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Spot The Bubble: Average New Home Price Soars By Most Ever In One Month To All Time High

Tyler Durden's picture




 

Curious why in yesterday's FOMC minutes the following line "a few participants expressed concern that conditions in certain U.S. financial markets were becoming too buoyant" received special attention? Here is the reason: as the chart below shows, according to the census bureau, the average new home sale price just hit a new all time high, rising by a record 15.4% to a record $330,800. In a country in which real disposable consumer income is flat at best and in reality declining, it only makes sense that the average new home price just hit a level not seen since the prior credit-bubble fueled housing peak.

Average new home sale price:

And the sequential change in the average new home sale price:

Obviously both of the above charts are justified by the average real disposable income per capita in the US:

Or maybe not...

 

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Thu, 05/23/2013 - 10:38 | 3591927 NipponMarketBlog
NipponMarketBlog's picture

 

 

No bubbles here. Move along....

 

http://nipponmarketblog.wordpress.com/

Thu, 05/23/2013 - 10:39 | 3591937 insanelysane
insanelysane's picture

Buy high, sell low.

Home prices, stock prices, and food prices have never been cheaper.

Thu, 05/23/2013 - 10:43 | 3591959 McMolotov
McMolotov's picture

"Housing is going to the moon! Investment opportunity of a lifetime! Buy now before you're priced out forever!" —every realtor that has ever existed

Thu, 05/23/2013 - 10:49 | 3591982 duo
duo's picture

you will be priced out forever when interest rates return to normal

Thu, 05/23/2013 - 10:55 | 3592004 SteveNYC
SteveNYC's picture

Au contraire, you'll be able to buy a house with the contents of your checking account.

Thu, 05/23/2013 - 10:58 | 3592021 Bobbyrib
Bobbyrib's picture

I think duo was being sarcastic.

Thu, 05/23/2013 - 11:17 | 3592101 kaiserhoff
kaiserhoff's picture

The fallacy of thin markets...,

  and greatest fools.

Thu, 05/23/2013 - 11:21 | 3592114 i-dog
i-dog's picture

The median price chart would be more telling. Multi-million dollar NYC apartment purchases in a thin market can really screw the average.

Thu, 05/23/2013 - 11:33 | 3592166 whotookmyalias
whotookmyalias's picture

F*ck this market.

Thu, 05/23/2013 - 11:36 | 3592179 rosiescenario
rosiescenario's picture

Toll Bros. recently reported some good numbers....they traditionally build for the higher end of the market. So what we have here is the elites being able to buy while the rest are not; therefore, the price reflects what is moving.

 

This also goes along with Porsche sales, Tesla sales, etc. confirming with some real numbers what we already know here....the U.S. has become a third world country with a few elites doing well and the rest surviving....

Thu, 05/23/2013 - 14:18 | 3592890 The Big Ching-aso
The Big Ching-aso's picture

Not everyone's gonna get rich off housing all at once.   It's gonna take several generations of greater fools.

Thu, 05/23/2013 - 16:10 | 3593452 mr_T
mr_T's picture

when Vanilla Ice has a show flipping homes... no bubble here.. move along. these are not the bubbles you are looking for..

Thu, 05/23/2013 - 10:58 | 3592022 new game
new game's picture

10 oz of gold for one 1500 sq ft ranch, coming to a city near you...

Thu, 05/23/2013 - 10:59 | 3592011 new game
new game's picture

oh, so this is an opportunity of a lifetime.

Realtor to sheeple:NEVER A BETTER TIME TO BUY!

NOT SO FAST, SLICK DUDE - fuck off and take you piece of shit home that owns you for a lifetime of headaches and false returns and...

Thu, 05/23/2013 - 10:59 | 3592028 EscapeKey
EscapeKey's picture

Yep, that's what they never admit on British TV, when the pundits argue "housing affordability has never been better". Uhuh, our bubble never truly burst - the interest rates were just manipulated (even further) down. As you say, when they return to normal, shitloads of borrowers will be in deep, deep shit.

Thu, 05/23/2013 - 11:14 | 3592088 new game
new game's picture

oh, and these new higher prices due to currency devaluation, have a new higher taxation.  oh and how is that raise coming?

now, here in the states with these ultra low rates one can not even deduct the interest as it doesn't meet the treshold vs standard deduction. 

over fucking rated to the max. it OWNS  you!

Thu, 05/23/2013 - 11:23 | 3592125 Agent P
Agent P's picture

That kind of advice seems worthy of a 6% commission, where do I sign?

Thu, 05/23/2013 - 11:26 | 3592137 NEOSERF
NEOSERF's picture

Really is ridiculous...frequently the first time the realtor has seen the house is with you on a walk through and I need them to point out granite counter tops?!!

Thu, 05/23/2013 - 11:32 | 3592158 machineh
machineh's picture

No ... you need them to point out the 'babbling brook' which might otherwise escape your attention.

Thu, 05/23/2013 - 16:37 | 3593589 jerry_theking_lawler
jerry_theking_lawler's picture

i hate RE agents....i avoid them at ALL costs....

Thu, 05/23/2013 - 11:03 | 3592044 venturen
venturen's picture

Good thing the record prices go with record income gains....Oh wait...is that air sound coming from the the bubble redux?

Thu, 05/23/2013 - 12:20 | 3592392 Professorlocknload
Professorlocknload's picture

In my area government employees are still getting nice wage increases. The school district just approved 6% again this year.

Also, my property manager reports many of her section 8 people are buying homes. No wonder;

http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_h...

Thu, 05/23/2013 - 11:06 | 3592057 PiltdownMan
PiltdownMan's picture

Even the FHFA house price index grew at an annual rate of 15% as mortgage purchase applications fall. This guy has great charts and data and points to a BUBBLE.

http://confoundedinterest.wordpress.com/2013/05/23/bubble-fhfa-house-prices-rise-15-6-annualized-new-home-sales-rise-2-3-in-april/

Thu, 05/23/2013 - 10:37 | 3591929 transaccountin
transaccountin's picture

only a 30% price increase, but theres no inflation brah

Thu, 05/23/2013 - 10:53 | 3591994 EscapeKey
EscapeKey's picture

Well, as long as you adjust your weights on the 12-month sliding window that is called "seasonal adjustment", and alter the housing component weight of the CPI, then no, it doesn't have to show up.

 

Thu, 05/23/2013 - 11:09 | 3592066 DeadFred
DeadFred's picture

These are new homes, and the average price of new homes at that. The great unwashed must buy recycled older homes and those prices aren't going up as much. Build ten new homes, nine of which are ordinary and one is a commissioned palace for a Russian oligarch, corrupt Chinese finance minister or wall street bankster and you get this result. This like the once ever rising stock market are natural outcomes of the ongoing transfer of assets to the elites. This is my guess, analysing the distribution of prices would be needed to confirm.

Thu, 05/23/2013 - 11:15 | 3592091 Lewshine
Lewshine's picture

@Trans:

How precise is Ben's control of every asset class?? He's able to claim "NO INFLATION (2%)", but at the same time he's able to directly target two asset classes that credits his POMO for the manipulation that it is - Housing and Stocks. He's also able to make Gold and Oil dance on the head of a pin, going in whatever direction he needs them to go, to again, strengthen his own credibility as Maestro. He owns the whole system, to the very last penny.

Oh there is ABSOLUTELY inflationary factors - "Controlled and targeted" minute to minute, everyday!

Thu, 05/23/2013 - 10:38 | 3591932 More_sellers_th...
More_sellers_than_buyers's picture

HAHAHAHAHA   get ready to use your dollars for warmth in the winter in the fireplace

Thu, 05/23/2013 - 10:40 | 3591933 Cognitive Dissonance
Cognitive Dissonance's picture

Bubblicious!

<And not a speck of inflation in sight. Nope, nothing here. Maybe over there. Nope. Nothing over there. Maybe housing. Nope. Nada.>

Thu, 05/23/2013 - 11:03 | 3592027 legal eagle
legal eagle's picture

Do not make a big deal about this.  It only means more houses have been built for millionaires and the higher price of those homes scews the average.  Right?  The lower price homes are not being built because the working class cannot afford to buy a new house, or should I say primarily former working class, now food stamp class.  You have to understand the difference between median and mean.

Thu, 05/23/2013 - 11:08 | 3592060 Cognitive Dissonance
Cognitive Dissonance's picture

I understand very well the difference between median and mean.

I like my steak median well. :)

Thu, 05/23/2013 - 11:10 | 3592069 DeadFred
DeadFred's picture

But the cow thinks you are mean to say so.

Thu, 05/23/2013 - 11:36 | 3592181 Cognitive Dissonance
Cognitive Dissonance's picture

On the udder hand.........

<Please.....make me stop. I'm begging you.> :)

Thu, 05/23/2013 - 10:38 | 3591935 FLUSA.com
FLUSA.com's picture

What goes up... must go up

Thu, 05/23/2013 - 10:39 | 3591938 SHEEPFUKKER
SHEEPFUKKER's picture

Above the 2% inflation target I would say, or is there nothing actually included in the CPI. 

Thu, 05/23/2013 - 10:49 | 3591985 Bay of Pigs
Bay of Pigs's picture

Nothing relevant to human survival like food and energy, clothing, taxes, cable, tuition, etc...

Thu, 05/23/2013 - 11:35 | 3592176 JohnnyBriefcase
JohnnyBriefcase's picture

Lol @ cable.

Thu, 05/23/2013 - 14:10 | 3592924 Bay of Pigs
Bay of Pigs's picture

Just an example of rising prices and inflation. Obviously, you don't need to have it, but almost ALL do.

Thu, 05/23/2013 - 10:39 | 3591939 fonzannoon
fonzannoon's picture

For whatever it's worth I am listening to Schiff's radio show and he is saying that new home prices reflect the cost of construction going up which is basically just another sign of inflation.

Thu, 05/23/2013 - 10:46 | 3591976 McMolotov
McMolotov's picture

Hey, did that beautiful crack den near you ever sell?

Thu, 05/23/2013 - 10:53 | 3591995 fonzannoon
fonzannoon's picture

LOL yes it did and well above asking. It will be demolished soon and some monster will go up in it's place. I agree with the poster below. This has less to do with the economy and everything to do with musical chairs. If you have 500k would you rather have it in the market, the bank, or a home. Granted everyone on here would like me to add pm's but since most people don't buy them...which would you choose? I'd take real estate. It seems like most people do as well. Funny though when they get their property tax bills as the years go on, they may wish they went another way.

Thu, 05/23/2013 - 10:56 | 3592008 McMolotov
McMolotov's picture

$500k of alcohol. At least that's my plan.

Thu, 05/23/2013 - 11:01 | 3592039 fonzannoon
fonzannoon's picture

Alcohol, tools, weapons, water, food, medicine. etc.

The hard part will be measuring everything. If we get to where this is going you will be valuing your bottles of alcohol in terms of something other than dollars. Cigarette's or something.

Everyone thinks that is like going back to the stone age. Maybe we were more advanced and this is the stone age.

Thu, 05/23/2013 - 11:13 | 3592084 McMolotov
McMolotov's picture

This guy's got good information based on what he experienced during the war in the Balkans.

http://shtfschool.com/trading/trading-101-for-long-term-survival-scenarios/

Thu, 05/23/2013 - 16:41 | 3593602 jerry_theking_lawler
jerry_theking_lawler's picture

but that is the beauty of THIS market....you don't have $500k in the house. currently, with some of renewed craziness going on, 3% down will suffice nicely. so for a $500k property you could slip into it for $15k, making the owner pay the closing.

you have a nice place, save on rent, and if things turn out poorly, you pack your important things and move them to your 'paid off farm', and then walk away from the *ucker.......or that is my plan anyways....

i now consider a mortgage, rent.

Thu, 05/23/2013 - 11:07 | 3592055 new game
new game's picture

hey fonz, from 20 years as broker there is an ol saying that "you buy a payment and the home comes with it".

I would suggest this rapid price increase is fueled primarily by low interest rates and the recent fear that rates will go higher and better buy the fucker now!

Thu, 05/23/2013 - 11:11 | 3592073 fonzannoon
fonzannoon's picture

Thanks new game. My buddy and I were just discussing exactly that. I don't know enough to draw a conclusion. Interesting to hear.

Thu, 05/23/2013 - 11:20 | 3592111 new game
new game's picture

i sat in models for 17 years and you can just feel the buyers juice flowing when it gets going. it is also that new big time toy rush.

and yea all for the low payment of ...

other factors for sure include the fact that existing is selling again and firs time buyers are moving into first home as payment lower than rent, suffice to say the log jam has freed up...

Thu, 05/23/2013 - 10:41 | 3591948 yogibear
yogibear's picture

Some markets have bubblized back. Like in New York, Chicago, etc. Corporations bid against people to buy for flipping  to rent.

 

Thu, 05/23/2013 - 10:46 | 3591971 bonzo112358
bonzo112358's picture

Don't forget L.A.  Check out what $1,200/sq. ft. gets you on the west side.

http://www.redfin.com/CA/West-Hollywood/562-Westbourne-Dr-90048/home/6816965

Thu, 05/23/2013 - 11:25 | 3592129 John Law Lives
John Law Lives's picture

The description of the L.A. property referenced in that link makes it sound much nicer than the overpriced pillbox that it really is.

Thu, 05/23/2013 - 11:36 | 3592178 DeadFred
DeadFred's picture

Google translation of RE to English:

charming 20s bungalow: Sub-standard wiring, plumbing, forget about storage space.

mature landscaping: overgrown jungle

vaulted ceilings: your electric heaters won't keep the drafts out in the winter.

reclaimed brick flooring: must love cheap 50's decor

detached guest studio (garage conversion): Good luck with finding a parking space

 Probate, no court confirmation required: The previous owner, a 90 year old cat lady, was found three weeks after death when neighbors complained about the smell being even worse than normal.

Bless Google for its translation services

Thu, 05/23/2013 - 13:20 | 3592659 yogibear
yogibear's picture

Wow! Plus California and LA get to suck more money yearly from you. Ever increasing taxes and fees.

 

Thu, 05/23/2013 - 10:41 | 3591950 azzhatter
azzhatter's picture

People buying new homes do not have flat wages. Probably .gov employees. Rapidly becoming a 2 class society

Thu, 05/23/2013 - 12:29 | 3592431 Professorlocknload
Professorlocknload's picture

When ones pension and healthcare are 100% covered, he can spend all his income. I know a City Groundskeeper who owns (at last count because he is still buying) 15 houses.

Thu, 05/23/2013 - 10:43 | 3591955 Uncle Zuzu
Uncle Zuzu's picture

I better buy that house I don't need. I feel left out.

Thu, 05/23/2013 - 10:45 | 3591956 OpTwoMistic
OpTwoMistic's picture

must be all those new part time workers

The tax collectors will attempt to use this.

Thu, 05/23/2013 - 10:43 | 3591961 williambanzai7
williambanzai7's picture

Here is where one should just say: Fuck You Ben Bernanke!

Thu, 05/23/2013 - 10:43 | 3591962 Dr. Engali
Dr. Engali's picture

The American sheep have the memory of a fruit fly. It simply amazes me how unbelievably stupid and greedy they are.

Thu, 05/23/2013 - 10:53 | 3591997 Kaiser Sousa
Kaiser Sousa's picture

more stupidity than greed i asure you........

Thu, 05/23/2013 - 10:59 | 3592025 insanelysane
insanelysane's picture

I remember when I was getting advice at the top of the market in the early 90's that you can never lose in real estate.  Rented and didn't get in.  Some friends got burned.  Everyone jumped back in 2006 too.

Thu, 05/23/2013 - 11:26 | 3592141 SheepDog-One
SheepDog-One's picture

No doubt, it's fuckin unreal how stupid people actually are.

Thu, 05/23/2013 - 11:36 | 3592160 Agent P
Agent P's picture

The American sheep always consider the high water mark of any asset they own to be the actual fair value.  They will see this data and think we are finally back to appropriate price levels in the housing market.  Same goes for stocks...I know many people who own AAPL and are waiting patiently for it to get back to the $700 they know it's worth.

Ask a sample of people about their equity portfolios and 99/100 will either tell you how much they made from the bottom or lost from the top...only 1 rare bird will evaluate it from cost.

Thu, 05/23/2013 - 12:36 | 3592465 Professorlocknload
Professorlocknload's picture

In Real Estate, like anything else, the key is ROI. And right now, there are some pretty good Cap rate numbers out there, especially considering alternatives.

Thu, 05/23/2013 - 12:54 | 3592540 Winston Smith 2009
Winston Smith 2009's picture

"The American sheep have the memory of a fruit fly. It simply amazes me how unbelievably stupid and greedy they are."

Which is why I laugh my ass off at anyone who suggests that this mess can be fixed by the American Voter(tm).  Stupid is as stupid does.  Stupidity got us into this fix and stupidity sure as hell isn't ever getting us out.

Too damned bad I'm too ethical to join the big money making winning side in this, the people shearing these sheep, fleecing these fools.

Thu, 05/23/2013 - 10:44 | 3591963 curmudgery
curmudgery's picture

In SF some neighborhoods are +30% YOY.  Almost all sales are cash.   Tech and international.  With fiat's purchasing power diving around the world, not too surprising people will try anything to hold on, even real estate.  

Thu, 05/23/2013 - 10:46 | 3591974 fonzannoon
fonzannoon's picture

Agree completely.

Thu, 05/23/2013 - 10:56 | 3592012 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

SF is probably the anomaly due to the ever growing tech bubble (in NYC, it's the financial oligarchs driving real estate prices to the sky) and selling shareholders on almost every IPO.  In general, the surge in real estate prices is most likely due to the return of the leverage game.  Even some pleb can create an aura of wealth through leverage (big mansion, flashy car, etc.) with very little equity required.

Thu, 05/23/2013 - 11:09 | 3592067 curmudgery
curmudgery's picture

leverage on cash purchase?

Thu, 05/23/2013 - 11:31 | 3592155 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

I'm assuming that much of the surge in SF real estate prices is due to the huge increase in newly minted tech millioniares.  In this specfic market, there is no need for leverage as insiders have monetized the sharp increase in their paper wealth.  In NYC, S&P 1650 has had a similar effect on real estate prices, particularly at the high-end.  Again, SF & NYC would appear to be anomalies and the "surge" in real estate prices elsewhere in the U.S. is most likely driven by the return of leverage to the equation.

Thu, 05/23/2013 - 11:30 | 3592149 NEOSERF
NEOSERF's picture

With nukes turning back on in Japan, can't imagine people want to stay there...nor China waiting for the corrapse.  West coast RE should stay crazy for at least another 2 years.

Thu, 05/23/2013 - 12:56 | 3592548 Winston Smith 2009
Winston Smith 2009's picture

Good point.  I wonder what percentage of this increase is due to high value properties being bought by future EU, Japan, and China expats.

Thu, 05/23/2013 - 12:49 | 3592526 Professorlocknload
Professorlocknload's picture

Yeah, at this point one could look at income property two ways. One as income source and secondly, future inflation hedge. Kinda like a bond, the market value fluctuates, but the cash flow continues.

 

Thu, 05/23/2013 - 10:44 | 3591965 FieldingMellish
FieldingMellish's picture

$4m studio maid's quarters will do that to an average.

Thu, 05/23/2013 - 10:49 | 3591981 Snoopy the Economist
Snoopy the Economist's picture

good point

Thu, 05/23/2013 - 10:44 | 3591966 buzzsaw99
buzzsaw99's picture

Data skew. Blankfein and Dimon each bought ten more mansions after they got their xmas bonus.

Thu, 05/23/2013 - 10:53 | 3592000 s2man
s2man's picture

My thought, too.  Perhaps this just shows only the rich are building/buying new homes.

Thu, 05/23/2013 - 10:53 | 3592001 s2man
s2man's picture

My thought, too.  Perhaps this just shows only the rich are building/buying new homes.

Thu, 05/23/2013 - 11:30 | 3592153 NEOSERF
NEOSERF's picture

Exclude Hamptons, SF and Manhattan and there was no increase.

Thu, 05/23/2013 - 10:47 | 3591977 Mark123
Mark123's picture

My guess is this is just caused by builders (spec) stopping construction on cheap homes, so the average price increases.  With hedge funds etc buying foreclosed properties like drunken sailors who would want to be builindg new homes to sell to the working poor???

Thu, 05/23/2013 - 10:52 | 3591992 Caveman93
Caveman93's picture

2.0

Thu, 05/23/2013 - 10:54 | 3592003 FLUSA.com
FLUSA.com's picture

What about sales volume in comparison to previous peak?  Im sure the volume is much much lower now

Thu, 05/23/2013 - 11:00 | 3592026 Fuku Ben
Fuku Ben's picture

"a few participants expressed concern that conditions in certain U.S. financial markets were becoming too buoyant"

 

This nautical reference warning is required under various sections of Admiralty and Maritime Law. It is considered informed consent to the sheeple. It is code for too much of the iceberg is visible above the water and the US Titanic may see it and avoid hitting it and sinking straight to the bottom.

Thu, 05/23/2013 - 22:15 | 3594491 duhhhhhh
duhhhhhh's picture

Just smile and wave boyz, just smile and wave.

Thu, 05/23/2013 - 10:59 | 3592029 Chicago bear
Chicago bear's picture

Friends of ours are in the contract period to sell to people they know. My first thought was never sell to people you know, especially at the top of a bubble like this. Lawsuit risk. I'm thinking of selling ASAP.

Thu, 05/23/2013 - 11:01 | 3592036 Dr. Engali
Dr. Engali's picture

My wife and I was having aconversation about this last night. According to her the only houses moving around here are the extremely high end or the low end"investment" houses which are being purchased with cash. The mid range houses are just sitting. 

Thu, 05/23/2013 - 11:02 | 3592041 Spastica Rex
Spastica Rex's picture

Same 'round where I am. Lots of flipping and McMansions.

Thu, 05/23/2013 - 11:04 | 3592050 fonzannoon
fonzannoon's picture

I own a mid range house. If I want to sell it I probably need to sell it asap and just take a hit. Everyone older than me wants to downsize, everyone younger than me can't afford it. Everyone wealthier than me wants something new. My house is quickly heading to illiquid status.

Luckily I live in NY and we have some of the most competent politicians around and they will find a way to rectify this for me.

Thu, 05/23/2013 - 11:13 | 3592081 MachoMan
MachoMan's picture

Luckily I live in NY and we have some of the most competent politicians around and they will find a way to rectify this for me.

Be careful what you wish for...

Thu, 05/23/2013 - 11:13 | 3592082 insanelysane
insanelysane's picture

I'm in the same boat but a little north and east of you.  My plan is to sell it when the last kid clears high school.  At that point, I am hoping it is worth at least what ever is left on mortgage.  My expectations are real low.  

After that, I am heading to a shack with some farmable land somewhere south of here.

Thu, 05/23/2013 - 11:37 | 3592184 new game
new game's picture

After that, I am heading to a shack with some farmable land somewhere south of here.

+1000. fucking excellent plan. don't forget the razor wired security fence surrounding the land .dont forget to build watchtowers at stategic positions!

Thu, 05/23/2013 - 11:33 | 3592161 new game
new game's picture

just sold my mid range home this week. still have the cabin up north though. it is for sale too.

soon to be able to be "free to roam about".  hey, i'm taking this shit serious! want my equity out b/4 frozen by the greatest up your ass scalping in a five generation time frame...

Thu, 05/23/2013 - 11:12 | 3592078 TheEdelman
TheEdelman's picture

in socal, everything is moving.  everything.  but this place is an outlier

Thu, 05/23/2013 - 13:24 | 3592683 Professorlocknload
Professorlocknload's picture

Same in Nor Cal. Phoenix is moving as well. This might be it. Getting lots of post cards from Realtors again, depicting their latest sales triumphs.

And all this negative-better-to-just-rent talk might indicate a bottom.

All most of the people know as an inflation hedge is RE.

The amnesty legislation might be a kicker as well, from a demographic standpoint.

 

 

Thu, 05/23/2013 - 11:06 | 3592040 venturen
venturen's picture

Nothing to worry about it is only the mega rich house prices bubbling up from the unlimited free money. It is so Bernanke! When are we off to the Hamptons?

Thu, 05/23/2013 - 11:04 | 3592051 FLUSA.com
FLUSA.com's picture

Ok...I found it  New Home Sale volume in April 2006 was 1,198,000......April 2013 454,000.

Thu, 05/23/2013 - 11:13 | 3592083 Bay of Pigs
Bay of Pigs's picture

Nice work, thanks.

Thu, 05/23/2013 - 13:14 | 3592630 Rustysilver
Rustysilver's picture

FLUSA.com,

Again, thanks

It easier to wrap you head around two data points,

Thu, 05/23/2013 - 11:08 | 3592058 SillySalesmanQu...
SillySalesmanQuestion's picture

Does this mean that our $160,000 home is now magically worth what was in 2007 $260,000? YIPPEE!!!!    SOLD!

Thu, 05/23/2013 - 11:56 | 3592268 the grateful un...
the grateful unemployed's picture

yes but theres no buyers, unless you consider wall streets latest reallocation into the landlord business, distoring market prices. one thing anyway, local government will be less likely to condemn your house to make room for a new cineplex and shopping mall.

Thu, 05/23/2013 - 11:09 | 3592063 ebworthen
ebworthen's picture

Goldman Sachs Chief Equity Strategist David Kostin on CNBC calling for S&P 1,750 for this year, and 2,100 by 2015.

Calling for 11% then 13% gains in 2014 and 2015.

Contrarian indicator?

Thu, 05/23/2013 - 11:11 | 3592074 Catullus
Catullus's picture

I'm about to build a house. Looking for some piece of shit to tear down and build. Within in an urban area. The thought of buying a $450k cookie cutter HOA 5-10 year old house 30 miles from downtown (60 minute commute one way) made me want to puke. I'd rather pay $150k to tear something down, another $20k to an architect, and get what I want.

The used house market in the burbs will get a heavy discount when gas goes above $4-5/gallon.

Thu, 05/23/2013 - 11:15 | 3592095 MachoMan
MachoMan's picture

2 hours a day of commute time has to be worth something...

Thu, 05/23/2013 - 11:41 | 3592196 new game
new game's picture

priceless; 2 x 5 x 52 + insanity and deep wrinkles on forhead> fucken eh man i want that...

Thu, 05/23/2013 - 13:31 | 3592713 Professorlocknload
Professorlocknload's picture

Macho, 2 hours a day of commute time has to be worth something...

About a buck a mile transportation costs, depreciation, fuel, maintenance, + what ever your productive time is worth per hour.

 

 

 

 

Thu, 05/23/2013 - 14:23 | 3592974 MachoMan
MachoMan's picture

+ missing time with your family...  having fun or "unwinding"...  those 2 hours are huge...  it's basically the only time that you get not making someone else rich...

Thu, 05/23/2013 - 11:50 | 3592238 the grateful un...
the grateful unemployed's picture

you dont mention how old you are, or what you do, if you might have to relocate at some point. its not nearly as pleasant but the downtown condo is probably your best option, the housing market is overpriced. you could at the same time build your fixer upper in the exburbs and live there on weekends. or find some property and use some modular solutions, steel framing delivered to the site, you just build a shell on top. since most older homes in CA for instance have no insulation, and you need to strip them down to the studs anyway. most of the new stuff has variegated roof designs, scones, etc. and there is chinese drywall and substandard plastic pipe, among other things to warn you off. keep the new design simple and functional, as most of those 70s ranch houses were. with solar, and cell phones you have more latitude with where you can build, lets say you can only afford 100 amp service, no problem. good luck its good to havea  job anyway

Thu, 05/23/2013 - 11:12 | 3592075 Seasmoke
Seasmoke's picture

As JCP and Mitt Romney found out. Being in the middle is not good !

Thu, 05/23/2013 - 11:12 | 3592080 John Law Lives
John Law Lives's picture

As asked earlier, why in the world does the Fed WANT higher home prices and rent levels (not to mention higher food and energy costs and health insurance and tuition etc.) when wages and salaries are largely stagnant and structural unemployment is high.  Do they WANT to see the middle class suffer even MOAR...

What a friend we have in Chairsatan...

Thu, 05/23/2013 - 11:16 | 3592099 Bay of Pigs
Bay of Pigs's picture

It gives the illusion of the "wealth effect" so people will continue to spend and not save.

In other words, complete fucking madness.

Thu, 05/23/2013 - 11:42 | 3592204 new game
new game's picture

this will have a trickle down effect as noted in H.D. earnings and income...

Thu, 05/23/2013 - 17:47 | 3593800 John Law Lives
John Law Lives's picture

The "wealth effect" may spur spending by those with "wealth".  The middle class largely owns little or no equities and don't have the ownership stake in RE that the wealthy do.  The middle class will choke on inflation.  I doubt that Chairsatan cares as much about them.

Fed class warfare = FUBAR

Thu, 05/23/2013 - 13:39 | 3592750 Professorlocknload
Professorlocknload's picture

Also, they need rising RE prices to provide equity for increased property taxes, with which to fund State and Municipal Pensions. Big elephant there that has gone the way of Meridith Whitney lately, but is still lurking.

All part of the Keynesian Claptrap Parade.

Thu, 05/23/2013 - 21:54 | 3594417 strayaway
strayaway's picture

They also want higher home prices to make good some bad bank paper.

Thu, 05/23/2013 - 11:15 | 3592098 Meat Hammer
Meat Hammer's picture

When gas is $5/gallon people will riot in the streets.  When the average middle class family keeps getting more and more priced out of the "American dream" it's happy days are here again.

 

Fuck you, Bernanke

Thu, 05/23/2013 - 14:02 | 3592886 Professorlocknload
Professorlocknload's picture

MH, I get the sentiment, but I don't see riots unless there is no gas. $7 a gallon is accepted in many places in the world today.  

 

Inflation creep. Boiled frogs and such?

Reset coming, soon. It's already in the system. Just waiting for acceleration. Maybe a 50% mortgage payment credit? Maybe a big minimum wage hike? An across the board multi-thousand dollar individual tax credit? Something stupid will kick start it.

Ben's leaving in the nick of time. The next apparatchik takes the fall.

Thu, 05/23/2013 - 14:29 | 3592996 Rustysilver
Rustysilver's picture

Meat Hammer,

Prices in CA are already over $5/gal. In CT $3.67 and higher.  It's all about conditioning.  Just look at Europe.They will never raise the prices quickly. Over a couple of months; that's different story. Add a refinery fire and your done.

Thu, 05/23/2013 - 11:16 | 3592102 XRAYD
XRAYD's picture

How many $10+ million homes in the average above, that Mr. "Consumer" is buying?

Thu, 05/23/2013 - 11:30 | 3592150 orangegeek
orangegeek's picture

fuck yeah!!!!

 

moar real estate!!!

 

moar stocks!!!

 

moar!!! moar!!!  moar!!!

Thu, 05/23/2013 - 11:33 | 3592168 the grateful un...
the grateful unemployed's picture

the insurance people bumped up the rebuilding costs for our home, nearly a third. if the place did burn i would sell the lot, take the insurance money and move to phoenix, because that valuation is way out of line with our neighborhood. the last time things got this crazy was about 2007. then of course there was a real housing market.

Thu, 05/23/2013 - 11:45 | 3592219 Goggles Pisano
Goggles Pisano's picture

New home prices are this high because all the new homes are being built for high paid bankers. It's the Guilded Age all over again.

Thu, 05/23/2013 - 12:06 | 3592308 asscannon101
asscannon101's picture

AWESOME!! Now the shit that people cannot afford is even MORE unaffordable!! Thank you President Kardashian and Chairsatan Bernanke!

Thu, 05/23/2013 - 12:17 | 3592372 viator
viator's picture

Much of the rising costs of new homes can be traced to government regulation. Codes are tightened each year requiring increased costs of labor materials for each new home without any reference to cost benefit. The rising costs of new materials also reflect the dead hand of the government I just finished hearing a news report about how no new cement plant could ever be built in the United States again. The report compared cement plants to refineries, also which cannot be built in the US. No new cement plants equals higher concrete costs. I just finished working on a new custom home where the owner went through hell to get it built. Among other requirements was a specially designed and built driveway since his driveway was longer than 1500 feet. Yet another small example were the grounding clamps called for by code in this home. The electrician showed them to me resting in the palm of his hand. That little handful cost almost $100. He mentioned there were clamps which could do the same job for less than $1 each but the code required the $7 grounding clamps.

New residential construction costs have zoomed past $100 ft2 to $200 ft2. Soon they will reach $300 ft2. We will have the best houses which only the very few can afford. Bye bye construction industry.

Thu, 05/23/2013 - 12:20 | 3592396 max2205
max2205's picture

Did the BLS make up those numbers.  I call bullshit

Thu, 05/23/2013 - 12:28 | 3592424 FecundaGoat
FecundaGoat's picture

I have been buying up houses for 20 years and my net worth is through the roof!!  The fact that the cost to build is going straight up is music to my ears....

Rock on Housing!!

Thu, 05/23/2013 - 13:09 | 3592610 SmallerGovNow2
SmallerGovNow2's picture

Explanation?  Only rich people are building houses.

Thu, 05/23/2013 - 13:27 | 3592699 yogibear
yogibear's picture

You have to be so rich and not reside in LA to buy one of those sucker homes. 

The state of california and it's public employees will make sure they deplete whatever money you have.

Best thing is to move out of the tax-mania states and let the public workers feed on themselves.

Thu, 05/23/2013 - 13:45 | 3592777 Money 4 Nothing
Money 4 Nothing's picture

I believe the word  used yesterday was "frothy". Bubble is a little harsh don't you think?

Thu, 05/23/2013 - 13:58 | 3592868 sbenard
sbenard's picture

Gee, I wonder what will be the impact on housing of the higher interest rates we're now seeing as the Fed "tapers" its interest rates suppression scheme! It doesn't take an advanced degree in economics to see that we're about to witness another plunge in home prices SOON!

And that will lead to more foreclosures, and more investors being forced to dump recently-acquired residential housing in a real estate version of a margin call!

It only gets worse from here!

Thu, 05/23/2013 - 14:31 | 3593003 adr
adr's picture

I remember when my grandmother's home was worth $110k in the late 80s. Of course my grandfather bought it for something like $22k in the 60s. Nice return right?

Then the ghetto types invaded the neighborhood. She sold the house for $30k in 1993.

So what may be a $330k home today is always just a few years away from being a $70k home when the ghetto needs to expand.

What can be asured almost as much as death, is that the low income population will expand much faster than the wealthy.

Thu, 05/23/2013 - 14:42 | 3593045 Herkimer Jerkimer
Herkimer Jerkimer's picture

'

'

'

 

Up in Toronto,

 

Friend of mine just had his side of the duplex he was renting the basement of, sell for 420K.

 

He was talking to his neighbour, who bought the other half 3 years ago.

 

His price?

 

$280K

 

Nope, no bubble there, eh!?

•J•
V-V

Thu, 05/23/2013 - 15:29 | 3593286 Paulson Bazooka
Paulson Bazooka's picture

What the heck are those spikes in the disposable personal income chart? Is that capital gains from massive insider selling before the market crashes?

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