A Bull Market In $1,000 Faucets As Home Equity Loans Soar

Tyler Durden's picture


Submitted by Michael Krieger of Liberty Blitzkrieg blog,

“People don’t want granite countertops — they want marble costing at least 25 percent more,” said Mroz, owner of Michael Robert Construction in Westfield, an affluent town less than an hour’s commute to Manhattan. “Money is so cheap today, people can splurge on $1,000 faucets.”


- From today’s Bloomberg News article: Faucets at $1,000 Abound as Home Equity Spigot Opens

It’s interesting, disturbing and pathetic that this article emerged so shortly after I highlighted the fact that there is about to be a huge, and potentially disruptive reset in home equity loans over the next several years. So while we are still dealing with the ramifications of the prior housing bubble and the HELOCs associated with that debacle, we are right back at it. Extracting additional equity from another phony housing bubble to remodel homes that likely aren’t worth anywhere near what people think once private equity and money laundering oligarchs are done with their binge buying.

As I have said many times before, QE makes a society lose its mind. From Bloomberg:

A year ago, New Jersey contractor Michael Mroz’s customers were focused on saving money when renovating kitchens and baths, he said. Now, with a resurgence of home equity lending, they’re ready to pay for the best.


“People don’t want granite countertops — they want marble costing at least 25 percent more,” said Mroz, owner of Michael Robert Construction in Westfield, an affluent town less than an hour’s commute to Manhattan. “Money is so cheap today, people can splurge on $1,000 faucets.”


Spending on home renovations is rising to records as banks such as Wells Fargo & Co. and JPMorgan Chase & Co. increase lending for home equity lines of credit, or Helocs, after property prices this year gained at a pace not seen since the last housing boom. Heloc originations could rise 16 percent this year and reach another five-year high in 2014, according to Mustafa Akcay, an economist for Moody’s Analytics, powering the earnings of Home Depot Inc. and boosting the economic expansion.


Helocs were used during the housing boom to cash in on surging property values to spend on cars or take vacations. Often, lenders allowed the loans to exceed property values by 25 percent on the supposition that home prices were only going up, Gumbinger said.


Home equity production at Bank of America for the first nine months of 2013 was $4.4 billion, an increase of 69 percent from the first nine months of 2012 when production stood at $2.6 billion, according to Terry Francisco, a spokesman.


Renovation spending this year probably will rise to an all-time high of $146.1 billion, according to Harvard’s Baker. Last year, the spending was $126 billion, he said.


“People aren’t cheaping out anymore because more of them are getting Helocs instead of saving up cash,” said Mroz. Getting a Heloc is “a lot easier to do with home prices coming back,” he said.

Good lord.

Full article here.

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Tue, 11/26/2013 - 00:01 | 4189733 Julian
Julian's picture

these fuckers deserve everything that is coming to them..

Tue, 11/26/2013 - 00:36 | 4189786 willwork4food
willwork4food's picture

Granted, but most people are doing it just to stay in their home and enjoy it.

The question is how long will they have the job that allows them to enjoy it?

Tue, 11/26/2013 - 03:58 | 4190030 lewy14
lewy14's picture

Yes, QE makes a society lose its mind.

But who's crazy - the people taking out these loans...

... or the people who aren't?

I'm not sure anymore.

Tue, 11/26/2013 - 04:48 | 4190059 Doña K
Doña K's picture

Kyle Bass's 2 year limit of amnesia/deja-vous is in play here all over again. 

Tue, 11/26/2013 - 09:41 | 4190287 starfcker
starfcker's picture

NR, could you explain a bit more? i don't quite get if you are serious or sarcastic, but either way you are bumping up against a pretty good topic.

Tue, 11/26/2013 - 05:44 | 4190071 StychoKiller
StychoKiller's picture

"What kind of idiot takes out a loan when they can't even make the first payment? 'What kind of idiot loans money to someone that can't make the first payment?'" -- parapharse from "The Big Short"

Tue, 11/26/2013 - 08:39 | 4190199 ZH Snob
ZH Snob's picture

many years ago I worked for a company that imported and resold these ultra high end faucets from Sweden, I believe it was.  I was a kid and had no idea anyone would pay that kind of money for something that simply delivered water from pipes.  and truthfully, they were really not much different from other faucets, but these guys had a name in the industry, and apparently, if one were to refurbish one of these Boston brownstone, one needed to recklessly splurge on the best or it just didn't cut it.


Tue, 11/26/2013 - 09:01 | 4190229 lewy14
lewy14's picture

These days we have a solution for that.

It's called Chinese counterfeit. FTW.

Tue, 11/26/2013 - 09:13 | 4190248 PT
PT's picture

Re "Chinese counterfeit":

Probably made in the same factory as the original.  Don't take my word for it.  I've never even been to China.

Pssst.  Wanna buy a "Pi-phone"?

(Again, I'm only guessing.  Feel free to show me if I'm right or wrong.) 

Tue, 11/26/2013 - 09:48 | 4190292 starfcker
starfcker's picture

pt, good call. a lot of foreign production runs a 'night shift' that the american owners are blissfully unaware of. why would any chinese 'businessman' invest in such silly things as R&D, or a factory, when american suckers provide all that for free

Tue, 11/26/2013 - 12:06 | 4190578 PT
PT's picture

I once met a man that had a "Pi-Phone".  Illegal to import in bulk into this country.  Out of all the names they could have called it .... I guess it was easier to tool up adding an extra "P".

And, sorry for repeating so soon, its time for this link again.  Look at number 8:

Tue, 11/26/2013 - 10:56 | 4190409 e-recep
e-recep's picture

Those of us who stacked missed the UNFUCKINGBELIEVABLE SURGE of stocks since 2008. Insane, insecure yet true.

Tue, 11/26/2013 - 01:49 | 4189883 NakedEconomics
NakedEconomics's picture

Couldn't agree more... But will the rest of us deserve what is coming with it?  When these douches collapse the banks, it's going to be a "bail-in".  Then we all get to participate in the "fun".

Tue, 11/26/2013 - 02:02 | 4189898 W74
W74's picture

I predict a good deal of violence.  America isn't Cyprus.  The only reason we haven't seen even more violence is that not enough people have lost everything.

When people lose everything, they lose it mentally; and all the moral, ethical and social barriers that were hitherto preventing them from engaging.

Tue, 11/26/2013 - 02:11 | 4189907 SAT 800
SAT 800's picture

I'd like to see them "bail in" silver bullion in the vault of a small family bank in a very conservative European country; which said bullion they don't even know exists. Now, that would be a good trick.

Tue, 11/26/2013 - 08:14 | 4190169 j0nx
j0nx's picture

I don't think so. So far Americans have been tolerant of the shit that these sociopaths have been doing but that tolerance will come to a swift fucking end if we wake up one morning to discover our bank balances have decreased by 15-20% without millions of banksters and politicians doing the perp walk for fraud. If they bail in Americans then the dollar will already be dead or shortly thereafter and it won't matter anyway imo. All they need to keep doing is inflate the money supply and it's effectively the same thing anyway without the uproar.

Tue, 11/26/2013 - 09:10 | 4190245 DanDaley
DanDaley's picture

But will the rest of us deserve what is coming with it? 


We all have it coming, kid.  Clint Eastwood -Unforgiven

Tue, 11/26/2013 - 02:09 | 4189903 SAT 800
SAT 800's picture

"QE makes a society lose its mind"---very good comment. Every historical example we have validates this premiss. The availability of cheap specualative capital causes market distortions, which become gross market distortions, which become grotesque market distortions; which become "bubbles"; which POP. Everytime. all the time. 100% of the time. The answer to the difficult, hard to analize, question of what causes market cycles and bubbles; is so simple it offends the mind; easy money.

Tue, 11/26/2013 - 02:36 | 4189946 vulcanraven
vulcanraven's picture

God bless aMOARica

Tue, 11/26/2013 - 04:22 | 4190047 ebworthen
ebworthen's picture

As long as it's a jump, a noose, or a guillotine blade.

Tue, 11/26/2013 - 08:05 | 4190159 XAU XAG
XAU XAG's picture



I have to agree with you but.........................


I am in the UK and same shit is happening.................can you belive it.


Our government is helping (bankrolling) first time buyers and other to buy houses up to £600K that's close on to $1m

Peeps are being brain washed like fish and are grabbing the hook.


Watched a programe on the BBC interviewing a girl who had just purchesed with Gov help with just 5% down, she had no idea that interest rates are at a 300 year low.....................if interest rates rise this girl is toast.


It makes me sick to the stomach how governments are distorting the markets to bail the banks on thier ballance sheets for short time gain and to get back in government.


How the feck can house prices increase when wages are stagnet at best or take home pay is less and cost of living going up......................EASY FECKING MONEY..........AS ALWAYS!


I am guseing this will be the shortest boom in history that will lead to a bigger mess than we are already in.


My 2 cents......................or should that be My $2M due to inflation

Tue, 11/26/2013 - 08:22 | 4190177 j0nx
j0nx's picture

I see it here too in the DC area. My coworker lives with some chick that when I mention the word marriage he wants to jump out of his skin and run out the door. So he tells me last week that he put an offer in on a $650k house with this chick that he doesn't even want to marry imo. Both of them make maybe $70k each. I honestly don't see how they could afford that place even with 20% down, which I don't even think they have, but then who am I...

I got out of my house this summer after 10 long years, 5 of them underwater and stuck in a neighborhood that went to section 8 blacks and illegal mexicans. After 10 years I walked out with $1800 in my pocket after expenses. 120 payments, over $10k of repairs and upgrades, and 5 years of dealing with 3rd world low lifes and I have $1800 left to show for it. Fucking ridiculous. Me and the family are making plans to move away from here within 12-18 months. We have all had it.

Tue, 11/26/2013 - 11:26 | 4190494 DavidJ
DavidJ's picture

May I ask which neighborhood?

Tue, 11/26/2013 - 08:28 | 4190186 XAU XAG
XAU XAG's picture










Tue, 11/26/2013 - 00:03 | 4189737 CharmaChameleon
CharmaChameleon's picture

Saving up "cash"?

Who dat?

Tue, 11/26/2013 - 00:05 | 4189738 TruthInSunshine
TruthInSunshine's picture

Ben BernankYellen followed Paul "when Mars attacks" Krugman's advice and went down on the monetary spigot, again, to blow an even bigger, broader, ballsier bubble, bitchez!


Tue, 11/26/2013 - 00:08 | 4189750 yogibear
yogibear's picture

Going for broke. When this Fed induced bubble blows there will be nothing to save, Hard to do anything when rates are so low.

Tue, 11/26/2013 - 00:04 | 4189740 Caviar Emptor
Caviar Emptor's picture

Got news. This bubble will first exceed dot.com 2000 plus subprime 2007 rolled together before it really takes off to new obscene levels never even imagined in a prop-trader wet dream. It'll be fun. While it lasts.

Tue, 11/26/2013 - 01:14 | 4189849 willwork4food
willwork4food's picture

I hope so. I've always said I wanted to afford a good high quality meth-drug binge before I see a FEMA camp.

Tue, 11/26/2013 - 00:04 | 4189741 yogibear
yogibear's picture

Improvements also hike up assessments. The property tax collectors will be happy again.

More money for all those government workers.

Tue, 11/26/2013 - 00:05 | 4189742 RafterManFMJ
RafterManFMJ's picture

Things getting crazy again! I just took out 2 home equities on my new home, and I've not even closed on it yet.

Tue, 11/26/2013 - 08:17 | 4190171 SilverIsKing
SilverIsKing's picture

Why only two?

Tue, 11/26/2013 - 00:05 | 4189746 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

I thought you were never suppse to go Full Retard.

Tue, 11/26/2013 - 00:09 | 4189752 Jack Burton
Jack Burton's picture

This is fucking mind blowing! After what we went through, to be back at this all over again, and at a time when the main street economy and wages are still in decline. What can you say, if this sucker blows up again, and I hear one word about bailouts, I will lose my fucking mind.

Tue, 11/26/2013 - 00:13 | 4189758 yogibear
yogibear's picture

In the past the mobs hung the banksters. This time they they can Pay-Per-View it,

Tue, 11/26/2013 - 11:02 | 4190421 RaceToTheBottom
RaceToTheBottom's picture

"In the past the mobs hung the banksters."

Nope, we did not hang the banksters, that is why we are having another bubble/crash

Tue, 11/26/2013 - 10:57 | 4190411 csmith
csmith's picture

One word about bailouts:  They're coming.

Tue, 11/26/2013 - 10:58 | 4190414 Bangin7GramRocks
Bangin7GramRocks's picture

You better prepare to lose your mind. The bailouts will be bigger and even include your money next time. We can't have our banking system compromised so the criminals will continue to go unpunished. Those pricks are probably writing iron-clad contracts so they get even more money after the bailouts. And predictably, dummies on here will support the criminals because we "have to honor our contracts".

Tue, 11/26/2013 - 00:19 | 4189767 SheepDog-One
SheepDog-One's picture

Hey don't worry....these lunatics pinky-swore for reelz double stamped that they learned their lesson last bubble collapse! They got this shit.

Tue, 11/26/2013 - 00:29 | 4189777 overexposed
overexposed's picture

Not satisfied enough with rhyming, history is repeating itself on full parade now.

Samuel Clemens never saw it coming.

Tue, 11/26/2013 - 00:30 | 4189778 EARLPEARL
EARLPEARL's picture


Tue, 11/26/2013 - 09:03 | 4190234 lewy14
lewy14's picture

OK I got a plan...

...if you got the money, and don't need the car, simple...

...buy me one!

Tue, 11/26/2013 - 00:34 | 4189784 Seasmoke
Seasmoke's picture

I honestly got on the caboose ride in 2007......maybe I can hop back in the caboose return trip in 2014 

Tue, 11/26/2013 - 00:45 | 4189797 Quaderratic Probing
Quaderratic Probing's picture

Thank God there are no bubbles

Tue, 11/26/2013 - 00:45 | 4189800 Make_Mine_A_Double
Make_Mine_A_Double's picture

There is a huge upside to this - for me anyways.

The ex was able to refi the 1st BA and the PNC - and as of today - I am off both them and officially a free man!

And now to stand back and watch this fucker implode - and than maybe check the wreckage for bottom market deals.

Tue, 11/26/2013 - 02:01 | 4189897 zhandax
zhandax's picture

That's even better than watching her drive your Porsche off a cliff.

Tue, 11/26/2013 - 10:11 | 4190330 GoldenTool
GoldenTool's picture

I hate replacing keyboards in the morning.  Need more coffee now.

Tue, 11/26/2013 - 00:48 | 4189807 Zero Point
Zero Point's picture

I wonder what a faucet is worth, if no water comes out of it.

Tue, 11/26/2013 - 08:20 | 4190174 XAU XAG
XAU XAG's picture

@Zero Point


Depends what the faucet is made off


Gold/silver..................still worth something

Tue, 11/26/2013 - 00:57 | 4189825 W74
W74's picture

I've never actually slammed my face against the keyboard before, but this made me come pretty damn close.

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