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'Pin' Meet 'Housing Bubble 2.0'

Tyler Durden's picture




 

Submitted by Jim Quinn via The Burning Platform blog,

Housing bubble 2.0 just met Pin 2.0

The 30 Year U.S. Treasury bond yield hit 2.35% yesterday. That is the lowest rate in U.S. history for the 30 Year Treasury. During the deepest darkest depths of the recession in March 2009, after the stock market had fallen over 50%, the yield was 3.5%. One year ago it was yielding 4.0%. Long term interest rates are not controlled by Yellen. They reflect the economic prospects of the country. When they are rising it means the economy is doing well. When they are plummeting to all time lows, the economy is either in recession or headed into recession. Take your pick. No amount of government data manipulation, feel good propaganda spewed by the captured mainstream media, or Ivy League educated Wall Street economist doublespeak, can change the fact this economy is in the dumper and headed much lower. The Greater Depression is resuming its downward march toward inevitable war.

ust30low

  • KBH SEES 1Q BOTTOM LINE ABOUT BREAK-EVEN (against expectations of a 17c rise!)
  • KB HOME CFO SAYS FIRST-QUARTER MARGINS EXPECTED TO BE DOWN
  • KB HOME PULLED OUT OF `COUPLE’ HOUSTON LAND DEALS, CEO SAYS
  • LENNAR CFO SAYS MARGINS ARE POISED TO NARROW ON LESS PRICING POWER
  • LENNAR GROSS MARGIN DECLINED & SALES INCENTIVES GREW
  • LENNAR CEO SAYS “ACROSS THE BOARD, WE’RE SEEING INTENSIFIED COMPETITION AS BUILDERS GO OUT AND CHASE VOLUME”

KB Home had revenues of $2.4 billion in 2014. They are one of the largest home builders in the country. It’s stock has dropped 30% in the last few days. It’s down 40% from its February 2014 high. It’s down 85% from its 2005 high. It had $9 billion of revenues and delivered 60,000 homes in 2005. Then Pin 1.0 popped the first bubble. Revenues collapsed to $1.3 billion and they lost hundreds of millions from 2007 through 2012.

Lennar had revenues of $7.0 billion in 2014. They are the largest home builder in the country. It’s stock has dropped 9% this week. It had been trading at a seven year high, but is still trading 33% below its 2005 bubble high. It had $14 billion of revenues and delivered 42,000 homes in 2005. Then Pin 1.0 popped their bubble. Revenues imploded to $3 billion and they also lost hundreds of millions from 2007 through 2012.

Their admissions earlier this week are proof Bubble 2.0 has met Pin 2.0. KB Home’s 85% increase in revenue and Lennar’s 130% increase in revenue since 2011 have been nothing but a Federal Reserve/Wall Street/U.S. Treasury engineered scheme to repair the balance sheets of the insolvent Too Big To Trust Wall Street banks. The financial industry oligarchs and their servile lackey puppet politicians decided an easy money, Wall Street created scheme to boost home prices would benefit the .1% and restore some of their fraudulently acquired wealth. It isn’t a coincidence home prices rose in parallel with the Fed’s QE programs. And it isn’t a coincidence the bubble is rapidly deflating now that QE3 is over.

The fraudulent nature of the supposed housing recovery can be deciphered by analyzing a few pertinent data points. 30 year mortgage rates were in the 5% to 6% range during the first bubble. Mortgage rates have been consistently below 4% for the last three years. In a healthy market driven economy, these low rates should have brought in first time home buyers and led to a sustainable long-term recovery.

Instead, the number of homes bought by first time buyers has languished at record low levels. The majority of homes sold in 2011 and 2012 were distressed foreclosures and short sales, and the vast majority of sales in the last two years have been to Federal Reserve financed Wall Street investors, Chinese billionaires and fast buck flippers. New home sales of just above 400,000 five years into an economic recovery are at previous recession lows, despite record low mortgage rates. They languish 65% below 2005 levels, when KB Home and Lennar were minting money. Existing home sales of 5 million are back at 1999 levels and 30% below the 2005 highs. This pitiful result is after $3.5 trillion of QE, extremely low mortgage rates, and tremendous hype from the NAR and the corporate MSM (It’s always the best time to buy).

The falsity of the housing recovery storyline can be seen in the fact that mortgage applications linger at 1995 levels, even though mortgage rates are 400 basis points lower than they were in 1995. A critical thinking individual might ask how home prices could rise by 20% since 2012 even though mortgage purchase applications are 20% lower than they were in 2012 and 65% below 2005 levels. The answer is they couldn’t have risen by 20% without massive monetary manipulation and insider deals between Wall Street banks, Wall Street hedge funds, FNMA, Freddie Mac, The Fed, and the U.S. Treasury.

gt10mbap

You see, average Americans buy houses not as an investment, but as a place to live. They save enough for a down payment by spending less than they earn, and then make monthly payments for 30 years from their rising household income. Of course, that was the old days. Real median household income is exactly where it was in 1995. It is currently below the level of 1989. Average Americans have made no headway in 20 years. The median price of a home in 1995, according to the Census Bureau, was $128,000. The median price of a home today is $281,000. When prices go up 120% and your real income remains stagnant, even record low mortgage rates is just pushing on a string. With real wages continuing to fall, young people saddled with a trillion dollars of student loan debt, the full impact of the Obamacare neutron bomb (kills small business, doctors and jobs, but not insurance conglomerates or government bureaucracy) just detonating, and an economy clearly going into the tank, there is absolutely no possibility of a real housing recovery in the foreseeable future.

nnnnffffff

The Too Big To Trust banks have consistently accounted for 35% to 55% of all mortgage originations in the U.S. over the last four years. Wells Fargo is the undisputed leader. All of these banks have reported dreadful financial results this week, with plunging revenues and profits, even with accounting shenanigans like relieving loan loss reserves and marking their balance sheets to fantasy rather than true market values. In the midst of a supposed housing recovery, with mortgage rates at historic lows, the largest mortgage originator in the world, saw their mortgage originations FALL by 12% over last year. They are down 65% from two years ago. JP Morgan and Citigroup also saw their mortgage businesses contracting. These banks have been firing thousands of people in their mortgage divisions. This is surely a sign of a healthy growing housing market. Right?

Essentially, the entire housing recovery storyline has revolved around the Federal Reserve providing free money to Wall Street banks, who then withheld foreclosures from the market, sold them in bulk at inflated prices to Wall Street hedge funds like Blackstone, who then created a nationwide rental business, driving prices higher. FNMA and Freddie Mac did their part by selling their bulk foreclosures to the same connected hedge funds. The average person had no opportunity to bid on foreclosed homes and reap the benefits of lower prices. Blackstone has since created a new derivative, by packaging their rental income streams into an “investment” to sell to muppets. Their rental properties are concentrated in the previous bubble markets of Arizona, California, Florida, and Nevada. What a beautiful business concept. Free money from their Federal Reserve sugar daddy, kicking people out of their homes and then renting their houses back to them, driving prices higher by restricting supply and stopping new household formations, double dipping by creating a new exotic subprime investment opportunity, and then exiting stage left before it all blows sky high again.

 

https://confoundedinterest.files.wordpress.com/2015/01/20131220_landlord_0.jpg

The areas of the country with the highest percentage of Wall Street owned rental properties have had the largest price  increases over the last three years. Some people never learn. Blackstone and the rest of the Wall Street crowd stopped buying properties in 2014. They’ve achieved their objective – easy profits. They have no intention of being long-term landlords. They are seeking the greater fools to take these properties off their hands at inflated prices. The result will be rapidly falling prices, as there is no real demand for these properties.

wayoutweat

The only thing propping up the housing market has been QE, connected Wall Street insiders, Chinese billionaires trying to get their money out of China before their collapse, and the usual flip that house morons you’ve seen on cable TV. QE has ceased. The Wall Street shysters are selling. The Chinese billionaires are only impacting the high end. The low IQ flippers are stuck holding the bag again. It’s no coincidence the Case-Shiller Index has been in a steady DECLINE since the beginning of 2014. Prices have round tripped back to 2012 levels and are headed back to 2009 levels. What a shame. Maybe they can hand out t-shirts that say:

THE FED PRINTED $3.5 TRILLION AND ALL I GOT WAS THIS STUPID T-SHIRT

Two of the biggest home builders in the country have already warned that 2015 is going to be bad. And they are surely painting a rosier picture than they will ever admit. Corporate executives aren’t known for honesty or forthrightness. A perfect storm is brewing and the second Fed induced housing bubble of this century is deflating rapidly. The plunge in oil prices is not due to over-supply. It’s due to under-demand. A global deflationary contraction is underway. What higher paying employment growth and capital investment that has occurred since 2009 was spurred by high oil prices. Texas has led the charge. Energy related companies are announcing thousands of layoffs, and the fun has just begun. Lance Roberts explains the ripple effects:

The majority of the jobs “created” since the financial crisis have been lower wage paying jobs in retail, healthcare and other service sectors of the economy. Conversely, the jobs created within the energy space are some of the highest wage paying opportunities available in engineering, technology, accounting, legal, etc. In fact, each job created in energy related areas has had a “ripple effect” of creating 2.8 jobs elsewhere in the economy from piping to coatings, trucking and transportation, restaurants and retail.

Energy companies have accounted for 25% of all S&P 500 capital expenditures. They are slashing cap-ex budgets by billions. Revenues and profits of energy companies are collapsing. Unemployment claims have already begun to rise. Retail sales growth below 3% always portends or confirms recession. People without jobs, burdened with student loan debt, and living on the same income they had in 1989, do not buy houses. Without QE and Wall Street hedge funds to prop up the market, the bubble is popped. Maybe someone should ask Ben Bernanke at one of his $300,000 lunch time speeches for Bank of America what he thinks about the housing market. He does have an Ivy league education and did save the world.

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”Ben Bernanke – July 2005

 

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Sat, 01/17/2015 - 19:54 | 5674934 Looney
Looney's picture

Pin, meet the bubble full of shit... and the fan!

Shit and Fan, meet Pin.  ;-)

Looney

Sat, 01/17/2015 - 20:23 | 5675006 Dead Canary
Dead Canary's picture

So... basically, we're talking about the classic poop/propeller paradigm.

Sat, 01/17/2015 - 21:34 | 5675248 max2205
max2205's picture

Robber barrons. .....the spread on 30 yr  mortgage  is 50% moar than the 30 yr bond.

 

Thats fair 

 

Fuck you Mr Yellen

Sun, 01/18/2015 - 01:16 | 5675713 sun tzu
sun tzu's picture

The 30 year mortgage is supposed to be pegged to the 10 year since the average life of a mortgage is 7 years. They're getting more than a 100% markup at 1.8% vs 3.8%. 

Mon, 01/19/2015 - 16:21 | 5680802 Shaznardickleze...
Shaznardickleze the Doon's picture

I like to the hippo/dubstep paradigm better.
http://youtu.be/o74i8MNauUA 

Sat, 01/17/2015 - 20:34 | 5675035 MalteseFalcon
MalteseFalcon's picture

The 30 year is going under 1.5% in the next 12 months.

If you are going to lose your mind every time it drops 0.1%, I'd suggest you starting huffing kolonopin.

Or stop fighting the FED and change your fucking bet.

Sat, 01/17/2015 - 20:44 | 5675075 Never One Roach
Never One Roach's picture

Don't worry, "it's contained."

 

Gafaw ... gafaw ... gafaw ....

Sat, 01/17/2015 - 21:18 | 5675198 andrewp111
andrewp111's picture

My guess is the 30y Treasury Bond will hit 0% before 2020. If the EuroZone implodes, it will hit -5%, and the short term Treasuries will hit -20%.

Sat, 01/17/2015 - 22:03 | 5675317 kloot
kloot's picture

so I should not refinance my ARM to a fixed? 

They may actually be paying me soon?

Sat, 01/17/2015 - 22:50 | 5675433 Colonel Klink
Colonel Klink's picture

My magic 8 ball says "yes".

Sun, 01/18/2015 - 01:50 | 5675781 I MISS KUDLOW
I MISS KUDLOW's picture

Yeah, according to a guy named kyle your supposed to short the 30 yr after japan collapses, of course I'm just a peasant who probably won't have access to the markets at that point that will be reserved for the "institutional investors" the game is rigged

Sun, 01/18/2015 - 06:52 | 5675999 MalteseFalcon
MalteseFalcon's picture

If you place a bet on the status quo failing catastropically, you won't win.

Why?

The status quo runs the casino. 

They'll just give you the finger, retreat behind armed guards and close the "payoff window".

Sun, 01/18/2015 - 10:24 | 5676235 Oldwood
Oldwood's picture

So what is your play?

I'm not buying anything that the government can artificially set value on, and that includes gold. I'm sure there will be some short term plays in almost any venue, but all of that is completely contingent on timing, something that the vast majority of us suck at. If there is a safe bet, I don't know what it would be other than situational awareness and the mental preparedness to react in our own interests, not in the herd directive of our "rulers".

Sun, 01/18/2015 - 12:07 | 5676452 MalteseFalcon
MalteseFalcon's picture

PMs have no counter-party risk.

But if you've ruled PMs out, consider my grandfather's comment about the depression of the 1930s.

"Many people lost their jobs and suffered, but we did okay, because we had a farm."

and my favorite high school teacher:

"Have a real trade that people need."

When I was a kid, I asked my mom "Who are the people who own these big houses?"

Her reply, "They are [fill in the blank] and in the depression, they had gold.

Hope that helps.

Sun, 01/18/2015 - 12:28 | 5676526 LooseLee
LooseLee's picture

You've got to be joking (or are part of the 'status quo'---in which case woe to you). It is more likely you will see countless lifeless bodies hanging from lampposts, tree branches, basketball hoops, etc. if they try such a thing. Count on it. The 'numbers' just don't support your claim.

Mon, 01/19/2015 - 09:42 | 5679255 MalteseFalcon
MalteseFalcon's picture

You missed the part about the armed guards.

Sat, 01/17/2015 - 23:59 | 5675591 malek
malek's picture

Why the timidity?

Sun, 01/18/2015 - 02:57 | 5675856 VegasBob
VegasBob's picture

I don't know about under 1.5%, but I predicted on another blog that the 30-year would fall below 2% during 2015.

Sat, 01/17/2015 - 19:54 | 5674938 knukles
knukles's picture

Bunch of folks with whom I'm acquainted who own rental property for a living out here in the Land of Fruit and Nuts, are in the process of liquidation everything they own.
2 reasons
1.  General economic downturn, they've got profits in Central Valley, SF/San Jose properties picked up last time around, cheap.
2.  CA is still in a drought, not had piss for rains, problem has been moved to the back burner as global events taken place, etc.  Lots of their places are in the Central Valley Ag areas.  No rain, no crops.  No crops, no jobs.  No jobs, no rent.  No rents, no cash flows.  No cash flows... well, y'all get the gist.
3.  SF/SJ property prices through the roofs, generally

They're smart money, and they're sellers.  A couple have almost liquidated out.

Sat, 01/17/2015 - 19:57 | 5674948 buzzsaw99
buzzsaw99's picture

they have to be smart because they won't get bailouts like the maggots do

Sat, 01/17/2015 - 20:32 | 5675032 Eeyores Enigma
Eeyores Enigma's picture

The futures so bright I gots to where...welders goggles.

Sat, 01/17/2015 - 20:50 | 5675097 Never One Roach
Never One Roach's picture

My old college roommate just sold his two rentals in the Houston area. He sees a long-term recession there and doesn't want to deal with evictions, etc. One problem with RE is it's illiquid as heck 99.9% of the time as shown by history. Once the mad rush to the exit beggins it may be extremely difficult to dump that rental.

 

I see two home sellers in my area with houses originally listed for >$600k back in September. Price has been reduced three times on both of them and zero buyers. One complaind almost no one even comes to look at it. Selling a house really sucks fo those non-flipper, non-realtor people; namely, your average person.

Sat, 01/17/2015 - 22:18 | 5675353 disabledvet
disabledvet's picture

Put some pontoons on those things!

 

5000 Sq foot McHouse Boats!

 

Let's start "moving the living space."  Go long piers and stowage!

Sun, 01/18/2015 - 01:31 | 5675747 sun tzu
sun tzu's picture

A $600K house in Texas is insanity. The property taxes would be at least $15K, insurance would be $5K, and the utilities for cooling the home would be $1K/mo from May-Oct. 

I got a good sized house at 2700sf for $175K in McKinney back during the housing crash. It sits on about half an acre with a nice little creek off the backyard. Why the hell would anyone pay over 4250K for a house is beyond me. I put it on Zillow for sale at $230K just for kicks and have had about 50 people contact me by email. LOL

The shit pissing me off with the "value" of the home rising is my property taxes have gone from $4,200 when I first bought it to $5K now. 

Sun, 01/18/2015 - 10:36 | 5676247 Oldwood
Oldwood's picture

The down side of relying on property taxes rather than income. We Texans have a target on our back that is tough to shed. Renting would seem the better choice until you realize that in a sustainable situation, those taxes will be paid through your rent. Living south of Dallas, my property taxes are over $25k, and I feel lucky for if I lived in your neck of the woods, they would be double. A past employee purchased ten acres two hours west of Dallas and pays $70.00 a year in property taxes. The problem is getting out, selling without losing your ass, which is exactly the plan. They know that few will be willing to sacrifice so much for freedom, which is really what we are talking about. To have a decent income most are forced to live near or in metro areas. A captive market where we demand schools, roads and protection that due to waste and corruption will never be affordable. The key component is our indoctrinated concept of what it is we need to be happy or fulfilled.

Sat, 01/17/2015 - 21:10 | 5675171 duo
duo's picture

"I felt a disturbance in the force, as if a million almond trees cried out in thirst and were suddenly silenced.  We must go to central California".

Sat, 01/17/2015 - 22:55 | 5675442 piratepiet
piratepiet's picture

which text are you referencing if I may ask ?

Sun, 01/18/2015 - 10:02 | 5676201 duo
duo's picture

Obi Wan

Sat, 01/17/2015 - 21:22 | 5675204 nightshiftsucks
nightshiftsucks's picture

I live in the SF East Bay and believe it or not there isn't much inventory.As far as rain we got a bunch and now nothing,still a few months to go.

Sat, 01/17/2015 - 21:25 | 5675220 knukles
knukles's picture

Yorp.  Them Dotcommies keep buyin up the stuff.  A doctor bud of mine just moved there and refuses to buy.  Renting for the time being and he's had a pretty good nose with RE.

Sat, 01/17/2015 - 19:55 | 5674943 Spitzer
Spitzer's picture

OT but here is my take on the Swiss peg cut.

They are gearing up for U.S.D support. Watch the Swiss balance sheet go Belgium in the coming months. They got their orders from the Seppo's. Stop the Euro peg, its time for you to buy dollars.

Sat, 01/17/2015 - 20:10 | 5674966 Looney
Looney's picture

... Seppo's?

The only times the Seppo-chat is bubblin'-up, a Malaysian plane is about to go down somewhere.  ;-)

Looney

Sat, 01/17/2015 - 20:21 | 5675005 Spitzer
Spitzer's picture

Time to call a spade a spade

 

seppo Slang for Americans - as septic tank rhymes with yank, but Americans are also full of shit like septic tanks "This seppo would not shut TF up about NFL last week"
Sat, 01/17/2015 - 20:09 | 5674974 Winston Churchill
Winston Churchill's picture

You may be right, but I think it smacks of desperation if so.

Seems to me we have a perfect(derivatives) storm brewing between the swissy revaluation,

and the oil complex, just the swissy may have already screwed some counterparty in either

chain.Next week could get very interesting.

Sat, 01/17/2015 - 20:23 | 5675012 kaiserhoff
kaiserhoff's picture

Having similar thoughts, Winston. 

This would be a great time for Greece, or anyone else, to go apey;)

Sat, 01/17/2015 - 21:23 | 5675205 KnuckleDragger-X
KnuckleDragger-X's picture

If all you have is desperation that's what you go with and since people are too busy trying to survive to buy real estate you can't make the loan bribes big enough. Somebody is going to wind up holding the shitty end of the stick.....

Sun, 01/18/2015 - 00:11 | 5675540 noben
noben's picture

Yeah, they screwed the PM oppressors:

20% increase in CH relative to USD is like the price of PM dropping 20% from present level. That's like Au dropping from $1260 to $1000.

Buy only for buyers using the CHF. Who could that be, I wonder?

Beep, beep, beep...

Sun, 01/18/2015 - 00:01 | 5675599 malek
malek's picture

Finally a not completely implausible theory to consider.

Kudos!

Sat, 01/17/2015 - 20:11 | 5674975 Carpenter1
Carpenter1's picture

Think it'll be bad in the US? That's nothing like what Canada has coming, with far more debt per person, way higher average house prices, and an economy running on  nothing now that all commodities have crashed.

 

And yet Canadian banks are still near all time highs, though now falling. Wanna make a bundle shorting? Think Canadian banks. 

Sat, 01/17/2015 - 20:19 | 5674993 Spitzer
Spitzer's picture

Royal Bank of Canada is a Fed primary dealer.

All the big Canadian banks got under-cover bailouts from the Fed liquidity lines last time as per Bloomberg freedom of information request:

 

http://www.bloomberg.com/data-visualization/federal-reserve-emergency-le...

Sat, 01/17/2015 - 22:16 | 5675307 Renfield
Renfield's picture

Let's go ahead and kill this lie about Canadian banks' "health" right now, shall we? Canadian banks received a fat bailout in '08, because of the housing panic, SAME as all other 'western' banks. But this hurts Canadian pride, so they've lied about it in subsequent years to the point that the population believe their own press.

Roughly $186 Billion they got, but really, it was just to "lend to small businesses", so the timing was purely coincidental, and was definitely NOT needed by the banksters even though that's who got the funds... anyone who believes in Canadian banks deserves to lose their money, since such investors have no bullshit filter at all, and obviously no aptitude for due diligence.

From my files:

http://mises.ca/posts/blog/the-canadian-bank-bailout

https://www.policyalternatives.ca/newsroom/updates/study-reveals-secret-...

http://business.financialpost.com/2012/04/30/did-canadian-banks-receive-...

http://www.macleans.ca/economy/business/the-real-canadian-bank-bailout

http://www.wellingtonfund.com/blog/2010/12/02/canadian-bank-bailout-tota...

http://behindthenumbers.ca/2012/04/30/canadas-secret-bank-bailout

http://rabble.ca/columnists/2011/11/bailed-out-any-other-name-canadian-b...

http://www.huffingtonpost.ca/2012/04/30/canada-bank-bailout-cost-ccpa_n_...

I include the useless HuffPo link only to quote its "update" of the bankster lie: "UPDATE: The Canadian Bankers' Association has responded to the CCPA's report, telling The Huffington Post that no Canadian banks were in danger of failing during the financial crisis, contradicting a claim in the CCPA's report. “They seem to be implying that liquidity support is the same as a bank bailout and this is not the case,” CBA spokeswoman Rachel Swiednicki said in an email. “These funding measures were put in place to ensure that credit was available to lend to businesses and consumers to help the economy through the recession. These funding measures were not put in place because banks were in financial difficulty.” More of the CBA’s response to the report can be found at the bottom of this article."

And by the way, Canadian banks are among the WORST capitalised in the world:

http://www.zerohedge.com/news/2014-09-03/presenting-worst-capitalized-ce...

http://mises.ca/posts/articles/canadas-banking-system-exposed

This, of course, is the savvy country that unloaded 100% (give or take a tonne or two) of its gold reserves to stack up worthless US paper. This reset is going to expose this country as completely broke, and I can't think of one who deserves it more richly. Even the US has more financial integrity, and as for the population, well, you can't fix stupid. The population is the best example I know, of a fool and his money: braindead, subservient workerbees who know their place and that's about it. But Canadians have been fools about money for a very long time. They've been paying negative interest here (parm me, "bank fees") since before it was cool. They worship their big banksters: take stupid pride in the fact that their country is run by a handful of banks.

When their country is exposed as completely insolvent in the reset that's coming, Canadians will probably blame whoever the White House tells them to blame, just before they're officially subsumed into the new North American Federation of United States. (Unofficially, this happened quite some time ago.) This will be a step up for most of the population, since at least that will make them countrymen with Americans, some of whom understand what a real country is. Canada, a country of spineless lackeys, never grew out of being the Queen's fucking footstool.

Sun, 01/18/2015 - 00:03 | 5675603 malek
malek's picture

You're on a roll today!

Sun, 01/18/2015 - 01:06 | 5675702 Coldfire
Coldfire's picture

You sound bitter enough to be a Canadian who has become aware...

Sun, 01/18/2015 - 14:45 | 5676933 Bay of Pigs
Bay of Pigs's picture

Well said. The oil patch will be the first to crack (happening now) and it will take the whole Canadian RE market right down the shitter. The valuations are totally insane. They need a 50% retracement to even get back to something even close to resembling reality.

Mon, 01/19/2015 - 07:45 | 5679085 Pareto
Pareto's picture

+1 im thinking  a fibonocci .6018  :)

Sun, 01/18/2015 - 01:41 | 5675765 sun tzu
sun tzu's picture

CIBC and RBC are already down about 12% in the last 2 weeks.

Sat, 01/17/2015 - 20:12 | 5674979 stormsailor
stormsailor's picture

the yield of the 30 year t bill at its lowest in history means that the demand for t-bills is at an all time high.  yields are the inverse of price meaning that in my opinion de leveredgeing of the currency traders, they have to buy t-bills to cover their margins.

 

now is the time to buy some puts on tbills about a year out.  this buying cannot be sustained and when it subsides the price will go down.

 

just my .02 cents worth, but i am going to put some frn where my mouth is. for what its worth, by .02 cents and frn, lol

Sat, 01/17/2015 - 21:10 | 5675166 andrewp111
andrewp111's picture

Really?? The 30 year trend in the 30 year is down, down, down. There are wiggles upward, but the trend is remarkably linear (see top graph). Linear means predictable - just draw a line. I don't think this trend will or can reverse until the 30 y bond hits 0%, or lower. And if the EuroZone implodes, the flood of flight capital from Europe could drive the 30y bond very negative. If that happens, it will be the sign of the end of the trend.

Sat, 01/17/2015 - 22:11 | 5675338 Redneck Hippy
Redneck Hippy's picture

If the 30 yr goes negative it will be the end of economics and finance and maybe everything.

Sun, 01/18/2015 - 03:29 | 5675886 August
August's picture

You know, these last five decades have been a great time to be alive! Lot's of interesting shit going down.

I think I've seen everything except human cannibalism, and we're sure not done yet.

Sun, 01/18/2015 - 08:44 | 5676093 jbvtme
jbvtme's picture

i agree. i don't follow politics either...

Sun, 01/18/2015 - 01:44 | 5675771 sun tzu
sun tzu's picture

JGB 30 is still above 1% after 25 years of BOJ ZIRP, so the US 30 will take a looong time to get there. 

Sun, 01/18/2015 - 00:05 | 5675610 malek
malek's picture

That can easily go on for 3, 4 more years. Especially if the US manages to kill off (read: sacrifice) some other currencies to stabilize theirs.

Sun, 01/18/2015 - 01:07 | 5675703 TheReplacement
TheReplacement's picture

I doubt it.  Maybe 2-3 more cycles but the rhythm is accelerating rapido now.

Sat, 01/17/2015 - 20:18 | 5674995 Catullus
Catullus's picture

Housing Bubble 2.0? You ain't seen nothing yet.

See that 30 year treasury? Sub 2.8% on the yield? Mortgages are still 3.8%. 100 BP spread.

If the ECB follows through on QE, it's a rush back into dollars and anything that pays a yield. That spread will collapse and you'll see 2.9% for a mortgage. Housing and everything else is in the US is going much much higher. Bullish everything. It's a reimportation of inflation.

And M&A is coming back. Big time. Every European major needs US exposure. To anything.

Sat, 01/17/2015 - 20:28 | 5675025 Thirtyseven
Thirtyseven's picture

That mortgage will work just fine for the wealthy and upper class who can get it.  Lower and middle classes will be squeezed out again like in 2009/10. 

Mixed bag.  Maybe some people will refinance, but most who could already did in the low-mid 3's, so high 2's would not be worth the lending fees.

Sat, 01/17/2015 - 20:43 | 5675077 Catullus
Catullus's picture

I'm not talking about refis. I'm talking about capital flight out of Europe and China.

Sat, 01/17/2015 - 21:01 | 5675138 jcaz
jcaz's picture

You're a little late to that party, Sparky-

The foreign serious money is already here-  ain't been that tough to figure out for them.

The more interesting moment will be when that "safe" money sees their property value drop 20%- 

Whoops.

Sat, 01/17/2015 - 21:07 | 5675159 Catullus
Catullus's picture

The "safe" money in Europe just took that 20% eat when the Swiss bank just fucked them. That was the "safest" trade going.

Sat, 01/17/2015 - 21:13 | 5675179 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

It has been musical chairs since 2009, with the music stopping at intervals and everybody scrambling. Something tells me the last chair is gonna be shiny and yellow colored. Oh, and grey, very dense, and suitable for high-speed propulsion through a steel tube with grooves designed to make it spin

Sat, 01/17/2015 - 22:49 | 5675415 new game
new game's picture

cat... agreed. when rates go down to the low threes(currently 3 3/4) we will see buyers come out of the wood work. like fall of '12- 3 percent 30 yr.. 3.0 percent will start the chain at the first time buyers. subsidies aside at that point in time rent will be unattractive. this will free up sellers to move up. up here in mn there is hardly any good homes for sale and they sell fast. i am not seeing what i just read. we have very low unemployment.  the hot markets that crashed -redux and the trend will be localized. no housing crash with rates dropping back to all time lows again...

bubble markets have been doing this for years, cally, houston and no word from fl as boomers flood to buy the last on the deals left over...

at 3 percent that is 421 for 100k loan 842 for 200k

rents? ha...

didn't i read an article simular to this 6 months ago and wow, where is the crash? now rates are lower and going lower and another article saying the sky is falling. oh, shit an acorn hit my head, fucken eh the sky fell and i survived. fucken joke, fear monger bull shit to whip a shitty for arm chair computer wizzes that are clueless. rates go down sales go up-wtf...

watch existing to trend back up in stable markets.

Sun, 01/18/2015 - 02:00 | 5675798 sun tzu
sun tzu's picture

Same here in the Dallas area. Houses are still relatively "cheap" compared to the rest of the country. I live in the wealthiest city in the wealthiest county in Texas, and the average higher end new construction home is going for around $350K for 3000sf. There is a development nearby with $600K homes. Those are 5000sf mcmansions though. The same homes in SD/LA/SF would cost over $3 million. We don't get that much price increase in TX due to high property taxes and endless land. New developments popping up like mushrooms, so why buy an older home and put in $50K to remodel?

Sat, 01/17/2015 - 21:01 | 5675141 Thirtyseven
Thirtyseven's picture

No doubt, but even the NY and SF housing markets are hitting peak, if not slightly (very slightly) declining.  They are certainly slowing down in terms of numbers of sales.

I'm not sure how much more capital is going to flee to an increasingly anti-capitalist USA, especially in light of the encroaching police state.

More likely people are going to shift their assets toward Singapore (as packed as it already is), Malaysia and Thailand.  Not everyone all the time, but it will be an increasing trend.  I can also see India and even Myanmar start to become more business friendly in order to take advantage of the global shift to Southeast Asia.

Sun, 01/18/2015 - 00:59 | 5675690 noben
noben's picture

If there's Capital Flight from Europe and Asia into the US, then those countries will have to De-Dollarize and opt for the "Every Lifeboat for itself policy".

Some are trying to get onto the Titanic, others are trying to get off.

Sun, 01/18/2015 - 12:08 | 5676453 rccalhoun
rccalhoun's picture

jumping on a ponzi near the end is hazardous to your wealth

Sat, 01/17/2015 - 20:21 | 5675000 Catullus
Catullus's picture

Dup

Sat, 01/17/2015 - 20:19 | 5675001 Voice of Reason
Voice of Reason's picture

All this begs the question, Why is IYR (US Real Estate ETF) at an all time high?  It has been on a rising streak in January!  Any revelations out there?

Sat, 01/17/2015 - 20:27 | 5675022 Sockeye
Sockeye's picture

Because deflated baloons don't pop.

Sun, 01/18/2015 - 02:05 | 5675802 sun tzu
sun tzu's picture

Interest rates are dropping like a lead balloon. 

Sat, 01/17/2015 - 20:24 | 5675013 Thirtyseven
Thirtyseven's picture

KB and Lennar might be plummeting, but I work in the private custom home building sector.  I don't think we've touched new construction under 1.2 mil or anything under 3k square feet (with 5-8k sq.ft. being typical though it does go up from there).  More than half of what we build is on the water and in a very pricy water-oriented county.  Just some subs, but my company pays me well vs. my age and experience (and boy do we make some beautiful stuff; nothing like quality, the cookie-cutter/corner-cutter companies can stuff it up their permit holes). 

Yep, rich getting richer and there's no sign of a slowdown in custom waterfront homes;  all this while the middle class gets foreclosed upon, and the poor in turn are getting squeezed out of rents.

 

Sat, 01/17/2015 - 22:28 | 5675378 disabledvet
disabledvet's picture

This has been a for a while, too.

Since WWII the Feds created an epic "fail" of inland real estate as folks built their camps on far more practical lakes and waterways.

Where I live most people have ditched the primary and moved to the camp.

The second lien MBS bubble in 2008 truly was one for the ages.

This is very valuable real estate in my view though.

And to say there is a lot of it in the USA is an understatement.

With a lot still available too.

Sun, 01/18/2015 - 08:57 | 5676099 jbvtme
jbvtme's picture

37...  i'm 65 and building a one bedroom 600sf house (not a home) with "artistic" finishes from recycled building materials: redwood, glass doors, stone floors...might cost $50sf. what i don't spend on bathrooms and bedrooms, i'll spend on trees and shrubs.  the future in housing is small with a view of the garden.

Sun, 01/18/2015 - 10:45 | 5676265 Oldwood
Oldwood's picture

Obviously you have no wife.

Sun, 01/18/2015 - 16:46 | 5677238 Hulk
Hulk's picture

LOL, but not really LOL...

Sat, 01/17/2015 - 20:25 | 5675015 stant
stant's picture

Just had my renters try to bug out and not pay the last months rent. But while moving out they had so much junk the boxes covered up the heat vents. Pipes burst on second floor bath. Water damage all the way to basement. They leave everything behind mostly junk. Cost me a grand just to fill up a 40 cubic ft dumpster labor and all.. 650 a month house. property tax is about 750. 20 grand from insurance co. House is worth about 80k now. Was 110k about 07 . No way I am going to spend much on it . Clean it up put it on the market. You just can't rent to this current level of people . Ps I just wrote the check for the clean up. Only to find someone hit my suburban at Wally and drove off while my was in the store.when I came home. You just can't have something nice anymore. Rant over

Sat, 01/17/2015 - 20:36 | 5675036 Eternal Complainer
Eternal Complainer's picture

Youre a slave to your possessions.

Sat, 01/17/2015 - 22:32 | 5675388 disabledvet
disabledvet's picture

For ten grand I know a guy who knows a guy who can...

Sun, 01/18/2015 - 03:37 | 5675891 August
August's picture

Ten grand is reasonable, though you can certainly get the job done for less.

But then you're liable to end up on the evening news....

Sat, 01/17/2015 - 20:41 | 5675057 Thirtyseven
Thirtyseven's picture

I am acquainted with a couple landlords, no close friends but I always ask these guys how the business is out of general curiosity and they are happy to tell.

The hardest part for them is to find someone who isn't a dirtbag, but who also isn't quite ready to buy a home yet is on track, responsible, and can hold down a job and not destroy things. The gist I'm getting is that it's an incredibly fine line.

Lets face it, we can only blame so much on the fed reserve and the jews for this country's problems (which is a lot); a lot of people out there are just loser dirtbags.

Sat, 01/17/2015 - 21:04 | 5675150 Thirtyseven
Thirtyseven's picture

For the record I'm pro renting.  I'm also pro home ownership. 

I take a neutral stance.  Do what's best for YOU and for YOUR Family.

Sun, 01/18/2015 - 09:06 | 5676109 jbvtme
jbvtme's picture

i've been renting for six years. there is a freedom that comes from not owning a house and being beholden to town taxation and neighbors judging the length of your grass or the dirt on your license plate. keep the noise down and you're just part of the backround scenery.

Sat, 01/17/2015 - 23:55 | 5675585 yogibear
yogibear's picture

"The hardest part for them is to find someone who isn't a dirtbag, but who also isn't quite ready to buy a home yet is on track, responsible, and can hold down a job and not destroy things."

One Mexican family paid 2 months of rent and then stopped paying. Then he brought in 5 others to live in the house.

It's what happens now. Everyone is learning to play the system and be a deadbeat.

Sun, 01/18/2015 - 08:59 | 5676102 jbvtme
jbvtme's picture

quantitative sleezing?

Sun, 01/18/2015 - 10:54 | 5676281 Oldwood
Oldwood's picture

People cannot witness a wholesale defiance of law and morality at the highest levels without consequence and not expect it to metastasize throughout society.

Like it or not, society is guided by our actions, not by legislation or laws.

Sat, 01/17/2015 - 21:47 | 5675285 weburke
weburke's picture

hope this year goes better for you.

Sat, 01/17/2015 - 21:58 | 5675304 stant
stant's picture

Well right after I posted I got a emergency call from the county jail , sewer flooding. Turns out the women didn't like the pototos and flushed them with anything else they could find. I shit you not. After hrs sat night took me awhile thats a 450$ call . On a lighter note sitting here with some burbon downloading my trail cam vids I got a nice vid if a raccoon making kissy face with the camera. God it's funny. The almighty provides

Sun, 01/18/2015 - 04:31 | 5675923 kareninca
kareninca's picture

+1000 racoon making kissy face

:)

Sun, 01/18/2015 - 09:08 | 5676112 jbvtme
jbvtme's picture

stant...just finished "the secret life of plants". might have your name on it.

Sun, 01/18/2015 - 01:06 | 5675698 noben
noben's picture

I think "Caveat Emptor" still applies.

Sun, 01/18/2015 - 13:58 | 5676772 W.M. Worry
W.M. Worry's picture

You're in the wrong market. My current crop of renters are a dentist, an ortho surgeon, and a petro engineer. The house I built in '95 has only had 4 different renters, hasn't been vacant for a single month, looks like new, and I've spent approximately nothing on upkeep. One of my tenants has a cleaning service that comes in once a week. Another one who had lived in the house for 8 years gave me a bottle of '61 Mouton Rothschild when she moved out.

Sat, 01/17/2015 - 20:31 | 5675028 rlouis
rlouis's picture

Housing is too expensive.  The numb-nuts in the bankiing system are too stupid to understand that.  Free markets adjust wages and costs, centrally planned economies fail.

Sat, 01/17/2015 - 20:46 | 5675052 rationale
rationale's picture

It's amazing to read an article about housing and mortgages that completely ignores the impact of tight underwriting standards and onerous new regulations. And institutional home buying by wall street never exceeded the low teens as a percentage of home buying and was concentrated in low end distressed properties that might still be on bank balance sheets. The author should probably write about a topic he's more familiar with.
Oh and the case shiller chart shows a slower rate of growth NOT a decline. Smh

Sun, 01/18/2015 - 02:26 | 5675828 sun tzu
sun tzu's picture

Tight standards? As in they make sure you have a job and can afford to pay the mortgage? Oooh, the horrors!!!

 

Sun, 01/18/2015 - 12:33 | 5676310 Oldwood
Oldwood's picture

My wife is a realtor and yes, it is much harder to get a deal to closing, and more expensive. Interest rates were always a component, but what really drove the bubble before was appraisers who worked for the banks. We never saw an appraisal come in under selling price. Now, it is a real battle to get the appraisal to come in AT selling price, much less above. We are seeing multiple bidders on many homes none the less, but even then, getting the deal to the closing table is hard. Everyone is getting pre-qualified on weak data and then when the full credit check comes up, all kind of crap comes out of the closet. Crap that ten years ago would have been ignored if even looked at.

The reality is that a great deal of consumption is based on credit, not on need or the ability to actually pay. Few give a shit if a new pickup is $60k, as long as they can qualify and drive off the lot. When the "rent" comes due is a different set of priorities completely.

Many home builders have circumvented this process by providing their own path to finance. Its not the same for pre-owned homes.

Sat, 01/17/2015 - 20:40 | 5675059 scuttlebutt
scuttlebutt's picture

Expect the unexpected.

This week European QE will come up short. Which means the Euro rebounds. Which means the dollar falls. Which means gold in dollar terms will rise.

Which all means that the stock markets will drop, drop, drop. 

For a while anyway.

Sat, 01/17/2015 - 20:49 | 5675102 JoeySandwiches
JoeySandwiches's picture

Just waiting for that real sharp drop early-ish this year, forcing Yellen to talk up plans for QE4... Market goes up a bit, crashes again.  QE4 commences, market goes up for about a week then it all goes to deep shit.

I haven't thought up what happens after that. 

Sat, 01/17/2015 - 22:40 | 5675412 Redneck Hippy
Redneck Hippy's picture

No way Draghi's QE can live up to the hype.  Euro will sell on the news no matter what.

Stock market is so gun shy now, with commodities crashing, FX whipping around and Treasuries setting new records, it's set up for the zombie apocalypse. 

Must be time to BTFD.

Sat, 01/17/2015 - 23:58 | 5675586 malek
malek's picture

 Which means the Euro rebounds

Fantastic forecast.
Will it rebound to $1.16? Or did you imply all the way back over $1.20, or even further back up?

Let me rephrase that, your's is an almost entirely content-free comment.
The Euro will not bounce back to $1.20 any time soon, and especially not because of the lack of an ECB QE.

Sat, 01/17/2015 - 20:44 | 5675071 Bangalore Torpedo
Bangalore Torpedo's picture

Real Estate is a local phenomenon...PERIOD.  Yes, it is affected by macro-government intervention, but in the end, it's local and it's location, location, location.  The selling boom here in coastal South Carolina has not abated this winter...which is unusual to say the least.  If you live where other people want to actually live and work, then you'll always experience a healthy and sustainable real estate market. 

Sat, 01/17/2015 - 21:05 | 5675154 jcaz
jcaz's picture

Yeah, but not every state is buildling new car plants....

Oh wait-  those plants are gonna be laying off when credit pukes again-

Enjoy while you can.

Free tip:  Buy low, Sell High.

Sat, 01/17/2015 - 22:02 | 5675195 Just Take It All
Just Take It All's picture

Lawrence? Lawrence Yun? is that you?

Sat, 01/17/2015 - 21:52 | 5675293 weburke
weburke's picture

new yorks westchester county has a lot of million dollar homes. The buyers, are missing because all the ones that could buy million dollar homes did. so who do they sell to? so real estate offices have -new price- on all the displayed homes. rough. I dont live there, I just did a lot of work there this year. 

oh, some of the hedge fund buyers of million dollar homes are actually buying the homes of connected elites. you can understand the arrangement.

Sun, 01/18/2015 - 02:36 | 5675837 sun tzu
sun tzu's picture

If the math doesn't work, the prices will go down PERIOD. No matter how badly people want to buy a house, they still have to be able to pay the mortgage. That's something the bubble deniers couldn't get through their heads in 2007. As long as there are buyers who want and can afford the higher mortgage payments, then the prices will be stable or go up. Any hiccup in the system, like a recession or higher rates, then prices will drop. Do you really think that if rates go to 6.25% that prices on the SC coast won't go down? That's an extra $400/mo on a $300K home. I don't care where the location is, prices will go down. 

Sat, 01/17/2015 - 20:45 | 5675079 fibonacci's claus
fibonacci's claus's picture

i always dreamed of owning a house.

i'm still dreaming of owning a house.

i think when i wake up tomorrow i will have had a dream of owning a house.

but like the article says, when .gov burys you under 300k of student loan debt and then decides the going rate of pay for your profession is 500/week because socialistic obamacare must be passed before it is even read, well i guess maybe i should dream of owning a card board figgin box.

if the united socialist states of america is going to charge socialist prices for education and parent us with socialist child support payments dictated by socialist judges so women can leave the court house casino with a smile on their face they can at least pay us a good enough socialist wage so we can pay their socialist usary.

don't you think?

Sat, 01/17/2015 - 20:50 | 5675106 rsnoble
rsnoble's picture

I always dreamed of owning a home.  Then I bought one.  Then I paid it off.  Now I get ever increasing tax bills to support the local fucks at the city hall that's as big as some people's rent payments.

There's no such thing as owning a home.

Furthermore once you do own it I discovered it's nothing more than an asset that can be stripped away during any mishap you may encounter.  I encountered a lawsuit several years ago one of the fist questions asked: Do you own a home?  What other assets do you have?

I don't suggest renting either.

If I weren't married i'd be living in my rv and fuck everyone else.   And when those start getting 2k a year tax bills there's always my wheelchair van.

 

Sat, 01/17/2015 - 21:26 | 5675223 Just Take It All
Just Take It All's picture

Fantastic rant.  That needs to be the voice-over on one of those bubble-era NAR "buy-a-home" commercials.  So much truth.  And most don't figure it out until it is too late.  That really needs to be required reading before signing a mortgage.

There is a right way to do it, but it doesn't involve a mortgage or a big expensive McMansion.

Sun, 01/18/2015 - 12:38 | 5676552 Oldwood
Oldwood's picture

While I Support the notion of property rights, I also accept that is an illusion. The "right" to my property ownership exists as long as I can defend it, or in our case pay for government "defense". Citizens demanded things that people who sought power were more than happy to provide. Once endentured to these "protectors" our protection payments have grown. Inflation perhaps?

Sun, 01/18/2015 - 02:38 | 5675840 sun tzu
sun tzu's picture

I used to pay $9K/yr to rent a decent 2/2 apartment. Now I pay $5K/yr for property taxes on top of my mortgage and insurance.

Sat, 01/17/2015 - 22:46 | 5675426 l8apex
l8apex's picture

So daddy gov forced you to take on that 300k in student debt?  And what degree costs that much?  I'm sure you looked into salaries in your chosen profession before you agreed to all of that money...   

Sun, 01/18/2015 - 02:40 | 5675841 sun tzu
sun tzu's picture

For $300k has to be a doctor. I do blame the government for driving up college tuition costs with easy money student loans and grants. If not for those, the colleges would be 75% empty.

Sat, 01/17/2015 - 23:19 | 5675493 Mike in GA
Mike in GA's picture

Please explain how the government buried you under 300K of debt.  

And, for the record, could you state how you managed to spend all that money on "education" when everything you wrote above indicates a fundamental lack of knowlege of spelling, capitalization and sentence structure?

If your defense is that you were drinking, please just be honest and say, "I were drinking." 

hic.

Sun, 01/18/2015 - 05:56 | 5675936 kareninca
kareninca's picture

If you owe 300k and are earning $500/week, it might have been prudent for you to delay starting a family.  I'm guessing that no-one put a gun to your head and demanded your sperm.

Also, if you owe 300k and are earning $500/week, I doubt that you are paying very much at all in child support.  More than you wish to, no doubt, more than is fair, perhaps, but certainly not enough money to put a smile on the face of anyone on the receiving end, unless you impregnated and owe offspring-support to a hamster.

Sat, 01/17/2015 - 20:45 | 5675081 rsnoble
rsnoble's picture

I feel a "Fuck Ben" is in order here.

Sat, 01/17/2015 - 20:58 | 5675128 db51
db51's picture

You know, I live about 100 miles from St. Louis.  Was there visiting my daughter, son-in-law and kids this weekend.   Went to a Cub Scout Pinewood Derby.   Place was filled with thrity-40 something folks who didn't appear to have a worry in the world.   My son-in-law looking at 3 year contract job with St. Louis Fed.....Restaurants full.    New SUV's and cars everywhere.....all the homies wearing gold and wearing $ 200.00 shoes and NFL gear......and I'm a Doomer?   W T F.  Maybe I need an attitude adjustment...cause no one I saw was of my mindset.

Sat, 01/17/2015 - 21:02 | 5675149 scuttlebutt
scuttlebutt's picture

db51,

They never see it coming.

I have the same conversation with many. Most listen, but don't want to believe. (Until its too late.)

 

Sun, 01/18/2015 - 06:09 | 5675977 B2u
B2u's picture

The only thing they see are lower gas prices.  What happens to "consumer confidence" when gas prices increase?

Sat, 01/17/2015 - 21:07 | 5675160 jcaz
jcaz's picture

LOL- working for the Government will do that for you....

Too bad about your son-in-law-  perhaps he'll get off the public dole someday and still produce something before he gets too messed up.

Sat, 01/17/2015 - 21:35 | 5675250 jamochavez
jamochavez's picture

Things don't fall apart cause everyone knows it's coming. Guessing the net positive equity of most of the people you see everyday is not bueno. Most live in the faux world we have created with debt to buy perceived happiness and stature. The mindless of the masses only supports what we fear. And seems inevitable at this point.

Sat, 01/17/2015 - 23:19 | 5675492 NoPension
NoPension's picture

As my dingbat 52 yo wife told me the other day; (and I fucking quote!!! + "&").....
" all I really want out life is what everyone else has"

Of all the dumb shit that has exited her pie hole over the last 32 years we have been joined in marital bliss, that one takes the prize.

Now, She Will NOT See It Coming.... Period.

Sun, 01/18/2015 - 05:04 | 5675943 kareninca
kareninca's picture

LOL, that is funny.  Well, my husband wants us to get back into the stock market.  Now.  Because I was wrong for the past several years (fair enough), and "the market always goes up in the long run."

I don't think my husband is going to see it coming, any more than your wife is, but I guess I won't see it coming either.

Sun, 01/18/2015 - 09:14 | 5676120 jbvtme
jbvtme's picture

the stock market and real estate are the least of this planet's worries.  jeb, hillary, nancy, soros, israel, fuku...that's the shit that gives me hives.

Sun, 01/18/2015 - 11:45 | 5676406 Jackson B. Nimble
Jackson B. Nimble's picture

Remember... Noah was considered an idiot until the second day of rain.

Sun, 01/18/2015 - 09:26 | 5676128 jbvtme
jbvtme's picture

nopension...stopped listening years ago.  i'm long head phones...

Sat, 01/17/2015 - 21:05 | 5675152 Peter Pan
Peter Pan's picture

Housing is underpinned by secure and well paying jobs as well as affordability. If these three factors are absent then housing as an investment, but more importantly as a home is damaged and by extension so is the family unit and the social fabric.

If the slide in the economy continues not only will housing prices suffer further but so will the houses themselves as fewer and fewer people are able to maintain them.

 

Sat, 01/17/2015 - 22:25 | 5675371 q99x2
q99x2's picture

Good time to sell or default on your house. Property values declined for 25 years in Japan. Then they became radioactive. In a few years they are going to be bombed in WWIII.

Dump em now or never.

Sun, 01/18/2015 - 00:01 | 5675595 yogibear
yogibear's picture

"Good time to sell or default on your house. Property values declined for 25 years in Japan. "

Exactly.

Sat, 01/17/2015 - 22:55 | 5675438 Colonel Klink
Colonel Klink's picture

Tick tock bitchez!

Sat, 01/17/2015 - 23:05 | 5675459 inorganic
inorganic's picture

No, the economy is not entering a recession.  The economy is suffering a downturn within the eternal depression created by decades of criminal abuse by central bankers and government.

Sun, 01/18/2015 - 00:00 | 5675594 yogibear
yogibear's picture

New game. Put 3% down on a FHA loan and then stop paying. The Foreclosure  process will take 2 to 3 years.  Live rent free for at least a couple of years.

Everyone is playing the system. The Banks and Wall Street are the largest fraudsters.

Sun, 01/18/2015 - 03:42 | 5675839 Md4
Md4's picture

Pretty soon, all hell is going to break loose.

It HAS too.

The grenade pin may have already been pulled by the SNB the other day, we'll see.

When it does, a lot of scores will need to be settled. One of the largest will be about shacks. Never in the history of the world have human beings gone so absolutely insane about something as basic as shelter. People have become so obsessed with the tremendously harmful idea of shacks as "investments" and ever-appreciating "wealth generators"...that the enormous sums wasted on creating and peddling these anathemas have so warped and debilitated our national minds about value, as to have paralyzed us into economic and social ruin.

We have become as sick about shacks as an addict is about dope. There is absolutely NO difference.

Any obsession this intense in an individual would require treatment.

In a nation, it requires an economic crash sufficient to put folks in the woods under tarps, if that's what it finally takes to get our collective minds right about needs and wants...and social responsibility.

Think of the money that has been wasted to preserve this mere symbol of wealth that could have been spent on national infrastructure and scientific R&D.

Think of the deficits, and now extra debt, that could have been avoided if the government-induced shack mania had never infected Wall Street, thereby creating tremendous financial harm that drove the inordinately expensive bailouts.

Think of the economic hardship created by rising costs of living in areas where this object of obsession artificially appreciated in value, for no other reason than a shack's addictive and fast buck-flipping appeal. The painful inflation these anathemas create hurt many, but benefit a relative few.

Think of the social injustice and warping inequities these overpriced, cheap boxes caused our country, as so many struggling without had to put up with funding tax credits, shack owner bailouts, expensive legal actions, and lost property taxes, without themselves receiving a single dime of the proceeds of a flipped shack.

Talk about opportunity costs...

...and STILL, as this squib points out, we're obsessing about shacks.

We have never needed a reaming like the one on it's way.

m

Sun, 01/18/2015 - 10:16 | 5676229 NoPension
NoPension's picture

In a system where the currency is created exclusively by debt, and 90% private debt, at that; large purchases such as homes, cars and high price school loans are pushed on the sheeple like crack.
People have evolved to the point where they think shelter and food are automatic, to be provided by some unseen hand, and simply by virtue of their existance they shall be entitled.

This mo fo needs to crash, just to yank the sheeple back to a point where they appreciate what blessings they have.

Sun, 01/18/2015 - 11:01 | 5676300 FredFlintstone
FredFlintstone's picture

I recall seeing a couple on HGTV a few years ago that stuck with me. They were childless, in their early 50's and probably weighed 450 to 500 lbs total. They were building a 5,000 sf, million dollar plus "dream home". I did not get the sense that they were made of money, just moderately successful, middle manger corporate types that were splurging a little.

 

Sun, 01/18/2015 - 03:36 | 5675860 Disc Jockey
Disc Jockey's picture

*pop*

Sun, 01/18/2015 - 04:59 | 5675938 Element
Element's picture

 

 

 

"The plunge in oil prices is not due to over-supply. It’s due to under-demand. A global deflationary contraction is underway"

Have a look at production charts, it clearly is over production, running into a multi-year global macro slide, that's finally going recessionary in this year. i.e. it's both.

Sun, 01/18/2015 - 11:42 | 5676403 Chad_the_short_...
Chad_the_short_seller's picture

I'm buying puts on HB's. They just hit new highs about 10 days ago and then got hit hard by kbh's and len's margin warnings. More to come and only downhill from here, for them. Proud owner of RYL puts and will add more in PHM.

Sun, 01/18/2015 - 14:29 | 5676876 Pitiful
Pitiful's picture

I went to the bank the other day to see about buying a house. They have made it almost an impossible task. The nice (and very attractive) lady who I was asking questions to explained a few things to me and I will spell out the two main points she made:

1: They won't even consider selling unless you have 20% down. So in this market here in Denver that's a bare minimum of 20-25k. Basically, an entire year of salary saved, in cash, assuming you make the median salary in the USSA.

2: If you have a co-signer OR co-buyer with you (including a spouse) they will only count the lower of the two credit scores. And it has to be at least 700 to be considered. So if you are married to someone with bad credit, or haven't established a stupid amount of credit (DEBT), you're fucked.

That is all.

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