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What Real Estate Bubble? Oh, You Mean The One That's Bigger Than The 2007 Bubble?
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
It's painfully obvious that real estate valuations are once again at asset-bubble extremes.
Correspondent Mark G. submitted a chart of the Wilshire REIT (real estate investment trusts) index that sums up the current real estate market in one image: it's painfully obvious that real estate valuations are once again at asset-bubble extremes, one that's even bigger than the last RE bubble that popped in 2008 with devastating consequences to the global economy.
Defenders of current real estate valuations can draw upon an array of justifications, but they boil down to the same one used to justify valuations in every asset bubble: this time it's different.
Is there anything in this chart that suggests this belief might be misplaced, for example, that credit/asset bubbles burst with a rough time/amplitude symmetry?
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* Global Financial Architecture and Economic Systems on Verge of Collapse
http://cosmicconvergence.org/?p=4290
! ! !
First and foremost: Salaries are not rising. Period. You cannot have an extended bull-run in real estate values during a period of falling personal incomes. It's silly. You can stop all arguments right there. Period. Done. Nothing else needs to be said.
But even if you're still not convinced, there's demographics. 80% of real estate value is owned by baby boomers who have already begun to die off. The great "hump" of the baby-boomer die off is only just beginning. What does this mean? It means that 80% of real estate value (not houses, value) will be returning to the market. Period. (Inherited houses are statistically seldom lived in by inheritors by the way. So yes, the houses return to the market).
Lastly, the Federal Reserve, contrary to propaganda does not set rates. Ultimately the bond market can and will bend the Fed over a table and bugger them. Mathematically this is a given. The Fed is a fractional size of the overall bond market and the whims of the market ultimately pummel the Fed when those whims start to matter. Rates *will* rise. Period.
So what are "housing prices"? The price of housing is a derivative of the above 3 things: personal income, rates and available inventory. Only 1 of those things can and will drive the price of housing. But a confluence of the three? Oh Jesus. This is going to be a shit storm of historic proportions.
Stupid slave, with mark to fantasy accounting and a fascist system telling you exactly what "prices" are and what your place is, you can make things whatever the fuck you want them to be...
Yes, the ultimate outcome (shitstorm) will be no different than the last time a relative few were benefitting greatly at the great expense of everyone else. hedge accordingly.
It's mark-to-unicorn-tears, not fantasy. Get the lie right - fantasy is so last administration/Kongress
6 months to 2 Moar years of BenYellen QE should make 2009 look like a squiggle. ...stay long...fuck the doom and gloomers
Here's what Greenspan said two days ago about what caused the first housing bubble. You can't make this stuff up.
This starts around 8:20 in the following clip....
http://video.cnbc.com/gallery/?play=1&video=3000211610
The transcript from Greenspan... "if you look at the -- it's not the issue of, first of all, subprime, that's a minor -- almost a minor issue. the real problem is that when the berlin wall came down, the economic room behind the iron curtain was so debilitating and so unexpected that the third world, which is what we now call the developing world, which had been largely collectivized with socialism and regulation, switched very dramatically towards market capitalism. and that money flowed here? is that what you're saying? from the berlin wall to the u.s. markets? china basically was the big mover, india's also moved. but the data show that since then, the rate of growth in the developing world is also running at twice the rate of growth of the developed world. the cultures in those societies are such that they can't spend it all and indeed china has savings. and we got the back wash. we got this huge flow of savings, which suppressed the real rate of interest not on in the united states but everywhere."
Years ago Greenspan said the housing bubble was caused by the fall of the Berlin Wall and globalism. Bernanke said it was a savings glut.
The housing bubble happened after Greenspan took the rate to 1%, and told home buyers to get adjustable rate mortgages. In other words, Greenspan wanted a housing bubble. Greenspan just keeps trying to sell the Brooklyn Bridge to as many people as he thinks he can.
bernanke? greenspan? I'm long thumbscrews
This isn't about Americans buying american real estate. Chinese money is absolutely flooding into the US real estate market. Talk to any real estate agent in one of the hot markets (LA, SF, DC, etc.)
Combine this with the fact that money launderers and tax "evaders" (aka sensible people) LOVE real estate, and you have a wonderful combination for skyrocketing real estate in those specific areas that rich people want to be.
First and foremost values have nothing to do with salaries. Period. Done. The current rise in value is a function of low interest rates. The ZIRP policy allowed big banks to borrow at 0% and re-sale the money at 3.75% or 4.5%. That is an infinite return. When interest rates rise....and they will....values will fall quickly...on average 7% for every 100 basis point change (on the math only) but likely more because the market is ill-informed and over-reacts.
You realize that rates were discussed in the above comment?
You said: "values have nothing to do with salaries": Wrong. Fail.
Values are a derivative of rates and income levels. Income is hugely important. A nation of fry-cooks isn't going to buy McMansions no matter where rates are. If rates alone set prices (as you said) there would have been no collapse and Fed policy would work forever. Which it won't.
Overlay the value chart above on the interest rate chart (inverse chart) and see to your amazement what I'm talking about. The change in value has nothing to do with salaries and everything to do with interest rates.
So, since the banks' rate is zero-bound, then interest rates can't get much lower. Even by your argument real estate will probably drop. BTW, the return to banks by way of interest spread is + or -, not x or /. Thus, their return on spread right now is around 4.5%, not infinite! And if rates were 8% and they borrowed at 3.5%, their profit would be the same 4.5%.
You forgot leverage.
The financially illiterate don't understand math. Let me explain it so the publicly schooled ZHers can understand....
if your cost is zero and you make $0.01 over your cost - the profit is infinite as a percent of cost. If you don't understand that then you and people like you are the reason this world is in the shape it is. Use a HP12c to do the calculation...if you don't know what a HP12C (don't google it) is you are clueless.
Salaries have everything to do with the price of real estate. You can value it anywhere you want, but if nobody can afford to buy it, it isn't going to sell.
I remember one of my parents friends telling me to buy their neighbor's house in 2006, telling me how much money I'd make. They said I'd make so much money on the house that it wouldn't matter that I was only making $50k. I should spend all my money on the house and sell it in a few years when the value doubled and then I could get an even bigger house.
The house was valued at $225k in 2002 and some idiot believed it should be worth $475 in 2006.
I calmly said, "How can I afford a $475k house? The mortgage payment would be almost my entire after tax income. You honestly believe the same house will be worth $1 million in a few years? Can you afford a million dollar house? I can't afford a million dollar house. None of my friends can either. Even a doctor making $150k would be a stretch."
The reply I got was typical greater fool mentality.
"Well I bought my house for $150 in 1990, so when I sell it for $700k I'll have close to $650k in equity, so I could easily afford a million dollar house."
That chart looks completely normal. You can get that Fred data yourself and see that prices are on trend. But prices can deviate from the trend for decades so depending where you are in the cycle, opinions may vary.
The real bubble is in VA and DC where the newly counterfeited money is causing a sweet housing bubble. But that's what you get when you decide that the federal elite are better and smarter than slave-citizens.
adr and Popo, you are theoretically right, but I Am More Equal has been practically right for the last 13 years that I know of. I remember, about ten years ago, using figures from our state newspaper to calculate that only doctors and lawyers could afford to buy the cheapest house in the cheapest suburb. By the maths, everyone else should be homeless. I've been asking since then , "Who is buying???" Double incomes, rich foreigners, large loans from rich parents, rich rellies "chipping in" to "help" the youngsters (which is really just money down the toilet as it drives prices higher), shared housing arrangements, houses held off market to keep prices high, all these things are combining to make stupid into reality - incomes "don't matter", well not on a macro scale anyway. Watch heavily indebted kids starve until they give up and lose the house - on the micro-scale those incomes really do matter. As much as I also like to insist that incomes matter, I think I Am More Equal is telling the truth - on the macro scale they are invisible ... for now. And as long as the Fed is buying $40 billion in RMBS every month, why does J6P need to buy anything to keep the "housing market" afloat. The banks get ZIRP, the Fed increases QE, real estate prices rise while the rest of the country is homeless and starves.
In the UK they are stealing inheritance, by forcing anyone with assets including houses to pay for elderly care. They also check all finances to see if you gave the kids a lump sum which they will take back as tax avoidence.
They twats will not get my inheritence and my kids will get theirs, I will make sure of it
Leave your kids a PM stack. Perhaps they will make it a generational thing. The outgoing generation gives the next a helping hand.
Outrageous! You have to use YOUR money to pay for YOUR care until you run out? Then society kicks in and takes care of you? How brutal!!!!!
Life is precious. It's your decision if that last painful year of life is really worth all your assets.
Hardly new in the UK.
My mother in law we kept at home until she died at 92 .Managing it from the US.
She absolutely did not want to go into a nursing home, even when bedridden.
Cost a small fortune to do it, but still cheaper that the Govt. taking her house to pay
for miserable 'home' enviroment.She lived, and died happy.Which should be the aim.
On the bright side, at least all problems are solved for obamacare if all those baby boomers die off all at once... according to you...
oh rest assured the Marxist in Chief is working on that plan and has for a very long time along with the rest of this treasonous, scumbag crew of dirtbags.
Downvote for the definition fail. Not the "treasonous scumbag crew of dirtbags" - you got that much right. It's the ridiculousness of calling a droning crony corporatist fascist like Obomber "Marxist". If you are going fling around buzzwords, at least educate yourself enough to apply the correct ones.
I could use a good breakdown of the differences between all the different ...ists
True...he's moderate to right...not a leftist or a Marxist
It all comes down to monthly payment and discretionary income. The reality is, the vast majority of home owners are no different than renters. Its all about what they can afford per month. End of story. Anything that negatively affects discetionary income (such as Obamacare) will also negatively affect home prices. Add in an increasing housing supply due to Boomers dropping out and the youth job market where no one can afford to start a family and buy a home, you can see a near irreversable trend. There is nothing on the horizon to affect this positively. There is a great deal on the horizon to affect it negatively.
Fate the Magnificent
"Push the Button, Max"
I'd love to agree with you, but $14k per year strawberry pickers buying 750k houses makes a mockery of us both. As does ZIRP, RMBSs and QEinfinity.
Where did I get $14k per year strawberry pickers from? Okay, for all I know maybe there was only one. It was just a tiny anecdote from Michael Lewis's "The Big Short Inside The Doomsday Machine".
But good point, maybe Obamacare will be the trigger to increase QE. Surely there is at least one of us who can calculate these things. QE per month increases by O'care per month?
The excess inventory will just be held off the market. For 1, 2, 5, 10 years. "Whatever it takes" as they say in banker parlance.
"You cannot have an extended bull-run in real estate values during a period of falling personal incomes. It's silly. You can stop all arguments right there. Period. Done. Nothing else needs to be said."
Nope. Salaries were flat to falling during the last housing bubble. It not wages that drive bubbles, but credit. During the Housing bubble (2004-2008) people without Jobs and no assets were given credit (NINJA loans) to buy real estate.
"The Fed is a fractional size of the overall bond market and the whims of the market ultimately pummel the Fed when those whims start to matter. Rates *will* rise. Period. "
Nope! Without the Fed there would be deflation as there is excess debt and not enough revenue to support the debt. If the Fed stops printing and withdraws from manipulation, bond yields will sink. Rates will only rise if the Fed continues to increase QE which is almost gaurenteed. The Fed also did have an factor in interest rates, by allowing the banks to borrow direcctly from the Fed at near zero interest rates. It was the Fed that started the housing bubble, not the bond market. The Fed also created the Stock bubble back beginning in 1998 when it began flooding the economy with cheap money so that businesses can prepare for Y2K.
"personal income, rates and available inventory. "
You forgot the most important item: CREDIT! No credit, no housing market. Personal income and inventory do not really play a role. Its Credit and to a lesser degree mortgage rates.
Brought to you by mark to fantasy accounting. Can I interest you in a financial "product" of mass destruction?
it's not a bubble when it's a recovery
Those green shoots are pretty damn big!
. .
0
is that porn or are you shocked lol
BMD's: Bubbles of Mass Destruction
You didn't build that bubble
this time IS different...QE. same for stock market...this time IS different for the same reason. the only thing that pops this now is stopping QE, which we all agree will not happen. full steam into collapse, but just like Caracas, there is no reason the market won't double from here before the collapse!
+1
QE makes stocks go up forever? The Nikkei 225 during the numerious rounds of QE in Japan says otherwise.
I agree in the end there will be a crack-up boom, but we are not there yet. There are more cycles of asset price inflation/deflation (with a general long term bias towards inflation) to come before we get to a currency crisis in the USA.
I up arrowed you *and* the person above. You both appear to be correct, and yet I could see you coming to blows over this at a party.
You both can't be right, can you?
"QE makes stocks go up forever? The Nikkei 225 during the numerious rounds of QE in Japan says otherwise. "
Depends on how QE is pushed. In Japan there was never a steady increase of QE to constantly push. At times they reduced purchases. QE could force stocks up higher as long as the amounts continue to increase over time. So far in the USSA, QE has been pushed higher everytime there is a hiccup. It seems unlikely that the Fed will throttleback or let the market crash in any significant manner. I think that the probably fear that if they let it fall it could trigger a collapse that the Fed could not contain.
so now is the perfect time to buy that 8000 sq ft mcmansion for $875k? W/ 3.5% down, I figure the wife and I and will be able to afford the $5k mortgage payment every month, buy new cars every 4 years, & send the kids to college for a measely $100k per year by the time they're ready!
Just fucking wait till they roll out 60 and 80 year mortgages. ...those payments drop in half and houses go up 100%....weeeeeee
I holding out for multi-generational mortgages
"Sweden's FSA says ready to force amortization if needed"
http://www.reuters.com/article/2013/10/02/us-nordic-investment-fsa-idUSB...
"Swedes have a long history of paying only interest on their home loans. At current amortization levels, it would take Swedes on average 140 years to pay down their mortgage debts. Debts are passed down to the next generation or homes are sold to repay debts."
We had a chance to fix a lot of things in 2008/2009, but instead it was bailout city. Now, we are back to where we were with 8 trillion more in debt. It's a shame we couldn't have a smaller reset in 2008/2009, we would be back on our way to proper prosperity.
Wait. Haven't you heard. Congress is going to discount 5T. We'll only be in debt 3T. Yay.
I dispute this... I see no reason why the collapse of 2008 couldn't have been for all the marbles. I'm not sure a global systemic collapse in 2008 is materially different from one in 2015...
We always have a chance to correct things... just as in 2008 though, it's really difficult to decide to take our medicine.
Don't be so melodramatic. Look out your window. When the financial "collapse" happens and you look out the window, all of the real stuff will still be there.
The collapse is going to wipe out debt and destroy the assets of the wealthy, leaving the lower class in a better position. Think of it as a national bankruptcy discharge.
Optimist. History is very clear on how this goes down as "the wealthy" control real assets. There will be blood. Ignore "money" as wealth, that's the illusion that allows a select few families to maintain power and control.
Same as it ever was.
I am thinking about getting into that condo flipping. I heard you can make good cash money doing it.
My point isn't that life is going to end... I'm simply making the point that once we've crossed the rubicon, prolonging the pain doesn't necessarily lead to any additional consequences. It's the difference between someone who is bankrupt versus triple bankrupt... the degree matters not (other than the more bankrupt you are, the longer you get to hold out!). If he wanted to say something like, "we had a chance to make reforms in the 1960s," then I might entertain his thesis a bit... but he's probably a few centuries too late... possibly millenia.
Further, it is possible that the more we prolong the charade, the worst the consequences, but I didn't see the OP connecting those dots... so I'm not going to give him credit for doing so (it's probably not even quantifiable to any reasonable degree of certainty). Not my job to make his case for him.
You are so right brother...
What a few of the posters fail to realize is that the wealthy is the 1% and they will continue their prolifigate ways. The following 19% are the ones in for a shock, they are about to join the bottom 80% in a mish mash with FAR less stratification than there is now.
I compare it to one of the areas in my neck of the woods, Orange County California. The Newport Beach set is going to continue to do well as they are part of, or very close to the TPTB. The paper pushers and RE hucksters who are there neighbors in Irvine, laguna NIguel, etc will get slaughtered. They falsely believe they are in "The Club" when they clearly aren't.
And the Armnageddon scenario is far less likely than the one you describe. The oil spigot would have to shut off literally overnight and some cataclysim would have to wipe out existing infrastructure. There's a reason we're calling this "The Great Recession" life isn't coming to and end. Even if 25% are suffering it still means 75% are doing well enough. It's a quagmire of gayness, but it is what it is.
"I dispute this... I see no reason why the collapse of 2008 couldn't have been for all the marbles. I'm not sure a global systemic collapse in 2008 is materially different from one in 2015..."
Math is additive. It is worse now than in 2008, to correct for the excesses, as they are greater.
Quick! Arrest that bubble-gun terrorist!
of course its different. before they didnt print 85b per month
You ain't seen nothing yet.
Over.
The ramp to the first peak just looks like your typical exponential growth, but the ramp to the second peak is opposite - convex where the first one is concave, like a log curve or, more likely, the charging curve on a relaxation oscillator. Like at some point the housing market will be "fully charged" and then it will be discharged. Is anyone analyzing what is driving this?
FED driving it because what banks hold that imploded are MBS so it's been a 5 year pumpfest to reinflate that garbage?
Yes, what is it? 40 billion per month driving it? But I was hoping we could get a smarter, more detailed description. For example, if it was a "charging circuit", I guess it would flatten out at roughly 15000 around the year 2035. Of course, I don't really expect that to happen. Something will change before then. But ignoring those changes for a second, just treating it like a charging circuit, that curve would flatten as the capacitor charged and restricted current flow. But the 40 billion per month is staying constant, not decreasing. Perhaps interest payments are eating up some of that 40 billion, restricting "money flow" that way?
Yeah - I noticed the different orientations of the curves too. I think it's basically an indication of the decreasing effectiveness of QE.
I think I got it. A constant 40 billion per month pushes up total US housing market cap by a constant 40 billion per month, but the percentage increase is decreasing. So in order to keep the percentage increase constant, we need to either keep increasing QE or keep decreasing the number of houses on the market. What a downer. I feel like I reinvented the wheel. It now seems so trivial. Actually no, the math still looks like fun. Hopefully I'll think about it more before I get distracted again.
... which I now realize is a more wordy way of saying, "Yes Citxmech, I agree with you."
Perhaps I need to go to sleep now.
No inflation here, folks. Nothing to see. Now move along.
Likely to plateau at infinity. Then all real estate owners will be rich--and equal!
Wall Street is driving this. The majority of homes are sold for cash to hedge funds and private equity who can borrow cash at very low rates. They assume that the rental cash flow will provide an above average rate of return while property values return to "normal". Unfortunately there are not enough renters that can afford the rent reuired to provide that return. The average home owner is being frozen out of the market. Once the Wall street leeches realize that the actual returns are far less than forecast, they will likely try to securitize their portfolios of homes and off load them to some poor unsuspecting pension fund.
All is well again, until suddenly 1 morning without any warning it's a worse crisis than 2008.
Yeah, but no-one could seed it coming becoz I yam smart coz I got a pees of paper that sez I'm smart plus those people gave me a job becoz I'm smart and therefore if I say no-one can predict it then I yam right coz I'm so smart and no-one else is smart so they wouldn't know DINGALINGALING I CAN'T HEAR YOU...
Ooops, sorry about that , I think I was just channelling a central banker.
I don't want to do this, but I can't not see the potential limerick in your post.
The Great Recession was easy to hate.
But QEternity made everyone feel great.
Until suddenly 1 morning,
Without an inkling of warning,
It's a crisis worse than 2008.
Who is talking about a bubble on the West Coast.......?
Just ask Mr. (((STARFISH)))
The only difference this time is that its on Bernanke's watch. Same old piss in a different coloured bottle.
He must be praying like fuck he gets out of Dodge before the SHTF.
When the dust has settled (after the SHTF) him, Greenspan, Paulson and every other "economics superman" needs a stake through the fucking heart.
Not to sell someone else's book, but GOTS.
The difference this time, as the reit chart attests, is that the banksters have pumped up the commercial real estate space so that they can bail out and head for the hills. The 08 collapse caught them completely by surprise and thus the reason for all this fed pumping ever since. I'm pretty sure they've exited by now and so the markets can go ahead and collapse of there own weight when ever it's ready.
Right when everyone has been totally convinced the only way to be is all-in.
I was not aware the WS Scumbag bankster slumlords had exited yet? I think that they are trying to now, but I think they still need mr Muppet to come through, even if that means buying their REITS.
In the mean time, unclog my toilet biatch. I took a large Dimon and clogged it.
The Handwriting is on chart.
lol. <sarc>This time it is different! We have more debt than ever, and DEBT IS GOOD.
In fact debt is so good the FED is making more to the tune of AT LEAST 85B/month - soon
to double to 170B. (Count on that)
People have not one job but two, because 29.5 hour jobs just can't make ends meet. Which means they can afford $1M McMansions with all that extra loot they are taking home.
And heck with the kids living at home this means it's even more important to have a bigger more expensive home now. Gotta get ready for those grand children.
Yep this time its soooo different. So much so when the next collapse happens they are going to need at least 2-4T Tarp, and will have to start printing at least 150-250B/month just to keep this puppy afloat.</sarc>
Yep this time it's different 'they have drones, computerized targeting, multispectrum eyes, and more 3 letter agency names that I can count filled with assholes who'd put their mother in prison if they could, etc.' We have a few guns and bullets and a couple whistle blowers.
This writer doesn't understand that when you are in a bubble, you don't know it until it pops. This bubble bad boy is just getting started. Only the posse of fraudsters has changed. New sheriff: Bernanke, with a new Buford Pusser, Yellen. They are riding on every continent- four horses of the apocalypse.
If you don't participate in blowing the bubble, it is pretty easy to spot.
With so many paying cash, there won't be a default. Why worry?
sunny
Just a Fama Morgana .What BUBB ........!*!€$%******!$€$!
'Shaded areas show U.S. recessions'....LOL nice trick there, just abruptly ending at around 2009?
'Depression' ever since.
There appears to be no end to the greed demonstrated by the elite as they maintain complete control of the money machine. I wonder if being a clinical psychopath is a requirement to serve as Chairsatan.
Jerry: He's a bubble boy.
George: A bubble boy?
Jerry: Yes, a bubble boy.
Susan: What's a bubble boy?
Jerry: He lives in a bubble.
George: Boy.
The boy in the bubble
SHORT IYR;
SHORT IWR
REITS ARE 64% Expensive vs NAV(´15)
I was just looking at my new data on my properties, all up a few percent, except one. None are anywhere near the peaks from back in the day, but I'd be comfortable selling one now to get some liquidity before the crash. The wife won't go for it though.
The 'retreat' out in the country is the one not doing so well. It just keeps hovering at 20k above what we paid. That's the one I'd never sell anyway. It's all set up for the post-apocalypse world.
I just sold my home for more then I bought it for in 2008, and in retrospect I should have asked for more. I see the housing market playing out in a mega crash, but that will probably be the least of our worries. I believe we are facing something akin to what the Weimar Republic experienced (1912-23).
There is a relevant matrix showing a breakdown of Weimar family expenses. Pre-hyperinflation, families spent roughly 30% of their income on housing and 30% went to food. By the time hyperinflation peaked, 91% of the income went to food, housing went to .2%.
That my friend is shit hitting the fan.
see the chart on page 42
http://www.nowandfutures.com/weimar.html
REIT income nowadays is pitiful. Run, don't walk, away from those stocks.
Somebody forgot to look at that chart when they valued my house.
$78k in 1983, $105k in 1999, with $100k in upgrades valued at $175k in 2006, $135k in 2009, $120k in 2011, no bids at $115k in 2013. Neighbors sold for $106k.
Sure the $175k was bubble market froth, but heading below 1999 is crazy when the house was bought with windows, roof, bath, and kitchen from the late 1960s.
My uncle paid $145k for a house on a large lake in 1988. It was just valued at $120k.
The bubble used to be everywhere, but now the bubble is concentrated in a few areas, making the bubble far larger than the last.
Lousy investment, but a good place to live, eh?
Pretty much how housing should be.
Manhattan, Hamptons, Miami- no mystery about why valuations are rising- just massive money laundering going on, which is squewing the numbers.
I believe you are correct. I work in appraisal for property tax and values have finally come back some this year but they are still far behind the hey days of 2006 and 2007 raw land especially. I have no idea what will happen but the bottom end of our Residential Market is in line with what Single Family homes rental rates on a capitalized annual basis. Case Schiller has us up +20% - I don't buy it but we are up +10% yoy from 2011-12. Just my 2 cents
In the UK they are stealing inheritance, by forcing anyone with assets including houses to pay for elderly care. They also check all finances to see if you gave the kids a lump sum which they will take back as tax avoidence.
They twats will not get my inheritence and my kids will get theirs, I will make sure of it
Get real, Kangaroo Kongreess Inkorporated, the Fraud-Fed and the teleprompter in chief have given the US of fuckin A everything they deserve.
TARP - finance bailout bonanza
ACA - insurance bailout bonanza
ZIRP - real estate bailout bonanza
Heads back in the sand, fuckers!
Normally, you should not be listening to anyone that claims "This time it is different", but now is not one of those times since this time it is different.
I could agree and disagree with that statement - depending on the timeframe. A few months, maybe even years - sure it's going to be different with FED thrusters on full power it's got to go up... until fuel runs out, or gets watered down and no longer generates the same thrust even as it's being burnt at increasing (not tapered) quantities.
It's up because the fed is pumping money into it. 70% are cash sakes with the hedge funds and banks buying foreclosures with free fed funny money at 0% interest and renting them back the people they threw out of them. Where it stops? Probably when the bond market spins out of control. The whole market is a fraud. What is the business of Amerika? FRAUD.
Historical fed interest rates between 1971 to 2013 0 to 20%. http://blog.estrategypartners.com/2013/10/historical-chart-fed-interest-rates-vs.html
The current rule in the western world is -don't have any savings.
If you do, they will either tax and steal them from you, or make you use them up before you qualify for state support and probably healthcare too, in your old age.
If you have no assets, the state will look after you without question -because you will give them your vote.
Sitting on a 20-30 year mortgage going into the greatest demographic housing sell off in the history of America is not a place you want to be.
Did everybody forget about the house rich and paid off baby boomer demographic die off?
The boomers kids already have homes mostly paid off also.
My grandma died 2 mo ago, I told my mom sell her home immediately, I can't afford it and don't want to live in it anyway, besides she got an all cash offer for $550,000, the replacement cost is about $125,000., maybe even less with all the cheap construction labor around.
Now take that cash and start stacking!
I hear Wallstreet's taking the gold and moving to China
http://twoshortplanksunplugged.blogspot.com.au/
This chart dramitizes the situation. Other Wilshire REIT charts are not so dramitic. It were were in a free market, I would worry, but this is a controlled assent with deeper pocketed buyers, corporate buyers, not the subprime NINJA buyers in the 2006 who gave us blow off in prices. Also the structure of the loans have changed, they are having a harder time turning junk into AAA bonds as they did.
And society is being stratified, the rich, educated, and in demand talent are buying; the rest can rent and hopefully never be included in home ownership.
Money printing, 85 billion a month, when they stop printing worry.
This chart dramitizes the situation. Other Wilshire REIT charts are not so dramitic. It were were in a free market, I would worry, but this is a controlled assent with deeper pocketed buyers, corporate buyers, not the subprime NINJA buyers in the 2006 who gave us blow off in prices. Also the structure of the loans have changed, they are having a harder time turning junk into AAA bonds as they did.
And society is being stratified, the rich, educated, and in demand talent are buying; the rest can rent and hopefully never be included in home ownership.
Money printing, 85 billion a month, when they stop printing worry.
When did prices begin to rise? Soon after Bernanke launched QE to Infinity in which he stated specifically that 45B per month was EARMARKED FOR HOUSING (or better yet housing market manipulation)
The likes of Black Rock said thank you kindly Ben and tapped that Zirp cash like it was Paris Hilton's filthy ass.
And the race was on - this added boost to a morbibund market turned things around - and the lemmings (i.e. those who still had a job or some cash stashed) joined in - some of them are smart and are in this for the flip - others are truly stupid morons who are long believing this is Housing ATM 2 underway (they will get crushed - fuck em)
Then there are the likes of Black Rock who don't fuck around flipping individual properties - what they do is cram this shit into a REIT - pay the presstitutes to spin some ++++ shit for them..... (with a AAA rating of course)
And unload the steaming pile of dung onto the mega lemmings - the pension funds and other dumb money.
READ MY LIPS - THIS IS A BUBBLE - IT IS POPPING BEFORE YOUR EYES - IF YOU ARE IN THIS MARKET THROUGH A DIRECT BUY OR A REIT - GET THE FUCK OUT - BEFORE YOU GET DESTROYED
This has been an unpaid public service message.
William K. Black – professor of economics and law, and the senior regulator during the S & L crisis – explained last month before to the Financial Crisis Inquiry Commission why banks gave home loans to people who they knew couldn’t repay. The whole piece is a must-read, but here are excerpts from the introduction:
In other words, banks made loans to borrowers who they knew couldn’t really repay because the heads of the banks could make huge bonuses based on high volumes and fraudulent appraisals, and they didn’t care if their own companies later failed.
In short, they looted their companies and the economy as a whole.
Professor Black brings us current to where we are today:
On a related note, Chris Whalen (co-founder of Institutional Risk Analytics, who has been hailed by Nouriel Roubini as one of the leading independent analysts of the U.S. banking system) told me that the collection of credit default swap payoutsmight also have played into the banks extending loans to borrowers who couldn’t repay:
Whalen also notes that Freddie and Fannie helped to create the epidemic of mortgage fraud, and – like Black – blasts the government for covering it up:
+++++
Sensible home-buyers got priced out of the market.
Honest bankers got priced out of the market.
The bankers could package those dodgy loans into RMBS, get them rated AAA and sell them to investors (probably your pension fund, or the pension fund of the dumb home buyers) and so remove the risk from their own books. The banks left holding the baby didn't have to be the banks that originated the baby. Oh yeah, and honest ratings agencies were eliminated from the market.
Someone thinks they're smart by buying an over-priced house? They're probably destroying their own pension, as well as their immediate wealth.