was crazy. We knew there would be a lot of interest because of the location and all the updates … but I really didn’t expect to see that much that quickly.” Quattlebaum said. “We did expect it to sell quickly, but when I say quickly, I mean a couple weeks or a month. Not two days.”
‘It’s becoming more and more common for houses to be snapped up by buyers days or even hours after they’ve been put on the market, said Chet Smith, a broker associate with Berkshire Hathaway HomeServices C. Dan Joyner REALTORS. In the past two and a half months, situations like Quattlebaum’s have become frequent not just in areas close to the city center, but suburban locales including Taylors and Simpsonville.’
“We’ve been getting multiple offers and running into this situation for months, not just in downtown, Augusta Road and North Main, those types of areas with older homes, but also in developments if the home is listed under $250,000,” said Smith, who did not represent Quattlebaum. “If a home is listed between $100,000 and $250,000, if it’s in good shape and it’s priced competitively, you can anticipate it will sell quickly and possibly have multiple offers.”
‘Greenville has been a seller’s market since Smith entered the real estate business 17 years ago, he said, except for a dip during the national housing crisis of 2008 and 2010.’
‘Nearly 5,500 homes are listed as on the market this month, but about a quarter of them won’t sell because they’re either overpriced or in bad shape. Another quarter of those listed are under contract and are unlikely to become available to buyers again. That leaves about 2,400 homes for 1,100 to 1,200 buyers, Smith estimates.’
“That’s not a lot to choose from per person,” Smith said. “That puts a lot of pressure on homes coming on the market.”
‘In 2011, the average sale price of a home was $172,002, and the median sale price was $142,000. By 2015, the average sale price had risen 18.86 percent to $204,447 and the median home price had risen by more than 21 percent to $172,000.’
‘South Carolina saw enough population growth to add a seventh congressional district in 2012, and a 2015 United Van Lines study said the Palmetto State was one of the top destinations for people moving to a new state. The market has reflected these trends, realtors say. “I don’t see it slowing down a lot at all,” Hayes said.’
One difference I’m seeing, at least in my little burg, is that the rate of new home construction isn’t even close to what is was last time. During bubble 1.0 they were building 1000+ houses a year here.
Now they are building about 300 a year. And almost all of them are mid $300K, or more. I don’t think that there are any sub $300K houses being built. So when someone puts their older, smaller house on the market for say $250K it sells within hours, regardless of condition.
During bubble 1.0. I recall that most of the new construction was in the low 200K range. So something has changed, but I don’t know what, but they aren’t building 1500 sq fr ranches like last time. Now they all seem to 2500 sq ft and up. And when those house are put on the market, the price is now in the upper 200K range.
It sure isn’t jobs that’s driving this. HP is long gone and Agilent is pretty much the sole tenant (a single building) in the old HP campus. Most people I know with real jobs either commute south to Longmont or beyond, or telecommute.
Loveland is a “drive till you qualify” type of place. Those $350K new houses here are comparable to the 500K+ places in Denver. Are there really that many people driving out here and commuting to jobs in the heart of Denver? I honestly don’t know, but what I do know is that most of the new houses are being built on the east side of town, close to I-25, 5 minutes or less from the freeway.
It’s 2016. There is no need to add more supply given the fact demand is at 20 year lows and all the excess empty houses out there.
We are 10-years out from the peak of the last bubble.
With 2% inflation, that means that costs rose by probably 20% +/-.
On a $250k home in 2006, would be $300k now, all else equal.
However, not all is equal–homes are larger today than before. On a price per square foot basis, how much more are homes currently than a decade ago? More or less than 20%?
And have any costs have risen faster than inflation in your area? Are there new impact fees?
What inflation?
Except in my burg the 200K homes are now 300K homes, and $200K basically buys a 40 year old dump that needs some serious TLC.
Sounds like prices have a long way to fall.
SDC’s are on a tear in our area.
Condo hotel” circa 2005
When they float ,,,sell !
‘Multifamily, multifamily, multifamily. It’s all nearly everyone in Chicago real estate wants to talk about these days. And for good reason. Multifamily may be the dominant sector in Chicago real estate in the first half of 2016.’
‘In her opening remarks, Axiometrics VP Stephanie McClesky says the near term is almost like a supernova. Chicago multifamily is enjoying 3% rent growth, but that will dip slightly as the nearly 15,000 units in the pipeline are delivered through Q4 2017. This will result in a brief oversupply, further constricting rent growth until Q3 2018. At that point, Stephanie expects rent growth to return to a healthy 3% spread for the next few years.’
‘The Private Bank president of CRE Karen Case (pictured with Hunt Mortgage Group CEO Greg Cazel) says lenders have been busy in this cycle financing Buzz Ruttenberg’s Belgravia condo projects in the West Loop, the South Loop and infill projects on the North Side.’
‘But developers seeking funds must be mindful of tightening guidelines on construction and land loans in the immediate future. Karen says regulators are concerned about oversupply and are applying these constrictions across all product types. As regulators are having banks review their lending commitments, expect to see a pullback on lending over the next 12 months. Karen concludes that the question developers should be asking lenders is if there’s money for them. If lenders ask for deposits, that puts you on a priority. Karen recently returned from a trip to Cuba and dreams of what could be done with historic tax credits there with buildings that have been untouched for over 60 years.’
‘Ascend Real Estate Group president Walt Rebenson (right, with development panel moderator, Pircher, Nichols & Meeks partner Gene Leone) says the amenities arms race has gotten out of control, driving increases in construction and management costs. Bigger amenity packages are driving chunk prices down, which is why Walt is constantly debating amenity packages for his buildings. He’s finding with his 905 N Orleans development that the more money invested in the apartment and the chunk price, the better the value for the tenant.’
‘AMLI Residential CEO and born comedian Greg Mutz is also aware of the growing number of Baby Boomers entering the rental market as they become empty nesters, citing a study that shows 75% of renters age 55 and up live alone. One of Greg’s funniest lines of the morning: on amenities, he draws the line at dog spas.’
‘the near term is almost like a supernova’
I’ve been telling you guys, listen to these people on the radio or TV. They are euphoric. I heard one big apartment guy go on a 30 minute rant about how it will never, ever end. Never!
‘the amenities arms race has gotten out of control…One of Greg’s funniest lines of the morning: on amenities, he draws the line at dog spas’
It would be funny except there’s pensions and life insurance being thrown away on this crap. Meanwhile, poor people are being uprooted and paying half their incomes on rent.
Once again, the prudent and responsible are being punished, and will be punished further when they are forced to fund the inevitable bailouts of the banks that lent to these reckless and greedy speculators.
“It would be funny except there’s pensions and life insurance being thrown away on this crap.”
Life insurance and pension money that needs to earn a hefty return (actually needs to earn two hefty returns) and no way to earn these returns except by chasing prices.
Here’s an interesting story about a fund trying to address the issue of affordable multi-family housing, they even have a celebrity spokesperson.
“Eva Longoria is investing in her home state of Texas to help alleviate what experts have long described as a desperate housing need: more affordable units in densely populated urban areas where rents are rising fast.
Since 2015, the fund has purchased almost 2,500 apartments in Maryland, Florida, Texas and Nevada, with plans to spend up to $1 billion.
Gee Kim, a principal at the firm, explained that a more traditional real estate investor would likely buy apartments in hot areas, spend a lot of money to improve them up front — and then bump up rents accordingly, thus displacing existing residents.
But Turner Impact Capital makes its money with a different approach, Kim said.
The firm doesn’t buy properties to renovate them and sell them — the firm manages the apartments and works with community education and health organizations to serve – which makes them more stable, longer term tenants.”
http://bizbeatblog.dallasnews.com/2016/05/eva-longoria-backs-dallas-affordable-housing-effort-fund-buys-two-apartment-properties.html/?_ga=1.158659066.1978560661.1459350372
JOHN BURNS REAL ESTATE CONSULTING
The Retiree Surge Is Here
By Lesley Deutch, Principal
Only 10 years ago, 2.2 million people were turning 65 each year. That number has surged to 3.5 million this year and will grow to 4.2 million in 2025!
Tomorrow’s retirees will completely transform the housing industry. We have done a tremendous amount of research on this group, all of whom were born in the 1950s. We call them the Innovators because they have created so many innovations throughout their lives. They are:
Tech savvy, which began with their space race fascination as kids
Family-oriented, with almost 50% reporting that they intend to live with their parent or adult child in the near future
More affluent than any prior generation of retirees, thanks to:
Careers that perfectly coincided with a strong economy
A workaholic attitude that led to more double-income households and delayed retirement
80% homeownership, with the majority having no mortgage today
30 years of falling interest rates boosting home values and retirement accounts
All of these factors above will play into the Innovators’ next housing move. They will:
Innovate retirement to be more about health, family, experiences, and continuing to work
Move several more times, including selling their home and moving into a rental in an urban area that is walkable to entertainment
Focus more on living near their kids, with huge rewards to the builders who sell multigenerational-living homes that satisfy Innovators’ needs
Continue migrating south, but not just to the traditional retirement areas, as they will want to be near their kids and a job
The chart above comes from our upcoming book The Big Shifts Ahead: Demographic Clarity for Businesses and shows how dramatic the retirement surge has been recently—and will be in the future.
*** My favorite line is: 30 years of falling interest rates boosting home values and retirement accounts
That explains why these adult living communities are mushrooming in every town in the US. When they start filling, 35 milllion houses start emptying.
Ooooph.
‘A new report reveals a shocking gap between the average income and the cost of housing in Southern New England. Experts say low wages and high rent make it nearly impossible for local families to make ends meet. Rhode Island boasts some of the highest housing costs in the country, and in Massachusetts it’s even worse.’
‘The average Rhode Islander, making minimum wage, would need to work 79 hours a week to afford a two-bedroom apartment. That’s two full-time jobs.’
“It’s pretty tough for those low-income wage earners, and it gets exacerbated by the fact that we have some specific things going on that are different from the national average,” said Jim Ryczek, executive director of the Rhode Island Coalition for the Homeless.’
‘Forty percent of Rhode Islanders rent in a state where there’s a rental housing shortage. The new properties that are being built are usually marketed as high-end, because high rent can offset construction costs.
‘The gap is even worse in Massachusetts, which boasts the seventh highest rental costs in the country. It’s forcing many Southern New Englanders to spend far more than the recommended 30 percent of their income on rent.’
“They can’t pay for things like new shoes for their kids and all those sorts of things, and the flip side of that is that the economy suffers,” said Ryczek.’
Mel, Janet, I know you’re busy but read this again:
‘The new properties that are being built are usually marketed as high-end…They can’t pay for things like new shoes for their kids and all those sorts of things, and the flip side of that is that the economy suffers’
See that’s a reverse wealth effect. Central planning doesn’t work. The market will determine how much of what gets delivered and at what price. But you have to let it function. In short, go away. You’re only making things worse.
“See that’s a reverse wealth effect. Central planning doesn’t work. The market will determine how much of what gets delivered and at what price. But you have to let it function. In short, go away. You’re only making things worse.”
And in the aftermath of this when market forces take effect, these two will be the first to act surprised and wonder WTF is happening.
“China’s Credit-Fuelled Economy Is ‘Gyrating Like A Spinning-Top That’s Out Of Momentum’”
http://www.zerohedge.com/news/2016-05-25/chinas-credit-fuelled-economy-gyrating-spinning-top-thats-out-momentum
Just how distorted is the global economy when this happens;
“Meanwhile In China, Cow-Collateralized Stock Buybacks”
http://www.zerohedge.com/news/2016-05-26/meanwhile-china-cow-collateralzed-stock-buybacks
“Huishan Dairy seems to be selling cows and leasing them back in order to raise money now”
I saw the cow thing on Bloomberg yesterday. You know what the CEO is doing with the money? Buying back shares.
Speaking of cows and government/corporate policy, lets relive this gem from days past for those who haven’t seen it.
http://www.wired.com/2008/02/new-and-improve/
‘Alabama lacks homes that are safe, decent, and affordable for more than 95,000 working families, seniors and those on fixed incomes. That’s more than Auburn’s stadium filled to capacity.’
‘Assuming a 40 hour a week, Alabamians need to earn at least $13.93 per hour in order to afford the rent and utilities on a basic two-bedroom apartment. Unfortunately, the typical renter in Alabama only earns about $11.64 per hour, meaning a second job is required just to make rent.’
‘For workers earning minimum wage, the situation is even worse. A person earning minimum wage must work 77 hours per week in order to afford that modest two-bedroom home.’
‘Nowhere in Alabama can low wage workers working full-time earn enough to afford a typical one- or two-bedroom apartment. The average household in Alabama is spending half of its income on rent, not leaving enough money for food, children and health care.’
‘For workers earning minimum wage, the situation is even worse. A person earning minimum wage must work 77 hours per week in order to afford that modest two-bedroom home.’
Hence the preponderance of people with two or even three jobs. And they’re on foodstamps as well.
Then it’s time to end the price fixing and market rigging charade and get back to business.
As if….
‘For workers earning minimum wage, the situation is even worse. A person earning minimum wage must work 77 hours per week in order to afford that modest two-bedroom home.’
That’s one definition of a poor state - people have to work their butts off just to survive. It’s possible that it wasn’t any better 20 years ago before the housing bubble.
It was definitely better before the bubble, as housing was much more affordable for the poor (especially in the less-desirable places to live).
Now, you go outside of Seattle 35-40 miles, and a double-wide on a couple acres of unimproved land is $450K+. That is just insane.
The local market right now - even the worst properties with unfixable defects (next to a railroad, highway, in a floodplain, or a combination of the above) are selling as though those defects don’t exist.
In a rational, normal market, those defects would always result in a lower price, much the same way as a branded title reduces the value of a used car.
I was referring to apartment rents in Alabama. House prices in Washington are a completely different issue.
Anyone bother to do this math? So a basic two-bedroom apartment in Alabama costs over $2300 a month for rent and utilities? I’m assuming 21 working days in a month. No way that’s correct.
There must be an assumption that people can’t spend their entire income on rent and utilities. People have to pay taxes and they have other expenses.
‘They always tell you in real estate it’s all about location, right? Well, some new ones in downtown Lansing have quite the location. Especially if you like baseball. You’re looking for an apartment in Downtown Lansing. Then, upon further inspection you land a place to live which just so happens to be home to the Lansing Lugnuts. Although currently empty, outside your window you can see the action of the game right in the heart of Stadium District.’
‘Gillespie Group Project Management Director Jason Kildea said, “it’s one of a kind. There’s nothing else like it in America right now. A lot of people want to do something like this but this is the first of its kind.”
‘The Outfield Apartments are pet friendly, and range from $900 to $1,700 a month. Why build apartments overlooking a baseball park? “This concept came up. The city wanted to improve the ballpark. Add some new amenities to it. And, ‘how could we find a good public/private partnership to do this,” said Kildea.’
Looks like the smart money is slipping out of the Fed’s asset bubbles and Ponzi markets before the stampede for the exits begins.
http://wolfstreet.com/2016/05/27/market-timer-sam-zell-fed-interest-rate-commercial-real-estate/
“No one has ever accused me of not being a realist,” Sam Zell told CNBC. The chairman of Equity Group Investments and of apartment mega-landlord Equity Residential was talking about the markets for office and apartment buildings in some major cities that have already peaked.’
“Overall we’ve come off this extraordinary period of liquidity and this extraordinary period of low interest rates,” he said. “I think we’re unlikely to see a repeat of that going forward, and I think we’re going to see more supply in what had been pretty tight markets.”
‘Now he’s selling again, unloading multifamily properties at peak prices on a massive scale just when a multi-year construction boom is flooding the market with new supply.’
‘On CNBC, Zell lashed out in his soft-spoken and well-balanced manner against the current zero-interest-rate environment in the US, and the fundamental damage it was doing — the man who so hugely benefited from it: “In the most simplistic terminology, I would ask you the question, if something is free, is it valued? Is it appropriately risked? I think when you talk about interest rates being close to zero for a long period of time, I’m very concerned about the fact that we have desensitized our business community to the cost of capital.”
“And we know that the cost of capital ain’t free,” he said. “Every time you defer facing up to the cost of capital, it’s going to catch up to you. That I think is the biggest concern.”
“We have distorted markets. Maybe we have bubbles.” Then, on second thought, he said, “I don’t even know what a bubble is, so I wouldn’t want to be the definer of it. But I think that we have too much intervention and not enough market movement in interest rates – and in other assets.”
“You know what the problem is? The problem is I think the Fed should have raised interest rates two years ago, and therefore today would be able to make a much more rational decision as to what to do. The problem is that they’ve so deferred reality for so long that I think they have a serious credibility problem if they don’t raise rates.”
‘Then he added another twist to this conundrum: “So now we’re talking about raising interest rates because of credibility and not because of economics.”
‘And the fear of losing “credibility” – what’s left of it after more than a year of flip-flopping on rates – may be why Fed heads are parading up and down in front of the media with suddenly invigorated rate-hike rhetoric. Meanwhile, Zell is selling, at peak prices, unloading assets at the top while he still can.’
And you know who backed the loans on the biggest sell he did? Mel Watt. It was said at the time (not that long ago), ‘without this backing, this deal wouldn’t have been done.’
Nice post Ben…
As much as I dislike the monetary policy, I can’t really blame those that are profiting from it. I just wish I was one of those people.
I long for the days back in the 1980s when I was getting 8% on my money-market checking account at the credit union.
Good post indeed.
“The problem is that they’ve so deferred reality for so long that I think they have a serious credibility problem if they don’t raise rates.”
What is Extend and Pretend Alex.
Zell’s views are a good read. I do think there is more nuance in his thinking today regarding multifamily than his views on office in 2007.
In 2007, he sold EOP lock, stock and barrel. All of it. He got the hell out at 5 minutes to midnight.
Today, he seems to be more bearish on suburban apartments, where he sees most of the new development occurring…as such, he sold 23k units of suburban apartments to Starwood/Barry Sternlicht, but specifically retained the urban units, where he sees higher barriers to entry and less new supply being added.
Earlier comments of his indicate that he believes home ownership will remain low, and so rental properties (especially those that appeal to people who want to live in the urban core) will be in high demand.
Of course, he may think apartments are priced too highly right now because of low rates (as do I), but he’s not exiting the multi-family market altogether.
“In the most simplistic terminology, I would ask you the question, if something is free, is it valued? Is it appropriately risked? I think when you talk about interest rates being close to zero for a long period of time, I’m very concerned about the fact that we have desensitized our business community to the cost of capital.”
There it is.
And I find it completely incredible the wonks at the Fed, the ECB and other western central banks fail to grasp this very simple relationship between interest rates and capital allocation. It has never been cheaper to throw away dumb borrowed money on worthless investments.
‘The Federal Reserve has a big problem if it wants to raise rates again. It will have to pay U.S. and foreign banks enormous sums of money instead of U.S. taxpayers. The gangbuster profits of $90 billion (plus) per year that the Fed remits to the Treasury could easily dwindle to zero. According to several leading economists, it’s also possible that the Fed will become technically insolvent (though it always has the power to print its way out of such a disastrous state).’
‘The putative savior of the financial crisis, quantitative easing, was a Faustian bargain. The Fed got to inject trillions of dollars into the financial sector while simultaneously “sterilizing” the very same money. It did this by incentivizing banks to deposit their digital cash at the Fed, paying above-market interest rates.’
‘Currently, the Fed pays 0.50% annually to banks to keep that money out of the economy. It might not seem like much, but the comparable rate paid by the U.S. Treasury for T-bills is 0.28%. In other words, the Fed pays banks nearly twice as much as the Treasury does.’
‘But the Fed refuses to acknowledge this. Each year, the Fed Chair is required by law to testify twice in front of Congress. Both Ben Bernanke and Janet Yellen have used the weasel word, “comparable,” to assert disingenuously that the Fed is paying an amount of interest similar to what banks could earn in the marketplace. It’s possible to “compare” apples to oranges, but it doesn’t mean they’re similar.’
‘Currently, the Fed is paying banks about $12 billion per year in interest. If the Fed raises rates two times (by 0.25% each time), that number doubles to $24 billion. If we are to believe San Francisco Fed President John Williams, who targets an eventual 3.0% for short-term rates, then that’s $72 billion per year to the banks. This is a huge expenses for the Fed. Subtract from that the $90 billion (plus) per year in operating profits, and the amount of money the Fed pays to the Treasury gets pretty small.’
‘But it gets worse. The Fed is taking capital losses on its $4.3 trillion bond portfolio, and those losses will eventually accelerate. When the bonds that the Fed holds mature, it realizes losses because it paid above-market prices for most of them to begin with.’
‘The Fed is currently keeping its balance sheet the same size, purchasing new bonds when old ones mature. Should it decide to sell bonds, it would realize huge losses over a short space of time and would likely go into debt with the U.S. Treasury. According to Hall and Reis, it would take the Fed 6 to 10 years to work off the debt and get back in the green.’
‘Bottom line: No matter how you slice it, the Fed payments to Uncle Sam will not only drop off a cliff someday, they could also go negative. That means, the taxpayers would be indirectly on the hook for Federal Reserve operating losses.’
‘The worst possible outcome would be for a fickle and indecisive Congress to assert its authority over monetary policy. Unfortunately, by waiting seven years to raise rates—and into an economy growing at best modestly—the Fed has backed itself into a corner. The Fed has clearly chosen the banks over the best interests of the taxpayers.’
‘by waiting seven years to raise rates’
I am reminded that I said in 2006 or 2007 that cutting rates to near zero and leaving them there are two different things. That was Greenspan, and he himself popped the housing bubble. Can one see Yellen doing anything?
“The Federal Reserve can be counted on to do the right thing, after it has exhausted all other possibilities.”
The prison-industrial racket continues to bear down on the bottom layer of society.
http://www.thedailysheeple.com/too-poor-to-make-bail-theyll-cage-you-for-that-lawsuit-exposes-horrors-of-the-us-injustice-system_052016
Bernie Sanders’ supporters are so naive and delusional that they still think the rule of law applies to members of the Oligopoly. Bwhahahahahaa!
Free Jon Corzine!
http://www.nytimes.com/2016/05/28/us/politics/bernie-sanders-hillary-clinton-fbi.html?_r=0
Today’s word of the day - feel free to use it in a sentence, i.e. Hillary Clinton is the embodiment of moral turpitude.
http://www.dictionary.com/browse/turpitude
I am imagining an episode of ‘Mr. Roger’s Neighborhood’ in which he explains the definition of that word to the kiddos. “Can you say turpitude? Say it with me.”
Brexit vote coming up on June 23rd, and Oligopoly scaremongering keeps hitting hysterial new pitches. What happens if a majority of the UK population chooses sovereignty over being a globalist neoliberal looting colony? Oh, the humanity….
http://www.breitbart.com/london/2016/05/27/g7-leaders-vote-brexit-world-will-end/
Using my uncanny, Nostradamus-like ability to foresee the future, I hereby predict Yellen the Felon will coo more dovishness at her Q & A this morning. There is no way she is going to let her NYC bankster accomplices head for the Hamptons on a Memorial Day weekend without goosing the Ponzi for them.
Remember when market fundamentals mattered more than lunatic Keynesian academics at the Fed? Me neither.
http://www.zerohedge.com/news/2016-05-27/all-eyes-yellen-global-markets-flat-dreadful-volumes-oil-slides
Apologies if this was already posted…….
Business
Wells Fargo launches 3% down payment mortgage
First-time buyers and low- to moderate-income buyers have largely been sidelined by today’s housing recovery.
The common cry is too-tight credit. Lenders have kept the credit box restrictive because they are gun-shy from the billions of dollars in buy backs and judicial settlements stemming from the mortgage crisis that they still face today. Now, the nation’s largest lender, Wells Fargo (WFC), says it is opening that box with a new low down payment loan — a loan it claims is low-risk to the bank.
“We are fully underwriting the borrowers, we are partnering with Fannie Mae to originate and sell these loans, we are ensuring the borrowers have an ability to repay and that they’re qualified for home ownership, but we’re simplifying things for the homebuyer,” said Brad Blackwell, executive vice president and portfolio business manager at Wells Fargo.
Branded “yourFirstMortgage,” Wells Fargo’s new product has a minimum down payment of 3 percent for a fixed-rate conventional mortgage of up to $417,000. Down payment help can come from gifts and community-assistance programs. Customers are not required to complete a homebuyer education course, but if they do, they may earn a 1/8 percent interest rate reduction. The minimum FICO score for these loans, which are underwritten according to Fannie Mae standards, is 620. Mortgage insurance can either be rolled in to the cost of the loan or purchased separately by the borrower.
https://www.yahoo.com/finance/news/wells-fargo-launches-3-down-103000097.html
‘Mortgage insurance can either be rolled in to the cost of the loan or purchased separately by the borrower’
The FHA loan works this way too, meaning it is less than 3% down.
Plus 5% downpayment assistance and voila…. Instantly underwater and sinking fast.
Yeah, and what’s the cited intent of this drip, drip of lower standards and easier money? To “help” lower income borrowers. My, that sure sounds familiar. It’s just what they said about Countrywide.
Again, if this market is so strong, why does it need propping up at all? If you have 100 people going to an open house in Michigan or Ohio, why does the government have to back the loans?
It take a special kind of stupid to believe that Hillary is “fighting for us.” Unless, of course, you’re George Soros or Goldman Sachs.
http://www.cnbc.com/2016/05/26/wall-street-gives-hillary-clinton-27m-but-love-affair-may-not-last.html
And yet you see nobody in the media asking those questions, Ben. I guess they are either too stupid or just willfully ignorant. Are is there something else going on?
You first.
‘nobody in the media asking those questions’
I don’t think that’s the case. There is Zell saying it’s a bubble in these comments, interviewed by CNBC. We see the Canadian central bank Governor providing the headline for this post, interviewed by the Canadian press. I’m not sure how to characterize it. As before, there are lots of warning and signs, but I’m sure we’ll hear “no one saw it coming.” Zell sees it coming and he sold off, just like he did years ago.
Yes….so there are a few folks here and there that are cautioning about a bubble. I know I am not the smartest guy in the world but there are indeed an abundance of warning signs. The signs are as bright as all of the ads in Times Square yet most people bury their heads and keep going full speed ahead and expecting a different outcome than last time. Housing prices to infinity! No more land! It’s different here! Location location location! Buy now or be priced out forever! Housing is a great investment!
The fact that resale housing is priced 300% higher than long term trend and double construction cost(lot, labor, materials and profit) is enough of a warning sign.
Priced like art, not replacement cost. Demand sets the price. See comps.
That and $1will get you a cup of coffee Lola.
I bet you look good in your Captain Obvious costume….
“It is difficult to get a man to understand something when his salary depends upon his not understanding it.” — Upton Sinclair
Here’s CNBC again:
‘Borrowers who only put 3 percent down on a new home could be taking a risk, former FDIC Chair Sheila Bair said Thursday. “The good news is these are fixed-rate mortgages, so you don’t have the problem with the payments shocks where you have to refinance to make the payment affordable,” Bair said in an interview with CNBC’s ” Closing Bell. However, “you’re exposing yourself to risk if home prices take a dip.”
‘Wells Fargo, the nation’s largest mortgage lender, is targeting first-time home buyers and low- to moderate-income buyers who have been sidelined in the housing recovery. ..Borrowers may take out a mortgage up to $417,000. ‘
“Fannie Mae’s got it. Private mortgage insurers got it. They’re underwriting, but they’re passing it along,” she said. “We saw during the crisis that when you separate the … credit decision to make the loan from who is actually holding the risk of the loan, you can run into some problems too. I’m not completely comfortable with it, but it is what it is.”
‘targeting first-time home buyers and low- to moderate-income buyers’
OK, I’m sure it went like this; board-room - ‘We have got to help out these low income people!’
Making a profit never entered into it.
Somewhere, the HBB’s Mr. Banker is cackling with Luciferian delight. “Dumb ‘em down and profit,” indeed.
Well I am sure that Mel knows that this will be good for the low income folks so he won’t be stepping in to discourage it……he is the biggest cheerleader for this type of buffoonery!
I’ll go further than that; Mel is purposefully backing the destruction of affordable apartments (via rehabs) all over the country, to jack up rents and push more people into buying. That’s right, I’m saying it is a willful conspiracy. Please, any reporter out there, take my accusations and ask Mel what his reply is.
I think they’ve been spending the past several years trying to figure out how they can make these loans, and be insulated from lawsuits in the future if they do something wrong.
It wasn’t very long ago that Jamie Dimon wrote:
“We have dramatically reduced FHA originations,” Dimon writes. “Currently, it simply is too costly and too risky to originate these kinds of mortgages. Part of the risk comes from the penalties that the government charges if you make a mistake – and part of the risk is because these types of mortgages default frequently.”
You can bet that there were similar concerns about other GSE loans by Wells Fargo…because the reality is that Wells is a pretty conservative lender (as compared to other mortgage lenders). Going into the downturn, they had much higher average down payments as compared to other lenders. It was pretty stark. And recall that of the banks that got TARP money, it was Wells Fargo that kicked and screamed the most about needing to take the money.
So, there is a huge market opportunity to originate these loans, especially given their size (they already have the infrastructure available to get the money out the door), so I’ll bet Wells Fargo paid a lot of attorneys a lot of money to figure out an underwriting process and agreement with the government to minimize their risk.
I suspect that we’ll find out pretty quickly if this results in more money being lent.
The reality is this is government’s effort to accommodate the widespread fraud going on right now in the market.
A song for Wall Street.
https://www.youtube.com/watch?v=yge311sFhC8
I cannot imagine the tax bill in some states with a $417,000 nut to boot. OUch!!!
Cui bono? I said a few years after the 2008 crash on this and other blogs that we would get another crash because the scum saw how they were able to further rob the country in the aftermath of that crash. They found the perfect blueprint for getting money out of thin air. They team up with the banks who get them elected to make the policies that allow the banks to rob people on the way up and on the way down via bailouts. If we don’t get medieval on these people in the very near future the country will be completely lawless. We’re headed in that direction but I am comforted by reading lots of people on the web waking up and willing to form choice (lol!) squads if need be.
I guess they are either too stupid or just willfully ignorant. [Or] is there something else going on?
The corporate media’s role is to influence, not inform. Google “six corporations control media” to see how the Oligopoly ensures that the sheeple are protected from inconvenient truths or anything that doesn’t fit The Narrative.
http://www.businessinsider.com/these-6-corporations-control-90-of-the-media-in-america-2012-6
Six corporations control the media; ergo, only sheep go to the MSM for real news or real truth.
http://theeconomiccollapseblog.com/archives/6-giant-corporations-control-the-media-and-americans-consume-10-hours-of-programming-a-day
Hard times and false narratives.
http://www.theburningplatform.com/2016/05/25/hard-times-false-narratives/
The mainstream media mouthpieces for the establishment peddle false narratives, disingenuous storylines, and outright propaganda to keep the ignorant masses confused, oblivious to reality, misinformed, and passively submissive to the opinions of highly paid “experts” and captured fiscal authorities. The existing social order likes things just as they are.
They reap ill-gotten riches, wield unchecked power, and control the minds of the masses. They are the invisible government consciously manipulating the minds, habits and opinions of the multitudes in order to dominate society, control the levers of government, and accumulate obscene levels of wealth through manipulation of the currency and domination of the banking and corporate interests.
http://davidstockmanscontracorner.com/losing-ground-in-flyover-america-part-2/
There has never been a more destructive central banking policy than the Fed’s current maniacal quest to stimulate more inflation and more debt. That’s what is killing real wages and economic vitality in flyover America—-even as it showers prodigious windfalls of unearned wealth on Wall Street and the bicoastal elites who draft on the nation’s vastly inflated finances.
In fact, the combination of pumping-up inflation toward 2% and hammering-down interest rates to the so-called zero bound is economically lethal. The former destroys the purchasing power of main street wages while the latter strip mines capital from business and channels it into Wall Street financial engineering and the inflation of stock prices.
ISIS takes a page out of the DNC’s book.
http://www.marketwatch.com/story/desperate-isis-is-taxing-nearly-everything-including-open-front-doors-and-messy-beards-2016-05-27
Yellen professes not to see any bubbles….
http://www.telegraph.co.uk/business/2016/05/25/take-a-look-inside-the-forgotten-3m-mansion-in-londons-east-end/
Another success story from the Fed.
http://www.marketwatch.com/story/new-data-shows-a-deeper-polarization-of-haves-and-have-nots-in-housing-2016-05-27
Best gun salesman evah! (Until Hillary steals the crown.)
https://twitter.com/AmmoLand/status/735591397345099780
my county reports a 16% commercial vacancy rate.
Is this like the unemployment rate where if you give up trying to rent the space it isn’t counted?
If sheep could vote….
https://twitter.com/maxkeiser/status/735054461941481472
‘Muricans coming off the rails is bullish for housing, right?
http://theeconomiccollapseblog.com/archives/a-spirit-of-violence-and-civil-unrest-is-rising-in-america
Washington Park(Denver), CO Housing Affordability Skyrockets As Prices Crater 22% YoY
http://www.zillow.com/washington-park-denver-co/home-values/
My hidden camera has captured two realtors approaching a wary mark, er, looky-loo, at an open house. Enjoy!
http://imgur.com/gallery/7vCr1UW
France caught between militant hard-left unions and a “socialist” prime minister who is a tool of the Oligopoly. Talk about screwed.
https://www.armstrongeconomics.com/international-news/europes-current-economy/france-socialist-trade-unions-refusing-to-reform-civil-unrest-erupting/
Bullish!
http://www.zerohedge.com/news/2016-05-27/im-going-stick-right-end-french-president-hollande-threatens-union-protesters
Are the same sheeple who voted for the crony capitalist status quo in 2008 and 2012 suddenly going to grow a brain in 2016? I’ll believe it when I see it.
http://www.independent.co.uk/voices/donald-trump-will-win-the-us-presidency-by-a-landslide-dont-underestimate-him-yet-again-a7051686.html
Trump debates Sanders? Already happened…
https://www.youtube.com/watch?v=8Poi5×0E2CM
The Comrades of Proven Worth who administer our NEA indoctrination mills and see to the all-important task of dumbing down the special snowflakes, overseeing their collectivist ideological development, and rendering them incapable of critical thinking or contributing to society - the perfect Democrat lifetime dependency voters, in other words - must be suitably rewarded for their towering achievements in turning out functional retards. Forward!
http://www.zerohedge.com/news/2016-05-27/exposing-detroits-no-school-administrator-left-behind-program
It is imperative that Yellen the Felon prop up the Ponzi markets and defer the financial reckoning day until her fellow crony capitalist, Hillary Clinton, can be elected to ensure that no one on Wall Street or at the Fed is held accountable for their fraud, recklessness, racketeering, or swindles against the 99%. Forward!
http://www.businessinsider.com/stock-market-predicts-election-winner-2016-5
G-7: We must not spook the herd by telling the truth.
http://www.zerohedge.com/news/2016-05-27/g-7-refuses-warn-global-economic-crisis-due-fear-sentiment-can-become-self-fulfillin
P-O-N-Z-I….
http://www.marketwatch.com/story/by-this-measure-us-stocks-are-more-expensive-than-ever-2016-05-27
Funny how the people who want less gov, complain when gov does not create jobs.
That’s rich. What part of the economy does the government not wrestle, strangle, regulate, coerce, tax, stimulate and distort? Just since I started this blog the government has absorbed almost the entire house loan industry. Now health care.
Let’s ask, who told the government to foam the runway for the banks? It was crammed down our throat as saving us from impending economic death. “High house and stock prices will make us prosper!” That’s looking like the biggest economic policy mistake ever. If high house prices fixed anything, the bubble would never have popped in the first place. Same with QE. I was agin’ it. Get your hands off and let the process work. What needs to be liquidate will be, and a stronger economy will come out. No, we got Japan as the model.
I liked it when Banks were separated under Glass-Steagall.
Conservative types could still make a decent buck trending with slow and steady.
Yes, but the goal is less gov.
It was less gov’t. You had choices, gambling (high risk) investing or Interest (low risk) investing. Less gov’t is about having choices/less monopolies.
Yes, that is the goal, break up the monopolies and add competition on all levels especially health care and education.
no more foam.
Or they complain when the roads are falling apart or that the security line is too long at the airport.
Here is a nice anecdote. Student enrollment to become teachers is in free fall here in the Centennial state. And I think I know why.
Starting pay in most districts is about $36K (about what a delivery van driver makes). The thing is, almost all the teaching jobs for new grads are part time, 20 hrs a week. So they start at 18K. They will try to supplement this with subbing, but there are only so many subbing gigs to go around.
The savings of course, are in the benefits. Full time teachers get 100% of their health insurance. Part timers have to pay, and quite a bit. So now you’re making only $18K AND you have a $250 a month healthcare premium. I suspect that many are skipping it and staying on mom-n-dad’s plan, at least until they turn 26. So by having part timers, the school districts are saving some healthcare premiums.
So you see that there are some drawbacks to your TABOR.
Definitely for school teachers and other civil servants. But few on this board will shed any tears for them. Still, I’m glad I’m paying $2,000 a year and not $10,000 a year in property taxes.
Voters in some districts have voted for overrides, but they are few and far between. I’d be willing to vote for say a $300 a year increase, but most of my neighbors won’t.
It sounds like it’s also bad for kids. I would think that parents would be concerned at some point is teachers’ salaries got too low.
We cant get new doctors to move to my town, wages too low for the local COL.
“Or they complain when the roads are falling apart or that the security line is too long at the airport.”
The long lines at airports are a problem for Hillary Clinton
By Ed Rogers
May 25 2016
Does anyone think of Clinton as a problem-solver? Answer: No. Can anyone think of a problem she has ever solved?
As I have written before, the Democrats are identified as a party that agitates for interest groups and social causes. They impose their will through regulations and via the courts. The Obama era has left the Democrats without any claim to managerial expertise or problem-solving skills, and Clinton will pay a price for that in November.
Not one person who is outraged and disgusted while standing in a security line and missing their flight could care less about Trump’s taxes or how he may or may not have treated a girlfriend decades ago. They want somebody who can make basic government functions work. Let’s face it, the people who rolled out the Obamacare website are the same people who can’t figure out how to match the number of TSA security screeners with airport traffic.
Honestly, do you think the White House has spent more time in the past 90 days managing its school bathroom mandate for transgender students or trying figuring out how to make TSA security lines work with adequate efficiency this travel season? The answer is obvious.
http://www.washingtonpost.com/…/ - Similar pages
2 days ago
Not one person who is outraged and disgusted while standing in a security line and missing their flight could care less about Trump’s taxes or how he may or may not have treated a girlfriend decades ago. They want somebody who can make basic government functions work.
The problem is that when people are no longer standing on security line, they stop caring about TSA delays and go back to being outraged about Trump’s taxes and so forth.
irrelev nt
Can I buy an a?
How does gov create a job ?
By funding more TSA positions, obviously!
Trump winks at Wall St
https://finance.yahoo.com/news/donald-trump-winning-over-wall-130140264.html
lol@lola
Hillary tosses Wall Street’s salad.
http://www.breitbart.com/2016-presidential-race/2016/05/27/goldman-sachs/
Then-Senator Clinton, who is under fire from Bernie Sanders for her close ties to the investment firm, identified herself as Goldman Sachs’ “partner in government” at the 2005 groundbreaking of the firm’s new 740-foot-tall headquarters in Lower Manhattan. Goldman Sachs won federal government Liberty Bonds to build it.
“Following the tragic events of September 11th, I was proud to have worked with my colleagues in Congress to secure $20 billion in federal aid for New York,” Clinton said. “Major employers like Goldman Sachs needed to know they had a partner in government to ensure that Lower Manhattan could continue to sustain their businesses in the area, I am pleased to be an ongoing partner in supporting economic development in Lower Manhattan and thank Goldman Sachs for their commitment to the future of Lower Manhattan and New York City.”
W.P.R.(why Pay Retail)? Just wait for the next recession.
Spike in Crime in Las Vegas Spurs Search for Causes, Cures
There’s also been a spike in “For Sale” signs in my little neighborhood, most recent one next door to us. I think they were the latest house burglarized. A “steal” at $430K.
https://www.reddit.com/r/LateStageCapitalism/comments/4l97p0/uber_disguises_survey_as_8_hour_interview/
As CA goes….
California’s three-year boom run is showing signs of fatigue!
It is good to be a free man and no debt!
Living debt free is like winning the lottery EVERYDAY!!
Imagine no payments - now imagine immeasurable freedom.
Unbelievable.
http://www.businessinsider.com/yellen-speech-at-harvard-may-27z-2016-5
‘The Federal Reserve did not see the financial crisis coming, even though there were apparent clues. “We saw trees, and the house-price bubble was a tree,” Fed Chair Janet Yellen said Friday at Harvard University, where she was awarded the Radcliffe Medal. “We really didn’t see that coming.”
‘She said the explosion in borrowing was a sign, but the Fed did not see the risks evolving into a full-blown crisis.’
The prices were a dead giveaway Janet. You were the San Francisco Fed President.
They chose not to see it because they were fully complicit in causing the bubble - and now history is repeating itself. Hillary and Yellen deserve to be cellmates at the Supermax.
Santa Clara, CA Housing Affordability Improves As Prices Dive 4% YoY
http://www.zillow.com/santa-clara-ca-95051/home-values/
https://anthonybsanders.wordpress.com/2016/05/27/penny-dreadful-q1-gdp-0-8-growth-vs-0-9-expected-personal-consumption-1-9/
‘Gross private domestic investment was down -2.6% while residential investment rose 17.1%.’
And look at how high its been the past few years. Good find, thanks for posting that.
Thanks to the Fed, the US now has a bifurcated housing market - one for the rich, one for the proles.
http://www.businessinsider.com/the-horror-story-of-the-us-housing-market-is-far-from-over-2016-5
Elizabeth “Fauxahontus” Warren, whose fake Native American bloodline is surpassed only by her fake “champion of the middle class” credentials, was supposedly Harvard’s first “woman of color.” And I, my friends, am Prince’s long-lost illegitimate son and sole heir to his fortune…because, you know, I FEEL biracial and like some of his songs….
http://dcwhispers.com/phony-elizabeth-warren-listed-harvards-first-woman-color-1997-article/
Burlingame, CA Housing Demand Plummets 15% YoY
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
https://research.stlouisfed.org/fred2/series/SPCS20RSA
Presto! Equity!
Equity = Wealth.
A rise in equity also means a rise in rents if the rent/buy ratio is to remain the same, and a rise in rents means a rise in rental income and a rise in rental income means a rise in GDP. This is true whether the rental income is real or if it is imputed.
Real income or imputed income - one is spendable, one is not. No matter: They both count the same when it comes to computing GDP.
2000, after the Housing Bubble was in high gear, is an odd point to start Shiller’s home price data. To my recollection, the series shown in his book goes back to 1890 or so.