November 27, 2014

A Quick Scan Of Data Can Be An Eye-Opener

For a Thanksgiving respite, I’ll point out this blog is nearing its tenth year anniversary. A trio of posts that month in 2004.

“Saturday, December 11, 2004″

“Subprime Lending Surges”

“Pricing bubbles often end in a parabolic rise, which we probably saw last year. It is no surprise that what is holding up the market now is lending to so-called subprime borrowers. I view this as bad news for this market as these folks will be in financial trouble even faster. Consider that the risk to mortgage lenders increases, suggesting some desperation for borrowers. ‘Overall, new originations of subprime mortgages totaled an estimated $375 billion through the end of September, a figure that marked a 63 percent year-to-date rise. Putting that number into perspective, one out of every six new residential mortgages made this year has gone to a credit-impaired’..borrower.”

“Wednesday, December 22, 2004″

“Most Influential List Revealing’”

“The website Builder Online recently published an editors list of people of whom ‘when these individuals speak, do other people listen? More important, do they act? Each of the professionals who made the cut left no doubts.’”

“I think it is telling that number one is Fed Chair Allan Greenspan who ‘can continue the current housing boom or grind it to a halt’. And number two is Franklin Raines, who as CEO of Fannie Mae, signed off on financials that must be restated negatively to the tune of nine billion dollars. And who was forced out of that position today.”

“It would seem the editors saw the most influence from a central banker and a disgraced bureaucrat, not very comforting picks for the industry.”

“Sunday, December 05, 2004″

“Fannie Mae Weakens Financially”

“A quick scan of Fannie Mae quarterly financial data can be an eye-opener. Of course, the most recent quarter isn’t available due to the accounting problem, but lets use what is available; the four quarters from June 30, 2004 and back. Compared to the quarter ending September 30th, 2003, Net Income has declined 58%. And if the Securities and Exchange Commission rules against the mortgage giant on accounting for derivatives, the firm will have to post a 9 billion dollar charge. Investors have also upped the shares “short”; that is betting the stock price will fall, some 2.28 million shares in the past month.”

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November 26, 2014

The Days of Double-Digit Appreciation Rapidly Fade Away

The Aurora Sentinel reports from Colorado. “While the housing market across the metro region continues to tighten, homes in Aurora are some of the most affordable in the state, according to a new market report released by Coldwell Banker. Average home prices in Aurora sit just under $297,000, which is significantly below the statewide mean of $407,000. Ed Hardey, board chair of the Aurora Association of Realtors, said that the rate of appreciation in Aurora has been staggering. ‘Aurora has seen dramatic appreciation in the past year, and prices show no indication of going down at all,’ he said. ‘The home that you bought six months ago is worth far more today than when you made your initial purchase.’”

From Bloomberg. “Growth in million-dollar home sales is slowing in areas including Miami, Las Vegas and Los Angeles as rising prices and the strengthening U.S. dollar discourage foreign investors who helped lead the recovery. ‘If the domestic buyer doesn’t step in. I wouldn’t be surprised to see the market stall,’ said Peter Zalewski, principal of CraneSpotters, a Miami-based real estate consulting firm. ‘It’s becoming too expensive for foreigners to buy in South Florida at the same pace as previous years. Foreign currencies are weakening against the dollar and local real estate prices are on the rise. It’s creating a perfect storm to push the foreign buyers away, or limit what they can acquire.’”

“Cash deals in the Las Vegas area have dropped in part because investors that helped revive the market by purchasing single-family homes after the crash have pulled back, said Kolleen Kelley, president of the Nevada Association of Realtors. Not only were investors buying low-priced homes to rent out, some were purchasing high-end foreclosures and reselling them for a profit, she said. ‘We don’t have big diversified economy here,’ Kelley said. ‘When the market starts slowing down, it really starts slowing down.’”

Vegas Inc in Nevada. “Southern Nevada homebuilders continue to struggle this year, with lower sales and a rising volume of canceled deals, a new report shows. Builders pulled 514 construction permits in October, ‘much less than we had hoped to see,’ Home Builders Research President Dennis Smith wrote. Buyers increasingly are canceling sales, Smith reported. Buyers backed out of 21 percent of new-home sales contracts in Henderson last month, up from 12 percent in April, according to Smith. In North Las Vegas, cancellation rates jumped to 34 percent from 25 percent in that period; in the northwest valley, it went to 24 percent from 13 percent; and in the southwest valley, it rose to 22 percent from 19 percent.”

The Seattle Times in Washington. “Housing prices showed further signs of cooling in September, with prices falling in the Seattle area and almost half of the cities in the S&P/Case-Shiller 20-city index, officials said. ‘The days of double-digit, home-value appreciation continue to rapidly fade away as more inventory comes on line, and the market is becoming more balanced between buyers and sellers,’ said Zillow Chief Economist Stan Humphries.”

Crain’s Chicago Business in Illinois. “The big-money investors that gobbled up thousands of local homes aren’t as hungry anymore. Institutional investors accounted for 4.7 percent of Chicago-area home sales in the third quarter, down from 7.6 percent a year earlier, according to RealtyTrac. Investor activity peaked at 10 percent of the sales in first-quarter 2013. The question is whether traditional homebuyers can pick up the slack. ‘That’s the only way the recovery can be sustainable, is if more traditional buyers get involved,’ said RealtyTrac VP Daren Blomquist. ‘The good news is the traditional buyer has less competition, but it probably means there’s not a lot of great affordable inventory in that market right now. If there were, the investors would be jumping on it.’”

The Union Tribune in California. “After a sluggish summer, the pace of home price appreciation in San Diego County’s housing market slowed again in September. It continued an intense slowdown in the pace of appreciation from a little more than a year ago, when prices were increasing 21.5 percent annually. At that time, the market’s large gains were driven by investor-led activity like foreclosure resales and fixing-and-flipping. ‘Prices continue to trend upward but most importantly they continue upward at a sustainable rate,’ said Mark Goldman, a loan officer and real-estate lecturer at San Diego State University. ‘We all want our houses to double in value, the problem with that is you end up with a market that’s going to collapse on its own weight.’”

The News Miner in Alaska. “Numbers collected by the Fairbanks North Star Borough show 150 foreclosures occurred through September of this year in the Fairbanks Recording District. That’s up from the 137 foreclosures for the same time period last year. In 2012, the number of foreclosures through September was 117. In 2011, the number was 102. Laura Burke, executive director of Fairbanks Neighborhood Housing Services, said her agency, which provides low-interest loans, is seeing a slight increase in the number of late payments, and she is bracing for harder times to come. ‘There is something in the air,’ she said. ‘I think it’s going to hit us again pretty hard.’”

“Audrey Foldoe, a real estate professional in Fairbanks for more than 30 years, said some of the foreclosures are a result of people simply walking away from their mortgages. Some people bought a home when prices in the real estate market were high about 10 years ago but now can’t sell their home for what they owe on the mortgage, she said. ‘One of the biggest factors is the fuel,’ she said. ‘A lot of people operate month to month,’ Foldoe said. ‘Any little thing is going to throw it off.’

“The Fairbanks housing market is strong with a large inventory and low interest rates, she said, making it even harder for strapped sellers to find a buyer. Sellers have to make concessions.”

Bits Bucket for November 26, 2014

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November 25, 2014

The Runaway Property Boom Looks To Be Over

The Mirror reports from the UK. “Foreign buyers accounted for almost three-quarters of home purchases in central London in 2012, according to a report by one property group, and more than half were snapped up by buyers from Singapore, Hong Kong, China and Malaysia. But many of these high-end homes are bought by wealthy foreign-based investors and left empty. Labour MP Sadiq Khan said: ‘Londoners are being priced out of the housing market by an influx of foreign buyers, who see London property as an investment and in many cases leave properties sitting empty as ‘ghost homes’.”

The Vancouver Sun in Canada. “Senior economist Robin Wiebe, a former analyst at the Canada Mortgage and Housing Corporation, says it’s true, Vancouver’s prices are out of whack with personal incomes. Wiebe says the only things that could reverse the escalation of West Coast prices is a significant downturn in China’s economy or a move by Beijing to restrict the ability of its citizens to take money out of the country. The idea of Chinese buyers being in some way responsible for higher housing prices in the city is controversial. Vancouver’s politicians and realtors, fearing a public backlash, have long been downplaying the notion.”

“The cat now appears to be well out of the bag. As Wiebe says, ‘If China’s economy slows, that has the potential to cool Vancouver’s housing demand, stall sales and price growth.’”

The Telegraph on China. “China has abandoned its policy of monetary tightening, cutting interest rates for the first time in over two years to head off a corporate crunch. China is uncomfortably close to deflation, made worse by the plunge in the Japanese yen, and by China’s quasi-peg to the soaring US dollar. The country is importing a contractionary policy at a time when its housing boom is already wilting, with prices down for the last six months.”

“Wei Yao from Societe Generale said bad loans are rising at a clip of 50pc a year. ‘The worst is still to come and banks know it. Chinese banks have doubled their loan loss provisions,’ she said. ‘But the bigger concern lies with state-owned enterprises (SOE). We estimate SOE debt at close to 100pc of GDP, twice as much as private corporate borrowing. Given that banks have always preferred SOEs, a disproportionally large part of banks’ balance sheets is probably locked in to non-performing SOE loans,’ she said.”

The Sydney Morning Herald in Australia. “The heady days of Sydney’s runaway property boom look to be over, with numbers of buyers at open homes and auctions halving in recent weeks. Experts say the flood of listings in November has diluted the number of buyers searching for homes. ‘We’re certainly seeing a waning of house price growth in Sydney,’ said Domain Group’s senior economist, Dr Andrew Wilson. ‘There is no surge in activity in our economy that’s pushing up real incomes to give us the capacity to keep bidding up house prices.’”

The Indian Express. “The weighed average cost of a new apartment in tony South Mumbai has soared to a dizzying high of Rs 7.5 crore, leading to peaking of an inventory pile-up to such an extent in the area that it will take more than eight years for many units to get sold. ‘The kind of pricing of super-luxury residences is unaffordable even to the high-end buyers who are, as it is, minuscule as compared to the spate of launches in the segment,’ said Paras Gundecha, builder and former president of Maharashtra Chamber of Housing Industry.”

Gulf Business on Dubai. “It’s been a year since the Dubai real estate market began to slowdown. Property agent Knight Frank reports the amount invested in Dubai property in the first half of 2014 was less than half that invested in the same months of 2013. However, price falls have been fairly rare until recently. Motivated-sellers, as they are known in the trade, now find that they have to reduce their prices to find buyers in all but the most popular locations.’

“Residential units available for rent or sale hit 192,000, admittedly a figure that multiple listings would net down to a much lower amount. In mid-October, that figure was down but still high at 164,000. It is impossible to estimate exactly how many empty units for rent or sale this now represents. But this could easily be 30 to 40,000 when netted out. There are also around 15,000 units being added annually to this inventory by developers, according to the survey. There has also been a marked deterioration in the economic outlook for Dubai over the summer.”

The Star on Kenya. “Real estate investors’ interest in building and buying bedsitters is increasing because the units offer a fasteer return on investment and higher financial liquidity. High mortgage rates have led to a slowdown in the property market over the last few months as potential home owners delay buying decisions waiting for interest rates and prices to reduce. Consequently, property developers are left with a cash hitch and glut in high-end and middle-income units, prompting them to venture into bedsitters which are easier to sell or rent.”

“While smaller houses always have higher demand, bigger houses can stay empty for months, said Property expert Clifford Mwenda. ‘I have four big housing units that I have been pushing in the market for a while, without success. I attribute it to the prices we have quoted, which are high and cannot be compared to bedsitters,’ he said. ‘As an investor, the bank will never take away your property. You are always liquid, unlike those who spend too much on expensive houses and are unable to sell them,’ he says.”

The Daily Express in Malaysia. “In a project located in Kota Damansara, Selangor when the first block was launched in 2012, all the 400-odd units were sold in less than a week. When the second block was launched, the next 400-odd units took a longer time to sell. The developer has launched the third and final block at about RM1,200 per sq ft but there were only 80 buyers after its launch early this month. Das Gupta the principal of Stocker Roberts & Gupta Sdn Bhd says the lettings market is very weak and this weakness is evident in all sub-segments of the property market.”

“Many of the sectors are ‘flat’ and many buildings – both office buildings and condominiums – are empty. Owners will be forced to reduced rental, he says, referring to the overall property market. He says the paltry capital appreciation was evident since a year ago and he expects the situation to persist one more year, at the minimum. Says Gupta: ‘Never in the last 20 years have I seen so many bungalows in Damansara Heights – one of Kuala Lumpur’s premium residential suburb – up for sale, with owners asking realistic prices.’”

Bits Bucket for November 25, 2014

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November 24, 2014

Hearing The Word Oversupply Just About Everywhere

The Los Angeles Times reports from California. “By most measures, the housing market these days is a bit sluggish. But the high end is hopping. Luxury home sales in Southern California are hitting levels not seen in decades. Sales worth $10 million or more are on pace this year to double their number from the heights of the housing bubble. The number of homes bought for $2 million or more in recent months is the highest on record. Sales have been brisk, said Joan Marcus Colvin, New Home’s senior VP of sales, marketing and design, especially at that Newport condo building, the Meridian, where 34 units have sold since February, at an average price of nearly $3 million.”

“That’s without even having a model home to show customers — the site is still under heavy construction. ‘It’s quite a testament to the strength of the high end of the market,’ Colvin said. ‘These were bought sight unseen. We couldn’t even stand people there and show them it.’”

CNN on New York. “Sales of multimillion dollar residential properties are up 120% so far this year, according to CityRealty. Many of this year’s sales have taken place at the new, super-luxury buildings that are popping up in neighborhoods just south of Central Park, the Upper East Side and in Chelsea, said Pam Liebman, CEO of Corcoran Group. The cost of acquiring land to build on in Manhattan is so sky-high that builders are aiming for the very high end and charging many millions for the apartments. ‘That’s the only way the math works,’ said Liebman.”

National Mortgage Professional. “The number of homes for sale continued to increase across the U.S. in October, a good sign for buyers—but with a catch. In many parts of the country, supply increased more among the most expensive homes than low- and mid-priced homes, according to Zillow. In Denver, there were almost four times as many homes available for sale in the upper price tier (priced at $357,900 or more) than there were homes priced in the lowest price tier (less than$219,000). The same was true in many other markets. Dallas, Atlanta, Phoenix and Nashville had at least two times more homes for sale in the top tier than the bottom tier.”

“As the market has cooled, buyers looking for less expensive homes did find some relief in the hottest metro areas, including San Diego, Los Angeles and the Bay Area. In San Francisco, the number of low-priced homes on the market rose by 39 percent, but there were fewer high-priced homes on the market.”

The Arizona Republic. “More owners of metro Phoenix’s high-end houses are trying to sell, but there fewer buyers in the market for a house costing between $500,000 and $3 million. The Valley’s luxury housing market had been bucking the overall slowing trend until recently. In September, 213 houses priced above $500,000 sold in east Phoenix and the northeast Valley. That’s down 10 percent from August and down 7 percent from September 2013, according to housing analyst Mike Orr’s Cromford Report.”

“The report tracks luxury home sales in Scottsdale, Paradise Valley, Fountain Hills, Rio Verde, Arcadia, Biltmore, Cave Creek and Carefree, where most of metro Phoenix’s more expensive neighborhoods are located. Listings of houses priced above $500,000 in these areas climbed to 2,295 in September, up 3.6 percent from August and 19 percent from September 2013. Demand from high-end buyers has enticed more owners of the Valley’s most expensive houses to try to sell.”

The Sun Sentinel in Florida. “Home listings are on the rise across South Florida — especially in the picked-over lower price ranges, a new report shows. In Palm Beach, Broward and Miami-Dade counties, 10,001 for-sale properties were priced below $149,950 in October, a 49 percent increase from a year ago, according to Zillow. Mid-tier and high-end listings also increased, but not by nearly as much as the low-priced properties.”

“Amanda Wilson, an agent for EWM Realty in Broward and Palm Beach counties, said many low-end homes are foreclosures that haven’t been maintained. Some have missing appliances or structural and roofing issues — costs that easily stretch into the tens of thousands of dollars. ‘Finding something that they’re proud to live in is hard,’ Wilson said. ‘Most buyers in that price range don’t have $30,000 or $40,000 that they can put into the house. They’re middle class America. Every penny counts.’”

The Philadelphia Inquirer in Pennsylvania. “I spent the first six months of the year hearing real estate agents complain there just wasn’t enough for sale to satisfy prospective buyers. The supply shortage - that is, a shortage of houses that buyers wanted, houses that were up to date and properly priced - lasted well past the spring selling season ending June 30. And it was widespread. For ‘Town by Town’ in the Sunday Business section, I visited 26 municipalities and neighborhoods in eight counties, and of the 75 real estate agents and builders I interviewed, all but two started the conversations lamenting a shortage of listings.”

“But after the usual summer sales lull ended at Labor Day, Veteran agent Gary Segal, who sells in eastern Montgomery County, and other agents said, folks began listing their houses at a pace Realtors had been hoping for back in the spring. Unfortunately, there were fewer prospective buyers in the fall market than there had been four months earlier, so ‘almost overnight,’ Segal said, ‘the seller’s market became a buyer’s market again.’”

“The dynamic has changed just about everywhere, said Martin Millner, an agent with Coldwell Banker Hearthside in Yardley. ‘There isn’t tremendous buyer demand, and yet more houses are going on the market,’ he said. The high-end market dynamic is changing as well, Millner said. He repeated an observation by a friend of his who sells more expensive houses that ‘it is the worst he’s seen in 35 years.’”

“As I like to emphasize, real estate is local down to the neighborhood and even the block. But I’m hearing the word oversupply just about everywhere in the region now. Where have all the buyers gone?”

Bits Bucket for November 24, 2014

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November 23, 2014

Six Months Ago Buyers Were Being Unrealistic

It’s Friday desk clearing time for this blogger. “Through the first 10 months of the year, sales in the Triangle are up 2 percent compared with the same period in 2013. While prices have inched up over the past year, the increases haven’t been substantial enough to entice a larger number of sellers to put their homes up for sale. The average sales price of the homes that sold in October was about $250,000, up 1 percent from a year ago. ‘There’s been a lot of people staying in houses because their values haven’t recovered from 2008 enough,’ said Ed Willer, an agent with Berkshire Hathaway HomeServices York Simpson Underwood Realty in Raleigh. ‘The economy overall is just not back yet.’”

“Many would-be buyers in the Triangle also continue to assume that it is a buyer’s market, and are demanding concessions from sellers that many are no longer willing to provide. ‘I think we’ve still got some buyers that are struggling to understand that they’re not 100 percent in control of what goes on, what a seller’s going to do for them,’ said John Wood, a Re/Max United agent in Cary. ‘They just get cast aside,’ Willer said of those folks.”

“On Saturday, during a luxury real-estate auction in Park City, a rich buyer from Texas got a steal — paying $7.7 million for a home that was previously listed for $13.25 million. The couple attended the auction but declined to be interviewed except to say, ‘We still love Park City, but it’s time to move on.’”

“Their home had been on the market for about 18 months and the couple decided that an absolute auction — where the highest bidder wins and there is no minimum price that must be paid — was a way to sell the property quickly. Daniel DeCaro said his company is planning a fourth auction in about three weeks for a newly constructed home in St. George. ‘These homes have been on the market and the owners want them sold and are willing to give a discount,’ he said.”

“Michael Ripson wants to pay your mortgage for a year. You just have to buy a new home at the Scottsdale home builder’s new subdivision in Surprise before Christmas. Ripson and is offering mortgage payments for a year to as many as 19 home buyers at his Sonoran Acres development. Homes there start at $265,000 and can run up to $400,000 with add-ons. Ripson said the hope is to get hesitant home buyers off the fence about purchases. He said home builders are wrestling being able to convert prospective home buyers into customers.”

“‘Those conversion rates are at historically low levels,’ Ripson said.”

“Whatever you say about the property market I’m glad I’m not selling. There wasn’t even a bid at two recent home auctions that I know of even though clearance rates are supposed to be high. Dump or not, that’s not like any property boom I can remember. Mind you, it was different six months ago when the heat was on and buyers were being, er, unrealistic.”

“The annual growth in home values in October was 13.1 per cent in Sydney and 8.9 per cent in Melbourne, according to RP Data. What am I saying, isn’t that pretty strong? Oh wait, six months ago it was 17.3 per cent for Sydney and 14.6 per cent for Melbourne. Everywhere else prices fell last month, except in Brisbane where they were virtually stagnant. So while mortgage rates are at an all time low, high property prices and falling real incomes are beginning to bite. In fact the Reserve Bank points out that ‘an increasing share of owner occupiers is opting for interest – only loans to increase repayment flexibility.’”

“It’s just as well it’s been keeping that to itself because they’ll be struggling once rates start rising and they won’t have paid off any of the mortgage.”

“Home prices in most Chinese cities continued to drop in October despite easing restrictions, official data showed. Chief analyst at real estate agent Centaline Property, Zhang Dawei, said the price decline resulted in losses for home buyers, especially those who purchased houses in 2013. ‘The Chinese property market has bid farewell to the past golden decade,’ he said. ‘Home prices are unlikely to rebound due to huge inventories and new projects.’”

“Billions of dollars from opaque sources in China may be flowing into Myanmar each year, causing excessive volatility in areas such as the local real estate market, according to experts. Flows have increased recently as Chinese political and business leaders respond to efforts to curb corruption, causing many to look abroad to store their ill-gotten money. These capital flows are distorting markets through the region, and, to some extent, the world, said Sean Turnell, associate professor of economics at Australia’s Macquarie University.”

“One manifestation of this is felt in the rising Myanmar real estate market, but this experience is mirrored in many countries, including Australia – where hot Chinese money is creating a very serious real estate ‘bubble’ in Sydney, he said. ‘The volumes are so large, the problem so acute. In all of it we have to ascribe blame too where it is primarily due – China,’ he said. ‘China is exporting its instability, its corruption, its lack of faith in its own institutions,’ he added.”

“Canada ended its millionaire migrant programme in June. The Federal Investor Immigrant Programme was designed to attract high net-worth migrants to settle in Canada, and opened the doors for thousands of wealthy Chinese investors over the past two decades. David Lesperance, a barrister and solicitor at Lesperance Associates, has been working with international investors from China for many years. He said that immigration authorities are reviewing applications retrospectively and have already cancelled approximately 2,000 citizenships. Lesperance also warns that the Canadian Revenue Agency is aggressively reviewing the tax status of foreign nationals, and is looking to freeze and repossess locally held assets.”

“‘I am already receiving calls from people who are not only having their citizenship challenged but are also getting audit notices from CRA. It is easy to see this trend accelerating as all the incentives are there for the government to ramp it up. Once news of this becomes more commonplace, you will see a mad rush to the exits to dump those easily collected Canadian assets,’ he said. ‘Given the time it takes for the market to fully realise that this crackdown has already begun and is accelerating, I would anticipate the fire sale to take place within the next few years.’”

“Professor Arturo Bris, who heads the World Competitiveness Centre at Swiss business school IMD, told a Singapore forum the world had become so flush with money that people were paying ‘crazy’ prices for real estate and stocks. He highlighted five ‘risk factors’: access to cheaper oil and gas; the real estate bubble; a parallel stock exchange bubble; Chinese lending; and a tendency for leading corporations to accrue huge sums on their balance sheets.”

“Professor Bris said the amount of money on some companies’ balance sheets was comparable to the value of entire countries, calculated by applying a typical sales multiple to the country’s GDP and subtracting national debt. By that measure, Citigroup had enough ready cash to acquire 51 per cent of Italy, which Professor Bris valued at $US840 billion ($977bn). Apple could buy a maj­ority stake in Israel and Cisco could purchase Portugal, he said. ‘A bank that employs maybe 30,000 people could buy a country with 50 million — it shows the magnitude of the problem.’”

“These levels of cash would send economies into meltdown if they were suddenly released into the markets. Similarly, China could destroy the American economy by suddenly selling off US bonds. Professor Bris said Chinese lending was the biggest risk factor of all, with ‘humungous’ sums concentrated in a few poorly governed banks. ‘The next Lehman Brother will be Lim Ma Brothers.’”

“This fall, federal regulators made a controversial decision to back down from tough new underwriting standards for mortgages. Some affordable-housing advocates, allied with parts of the corporate housing industry, had successfully argued that the proposed standards would make it too hard for people to qualify, thereby reducing homeownership and hurting the housing market.”

“All of this ignores a crucial fact: Much, and at times most, of what happens in the mortgage market doesn’t have anything to do with homeownership. A sizable percentage of mortgages — including most of the risky ones that were made in the run-up to the financial crisis — are not used to buy a home. They’re used to refinance an existing mortgage. One of the most abjectly false narratives about the financial crisis is that risky mortgages proliferated so that people who couldn’t afford homes could nonetheless buy them.”

“According to a joint HUD-Treasury report published in 2000, by 1999, a staggering 82 percent of subprime mortgages were refinancings, and in nearly 60 percent of those cases, the borrower pulled out cash, adding to his debt burden. The report noted that ‘relatively few subprime mortgages are used to purchase a house.’”

“The problem, of course, is that the conflation of homeownership and consumer credit is so convenient for the powers that be. It allows lenders to cloak themselves in the American-as-apple-pie mantle of homeownership, thereby making it less likely that anyone will crack down on their practices. It allows members of Congress, many of whom depend on the financial industry for campaign contributions, to pretend that something that’s bad for us is actually a good thing for which we should be grateful.”

Bits Bucket for November 23, 2014

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November 22, 2014

Bits Bucket for November 22, 2014

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November 21, 2014

Bits Bucket for November 21, 2014

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