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An Update On The Housing "Recovery"

Tyler Durden's picture


Submitted by Lance Roberts of STA Wealth Management,


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Fri, 01/17/2014 - 14:06 | 4341563 mayhem_korner
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Housing is being supported by printed dollars, not earned ones.

Fri, 01/17/2014 - 14:11 | 4341579 fonestar
fonestar's picture

I sold my house and now I live in an attic with an old lady downstairs who knows my family.  I own so many Bitcoins that its crowded up here.

Fri, 01/17/2014 - 14:20 | 4341613 Bill of Rights
Bill of Rights's picture

So sorry to hear of your misfourtune.



Fri, 01/17/2014 - 14:40 | 4341684 jbvtme
jbvtme's picture

fonestar...i just realized your handle was a picture of ezra pound. the jig is up

Fri, 01/17/2014 - 14:44 | 4341691 akak
akak's picture

Ezra Pound had a goatee?

Fri, 01/17/2014 - 15:19 | 4341806 akak
akak's picture

Yes, sorry, when I posted that stupid comment I was thinking of somebody else.

Fri, 01/17/2014 - 18:56 | 4342445 CarrierWave
CarrierWave's picture

But, but... none of that matters for those who want to profit from the rising markets.

Most people do not care about the above analysis and they are the ones who buy and push the markets higher.

That's where you want to be. Not follow the 'truth' that only few accept.

Stay on the sidelines and miss the rising markets

2014 will see the markets heading higher still courtesy of Central Banks support and also because it's an election year.

Does anyone really think that the Gov will allow the markets to drop more than 3-5% in an Election year?

Also, as long as Interest rates stay as low as they are, stocks will keep going higher.

The FED got the hang of how to keep the markets going higher and they are the ones at the Helm. Not the distinguished writers of the Articles posted on ZH.

Fri, 01/17/2014 - 14:49 | 4341706 fonestar
fonestar's picture

There wasn't shaving kits available when you were interned.

Fri, 01/17/2014 - 14:52 | 4341718 jbvtme
jbvtme's picture

EP was a great American patriot who outed the federal reserve before it became fashionable.   He also edited The Wasteland, Prufrock, Portrait of the Artist and others

Fri, 01/17/2014 - 14:57 | 4341742 fonestar
fonestar's picture

Yes, I know... and he was a great and powerful commander of English, Italian and more and spoke against usury which made him a persona-non-grata in his day.

Fri, 01/17/2014 - 14:59 | 4341755 jbvtme
jbvtme's picture

and cut from similar cloth

Fri, 01/17/2014 - 14:52 | 4341713 fonestar
fonestar's picture
Fri, 01/17/2014 - 14:21 | 4341616 StacksOnStacks
StacksOnStacks's picture

Someone told me a little while back that you used to live in the closet?

Sun, 01/19/2014 - 00:30 | 4345310 Colonel Klink
Colonel Klink's picture

Fonestar came out of the closet awhile back.

Fri, 01/17/2014 - 14:26 | 4341629 Stoploss
Stoploss's picture

Get a smaller fone to hold your bitcoins, that should free up some space.

Fri, 01/17/2014 - 14:26 | 4341634 q99x2
q99x2's picture

Go Bitcoin.

Fri, 01/17/2014 - 14:31 | 4341653 Miffed Microbio...
Miffed Microbiologist's picture

Well, I admire your honesty. I would have thought you would have boasted you lived in a sprawling mansion replete with servants, the obligatory trophy wife on your arm and a fawning mistress due to your savvy investment. Me thinks you may have put too many eggs in one basket but, at least, you don't have too far to fall.


Fri, 01/17/2014 - 15:50 | 4341876 RaceToTheBottom
RaceToTheBottom's picture

Fawning mistresses are the best kind.

Fri, 01/17/2014 - 17:48 | 4342250 Miffed Microbio...
Miffed Microbiologist's picture

This is why my husband often refers to me as his girlfriend rather than his wife. I'm okay with that. ;-)


Fri, 01/17/2014 - 14:34 | 4341662 JLee2027
JLee2027's picture

This must be the 50th time I've heard housing is in "recovery" since 2008 and it's not.

Fri, 01/17/2014 - 15:25 | 4341732 fonestar
fonestar's picture

It's always a great time to buy!  I work with lots of sheeple, they're practically programmed to "buy" (mortgage) a house at any price when they're 25 - 30 and procreate sheeplets.  Of course the Keynesian wishing well economy will provide full employment possibilities for at least a few more light years.

Fri, 01/17/2014 - 14:16 | 4341593 J J Pettigrew
J J Pettigrew's picture

The Property Owner is the TARGET for taxation...
a taxation that is ramped up to attempt to cover the overwhelming pension promises for the municipal and school district employees.
You are a target. The property taxes did not proportionally change with the decline in values...that is the tell.
They will EXTRACT what they can...whenever and however they can.

Fri, 01/17/2014 - 14:20 | 4341611 Rukeysers Ghost
Rukeysers Ghost's picture

The problem is that the market was never allowed to bottom out and find it's natural floor because the Govt' has been constantly peddling absurd programs to pump it up. Now it is so manipulated we may not see real housing recovery for decades. But then again, that goes for most areas of this phoney economy.

Fri, 01/17/2014 - 14:21 | 4341615 bobcromwell
bobcromwell's picture

Canadian home prices are twice as high as U.S. home prices,They have both the same household income and official unemployment rate. Who's wrong ???

Fri, 01/17/2014 - 19:14 | 4342505 andrewp111
andrewp111's picture

It is more like which one mean reverts first. Probably the US. Canada has a very high influx of rich Chinese, and that is enough to inflate prices in a low population country.

Fri, 01/17/2014 - 14:26 | 4341632 Yen Cross
Yen Cross's picture

    Everyone should go buy a house. 10s' are down another 1/2% today. The dollar and stocks are up, and I saw a rainbow in the shower this morning.


Fri, 01/17/2014 - 14:30 | 4341648 youngman
youngman's picture

I think those investment companies that bought all that inventory is not going to end well...unless the government subsidizes them...and they will....if they rent to a minority they will get government rent...the problem is the upkeep will be more than the rent....as freeloaders will trash the place...can you say crack house....then that will destroy the neighborhood and then we start the default game again...round two...

Fri, 01/17/2014 - 15:28 | 4341828 kralizec
kralizec's picture

It's getting harder and harder to move those big fugly shells of toxic waste around though...the jig is almost up...

Fri, 01/17/2014 - 15:52 | 4341885 RaceToTheBottom
RaceToTheBottom's picture

Subsidized going in and subsidized going out.

The FED did not like that all those people owned those houses, "Better to have them owned by one or two TBTFs.  Those we can deal with."

Fri, 01/17/2014 - 14:34 | 4341656 q99x2
q99x2's picture

Those big companies that bought 100s of single family homes are a complete scam. For a hundred years small investors have tried to make renting large numbers of single family homes out profitable. There is no way to do it at the same profit level as apartments. The risk grows greater as the number of single homes grows. It will take a government bailout for those companies to get out without going bust.

Fri, 01/17/2014 - 16:04 | 4341920 Dr Benway
Dr Benway's picture

Want to know how these companies can pay high returns despite not being operationally profitable? They don't pay dividends out of collected rents, they pay dividends out of new capital raisings. They are ponzi schemes.

Fri, 01/17/2014 - 14:34 | 4341660 JLee2027
JLee2027's picture

How many millions of empty homes are the banks keeping off the market to prevent a collapse in prices?

Fri, 01/17/2014 - 19:12 | 4342494 andrewp111
andrewp111's picture

There can't be that many anymore, except in select localities. I mean the banks have to pay property tax on these houses. They have a substantial carrying cost. It is more likely they sell them secretly to Hedge Funds in bulk to avoid depressing prices.

Fri, 01/17/2014 - 14:36 | 4341667 adr
adr's picture

The housing boom since the creation of the fascist NAR has been good for one generation. Yes it was great for the boomer that paid $75k for thier first home and saw it grow in value to $350k+, financing a decadent lifestyle. Yet for thier children, they created an impossible situation. With real wages stuck at early 1980s levels, the neighbourhoods flooded with boomers during the 70s and 80s are now priced far out of reach. $350k for a mid century starter home is insane when the best 90% of the population can hope for is a job that pays $35k a year.

The owners of these homes, be it a person or a bank, are insane. I just saw a home listed where I need to move for $250k. 1800sq ft three bedroom built in 1980. Average price for the area is around $275k. So the home seems to be a bargain, other than the fact it should be condemned. It was vacant after the previous owner forclosed and paid $375k. During the winter pipes froze and burst, including the upstairs bathroom. The entire house was destroyed inside, ceilings down, rotten warped floors, drywall with more mold than wall. Some bank seems to think this home is still worth $250k. I might give them $20k so I can tear it down and build a new one. But the bank has a mortgage on its book with a lot of money left on it. Just insane.

Fri, 01/17/2014 - 14:58 | 4341746 disabledvet
disabledvet's picture

the bank owns the homes. trillions of dollars worth actually. the Federal Government owns the debt...trillions of dollars worth. And everyone knows if a home becomes an income producing asset...by which i mean the home owner makes money through owning not just the property but an acre of land with a shed on it that is cash flow positive...the gig is up. for ten thousand down you really can live on a dollar a day. North Dakota has pondered this as they think about becoming the first State without a property tax. "get rid of the property taxes" and its game over for the debt machine. http://www.prisonplanet.com/north-dakota-considers-eliminating-property-... interesting "confluence of resources" rise up against it (chamber of commerce? REALLY?) Unions of course...since the idea of "free land" is abhorrent to their very existence.

Fri, 01/17/2014 - 18:10 | 4342297 LauraB
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PA has also been attempting to eliminate property taxes.  Legislation has been put forth in both the PA House and Senate year after year, but is finally gaining some traction.  There is now bipartisan support for the bill in the Senate with 13 Republicans & 13 Democrats supporting the bill.  With 26 Senators in support, they have more than the 25 votes needed for passage.  They are currently working on technical amendments to clarify the language and expect a Finance Committee vote this month.  Lets hope this moves forward and other states follow PA in passing legislation to restore property rights.  You can read about the PA legislation and udates on its progress here: http://www.ptcc.us/index.htm

Fri, 01/17/2014 - 16:14 | 4341944 greatbeard
greatbeard's picture

>> $75k for thier first home and saw it grow in value to $350k+,

Damn man, you almost pegged me perfectly, only it was my second house. Paid $75K, sold it 26 years later for $350K.

>> financing a decadent lifestyle.

Decadent lifestyle? WTF are  you fooling? I worked my ass off renovating that house and have always lived a very frugal lifestyle.  I never expected much and made the most of what was there.  Maybe you should do a bit of the same and a bit less whining?  I'm still working the real estate market and making the best of it.  But then again, I'm not looking for something for nothing and I don't resent the generation that preceded me for doing well with what they had.

Fri, 01/17/2014 - 16:51 | 4342093 new game
new game's picture

g beard- another good post; yea if you took that money 26 years ago and put it in the bank and got 5-6 percent non-risk or a mix stocks/bonds 8-10 percent, what would you have by the rule of 70? plus if you didn't pay the interest, up keep. yea you wouldn't get to "enjoy" home ownwership. lot to be said to be able to say it is mine(after the first lien forever-taxes). all in all it is a piss poor investment but a great poor mans way to get ahead gradually. also a lifestyle choice! if i could go back i would have bought one small home and stayed put, paid off and be in a second warm climate home right now-oh well, shoulda coulda club.

thanks tyler for this article - nice info as i figure my next "move".

now with time all the charts should prove that the cash buyer/blackcocks and mom pops have exhausted out and within the margins the pool is contracted and home buyers too are exhausted both in numbers and financialy with higher interest rates.  we will see.


Sat, 01/18/2014 - 01:49 | 4343391 ThirdCoastSurfer
ThirdCoastSurfer's picture

Thing is, even if the house HAS been kept up, who wants to move into a circa 1960-1980's style house with an 8 foot ceiling and one bath, with lead based paint and a central A/C with 30 years,ect.? Maybe if you have to because of job relocation, but not as part of the "American Dream". New houses are fine, but who wants to live 40 miles from town in a HOA neighborhod where you pay $100 a month to have someone tell you you're driveway is too dirty.

Creative destruction applies to more than just the banks and forests. 

Fri, 01/17/2014 - 15:07 | 4341777 mumbo_jumbo
mumbo_jumbo's picture


$75K my Aunt bought a house in HB for $20K in 1968.....

Fri, 01/17/2014 - 15:10 | 4341787 IREN Colorado
IREN Colorado's picture

"the question is really how sustainable is the current recovery in housing"

The answer is: There is no housing recovery. That current residential home values are a new bubble that has been created by politicians to mitigate the crash of 2008-2010. By preventing the assets involved in the original bubble from finding their own natural value in the market they placed all of those involved in home selling, financing, and ownership in extreme financial jeopardy. Especially the US taxpayer who now carries the market on their backs.

People today need to know that housing is not an investment. It is a place to live, plain and simple. When you "buy" a house you get the privledge to modify it as you see fit (as long as you don't violate your agreement with your mortgage lender, the HOA, County et.). But you don't own it unless you paid cash for it. 

Home values will remain volitile nationwide, subject to crashes and short term spikes , until the general economic conditions catch up with the artificial bubble that your Government has created. I suspect that residential real estate values nationwide may be as much as 50% over valued when comparing it to historical value trends. 

I don't see how this ends well for any of the interested parties involved. Especially the US consumer/taxpayer.


Fri, 01/17/2014 - 15:17 | 4341800 IREN Colorado
IREN Colorado's picture

Here is one more chilling thought.

If the broader economy really tanks and we see a new, bigger, economic collapse (what are the odds?). Then everyone who thinks that they own a home and are not able to maintain their mortgage will be moved out of their homes, en-mass. These properties will be then assigned to the new "Barons & Baronesses" of JPM, Goldman Sachs, B of A, Wells F., Fannie, Freddie, US Dept. HUD. These institutions will not only control the mortgages they will control the physical properties themselves. At that point your possession of said property will be subject to the rules that your elected Gub'ment think best for you. Whatever is left of the Constitution will be null and void.

Ponder that......

Fri, 01/17/2014 - 16:38 | 4341981 NihilistZero
NihilistZero's picture

Your doomsday scenario can't happen for this reason: Human Nature.

There's a reason we know communisim doesn't work, people are tricky animals.  To maintain such a market control is unpossible.  Think of it this way, Bernanke was in full panic mode for the last 5 years and tried every stimulus possible and in those 5 years the BEST he could do was roll all the asset bubbles in to one credit bubble whose deflation is inevitable.

The most chilling thought you should have is that there really is no "Grand Conspiracy", just a bunch of desperate, power mad, twits who don't really know what they are doing.

Fri, 01/17/2014 - 19:09 | 4342484 andrewp111
andrewp111's picture

Even power mad twits are guided by an invisible hand, as if there was a conspiracy. There is a direction to History.

Fri, 01/17/2014 - 19:07 | 4342476 andrewp111
andrewp111's picture

They will just use Eminent Domain to seize the remaining houses that are already paid for, and then bulldoze entire tracts of suburbs back to farmland or parks. Everyone will be forced to live in dense cities.

Fri, 01/17/2014 - 15:12 | 4341790 bobcromwell
bobcromwell's picture

Housing is in Bubble Territory when is more than 3 times the zipcode median household income.it's simple as that.

Fri, 01/17/2014 - 15:21 | 4341813 mumbo_jumbo
mumbo_jumbo's picture


there's your entry level "starter home" here in southern California......as you can see, completely divorced from my reality.

Fri, 01/17/2014 - 15:23 | 4341817 Jack Burton
Jack Burton's picture

The medium size town where my daughter lives has seen a surge in apartment complexes over the last 10 years. Since she began college, the growth in that city has been 80% in rental apartments, and maybe 20% new homes. You now drive the ring road around the town and see everwhere modest and large apartment complexes built in the last few years. This reflects a lack of good paying jobs. All the 20 somethings like her are in apartments, and 30 somethings as well. She is in a home, only because her husband owned a home at the time they married. He made money during the boom and bought a house, otherwise they would be apartment bound like so many others. I just don't see where the demand is going to come from for anything but cheap starter homes at best. The 1% can only buy or live in so many houses.

Fri, 01/17/2014 - 15:28 | 4341827 Spungo
Spungo's picture

The government doesn't want a real housing recovery. A real recovery with millions of first time home buyers would mean prices need to drop until housing is affordable. The government and fed have repeatedly said they will fight against a housing recovery.

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