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The Entire US Housing Market In One Chart

Tyler Durden's picture




 

Last night's IPO filing of American Homes 4 Rent - the latest large "own to rent" vehicle scrambling to cash out while the cashing out is good (if not for its peer Colony which pulled its IPO as we reported last night) may or may not pull the "market conditions" card, but it did provide for an informative S-1 filing, where among other things one can find the following one-chart schematic summarizing the entire US market.

In short:

  • Residential housing is the single largest "tangible" US real estate asset, worth roughly $18 trillion (but well below the total financial assets in circulation in the US).
  • Housing inventory as of May was 133.2 million units, of which owner occupied is 78.9 million, renter occupied was 41.7 million, but most troubling: 12.6 million was Vacant. Some shortage.
  • Of the Owner-occupied units, 3.3 million units were 90+ delinquent or in foreclosure, 2.0 million units were 30-90 days delinquent, and 5.8 million were current but with negative equity.
  • It is this mismatch between 11.1 million in negative equity "owner occupied" units and 12.6 million vacant units that all those who peddle the rent-to-own dream are focused on as America becomes increasingly a society of rents.
  • It also means that the millions in soon to be formerly owner-occupied homes (once the anticipated switch to rental ownership takes place) have to stay on bank books and not enter the market in other to generate the illusion of scarcity (see: foreclosure stuffing), or else the myth that there is a housing shortage will be blown right out of the water.
 

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Wed, 06/05/2013 - 11:53 | 3626470 SheepDog-One
SheepDog-One's picture

Must....Somehow Pump....FED's....REIT holdings....1.2.3. LIFT!....

Wed, 06/05/2013 - 12:12 | 3626502 jbvtme
jbvtme's picture

12 million houses are vacant.  and this is called troubling?  i'd say more like a nightmare.

Wed, 06/05/2013 - 12:14 | 3626522 Rainman
Rainman's picture

Yes, but how many are located in nightmare urban areas..?? W. Philly, Camden, Detroit, E. St Louis, etc. < present and future urban wastelands >

Wed, 06/05/2013 - 12:17 | 3626531 Careless Whisper
Careless Whisper's picture

Where's the chart that shows the pro forma net income per unit vs. the price paid per unit? In other words, since the purchases are usually for cash, what's the net return? I'm gonna take a wild guess and say they predict something in excess of 5%. Owning rental units means inflation is your friend.

Wed, 06/05/2013 - 12:38 | 3626593 Jack Napier
Jack Napier's picture

Not to worry, China has far more vacant cities than the US, and look at their GDP growth!

Wed, 06/05/2013 - 12:46 | 3626628 Professorlocknload
Professorlocknload's picture

Yep, whisper.

Cap rate, cap rate, cap rate.

Screw location, location,  speculative capital appreciation.

That's contrary to "Depreciation Allowance" anyway.

But, inflation is nobody's friend, just less damaging when hedged.

Wed, 06/05/2013 - 13:01 | 3626715 Careless Whisper
Careless Whisper's picture

yup. Actually I think these REITs with the single family rentals are going to be screaming shorts. The business model is flawed. There's a big difference in managing 500 single family homes spread out in the Las vegas suburbs (if you can call it that) and having one skyscraper of 500 rentals on the corner of 65th and 3rd in Manhattan.

Wed, 06/05/2013 - 13:25 | 3626821 blindfaith
blindfaith's picture

 

 

Maybe we are seeing the ultimate write down, the one that the banks should have been made to take.  I mean, they buy for cash, and when the reality of renting sets in with these 'novis' landlords they will be pounding the table to get out...at any cost or loss.  So much of it is money laundering anyway, and that is the clean side of the story.

Wed, 06/05/2013 - 13:42 | 3626903 SafelyGraze
SafelyGraze's picture

"Housing inventory as of May was 133.2 million units, of 12.6 million was Vacant."

instead of "vacant", we like to call it "housing reserves"

trying to bring it to the 10% mark as part of our re-cap program

Wed, 06/05/2013 - 16:10 | 3627425 eatthebanksters
eatthebanksters's picture

Funny how $30million ocean front homes in Hawaii and Malibu are selling, but little starter home shitboxes can't sell for shit.  Hmm, what does that tell you about Bernankes QE policies? Motherfucker!!!

Wed, 06/05/2013 - 13:21 | 3626805 Georgiabelle
Georgiabelle's picture

Exactly my thought. Real estate is all about location, location, location. Too many of those vacant units are in urban "no-go" types of places that can't attract buyers at any price. It's a seller's market where I live. 

Wed, 06/05/2013 - 14:12 | 3627003 Blankenstein
Blankenstein's picture

That's what the realwhores want you to think - that there are no empty homes or foreclosure in the more "desireable" areas.  That's not the case, though, if you look behind the curtain.  Maybe not as many vacancies as the locations mentioned, but they are there and so are the foreclosures.  In my area the people who couldn't unload their albatross before, have put them back on the market for bubble 1.0 asking prices waiting for the next round of greater fools to jump in. 

Wed, 06/05/2013 - 14:21 | 3627019 Joe Davola
Joe Davola's picture

Follow an Escalade and they'll lead you, more often than not, to delinquent (or soon to be) homes.

Wed, 06/05/2013 - 17:48 | 3627723 Georgiabelle
Georgiabelle's picture

Well that explains it. My neighbors tend to drive Lexuses (Lexi?) or Acuras, with the occassional Prius or Mercedes for variety. All throughout the meltdown and ensuing recession there have been no foreclosures or short-sales in my neighborhood. I attribute that to great schools and non-flashy neighbors who live within their means.  

Thu, 06/06/2013 - 00:43 | 3628751 kareninca
kareninca's picture

Or, those of your neighbors who are not paying their mortgages, have not even been contacted by their banks.  There's a lot of that.  The banks have no incentive to take even the first step in foreclosing.  Why should they?  They don't have to mark to market, and they make money via the Fed.

I doubt your data.

Wed, 06/05/2013 - 15:50 | 3627372 hatchaser
hatchaser's picture

To pile on:  Suburbs are bound for the wasteland as well.  Plagued by inadequate infrastructure, crappy construction, traffic  resulting from growth & poor design, and, just darn, uninviting.

Wed, 06/05/2013 - 17:36 | 3627689 Georgiabelle
Georgiabelle's picture

Families with school-age children will continue to move to the suburbs because they want to raise their kids in safe neighborhoods with good schools. This simple fact is unlikely to change, hence the seller's market in locations that offer safe neighborhoods and top-notch schools. 

Thu, 06/06/2013 - 00:47 | 3628744 kareninca
kareninca's picture

Are you a RE agent, Georgiabelle?

The young people I know have sh** jobs if any, and likely won't be having kids. let alone raising them in the burbs.  Unless the burbs go down in price a whole lot more.

BTW, if you are a RE agent, please go fuck yourself and your "top notch schools."  If you're not, then they should be paying you shill fees.

Wed, 06/05/2013 - 15:53 | 3627387 CrashingDollars
CrashingDollars's picture

It's gonna be like playing fallout 3 just without the nuclear war. . . yet

Wed, 06/05/2013 - 12:21 | 3626542 CrashisOptimistic
CrashisOptimistic's picture

No one has any idea what bank balance sheets truly look like.

That's what abrogating mark-to-market did.  Now they mark to fantasy, and it's accepted as GAAP.

Wed, 06/05/2013 - 12:00 | 3626472 Mercury
Mercury's picture

All housing shortages are local.

But even under more optimal conditions the whole mega landlord of single family homes thing is a very untested business model.

 

I'll take a large, no butter please.

Wed, 06/05/2013 - 12:08 | 3626501 PiltdownMan
PiltdownMan's picture

GREAT chart! 

Today's plunge in mortgage applications with a small rise in mortgage rates points to how sucky the US housing market really is.

http://confoundedinterest.wordpress.com/2013/06/05/whoopsie-mortgage-applications-dive-11-5-as-rates-surge-and-adp-employment-misses/

Wed, 06/05/2013 - 12:14 | 3626520 Spacemoose
Spacemoose's picture

i'll second the point that all housing is local.  drawing conclusions about the scarcity of housing by looking at the housing market on a national scale is a futile exercise.  does anyone really think that the stock of vacant homes in detroit has an impact on the housing market in san diego?  show me the stock of vacant houses where the jobs are.  now, that would be actionable information. 

Wed, 06/05/2013 - 13:31 | 3626848 crazyjsmith
crazyjsmith's picture

" well, I guess I don't buy your premise, it's a pretty unlikely possibility, we've never had a decline in prices on a nationwide basis "
July 2005 The Bernank

Are we saying the Bernank is wrong? Again!?

Wed, 06/05/2013 - 14:15 | 3627014 Buckaroo Banzai
Buckaroo Banzai's picture

Well it depends how you define "nation". If you define "nation" = NYC metro area + Washington DC metro area + Bay area, then he's right.

Remember, they view anything outside those areas as a grim wasteland populated by knuckle-dragging racist retards.

Wed, 06/05/2013 - 12:16 | 3626527 CrashisOptimistic
CrashisOptimistic's picture

Friend of mine in the industry got drunk with me over the weekend and ** he talked **.  It went like this.

"We're cutting our own throats.  The business model was . . . a young family buys a house.  They add babies and need to upsize.  That's another commission.  Then they get a promotion at work and transfer and that's another real estate agent's commission.  Then maybe they upsize again to maximum family size.  That's another commission.  Then they want to retire and downsize.  Another commission.

We are flushing all that.  These assholes come in and buy 1000 houses to rent out.  They may NEVER sell.  They may rent that thing out for 40 years.  We get no more commissions!  Yeah, some want to flip, but anywhere other than the hype areas, if you see a owner with LLC after his name, there will never be another commission from that guy"

 

Wed, 06/05/2013 - 12:27 | 3626551 Mercury
Mercury's picture

...if the LLC's business model actually works as advertized.

Wed, 06/05/2013 - 12:32 | 3626577 ParkAveFlasher
ParkAveFlasher's picture

Zi-i-llow killed the mi-i-ddleman

Wed, 06/05/2013 - 12:36 | 3626590 Timmay
Timmay's picture

...if wages were rising and/or there was a bubble joe six pack could participate in. The dream of buying more and more house to "keep up with the Jones'" is over.

The coming rise in Healthcare Insurance premiums will crush housing and rentals. Rates don't need to rise to bury the housing markets, a declining disposable income will be enough to do the trick....

Wed, 06/05/2013 - 12:45 | 3626624 machineh
machineh's picture

So future vacancies will depend on how active the death panels are.

Unless the government starts cloning a new race of submissive zombies.

Oh, wait ... !!!

Wed, 06/05/2013 - 13:12 | 3626768 spine001
spine001's picture

Marihuana/Cannabis/Zombies. They are doing it. That is exactly what it does, it reduces you amigdala, the primitive  brain that rules your flight/freeze/fight reaction. Makes you mellow and tolerant. Only problem is that 10% of those who try it, get caught and start using daily, then thier probability of developing schizophrenia goes up by 500-1000% depending on family history.

"Unless the government starts cloning a new race of submissive zombies" 

Wed, 06/05/2013 - 15:13 | 3627248 What you talkin...
What you talkin about Willis's picture

bull fucking shit

Wed, 06/05/2013 - 12:38 | 3626598 jcaz
jcaz's picture

Which it doesn't, because we've seen this trick before....

Doesn't matter what scale it is, it always comes down to property appreciation over time-  the cash flow from the rentals will only cover taxes and maintainance,  it's a zero-sum game there- the only way to make a net profit is from a capital gain on the ultimate sale of the property,  which historically has been a 1-2%/yr gain- yawn.

People act like they're Christopher Columbus with these LLC's- please....  A couple of dumbasses who failed at being a hedge fund think they've found gold by turning themselves into REITS.......

Wed, 06/05/2013 - 12:47 | 3626635 KidHorn
KidHorn's picture

I don't know where you live, but where I live the rent will do a lot more than pay for taxes and upkeep. If you have a mortgage to pay, maybe you break even, but if there's no mortgage, you can get good free cash flow from renting.

Wed, 06/05/2013 - 12:51 | 3626657 CrashisOptimistic
CrashisOptimistic's picture

It may be that part of the appeal is that it's a non financial asset and property laws tend to be far, far more strict about land ownership than . . . pretty much anything else.  Guns, gold, whatever.

These LLCs may be trying to insulate from inflation via rent increases.

Wed, 06/05/2013 - 12:58 | 3626702 Variance Doc
Variance Doc's picture

"These LLCs may be trying to insulate from inflation via rent increases."

Good luck with that.  As I've told many, many people, you cannot leverage rent.  Blank stares in return.  'Merikans don't have the income stream (nominal or especially real) for rent to keep up with housing prices.

It never ceases to amaze me how dumb people are.

Wed, 06/05/2013 - 14:31 | 3627038 CrashisOptimistic
CrashisOptimistic's picture

Not an expert.  But my drunk buddy somewhat is.  He says it works when there's no mortgage.  The bulk buys are cash.  His own buys are cash.

The youngsters are screwed.  This sort of thing requires that you can make cash buys.  It takes time to accumulate money.

There are a lot of folks who think you can have inflation when there is no demand for things.  Rent is a big part of the inflation equation, which some may dislike, but it's true.  If you have housing expense, it's likely the largest item in your monthly budget.  If it's not, you're an aberration.  Talk to your friends.  House price increases (which are pretty much bogus, he says, via the bulk buys of foreclosures) are NOT rent increases.  Check your craigslist apartment rents.  See if they are spiking.  They're not.

So if inflation goes up, it's because rent went up.  If rent doesn't go up, it erodes food and gasoline rises.  That's just mathematics.  So if rents are going up, you get inflation insulation.

Wed, 06/05/2013 - 16:10 | 3627424 Variance Doc
Variance Doc's picture

Not targeting you, but mearly making a statement on the dumb money plowing into real estate.  "House price increases...are NOT rent increases."  Exactly, but what people are buying into is that housing prices are going to continue to go up and up - I'd better get in now!  The late to the party (aka, dumb money) REO-to-rent theory follows the same logic.  The costs are not yielding the returns desired now, hence the smart money is exiting.

I'm simply saying that if people are dreaming of be coming the next Trump of the housing rental world, stop dreaming.  It's going to end very bad.

I don't understand your rent and inflation directional flow, perhaps 'casue we differ on what is inflation.

Wed, 06/05/2013 - 17:29 | 3627666 CrashisOptimistic
CrashisOptimistic's picture

Nod, good reply. 

My buddy is not thinking appreciation.  He is thinking retirement income flow with a property manager to eliminate hassle while he travels.  He says (rightly) that stocks and bonds are a joke and he wants an income stream from something not involving them.

We may differ on inflation.  Many argue it.  But the definition is what the CPI survey says it is, and they make very clear that rent or housing expense is the dominant item of American budgets.  If apartment rents are not going up, if duplex rents are not going up, then arguing about "imputed rent" being invalid is itself invalid.  Rents of all sorts of abodes are not going up. 

Hence no inflation to worry about.  If they are going up, then the rent you would charge on your rental holding would seek to be competitive and presto, you have an indexed pension.

Wed, 06/05/2013 - 13:12 | 3626769 blindfaith
blindfaith's picture

 

 

Sounds like a plan until the continuing unemployment picture advances (which is will), and inflation eats up that declining salary (which it is) and property taxes go up to pay 'automatic salary increases' for county and city employees (which it ALWAYS will), and on and on and on.

Oh, and don't forget that when the tenant can't pay it can take a year or more to get them out and if they claim hardship...good luck.  It is easier to get a homeowner out than a tenant renting.  So much for cash flow..... Nuts, forgot about the expense to get the damn place back into rentable shape for the next 'cash flow' application.  Did I mention handicap and discrimination law suits?  Oh well, it works for some.

It is the little details that make rockets bow down to gravity.

Wed, 06/05/2013 - 14:11 | 3627000 MachoMan
MachoMan's picture

A foreclosure is dramatically more difficult, longer, and expensive (on average) than an eviction...  Look at it this way, a foreclosure seeks to not only rid the owner of his possessory interest in the real estate, but also his ownership in the land...  needless to say, there are a few more hurdles for taking peoples' homes.

Wed, 06/05/2013 - 14:34 | 3627094 CrashisOptimistic
CrashisOptimistic's picture

THESE ARE CASH BUYS.

If you think it's hard to evict, cut their rent and explain how you're trying to help them avoid a bad credit rating.

They'll pay, and then leave when they feel like it.

And when you cut their rent, you are cutting the national inflation rate, if your situation is common.

Wed, 06/05/2013 - 14:16 | 3627020 pursueliberty
pursueliberty's picture

Where I live I can easily, as in today, buy two or three homes that will cash flow a down right incredible without using cash.  I've got a duplex that grosses almost double the property tax/payment/insurance.  Since December of 09 I've had less than three months of rent loss due to vacancy. 

It is all local.  I'm only interested in actual money that makes it way to my pocket, true income producing property where I can carry a mortgage. 

 

That said, there is no way these companies are going to be able to make a true return.  The amount of man hours used for renting/maintaining, repairs, etc. along with vacancies will destroy any return they are hoping to see in single family units.  I'm done with single family unless it is truly too good a deal to pass up, and with currently multi family prices it looks like I'm out of that market unless I build.

Wed, 06/05/2013 - 14:35 | 3627099 CrashisOptimistic
CrashisOptimistic's picture

Suppose you inherit the single family place free.

Wed, 06/05/2013 - 13:17 | 3626790 spine001
spine001's picture

Property Value interest rate

"it's a zero-sum game there- the only way to make a net profit is from a capital gain"

The property value depends on the discounted free cash flows (CF) that it generates and the rate of increse/decrease of those cash flows. CF = Rent - Expenses - taxes (all income, property, etc)

 Value = CF/R where R is the expected rate of return. Guess where R comes from? Well from the return that you could obtain with an alternative investment of similar risk. For instance an A quality bond? Or BB? do you think that rates are going up? or down? From there se what happens to your Value (capital gain) as the interest rates go up?

And if you are right and CF = zero, then Value is actually cero.

Finance 101

Wed, 06/05/2013 - 12:34 | 3626580 tip e. canoe
tip e. canoe's picture

throat was already cut back in 2005.   this is just sicking leeches on the still gaping wound while putting clean bandages on everyday and calling it healed.

Wed, 06/05/2013 - 12:33 | 3626568 CheapBastard
CheapBastard's picture

Even the WSJ (or maybe it was the NYT) reported there were over 109 months supply of empty houses.

 

That's alot. And since then builders have gone wild adding thousands of houses to the market thinking an endless supply of zero-down (or near zero-down, depending on yoru area) mortgage loans .... loans to people for Giant houses they cannot afford.

 

I see lots of sellers in the Burbs listing their houses for about 40% higher then estimates ....they simply don't sell and the Sellers get very frustrated. Many are stuck with a massive lead weight (mortgage) tied to their ankles. Unrealistic prices and a tad of irrational exuberance. Remember, an American moves on the average every 4-to-5 years...this is painful in a alling house market. I know, I've been there and done that.

And "No Thanks!"

Now, I'm a Cheap (and Wiser) Bastard and not paying for ANYTHING unless it's at least 40% reduced.....(preferably 80-90%). Patience.

 

It's getting ugly.

Wed, 06/05/2013 - 14:03 | 3626971 Rustysilver
Rustysilver's picture

CheapBastard,

You should rename your handle to

 

CheapWiserBastard

It would be more appropriate, since I am in total agreement.

Wed, 06/05/2013 - 11:55 | 3626474 Ham-bone
Ham-bone's picture

Silly Tylers...reality is for doomers.

Wed, 06/05/2013 - 11:56 | 3626475 DaveyJones
DaveyJones's picture

never seen real property in such an unreal state

Wed, 06/05/2013 - 12:48 | 3626638 SAT 800
SAT 800's picture

Next door to where I live in Hawaii is the US's largest housing estate; you drive on the corporation roads for a half hour up and down the mountain around and around and see blocks of vacant houses. It looks like an advertisement for Neutron Bombs. They were either built for the speculation market; or the people went back to the real world where there's some-kind of an economy. If you already have your retirement figured out, you can probably find an individual owner who's a "motivated seller". But it's a very boring place. you can't rent anything because nobody has a job.

Wed, 06/05/2013 - 13:09 | 3626748 DaveyJones
DaveyJones's picture

but can you grow weed?

Wed, 06/05/2013 - 13:23 | 3626812 spine001
spine001's picture

Yea! and Create a Zombie society that you can then abuse at your will. Dream of slavers...

Wed, 06/05/2013 - 15:24 | 3627289 What you talkin...
What you talkin about Willis's picture

YO dick, just cuz you are to fucking week willed to handly a little pot dosent mean that everyone is.  Do you call the nanny state to change your diapers when you shit yourself?

Wed, 06/05/2013 - 11:57 | 3626476 Dr. No
Dr. No's picture

America is a throwaway society.  I know there is alarm at non-occupied homes, but it is not tha simple.  Recently looking at some homes, there is no doubt why they are not occupied.  They are trashed.  The useable life on these fab houses is 25 years or so.  Yes, they dont make them like they used to and 100 year old homes are often in better shape.  These disposable fab houses need to be priced accordingly: $50k?  Basically assume the price is depreciated over 25 years and then worth zero.  Burn it down and build a new house on the lot.

Wed, 06/05/2013 - 12:03 | 3626485 Mercury
Mercury's picture

But...but...government building codes and permitting requirements are stricter than ever!

Wed, 06/05/2013 - 12:07 | 3626498 Dr. No
Dr. No's picture

Like my dad (old skool carpenter) sez, "just becasue the inspector checks the outlets does't mean house wont fall down tomorrow."

Wed, 06/05/2013 - 12:08 | 3626504 adr
adr's picture

And government home inspectors are basically paid based on the number of homes they approve in a day, not whether or not they find violations. The FHA appraiser that looked at my home didn't do anything but walk around and turn on the faucets. It was my job to hire someone to look at the foundation, electrical, and drains.

Drywall covers a lot of shit. Go to a recently built Pulte home and pull off some interior drywall and count the number of wall studs that aren't anchored to anything. 90% of the wires and pipes aren't put in to code.

Wed, 06/05/2013 - 12:37 | 3626589 PiratePawpaw
PiratePawpaw's picture

20 years ago I was working in residential construction in the suburbs north of Dallas. There isnt enough time for me to list all the poor/substandard practices and materials I saw. Corners were cut everywhere and just whitewashed over to look nice until after the sale. We joked about our "tail-light warranty". It is guaranteed for as long as you can see our tail lights when we drive away.

Basicly, those "500k+" houses werent worth 30k new. They will not have held up well over time, and I'm sure they arent building them any better now.

Wed, 06/05/2013 - 13:18 | 3626793 blindfaith
blindfaith's picture

 

 

The great State of Texas has the most pro contractor laws in the nation.  You have an issue with a contractor, any issue, and you will find out real fast just how the homeowner has ZERO rights and must learn to enjoy anal penetration.

Wed, 06/05/2013 - 13:38 | 3626878 spine001
spine001's picture

Shitty Construction: http://www.zerohedge.com/news/2013-06-05/meanwhile-philadelphia

This is proof that you guys are right!

Wed, 06/05/2013 - 14:01 | 3626961 reTARD
reTARD's picture

What?! You mean the US is becoming like China and producing poor quality products? Well at least they're still able to sell them at the higher western premiums! It's called "Made in the USA (under Government regulations)."

Wed, 06/05/2013 - 12:39 | 3626595 CheapBastard
CheapBastard's picture

adr and pirate are correct. I was shocked when I saw some of these new houses being built by various builders...just thrown up with crappy knotted wood.....crappy plastic piping....huge tears in the  wrap....you name it.

 

I see lots of "new" neighborhoods already falling apart after only 5 years. Perhaps maintenance --air con, carpentry, etc-- is the place to be excpet they are being priced out by $6/hour laborers from abroad.

 

Buyers beware.

 

 

Wed, 06/05/2013 - 12:19 | 3626538 HowardBeale
HowardBeale's picture

California has MILLIONS of those disposable houses, rotting by the minute; they are to people who need shelter what the crumbling highway infrastructure is to people who need to go somewhere--without being killed. We have a decade at the most before this country is a non-big screen version of the movie The Road...

Wed, 06/05/2013 - 13:49 | 3626923 DaveyJones
DaveyJones's picture

true, as we speak, society is throwing america away

Wed, 06/05/2013 - 11:57 | 3626477 jomama
jomama's picture

wtb larger image!

Wed, 06/05/2013 - 11:57 | 3626478 Smuckers
Smuckers's picture

I'm sure the banks are dwelling on the numbers.

Wed, 06/05/2013 - 11:58 | 3626480 Azannoth
Azannoth's picture

So only 20% are truly owned(minus property taxes ofc)

Wed, 06/05/2013 - 12:27 | 3626560 BurningFuld
BurningFuld's picture

Yes and housing prices in Canada are totally out of control!

But wait: "Among Canadian homeowners, the number of mortgage-free Canadians has increased slightly to 41 per cent in the fourth quarter from 38 per cent in the first quarter, and the highest level since 2006." (Nov, 2011)

Wed, 06/05/2013 - 12:04 | 3626487 adr
adr's picture

It's OK, every home built since about 1996 was built to only last about 20 years before falling into a smoking crater.

Voila, no more shortage!!!!

 

Seriously, I'm not kidding. I went to look at some homes built in the late 90s and early 2000s when I bought my home in 2009. Every one I looked at had cracked foundations, bowed walls, leaking roofs, and sagging windows. From what I have seen and heard, the construction from 2002-2007 didn't get any better and even cut more corners.

Planned obsolescence entered the halls of Lennar, Pulte, etc. Just like appliances in the 1970s. What better way to ensure future profits as a publicly traded construction company than to build your product to fail.

Wed, 06/05/2013 - 12:07 | 3626496 Cursive
Cursive's picture

@adr

I can proudly say that I have never lived in a home that was built before 1976 and I've never owned one built before 1962.

Wed, 06/05/2013 - 12:23 | 3626548 Not My Real Name
Not My Real Name's picture

1962 ... Back then a 2 x 4 was almost the full 2 inches by 4 inches.  I said almost. Seems like they keep shaving an eighth of an inch off the dimensions every decade or so. I see some of them today as small as a RCH less than 1.5 x 3.5 inches.

Wed, 06/05/2013 - 12:29 | 3626565 BurningFuld
BurningFuld's picture

You don't use 2 x 4 to build a house. Do you?? If you find a home with exterior walls built of 2x4's please do not buy it.

Wed, 06/05/2013 - 12:52 | 3626664 KidHorn
KidHorn's picture

Where I live all the walls are studded with 2x4's. The homes are over 30 years old and are still standing.

Wed, 06/05/2013 - 12:53 | 3626674 Not My Real Name
Not My Real Name's picture

If you live in colder climes, 2 x 6s may make more sense. In warmer areas, framing exterior walls with 2 x 6s is overkill.

Wed, 06/05/2013 - 12:53 | 3626670 KidHorn
KidHorn's picture

2x4's have been 1.5x3.5 since at least the 1970's.

Wed, 06/05/2013 - 13:20 | 3626801 Dr. No
Dr. No's picture

Yeah but these new ones have about 3 growth rings.  No strength.  No doubt some Monsonto Silver Pine engineered for 5 year harvest cycle.

Wed, 06/05/2013 - 14:01 | 3626960 Boxed Merlot
Boxed Merlot's picture

4x4s are 3-3/8".  The mills have had proprietary techniques in saw blades for several years now that produce very little in waste too.  I believe they get 6 2x4s out of a peeler core nowadays.

Wed, 06/05/2013 - 12:58 | 3626701 blindfaith
blindfaith's picture

 

 

I knew an architect in Charleston, SC who designed many housing projects in several Southern states....he called these houses'stage sets' and no quams about the sham.

Wed, 06/05/2013 - 12:05 | 3626488 Cursive
Cursive's picture

The banks have been pushing "rent-to-own" to avoid asset writedowns.  Well, maybe that's worked up until now, but it ain't gonna last another 5 years.  Housing Meltdown 2.0 is almost here.

Wed, 06/05/2013 - 12:05 | 3626492 Richard Whiskey
Richard Whiskey's picture

My parents have their house paid off.

I think I'll move back home and wait for them to kick the bucket.

Wed, 06/05/2013 - 12:12 | 3626514 Yardfarmer
Yardfarmer's picture

typical of the new generation of parasites.

Wed, 06/05/2013 - 12:31 | 3626574 Momauguin Joe
Momauguin Joe's picture

You's better hope mom and pops don't reverse mortgage behind your back.

Wed, 06/05/2013 - 12:13 | 3626518 adr
adr's picture

Doh, dad didn't pay the property tax and you don't have the cash to make the payment. Out on the lawn for you!!!

Wed, 06/05/2013 - 12:51 | 3626654 machineh
machineh's picture

No way.

He's takin' over the garage.

And they ain't jack shit the old farts can do about it.

Wed, 06/05/2013 - 12:07 | 3626495 ebworthen
ebworthen's picture

120.6 Million Occupied.

41.2 Million Positive Equity and 26.5 Million No Mortgage = 67.7 Million not underwater.

Which leaves 52.9 million homes that are in Neqative Equity, Delinquent, or Foreclosure.

Which means almost half of U.S. housing is in the shitter.

Recovery!

Wed, 06/05/2013 - 12:59 | 3626708 KidHorn
KidHorn's picture

Neqative Equity, Delinquent, or Foreclosure is 11.1 million.

Wed, 06/05/2013 - 13:52 | 3626934 DaveyJones
DaveyJones's picture

they mean recovered like the recovered alcoholic

Wed, 06/05/2013 - 12:10 | 3626503 Kaiser Sousa
Kaiser Sousa's picture

LIESman just said the follwoing...paraphrasing

"what if the weakness we are seeing in the markets is not due to the worsening job numbers and the housing market showing signs of weakness, but instead this is the weakness we perhaps anticipated due to the sequester?"

 

i yeild the floor....

Wed, 06/05/2013 - 12:11 | 3626509 adr
adr's picture

Yes, the first thing I think of when I look at a house is the sequester.

DAMN THOSE SPENDING CUTS LESS THAN THE COST OF ONE OBAMA VACATION!!!!!!!

Wed, 06/05/2013 - 12:54 | 3626677 machineh
machineh's picture

That damned sequester stole my car, emptied my bank account, and seduced my girlfriend.

When are we going to rise up and just say no to this evil?

Wed, 06/05/2013 - 12:24 | 3626541 ebworthen
ebworthen's picture

Steve LIESman needs to be bitch-slapped back into the last century.

Thu, 06/06/2013 - 07:48 | 3629136 jerry_theking_lawler
jerry_theking_lawler's picture

its hard to do this when he has the .gov goober in his mouth....unless you want to slap his ass, in which case he will probably like it....

Wed, 06/05/2013 - 12:53 | 3626675 SAT 800
SAT 800's picture

"It's the republicans fault"; that sounds familiar.

Wed, 06/05/2013 - 12:58 | 3626699 Bastiat
Bastiat's picture

and he continues . . . "On the other hand, what if I'm a shameless lying shill?

Wed, 06/05/2013 - 16:37 | 3627513 DeadFinks
DeadFinks's picture

I bought the biggest cantaloupe I'd ever seen at the grocey a few weeks ago even though it wasn't ripe. It sat on the kitchen counter so long to ripen that it became a familiar entity.  I named it Liesman.

Wed, 06/05/2013 - 12:11 | 3626506 Yardfarmer
Yardfarmer's picture

are we to assume them that "ownership", at least for the majority of American citizenship, in our rapidly expanding socialist paradigm is becoming the very real barbarous relic? indeed the temporary facade of ownership underpinned as it has been by the tenuous and largely emphemeral relationship of lender to lendee is being stripped away. a home's man is its vassal.

Wed, 06/05/2013 - 12:12 | 3626515 adr
adr's picture

Considering you really don't own your home thanks to property taxes, why would you really want to own anyway?

The sad death of the idea of a free country.

Wed, 06/05/2013 - 12:13 | 3626519 bankonzhongguo
bankonzhongguo's picture

Ran into a RE broker from Merced County California (one of the worse most over built areas in the whole country).

Stated they were breaking ground on 13 NEW 2,500sqft homes in a neighborhood that already had over 20 vacant (OREO) homes in the shadow inventory.

Green shoots of insanity.

Wed, 06/05/2013 - 12:51 | 3626625 Kaiser Sousa
Kaiser Sousa's picture

Merced is a shithole...

i know cause i got farmland down there...

mother fuckers r stealing everything including shits thats even nailed down....

Wed, 06/05/2013 - 12:56 | 3626691 RichardP
RichardP's picture

Money laundering.

Wed, 06/05/2013 - 13:06 | 3626736 Professorlocknload
Professorlocknload's picture

Shadow inventory isn't for sale to the general public. I've tried to purchase on several occasions and been denied by fnma/home path because I wasn't a first time buyer, or classified as "disadvantaged"

 

On a couple tries, the under bid got the house, even though my offer was higher and in cash. Guess the tax payer doesn't mind the low bid on his shadow houses.

 

Wed, 06/05/2013 - 12:14 | 3626524 eclectic syncretist
eclectic syncretist's picture

OT question.  JPM has 421,323 ounces of gold registered at comex, as you can verify yourself.

http://www.cmegroup.com/trading/energy/nymex-delivery-notices.html

And so far this month they have received delivery notices for 509,400 ounces from their house and customer accounts, as you can verify at the Comex site as well.

http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf

So the question is, how are they going to deliver 90,000 ounces of gold they don't have?

Wed, 06/05/2013 - 12:23 | 3626549 ebworthen
ebworthen's picture

There may be 90,000 ounces left in Fort Knox.

If not there is German gold in Manhattan.

Wed, 06/05/2013 - 12:31 | 3626573 eclectic syncretist
eclectic syncretist's picture

Well they better start stacking into the delivery trucks.  It looks like HSCB (317,400 ounces bought in their house account) and Barclays (128,900 ounces bought in their house account; 83,000 ounces being delivered to customer accounts) are getting most of it. 

Wed, 06/05/2013 - 12:17 | 3626530 GrinandBearit
GrinandBearit's picture

Don't worry, Blackrock is going to buy them all.

US will soon be a nation of renters.

Wed, 06/05/2013 - 12:42 | 3626608 Never One Roach
Never One Roach's picture

Blackrock?

 

Wait a minute. I thought they said The Aliens" would buy all those high priced houses.

Wed, 06/05/2013 - 12:22 | 3626544 Kirk2NCC1701
Kirk2NCC1701's picture

My contention is that if Property Taxes are > 0.5% of assessed value, you don't really 'own' the place.  You're merely leasing from the City/County/Nobility.

Vacant properties are a health & safety, and moral hazard.  And should be leveled.  That would also get rid of excess inventory, create opportunity for the construction industry, and green jobs, supplies and technology.

Heck we're #1 in the Destruction & Construction business around the world!  How's about some of that Destruction & Construction here at home?

Mr. Obama, Tear Down These Walls!

Wed, 06/05/2013 - 12:56 | 3626690 machineh
machineh's picture

Death panels for houses!

... a-a-a-nd it's gone!

Wed, 06/05/2013 - 13:14 | 3626776 Professorlocknload
Professorlocknload's picture

Break all the windows!  We'll hire 20 million glass installers and be rich!

s/0

 

Wed, 06/05/2013 - 12:25 | 3626556 Catullus
Catullus's picture

So own to rent is picking up pennies in front of a steamroller? Got it. Leveraged insanity. Equity eats a giant shitburger no matter what.

So if banks actually dump houses onto the market because the Fed owns all the bonds: you write down the asset and equity eats it.

Banks don't foreclose, rates stay low, people buy houses: you can't compete on the rents vs mortgages, cash burn. Equity eats it.

Banks don't foreclose, rates stable, builds slow, you're good, but you only ever make an annuity income. You get no asset appreciation and you hold on to an increasing depreciating asset. Over time, your rents have to beat the taxes, the depreciation and your bond interest. Equity doesn't eat it. But it was better off being a REIT or MLP.

Should rates rise and banks hold on to inventory, you're completely screwed. There's no money to borrow. Housing prices drop. And more than likely you can't roll your debt load.

Shorting these things is like the new IR swap.

Wed, 06/05/2013 - 12:37 | 3626592 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Seems like the end result these people want is no housing pricing correction at all. That cheap money propping up the stock market is being used to rob private home ownership while still staying in the stock market via these hedge funds chasing yield. Rehypothication being used to transfer tangible assets up the food chain away from the serfs. TBTF is coming next for these ass clowns since we can't throw the serfs off the land less there be a real revolt when that happens.

Wed, 06/05/2013 - 13:17 | 3626786 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Next up government backed rent loans floating government/corporation hyrid crony owned rental houses with almost no chance in hell of ever beating the system to actually be able to get a real mortgage and in turn lottery ticket to actually own property in the new normal America. Then if you can get your lottery ticket they will make the payment terms so rigid you can't ever pay it off in your lifetime anyways and rig the game so the title reverts back to the lien holder once you do pass on.

Wed, 06/05/2013 - 12:38 | 3626594 FLUSA.com
FLUSA.com's picture

I haven't seen this in 6 years....people are getting properties under contract (larger commercial type deals) and trying to flip them now. These are bank owned deals too...the banks should know better then contracting with flippers. Flippers only add cost, no value.

Wed, 06/05/2013 - 12:42 | 3626607 astoriajoe
astoriajoe's picture

"It also means that the millions in soon to be formerly owner-occupied homes (once the anticipated switch to rental ownership takes place) have to stay on bank books and not enter the market in other to generate the illusion of scarcity (see: foreclosure stuffing), or else the myth that there is a housing shortage will be blown right out of the water."

Well, now that there's a template, it doesn't matter if they stay on bank books or not.

Wed, 06/05/2013 - 12:43 | 3626611 Mattress Money
Mattress Money's picture

As man in 30s who takes home only 50K a year and saves 30K what am i suppose to do. Companies do not sell gold unless you buy in bulk.

Wed, 06/05/2013 - 12:53 | 3626671 astoriajoe
astoriajoe's picture

keep looking, they exist.

Wed, 06/05/2013 - 13:47 | 3626916 Nue
Nue's picture

I have no investments with Peter Schiff or his company but you could try him and see

http://www.europacmetals.com/our-products.aspx

 

Wed, 06/05/2013 - 12:43 | 3626612 Mattress Money
Mattress Money's picture

As man in 30s who takes home only 50K a year and saves 30K what am i suppose to do. Companies do not sell gold unless you buy in bulk.

Wed, 06/05/2013 - 13:42 | 3626899 Nue
Nue's picture

You save over 50% of your income? My God man do you want a Federal Reserve Death squad coming after you? Hope your posting behind a proxy.

Wed, 06/05/2013 - 12:48 | 3626639 orangegeek
orangegeek's picture

Well it's fucking settled.  The depression, oops, recession is over.

 

Prosperity for everyone.

 

Hey Ben!  Send over some MO POMO!!!!

 

What a fucking disaster.

Wed, 06/05/2013 - 12:49 | 3626644 q99x2
q99x2's picture

With all this turkey meat floating around there should plenty of opportunity for a pack of wolves (myself included) to get some healthy eatin in.

Wed, 06/05/2013 - 12:51 | 3626651 Tombstone
Tombstone's picture

Rising prices, rising interest rates, stagnant incomes, little employment growth, smaller families and tighter credit; yep, we are in a true housing boom.  Maybe for the top 20%, the markets are booming, but there will be little to support the market when that bubble de-bubbles.

Wed, 06/05/2013 - 12:56 | 3626689 JJ McApe
JJ McApe's picture

No no no... This is all Goerge Bush's fault...

Wed, 06/05/2013 - 13:02 | 3626723 SAT 800
SAT 800's picture

The five minute chart for the S&P500 futures contract today looks like "no bid". Or something that fell down a staircase. sell some moar please; make me some more "money".

Wed, 06/05/2013 - 13:16 | 3626760 Aurora Ex Machina
Aurora Ex Machina's picture

If you need to check where these 12.3 million units are, and where's hot and where's not, here's a couple of useful tools:

Forbes Census map (only listed by county, use the text bar to load a county you're interested in; shows inflows / outflows)

USA immigration Map 1960 vrs 2010 (national)

Zillow 1st Quarter data 2013 infographic of houses with negative equity (this one is a KILLER. Brilliant stuff. Detroit is a sea of dark red)

 

Please note: I discovered one of those "dirty little secrets" when looking into this. Certain counties provide census data that includes prison populations in their jurisdictions as inhabitants. Obviously, this is somewhat true, but it's being used to gerrymander / artificially weight rural counties in terms of % vote to Senate positions (and mostly by Republicans, I see) but more importantly: They ain't gonna be buying a house anytime soon.

 

From the Zillow report:

Zillow Q1 2013 Negative Equity Report Summary: Zillow Q1 2013 Negative Equity Report Summary: According to the latest Zillow Negative Equity Report, 25.4 percent of U.S. homeowners with a mortgage were in negative equity, or “underwater,” at the end of the first quarter, owing more on their mortgage than their homes are worth. This represents approximately 13 million homeowners nationwide, and is down from 31.4 percent (or 15.7 million homeowners) in the first quarter of 2012. American homeowners with a mortgage were collectively underwater by approximately $950 billion at the end of the first quarter of 2013, the first time this figure has fallen below $1 trillion since Zillow began using our current methodology to track negative equity. As home values rise, more homeowners can expect to be freed from negative equity. Zillow currently predicts that the negative equity rate will fall to 23.5 percent by the end of the first quarter of 2014, bringing almost 1.5 million more homeowners into positive equity. Still, despite widespread home value appreciation recently, millions of homeowners remain trapped underwater. Of the top 30 metros covered by Zillow, 25 were underwater by more than 20 percent in the first quarter, and 20 had negative equity rates above the national average.

 

So, basically, you're inflating the money supply by at least a trillion dollars to get rid of that negative equity trap. But, as this is now under $1 trillion dollars of negative equity worth, your economy should be hitting the Moon soon.

 

 

Good luck with that.

Wed, 06/05/2013 - 14:09 | 3626992 KCMLO
KCMLO's picture

Wow, very informative to see it all heat mapped.  Can anyone find any worse than Clayton county in Atlanta?  82% underwater!  All of Atlanta looks pretty well fucked though.

Wed, 06/05/2013 - 15:27 | 3627295 Aurora Ex Machina
Aurora Ex Machina's picture

Big Data, and proper analytical tools becoming open to everyone will certainly lead to a certain power shift in the US economy. i.e. Next time a politician says their State is a glowing example of something - go check for yourself.

 

This is why you should fight for free / open data and help out the EFF. Having visited the census.gov site, the raw data is there, but it's atrociously organized.

Wed, 06/05/2013 - 14:32 | 3627090 IridiumRebel
IridiumRebel's picture

Bought ours at 171K. Hopefully selling at 155K. 10K in improvements.....we will buy in ten years all cash.

Wed, 06/05/2013 - 13:14 | 3626775 newworldorder
newworldorder's picture

The US Financial Powers that are - namely the US Treasury and the FED do not want have their TBTF banks take the hit on losses. They also to not want these same banks to take the hit with having sold fraudulant MBS Bonds, which would have to be made whole after many a law suit.

The only thing holding all this together, is the willingness of underwater owner occupied properties still making mortgage payments.

Wed, 06/05/2013 - 14:00 | 3626957 Catullus
Catullus's picture

Apparently CalSTRS is a major contributor to this madness.

Wed, 06/05/2013 - 15:11 | 3627242 beachdude
beachdude's picture

We don't see the dire consequences here... yet.

http://www.zillow.com/visuals/negative-equity/#9/33.7289/-118.1923

Bidding wars and low inventory; waiting for reality to hit the Los Angeles/Orange county beaches.

But when?

Wed, 06/05/2013 - 15:15 | 3627256 muleskinner
muleskinner's picture

People don't want a home anymore that requires upkeep, tax burden, a mortgage and insurance.  It's a waste of time and money, not that difficult to see.  You cut your throat on a daily basis when you own a home, you're always obligated to someone or a gov entity.  That's the way they like it.

 

A house is a wooden box that sits and rots in the rain say the realtors, so sell it fast and often.  In the long haul, it will be worthless.

 

Unless, of course, its valuation is used for levying property tax, then it's worth more than you ever imagined.

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