The Second Housing Bubble Ends With A Bang, Not A Whimper, David Stockman Warns

Tyler Durden's picture




 

Following our earlier discussion of the echo-boom in housing, David Stockman appeared on Yahoo's Daily Ticker with Lauren Lyster to pour come much-needed cold water 'reality' onto the hopes of an increasingly sheep-like investing public. Homebuilder stocks up 100%-plus simply reflects that "we are in a bubble once again." The former CBO Director added that "in a world of medicated money by the central bank, things aren't what they appear to be," as he explained there is "no real organic sustainable recovery."

 

Stockman further contends, "It's happening in the most speculative sub-prime markets, where massive amounts of 'fast money' is rolling in to buy, to rent, on a speculative basis for a quick trade. And as soon as they conclude prices have moved enough, they’ll be gone as fast as they came." Critically, he points out we live in a world of boomers looking to be trade-down sellers, not one of trade-up buyers, as "the fast money will sell as quickly as they can and the bubble will pop almost as rapidly as it’s appeared.

 

He concludes that the American Dream of home-ownership 'forced' upon the citizens was a huge policy mistake as he chides, "let the market decide," as he clearly sees Bernanke recreating yet another speculative bubble.

 

Click image for full clip (no embed):

0
Your rating: None
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 02/04/2013 - 20:09 | 3214894 azzhatter
azzhatter's picture

JR you were my hero in chicago. Marleau is a pimp

Mon, 02/04/2013 - 20:16 | 3214912 NotApplicable
NotApplicable's picture

I'd consider him a member of the "controlled opposition." Says all of the right things, yet never implicates his Harvard buddies as the criminals they are (ala Chomsky).

Mon, 02/04/2013 - 21:48 | 3215173 Seer
Seer's picture

He's got a bit of a way to go yet, he just needs to see if Paul Craig Roberts is still alive: if anyone is a threat to TPTB it's a big insider like Roberts attacking it/them as he has.

Mon, 02/04/2013 - 21:08 | 3215057 Buck Johnson
Buck Johnson's picture

No kidding.

Mon, 02/04/2013 - 18:36 | 3214609 Tsar Pointless
Tsar Pointless's picture

House-flipping advertisements are all over our radio here in Pittsburgh.

I don't remember the name of the company in the ad, but here is a web site for one such company:

https://www.fortunebuildersregistration.com/Pittsburg/index.cgi?MID=3492889

We're making the same mistakes again, because we're Amerikkkans. We don't like to learn, especially from history.

Mon, 02/04/2013 - 18:55 | 3214657 1eyedman
1eyedman's picture

same in south florida again.  so many empty houses and condos still and obvious.  bought a scrtch n dent refridge last week, sales guy is hot to get his r.e. license so he can build a portfolio of 10-15 houses, using money he makes flipping the first 5 or so.  

ALL this activity is based on the good graces of the fed enabling banks to not need liquidity....probably will continue.  as another noted above once the old inventory comes in faster than a trickle, prices will stop and then the sudden appearance of many for sale signs.  units for sale will increase rapidly, but unless the fed takes away the honeypot, prices should just flounder.   

Mon, 02/04/2013 - 20:19 | 3214923 NotApplicable
NotApplicable's picture

Funny, no real buyers, and no real sellers. Just another zombie enterprise operating where a market once lived. As long as it keeps up appearances while enriching/busting those with access to credit, they can pretend it's all getting better.

Thank God beer-thirty has arrived!

Mon, 02/04/2013 - 21:39 | 3215149 Blano
Blano's picture

The "We Buy Ugly Houses" caveman is up all over Dallas now too.

Mon, 02/04/2013 - 18:38 | 3214616 Pairadimes
Pairadimes's picture

That 'bang' he is referring to will just be a DHS training exercise. Nothing to see here, move along.

Mon, 02/04/2013 - 18:39 | 3214617 NoDebt
NoDebt's picture

Pursue the same policies.  Act surprised when you get the same results.

Mon, 02/04/2013 - 18:44 | 3214626 bonzo112358
bonzo112358's picture

Socal is building again like its 2005.  Mainly townhomes and condos.  I mean who doesn't want a 1300 sq ft condo for 400k+ and an HOA of $300/month.  They are also trying to sell them months before they are even done building them.  The difference this time (one of many) is that back in 2006 banks weren't sitting on a home waiting for the fed to prop up prices so they won't have to take a write-down.  At some point this new inventory will run into the shadown inventory.  This will not end pretty.  If you haven't already, visit doctorhousingbubble to read about the farce that is Southern California.

Mon, 02/04/2013 - 18:54 | 3214652 fonzannoon
fonzannoon's picture

you need to pony up 350k to get a 500sq ft studio in Brooklyn.

Mon, 02/04/2013 - 19:00 | 3214670 kito
kito's picture

tis true fonz, but brooklyn is not a bubble. brooklyn is the natural offshoot of being priced out of manhattan. i was in williamsburg for many years. 15 years ago you wouldnt want to be walking around at night. today, its out of reach for most people......its now bushwick thats being gentrified..........

Mon, 02/04/2013 - 19:06 | 3214693 fonzannoon
fonzannoon's picture

I have a family member looking to buy there. The bubble question is the big debate in my family. I am in the camp that it is very specific to certain situations.. I agree with your assessment somewhat. She is in park slope. My problem is that she can only afford a studio at these levels. So in reality the only demographic she can plan to sell to is a young person. I think the next generations are in big trouble. Unless it is some kid with a rich daddy, I don't see her being able to sell very easily if need be. Also, I have been to open houses and pretty active. The real estate agents are doing a great job of making it seem like things are busy. But I don't see any action when I am there.

Mon, 02/04/2013 - 19:19 | 3214739 kito
kito's picture

nyc is its own world.....so many foreigners jump in to invest there as soon as prices drop.....if america continues into a slow decaying decline, i still see nyc as moscow is to russia....money center with third world outlying areas in most of the country....if america hits cardiac arrest and ebt cards dry up....well then, i wouldnt want to be anywhere near nyc................

Mon, 02/04/2013 - 19:37 | 3214788 fonzannoon
fonzannoon's picture

Thanks lol I will let her know either she will be fine or it's zombie apocolpse.

Mon, 02/04/2013 - 19:41 | 3214797 kito
kito's picture

flip of the coin.....although im starting to think its just going to be an ongoing inevitable slow decline into third world standards for the country.........................

Mon, 02/04/2013 - 19:43 | 3214794 Muppet Pimp
Muppet Pimp's picture

If you are following the PE money you will see the buying is in the sun states.  I would not touch NYC real estate with my worst enemies prick.  They are broke, have commie leadership, want you guns, and no amount of tax will satisfy them.  Get out of union strongholds.  The beauty contest is being won by low tax, freedom loving southern states.  Blankfein marked the top of the market with his 32.5M buy in the Hamptons.  We still allow sodas of any size, encourage both gun and PM ownership, and have no state income tax.  If you are a lefty stay put, Bloomberg and Cuomo will happily tell you what you can and cannot do (for your own good of course, they really love you) not to mention you will hate freedom.

Get out while it is still legal if you can swing it.

Mon, 02/04/2013 - 19:47 | 3214816 fonzannoon
fonzannoon's picture

You know what muppet, other than some apparently minor disagreement...I agree with your overall assesment. You make a lot of good points.

Mon, 02/04/2013 - 19:58 | 3214865 Muppet Pimp
Muppet Pimp's picture

Thanks for having an open mind.  Look at history and southern europe presently, and it is should be no mystery how it will turn out for these guys.  Southern states will never go along with an Obama bailout of of broke socialist states.  CA saved themselves by the skin of their teeth (and really with pension obligations, they are still in bad shape).  History tells us austerity is coming for those folks.  Get out ASAP if you have the means to do so.

Mon, 02/04/2013 - 20:00 | 3214869 fonzannoon
fonzannoon's picture

I do see your point there. How did CA save themselves?  Their budget numbers seem like smoke and mirrors? No?

Mon, 02/04/2013 - 20:25 | 3214932 Muppet Pimp
Muppet Pimp's picture

They taxed the daylights out of the productive class.  They may get a successful lefty state, but if you produce, you will pay the way of those who don't.  In time, capital will flee.

See this:

http://www.foxnews.com/opinion/2013/01/30/look-out-mr-obama-tax-revolt-h...

And this:

http://www.dailymail.co.uk/news/article-2266830/Tiger-Woods-admits-left-...

and this:

http://www.telegraph.co.uk/news/worldnews/vladimir-putin/9783711/Vladimi...

and don't forget these:

http://www.youtube.com/watch?v=XFnBDFjfOg0

http://www.guardian.co.uk/world/2012/nov/07/greece-austerity-protests-vi...

and of course this classic should not be forgotten:

http://www.breitbart.com/Big-Peace/2013/01/22/Report-Former-French-Presi...

California is beautiful and is full of special folks so maybe they will put up with it for awhile.  But in time....

I suspect the riots will hit Chicago first, as Illinois is run by a bunch of crooked leftists, and the people there are pretty hostile already.  It won't take much to get the riots started when they find out there is in fact, no free lunch.  Once Chicago has been set ablaze NY won't be far behind.  Good luck!

 

 

Mon, 02/04/2013 - 20:29 | 3214945 fonzannoon
fonzannoon's picture

I hear you. Like you said, it's temporary. Big money is fleeing. It's gonna fall apart.

Mon, 02/04/2013 - 20:27 | 3214938 NotApplicable
NotApplicable's picture

If you think your governor is gonna save you from Obummer, you're in for a BIG disappointment.

If you start another war of Northern Aggression by seceding? Well, you'll just fulfill his Lincoln fantasies and he'll start yet another war.

Let me tell you something. You'll never escape enslavement by fighting centralized power, as your actions create the very mandate the centralizers need to align their minions against you.

Mon, 02/04/2013 - 21:42 | 3215156 Blano
Blano's picture

Unfortunately there are plenty of people around Dallas (and I'm guessing Austin) who would gladly go along with their fellow dark skinned Messiah.  Hopefully they are just that in this state, a minority that can be overrun when push comes to shove.

Tue, 02/05/2013 - 00:23 | 3215492 Seer
Seer's picture

I think that you actually LIKE saying "socialist."  It's a great trigger word.  Problem is, and in no way do I endorse "socialism," NOTHING is going to resolve what we're facing, and painting a bullseye on "socialism" is merely tilting at windmills.

To say that the South is great, well... I'll take a rural countryside in the North over Miami, Dallas, New Orleans or any city in the South.  Nothing against the South itself, it's about cities, BIG cities.  Those who have been exposed to my positions know that I state BIG = FAIL (which would include anything, "socialism" included).

Shallow thinking gets one into an early shallow grave.  Fine by me (though it tends to leave behind the inculcations for more shallow thinking), as we need a lot of compost.

Mon, 02/04/2013 - 20:12 | 3214907 kito
kito's picture

no doubt you are right about the leadership, but the sun states (i assume you mean west coast) have no water and are way to close to the mexican border for my liking.....................if im heading west, im going to idaho, montana, oregon, etc..................

Mon, 02/04/2013 - 20:16 | 3214917 fonzannoon
fonzannoon's picture

I even like Wisconsin.

Mon, 02/04/2013 - 20:33 | 3214959 NotApplicable
NotApplicable's picture

Why would you move to federal lands?

http://strangemaps.files.wordpress.com/2008/06/map-owns_the_west.jpg

Those people out there are gonna get droned!

Tue, 02/05/2013 - 00:25 | 3215496 Seer
Seer's picture

You mean that California isn't the only state out West? </sarc>

Mon, 02/04/2013 - 20:40 | 3214975 NeedtoSecede
NeedtoSecede's picture

Nailed it Pimp.  There are still parts of the country that are relatively free.  And if it wasn't so damn tragic we would be laughing our asses off at all the dumb sheep stuck in DC, Detroit, Chicago and other libtard Nirvanas.  I am a translpanted northerner now living in a state that is both Southern and "Flyover", so we stay way off the radar of the power grabbers.  We would welcome anyone to our state with open arms and all we ask that you respect us, our freedoms, and our way of life.

And this is how I see it playing out.  While the nation declines and decays (as @Kito says) overall, there will be a slow steady migration of freedom-loving productive peope to areas where they will be welcome. Over time the Detroits and Chicagos and Camdens will continue to decay.  But Charlotte (not Raliegh-too many colleges with their progressive drivel poisoning the well), Atlanta, DFW, Austin, OKC, Tulsa, Nashville will continue to thrive.  These empowered states will eventually start taking a stand against the oppression of DC and they will start taking back their sovereignty.  There will be no need for violent revolution or civil war (unless .gov wants it--and they might).  But just a quiet secession made by everyday people voting with their feet.  One person at a time, one family at a time, one business at a time.  Move to where you are free, move to where you are respected as an individual, not some protected class, and we can change the course we are on.

Now if we can just shut down the Fed, balance the budget and clean out every damn sticking politician in DC...  On second thought revolution may be the answer...

Tue, 02/05/2013 - 00:36 | 3215505 Seer
Seer's picture

I'm afraid that you born in the wrong century.

Don't know where in the North you were from, but apparently you don't have much exposure to the likes of Idaho or Montana.

"Now if we can just shut down the Fed, balance the budget and clean out every damn sticking politician in DC...  On second thought revolution may be the answer..."

How is the budget going to be balanced?  Even if we stopped all expenditures we cannot pay off both PRIVATE and PUBLIC debt!

And how are you going to select "replacement" politicians?

As far as revolution goes:

"La Revolucion is like a great love affair. In the beginning, she is a goddess. A holy cause. But... every love affair has a terrible enemy: time. We see her as she is. La Revolucion is not a goddess but a whore. She was never pure, never saintly, never perfect."

- Jack Palance, as 'Jesus Raza', in, 'The Professionals' (1966)

Those that fail to understand that power corrupts will NEVER be able to address the real problems...

Tue, 02/05/2013 - 08:01 | 3215817 NeedtoSecede
NeedtoSecede's picture

What is your point Seer? My main point was there would be no need for revolution, but you seemed to focus on the sarc part of my post. Please clarify your thoughts.

Mon, 02/04/2013 - 21:37 | 3215141 smartstrike
smartstrike's picture

That's nice but I lived in 3 states with no income tax and all were and are  shit states with higher than average unemployment:

1. Texas in 1980s

2. Florida in 1990s

3. Nevada in 2008

Mon, 02/04/2013 - 21:43 | 3215159 Blano
Blano's picture

Your timing really sucks. 

Tue, 02/05/2013 - 00:43 | 3215516 Seer
Seer's picture

Nevada and Florida have always been speculator states.  I suppose that Florida has a slight edge on long-term stability.  Texas is another matter, it's got the mother-of-all-resources - oil, so it has an underlying base.

But, like I was saying above, it's an issue of whether we're talking rural or urban.  A good rural place in a Northern state is likely far better than any urban place in the South.  I suppose that the discussion should be about which "half" has the better rural locations, and I think that there's too many variable to make any "right" call here, other than live where you feel comfortable (I don't have to make claims or sales pitches for where I live- I just live here, comfortably and with little disruption).

Mon, 02/04/2013 - 21:07 | 3215055 Arkadaba
Arkadaba's picture

In that neighbourhood, she could always rent it out if needed (if she couldn't find a buyer). As a post below suggested, real estate markets are local and I don't see demand for rentals going down in that area in the near future (5 - 10 years).

Mon, 02/04/2013 - 20:50 | 3215003 WmMcK
WmMcK's picture

Wake me up when Bed Sty gets gentrified.

Mon, 02/04/2013 - 19:01 | 3214671 kaiserhoff
kaiserhoff's picture

Must be because Cali has such low taxes and no debt;)

Mon, 02/04/2013 - 20:29 | 3214943 GrinandBearit
GrinandBearit's picture

One of my realtor friends in So Cal has admitted to me that this is just another bubble and it's going to blow up just like it did in 2006.  He dare not tell his buyers that though.  Unbelievably, many houses in desirable areas are back up to 2006 pricing.  He said he's determined to milk it as far/long as he possibly can.  When I call him a despicable human being, he simply laughs about it. 

Mon, 02/04/2013 - 18:46 | 3214630 Hobbleknee
Hobbleknee's picture

I didn't know we recovered from the first bubble.

Tue, 02/05/2013 - 00:45 | 3215519 Seer
Seer's picture

DUDE!  Wake up!  We've also been out of recession for a LONG time now (so long that it's been out since before it even started! that's what they tell me!). </sarc>

Mon, 02/04/2013 - 18:49 | 3214636 kaiserhoff
kaiserhoff's picture

Money makes the verld go round, or it might, if anyone had a damn job.

Mon, 02/04/2013 - 18:50 | 3214638 Practical Cogitator
Practical Cogitator's picture

My mid-forties nephew rolled his California rentals into a Scotsdale portfolio, just before Blackstone began accumualting 16,000 single family rental homes.  I thought it foolish when he began, but success is tough to argue with.  Will he exit before the fast money flees?  Maybe.  But probably not.  When the housing bubble bursts once again, it will likely take out a good portion of what's left of the younger entrepreneur class.

Tue, 02/05/2013 - 00:16 | 3215480 steve from virginia
steve from virginia's picture

 

 

The second-tier speculators will lose all their money. Investment real estate is a currency trap the same as China.

 

If prices fall 5% everyone of these true-believers will want to sell at once and the market will freeze. 5% will rapidly become 25%.

 

If house prices fall overall 10% or so from here the TBTFs are insolvent, Fed or no Fed.

Mon, 02/04/2013 - 18:52 | 3214645 Never One Roach
Never One Roach's picture

EZCredit (with lots of zero down loans, for example) always works out so well.

 

"Our credit-based financial markets and the economy it supports are levered, fragile and increasingly entropic," Gross said in his February newsletter.

"When does money run out of time? The countdown begins when investable assets pose too much risk for too little return; when lenders desert credit markets for other alternatives such as cash or real assets," he added.

Gross advocates investors turn to gold and other commodities

 

http://finance.yahoo.com/news/beware-credit-supernova-looming-ahead-1808...

Mon, 02/04/2013 - 18:53 | 3214647 orangegeek
orangegeek's picture

And the Philly Housing Index keeps riding higher into 62% retracement.

 

http://bullandbearmash.com/chart/housing-index-monthly-completing-wave-w...

Mon, 02/04/2013 - 18:57 | 3214661 monopoly
monopoly's picture

U need a cave. That is it. Sure, if you are quick and nimble and lucky you can take a 100% gain on KBH or others. I have no interest in trying my fate in housing. It was good to us, now it is over, and all we have is one cave. This will end like all the others. I chuckle when I see Bloomberg espousing how much retail money is moving into the markets. How many times do people have to see the same movie before they remember the ending. Beyond words.

Mon, 02/04/2013 - 19:20 | 3214715 knukles
knukles's picture

People're getting thrown out of caves, trailers evicted from private property, etc., for living off the grid.....  being fined for growing shit in their gardens, illegal to sell raw milk, but Take Your Fucking Vaccine and Like It, Peasant.
And tithe to the section 8 and EBT Gods for the Free Shit Army might get restless.
And watch you bigasis's movie on how to protect yourself with scissors when the fuck who still has a gun uses it on the thems no longer has them to legally defend themselves. 
Welcome to Yobommah Ville, just down the hill from the New Versailles.

Mon, 02/04/2013 - 19:35 | 3214783 eatthebanksters
eatthebanksters's picture

always appreciate your clear thinking Knukles    +1

Do NOT follow this link or you will be banned from the site!