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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 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Housing is being supported by printed dollars, not earned ones.

Fri, 01/17/2014 - 14:11 | Link to Comment 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 | Link to Comment Bill of Rights
Bill of Rights's picture

So sorry to hear of your misfourtune.

https://www.tradingview.com/x/Im5dU6kK/

 

Fri, 01/17/2014 - 14:40 | Link to Comment 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 | Link to Comment akak
akak's picture

Ezra Pound had a goatee?

Fri, 01/17/2014 - 15:19 | Link to Comment akak
akak's picture

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

Fri, 01/17/2014 - 18:56 | Link to Comment 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 | Link to Comment fonestar
fonestar's picture

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

Fri, 01/17/2014 - 14:52 | Link to Comment 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 | Link to Comment 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 | Link to Comment jbvtme
jbvtme's picture

and cut from similar cloth

Fri, 01/17/2014 - 14:52 | Link to Comment fonestar
fonestar's picture
.
Fri, 01/17/2014 - 14:21 | Link to Comment 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 | Link to Comment Colonel Klink
Colonel Klink's picture

Fonestar came out of the closet awhile back.

Fri, 01/17/2014 - 14:26 | Link to Comment Stoploss
Stoploss's picture

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

Fri, 01/17/2014 - 14:26 | Link to Comment q99x2
q99x2's picture

Go Bitcoin.

Fri, 01/17/2014 - 14:31 | Link to Comment 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.

Miffed;-)

Fri, 01/17/2014 - 15:50 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

Fawning mistresses are the best kind.

Fri, 01/17/2014 - 17:48 | Link to Comment 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. ;-)

Miffed;-)

Fri, 01/17/2014 - 14:34 | Link to Comment JLee2027
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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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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.

   <SARC>

Fri, 01/17/2014 - 14:30 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment mumbo_jumbo
mumbo_jumbo's picture

Adr,

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

Fri, 01/17/2014 - 15:10 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment bobcromwell
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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 | Link to Comment mumbo_jumbo
mumbo_jumbo's picture

http://orangecounty.craigslist.org/reb/4291772975.html

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 | Link to Comment 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 | Link to Comment 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.

Fri, 01/17/2014 - 15:28 | Link to Comment zaphod42
zaphod42's picture

Naw, the Fed will keep pumping until the banksters have coverted all of their bad loans into bargain sale rentals, and try to gouge the renters.  By then wages will be so low, no one will be able to rent a house.  We'll all be living in cardboard cartons under the freeway!

Not even shanty towns.  Imagine that!

Craig

Fri, 01/17/2014 - 17:10 | Link to Comment sgorem
sgorem's picture

I'm already there. Just found a new Cheerios box for a coffee table, the wife is thrilled!

Fri, 01/17/2014 - 15:37 | Link to Comment Jadr
Jadr's picture

The author makes a really dumb comment where he states that institutional buyers buying the vacant properties for rentals increases rents.   It is the exact opposite, as more institutional players enter the market the rental prices drop.  Look at Atlanta and Pheonix rental prices for this evidence.  I work for a PE fund that is in this space and there are so many people trying to rent homes in Atlanta that rental rates dropped significantly in the past year in many of the areas.

Fri, 01/17/2014 - 17:17 | Link to Comment new game
new game's picture

what he should have said is rent is going higher do to the temporary shortage created by cash buyers and 3 p-ercent interest creating v shaped recovery. but his point was the future anyways. and rent will revert to the income norm as well as cost. unless the intervention continues with fed buying ramped in mbs.  he sorta adressed that too.

fuckin joke called the housing market-ultra manipulated to cover one bozo move after another.

with gse's involve with 90 percent of loan purch/underwrite we are in this situation forever and it will be v after v of unstable hsg-one thing you can count one.

if ya buy one be damn sure it is very saleable or easy to rent(usually one of the same)...

Fri, 01/17/2014 - 18:26 | Link to Comment Jadr
Jadr's picture

Rental rates don't go up as the result of increasing supply of rental properties, they go down.  This is evident in many markets in the US where institutional buyers have been very active, such as Pheonix and Atlanta.

Fri, 01/17/2014 - 17:38 | Link to Comment sgorem
sgorem's picture

All joking aside, kinda, ALL of this bullshit will collapse only when the whining, desparate herds of sheeple come to the realizeation that the profuse utter bullshit that spews from the Goverment, it's agencies, the lying MSM, your elected reprehensible, and even your "head up his ass" next door neighbor, has all been a decoy while the powers that be have stripped them bare of their prosperity, their freedoms, and ultimetly, their souls. We are past the point of no return for any electoral fix I'm afraid, which leaves US with a very narrow choice of options. It's time I suspect to pick our poison, succumb or fight back.

Fri, 01/17/2014 - 23:36 | Link to Comment sgorem
sgorem's picture

as an aside, i appologize for the grammar/spelling, (knowing the fairly high standards of my fellow ZHer's), I tried using my wifes damn I-Piece-of-shit and couldn't figure out to go back and correct anything. Hope I made my point, take care.

Fri, 01/17/2014 - 18:17 | Link to Comment highwaytoserfdom
highwaytoserfdom's picture

With the FED strong arm (crony capital printing bond buying, printing. bond issues)  on Blackstone's 31,000 homes  to say this has anything to do with housing is specious...  Taking out the trusty hp 10bii  ( yea sh*t canned the 12c)   for 100,0000 @ 4.2% on a 30 year for my 489 a month  year the principle is down  whole $1700 with $4167.3 in interest.. per hundred K mind you ... so  or this 120,000 dollar (assuming 20% down) the good old bank and property tax collector gets to  tell you that this 40 to one interest to principle is a good investment.         Well it is  just a spiffy deal for those YUCK YUCK printed reserves...            Killing me kindly.......   and the home interest deduction is helping who?       CalaFornication  so much so that FED has Countrywide lawyers......   

Oh I'm just in la la land and the can kicking keeps waking me up.


Fri, 01/17/2014 - 19:55 | Link to Comment Newager23
Newager23's picture

There is a recovery is some cities. For instance, Bakersfield, CA has oil and agriculture, as well as overflow from Los Angeles, which is 2 hours away. Prices crashed in Bakersfield. I don't know the exact numbers, buy my sisters house (1200 sq feet) dropped from $300,000 (2007) to $120,000 (2010). Now it is back to $180,000. That's a 50% rise in 3 years. Not bad.

And this is not a random example. I spoke to several people and this kind of rise has been common. Were not back to 2005 levels, but the market has definitely rebounded nicely. I personally don't think it will hold. I expect my sister's house to eventually drop well below $100,000. Not too many agree with that assessment, but without jobs the value of homes has to crash. 

Currently people are feeling somewhat upbeat in Bakersfield that housing is on the mend and prices are going to continue heading higher. The investor market for entry level 3 BR (1,000 to 1,5000 SF) is pretty hot. You can't find anything in good shape for less than $135 SF. And these houses are selling fast. Once you get above 1,500 SF, the prices drop and there is more inventory.

This real estate rebound is close to playing itself out. I think 2014 is the year America faces reality. We have been living beyond our means for 35+ years, and it's time to pay the piper. I think it gets ugly real soon. And by ugly I mean a lot fewer jobs and all of the ramifications that entails.

 

Sat, 01/18/2014 - 14:39 | Link to Comment novictim
novictim's picture

New Speak of the New Millenium:

Housing Recovery = Housing exceeding affordability.

Jobs Recovery = Higher unemployment but fewer people looking for work

Jobs Program = Elimination of Unemployment Insurance

 

Prosperity = Impoverished Middle class living in rentals or in card board homes and Mega Wealthy handful of Elite Oligarchs

Tax Cuts = Your kids will have no chance to get a quality education.

"Prosperity is around the corner" = You will soon be screwed.

Do NOT follow this link or you will be banned from the site!