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Spot The Paradox

Tyler Durden's picture





 

This morning we showed that new home prices in America have never been higher. This is great news, right? Well not if you are an average American looking to buy a new home. Based on the median real income, home prices have never been more unaffordable at a stunning 6.7x average salary. Moreover, for those unable to see the bubble (or unsustainability), it appears Bernanke learned well from his previous planner-in-chief, having manufactured a much more aggressive ramp in prices leaving the average American even further away from the American Dream.

 

 

Still think "we" can handle higher interest rates?

 


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Tue, 12/24/2013 - 16:12 | Link to Comment Joebloinvestor
Joebloinvestor's picture

So to "fix" this inequity the US should make the American Dream available to anyone who can breath. like they did before?

How about going back to "Liar Loans" and sub prime mortgages or even "interest only" loans.

The best way (IMO) to "fix" it is not to sell something to people who can't afford it.

20% down is a good start.

 

It isn't a "paradox" that the same conditions exist as before, it is the avoidance of common sense economics that is the paradox.

Tue, 12/24/2013 - 16:19 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

I put down 5%. Now if I invest that other 15% in TWTR and FB, I should be able to pay my house off in 3 years!

Tue, 12/24/2013 - 16:23 | Link to Comment Chris Jusset
Chris Jusset's picture

Clearly, Bernanke has been more successful at blowing bubbles than Greenspan.

Tue, 12/24/2013 - 17:24 | Link to Comment 666
666's picture

Not to worry, because in 2014 Obama will institute ObamaHome. For a monthly fee tax, home ownership will become affordable for everyone!

Tue, 12/24/2013 - 17:25 | Link to Comment zaphod
zaphod's picture

Stop giving them ideas. Please

Tue, 12/24/2013 - 18:40 | Link to Comment Skateboarder
Skateboarder's picture

2015: ObamaFood. Eating becomes affordable for everyone!

Tue, 12/24/2013 - 18:47 | Link to Comment Never One Roach
Never One Roach's picture

Builders have their own 'lenders' so it's still pretty easy to get a near-zero-down-loan. The only difference I see now is you need to have some job, any job, even if it's flipping burgers for $9.25/hr; you will be able 'qualify' for a fat $680k loan.

Banks are somewhat tougher these days. Since they get free, risk-free money from the Fed, they have zero incentive to lend anymore.

Wed, 12/25/2013 - 09:51 | Link to Comment Shooting Shark
Shooting Shark's picture

Some jokes are not funny, because they are obvious.  Nobody laughed when they read that.  You didn't laugh when you wrote it.

The math is simple: what do people need more than healthcare but less than oxygen?  Sustenance.  The lefty human rights argument is easy to make, as long as you never have to tie incentives to outlays.

Frankly, I think the biggest obstacle to getting ObamaFood done is ObamaCare.  Ohhh, that stingssss...

Wed, 12/25/2013 - 16:21 | Link to Comment caShOnlY
caShOnlY's picture

I spotted the PARADOX!!  OMG, I am so lucky!!  I actually think I have the right answer!!!!  Oh my gosh!!

Correct me ZH'ers if I am wrong but the paradox is: 

Without Central bank intervention my home value wouldn't have increased enough to allow me to extract:  My corvette, trip to italy, $65,000 inground swimming pool, Winnebago, winter home in Florida, Jewelry and the ability to pay off all that debt I made ......

DRUM ROLL PLEASE!!!!!........... 

IN THE FUCKING 1990's!!!! 

*****BADA-BOOM******

 

 

Tue, 12/24/2013 - 18:51 | Link to Comment bonin006
bonin006's picture

Don't worry, 666 is not giving them ideas. They have had this planned out for several years now. In order to increase home ownership, home ownership will be required by the government (in case of non-complience a tax will be assessed based on the income level of the individual). If you already have a home, you may need to upgrade it, if it does not meet the minimum requirements, which are based on your family size and possibly other criteria yet to be determined. Currently, the tentative criteria are at least one bedroom and one bath for each person living in the house. Households with children under 16 years of age will be required to install computer controlled temperature limiting devices in all water outlets, using facial recognition to limit the maximum water temperature based on the age of the person at the controls. Installation of this equipment will be mandatory by December 31, 2014 (with failure to comply resulting in a tax penalty, and removal of the endangered children to protective custody by FEMA). The equipment is expected to be available starting December 30, 2014. The vendors will be chosen after the November mid-term elections based on campaign contributions of the companies requesting the contracts.

OK, maybe we should worry.

(I got this information from a memory stick accidently dropped by a drunken White House aid)

Tue, 12/24/2013 - 19:19 | Link to Comment RockyRacoon
RockyRacoon's picture

Under this plan, all those idle shipping containers could make some interesting condo configurations.  Maybe even a fine arts grant and award for the best Rube Goldberg "home".

Tue, 12/24/2013 - 19:49 | Link to Comment SDShack
SDShack's picture

Potters Land = AKA... Fema Camps

Tue, 12/24/2013 - 21:58 | Link to Comment Uncle Remus
Uncle Remus's picture

Shit. This administration makes Rube Goldberg look like a model of German efficiency.

Tue, 12/24/2013 - 22:09 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

When it comes to eliminating freedom and imposing tyranny, it is ruthlessly efficient.

Wed, 12/25/2013 - 02:57 | Link to Comment ebworthen
ebworthen's picture

LOL.

Good stuff, thanks.

Don't forget EPA regulations and inspectors to verify 1.6 Gallon toilets, # flushes per day, and mandatory recycled toilet paper.

Also, methane emissions monitoring of gaseous admissions from you, your significant other, children, and pets.

Coming soon to a doomed Kleptoligarchy called "New Rome" soon.

That's "Nueva Roma" if you pushed #2.

Tue, 12/24/2013 - 23:24 | Link to Comment applelover
applelover's picture

dont worry.  obama said years ago that this idea doesnt make sense.  he wont do it.

Tue, 12/24/2013 - 18:40 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

:( You just made me sad. Mostly because it reminds me of my WHOLE-LIFE insurance plan. Rather than prioritizing the things we want, we can just buy a monthly policy that insures we have "this house, this car, this food, this amount of gas, unlimited electricity*, etc." *blackouts may occur at random

It will be cheaper for some because the insurance company can buy in bulk, average costs, negotiate with the sellers. Then comes the best part, when prices are steadily increased because most people have a WHOLE-LIFE policy, so they could not care less what the price is, the only way to not get ripped off on your WHOLE-LIFE is to buy a policy, so you do it. Why not, it's cheaper than buying your life yourself, and the options look pretty great!!!!

Pretty soon your WHOLE-LIFE costs about $2000 a month, when in other countries the same life costs about $200. But hey, it's not socialism if it's run by a private industry!!!!!@# (It's a health insurance analogy)

Tue, 12/24/2013 - 20:21 | Link to Comment 666
666's picture

Not to worry, because in 2015 Obama will institute ObamaDeath. For a monthly fee tax, burial will become affordable for everyone!

Tue, 12/24/2013 - 21:29 | Link to Comment Yenbot
Yenbot's picture

And as O says, he's GOOD AT THAT...

Wed, 12/25/2013 - 05:16 | Link to Comment Bucket Boy
Bucket Boy's picture

"Soylent Green is People"

Wed, 12/25/2013 - 09:38 | Link to Comment Mareka
Mareka's picture

"Obamahome"... I assume the 1st step to making housing affordable will be to make home ownership mandatory and fine anyone who does not comply.

Tue, 12/24/2013 - 20:47 | Link to Comment WmMcK
WmMcK's picture

I put 0% down (VA) and invested the 20% (well, maybe a little more) in PM's. 

My kids should be able to pay off the house later, but at ~ 3% fixed, I'd suggest they don't.  YMMV.

Tue, 12/24/2013 - 18:47 | Link to Comment ZH Snob
ZH Snob's picture

these days we don't have to wait long for the crash.  then just buy the dip.

Wed, 12/25/2013 - 12:06 | Link to Comment Gordon Freeman
Gordon Freeman's picture

The "housing multiple" in any other developed country is much higher than in the U.S.--but why ruin TD's Hate America First wet dream?

Tue, 12/24/2013 - 16:09 | Link to Comment ptoemmes
ptoemmes's picture

It worked (for them) once, why not crash and repeat?

 

/sarc off

Tue, 12/24/2013 - 16:12 | Link to Comment Colonel Klink
Colonel Klink's picture

May the housing market once again come crashing down with bad debt upon the banks, thus collapsing the ponzi banking system with it.

Tue, 12/24/2013 - 16:26 | Link to Comment NoDebt
NoDebt's picture

THey'll just bail them out again.

Tue, 12/24/2013 - 16:39 | Link to Comment Colonel Klink
Colonel Klink's picture

Me thinks that may not go over well the second time if done overtly via CONgress.

Then again I try to never underestimate the stupidity and gullibility of the US sheeple.

Tue, 12/24/2013 - 17:00 | Link to Comment seek
seek's picture

Bail IN this time. Which means taking from savers in modest homes ("the rich") and giving to the big spenders ("the poor") in McMansions.

Obamaloans should get us another few miles down the road to communism.

Tue, 12/24/2013 - 17:11 | Link to Comment Colonel Klink
Colonel Klink's picture

When fraud is the game, possession is the rule.

For all others, there's theft!

Tue, 12/24/2013 - 19:55 | Link to Comment FeralSerf
FeralSerf's picture

What's the difference whether it's communism, feudalism, capitalism or even Catholicism? The REAL owners, the rentiers, are pretty much the same class. Only their class' name is changed to protect the guilty.

Tue, 12/24/2013 - 22:30 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

These distinctions are important, because they help us know what to expect. We are transitioning from National Socialism (fascism) to International Socialism (communism). Communism is marked by military purges (check), wholesale economic impoverishmnet (check), creation of a dependent underclass (check) and wholesale slaughter of the country's own citizens (coming to a theater near you!)

Remember, Stalin was starving millions and millions of Ukrainians before Hitler even had the blueprints of his first death camp drawn up.

Tue, 12/24/2013 - 20:05 | Link to Comment SDShack
SDShack's picture

Definitely will crash the system again. This time they have learned from their mistakes with the foreclosure robo-signing fiasco, and won't screw that up again. No more 3-5 years for a foreclosure to go through. Next time it will be 12-18 months, tops. But the real kicker will be when the "compassionate" govt steps in to "save" the people from the greedy banks and investors that are stealing their homes and allow you to relocate to another foreclosed property (smaller, and more distressed, of course), for the same "rental" price. This will all be under the guise of "protecting" the people from being thrown into the street. SNAP homes to go with SNAP cards. The New Feudal Kings will own the McMansions. The New Feudal Lords will be the hedgefunds tha own the average homes that the masses will be foreclosed on once and for all, and get rented to the New Serfs. And those that don't even qualify for serfs will be relegated to the Potter Slums... AKA Fema Camps.

Tue, 12/24/2013 - 16:54 | Link to Comment MunX
MunX's picture

That's the plan. Crash the world economy. Blame it on competing currencies (currency wars). Issue new world currency. Thus centralizing power even more. Not to mention buying everything back up again in the panic.

Tue, 12/24/2013 - 16:15 | Link to Comment hugovanderbubble
hugovanderbubble's picture

Sorry for Us Citizens...but the chart is exactly the same as we have suffered in Spain between 1997-2007, U know what happened after AFFOR RATIO HITS ABOVE 7x.....Biggest Drop in Real Estate Prices Ever....

So Congratulates Bernanke, you did it again, all based on MEGA DEBT/CREDIT....IS very easy to manipulated economy with infinite debt.

 

Happy Xmas to all ZH Members from Spain,

 

Long Live ZH,

Tue, 12/24/2013 - 17:44 | Link to Comment Muppet Pimp
Muppet Pimp's picture

While not one to talk myself, you should come back around more HVB.  Have they started picking up the trash yet?

Tue, 12/24/2013 - 16:17 | Link to Comment Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

Hmm, my house is about 1.6x my income, where are all these suckers living?

Tue, 12/24/2013 - 16:29 | Link to Comment gmrpeabody
gmrpeabody's picture

Yes..., well, we can all see what you're spending your money on, Doctor.

Tue, 12/24/2013 - 16:37 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

2.2 here. Or 1.5 household income..This is why I know things aren't as bad as most people say. Because most people are just idiots who will pay whatever they are told to pay. Or they're too damn lazy to adapt to a changing economy. Just another generation of fools thinking it was better back in their day. It happens every-single-damn-generation.

Tue, 12/24/2013 - 17:04 | Link to Comment giggler321
giggler321's picture

You guys are just rich

Tue, 12/24/2013 - 18:22 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

Richer than some. Also not dumb enough to buy the most expensive house a bank would approve me for.

 

Tue, 12/24/2013 - 18:45 | Link to Comment Simplifiedfrisbee
Simplifiedfrisbee's picture

Out of touch with reality. Learn beyond your own perceptual fallacy.

Tue, 12/24/2013 - 18:59 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

Please inform me as to what I was perceiving that allowed you to determine I had some fallacy.

Tue, 12/24/2013 - 18:19 | Link to Comment EARLPEARL
EARLPEARL's picture

MINE IS 70 PERCENT OF MY ANNUAL INCOME AND I HAVE 2 BEDROOMS MORE THAN I USE

Tue, 12/24/2013 - 23:05 | Link to Comment Cortez
Cortez's picture

My home is 60% of annual income but I bought in January of 2009 before the banks were allowed to mark to make believe.

Wed, 12/25/2013 - 08:55 | Link to Comment eddiebe
eddiebe's picture

Hey Kenny, most people don't make doctors wages, no matter where they live.

Tue, 12/24/2013 - 16:18 | Link to Comment jim249
jim249's picture

And with the low interest rates, the mortgage interest deduction is now worth even less, making homes even more unaffordable.  In a way, congress just got their removal of the mortgage deduction on taxes.

Tue, 12/24/2013 - 16:30 | Link to Comment ClassicalLib17
ClassicalLib17's picture

I guess the author doesn't do any research in flyover country.  In my northern Illinois community of 90,000, one can pick up a foreclosure or a tax sale for well under 50,000.  We have some very nice bungalows available for as low as 15-20,000 dollars.  A little sweat equity may be required. 

The only downside is the fact that our school district can't seem to figure out how to teach our elementary school children how to read, write, and cipher.  They are, however, very well versed on social justice issues.

Tue, 12/24/2013 - 16:35 | Link to Comment NoDebt
NoDebt's picture

This article deals with NEW home prices.  Nobody builds cheap houses anymore.  No money in it.  Only McMansions for the 1%, which is why new home starts are so low and their prices so high.  Want a cheap house?  You're buying somebody else's "unique fixer-upper opportunity."

There's homes you can buy near Virginia Beach for $20K..... but you probably won't like the neighborhood.

Tue, 12/24/2013 - 17:06 | Link to Comment disabledvet
disabledvet's picture

you can buy new for 20,000. it'll be small...could come with wheels too. there's nothing unusual about being priced out of your own real estate. just ask the folks who live in San Francisco. They've been dealing with this problem for decades now. Nothing says "real estate" like the West Coast. still "there's a disturbance in the force." we've never really recovered off the collapse of 2008. and now we're deflating again. the dollar is claimed to be weak...but that's only against the euro. it has moonshot against almost every major currency this year. that will make it harder for foreign investors to continue to speculate going forward. you can always do some Detroit Spinning of course. http://www.youtube.com/watch?v=ojCikI9npJQ

Tue, 12/24/2013 - 19:25 | Link to Comment RockyRacoon
RockyRacoon's picture

Wheels?   Now there's an idea for some beautiful room additions that are both functional and attractive!

A little skirting and, voilà, frugal living at its finest.

Tue, 12/24/2013 - 21:36 | Link to Comment Yenbot
Yenbot's picture

Illegal in Cali. Zoning saw it coming, and killed it before the engine shut down. Can't even camp on your own land in your own RV.

Tue, 12/24/2013 - 19:45 | Link to Comment Papasmurf
Papasmurf's picture

I guess the author doesn't do any research in flyover country.  In my northern Illinois community of 90,000, one can pick up a foreclosure or a tax sale for well under 50,000.

The trouble is:  location, location, location.

Tue, 12/24/2013 - 16:38 | Link to Comment Colonel Klink
Colonel Klink's picture

I can't spot the paradox but I can spot the bubble.  There's NO WAY I'll ever be allowed to be a Central banker.  Because they can never spot shit before it pops.

Tue, 12/24/2013 - 22:24 | Link to Comment bh2
bh2's picture

"home prices have never been more unaffordable at a stunning 6.7x average salary"

I don't think the data support the premise. The housing market consists of new and existing homes. Existing homes are not, in fact, more unaffordable than ever in many locations. Far from it. They would be only if valued at their replacement cost, which is same/similar to new home prices. Some of these markets have always been "tight" (e.g. San Francisco and Manhattan). And there are virtually always more existing homes available in the market than new ones being added to it.

All markets don't look like Las Vegas or Phoenix, which were totally crushed after overbuilding. That these cratered markets have recovered significantly from their lows isn't, by itself, particularly surprising, even if they are overshooting.  Meanwhile, existing home prices in some markets have actually declined or remained stuck Y-O-Y and remain well below their previous peaks.

 

Tue, 12/24/2013 - 16:43 | Link to Comment Oldwood
Oldwood's picture

A home is just another investment strategy and as we know "valuation" has very little to do with price. You pay for the bet that someone else will pay more. People used to buy a home, not for an investment but someplace to raise a family and live in security of not worrying about your landlord putting you on the street. Today's housing market has no similarity at all.

Tue, 12/24/2013 - 16:53 | Link to Comment ThirdCoastSurfer
ThirdCoastSurfer's picture

Nov 2013 US:

Avg Hourly wage: $24.15

Median New Home: $270,900

Average new car price: $32,769

($24.15*40*52)*2 = $100,464 -.30% taxes = $70,325 / 12 = $5860.40 *.3 (amount for mort) = $1,758.12

$4,102.28 balance

Tue, 12/24/2013 - 17:17 | Link to Comment Skateboarder
Skateboarder's picture

Where is that extra 2x coming from? 25/hr = 50K annual, not 100K.

Recalculated for 50 weeks of work (not the theoretical 52 hehe):

Avg Hourly wage: $24.15

Median New Home: $270,900

Average new car price: $32,769

($24.15*40*50) = $48,300 -.30% taxes = $33,810 / 12 = $2817.50 *.3 (amount for mort) = $845.25

$1972.25 balance

Tue, 12/24/2013 - 17:43 | Link to Comment Icewater Enema
Icewater Enema's picture

I'm assuming he means that both members of a (married?) couple are working. But that still needs to be reduced for childcare costs if that is a factor. 

$4,102.28 balance - ($100,464 -.10%)/12 = $3265.05

$1972.25 balance - ($48,300 -.10%)/12 = 1572.75

Point is, (and I know this is a no-brainer) it gets harder and harder with less income). Single income with kids-hard to save, get into a nice decent house. I agree with other posters, Midwest, non-urban locations are still very accessible, though. Easily get into a house in WI, IA, etc. for 80-120K. Problem is, can you keep a job there?

Tue, 12/24/2013 - 17:50 | Link to Comment Skateboarder
Skateboarder's picture

I did get the feeling the 2x was for a working couple (married or otherwise). In this age, it is difficult for an 'average' 20something guy to settle down with a gal and expect to maintain the traditional guy goes to work / woman takes care of the family structure. Hell, a 20something guy is still a child these days. There are also not enough jobs for everyone. The least skilled jobs fill up the fastest, and in a world where a bachelor's degree is the great required check mark to join the ranks of the 'average,' the competition for 'average' jobs is of equal magnitude, skills aside.

Would I be incorrect in my guess to say that in 2014, only one member of an 'average' couple will be gainfully employed at the best? (given they are not / don't have intentions of being welfare recipients)

Tue, 12/24/2013 - 18:02 | Link to Comment Icewater Enema
Icewater Enema's picture

Speaking as an older guy (40's+), I see a lot of wife working corp. job/husband consulting or working small business. Wife provides the benefits. You are probably right, with obamacare more will be on reduced hours or benefits or both, adding to cost of living.

Tue, 12/24/2013 - 16:57 | Link to Comment cynicalskeptic
cynicalskeptic's picture

But if you adjust housing prices for the cost of REAL inflation (not the 'official' BS numbers) housing prices are staying flat.....  

Of course salaries and their buying power are dropping like a rock when adjusted for the same inflation  - hence that record 6.7 times annual earnings figure

 

 

 

Wed, 12/25/2013 - 12:22 | Link to Comment css1971
css1971's picture

Welcome to Investing 101 and your awakening from The Matrix.

Values are not going "up".  Currencies are simply being debased and wealth is being trasferred from those who don't understand that to those who do.

Tue, 12/24/2013 - 16:57 | Link to Comment noob
noob's picture

Blowing bottle with wonderful music
http://www.youtube.com/watch?v=2o8ZnG19rV4

Tue, 12/24/2013 - 17:00 | Link to Comment cassotto
cassotto's picture

won't demand just drop then, and prices too eventually?

Tue, 12/24/2013 - 17:10 | Link to Comment disabledvet
disabledvet's picture

this might not be 2008 exactly but it sure has an echo. the dollar has suddenly strengthened...gold and silver have been crushed. i think we're due for a mid-cycle correction in a big way. high Beta got crushed this November only to roar back this December. You got a nice Christmas present in the form of a big GDP revision. My view is that people have gotten carried away here...but we'll see. Again "do not short, do not borrow and go short." Those are called hedge funds and they've been annihilated. Interestingly i can definitely see so "delicate short selling" here. Apple comes to mind actually. I don't think we're talking much on the downside...maybe 5 percent from here. Sure beats going all in on Twitter short and borrowed and now down 300 percent since the IPO just six weeks ago.

Tue, 12/24/2013 - 17:09 | Link to Comment bnbdnb
bnbdnb's picture

So, whats the problem? Lots of rich folks own useless wood, cement and glass.

Tue, 12/24/2013 - 17:14 | Link to Comment NoWayJose
NoWayJose's picture

And the Fed says that inflation is just 1.1%?? Obviously they have added housing prices and medical costs to food and energy, as things to leave OUT of the inflation calculation. Or maybe they are using one of their 'chained inflation' calculations on housing. Actual houses maybe be up 15% but perhaps the inflation rate for cardboard refrigerator boxes is only running at a 1% inflation clip...

Tue, 12/24/2013 - 17:12 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

Buying a house is for people who aren't smart enough to figure out what property taxes will cost, or the real cost of having to move when your neighborhood goes to shit. Stay nimble, or stay rooted.

Tue, 12/24/2013 - 18:51 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

It is true that a house is not wise to be viewed as an investment, but it certainly holds value (even assuming only a value growth of inflation) better than renting an equivalent home. So, unless you are okay with living in a tent or RV, it would seem you should just do your research on neighborhoods.

Tue, 12/24/2013 - 19:18 | Link to Comment donsluck
donsluck's picture

Incorrect. Accoding to a British study of 500 years of property, there is a negative 0.5% inflation adjusted price change per year. This means that real estate steadily LOSES value.

Tue, 12/24/2013 - 19:26 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

So long enough term, a structure will on average become worthless, yes. .995^100 = .60 ............So after 100 years, a .5% annual value loss would bring you down to 60% of value. Are you trying to tell me renting is a better deal than retaining 60% of the initial purchase price?

Tue, 12/24/2013 - 20:36 | Link to Comment honestann
honestann's picture

Yes.
Usually.
All things considered.

Wed, 12/25/2013 - 12:09 | Link to Comment css1971
css1971's picture

Are you saying landlords don't own the properties they rent out and pay mortgages, land taxes, maintenance etc and compete with other landlords on?

 

How could renting possibly work?

 

Please people, think before you open your mouths.

Tue, 12/24/2013 - 19:29 | Link to Comment nmewn
nmewn's picture

Price often times has nothing to do with real value.

A boat has little value in the desert (outside of shading yourself from the sun) so the price would be a lot lower than one offered down by the sea.

Besides, an apartment never fed a hungry child ;-)

Wed, 12/25/2013 - 06:43 | Link to Comment SunRise
SunRise's picture

To an optimist a boat has great value in the desert.

To a Fed member inflation has great value in the desert.

Ques:  Do all Fed members also own boats in the desert?  It would be consistent thinking.

Tue, 12/24/2013 - 17:29 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Here in coastal California we are all used to living in homes that are 10x our incomes.  Thank God for prop 13.

 

Tue, 12/24/2013 - 18:20 | Link to Comment Peter Pan
Peter Pan's picture

This is all called the end of ownership.

Everything in the future will be rented including our burial plot from which you will be exhumunicated within three years of being buried.

Heaven somehow seems much more attainable these days compared to the high hurdles of living in this society that ascribes exclusively to the logic of profit.

Tue, 12/24/2013 - 18:29 | Link to Comment therearetoomany...
therearetoomanyidiots's picture

Agenda 21....

Tue, 12/24/2013 - 20:52 | Link to Comment Oldwood
Oldwood's picture

Debt slavery pretty much ensures we won't own our remains at death anyway. Think soylent.

Wed, 12/25/2013 - 06:53 | Link to Comment SunRise
SunRise's picture

This is the conundrum facing euthanasianists everywhere: The longer they let you live, the more gold teeth you'll be able to "donate" to them upon burial.  Prediction:  Every nursing home will  soon have an on-site dentist.  YohToothOCare!

Tue, 12/24/2013 - 23:33 | Link to Comment malek
malek's picture

For everyone's information, it is standard practice that graveyard spots expire after 30 years in Germany. The remains get exhumed and the spot reused.

Wed, 12/25/2013 - 06:52 | Link to Comment SunRise
SunRise's picture

What do they do with the remains?

Who gets the gold?

Wed, 12/25/2013 - 00:54 | Link to Comment savedbyfreethought
savedbyfreethought's picture

You were not brought into this world so that you may live a life, instead you were brought here so that a profit can be made from you, if you can't make a profit for us then you must die to make way for another potentially profitable person.

Wed, 12/25/2013 - 07:31 | Link to Comment bunnyswanson
bunnyswanson's picture

The real issue is a supply and demand of labor.  The answer is to create more consumers.  You say the increase of middle class lifestyle would be a burden on the earth it could not bear, but I disagree.  Science and technology have failed to advance in areas which would alleviate the impact, recycling namely is abandoned foolishly in a throw away society created by built-to-break products to move production at a faster rate, increasing profits.

This design is flawed.  We know it, you know it.  Were these gentlemen who have fancied themselves kings of the world so gifted to hold the position, the focus would have been family planning and not profit.

There are graves filled with men who have tried to stop this mad men, who sneak up behind their victims, these barnacles' assasins, and when the heroes do not stand a chance to win the war, we have to stop and take a good look around us, assess the situation and remedy the situation (conflicts of interest have no place in a government ffs).

When the natives are not happy, no one is happy.  Equipment breaks down.  Computers crash.  There is strength in numbers.  People can be bought on both sides of the field goal (pay them to lose the game).  So, don't say we did not warn you.  Several million people are thinking about nothing else but this right now.  Devising plans, imagining scenarios, after their lives have been ruined by men who spend more time thinking about which tie to wear than the depth of despair and anguish outside their door.

Wed, 12/25/2013 - 11:35 | Link to Comment Accounting101
Accounting101's picture

Exactly! Pure rent extraction. Everything that we need to survive (food, clothing, shelter, healthcare, etc.) will have some form of rent extraction scheme attached to it. Actually, the Affordable Care Act is a perfect example. Many believe the ACA to be some liberal/progressive wet dream of taking money from the producers (middle class) and giving it to the undesirables (black/brown) people. Nothing could be further from the truth.

The ACA simply codified into law our corrupt, bloated for profit healthcare delivery system. We are now required by law to pay half to two-thirds more for healthcare as compared to any other advanced country in the world. The resulting health outcomes are at best equal, often times worst. This is extra, unnecessary cost- healthcare rent. And that money is flowing up!

Heads the Oligarchs win, tails the middle class loses.

Tue, 12/24/2013 - 18:26 | Link to Comment Goldilocks
Goldilocks's picture

Merry Christmas, ya’ll

Tue, 12/24/2013 - 18:40 | Link to Comment webspin
webspin's picture

Another highly misleading article on ZH, home of the undiagnosed paranoid. "Charlie Brown, he'll come next year! The great Bumpkin takes away everyone's gifts and spreads misery that all ZH'ers seem to wallow in!"

Tue, 12/24/2013 - 21:57 | Link to Comment Jayda1850
Jayda1850's picture

fuck em all.

Wed, 12/25/2013 - 06:55 | Link to Comment SunRise
SunRise's picture

The only way not to wallow in it is to ignore it.  That's easy to do when it's a spot here and there, but when it's so deep that you have to stand on your tip-toes and hold your chin up to keep it out of your lungs, then it becomes THE problem, because it's life threatening.

Wed, 12/25/2013 - 07:19 | Link to Comment bunnyswanson
bunnyswanson's picture

When you are standing in a line so long it never ends, in tattered clothes and not a penny to your name, forced to beg, wallowing in the stench of a million good people overwhelmed with regret they fell for the scheme, taxed into a state of forced labor to survive, ruined credit and taxed into destitution in a jobless economy, amidst a culture set on creating a cloud to define individuals...comparing the two, which would you say is more bearable for the average man?

Tue, 12/24/2013 - 18:46 | Link to Comment JailBanksters
JailBanksters's picture

So the Bernanke Bubble still has some milage left before the crash and they are reset back to being unaffordable again. Then the ol' Yeller bubble kicks in.

 

Tue, 12/24/2013 - 19:01 | Link to Comment migra
migra's picture

Where I live in southern California the median income is 84k. The median home price is 657k. I'd say that is a problem.  I'm going to gross around 112k this year. I'm pretty much lower/working class at my income. Something is wrong here.

Tue, 12/24/2013 - 19:05 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

I'd say you should move somewhere that isn't full of people willing to sacrafice standards of living to live by a beach.

Tue, 12/24/2013 - 20:22 | Link to Comment migra
migra's picture

If I could find a job somewhere elsewhere I would. I live 40 miles away from the beach. If I lived close to the beach, a small house would be well over a million.

Wed, 12/25/2013 - 06:58 | Link to Comment SunRise
SunRise's picture

True, but on the beach you should expect to pay more since it comes with glow-in-the-dark Fukushima lighting and easy-catch fish.

Tue, 12/24/2013 - 19:13 | Link to Comment idontcare
idontcare's picture

Come to Southeastern FL where people who make $112K act like they are Thurston Howell III.  Loads of McManses in the $350-$400K range looking for incomes just like yours.  Of course, at $112K, you'd be making more than most of your snooty neighbors who probably are grossing less than $50K but they own a McManse, a "ski" boat, an RV, and lease a few German vehicles as well.... and the beach is closeby no matter how far inland you live.

Tue, 12/24/2013 - 22:33 | Link to Comment bh2
bh2's picture

Subject poster probably wouldn't be making $112K in SE Florida unless his income source is highly portable. Could he earn $50K in that local economy? Yeah, maybe ... just like those neighbors you mentioned.

Tue, 12/24/2013 - 19:53 | Link to Comment all-priced-in
all-priced-in's picture

Back in 2000 the company I worked for had a facility in San Diego - I spent a lot of time out there - beautiful place.

I got to know several of the employees pretty well -  were making $100 - $150K and living in homes that cost $800+K  - they claimed they were worth much more.

They all had a BWM or MB on lease. 

I was making more than they were - but in Texas my house cost me $100K - I was driving a Toyota.

I ask them - How do you afford to live?

They told me it was something like this -

Started out with a $250K home  - sold it for $300K - kept $25K of the profit in cash - rolled the rest into the down payment on a $400K home - sold that for $500K - kept $100K in cash - rolled rest into a $600K home - sold that for $700K kept  $100K of the cash and rolled the rest into an $800K house.   

I told them they were setting themselves up for a disaster - they all laughed - I didn't understand.

One guy just kept saying - they can't make any more land - the prices can only go up - I can sell anytime I want and pay everything off and still be ahead.

 

 

      

Tue, 12/24/2013 - 19:10 | Link to Comment idontcare
idontcare's picture

damn double post ....

Tue, 12/24/2013 - 19:09 | Link to Comment idontcare
idontcare's picture

Oh, pashaw, them be bargain prices for Blackrock and the gang.... Merry Xmas y'all from the swamplands of Flori-duh!

Tue, 12/24/2013 - 19:33 | Link to Comment 3rivers
3rivers's picture

Greenspan etc say they don't do bubbles.  what if they were "lying"......... all along the way...... but now they are in a situation where they both WOULDN'T and COULDN'T stock what the market has selected as the next and final really big bubble.... no matter how big it got?  What if the S&P were to somehow become a tiny bit correlated with "excess reserves"?  Where it looks like it was hugging zero for 100 years and then suddenly goes vertical a distance twice as high as the X axis where 100 years is plotted?  We would also finally be done taklng about bubbles and all of these other "bubbles", as wel as all other bubbles in history, were to disappear.... you already could niot find WWII or the Great Depression on the EXCRESNS chart, and that was back in early 2009 when they still showed it that far back in the FRED charts.

Tue, 12/24/2013 - 19:35 | Link to Comment 3rivers
3rivers's picture

Greenspan etc say they don't do bubbles.  what if they were "lying"......... all along the way...... but now they are in a situation where they both WOULDN'T and COULDN'T stop the next and final really big bubble.... no matter how big it got?  What if the S&P were to finally become a little bit correlated with "excess reserves"?  Where it looks like it was hugging zero and suddenly goes vertical a distance twice as high as the X axis where 90 years is plotted?  We would also finally be done talklng about bubbles as well as every other bubbles in history... you already could not find WWII or the Great Depression on the EXCRESNS chart, and that was back in early 2009.

Wed, 12/25/2013 - 08:00 | Link to Comment bunnyswanson
bunnyswanson's picture

"What if they are lying?"

Exactly, the element of surprise is of course necessary before you rob a person, path of least resistance.  The heist has been made possible due to ownership of media.  The message the viewers should be hearing, from their assigned "town crier" is not what it should be.  There are stupid people everywhere but they all know how to count when it comes to the money they call theirs.  "We have a blueprint to destroy the soverignty of your country and have implemented it as an economic policy." is not what you are going to hear leave the lips of these master thieves.

(typo :P)

 

Tue, 12/24/2013 - 21:13 | Link to Comment Ms. Erable
Ms. Erable's picture

Who said the 'Mercan Dream was owning a house? Something that was fed to all y'all via corporate propaganda and teewee programming? The American Dream is about living your life the way you see fit, without interference from the criminal classes - including those with official titles, shiny metal badges and jackboots, or FSA member cards.

But, please - don't mind me. Spend the majority of your productive lifetime paying 2.5 - 3x the bubblicious value of that postage stamp-sized lot with a bunch of green timber and toxic drywall in the middle of it - you know, the one the gubbermint or banksters can steal from you at their whim. It's your dream, right?

Merry Christmas*, Bitchez.

 

 

 

 

 

 

 

 

*fuck Kwanzaa and 'happy holidays'.

Wed, 12/25/2013 - 16:10 | Link to Comment F-Tipp
F-Tipp's picture

The realtor's association of america has been able to redefine the "American Dream" away from sacrifice, service, risk, and hard work to simply owning a home. Orwell was more right than he knew in his estimation of the control and forced understanding of language.

Tue, 12/24/2013 - 21:39 | Link to Comment Jackson A-Hole
Jackson A-Hole's picture

Can someone explain why you would use real income and not nominal income here? This doesn't make sense to me.

Tue, 12/24/2013 - 21:40 | Link to Comment q99x2
q99x2's picture

Yes I do think we can afford higher interest rates. A lot higher; now that the FED is counterfeiting and giving the money to banks and foreign nationals.

Why would this not work?

I can find my ferret more often than I can find a protester.

Tue, 12/24/2013 - 21:46 | Link to Comment booboo
booboo's picture

Not to worry, many Florida Muncipalities are getting ready (now that housing has "recovered") to restart or reinact some heavy duty impact fees. During the screaming days of the mid 2000's were near 20 thousand per home. Something will have to give, either homes will take a great leap forward in pricing or builders such as myself will take less. I would bet on the latter, an even split will push most new home buyers over the affordability cliff. At any rate a delayed reaction should show up in time for spring buying season.

Wed, 12/25/2013 - 00:31 | Link to Comment savedbyfreethought
savedbyfreethought's picture

Why does affordability matter ? And why does it have to be a measure based on average income and price?

As long as there are willing and able buyers to support the market, it doesn't matter how small as a percentage they are to the wider population. What is important is if the active buyers (not potential) begin to get priced out and are not replaced by new ones.

From a realistic point of view the ordinary wage earner got priced out long time ago, only thing the kept them in the market is the mortgage. On the other hand the ones with enough money will continue to prefer real asset over paper money and if you take inflation into account the bubble doesn't really seem to that much of a bubble.

It's becoming like the end game in monopoly where the rich players will own more and more properties despite the prices of them get ridiculously unaffordable to the poor players but the prices won't drop until even the rich players themselves consider what they hold to be overpriced compared to other forms of store of value.

Wed, 12/25/2013 - 05:21 | Link to Comment o2sd
o2sd's picture

It's becoming like the end game in monopoly where the rich players will own more and more properties despite the prices of them get ridiculously unaffordable to the poor players but the prices won't drop until even the rich players themselves consider what they hold to be overpriced compared to other forms of store of value.

A game as old as Jewish banking. Swap pieces of paper for hard assets, then make the pieces of paper worthless, while keeping the hard assets. Inflation is one of the oldest and most successful forms of theft, which is why it is the policy of central banks in the developed world. In the Islamic world, usury is forbidden, which makes it difficult for the the central bank to steal by stealth. Islamic governments are most honest about their theft from citizens.

Wed, 12/25/2013 - 02:05 | Link to Comment TheRedScourge
TheRedScourge's picture

The same ratio tends to be around 7-10 in most parts of Canada, and this has been true for a decade at least, and Canada didn't have the same subprime crap the US had, so don't hold your breath on real estate collapsing all on its own any time soon.

Wed, 12/25/2013 - 03:08 | Link to Comment Decimus Lunius ...
Decimus Lunius Luvenalis's picture

Can we get a non-Jew Chairman please?  

Wed, 12/25/2013 - 08:15 | Link to Comment Peter Pan
Peter Pan's picture

Just get one that can do the job properly in the name of and for the benefit of the American people.

Wed, 12/25/2013 - 03:43 | Link to Comment Milton Waddams
Milton Waddams's picture

Main stream has gone parabolic. That was the risk,

Mania

Wed, 12/25/2013 - 08:29 | Link to Comment U4 eee aaa
U4 eee aaa's picture

So Canada was a test run?

BTW, a Goldman guy has taken over Canada's CHMC (the Can housing insurance corp.). There may be plans for fireworks in the new year

Wed, 12/25/2013 - 09:06 | Link to Comment bill1102inf
bill1102inf's picture

Just checked out a $130,000 condo 2.2.1 fully furnished across the street from the beach in Cocoa Beach, FL.  Someone that makes 40K can easily afford it. $200 a month in fees. Only the 1% are making over 100K down here and can afford anything they want including penthouse apmnts direct ocean front. I live on a canal across the street from the beach in a 350K 3.2.2. Very Very affordable for what you get.

Wed, 12/25/2013 - 09:47 | Link to Comment Jameson18
Jameson18's picture

Cocoa beach is white trash poor and full of crack heads. Why would you pay 130 for a condo when you can get it for half that. And if you paid 350 for a house in cocoa beach your and idiot.

 

//
Wed, 12/25/2013 - 09:49 | Link to Comment Jameson18
Jameson18's picture

Cocoa beach is white trash poor and full of crack heads. Why would you pay 130 for a condo when you can get it for half that. And if you paid 350 for a house in cocoa beach your and idiot.

 

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Wed, 12/25/2013 - 16:22 | Link to Comment caShOnlY
caShOnlY's picture

 

Thu, 12/26/2013 - 16:04 | Link to Comment novictim
novictim's picture

BTATFH!  Muppets to the front...fix bayonets...charge!

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