Guest Post: The Real Housing Recovery Story

Tyler Durden's picture

Via Lance Roberts of Street Talk Live,

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Say What Again's picture

I made SOOOOO much in the market, I'm gonna buy every house in sight!

idea_hamster's picture

Imagine that your financial advisor called you up one day and said:

"Great news...your investment portfolio gained 1% in January which is an annualized return of 12%.

Well, for starters, I'd say "Go look up 'compounding.'  Also, you're fired."

OutLookingIn's picture

The 'boomers' want to downsize.

Accept most are underwater.

Trapped in houses they can ill afford and forced to work until they croak!

Only to pass on nothing but the rags on their backs.

Housing supply is going to remain elevated, with little increased demand. Except as rentals.

Never One Roach's picture

costs of house owneship are rising fast...maintenance, insurance ...an dnow property taxes. i just heard on the radio there most likely will be a property tax increase to pay for, "school security training and additional school police" in light of the recent Newtown thing.

 

As far as supply, NYT had an article last year showing a 9 year supply of houses...that's impressive and does not include the massive increase in tract houses recently.

 

The next housing crash is going to be messier.

EnslavethechildrenforBen's picture

Evil bastards stole our printing press, now their buying our houses with our money. That will drive prices way up beyond previous levels eventually.

Seems fair enough.

Popo's picture

It drives me nuts that the media consistently reports rising home prices as a "good thing".   Are rising food prices a good thing?   How about rising gas prices?   In what other sector are rising prices in the cost of living considered a "good thing"?  The assumption with this type of reporting is that we're all homeowners.  But we're not.  We're increasingly a nation of renters.  So celebrating rising real estate prices are another way of saying, "Hooray! It's going to get shittier for you".  

nope-1004's picture

Houses used to be a place where you raised a family, had friends over, enjoyed company, provided a sanctuary for your children, and where you could relax.

Wall St. turned it into a side show.  House flippinig, mortgage fraud, and unserviceable debt load created one of the biggest asset transfers of our time.

Amazing how so many people got sucked in.  There will never be a housing recovery because in a debt based economy, the house is the only hard asset security against the loan.  Confidence is gone, but the loans aren't and will linger for decades.

Live in your home and enjoy life.  If you plan of flipping, you're much too late to the party and now look like an idiot.

 

FMR Bankster's picture

Yeah, unfortunately it's a tough situation for the 61 year old guy who refinanced into a 30 year 5 years ago so he could take the old lady to europe and lease a new Lexis. What the hell, at least his social security will go up as he works till age 70.

withnmeans's picture

Thank you Tylers, I knew my assessment was not far off on the housing numbers, however I was not sure how our government adjusted the numbers. I think the world would just love to have the numbers and facts straight out, no bending.

Although they still like to manipulate the markets with the false media figures.

Great work, Carry on

francis_sawyer's picture

Some people buy houses & others dig... You dig...

fonzannoon's picture

whatthefuckever.

Bernak said QE4eva was for one reason. To lower interest rates. They have risen. The fact that the market just keeps movin up is just an unintended consequence I guess.

NoDebt's picture

Surely, at this late date you can not believe that the consequences of QE (version whatever) are unintended.

<I can, and stop calling me Shirley.>

We are in a place where both the intended and "unintended" consequences of QE are seen as desirable.  They drove rates pretty low and they pumped the stock market.  Additionally, they largely monetized the federal deficit with apparently no adverse inflationary impact.  If you're a monterarist, this is what you call "winning".

However, I see nothing different than the last bubble (certainly no lack of hubris anywhere).  The only difference is if we get hit with another significantly destabilizing economic event there's nothing left to lean against it from a policy perspective.  All institutions are financially locked at the hip (dominoes are lined up perfectly).  All policy levers are already pushed up into the "run until failure" position, just to get us back to this middling state of affairs.  Downside risks of toppling that first domino are everwhere, upside risks..... not so many.

The current regime never sees the next wave coming.  Patience.  It's just halftime.

20834A's picture

Yes, the FED can't understand why mtg. interest rates haven't fallen even lower, to under 3%. Maybe because banks don't see much return on a 30 yr. loan at such low interest when they can find other, more profitable investments?

http://libertystreeteconomics.newyorkfed.org/2012/12/why-isnt-the-thirty-year-fixed-rate-mortgage-at-26-percent-.html#.UOGJBGF7DcY.twitter

 

dunce's picture

I have read some anecdotal stories about people with great credit having a hard time getting a mortgage which makes sense from the banks point of view, as you said why give a 30 year fixed rate low interest loan to someone who will pay you back with inflation dollars. If i was young though i would sure try to buy a house now with prices down and low interest. As for the taxes going up, you still pay them when you rent through your landlord but can not deduct them on your 1040.

Buckaroo Banzai's picture

LOL, look at the huge divergence between Residential Building Employment and Housing Starts. So, the houses are magically erecting themselves now???

francis_sawyer's picture

Yeah ~ the money is PRINTING itself too... Didn't you get the memo?...

booboo's picture

Mexicans "don't earn no income" and don't pay no stinkin income tax.

Snoopy the Economist's picture

uhhhh...double negatives result in a positive. I guess that was your unintended consequence.

Miss Expectations's picture

Trying to figure out what's in the numbers is likely a fool's errand...but perhaps the Residential Building Employment number is flat is because the jobs moved to the pre-fab factories:

Factory-Assembled Homes
Factory-assembled homes are sometimes called
manufactured homes, modular homes, factory
homes, or kit homes. All factory-assembled
homes share a common strategy which moves
as much of the construction process as possible
from the building site into a factory environment.

http://gccds.org/research/altconstruction/factory/factory.pdf

I know that this is happening with the 4 houses under construction down the road from me...and sadly no scraps in the scrap box either.  When they were building from scratch, we salvaged all sorts of stuff and built a shed.

CheapBastard's picture

I've watched them build some of these track houses and many look like crap....knotted, low grade wood, 2x4s too widely spaced, etc...I'm not sure they will last for the length of that 30-year morgtage or will fall apart before then.

Say What Again's picture

Hmmmm

"Great news...your investment portfolio gained 1% in January which is an annualized return of 12%."

Has this guy ever heard of compounding interest?

 

W74's picture

Question is always this: When?

Getting Old Sucks's picture

Home ownership is becomming less a priority among the young, especially in urban areas.  They are realizing that you buy a depreciating asset, pay a mortgage, maintain it to protect your investment and keep it comfortable, pay rent to the government to keep it, and stuck there if they want or need to move.  Renting is the way to go.  Even if they try to get rents to go higher than owning, It'll nevr be like it was when you could buy a house at 20K and sell it at 300K again.

otto skorzeny's picture

I'd say the same thing about auto ownership not being a youth priority-of course the most they'll ever be able to afford is some iShit

Getting Old Sucks's picture

OMG, I can find you houses (move in condition in decent areas) on Zillow that cost less than some of the higher priced cars on the market today.  That's why the auto industry will have to deflate sooner or later.  It's only a matter of time.

stormsailor's picture

son just bought a foreclosed home in terrific condition.  had a 320k loan for owner in 2007.  117k,  nice subdivision in charlotte,  most of the homes in there are custom built back in the middle to late 80's.   i told him to take it as a possible he may lose 20% or more if this bubble burst,  he knows and said he could stand it for he intends to live in it for more than 5 years. one heck of a lot of house for the money, but i think it will go lower, or even to 0 for a couple of years when this currency/country bubble burst.

 

 

Getting Old Sucks's picture

He made his decision, support him and be there.  Hope he is happy and lucks out.

The Navigator's picture

Just a contra-thought -- real estate "Could" win in a currency bubble bursting by

1- (hyper) inflation making the payments pennies on the dollar

and/or

2- a real asset that could be sold/traded/rented/mortgaged if/when the new currency appears.

Somebody is gonna be right (about RE, Ag/Au/Pb, meds/food, etc) when TSHTF - we just don't know who, yet. Could be your son made one helluva investment.

MachoMan's picture

Not really...  FOFOA covered this ad nauseum...  while it might appreciate during a currency crisis/inflationary environment, it will not appreciate as quickly as other assets...  aside from the intuitive fact that an abundance of supply typically doesn't convert into riches, regardless of the underlying economic conditions...

However, a house can provide utility other assets cannot...

Town Crier's picture

I'll never buy another house, condo, anything.  My property taxes always go up, regardless of the price the property can be sold for.  Ownership is an illusion as long as your place can be taken away from you if you don't pay onerous taxes (more than you ever paid in rent) determined by government toads. 

CoolBeans's picture

I'm with YOU, Town Crier.

Never, ever again.

CoolBeans's picture

RV or Tumbleweed house on wheels is starting to look good to me...after the kids have grown and left (if they can).  If not, we'll stick together.

Orly's picture

Love me some Lance!

stormsailor's picture

bet you say that to all the guys, lol

booboo's picture

Defaulting as a stigma has been cleansed from the American psyche, I have been involved in the building side of home building for over 30+ years, custom homes. That fucking market is deader then a door nail until you get into the multi million dollar market. Tract whores are throwing them up like it was 1999 but they are treated the same way as the large banks when it comes to accounting fraud, in house financing and dumping them onto to their Fannie (taxpayer). Fog a mirror, get a new Lennar, KB home. Dirt prices are starting to move up by the minute again. On the re-sale side Canadians, Chinese and young married couples that are taking another crack at a future default.

When the power brokers pull the rug this next time the guys who thought they were buying low are going to be shiting their Dockers.

  

otto skorzeny's picture

there is no stigma in doing things that used to be unthinkable-whether it be defaulting on loans or the use of torture by Uncle Sam-and that signals the death knell for the US. relativism is like termites that rot the structure while hidden from view-eventually it will fall albeit in the blink of an eye

847328_3527's picture

booboo, I see some of the same. We visited several tract house builders htis weekend and I was stunned to see the reurn of zero down and almost zero down mortgages. Seems as if nothing has changed. They just pass them on to the FHA (taxpayers) not really caring what your ability to afford the place is.

 

It's almost heartbreaking to see these young folks lock into a 30-year mortgage when they don't really even know where they will be in three years.

jomama's picture

'almost'? if you're stupid enough to buy into the dream, you deserve to face the consequences of your shitty decision.

and the real criminals making the money from these liar's loans walk away scott-free. 

fraud is really the only way to make any money in this country anymore.

Moon Pie's picture

Housing Schmousing....

q99x2's picture

I'm not buying a house until they let me do it with my student loans.

847328_3527's picture

All those empty houses I see in my neighborhood (with no For Sale signs) surely are very positive signs in the New Paradigm.  Almost as Bullish as the empty store fronts in the mall and rise in local crime.

GittyUP's picture

all over florida the demand way out strips supply.   not sure how the rest of the country is.  Investories are are super tight and the number of big investment companies coming into the market in the last few months is rediculous. 

I personally know 3 legit companies that are trying to buy 1000's of houses each over the next few years.  That alone would snap up a chunk of the foreclosures in Florida.   There are many many more I obviously dont know.  

The bottom has been in for 1.5 to 2 years.

Development is up.  Tons of condo projects breaking ground, apartments being built all over.  I know of a couple of mid size developers in central Flroida that keep being bid out on tracts of land by the national companies also. 

fonzannoon's picture

I think there is a paradign shift for real to Florida this time. Climate plus no state income tax. What's not to like?

Getting Old Sucks's picture

"I personally know 3 legit companies that are trying to buy 1000's of houses each over the next few years."

 

There's your demand

CoolBeans's picture

Yeah...and there's nothing better than an empty house (or 500,000 of 'em) that have been sitting in the FL heat and humidty for years and years.

Saw a place "just for beans" a few months ago...even the real estate agent for the bank was shocked -- part of the roof had caved in.  I'm thinkin' the bank will want to re-think that price or knock it down (hazardous) and sell the land.

eclectic syncretist's picture

I think you're an idiot.  Have a look at the data and see how it marry's up with your windage.

According to hotpads.com over 500,000 homes in florida are on the market today.

Three outfits buying 1K homes each isn't going to be much of a catalyst.

GittyUP's picture

Lol hotpads? How about running some real data like I do. Combine realtytrac, real quest professional , Mls, etc. get back to me when you realize how stupid you look.

Blankenstein's picture

 

+500,000

 

Sounds like this dunce just came from his NAR (National Association of Racketeers) pep rally.

CoolBeans's picture

Are you high?  ALL over Florida?  

I'm in FL.  Subdivision with 4 houses built.  Super quiet around here.

The subdivision to the north has zero houses and most are bank owned. The HOA isn't even pursuing unpaid HOA fees.  More than 1/2 doz more subdivisions that are e-m-p-t-y.  

We have properties ready and waiting for buyers - water front and gulf front that when they do sell are going for less than 1/3 of prices from a few years ago.

Some are buying cheap lots and holding - a few building....some say they don't want the existing houses due to toxic titles, etc.