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Guest Post: Some Thoughts On Investing In The "Bottom" In Housing

Tyler Durden's picture


Submitted by Charles Hugh Smith from Of Two Minds

Some Thoughts On Investing In The "Bottom" In Housing

Investor buying has helped put a floor under the housing market. The rental housing market is currently robust, but that is dependent on a highly artificial economy supported by unprecedented government stimulus and transfers.

In my previous entry on housing's presumptive "bottom," ( The Housing Recovery: Based on What? June 20, 2012), I showed that the conventional foundations of the housing market were impaired: demand was weakened by demographics and declining income/employment, and supply was still well above the organic growth of new household formation.

The housing "Bulls" who think the millions of young people living in basements can afford to buy a house despite having high student debt, little job security and declining incomes are either delusional or they are studiously ignoring the causal relation between buying a house and qualifying for a conventional mortgage, i.e. the financial factors of current debt loads, income, the need for a down payment, etc.

The majority of wage earners have seen real incomes decline and most households have high debt levels.

Not buying a house is a choice for a relatively few who qualify but who choose to rent. The vast majority of people who do qualify to own a home by conventional standards already own a home (65% of all households). Those who don't own generally do not qualify due to insufficient income, heavy debt loads, poor credit, etc.

There are two significant pools of buyers, however, who have become very active in the U.S. and Canadian real estate markets: domestic and overseas investors. Their buying has soaked up quite a bit of inventory--up to 40% of all home purchases in some areas have been all cash, a transaction that typifies investor buying rather than young people moving out of basements.

Each pool of investors is motivated by different forces. Domestically, the Federal Reserve's ZIRP (zero-interest rate policy) has turned cash into trash, and investors desperate for a return above 2% without the risks of the stock market casino have flooded into the rental housing market.

In California, roughly 30% of all house purchases have been for cash (investors). Some may be planning to improve and then "flip" the house as the market improves (the housing bubble redux strategy), while others are assembling a portfolio of rental properties.

I recently came across a local real estate listing in a desirable Bay Area (Northern California) location (near a University of California campus) for a multi-unit rental building: $4.9 million for 40 units, with a net of all expenses of $150,000 (not counting depreciation or tax benefits). That's a 3% return on a cash purchase, but the real yield is much higher if the buy is made with a 35% cash down payment and 65% mortgage. Regardless of the financing, the yield instantly doubles with depreciation and basic tax benefits, and could even be higher in some circumstances.

The higher yield and relatively low risk of owning rentals in a high-demand area make real estate more attractive than other investments such as 10-year bonds or dividends. As a bonus, if housing does recover, there is the potential for a capital gain.

The appeal of rental housing is understandable, and it has long been a favored investment for households (as opposed to institutional investors). According to a March 1996 report from the Census Bureau (I couldn't locate any more recent data), 92% of the nation's rental housing was owned by individual investors. In other words, owning rental property has long been a localized "Mom and Pop" enterprise.

Here is a Quick Fact Sheet on rentals in the U.S. from the National Multi-Housing Council (NMHC). According to this data, there are about 40 million households in rental housing and 78 million households in owner-occupied housing.

Owning rental property as an investment is not like owning a bond or stock or gold. Housing is a "real-world" investment that irrevocably decays with time. Heaters fail in the dead of winter, the roof eventually needs to be replaced, the yard must be maintained, and rapacious local governments generally view property owners as tax donkeys who they can load with ever-higher property taxes unless they are restrained by Prop 13-type limits.

Rental housing is also a "people business:" some tenants might disturb other tenants, others might not pay the rent, and so on. A renter is a customer, though newly minted landlords often seem to regard the tenant as an ATM machine whose only function in life is paying the rent.

The point here is the higher yield promised by rental property must be earned. Those with no experience in rental housing will learn this the hard way. All the rosy projections of steady profits vanish if vacancies rise above a very low level.

The price of rentals, like almost everything, is set on the margins. If the inventory of rentals rises above demand, then prices will eventually decline. In areas with limited inventory and strong demand (Manhattan, San Francisco, etc.), rents are generally high and the rental properties fetch a premium.

In areas without such geographical constraints, the market for rentals might not be so favorable.

In other words, it's quite possible to lose money buying and managing rental housing. There is nothing guaranteed about the return, as there are so many inputs and variables. It can be a profitable business, but that is not guaranteed.

In this chart, we can see the decline in rental income as marginal buyers became homeowners in the housing bubble, and the subsequent rise in rental income as former homeowners returned to the rental housing market.

But this rise in rental income occurred in an era that has been distorted by unprecedented Federal transfer payments, stimulus, etc., and unprecedented intervention in capital and credit markets by the Federal Reserve. The total sum of "extra money" borrowed (or printed) and injected into the economy exceeds $8 trillion, and this does not count banking-sector backstops and guarantees. The U.S. economy was not allowed to experience a "burn the deadwood and rejuvenate the forest" recession, and demand for housing, owner-occupied and rental alike, has been artificially supported by near-zero interest rates, enormous deficit spending and transfer payments.

We can see some of the consequences of borrowing and spending $1.5 trillion a year in these charts. The first chart is employee compensation, wages and salaries. It has recovered smartly from its shallow recessionary trough and has risen above 2007 levels.

One would hope that borrowing and spending trillions of dollars would support employment, but the question raised here is whether the stimulus required to keep employment aloft is sustainable.

Here is a chart of personal transfers, cash transferred by the government to individuals. This has risen by $1 trillion a year in a decade, and roughly $400 billion since late 2007.

If we subtract transfer payments from real personal income, we get a more realistic snapshot of the household economy: minus government transfers, personal income is still about $400 billion below its pre-cression peak.

Thus the rental housing market has yet to experience a "real recession." When it does, household formation may well decline or even go negative and rents may well decline as demand falls and supply of rentals rises as millions of previously owner-occupied units go on the market as rentals.

There are a number of potential (but by no means guaranteed) secondary forces that may influence rents and the value of rental property.

1. Some new landlords may realize the business isn't as easy as expected. Some may decide to cut their losses by dumping their property back on the market.

2. Investors who planned to improve and "flip" the unit may find they can't unload the property, and so they become reluctant (and thus very possibly incompetent) landlords.

3. A peculiar feedback loop may arise as the rental market is flooded with new investor-owned inventory. Rents start declining as landlords tire of vacancy-created losses, and that pushes the value of all homes in the area down, owner-occupied and rentals alike.

4. The trend to "double up" and rent out rooms could go mainstream. These "informal" rentals are already standard practice in high-rent areas such as those found around large universities and geographically constrained markets. For example, it is not unusual for four co-eds to share a 2-bedroom apartment.

Outside these high-demand markets, people who lose their job or see their hours cut to the point they cannot afford their own apartment will move in with family or friends. Anecdotally, I have heard of Mom clearing out the dining room for a returning son and his family.

There are roughly 19 million vacant dwellings in the U.S., of which around 4 million are second homes and a million or two are on the market. Let's stipulate that several million more are in areas with very low demand (i.e. few want to live there year-round). Let's also stipulate that several million more are in the "shadow inventory" of homes that are neither on the market nor even officially in the foreclosure pipeline, i.e. zombie homes.

Even if you account for 9 million of these homes, that still leaves 10 million vacant dwellings in the U.S. which could be occupied. That means 1 in 12 of all dwellings are vacant. Even if you discount this by half, that still leaves 5 million vacant dwellings that could be occupied. Given that the total rental market is 40 million households, that constitutes a very large inventory of supply that remains untapped.

Lastly, it is important to note that the ratio of residents to dwellings is rather low in the U.S., with millions of single-person households and large homes occupied by one or two people. The potential pool of existing homeowners who could enter the "informal" rental market by offering bedrooms, basements and even enclosed garages for rent is extremely large, and that is a difficult-to-count "shadow" inventory of potential rentals.

All of these forces will play out differently in each neighborhood, town and city, depending on the inventory of rentals, the geographical constraints, the employment picture and a host of other factors. The key point here is that the rental market's current robustness is at least partially dependent on unprecedented government stimulus/transfers. The current strength may be temporary rather than permanent.

The second take-away is that demand could weaken considerably in a "real recession" even as supply increases due to millions of investor-owned properties hitting the rental market and the "informal rental" market expanding as people with mostly empty houses seek additional income or accept relatives/friends with a need for shelter.


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Tue, 06/26/2012 - 11:44 | 2561795 Snakeeyes
Snakeeyes's picture

Ok, rents are skyrocketing and house prices are bobbling round in the ocean. But multifamily construction has suddenly stalled. Only if the government prods MF construction will the rental market bubble burst.

Tue, 06/26/2012 - 12:20 | 2561815 dlmaniac
dlmaniac's picture

Never quickly jump back into a market that just had a mega implosion. It usually takes a decade (or longer) for the shock waves to be fully absorbed.

Tue, 06/26/2012 - 12:50 | 2562070 ZerOhead
ZerOhead's picture

Good advice. The 'mega implosion' is still swirling around the toilet bowl waiting to clear due to too much waste product still in the pipeline.

This is perhaps the best analysis of where the current situation and future challenges stand that I have read.

Tue, 06/26/2012 - 13:21 | 2562169 Plymster
Plymster's picture

I have to agree here.  In every housing bust we've had since (and including) the great depression, house prices are flat for at least a couple of years before a recovery ensues.  What we've seen lately have been down, down down, followed by a few months of positive YoY prices as knife catchers bid up the miniscule inventory (meanwhile decades of shadow inventory lurk).

As soon as the banks blow (which is what Europe will bring), they'll be forced to dump real assets on the market, or hyperinflate, and the FOMC just blinked on their printing threats.

Tue, 06/26/2012 - 13:27 | 2562182 bgilliam83
bgilliam83's picture

Never use a flat cookie cutter approach with zero analysis either.   You are going to fade the drunken sailor with ZIRP to eternity?  Umm yeah you should be buying this floor, take a look at Vegas for example. 

Tue, 06/26/2012 - 13:45 | 2562232 Citxmech
Citxmech's picture

You're going to buy in Vegas?  Good luck with those turds.

Las Vegas has no future.

Tue, 06/26/2012 - 13:49 | 2562247 bgilliam83
bgilliam83's picture

Where do you live?  I own and not underwater have a great quality of live with relatively cheap living expenses here.  I'm a VIP at XS too what are you?

Tue, 06/26/2012 - 14:51 | 2562408 Jon Bong Jovi
Jon Bong Jovi's picture

"I'm a VIP at XS too what are you?"

Wow, we should all bow down.

Tue, 06/26/2012 - 15:40 | 2562614 Pharming
Pharming's picture

You are exactly right Snakeeyes...  Here is a quick example.  Just a single block away from my quiet little suburbian homestead, low and behold what is this?  Those empty "strip mall lots" just got rezoned.  Apartments?  Yes?  The neighbors faught it and faught it...tough to fight attorneys and one of the biggest developers here in west Omaha.  Then ground broke, pipes layed, concrete the economy doing good enough to build these???   Oh...just yesterday, we find out...  wait for it...  Section 8 housing.  Are you shitting me? So, my property values have gone down below what I paid for this home in 2000.  Now Section 8?  WTF?  Let me bend over for the G man a little more...not only do I need the safe inside the safe, but I have to put cameras out now for the neighborhood watch!  That is the only way funding was available to build those 90 units...not big...but big be a stick a fork in us...we are done. 

Tue, 06/26/2012 - 16:27 | 2562772 marathonman
marathonman's picture

Obamaville, right next door.  That sucks.

Tue, 06/26/2012 - 18:35 | 2563149 mkkby
mkkby's picture

"my property values have gone down below what I paid for this home in 2000."

I would stop paying my mortgage and taxes immediately and save it all for a rental or buy somewhere else.  If that's their game let em eat it.

Tue, 06/26/2012 - 11:47 | 2561796 LawsofPhysics
LawsofPhysics's picture

Show me a chart that speaks to wages and salaries and then let's talk about housing and rentals, bitchez.  Thanks for another grt post ZH!

Something has got to give.  Place your bets.

Tue, 06/26/2012 - 12:25 | 2561996 Whoa Dammit
Whoa Dammit's picture

Yep, Neighbors down the street, who we think were renters, got evicted yesterday. I couldn't hardly get out of the subdivision for all of the people trying to vulture up the stuff who were driving in/parked on the side of the street. The sheriff was still there, but people were already grabbing shit. Most of them looked like nice white (former) middle class folks. 

Tue, 06/26/2012 - 12:52 | 2562084 ZerOhead
ZerOhead's picture

Good point. And lets not forget the wage and salary increases are predominantly in the top income echelons. You know... the guys who already own.

Tue, 06/26/2012 - 13:06 | 2562129 Arnold Ziffel
Arnold Ziffel's picture

LOP, don't forget ZIRP. Mortgage rates will regress to the mean (around 7.5%) ... some day.

Tue, 06/26/2012 - 13:35 | 2562211 bgilliam83
bgilliam83's picture

Yes, don't forget ZIRP.  Mortgage rates regress to the mean?  Are you batshit insane?  That has 0% chance of ever happening!  The feds would be bankrupt if we go to 1%.  If you mean that some day is after the fall of the US government then were in agreement lol.

Tue, 06/26/2012 - 11:46 | 2561800 GolfHatesMe
GolfHatesMe's picture

another Greek dude goes down.  - Deputy minister Merchant Marine ministry

Tue, 06/26/2012 - 11:48 | 2561809 LawsofPhysics
LawsofPhysics's picture

"For example, it is not unusual for four co-eds to share a 2-bedroom apartment."

Dear Penthouse Forum,

Sorry, couldn't resist.

Tue, 06/26/2012 - 12:08 | 2561913 Cursive
Cursive's picture


Penthouse forum?  You are showing your age.  Now, this shit is on MTV.

Tue, 06/26/2012 - 14:03 | 2562285 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Long live Martha Quinn

Tue, 06/26/2012 - 17:00 | 2562880 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

"I rent my house to four students, and you won't believe what happened to me the other day. One student is a tall blonde, one is a saucy brunette, another is a redhead, and the last is a petite Thai exchange student...."

Tue, 06/26/2012 - 11:48 | 2561811 Winston Churchill
Winston Churchill's picture

Citi and Bof A  about to be downgraded to junk.

Tue, 06/26/2012 - 11:50 | 2561821 LawsofPhysics
LawsofPhysics's picture

Timeline?  I still have some fiat left there.  when to move?  thinking more physical silver.  Suggestions?

Tue, 06/26/2012 - 11:55 | 2561841 Dr. Engali
Dr. Engali's picture

physical gold, physical lead ,physical food, physical new location.....

Tue, 06/26/2012 - 11:57 | 2561852 LawsofPhysics
LawsofPhysics's picture

Already have like-minded and well-armed neighbors.  No one makes it through what is coming alone.

Tue, 06/26/2012 - 12:17 | 2561958 T-roll
T-roll's picture

You couldn't be more correct.  I am starting a "prepping community" of like-minded individuals.  Those who think they can go to Montana alone with their family and make it through this will be in for a rude awakening.

Tue, 06/26/2012 - 16:15 | 2562730 AustriAnnie
AustriAnnie's picture

But the flip-side to that is:

Thinking you have "like-minded" friends who turn on you when TSHTF.

The majority of people become pretty nasty when panic hits.   A "prepping community" can quickly turn into a mob.  

Given the choice though, its still a better option than trying to go it alone.  Just be very careful how much information you share regarding what you have stored.  Also keep in mind the gov't will be encouraging these people to turn you in for hoarding or other "suspicious activity".  Many people who think growing organic veggies is quaint and trendy now will run straight to gov't for a handout when the going gets tough.

Choose your friends carefully! 

Tue, 06/26/2012 - 13:47 | 2562236 Lucky Guesst
Lucky Guesst's picture

I recently cleared out the finished basement and turned it into an apartment for my mother. It's too risky to have her stuck with a house in another state and alone.

Tue, 06/26/2012 - 15:50 | 2562646 Pharming
Pharming's picture

I went to a Infrastructure Protection Conference here locally...I raised the question about an increasing well armed society.  Good or Bad for the law enforcement.  

Two tables of local/state/ and federal government law enforcement..."crickets chirping".  The Lt. Governor asked again... "crickets" and chuckles from the other 250 people or so.  The Lt Gov said he was at Cabelas and asked them how business was. 

At the local Cabela's (Sports / Outdoors) if you don't know what Cabelas is...  the answer was business was unbelievable.  They had sold more guns at the their store than they had sold since they were in business!!  What are the 5 G's?  Gold, Guns, Ground, Grub, and Gas.  God too...makes it 6.  

Tue, 06/26/2012 - 12:09 | 2561920 FEDbuster
FEDbuster's picture

Pre 1964 US quarters, timeframe ASAP.  Two years of long term food storage first.

Tue, 06/26/2012 - 13:28 | 2562188 Winston Churchill
Winston Churchill's picture

Six weeks to six months.

Tue, 06/26/2012 - 11:51 | 2561816 Dr. Engali
Dr. Engali's picture

Stockton California is considering bankruptcy...


Meredith who?

Tue, 06/26/2012 - 12:19 | 2561967 T-roll
T-roll's picture

Meredith will be proven to be correct in time.  She was just a little off with her timing.

Tue, 06/26/2012 - 11:50 | 2561817 MillionDollarBogus_
MillionDollarBogus_'s picture

I prefer to rent.

Makes more sense.

Tue, 06/26/2012 - 11:55 | 2561838 mayhem_korner
mayhem_korner's picture



Unless an owned home is sans mortgage.

Tue, 06/26/2012 - 11:58 | 2561862 LawsofPhysics
LawsofPhysics's picture

Correct, or the interest on the property is well below the revenue generation of said property.  Let him rent, and for that I am thankful.

Tue, 06/26/2012 - 12:19 | 2561969 FeralSerf
FeralSerf's picture

About the only way a middle-class individual can take advantage of the large real negative interest rates is with a long term real estate mortgage.  Where else can you borrow with only 20% margin at 3.5% fixed interest for 30 years?  Do you really think inflation is going to average at or below 3.5% per year for the next 30 years?  On top of that there's even a tax incentive!

Tue, 06/26/2012 - 12:36 | 2562034 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

I just got preapproved for a 94% LTV in Texas at 3.49% (not APR) for a 30 year fixed.


Even if housing prices went down 30-40% more in Texas, that would be survivable, and the $$ I was preapproved for is doable at 60% of my current gross.


Now to find a place with some land outside the city, commutable but without HOAs and nosy neighbors, so's I can have dogs, chickens, maybe pigs, chest freezers, some raised-bed veggie gardens and a greenhouse, solar, cisterns, ground loop HVAC, insulation, a garage with lift and tools, maybe a makerbot, and battery backup with natgas/diesel backup (co)generator..

Tue, 06/26/2012 - 13:02 | 2562114 who-is-john-galt
who-is-john-galt's picture

Welcome to Texas sir!

Tue, 06/26/2012 - 11:59 | 2561856 duo
duo's picture

the first +1 I ever gave you.

You never own real estate in the US.  You only rent it from the government.  Try not paying your property taxes and see what happens.

Tue, 06/26/2012 - 12:03 | 2561885 fuu
fuu's picture

psst that is milliondollarbogus_

Tue, 06/26/2012 - 14:44 | 2561970 LawsofPhysics
LawsofPhysics's picture

Don't feed the trolls.  FYI- the rent I am collecting is still buying me all kinds of physical assets.  Truth is, no one really ever owns anything and on a long enough timeline...

It is all about power and control, always has been.

Tue, 06/26/2012 - 12:24 | 2561985 FeralSerf
FeralSerf's picture

You never own your own body in the U.S.  You only rent it from the government.   Try not paying your income taxes and see what happens.

Tue, 06/26/2012 - 13:16 | 2562151 grey7beard
grey7beard's picture

>> Try not paying your property taxes

I bailed out to the stix.  I've got 10 acres, a nice little mobile, a well with excellent water, 70X70 garden plot, 17 fruit trees.  My taxes $240 a year.  You can never get out of payin taxes but you can minimize it to the point of not mattering.

Tue, 06/26/2012 - 13:19 | 2562161 Winston Churchill
Winston Churchill's picture

You can buy alludial title for approx 7 years property taxes.(Varies by State).

No taxes liens or mortgages can be levied/taken  thereafter.

Tue, 06/26/2012 - 14:26 | 2562351 ultraticum
ultraticum's picture

Well said duo. 

ALL real estate on every square inch of United States soil is owned outright by the government.  Period.  Full stop.  I once had a commercial rental property confiscated via the greedy county assessor raising taxes to the point where neither I (the owner) nor the tenent could afford the taxes, which nearly eclipsed the rents.  County became majority partner in the deal, with no skin in the game, over a 10 year period of 10% compound tax increases.

The crooks in city hall do not realize nor care how much of a wet blanket their arbitrary ad valorem real estate taxes put on the economy.  Entrepreneurs would risk huge amounts of capital on projects involving commercial/industrial (and maybe even residential) real estate if it weren't for the massive pound of flesh the Leviathon takes simply because they are the "monpoly on force".

But the sheeple, still deluded into thinking they're free, walk around thinking these egregious taxes ("revenue" is the carefully crafted parlance used by the slave masters) are necessary for a functioning world. 


Tue, 06/26/2012 - 12:02 | 2561878 midgetrannyporn
midgetrannyporn's picture

For you perhaps.

Tue, 06/26/2012 - 12:31 | 2562015 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

I'm leaning towards buying some property that I can fortify, as in my local area rents are rising as people flee hightaxland and relocate here.  Plus, I don't like the idea of buying a whole bunch of improvements (solar, cisterns, ground loop HVAC, freezers and food storage, power backup and generation, tools and equipment) for a rental that either can't be moved or moved at great difficulty and expense..

Tue, 06/26/2012 - 12:35 | 2562032 blunderdog
blunderdog's picture

Squatting's an even better value.

Tue, 06/26/2012 - 11:50 | 2561818 Stoploss
Stoploss's picture

Looking at county by county tax liens, we are far, far from a bottom.

Tue, 06/26/2012 - 12:20 | 2561827 francis_sawyer
francis_sawyer's picture

Some [Simpler] Thoughts On Investing In The "Bottom" In Housing...



Edit: For historical perspective on that 'one liner', I'll tell the following story... My dad [now deceased] was big into coin collecting... In 1964, he and my mom bought a house in Bethesda, MD for $10,000 (that would be 100,000, pre-64 'Rosie', or otherwise 'Mercury' dimes ~ Otherwise known as REAL MONEY)...

I just did a quick check & at 'coinflation', the melt value of one of those dimes would be $1.95 (which would mean that the implied MEAN value of the same home, in Bethesda, would be $195,000)... Instead, the median value of homes in Bethesda, MD was $734,614 (2009 stats)...

So what's the situation here? Is Ag that undervalued? (almost 4-1)? Or, have home prices been that inflated...

Note: My dad didn't have to pay inflated property taxes, water, sewer, gas, & electricity on his Roosevelt Dimes... Now, you still want to go searching for a bottom in housing? Be my guest...


Tue, 06/26/2012 - 12:24 | 2561987 T-roll
T-roll's picture

As someone that grew up in the DC Metro area and worked in Bethesda for a few years, I can tell you that the home prices in the area are over inflated.  I used to own a home in nearby Laurel, MD and the value of my house doubled in value from 2002-2005.  The only thing keeping them up is the largess of the Federal Gov't.  Once the gov't starts cutting the budget due to necessity, you will see prices in the area come down remarkably. 

Tue, 06/26/2012 - 14:11 | 2562308 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

I live here in DC area.  I don't see gubmint ever shrinking, unfortunately.  As such, I definitely do not see home prices here ever coming down remarkably.  DC remains awash in cash.  Construction cranes cover downtown DC

Tue, 06/26/2012 - 14:37 | 2562340 francis_sawyer
francis_sawyer's picture

Unfortunately... you BOTH have points...

Fucking Ft. Meade man (November Sierra Alpha)... I-95 corridor is all spooks, lobbyists, politicians, delta oscar delta & their faggoty contractor legions & the lawyering up that all the aforementioned fucks need to keep themselves in business... The female polulation of the region are either sorority girls who learned to 'play' at an early age and otherwise looked good in navy blue skirts & button down blouses, or soccer moms who scored the 'skull & bonezer', who is now, essentially a soccer mom fucking Max Fischer's wifes pool boy & buying her little future franken-shits all the iThingy's they need to giver her time to hit the day spa... Fucking Martin O'Malley has all their backs by socializing the 'education' system by keeping THE KIDS prosperous by all the state revenue coming in through lottery & casinos strategically placed to lure the [insert gong sound here]'s up from Baltimore City, & Anne Arundel & Prince Georges County...

Welcome to the Republic! Maryland... Fuck yea!

Tue, 06/26/2012 - 12:35 | 2562031 FeralSerf
FeralSerf's picture

Did your dad and mom get any shelter value from the house?  Did they get any shelter value from the coins?  Even a cave man is smart enough to know that if he doesn't have a cave it can get very cold in Bethesda in January.

How much did rents go up from 1964?  Was your dad a good tenant for his investment house?  Did he pay his rent on time?  Did he get any tax bennies?  Would he and your mom have enjoyed living in a tenement knowing they would have to leave whenever it suited the building owner?

How much did silver go up in price from 1900 to 1964?  Physical silver and owner occupied real estate are very different investments.

Tue, 06/26/2012 - 13:21 | 2562163 HungrySeagull
HungrySeagull's picture

My parents bought a house for a middling sum 30 years ago. Now they are free and clear, Just barely.

They know enough never to sell.

And I already said I dont want the place in probate or will. I would auction it off asap. The monthly bills and annual taxes are horrifying.

We on the other hand are adding on and rebuilding our own home little by little by gumption and grit. The taxes are next to nothing and the state does not tax realized income from sale some day.

Tue, 06/26/2012 - 13:12 | 2562141 LostAtSea
LostAtSea's picture

sounds like your Dad made quite a bit of money in the capital appreciation of that house.


Tue, 06/26/2012 - 13:18 | 2562155 HungrySeagull
HungrySeagull's picture

We're sorry, your Home Equity Loan has been denied. Please refer to your Credit report.

Tue, 06/26/2012 - 14:32 | 2562368 francis_sawyer
francis_sawyer's picture

I'll restrain from responding in a meaningful way... Seeing that you're 'LOST AT SEA' & all...

Tue, 06/26/2012 - 11:53 | 2561830 LoneStarHog
LoneStarHog's picture

"Some Thoughts On Investing In The Bottom In Housing"

Well, at least it does not say AT the bottom in housing.

It does sound like a Colonscopy, which is where the Proctologist will find your head of you buy into the bullcrap housing market.

Tue, 06/26/2012 - 11:54 | 2561834 dirtbagger
dirtbagger's picture

"Housing is a "real-world" investment that irrevocably decays with time"  Well duh! This is the process that over time turns housing investors into slumlords.

Tue, 06/26/2012 - 11:55 | 2561842 randocalrissian
randocalrissian's picture

No doubt it is in housing's bottom.

Tue, 06/26/2012 - 11:56 | 2561845 Poetic injustice
Poetic injustice's picture

I will glady invest in housing bottom.


(Hint - if it is not my money, but taxpayers or somebody's else).

Tue, 06/26/2012 - 15:28 | 2562568 DeadFinks
DeadFinks's picture

Poetic's Home for Wayward Girls?

Tue, 06/26/2012 - 16:17 | 2562736 Poetic injustice
Poetic injustice's picture

Your guess is dead on :)

Tue, 06/26/2012 - 11:58 | 2561858 otto skorzeny
otto skorzeny's picture

great article. obama MSM lackeys don't report it

Tue, 06/26/2012 - 11:58 | 2561861 sbenard
sbenard's picture

Go ahead. Make my day! Try to catch a falling knife!

Tue, 06/26/2012 - 12:05 | 2561879 zebrasquid
zebrasquid's picture

Actually, the way things are going, better to rent or to have little to no equity tied up in your house, particularly if you live where most of the population lives(not a farm or Idaho survival bunker).  Having your capital tied up in a depreciating, illiquid, govt. regulated/taxed asset, all to save a few percentage points a year in interest....that makes little sense to me.   Plus if the SHTF you probably do not want to have to stay and defend your investment from the ransacking hordes.



Tue, 06/26/2012 - 12:34 | 2562024 atomicwasted
atomicwasted's picture

Point to me one time in US history when we had Mad Max style hordes rampaging across the country and I'll start believing in the SHTF BS.

Tue, 06/26/2012 - 12:37 | 2562042 blunderdog
blunderdog's picture

1861 to 1865.

Tue, 06/26/2012 - 12:57 | 2562097 toady
toady's picture

And post Columbus thru post American Revolution

And the indian wars as the west was colonized

I think the questioner isn't a history scholar and is only relying on his memory of his own lifetime ...

Tue, 06/26/2012 - 13:11 | 2562138 viahj
viahj's picture

...and normalcy bias.  "it can't happen here because it never has before!"

Tue, 06/26/2012 - 18:52 | 2563183 mkkby
mkkby's picture

Post Rodney King Los Angeles, Detroit, Bronx... and many other times.

Wed, 06/27/2012 - 00:57 | 2564079 Blankenstein
Blankenstein's picture


Tue, 06/26/2012 - 12:03 | 2561882 monopoly
monopoly's picture

Renting is a good idea on this broken planet. We sold all properties over the years, both rental and commercial, except our cave, which of course is worth much less than 5 years ago. But you need a cave. Just do not want to be bothered with phone calls and tenants bitching, rent being late and vacancies. Just not worth it for us. So we put our excess worthless cash in gold, silver, miners. A little better than 2% so far. LOL. And do not care when housing bottoms, either 2014, 2020. We are done with real estate.

Tue, 06/26/2012 - 12:09 | 2561917 emersonreturn
emersonreturn's picture

if JPM is downgraded this will TPTB dance us through?

Tue, 06/26/2012 - 12:14 | 2561938 Ignorance is bliss
Ignorance is bliss's picture

Let me know when the TBTF go into bankruptcy and are forced to clear their books of shadow inventory.

Tue, 06/26/2012 - 12:13 | 2561939 Cursive
Cursive's picture

I would love for some of the slumlords in my town to get their comeuppance, but I'm reminded that shit floats.  I do think johnny-come-lately fast cash circa 2010 to now is going to get crushed over the next 5 years.

Tue, 06/26/2012 - 12:13 | 2561941 printmoremoney
printmoremoney's picture

As Tyler points out, there is no market. Only Central Bank manipulations. ZIRP distorts the direction of Capital. Misappropriated and misdirected. Cash may be Trash, but taking a bet within the Ponzi that is illiquid is playing into the hands of Banksters.

Tue, 06/26/2012 - 12:19 | 2561965 apberusdisvet
apberusdisvet's picture

The Daily Bell has an interesting article that points to downsizing as the new norm and that there are 40 million homes out there of greater than 2500 sf that are effectively dinosaurs.  The article goes further in stating that the total cost to GDP if these homes are eventually abandoned or bulldozed will be $10 trillion (40milx$250k average).


Tue, 06/26/2012 - 13:23 | 2562177 HungrySeagull
HungrySeagull's picture

A D9 Bulldozer will make short work of those Dino Houses.

And eliminate blight, crime, pare down service cost etc.

Tue, 06/26/2012 - 13:33 | 2562206 toady
toady's picture

There is a move afoot to go 'multi-generational' and convert those giant dinosaurs into three or four units. One for grandma (SS checks), one for Sonny (22 hours a week at BK) and one for weird old uncle Timmy.

Tue, 06/26/2012 - 17:54 | 2563042 Cathartes Aura
Cathartes Aura's picture

many younger people are heading for the "tiny homes movement" - youtube is also adding more & more posts on "building your own small cabin" - see: solarcabin guy's vids:

some on flatbeds (wheels), some just on the back 40. . . but smart peeps are going small, self sufficient, community. . .

Tue, 06/26/2012 - 12:20 | 2561974 Meremortal
Meremortal's picture

I've worked in the rental market biz for 40 years and land devlopment biz concurrently for 30. I started at 22 and took an early semi-retirement in 2007, as I could see what was coming. My powder was quite dry by 2007, whe I finished my last development project. I am now starting to dabble in picking up rental properties again. I pay cash, screw the banks. 

The big-picture analysis in this article may be useful for general discussion, but it has pitfalls. There is no national real estate market, there are about 250 submarkets in the USA, and like all real estate it's about location, location location and availability of jobs jobs jobs.

As always, there are currently some good and bad locations for buying.

The rent/buy analysis also depends on location, as well as age and career path of the participant. Most younger people today should rent, imo, since mobility is required for decent jobs. If mobility is not an issue, buying can be a great idea in certain areas, especially once asset inflation begins.

The hard part about understanding real estate investing is the long-range planning that must take place. Most people have no experience in estimating future trends over 10-20 years and taking advantage of same. That skill is required for land developers, at least for those who want to stay in business. 

The current real estate dip (the third and deepest of my career), is the best opportunity for creating wealth I have seen since 1978. BUT, one must know how to take advantage of it. I'm not talking about home ownership here, which is not really an investment. I'm talking about land speculation, development and income property.

Home ownership is a completely different animal and a different discussion.

Even if you think a major collapse is coming, there is a place to invest in real estate. That would be farmland with good water and d ecent growing season.

Good luck everyone, and remember, planning requires thinking past the current situation. Wise investors have already discounted the obvious, and are looking 5-20 years ahead. And the demographics look good for real estate 2022-2025.

Good luck, everyone.

Tue, 06/26/2012 - 12:33 | 2562023 the grateful un...
the grateful unemployed's picture

agree with you about owning land, since taxes are low or nonexistent. and in areas like SoCal there is only so much usable land. but you really need to know your market. Vegas and AZ bother me, because land is readily available, its a matter of infrastructure. i know someone who works for the city of Phoenix, he tells me water isn't the problem, its sewer, the infrastructure they put down twenty years ago can't handle any more capacity. one must also consider the slowing pace of highway development. in SoCal i would say Urban (or is it Suburban, ExUrban even) Sprawl is probably over. County supervisors are taking hard line on development (developers sold homes for a quick profit and existing taxpayers were stuck paying for the infrastructure, schools, roads police and fire) those days are over.

and demand vs supply is tipping the scale. my personal thought is look toward the upscale buyer. the rich are still with us, and additionally that report i mentioned gave a big push to the rental market in Silicon Valley. they see a second wave of growth there.

Tue, 06/26/2012 - 13:18 | 2562158 mmanvil74
mmanvil74's picture

At the risk of sounding like a bull on ZH, which will probably lead to a severe bashing, I certainly agree with Meremortal.  Charles Hugh Smith makes some solid points in this post, but there are a few reasons why US Housing looks like one of the better investments available today.  

** 30 year fixed mortgage rates at under 4%. 30 years from now any amount borrowed today will look like peanuts - IF the US Dollar still exists and IF the bank who lent you the money is still around.  Rentals that yield 8% on cash yield 3x that with financing, not including capital gains.

** Compare US real estate prices vs.  average incomes and compare house price to rent ratios and you'll find that the US has by far the cheapest real estate in the world.  Real estate still has intrinsic value that most other investments lack.  It is one of the few sectors that "corrected" since 2007 and has not been directly juiced by the FED ever since (like the S&P for example)

** While national statistics look stagnant at best, house prices in markets like Phoenix and Miami are up double digits so far THIS YEAR.  The markets that were hit the worst will be the first and fastest to recover.  The national stats are misleading because many markets took years to feel the downward effects of the recession. 

** Most foreclosure properties are selling below the cost of construction, making the land essentially free.

** Charles underestimates the desire for all those kids and unemployed who live in basements and converted dining rooms at mom's place who at some point will do anything to live on their own again.   Also Charles' data did not account for population and household growth which should consume some of the 'shadow inventory'.

** Even if things get worse, rent will get paid, or if it gets that bad, all bets are off anyway.  If things get really bad, US housing will fall the least compared to stocks and many other investment vehicles

** US house prices compared to GOLD or the DOW or OIL are at or near record lows

** The sucking sound created by Wall Street which pumped house prices up via mortgage backed securities cannot be so easily reversed in the other direction, which has led to a severe overselling of homes in the US.  (That said, new investment funds are being formed to acquire rental housing but this process will be much slower than offloading mortgage paper to pension funds).

** I am not a US realtor but I can see a beat up market and subsequent investment opportunity when I see one

**  There are few places to hide in today's investment environment, so after you have enough food, and precious metals, arable farmland and rental housing would be next on my list of things to do with cash

Tue, 06/26/2012 - 13:24 | 2562179 HungrySeagull
HungrySeagull's picture

Cash Talks, everything else is bullshit.

How much you got?

Tue, 06/26/2012 - 14:38 | 2562383 the grateful un...
the grateful unemployed's picture

i like your point, here's a few things to consider. birth rates and immigration and heading down. ina few years we may have negative population growth. the technology used in housing is evolving rapidly. if you buy into a 30yr mortgage and building costs are cut in half, what do you do? (see my thoughts on why a Romney presidency would bring that about) right now Obama is paying a lot of rent, section 8 etc. what happens with the Rent Put comes off? if you go underwater on a 300k mortgage you might talk your way out of it.  what happens when you go underwater on a 1M apartment complex?

Tue, 06/26/2012 - 15:45 | 2562627 PlausibleDenial
PlausibleDenial's picture

While Smith does make some good points, he seems to forget to mention the recapture tax.  If you do become a landlord just beware that nasty recapture tax when you sell.  I have seen many folks think they want to be landlords only to sell as fast as possible.  When this occurs you friendly gov. will recapture the depreciation that you took on the house.  Oh, btw, you HAVE to take the depreciation.  At last look recapture was @25%.  So, since you have to depreciate then it would only make sense to have an effectvie personal tax bracket less than the 25% recapture tax.  Yep, depreciation is nothing more than tax deferral.  Alternatively, you can hold the property till death and bequeth it at a step up in basis (or 1031 exchange forever). 

The above would not apply to someone who is in the real estate business as a profession the way I understand it.  And, there are those folks that find themselves in the passive income/loss realm that may have alternative options. But, then again, if you are passive income, you likely will find some alternative minimum tax haunting you.



Tue, 06/26/2012 - 14:39 | 2562378 MeBizarro
MeBizarro's picture

Great post. Real estate development like politics is local.  Have to read the tea leaves correctly and figure out what several things in the future including where future road projects/public transit will be.  Its a tough act but there are some companies that are very good at doing. 

I was really impressed at how good at McDonald's was at doing this for a long-time and how much data they have on a local area.  Pretty impressive stuff when you see some of the details and just how many things they consider.  Problem they are having is that it is not nearly as easy in many developing countries to get the kinds of local data that is readily available and frequently collected in the U.S.  People always look at the Census and some of the things they do as being really boring but it is incredibly necessarily for all kinds of business development and planning.

Tue, 06/26/2012 - 18:41 | 2563156 Shankopotomus
Shankopotomus's picture

You should have taken your own advice and bought some Iowa (that's where I'm from, north central Winnebago county to be exact) land in 2007 for around $4000-$4500 an acre because it's going for $10,000-$11,500 now.  You could have made a killing. To bad you missed out, but it happens I guess.

Tue, 06/26/2012 - 12:21 | 2561975 the grateful un...
the grateful unemployed's picture

already studied this in terms of REITS. all the numbers pretty much match this analysis, including dividends that average about 3% (and your hands never get dirty). the analysis (from a major broker) was especially concerned with regional markets, availability of alternate rentals (homes) and new projects in the planning stage; Supply vs Demand projections. 

still lots of questions. what happens to your profit if asset values continue to drop? in other words its like a bond fund which is paying dividends using their principle, you know the routine, 5% a year dividend and the fund share price loses 5% a year.

as for that chart of PCTR that's about to hit a wall, while unemployment benefits run out. should the GOP take power (that's POTUS and CONGRESS mind you) then the (longheld and oftstated)  GOP policy of cutting benefits in order to force people back to work will kick in. that will not be pretty, and wages will fall, and rental prices as well.

in the end Romney might force prices to drop to a level where economic activity resumes. Obama Bernanke have been all in on maintaining asset prices, (they put the lift in the PCTR) but as we get closer to the election BB will back off to make him seem neutral on the matter. (this is one reason gas prices are down, you can bet home prices are falling as well, but that evidence hasn't shown up)

eventually homeowners will torch their homes (and apartments) for the insurance money.(as local taxes and maintenance will make home ownership a liability) if Romney is smart he'll come up with a government program to take them off the market. (and of course Bernanke can buy them, its part of the Feds authority to buy assets, and he will do that to square the circle on the MBS paper he already has)

assuming Romney wins (and i think he will, he's white, he's better looking, and he some pull with bipartisan evangelicals) then owning real estate will be a painful experience. right now the polls are 50/50, if Obama wins more of the same probably. buy a hybrid car, it will be worth more than your home, and you will end up living in it.

Tue, 06/26/2012 - 13:30 | 2562153 Tinky
Tinky's picture

"(and i think he will, he's white, he's better looking, and he some pull with bipartisan evangelicals)"

Along with the mainstream media, I'm afraid that you've completely overlooked the likely impact of Obama's sweet left-handed jumper on the minds of swing voters.

Tue, 06/26/2012 - 15:17 | 2562532 Bicycle Repairman
Bicycle Repairman's picture

"overlooked the likely impact of Obama's sweet left-handed jumper"

I see Obama draining  a couple of "threes" in October to put this one away.

Tue, 06/26/2012 - 12:22 | 2561976 Mark123
Mark123's picture

Modern day western economic theory:

Massive immigration from third world and unlimited debt creation = good GDP growth

So, housing problems solved if we bring in about 5 million more Chinese/Mexicans/Indians etc.

Don't worry about the social program costs accruing for all these eager new Americans - we'll deal with that in the future sometime maybe....the Fed has our back.


Tue, 06/26/2012 - 14:27 | 2562354 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

5 million?  I see 50 million happening, if not more.  Drive around this land a bit and you'll see a relatively young, underdeveloped country.

Tue, 06/26/2012 - 14:46 | 2562400 the grateful un...
the grateful unemployed's picture

the government doesn't want you scattered all over hell and gone, they want to stack you like firewood in an urban center, where your demand (or carbon footprint) on energy and transportation and food is minimal, because you have no job (welcome to the future, they're basically warehousing people) once you get out and get a breath of fresh air you start to think anti government thoughts, you buy a bunch of guns, set a up perimeter, and tell the rest of the world to kiss off. then they come looking for you. you might start a wildfire, or shoot an endangered species, or pollute some stream by pissing in it. they care more about what you do when you're miles from that city, than they do when you're living in their city. but once you leave that city you have completely screwed up their plan for you.

Tue, 06/26/2012 - 12:32 | 2562019 atomicwasted
atomicwasted's picture

All real estate is local, so all national generalizations from statistics are worse than useless.  Some areas like Detroit offer homes for sale for $8000, but there's no one there to rent them.  Other areas with jobs have booming real estate markets for purchase and for rent.  As with anything, invest prudently and actually understand what you're investing in. 

Tue, 06/26/2012 - 13:16 | 2562150 tarsubil
tarsubil's picture

Very good point. I know someone who sold their nice house in 2006 due to the housing bubble. They were right about the bubble but wrong that it would affect their local market. The house didn't lose much in price while they lost on the early sale of the house and all that goes along with that.

Tue, 06/26/2012 - 18:45 | 2563026 reader2010
reader2010's picture

That's exactly the same bullshit that Greenie told the Congress when he was asked whether there was a housing bubble forming under his watch. Later Bernanke told the same lie under oath. The truth is there has been a worldwide housing collapse taking place right before our eyes. 

Tue, 06/26/2012 - 13:00 | 2562104 Arnold Ziffel
Arnold Ziffel's picture

Yeah, all those Chinese are gonna buy these crappy boxed that are already falling apart--unmowed lawns, broken fences, and on and gotta be kidding me. I remember when Japanese were stomping all over my little town looking for RE to buy in the 1980's before their collapse....

As far as landlords go, I was one until a tenant with a stellar credit score did $18k damge to the place and you cannot get blood out of a rock. It was heck even to evict him. I was VERY happy when I finally sold that lead weight around my ankle.

...and with 10,000 Broke Baby Boomers a day trying to downsize......and 12 million shadow inventory.....

Good luck!

Tue, 06/26/2012 - 13:47 | 2562234 bgilliam83
bgilliam83's picture

the point you miss is this world will not miss the baby boomers in any way shape or form, life will go on.  Money is just debt that will be reset, or inflated away so now is the buying opportunity of a lifetime in 2012 fiat dollars at 1990 real estate prices if you ask me.  There are always 2 sides to a trade....The right one is usually what appears wrong at first glance.

Tue, 06/26/2012 - 18:40 | 2563159 malek
malek's picture

So you're saying we don't buyers or owners to keep home prices up? Maybe you're right...

Tue, 06/26/2012 - 13:53 | 2562257 toady
toady's picture

Chinese immigrants would LOVE even torn up US housing. Have you seen the shitholes 99% of their population lives in?

Chinese investors? Maybe not so much...

Tue, 06/26/2012 - 16:49 | 2562844 847328_3527
847328_3527's picture

Alien immigrants from Uranus will surely fly to Earth to grab these "Best Time to Buy" houses, right?

We are in a 30-year down cycle for houses after a long up cycle.

Tue, 06/26/2012 - 13:13 | 2562142 Floodmaster
Floodmaster's picture

US housing ratio

1950: $7354 / $3,319 =2.2
1960: $11,900 / $5,620 = 2.1
1970: $17,000 / $9,867 =1.7
1980: $47,200 / $21,023 = 2.2
1990: $79,100 / $35,353 = 2.2
2000: $119,600 / $50,732 = 2.3
2010: $170,500 / $50,221 = 3.3

Canada housing ratio

2012: $375,000 / $55,000 = 6.8  !!!

Tue, 06/26/2012 - 13:26 | 2562183 HungrySeagull
HungrySeagull's picture

No need for numbers in Canada.

I personally witnessed first hand miles and miles of pasture and valleys north of Toronto slowly covered with houses 10 feet apart for a hundred miles.

10 years after that, the traffic was a beitch.

Tue, 06/26/2012 - 13:33 | 2562205 pursueliberty
pursueliberty's picture

Don't really see how that can end up any other way.

Tue, 06/26/2012 - 16:50 | 2562850 847328_3527
847328_3527's picture


2012:  $1,200,000 / $63,000 = well, you can figure that out

Tue, 06/26/2012 - 13:43 | 2562229 boeing747
boeing747's picture

There are 3 more crises bigger than 2008's coming in next 20 years. Each is bigger than previous one. The nearest is around 2015 when interest rate has to go up. Put that in consideration when chasing a 'housing' bottom so you can come out as a winner, otherwise you will lose everything except 'hope and change'.


Tue, 06/26/2012 - 14:07 | 2562298 deerhunter
deerhunter's picture

collar county chicago suburb here and May 12 foreclosures up 54% from May 11 numbers.  Let that sink in for a minute.  We have 6 or 7 full pages of foreclosures in local daily paper here.  Firming up?  Forming a bottom?  I saw better bottoms in college.  Good luck with these MSM bottoms. 

Tue, 06/26/2012 - 14:49 | 2562405 Bicycle Repairman
Bicycle Repairman's picture

Any recent and near future investment in housing is going to get hosed. 

Then there are the millions of McMansions for which there are $ trillions outstanding.  Their future is a bulldozer.  So even if investment in RE picks up, nothing is going to change the fate of those $ trillions.  That money is going to money heaven. 

Tue, 06/26/2012 - 17:39 | 2562540 reader2010
reader2010's picture

Of course, one of Bernanke's goals is to suck some fools back in RE as quickly as possible. Place your bet accordingly. 

Tue, 06/26/2012 - 15:45 | 2562632 SmittyinLA
SmittyinLA's picture

The key point here is that the rental market's current robustness is at least partially dependent on unprecedented government stimulus/transfers........


Yes, here's a biggie: 

Nearly all of CA is legally restricted from development-mainly by elitist white liberals and political hacks-whom no longer have the votes to protect their racial barriers to "Latino Development", the "Save the forest people" have literally been replaced by Mexicans that want the American dream (no not an apartment in the ghetto) but their own detatched home.

In the next 10 years pretty much every barrier to tract housing development in CA will be removed, even WATER. 

Tue, 06/26/2012 - 19:32 | 2563271 FeralSerf
FeralSerf's picture

There's plenty of vacant houses for the Mexicans in the "Inland Empire".  Many of them have been abandoned by their previous Mexican owners.

Tue, 06/26/2012 - 16:26 | 2562771 Lore
Lore's picture

"Household formation may well decline or even go negative and rents may well decline as demand falls and supply of rentals rises as millions of previously owner-occupied units go on the market as rentals."


I spoke last weekend with owners of units in some of the tacky "planned communities" that sprang up like weeds across the desert 20-25 years ago. YOU CAN'T SELL THEM. THERE IS NO MARKET. They've been offsetting the costs of ownership by renting out for months at a time, but there's no stability because the renter can just walk next door for a better rate. It's a disaster.

Wed, 06/27/2012 - 01:04 | 2564090 merscrusher
merscrusher's picture

oh my god...time to run and hide in that cave in arkansas...except that the number of vacant properties in 2005, at the hight of the boom was over 15.6 almost 7 years of THE WORST ECONOMY SINCE WINSTON CHURCHILL CRASHED THE MARKETS WITH HIS DRIVE TO KEEP THE BRITISH POUND ON A GOLD STANDARD...(what they did not teach you that piece of reality at the ron paul...or was that rupaul school of dangernomics) after 7 years of hell...that magic number has gone up a whole 20 how did we survive with all those empty homes in 2005...oh...and there were about 14.5 million empty homes in did we survive with all those empty homes...mustabin a dick chaney miracle...

the hardest part about not laughing myself off the chair is how somehow, all these newbeez suddenly see a stat they never noticed before and are spun around by their lack of background on the issue and off they go running about the sky is falling and a fox is in the hen house...and all that fear nonsense...must be some kinda high to get frightened all the time...must be some adrenalin kick or something...

Wed, 06/27/2012 - 18:07 | 2566606 Blankenstein
Blankenstein's picture

Keep drinking your NAR kool-aid realtard.

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