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What Do Arizona, California And Nevada Have In Common?
What states were the primary drivers of the 2006 housing bubble, at least right before the "subprime is contained" pop that is? Those who said Phoenix, California and Nevada are in the right direction.
We bring it up because according to the just released Case-Shiller data for March, these three same states, indicated by the representative MSAs of Phoenix, San Francisco and Las Vegas, are once again heading the charge in the latest bubble fed by Bernanke's cheap credit. What do they have in common: they were the three to post a greater than 20% increase in home prices compared to last year. Where was Detroit? Sadly it just barely missed the cut off with a far less bubbly 18% increase in home prices.
Perhaps Case Shiller should readjust its New York index to only look at $5+ million penthouses instead of the broader market in the Tristate area. At least then the cash parking by offshore oligarchs would accurately reflect the true nature of "price increases" in various cities, instead of having NYC in the rather dejected last place.
So how does the much trumpeted Top 20 city NSA average look? Like this:
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Equity bitchez?
I just found this- Bernanke may be opening the way for possible successors by skipping the Jackson Hole gathering later this year due to an unspecified scheduling conflict.
What? he can't reschedule his colonic?
This guy likens The Fed to MacBeth's withches coven. Double, double toil and trouble.
ALL the house price indices are rising and San Francisco is in second place.
http://confoundedinterest.wordpress.com/2013/05/28/double-double-toil-and-trouble-case-shiller-hpi-rises-10-9-yoy-lps-hpi-rises-7-6-bubble/
Recall the Fed's very own Mishkin's report on "Financial stability in Iceland"?
http://www.vi.is/files/555877819Financial%20Stability%20in%20Iceland%20Screen%20Version.pdf
Ahhh... the good old incorruptible, non-self serving Federal Reserve.
What do Arizona, California and Nevada have in common?
Really bad politicians
Really bad agriculture practice
But not enough slot machines
Jizzbelly LIESman will be able to fill Bernanke's Jackson Hole
No, I think Geithner has got Ben's colonic covered and is whipping up some of his 'Special Sauce' as we speak. I believe the scheduling conflict revolves around some hot-tubbing with Warren Buffet. He and Ben will be shaving one-another's backs.
Great,,,I just made 18 fiatscos on my hundred dollar Detroit house.
Congrats! And the property taxes are only $5000! What a deal!
Put it towards that AK-47 you need to get to it, if you don't already have one.
can you graph these price moves against wages? Where are the young workers getting those $100k to pay for their 1st house? Or do you just get a free one with each vote for Obama?
While that certainly is true, color me amazed that the fed has actually succeeded, at least temporarily, it re-inflating the housing bubble. "Inflation in the things you need, deflation in the things you own, to include your own labor" - that's been my postion since the beginning. I am wrong, for the moment.
When you are correct, status quo has been broken.
lol@detroit18% houses here are going no bid.
Nothin' from nothin' leaves nothin'
And I'm not stuffin'
Believe you me
Don't you remember I told ya
I'm a soldier in the war on poverty, yeah
Yes, I am
Can we see the average wage for those areas as well? What % of the occupants income is spent on supporting bankers (who created all these mortgages out of thin air with the click of a button)? This should end well...
Exactly. Around here its just like 2006 again: They make it easy for the feeble-minded to GET the loan, but ignore the fact that it will be impossible for them to actually REPAY the loan. But none of the usual suspects cares, because they all get their $$ at the contract signing and get the hell out of Dodge.
The bagholders don't care either because they're public/private entities... all of the money gets siphoned out through executives/bonuses and the equity in the institution continues to accrue a balance due. Moral hazard.
Yeah man, worrying about them not being able to pay back the loan is so last century. Your ass gets bankrupted, banks get tarped. If you're a banker you bet one way. Socialize the losses, capitalize the gains, grease the politicians, fuck the masses.
Where I live the real estate market was described as SIZZLING by the local rag... this shit is a bit crazy.
Remember - house prices only ever go up.
Except when they don't, because sometimes, they won't. I'm sorry to say, but sadly it's true, that bang up and hang ups can happen to you.
"A lot of private mortgages that had been securitized during the past few years really do have much more risk than the investors have been focusing on." --Susan Bies, Federal Reserve Governor, 2006.
I bet wages rose a comprable amount in these states so that people can afford to pay the inflated prices, cause otherwise we're just blowing an asset bubble to burst, and that'd be crazy....................
Of course the wages have drastically increased to keep pace- these people are all getting incredibly wealthy from flipping houses to one another! Its like perpetual motion! A glorious, self-sustaining reaction that simply requires critical mass in order to reach its full potential. Huh... "Critical mass", where have I heard that term before? Anyway, its a whole new paradigm and what could possibly go wrong?
egg xactly. if the job creators can't even create jobs that pay a measley 30K, then where the hell are the mom and pop 80/20 borrowers with 700 ficos?
from the Outlaw Josey Wales- "don't piss down my back and tell me it's raining..."
"Well, unquestionably, housing prices are up quite a bit; I think it's important to note that fundamentals are also very strong. We've got a growing economy, jobs, incomes. We've got very low mortgage rates. We've got demographics supporting housing growth. We've got restricted supply in some places. So it's certainly understandable that prices would go up some. I don't know whether prices are exactly where they should be, but I think it's fair to say that much of what's happened is supported by the strength of the economy." --Ben Bernanke, CNBC interview, 2007.
One type of housing that has continued to perform despite the economy... prisons. The rise in the prison population has been fueled, in part, by stricter enforcement and stronger sentencing of victimless crimes. Meanwhile, people who really inflict damage on others do their time on luxury yachts hopping between recently purchased islands.
Not really... same boat; the prison industry is completely dependent upon government largesse/moral hazard...
"What states were the primary drivers of the 2006 housing bubble, at least right before the "subprime is contained" pop that is? Those who said Phoenix, California and Nevada are in the right direction."
Not to be a dick, but Phoenix isn't a state. At least not yet.
too bad their water's not inflating
All right, who was supposed to be keeping an eye on Angelo Mozilo?
Willy Wonka
Jon Corzine, who is supposedly watched by Bernie Madoff.
A lot of disgusted people getting OUT and a lot of suckers getting IN to the housing market.
who the fuck wants to own a home? Seriously.
It's like Raiders of the Lost Market....WHEN THEY OPEN THE ARC....DO NOT LOOK, JUST SHUT YOUR EYES.....it will pass. I guaranteeeee it.
Who the fuck wants a landlord? Buying a house in 1981 was the best investment I ever made, even though the mortgage rate was 12.75%.
--bks
dam i should bought a house when i was 8
This is a great time to buy a house. I just refinanced at 2.99%. New 30-years are available at 3.5%. Don't listen to the troglodytes on ZH.
--bks
What are you investing in to earn more than 3.5%?
There are so many things wrong with that question that I'm not sure the margins of the Internet are large enough to hold the answer. A few points: 1) you have to live somewhere. 2) you get to deduct the interest at tax time. 3) the house might appreciate.
BTW, since 1981, the S&P 500 is up 1230%
--bks
So long as the property is in a location where wages will support the mortgage, property is in general always a good investment. At the end of the day it becomes a revenue-generating asset as well when the note is paid off. Yes, there are maintence costs for rentals, but with so many skilled laborers looking for any work, that hasn't been a problem thus far.
quit trolling fuckstick
Expecting to be able to extrapolate that into the future? Puts the s and p at what, 18000 in 2040. Maybe. However, the yardstick you're measuring with will have changed just as significantly.
Also, a lot of that increase has been because people put money in "the market" because of a certain law, ERISA (ie funnel money to wall street). People are herded into their life savings in the market. As boomers start to withdraw money in their retirement, I do not expect returns to be the same going forward. Unless you consider a 1980 dollar the same as a 2013 dollar the same as a 2040 dollar. If you do, then you may as well not be on ZH, it's totally beyond you.
BTW, I refied at 2.99%. Buying a house is a hedge for me, plus I really like our neighborhood. If the house appreciates I consider it inflation only. There is no gain in value unless I put money/work into it. I'd love to pay off the house early but with the tax deduction I'm only paying 2% ish. Seems like I should take my chances with that. Inflation hits hard hopefully some of it will show up in wages and my payment will be less relatively speaking. Then I'm the one paying them back with shit dollars.
This is a great time to buy a house. I just refinanced at 2.99%. New 30-years are available at 3.5%. Don't listen to the troglodytes on ZH.
Sure it is, IF you are self employed,extremely wealthy,and know you will have 100% assurance you can never lose it.Anyone with a real job, cannot be assured of that job for 24hrs any longer.Buying a home or anything of major value on credit is asking for a real ass kikr.Read the latest reports on the Bankruptcies?,the most surprising thing is the people with immaculate credit scores and who get the highest credit ratings are just declaring bankruptcy, and leaving their creditors wondering what the hades just happened to them.
(the new game, the great credit risks are now gaming the system).
Wait a second, you bought a house in 1981 and you just refinanced? What did you pay for it? And in 32 years you haven't paid it off?
And you're giving housing advice here? LOL...
Not the same house. I sold that house in 2001 and recouped every penny I put into it including property tax, mortgage interest and upkeep.
--bks
Thanks, because that wasn't making any sense.
Why? When you refinance a house it can extend the period of the mortgage. My current refi was from a 30 year to a 15 year, but there can be sound reasons to do 30 to 30 refis: for example when your mortgage rate is 12.75%!
--bks
Don't feed the trolls.
We're smarter than them and they can't stand it.
Doesn't really matter. Interest goes up, prices come down. More interest is deductible, and or you can make excess payments towards principle. In the end it is a wash. I would rather have CHEAPER prices and higher interest, than low interest and expensive shit shacks. At least at that moment you are not getting some crack smoking whore moving in next door, without a job or pot to piss in, and your property and neighborhood plummet...
To Taper or to Tepper, that is the question.
Every time I read the word taper the image of a turd tapering out an asshole appears in my mind and for some reason Bernake is the pooper.
i think of the old joke
You know why turds are tapered?
So your asshole doesn't slam shut!
I actually know several panic-driven homebuyers who paid the premium believing interest rates are about to go up, up, up !! ...roflmao
Aint no up in zirp.
they're in the minority... apparently everyone else stops buying/refinancing (heavy on the refinancing) once there is the slightest tick up in rates...
Great, so to the stock market bubble, the bond bubble and the dollar bubble we can now add a new housing bubble...?
DavidC
it's almost as if... they have fucked up everything
http://youtu.be/EsyzRUKwgng - you got a problem?
How very well put.
Phoenix isn't a state unless you count despair.
Realize that maybe a third of these sales are "flip" homes - which need a 30% gross profit for the operator to break even (15% renovation,15% financing and sales fees).
6% realtor
i'm in the other big city of AZ, alot of the homes selling around here are being bought by investors and they turn them into rentals. i hate renters, most of them dont give a shit about the neighborhood.
i want to see the stats on how many of these homes are actually being lived in by the home onwer.
I went to a casino yesterday in Shreveport, LA (I live near Dallas) and the local rock station was pumping yet another seminar by some guy on an A&E show (I don't watch TV sorry). That's the third flipping seminar I've heard on the radio in the last week.
http://en.wikipedia.org/wiki/Armando_Montelongo
Community property states?
Ding ding ding! We have a winner.
deja vu
http://www.bloomberg.com/news/2013-05-27/europe-s-banks-turn-to-u-s-subp...
I've fallen and I can't get up!
Just trying to figure out when to short Fannie and Freddie, they are up close to 1000% this year. These people are freakin crazy.
fannie is getting ruthlessly greedy
So let me guess, all of those new bubble Fed- fed real estate funds are showing massive paper profits because they are marking the properties to the "so called" market.
Justr like the stock market, there is no real profit until you sell.
"FED Debt Fueled Housing Bubble - Part II"
The sequel is never as good (read always WORSE) than the original.
20% price increases are very healthy. Good job Ben, you fucking cocksucker
Not at all a sign of people chasing yeild, increased inflationary expectations etc. i agree, good job Ben
A friend of mine who earns $118K/yr just purchased a $746K duplex with no money down and an interest rate of 3.3% on a 30 yr fixed. That's not a bad deal. There is absolutely nothing to lose with a deal like that.
So your friend expects nothing to change over the next 30 years?
Wouldn't it be funny if he ends up charging 20K a month to rent half in 15 years?
Actually, that would be pretty terrifying... At that type of price point I'm guessing some sovereign crashes, supply chain disruptions, and quite a bit of general lawlessness. Aside from the fact that folks like FOFOA argue that money would have been better spent buying gold (if we're talking about guaranteed appreciation and what not).
Only his job.
6x income, what could possibly go wrong??
That pmt is only 33% of his monthly income and he's building equity if he gets to keep the home. I dont see any reason not to buy right now with these rates unless youre worried about property taxes exploding up north or happen to live somewhere thats especially bubbled.
These States and the housing market in general is like the stock market - A BIG FABRICATION!! The Fed has been providing low interest money to Wall St, companies like BlackRock, who have been buying in the foreclosure market - 1500 to 2000 homes at a time. Black Rock bought over 56,000 homes in Vegas, bidding these homes up by 40 and 50% against private home investors (flippers).
Just like the stock market the Fed has "intervened" big time. I paid 40K for a 2 bdrm / 2 bth condo in 2011- That same property today because of the Fed, Black Rock and various other Fed fiduciaries, this property has doubled in price (now valued at 93K based on recent comps). Ben at work!
They all have two "A's" in their names
A horrendous debt-to-equity ratio?
So, Detroit house prices are up 18%, hmmmmmm?
I guess that puts the average selling price at $1.18 now.
Way, way overpriced.
"What do Arizona, California, and Nevada have in common?"
Too many fucking Californians
A-fucking-men. Along with Colorado.
I used to love living here...
Can't help hearing this in my head:
"Those who cannot remember the past, are condemned to repeat it." George Santayana
and those who can remember the past, are condemned to stand by helplessly as everyone else repeats it
1. When markets crash, they tend to crash to below fair value. No surprise that they bounce from an extreme bottom. I added a foreclosed house to my stable last year for 60k (put another 10k into it) that sold 5 years before that for 195K (Colorado). I have it rented for 900 a month, ROI is over 12% net as I paid cash. I've got a friend who bought several in Arizona at similar discounts. He's making great income and vacancies are rare. We don't care if that income gets cut in half, the deals will still look very good compared to alternatives.
2. Of course investors have filled the buy gap, people still need a place to live even if they can't buy. Also many young people are finally figuring out that renting is better when job changes lead to moving every few years.
2. New home construction has been almost non-existent in many submarkets since 2008 so some submarkets are experiencing a shortage of inventory. Appraisers are slowing the rate of appreciation which helps smooth the markets actually.
After 40 years in real estate, I'd say the current situation is quite familiar, the last time I saw these conditions was in 1990. Everyone denied that the market could be coming back then too.
Can it last? I don't see how it lasts very long without some job growth. House sales do produce job growth, but the current rate of job growth is not fast enough to give the real estate market a lot of room.
I expect values to flatten soon. Rental markets are tight in many cities due to households retrenching after job crash.
A bounce off a multi-decade bottom is not a bubble, it's normal, of all things. If prices do decline again, that would be deflationary, which everyone around here claims won't happen.
So make up your minds. I see a flat future for real estate until about 2022 as all the forces cancel each other. I like it just fine, the income streams look good.
A bounce off a multi-decade bottom is not a bubble, it's normal, of all things. If prices do decline again, that would be deflationary, which everyone around here claims won't happen.
First, referencing historical trends without applying them to the present scenario is... incredibly dangerous.
Second, even the most steadfast hyperinflationists accept the fact that deflationary forces are at play and prices in particular assets may decrease... the argument is over policy response and its effect. Further, price declines do not dictate whether we have inflation or deflation... rather, it's generally vice versa. Money creation (or destruction) is the catalyst for price increases or decreases... not the other around. Else, you could have simultaneous inflation and deflation (impossible).
"Where was Detroit? Sadly it just barely missed the cut off with a far less bubbly 18% increase in home prices"
Detroit, 18%?! LOL
Fake and propaganda.
So now we know why Berstank hinted at "tapering" QE, a desperate last gasp attempt to push home prices up--"the low rates are going and see prices are on the move, even in Detroit, better get on the train."
The secret that’s not a secret.
“A disproportionate share of Hispanics live in California, Florida, Nevada and Arizona.” – The Economist (August 5, 2011 “Looking at the Wealth Gap”)
That’s what Arizona, California and Nevada have in common.
And "liar loans"or Alternative-A loans (ALT-A loans for short), loans that involve proving no income, no job and no assets - known as the "ninja loan"…
“In certain parts of the nation, such as California, Florida, Nevada and Arizona, these loans could lengthen the mortgage crisis for another two years.” -- Prue Morland, “A Short History of the ALT-A Loan”
The article “Financial Reform: Mortgage Fraud Continues to Boom” posted August 17, 2010 on mcauleysworld from Reuters relates:
“Reports this year from Interthinx, CoreLogic Inc and the Mortgage Asset Research Institute (MARI) — which all provide fraud prevention tools for lenders — show foreclosure hotspots Florida, California, Arizona and Nevada are also big mortgage fraud markets.”
And reports on the worst case of mortgage fraud in the nation, Obama’s home terriroty, Chicago’s Back of the Yards:
“Just a stone’s throw from downtown Chicago, Back of the Yards is the setting for Upton Sinclair’s classic 1906 novel ‘The Jungle,’ a tale of grueling hardship and worker exploitation at the city’s stockyards. The book includes an act of mortgage fraud against an unsuspecting Lithuanian family…
“Saul Alinsky, considered the founder of modern community organizing, started out in Back of the Yards in the 1930s. Decades later, a young community organizer named Obama got his start near here.
"Marni Scott, executive vice president for credit at Troy, Michigan-based lender Flagstar Bancorp, says there are virtually no untainted sales in the area. 'There are no cases of Mr and Mr Jones selling to Mr and Mrs Smith.
“'We see cases of mortgage fraud around the country,' she added. 'But there’s nothing out there that could match the mass-production, assembly-line fraud that’s going on here.'”
http://mcauleysworld.wordpress.com/2010/08/17/financial-reform-mortgage-fraud-continues-to-boom/
President George W. Bush set a goal of helping 5.5 million minority families buy their own homes before the end of the decade, hoping to end what he called a "home ownership gap." He traveled the “minority communities" citing high down payments as a major obstacle to home ownership for low-income families and pushing for millions to expand the American Dream Down Payment Fund.
All the while, Obama was bringing Chicago-mob politics to Washington, and with him the mob’s use of ACORN and the Community Reinvestment Act (CRA) for a grassroots activist movement to force banks into bad loans —planting the seeds of today’s financial mortgage meltdown. Barack Obama for years worked with ACORN (the Association of Community Organizations for Reform Now), abusing the law by forcing banks to make hundreds of millions of dollars in ‘subprime’ loans to often uncreditworthy customers using intimidation tactics, public charges of racism and threats to use CRA to block business expansion. And now taxpayers are being forced to pay off these bad loans.
Most significant of all, ACORN was the driving force behind a 1995 regulatory revision that greatly expanded the CRA and laid the groundwork for the Fannie Mae, Freddie Mac home financial crisis.
Barack Obama was the attorney representing ACORN in this effort.
And now he’s president of the United States.
Good weather.