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The Housing Bubble Goes Mainstream

Tyler Durden's picture




 

While it isn't news to regular readers, the fact that one of the key pillars of the "housing recovery" (the other three being foreign oligarchs parking cash in the US courtesy of an Anti Money Laundering regulation-exempt NAR, foreclosure stuffing and, of course, the Fed's $40 billion in monthly MBS purchases) have been the very biggest Wall Street firms (many of whom had to be bailed out the last time the housing bubble burst) who have also become the biggest institutional landlords "using other people's very cheap money" to buy up tens of thousands of properties, appears to still be lost on the larger population.

Intuitively this is to be expected: in a world in which the restoration of confidence that a New Normal, in which everything is centrally-planned, is somehow comparable to life as it used to be before Bernanke, is critical to Ben's (and the administration's) reflationary succession planning. As such perpetuating the myth of a housing recovery has been absolutely essential. Which is why we were surprised to see an article in the very much mainstream, and pro-administration policies NYT, exposing just this facet of the new housing bubble, reflated by those with access to cheap credit, and which has seen the vast majority of the population completely locked out.

From the NYT:

The last time the housing market was this hot in Phoenix and Las Vegas, the buyers pushing up prices were mostly small time. Nowadays, they are big time — Wall Street big.

 

Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Some are already wondering if prices will slump anew if the big money stops flowing.

 

“The growth is being propelled by institutional money,” said Suzanne Mistretta, an analyst at Fitch Ratings. “The question is how much the change in prices really reflects market demand, rather than one-off market shifts that may not be around in a couple years.”

We have quantified the massive footprint of the New Normal's landlords in the past, but here it is again from the NYT:

Blackstone, which helped define a period of Wall Street hyperwealth, has bought some 26,000 homes in nine states. Colony Capital, a Los Angeles-based investment firm, is spending $250 million each month and already owns 10,000 properties. With little fanfare, these and other financial companies have become significant landlords on Main Street. Most of the firms are renting out the homes, with the possibility of unloading them at a profit when prices rise far enough.

To be sure, the supportive spin is already in place - primarily by those who stand to benefit by this dynamic:

“When people write the story of this housing recovery, these investors will be seen to have helped put the floor under the housing market,” said David Bragg, an analyst at Green Street Advisors. “In some of the key markets, that contributed to the recovery.”

The reality is somewhat different:

The story, though, often looks more complicated on the ground. Joe Cusumano, a real estate agent in Riverside County, Calif., said that in recent months 90 percent of his business had been for companies like Invitation Homes, a Blackstone subsidiary. Home values in Riverside County have risen by 15 percent in the last year, according to CoreLogic.

 

But Mr. Cusumano said he wondered if faraway investors would properly maintain the homes they buy. He said that Invitation Homes had been willing to put money into the properties, but he was not so sure about the other players. He also worries what will happen when these investors start selling, as they inevitably will.

 

“The thing that scares me is the values going up so quickly,” said Mr. Cusumano. “That’s what happened before and that’s what’s scaring me. Is this going to happen again?”

And what's worse, as we reported last week, the top is already in and many of the deep pocketed investors have started pulling out:

Yet some investment companies are already pulling back in the markets that have had the fastest growth. In Phoenix, the percentage of all house purchases involving investors fell to about 25 percent in March from a high of 36 percent last summer, according to the Campbell HousingPulse Survey. The same survey shows that investors have been increasing their presence in new areas like Florida and California.

 

All of this has made it hard for house hunters like Jeff Martin, who is looking to buy a fixer-upper in Riverside County. Mr. Martin, 58, has made offers on 15 houses over the last year. Last Wednesday, he received his latest rejection. On most of the houses, Mr. Martin has lost out to investors offering all cash.

 

Mr. Martin, a retired Navy veteran, puts much of the blame on banks that have been holding onto empty houses, lowering the supply of available homes. He said he has trouble faulting the investors, given that he was involved in real estate financing during the last boom. But he is worried that if mortgage rates begin to rise he will lose out on his opportunity to buy. Rising mortgage rates could also lead to a broader slowdown in the real estate recovery.

 

Mr. Cusumano said that the investors he works for have been trimming back their purchases in the area. His agency closed on three houses for investors in May, down from eight in February.

The conclusion: the second housing bubble may have already popped: "the fevered pitch of the market has not died down."

In fact, scratch may and replace with has. The following comment from Mark Hanson should pour cold water on anyone who still harbors any delusion that there is a "housing recovery" or that any transitory, cheap-credit driven price hikes, will persist.

Mass Layoffs in Mortgage Space

 

Large scale, sudden mortgage finance job loss on deck...will impact weekly claims.  Rates a stiff headwind to house prices, bank earnings, consumer spend, home improvement et al.

 

After 5 years of interest rates being forced incrementally lower each year -- and everybody that qualifies refinancing over and over again allowing the banks to originate and earn several points off of each gov't loan churn -- the jig is up for a while at least.  The mortgage market is now so efficient -- and rates have been at historic lows for so long -- there is simply nobody on the proverbial "fence".

 

This morning I was made aware that three large private mortgage bankers I follow closely for trends in mortgage finance ALL had mass layoffs last Friday and yesterday to the tune of 25% to 50% of their operations staff (intake, processing, underwriting, document drawing, funding, post-closing).  This obviously means that my reports of refi apps being down 65% to 90% in the past 3 weeks are far more accurate than the lagging MBA index, which is likely on its' way to print multi-year lows in the next month.

 

As I stress in the note below, the "refi capital conveyor belt" is a quiet, yet powerful economic driver.  Not only do refi's grease homeowners balance sheets and have been responsible for the lions'' share of mortgage-centric US banks' earnings over the past few years but they are huge for the labor market.

 

With respect to jobs, well over 100 individuals touch one refi from loan application printing/shipping, up-front processing (appraisal, credit, bank/job verifications, title, escrow etc), to lender underwriting, document drawing, and funding, and through post-closing including securitization and trustee services. So when the refi door slams shut it's a macro headwind for which few account. In fact, many model the exact opposite...that rising rates is great for banks and the economy.

Bubbles: because this time is always the same.

 

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Tue, 06/04/2013 - 12:22 | 3623745 CaptainSpaulding
CaptainSpaulding's picture

What is this so called house everyone speaks of?

Tue, 06/04/2013 - 12:34 | 3623784 RSloane
RSloane's picture

Its that big thing that sits between your front garden and your back yard and is frequently used as an ATM by the willingly stupid.

Tue, 06/04/2013 - 12:43 | 3623792 CaptainSpaulding
CaptainSpaulding's picture

Mr Sloane, I just gave you a big green cigar.

Tue, 06/04/2013 - 12:50 | 3623828 jbvtme
jbvtme's picture

my only fear is that, when the time comes, the seats to watch the bankers rot in hell will be sold out

Tue, 06/04/2013 - 12:54 | 3623844 Oh regional Indian
Oh regional Indian's picture

This ain't no housing bubble..... it's a LAND GRAB.

Watch the rich walk the wild-lands of the former city of detroit in 10 years.

They have an agenda and it's number is 21.

It's a feeding frenzy now.

ori

Tue, 06/04/2013 - 12:59 | 3623862 jbvtme
jbvtme's picture

right.  blackstone has bigger plans than being a landlord.

Tue, 06/04/2013 - 13:20 | 3623887 King_of_simpletons
King_of_simpletons's picture

BUBBLE, Ya think ?

In South Florida, the price of homes are miraculously back to 2006 levels.

Check this home for giggles. Look at the disclosures. WOW !!! and check the list price.

http://www.bestofluxuryrealty.com/Weston/Isles_at_Weston_Homes/comm_id_1017095.html

Tue, 06/04/2013 - 13:29 | 3623976 Bill the Cat
Bill the Cat's picture

Pffthwpt!

Tue, 06/04/2013 - 13:33 | 3623996 knukles
knukles's picture

That's the Bluth house!
LOL

 

Like what is not wrong with this picture.
+++, Tyler!

Tue, 06/04/2013 - 13:57 | 3624070 Big Slick
Big Slick's picture

So THIS is where all that Fed-printed bank money is going??

(BTW, "there's always money in the banana stand" - shameless Arrested Development quote)

Tue, 06/04/2013 - 15:07 | 3624269 walküre
walküre's picture

the banana stand? it burnt to the ground... LOL

Tue, 06/04/2013 - 14:26 | 3624136 collon88
collon88's picture

Wow, a fixer-upper for $700K and mold as a bonus!

Tue, 06/04/2013 - 15:08 | 3624271 walküre
walküre's picture

tear down special. land value 699k in Florida?

ain't no fixing and/or upping that shit box

Wed, 06/05/2013 - 08:15 | 3625744 thestarl
thestarl's picture

LOL.

Tue, 06/04/2013 - 14:29 | 3624141 Freddie
Freddie's picture

Weston is out west by the Everglades aka a real shit hole.  I had a realtive who lived down there.  Mosquitoes, daily afternoon rain, third world neighbors.  The house looks like it is falling apart.  What a joke.

Tue, 06/04/2013 - 17:31 | 3624621 Chupacabra-322
Chupacabra-322's picture

Best kept secret is Miami Springs. One of the last unincorporated, free cities left in Amerika. Unlike the rest of the rapped and pillaged cities, property values are maintained stable in relation to false markets.

Tue, 06/04/2013 - 14:54 | 3624217 quasimodo
quasimodo's picture

Good Godfrey, who in the hell would plunk down 700 large for THAT? Is a distressed property down there really worth even close to that? WTF am I missing here?

Signed,

A ignorant midwesterner

Tue, 06/04/2013 - 13:01 | 3623870 illyia
illyia's picture

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up home-less on the continent their fathers conquered."

 


–Thomas Jefferson

Tue, 06/04/2013 - 13:35 | 3624009 WhiteWolf
WhiteWolf's picture

He said many other things very very important things.

I am convinced that those societies (such as the Native American peoples) which live without government enjoy in their general mass an infinitely greater degree of happiness than those who live under the European governments. Among the former, public opinion is in the place of law, & restrains morals as powerfully as laws ever did anywhere. Among the latter, under pretence of governing they have divided their nations into two classes, wolves & sheep. I do not exaggerate."
- Thomas Jefferson

"The modern theory of the perpetuation of debt has drenched the earth with blood, and crushed its inhabitants under burdens ever accumulating."
- Thomas Jefferson

"I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country."
- Thomas Jefferson

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs."
- Thomas Jefferson

"The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our constitutions, which, if not covered, will end in their destruction. I sincerely believe, with you...that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."
- Thomas Jefferson

"To take a single step beyond the boundaries thus specially drawn around the powers of Congress is to take possession of a boundless field of power, no longer susceptible of any definition. The incorporation of a bank, and the powers assumed by this bill [chartering the first Bank of the United States] have not, in my opinion, been delegated to the United States by the Constitution. They are not among the powers specially enumerated."
- Thomas Jefferson

"I wish it were possible to obtain a single amendment to our Constitution - taking from the Federal government their power of borrowing (from privately-owned corporate banks)."
- Thomas Jefferson

"We are undone, my dear sir, if legislation is still permitted which makes our money, much or little, real or imaginary, as the moneyed interests shall choose to make it."
- Thomas Jefferson

 

Tue, 06/04/2013 - 15:27 | 3624254 ZerOhead
ZerOhead's picture

That Jefferson rascal is clearly an unpatriotic (and probably anti-semitic) rabble rousing NUTJOB.

It's high time Obama placed him on the KILL LIST... 

Fri, 06/07/2013 - 12:36 | 3634106 illyia
illyia's picture

Thanks for the additional quotes.

Tue, 06/04/2013 - 14:07 | 3624091 WTFUD
WTFUD's picture

Who's this Thomas Jefferson fellar? What does he know? Will never happen!
When Obama reads T.J's foresight he must feel like the foolish non-entity that he is.

Tue, 06/04/2013 - 13:49 | 3624048 Blano
Blano's picture

That chunk of land they can have.

Tue, 06/04/2013 - 13:54 | 3624066 ElvisDog
ElvisDog's picture

You know, one thing I really respect about nature is how quickly it reclaims land that is not maintained by the human parasites. 

Tue, 06/04/2013 - 14:10 | 3624097 strayaway
strayaway's picture

There's a guy in Detroit that will scope out the properties being offered.

http://www.youtube.com/watch?v=66vEX1tAsHc 

Tue, 06/04/2013 - 14:26 | 3624135 resurger
resurger's picture

It's only a matter of time ori untill the central banks will have the entire fucking world in their balance sheets...

I pray they don't ever say we are going to buy gold and silver...

Fucking sad reality..really, only the mega rich benefit from all those bubbles and the small guy and the savers get "Ass Bunga Sauce" <-- whatever that means

Tue, 06/04/2013 - 14:56 | 3624223 Oh regional Indian
Oh regional Indian's picture

Too true resurger. That seems to be the plan. Everyone else rent everything from people that "know better".

ori

Tue, 06/04/2013 - 13:18 | 3623931 Bangin7GramRocks
Bangin7GramRocks's picture

Let's see here....10,000 homes. 14 Mexicans per home @400 per month each. Goddamn, we got us a new business! Good luck America, your idyllic suburban development will soon become a nightmare.

Tue, 06/04/2013 - 12:44 | 3623807 SafelyGraze
SafelyGraze's picture

"Blackstone, which helped define a period of Wall Street hyperwealth, has bought some 26,000 homes in nine states."

wow. that's an awful lot of real estate.

if only blackstone had a board member (like the ones from GS and reuters and the dept of state and the ceo of bain&co) in the entity that claims 117 million acres

that's 183k square miles.

if it were a state, it would be the 3rd largest (ahead of california)

you are a Good Person if you donate your land to this entity.

Tue, 06/04/2013 - 12:55 | 3623845 jbvtme
jbvtme's picture

26,000 homes?  apparently there are 300k+ houses in zombie foreclosure.  how many houses are lived in with negative equity?  http://www.businessinsider.com/more-than-300000-us-homes-are-foreclosed-...

Tue, 06/04/2013 - 13:09 | 3623903 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

You know what comes next in a marxist takeover of the US. Nationalization or in the new normal a hyrid government/private corporation crony setup like the FED and all that land winds up being owned by the government. You get to stay in your house but never own the title on it ever in this take-over always paying rent to the government one way or the other. Forced labor is next.

Tue, 06/04/2013 - 13:42 | 3624029 youngman
youngman's picture

I think what you will see is Blackstone pushing a new Federal Housing administration to help people rent these homes....government run housing..perfect for blackstone....guaranteed income...whats a couple more trillion in debt..nothing

Tue, 06/04/2013 - 14:32 | 3624148 Caviar Emptor
Caviar Emptor's picture

Yes. Close the loop. Crony Capitalism lives off public funds and trust. Next up: send your daughters to our maid school

Tue, 06/04/2013 - 14:59 | 3624233 theprofromdover
theprofromdover's picture

Correct.

When they start to worry that they might lose some money, they will tell OBummer  that he should start another home-assistance program, 'to help people get onto the ownership ladder'

 

Tue, 06/04/2013 - 14:32 | 3624150 Freddie
Freddie's picture

Like how is that any different then what we have today?  We don't own shit.   The county owns your home. You are a host for the union govt employees parasites to live off of.

Tue, 06/04/2013 - 15:53 | 3624412 Professorlocknload
Professorlocknload's picture

  Un fking real!  Oh, the connections!

Tue, 06/04/2013 - 14:23 | 3624131 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

forgot to mention that they rarely produce anything of value...

Tue, 06/04/2013 - 12:37 | 3623794 prains
prains's picture

it's not a house, it's a financial fantasy cooked up by wall street to steal peoples equity and rip off foreign investors through rating agency price fixing. Criminal Syndication, this is America's greatest capitalist contribution to humanity. Who would have dreamed they could have outdone Stalin but they did.

Tue, 06/04/2013 - 12:57 | 3623853 jbvtme
jbvtme's picture

i agree.  but how is it that blackstone fell for it?

Tue, 06/04/2013 - 13:08 | 3623873 prains
prains's picture

how is Blackstone not just a private organ of the Bernankatron Fed. It's a hydra with many heads and many names but they all lead back to one body, The Fed. Blackstone does its masters bidding to trick the sheep back into a confidence game but fucknut Ben doesn't understand Joe six pack is having trouble buying a six pack let alone real estate speculation, i mean buying.

Joe 6 is getting double stuffed by inflation and no cost of living wage increase and he won't see a pay raise anytime soon because the company he's working for is either not making money of sitting on all of it for protection.

Tue, 06/04/2013 - 14:34 | 3624157 Caviar Emptor
Caviar Emptor's picture

Yes. Biflationary double-shagging

Tue, 06/04/2013 - 13:07 | 3623896 NotApplicable
NotApplicable's picture

Because once this real estate collecting conduit dries up, Blackstone will be first in line to offload the whole thing onto Uncle $ugar.

Tue, 06/04/2013 - 12:47 | 3623818 SRSrocco
SRSrocco's picture

Housing is in a bubble and I would wager that prices will be a fraction of where they are today by 2020-2025.

However, gold and silver will be some of the best assets to own in the future.  I find it ironic that Shanghai Silver Warehouse Stocks have declined substantially since the price take-down while the COMEX silver stocks remained virtually unchanged.

The rest of the article:

Shanghai Silver Stocks Decline Substantially after Price Take-down

 

http://srsroccoreport.com/shanghai-silver-stocks-decline-substantially-a...

Tue, 06/04/2013 - 13:10 | 3623906 NotApplicable
NotApplicable's picture

If markets are not allowed to clear, prices will never fall. I see this as one giant "liquidity sop-up" operation, where the Fed is using Wall St. to absorb worthless assets.

Tue, 06/04/2013 - 13:21 | 3623945 Bangin7GramRocks
Bangin7GramRocks's picture

Blah blah blah silver, blah blah blah blah blah gold. That's all I see in 20% of the posts here. Not saying its wrong, just fucking ponderous.

Tue, 06/04/2013 - 16:03 | 3624442 Professorlocknload
Professorlocknload's picture

  For housing to fall and stay down would require a collapse of the Section 8 program. That's what really sets the long term investment return, therefor price floor, of RE.

  .Gov assured income is also attractive to the likes of Blackstone and other investment entities, one would think?

  The  investment market is still getting regular increases in Sec 8 rents, as well. Not much else is hedging to inflation at this point.

Tue, 06/04/2013 - 12:48 | 3623821 PiltdownMan
PiltdownMan's picture

Housing is the thing that investors buy at discounted prices. CoreLogic up 12.1% YoY, but mortgage purchase applications suck and bank interest margins are falling. Oh and GDP stil is way below average, see this guy's charts.

http://confoundedinterest.wordpress.com/2013/06/04/zandi-economy-to-grow...

Tue, 06/04/2013 - 12:57 | 3623846 CheapBastard
CheapBastard's picture

Moar renters are failing to pay rent...the backup to evict is ridiculously long since courts are alrwayd swamped with all kinds of mortgage battles and property tax fights.....and the tenant damage to the property by an angry renter can be devastating.

Landlords seem to miss the fact that people who cannot affrord $1,200/month mortgage, probably cannot afford that rent either.

 

I don't know who will be the Suckers ultimately holding these packed-and-stacked AAA+ Tranched Subprime Boxes, but good luck to them.

Tue, 06/04/2013 - 13:11 | 3623910 NotApplicable
NotApplicable's picture

Why that would be you. By proxy, of course.

Tue, 06/04/2013 - 13:21 | 3623944 MachoMan
MachoMan's picture

Depends on location...  here, there is no court backlog, but there also isn't much shadow inventory...  go figure.

Tue, 06/04/2013 - 13:43 | 3624025 IdeasRbulletproof
IdeasRbulletproof's picture

I just sold my condo luckily to some poor guy. I was paying 1400 mo. + HOA ($200) and not to mention electric etc. Overall I would've been paying min $1800-$2000 in my home alone. Didn't qualify for a refi. Actually I rented it for almost the whole time I owned it. I figured there was no way someone would rent it for that much as the last renter was having trouble paying. Btw this was in chandler, AZ. In a very good location. I'm actually ecstatic that I was able to get out in time as no one knows when and how this bubbles going to burst. Personally I don't wanna get caught up in it. I'll wait for a crash and see where the chips fall from there. Oh, and the best thing...Debt Free!!!

Tue, 06/04/2013 - 13:50 | 3624050 yogibear
yogibear's picture

First defaulted on houses. Now onwards to investor landlords. The municipalities can tax the investor landlords to death. 

When the  investor landlords stop paying the taxes the local governments can take the houses away through tax sales. Rinse and repeat.

Tue, 06/04/2013 - 15:00 | 3624236 Oh regional Indian
Oh regional Indian's picture

Very astute observation yogibear.

Tue, 06/04/2013 - 22:13 | 3625249 MachoMan
MachoMan's picture

It's already happening to banks...  there is a real cost to the shadow inventory and it will be felt soon enough.

Tue, 06/04/2013 - 13:20 | 3623941 Canadian Dirtlump
Canadian Dirtlump's picture

It is a dream, folded into a myth, baked into an illusion nestled in a steaming pile of dog excrement.

Tue, 06/04/2013 - 14:34 | 3624161 Freddie
Freddie's picture

And it ain't that good.

Tue, 06/04/2013 - 13:54 | 3624062 Dingleberry
Dingleberry's picture

To say the RE market is in a bubble is like Bernanke using hedonics to measure inflation, i.e. it's a LIE.

The few markets that have good homes and neighbors that don't run foreclosed-homes-turned-meth-labs are indeed rising. 

Those are few and far between.

The market is bifurcated. The good ones go up, while a lot of shitty ones continue the slide into cesspool-ness.

Tue, 06/04/2013 - 13:01 | 3623872 Midas
Midas's picture

"I've made a huge mistake."

Tue, 06/04/2013 - 12:27 | 3623757 Victorio
Victorio's picture

The mainstream goes bubble.

Tue, 06/04/2013 - 12:40 | 3623798 Go Tribe
Go Tribe's picture

It's almost as if the Wall Street bigs collapsed the market in 2008 so they could scoop up all the best inventory on the cheap. As if....

Tue, 06/04/2013 - 12:29 | 3623764 apberusdisvet
apberusdisvet's picture

The biggest problem that the housing recovery disinformation specialists have is that, even in the supposedly hot markets (outside of NYC and DC----distinct anomalies), rents have remained stable or are falling.  Hedgies can't make those double digit returns without 5% rent increases YOY.  It's that simple.

Tue, 06/04/2013 - 12:44 | 3623812 disabledvet
disabledvet's picture

The real winners have been the holders of the MBS's actually (ironically enough the Federal Government. AIG as well!??) still...with prices having moved so far so fast (San Fran never collapsed...just go over to Dr. housing Bubble's blog) some of these folks have cleared a fortune. To the "lonely buyer" you're Government is telling you "Move to Mexico." of course we need regulation and smart planning here. Good luck on that! "this is what Wall Street does" folks. Get real. There are people in Cali sitting on BILLIONS in unrealized gains in that State "because when everything collapsed they did nothing."

Tue, 06/04/2013 - 12:59 | 3623863 Confused
Confused's picture

If they own all the assets (in this case housing) they don't need an increase in rents. They have a stable, reliable income stream, for the long term.

 

 

Tue, 06/04/2013 - 13:52 | 3624059 yogibear
yogibear's picture

And the local governments have them trapped to pay for ever increasing pension shortfalls and benefits.

Tue, 06/04/2013 - 12:29 | 3623765 ghengis86
ghengis86's picture

+1 for Arrested Development picture!

Tue, 06/04/2013 - 14:10 | 3624099 Skin666
Skin666's picture

I've made a huge mistake...

Tue, 06/04/2013 - 12:29 | 3623769 caimen garou
caimen garou's picture

thanks to the likes of bend us all over bernake and paul the fuck up krugman and piles of monoply money this administration is creating more bubbles than a mr. bubble bath! built my house out of pocket and don't care if prices crash to zero! and by the way, bubble you bernake!

Tue, 06/04/2013 - 12:31 | 3623772 EscapeKey
EscapeKey's picture

Mark Hanson's commentary was excellent last time around (2007ish). Certainly helped me understand a lot about the housing situation.

Tue, 06/04/2013 - 13:50 | 3624041 Seasmoke
Seasmoke's picture

Good to see Mr. Mortgage.... Why did he disappear ????

I hoped he was alright. .

He actually started me down the rabbit hole. Which of course led me to ZH.

Tue, 06/04/2013 - 12:31 | 3623773 Bay of Pigs
Bay of Pigs's picture

Just when we think we've hit rock bottom, Blackstone takes it a notch lower.

Tue, 06/04/2013 - 12:51 | 3623775 Ham-bone
Ham-bone's picture

Decreasing mortgage rates for 30+yrs (along w/ lessening downpayments to 0%, interest only options, moving from single to double income households, etc. etc.) has gotten us here. And 3.5% 30yr fixed as of 1 month ago signaled THE END.  3% is really the lowest a 30yr fixed could theoretically get (1% 10yr + 2% lender)...but looks like the re-fi machine will stop, the MEW will stop, as prices slide lower from here due to a stall or ever higher interest costs...much like Japan's debt only requires a miniscule move to wipe out all tax revenue...so the housing market which requires ever lower rates to maintain the ponzi has hit the wall...that is the END.  Small moves from 3.5% to 4.1% presently to maybe 4.5% are a deathknell.

possible caveat is for FHA / Fred / Fan to move to directly fund mortgages lowering the typical 2% lender portion to something like 1%...allowing 30yr mortgages another leg to something like 2% or 2.5%...or to start offering 50yr or 100yr mortgages...or or or...all leading to the same destruction.

GAME.SET.MATCH.  happy days are over...run for hills...well and truly believe the BS phase is over and get ready for a more totalitarian phase as the happy games are through now.

Tue, 06/04/2013 - 13:24 | 3623952 MachoMan
MachoMan's picture

The math has always been certain, however the timing is not...  if you think that rates have bottomed already, then I strongly encourage you to bet accordingly...  however, I'm not so sure.

Tue, 06/04/2013 - 12:32 | 3623777 RSloane
RSloane's picture

Just when you think banks couldn't possibly fuck up anything else, they do!

I wonder how many MBS's Bernanke will be buying next month.

Tue, 06/04/2013 - 16:53 | 3624550 NihilistZero
NihilistZero's picture

The better question is how many of them will there be for him to buy?  The FED is now in total pushing on a string mode.  There is plumetting mortgage demand.  The American consumer is done taking on mortgages at these prices.  The pool of greater fools is much smaller than during Housing Bubble 1.0.  This mania will retract by next spring/summer at the latest as the specuvestors trailing Wall Street realize they are fucked.

Tue, 06/04/2013 - 12:33 | 3623780 williambanzai7
williambanzai7's picture

FICO

Tue, 06/04/2013 - 12:42 | 3623791 RSloane
RSloane's picture

I withdraw my comment. Too pissed to type.

Tue, 06/04/2013 - 12:43 | 3623808 prains
prains's picture

don't forget the rating agencies in the pocket of wall street calling this shit AAA

Tue, 06/04/2013 - 12:54 | 3623843 RSloane
RSloane's picture

It is AAA. Bernanke taught bankers and investment houses that if their shit goes bad, Bernanke will buy it and clean their books. Malinvestments, which equates to fuckingly stupid calls, don't matter anymore. They can't lose on this deal. Bernanke is still buying MBS's and will never stop until someone successfully throws an axe at his head. Then, if you get rid of one Bernanke, you get Son of Bernanke for the next Fed chair. None of this is going to change until there is a systemic crash.

Tue, 06/04/2013 - 14:00 | 3624078 Bastiat
Bastiat's picture

+1 for "fuckingly"

Tue, 06/04/2013 - 13:54 | 3624067 yogibear
yogibear's picture

Painting a turd green and spraying it with perfume. Bailout #2. "We never saw it coming".

Tue, 06/04/2013 - 13:02 | 3623876 WezTheJuic
WezTheJuic's picture

Tooo funny.

Tue, 06/04/2013 - 12:34 | 3623785 Downtoolong
Downtoolong's picture

Let's just get it over with and change the name of this place to The United Hedge Funds Of America. We'll just have to figure out how to put 30,000 stars on the flag.

Tue, 06/04/2013 - 12:40 | 3623801 BLOTTO
BLOTTO's picture

Its easier for 'them' to just make one st*r...instead of 30,000 of them

.

One New World Order to control us all...

 

Tue, 06/04/2013 - 12:42 | 3623806 Go Tribe
Go Tribe's picture

Stars in supernova.

Tue, 06/04/2013 - 12:38 | 3623795 Unprepared
Unprepared's picture

So QE-Hi-5 by September?

Tue, 06/04/2013 - 12:40 | 3623800 RmcAZ
RmcAZ's picture

Housing bubble is easy to see in N. CA. A home near me was listed at $309,000 in December, and was taken off the market. It recently came back on the market for $399,000, and there are similar ones nearby at $415,000.

Tue, 06/04/2013 - 12:46 | 3623811 FecundaGoat
FecundaGoat's picture

Looks like the smart money is rushing into housing....Am I supposed to believe that is a negative sign??

BTW...Who cares about the Re-Fi market....It has zero impact on housing sales.....

Flame away boys....I'll let my net worth protect me....

Tue, 06/04/2013 - 12:56 | 3623850 Bay of Pigs
Bay of Pigs's picture

 fecundagoat

Biography: Self Made Millionare, Investor, Vice President, Professional SmartAss, Born Bitter, Reagan Republican, Outraged at the current state of world affairs, Feel at Home on your Website!!

Thanks for the laughs....I notice you are a "self made millionaire", but can't spell it? No doubt.

Tue, 06/04/2013 - 12:45 | 3623814 TheLooza
TheLooza's picture

so now is  bad time to buy, is that what you;re saying?

Tue, 06/04/2013 - 17:25 | 3624617 Professorlocknload
Professorlocknload's picture

Looza,

To play devils advocate for a spell here;

(dates/prices approximate) 

 

1963= The old man bought a house in central cal for $10k.

1972= Friend bought one same area for $36k

1979= I bought one next door for $65k

1986= Friend sold his for $124K

1995= Sold mine for $250K and split for the sticks.

2007= Drove by the old place, listed for $415K

2012= Looked at it again, appraised at $350k

2013= One up the street sold for $385k

Other than the hiccup between 07 and 12, is there a trend here?

If this is a reset, he who is out of the market is burnt toast, because the devaluation of the bennie buck should be around 40%, putting that latter house at around $539k not too far out from here. Say 4 years?

Got to ask ourselves, is this another bust-boom cycle, or the end of the world? Helluva gamble, or business as usual?

But, knowing the only thing governments and their banks know is to devalue, and considering these low mtg rates, I wouldn't get caught principal-dwelling-houseless about now. Leverage just might return as a strategy, as once the fed gets the fire lit, skyrocketing interest is the only extinguisher they have. 

And I don't know too many J6P's who know any other inflation hedge than bricks and mortar and particle board.

My guess? We are in the early stages of a Crackup Boom. EVERYTHING goes parabolic soon. Money flurries will abound!

But ya' ll do your own thang.

ps. We don't suppose Blackstone and a few other "connected's" might have caught wind of some privileged info, do we? 

 

Tue, 06/04/2013 - 12:48 | 3623822 q99x2
q99x2's picture

That photo of the house is the ugliest I've seen. I can't make out what is wrong with it. It is really ugly.

Tue, 06/04/2013 - 13:03 | 3623880 Midas
Midas's picture

What if I told you it had a hot tub in the attic?

Tue, 06/04/2013 - 13:24 | 3623953 seek
seek's picture

That's more or less by design. It's a digital render of a "model home" from Arrested Development.

http://arresteddevelopment.wikia.com/wiki/Model_Home

Tue, 06/04/2013 - 14:14 | 3624107 Skin666
Skin666's picture

Solid as a rock...

Tue, 06/04/2013 - 12:50 | 3623832 SheepDog-One
SheepDog-One's picture

YAY for housing bubble! Never been a better time to buy than now!

BTW how's that Tuesday big POMO ups goin so far? :(

Tue, 06/04/2013 - 12:58 | 3623858 RSloane
RSloane's picture

He's going to wait until later in the day to push it to green. Then everyone on WS will cheer and the word 'saint' will be bantered about.

Tue, 06/04/2013 - 14:44 | 3624191 RSloane
RSloane's picture

DJIA now bouncing off the -115 range and is at -100. I smell a repair heading our way.

Tue, 06/04/2013 - 14:50 | 3624204 fonzannoon
fonzannoon's picture

imagine RSloane....imagine how awesome it would be if btfd tuesday fought off a massive assault to finish up 1 point. I say they just close the market the rest of the week and hit the hamptons early. or better yet leave it open so we get a 1,000 point rally tomorrow.

Tue, 06/04/2013 - 12:56 | 3623848 Peter Pan
Peter Pan's picture

So what is left to invest in?

Every asset class is suspect.

Shares...risky
Houses.....too many vacancies and high unemployment
Bonds......suicide
Previous metals......manipuated to death
Savings accounts.....no return and at risk of haircut
Collectibles.....over valued and hard to liquidate at short notice

We are witnessing the death of vslue and eventually ownership,

Tue, 06/04/2013 - 13:07 | 3623898 Eagle Keeper
Eagle Keeper's picture

Guns & Ammo

Tue, 06/04/2013 - 13:10 | 3623909 Peter Pan
Peter Pan's picture

To defend what other than a life where nothing is yours including your privacy?

Tue, 06/04/2013 - 12:56 | 3623849 Mercury
Mercury's picture

Mass Layoffs in Mortgage Space

 

Large scale, sudden mortgage finance job loss on deck...will impact weekly claims.  Rates a stiff headwind to house prices, bank earnings, consumer spend, home improvement et al.

 

 

Not only that but Blackstone et al aren’t taking down individual mortgages on those 26k homes anyway. I suppose they are raising debt in large chunks using the properties as collateral but they aren’t keeping mortgage brokers in lollipops.

Tue, 06/04/2013 - 17:37 | 3624632 Professorlocknload
Professorlocknload's picture

I suppose they are raising debt in large chunks

  Yup. Converting as much paper as possible into things "Real" in the last of this Security Sellers Market. Lev-er-age.

 

Tue, 06/04/2013 - 12:56 | 3623851 Hongcha
Hongcha's picture

Yes RmcAZ, I am in CoCo County and had a self-described prospector show up at my door (modest clinging-to-middle-class neighborhood) on Sunday.  He was walking up & down the block looking for people who wanted to sell.

I believe this is a one-wave phenomenon and would be happy to sell and clear profit but try telling that to my wife. 

(RACISS ALERT) there are enough people of my tribe around that we can hold the fort for a while against the interlopers and meth freaks walking the fresh green streets of our little burg; keep our lawns neat & tidy, cling to Beaver Cleaver Daze like the Mormon church down the street (banjoes, pancake breakfasts on Sunday).  The Mormons are an interesting clan.  Their leaders recognize what is going down and they are bent on preserving the culture, silly as it may seem from time to time.  I would ask to join in a heartbeat if I could do the faith.

The greatest annoyance is Kalifornia's unrelenting support of the non-functioning, to the detriment of the class that made it what it was.

 

Tue, 06/04/2013 - 12:58 | 3623857 pragmatic hobo
pragmatic hobo's picture

this is ben bernanke's solution to burst housing bubble,

first foreclose on all small timers who got in over their head, allowing banks to take back the property on the cheap

second, rape and plunder these small timers again by raising food/energy price via dollar devaluation and using that money to stuff the wall street pirates with excess cash,

third, these wall street pirates will use the excess cash to buy homes from the banks at inflated price.

fourth, inundate news media with story of rising home prices luring in small fish again so the wall street can resell the home with profit.

fifth, if small fish won't bite, then buy up all the properties and jack up the rental price. One way or the other the slaves have to pay.

It's a win-win situation for the top 0.01%. Thank you bernanke, you are a genius.

Tue, 06/04/2013 - 13:30 | 3623980 WezTheJuic
WezTheJuic's picture

Many angles, many approaches, many facets to create one net result?  OR, is that to create many results to further a direction?  OR, is it the same people doing the same thing with different people because they know that they are getting caught?

 

Nothing to see here, move along?

 

Pens,

Tue, 06/04/2013 - 13:14 | 3623916 CaptainSpaulding
CaptainSpaulding's picture

I cant afford a house.

Tue, 06/04/2013 - 13:25 | 3623955 edifice
edifice's picture

Me either, man.  Renting a room for $500/mo. in Denver.  And, I make over $50k/year.  Houses are for 6-figure folk.

Tue, 06/04/2013 - 13:31 | 3623977 CaptainSpaulding
CaptainSpaulding's picture

$500/ month is unheard of here in NY. $700 At least will get you an apt. here

Tue, 06/04/2013 - 15:12 | 3623929 Kirk2NCC1701
Kirk2NCC1701's picture

So, it's "OK" for the Fed and its Big Bank shareholders to work in criminal tandem (create & sanitize), i.e. launder paper money at the rate of $85B/mo, but not for small-fry to do likewise?

If you think about it, one key difference between 'clean' and 'dirty' money is that 'dirty' money has decoupled the tracking history along its exchanges.  Thus clouding the banks' ability to monitor and control money flow, and to maximize its FRB model.  The other key difference is that the Gov cannot tax 'dirty' money at source (and control its genealogy on behalf of the Fed and the banks).

The Gov is 100% disingenuous/deceitful about its claim to want to prevent drug money from flowing.  If they wanted that, they'd shut down drugs within a week, by using draconian measures:  All sale or possession awards the holder an inescapable death sentence within 30 day.  And all possessions (house, etc) are confiscated and sold at public auction.  But that would be 'bad for business': Think of all the unemployed or underemployed LEAs, judges, lawyers, jailors, nurses, doctors, therapists, social workers, lobbyists, Movie & TV screen writers, etc. -- who, ironically and perversely enough, benefit from a "controlled crime level" in a parasitic way.  Too much crime is just as bad as too little crime, for the sake of all these self-righteous people.  Unpleasant to contemplate perhaps, but true nonetheless.

The Fed (all fiat CBs) + their Prime Banks are THE biggest money launders around.  It's like the pot calling the pencil 'black'.  Hang 'em All, Hang 'em High!

Tue, 06/04/2013 - 13:19 | 3623933 monopoly
monopoly's picture

U need a cave. A house, an apt. an igloo. Something.... But you only need one cave. After that I just do not care, up or down. My cave is safe.

Tue, 06/04/2013 - 13:21 | 3623943 monopoly
monopoly's picture

The time to buy a house was two years ago. Not now. We are near the top and soon it all comes down again. We never learn.

Tue, 06/04/2013 - 13:31 | 3623965 Hongcha
Hongcha's picture

Kirk etc.  You have to work around, in cold blood.  Our newly-documented friends are all about underground markets and services, while the Anglos are heaped with propaganda to make them sore afeared of the Law/IRS.

Meanwhile, our leaders and their boosters cheat more or less openly.  It is falling apart and they are backing to the lifeboats, dressed in drag, even as they exhort us to follow the rules.

Learn how to live well in a declining empire; that is the karma we are all in, like it or not.  How do they work it?  They will try to keep the cancer that is government alive by consuming healthy cells and buying the votes with handouts.  It will not end until the walls are completely breached and there is 'no more history'.  This is the Fed plan and people like Gov. Moonbeam are emulating it.  It is the way the cancer keeps itself alive, it has no other means.

But unlike a body, the smarter cells can walk and/or slow their participation.  PTB are desperate to halt that exodus.

I find it invigorating, myself.  End of days and I am a born preacher.  The day will come when I pull the plug and Hongcha is no more.  But for the present we are ok and I very much enjoy these exchanges.

Tue, 06/04/2013 - 15:33 | 3624344 Kirk2NCC1701
Kirk2NCC1701's picture

Friend, I have NO issue with what you're saying.  Let me make clear what gets my blood pressure up more than anything else...

Those people whom Jesus referred to as "whitened sepulchers":  Self-Righteous Hypocrites.  I loathe and despise them!

Inasmuch as we have way to many of these in all levels of Gov and LEA's, I'd happily cheer on those who do whatever it is they do to "reduce the Velocity Of Money" and undue taxation of money, if ya know what I mean.  Like I said, IF the Gov genuinely had an intention of curbing drugs, then they could've and should've done so.  Insofar they have not, but have opted to "contain" it, they are simply "managing careers & lifestyles" for too many people on their payroll.  People, who ironically and hypocritically enough, are getting paid to 'service' the drug problem and associated crime.  In so doing, the taxation and debt just keeps going up for the mere 53% who pay Federal Income Tax.

I'm not for drugs or crime, and have no sympathy for people engaged in this -- that much should be obvious.  But what should also be obvious, is that I have even LESS sympathy for the Gov and LEA hypocrites who need to either shut down the drugs & crime completely (like in Singapore or Saudi Arabia), or get a job that's not paid by tax payers.

More unvarnished truth, and less BS & hypocrisy in the land that is the "Mother Of All Hypocrisy"!  At this point I'm taking a binary position:  Fix the System properly and completely, or bring on the proverbial wrecking ball -- so we can start fresh.

Tue, 06/04/2013 - 17:15 | 3624595 NihilistZero
NihilistZero's picture

"I'm not for drugs or crime..."

Total double-think because legislating what another person can put into his/her body is an ethical crime of the first degree.  You don't like drugs, don't do them.  If you don't like the effects of other drug users upon your person or property, I can gaurantee you that behavior is already illegal.  You morality police have no intwellectual ground to stand on when speaking out against Big Government.

Tue, 06/04/2013 - 13:35 | 3623970 jesusonline
jesusonline's picture
American Gang Raped in India, Police Say http://online.wsj.com/article/SB10001424127887324063304578524863720210882.html#articleTabs%3Darticle had to tell you about it, sorry for being off-topic.
Tue, 06/04/2013 - 13:32 | 3623975 buzzsaw99
buzzsaw99's picture

It is impossible for Blackstone to take a loss on those because of the bernank and toadies on crapitol hill. Besides, they aren't making any more desert. Oh wait a minute, actually with the aquifer drying up they are. Anyway, the fed and usa gubbermint decide who wins and who loses in this supposedly capitalistic too big to fail market.

Tue, 06/04/2013 - 14:07 | 3624085 JR
JR's picture

+ 1,000,000,000 give or take a Bernanke 0 computer entry or two...

Larry Fink pioneered the mortgage-backed securities market in the United States.

The U.S. government then contracted with BlackRock* and Larry Fink to help clean up after the financial meltdown of 2008. No problem that Fink had “longstanding relationships with senior government officials and potential conflict of interest regarding government contracts awarded without competitive bidding.

As Zero Hedge said would happen back in 2010:

 Wall Street will be back to doing everything it used to do before, but this time with the Frank-Dodd stamp of approval. Until the next inevitable crash.

*Blackrock not to be confused with Blackstone.

Tue, 06/04/2013 - 13:39 | 3624023 Aztec Warrior
Aztec Warrior's picture

Is it just me or someone else also thinks -this isn't just a coincidence

2003-2006 Housing bubble 2003-2005 - Arrested Development seasons 1, 2, 3

2012-201X Housing Bubble 2013-201Y - Arrested Development seasons 4, ?, ?

Tue, 06/04/2013 - 13:41 | 3624027 bill1102inf
bill1102inf's picture

They simply took the concept of HFT and applied it to real estate, one can drive up the price of anything this way.

Tue, 06/04/2013 - 13:47 | 3624028 TomGa
TomGa's picture

A family member in the residentilal real estate arena told me just last week that the head broker at their office (high-end residential) told all the agents to "get what they can over the next couple of years."  After that, residential real estate will become "very difficult" and that they should consider that as they make plans for what they may be doing professionally over the next few years.

Tue, 06/04/2013 - 13:52 | 3624056 rockraider3
rockraider3's picture

Why is there a picture of Bernanke's house on ZH?

Tue, 06/04/2013 - 14:01 | 3624080 Dingleberry
Dingleberry's picture

I'm sure you all heard about the new FHA rules starting this month. You know, the poor fuckers that have only about 3% down and makes up a good chunk of the market (I have read from 20-40%).

LIFETIME PMI.

Let your brain marinate on that. And think about what that will do to this market that runs on high margin. 

Tue, 06/04/2013 - 14:32 | 3624151 RmcAZ
RmcAZ's picture

That's nuts... FHA PMI is crazy compared to conventional loans, at least from what i've seen. Imagine people getting into a situation where their FHA PMI is $300/month, and then they are paying $250/month in HOA's, in addition to hundreds per month in taxes. And yet I still have a majority of people telling me that renting is stupid. People will never learn.

Tue, 06/04/2013 - 15:41 | 3624292 Almost Solvent
Almost Solvent's picture

Depends on where you live. Some places you can get a 2,500sq. house for under 150k in the 'burbs. But, living in central Iowa or upstate NY is not for everyone.

Wed, 06/05/2013 - 03:50 | 3625571 zipit
zipit's picture

RE: "living in central Iowa or upstate NY is not for everyone": You can say that again. They should pay you to live in places like that.

Tue, 06/04/2013 - 14:25 | 3624102 robertocarlos
robertocarlos's picture

My Canuck newspaper reported today that US housing is up 12% in price year over year. You are doing so well and by extension so are we. Recession over.

Tue, 06/04/2013 - 14:30 | 3624144 Evil Bugeyes
Evil Bugeyes's picture

Kudos to Ben Bernanke. He has been able to reignite the stock market and housing bubbles so that we can all party like it is 2006! He can now leave on a high note, just like his mentor Greenspan. And people worried that he didn't have an exit plan!

Tue, 06/04/2013 - 14:39 | 3624172 orangegeek
orangegeek's picture

Amazing - 2005 top being revisited.

 

Bankruptcies lawyers are going to be busy for the next few years.

Tue, 06/04/2013 - 15:29 | 3624324 Stuck on Zero
Stuck on Zero's picture

One House you don't want to get stuck with trades hands every two years, has multiple owners, is full of weeds, despised by everyone, is like a giant money pit, and commands no respect - The House of Representatives.

 

Tue, 06/04/2013 - 15:39 | 3624364 WallowaMountainMan
WallowaMountainMan's picture

i don't get why everyones upset.

loan quadrillions to people who have no chance of repay so the people can buy hyped up priced housing, foreclose, sell at full face value to the same people (aka the fed), take the money, buy on the dippity do da, and re-loan to the same people who couldn't pay in the first place.

blankenstein hisself gets hot over that scheme market making.

:)

Tue, 06/04/2013 - 16:19 | 3624490 Winston Smith 2009
Winston Smith 2009's picture

Found exactly what I suspected when I searched for it on-line. 

Here's some of your "institutional investors" buying up real estate in a desperate search for yield:

Private Sector Pension Funds Investing in Real Estate – May 2013

"Private sector pension funds represent one of the most significant institutional investors in the alternative assets space. Preqin's Real Estate Online database has identified a total of 722 private pension funds that are currently active in the real estate asset class."

https://www.preqin.com/blog/101/6588/private-pension-funds-re

Carpenters, laborers see pension fund money create jobs, pharma HQ - May 29, 2013

http://www.rew-online.com/2013/05/29/carpenters-laborers-see-pension-fun...

Now, guess who gets even further creamed when the Ponzi ends?  There'd better not be any g-damned bailouts for pension funds!

Tue, 06/04/2013 - 18:43 | 3624791 Professorlocknload
Professorlocknload's picture

There'd better not be any g-damned bailouts for pension funds!

 

Uh, oh!...

http://www.pbgc.gov/

Tue, 06/04/2013 - 17:21 | 3624604 beardeus
beardeus's picture

Wife and I bought a home, I didn't want to, in the fall of 2011 for 90k. It was a FHA loan and we refinanced it conventional when an appraisal came in at 130k. A house in the neighborhood just sold for 150k (same as ours except with a pool). Another neighbor who bought 1-2 years ago, for 111k, fixed it up rather nicely and just listed it for 225k.

It is a decent neighborhood. I'm happy with it. It is in a city that borders, sort of, Phoenix, AZ. My mortgage is $557 plus a $69 HOA fee (NAZIS!).

I'm happy with it. I'd like to sell and make an easy 100k but then what would I do? I personally would buy a nice RV and live in it but the wife would never do it! Haha!

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