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Guest Post: What If Housing Is Done for a Generation?

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Submitted by Charles Hugh Smith from Of Two Minds

What If Housing Is Done for a Generation?

What if housing valuations are in a structural, multi-decade decline?

A strong case can be made that the fundamental supports of the housing market-- demographics, employment, creditworthiness and income--will not recover for a generation. It can even be argued that housing has lost its status as the foundation of middle class wealth, not for a generation, but for the long term.

Let's begin by noting that despite the many tax breaks lavished on housing--the mortgage interest deduction, etc.--there is nothing magical about housing as an asset. That is, its price responds in an open, transparent market to supply and demand and the cost of money and risk.

There are a number of quantifiable inputs that feed into supply and demand--new housing starts, mortgage rates and income, to name three--but there are other less quantifiable inputs as well, notably the belief (or faith) that housing will return to being a "good investment," i.e. rising in price roughly 1% above the rate of inflation.

If this faith erodes, then the other factors of demand face an insurmountable headwind, for the most fundamental support of housing is the belief that buying a house is the first step to securing middle class wealth.

Rising rates of homeownership require five conditions:

1. Favorable demographics: a cohort of potential buyers that is larger than the cohort of potential sellers.

2. Rising household formation rates: an expanding population does not necessarily translate into rising rates of household formation. If the number of people per household goes up, then the number of households can plummet even as population expands.

3. A large cohort of creditworthy potential buyers: that means buyers with savings, buyers with sufficient income to pay the mortgage and buyers with low debt loads.

4. An economy that generates rising incomes to support homeownership.

5. An unshakable belief that owning a house is a favorable and secure investment that will rise in value in the decades ahead.

If the first four conditions have eroded, then the belief in the permanence of a rising housing market will also erode.

The demographics are not favorable to housing on a number of fronts. Jim Quinn recently posted some devastating charts of U.S. demographics in his brilliant post CAUSE, EFFECT & THE FALLACY OF A RETURN TO NORMALCY (The Burning Platform).

Without going into too much detail, we can stipulate that the Baby Boom (65 million people) will be downsizing their housing, i.e. selling for the next two decades. We can also stipulate that most of the Baby Boom no longer has the wherewithal to buy second homes; rather, they will be dumping second homes to pay for living expenses as earnings, interest income and housing equity have all cratered since 2007.

Not only are there not enough younger workers to buy all these millions of homes that will be put on the market, few of those younger workers have either the creditworthiness or income to buy a house unless the Federal government gives them essentially free money and a no-down payment entry. With the Federal deficit skyrocketing, that sort of giveaway won't last long.

Labor's share of the national income has plummeted to historic lows. How can households be expected to buy a house when their real (inflation-adjusted) income declines year after year?

Labor share is the portion of output that employers spend on labor costs (wages, salaries, and benefits) valued in each year’s prices. Nonlabor share—the remaining portion of output-- includes returns to capital, such as profits, net interest, depreciation, and indirect taxes.

This chart suggests that a fundamental structural shift has taken place since the dot-com bubble popped in 2000: labor's share of the national income is in a secular long-term decline. That does not bode well for household income going forward.

Meanwhile, income has declined, especially for younger workers. Soaring Poverty Casts Spotlight on ‘Lost Decade’:

According to the Census figures, the median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065.

 

Overall, median household income adjusted for inflation declined by 2.3 percent in 2010 from the previous year, to $49,445. That was 7 percent less than the peak of $53,252 in 1999.

Notice that the only age brackets with flat or rising incomes are the over 55 cohort; everyone younger than 55 has seen their income slashed. And this is assuming "official" inflation is accurate; if it understates real inflation (loss of purchasing power), then the income declines are actually much more severe than charted here.

Part-time jobs and temp jobs do not generate enough stable income to support a mortgage. The only measure of employment that really matters in housing is fulltime employment, and that has declined to levels of 1999-2000 even as the workforce has added tens of millions of potential workers (all of whom have been deleted from the official workforce by Federal bean counters as "not in labor force" or "discouraged workers").

I don't have time to assemble the statistics for this entry, but the number of people with fulltime jobs that pay enough to support a mortgage is smaller than the number of fulltime workers. In other words, people working fulltime at or near minimum wage have a difficult time qualifying for a non-subsidized mortgage.

Household formation is also in a long-term decline. The chart depicts the housing bubble spike when marginally qualified people bought homes. Once the bubble popped, household formation plummeted and then returned to the declining trendline.

Recall that there are about 130 million housing units in the United States. About 112 million housing units are occupied: 75 million by owners and 37 million by renters. There are are about 19 million vacant dwellings: about 8.5 million second homes and vacation rentals, 2.5 million home for sale and another 8 million "vacant for other reasons" in Census-speak. (All number are approximate, drawn from 2010 Census Bureau data.)

If we subtract the 4 million second homes, that leaves about 15 million homes that could be occupied by owners or renters. With an average household size of about 2.5 people, that means we already have enough dwellings to house an additional 15 million households or 37 million people.

But this calculation overlooks the financial realities of declining income: the number of people per household is likely rising as fewer people can afford their own homes or apartments.

This oversupply of dwellings and soft demand is reflected in this chart of housing activity: despite unprecedented Federal subsidies and Federal Reserve pump-priming (buying impaired mortgages, lowering interest rates, etc.), housing has flatlined.

What few are willing to entertain is the possibility that housing is no longer the foundation of middle class wealth, and that its decline is structural, not cyclical. If we think of housing as an asset class that reflects not just demographics and income but financialization (i.e. hollowing out), then perhaps it is simply following the S-curve of financialization:

Lastly, we must consider the impact of declining employment, stagnating income and skyrocketing rates of student-loan debt on the creditworthiness of young potential buyers. If someone exits college with $100,000 in student-loan debt, how much will they have to earn to qualify for a $100,000 mortgage? How many graduates will earn that sum on a secure basis? Perhaps not as many as is generally assumed.

If the risk of default is once again priced into mortgages--that is, if the mortgage market ever ceases to be socialized and 99% guaranteed by Federal agencies--then we can also anticipate higher standards for qualification and a shrinking pool of qualified buyers.

It's easy to qualify people for a mortgage. The hard part is making sure they will have enough income and faith to service the mortgage for the next 30 years. If demand is softer than supply, prices will decline. If the belief that housing is the "best, most secure investment" fades, then so too will demand.

Declining employment, income and household formation are complex, long-term trends. If they continue trending down, so too will housing.

 

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Wed, 04/11/2012 - 10:51 | 2334458 Colombian Gringo
Colombian Gringo's picture

Housing is done for this generation.

Wed, 04/11/2012 - 11:03 | 2334497 LawsofPhysics
LawsofPhysics's picture

Look at what ZIRP has done for Japan...  housing is done for several  generations.

Wed, 04/11/2012 - 11:07 | 2334512 Diet Coke and F...
Diet Coke and Floozies's picture

Look at Fukushima... Japan done for millenia...

Wed, 04/11/2012 - 11:18 | 2334543 The Big Ching-aso
The Big Ching-aso's picture

 

 

Habitat For Inhumanity is looking for expert cardboard construction volunteers.

Wed, 04/11/2012 - 11:52 | 2334654 Joeman34
Joeman34's picture

It would seem the housing market is dead, but anecdotally, facts do not support.  The market where I live can only be described as hot.  My sister-in-law just sold her house in 6 days for 96% of the asking price.  Also, through my wife's business, we're in touch with a large network of contractors and sub-contractors and most are currently maxed-out with new construction and remodeling work.  I know the ZH community love the doom and gloom, but what I'm experiencing does not support the belief housing is dead.  Contrarian viewpoint would suggest housing may recover faster than most expect at this point.  We shall see...

Wed, 04/11/2012 - 11:58 | 2334674 insanelysane
insanelysane's picture

and your other sister-in-law makes millions sitting at home.  You didn't note what the asking price was so your statement that it sold in 6 days for 96% of the asking price is meaningless.  In the Northeast we are losing US Reps because people are fleeing South and not just those retiring.  The housing market will not recover here for years.

Wed, 04/11/2012 - 12:05 | 2334697 Joeman34
Joeman34's picture

No need for the dickhead response.  Asking $375m, sold for $360m.  Sorry if some of the facts on the ground don't support your doom and gloom milieu.

Wed, 04/11/2012 - 12:14 | 2334738 riphowardkatz
riphowardkatz's picture

that is all you will get when presenting the other side of the argument to housing here.

The doom and gloom can tell you everything people will not put their money into but have no clue what people will put their money into. 

Also facts on the ground where I am support what you are saying. Houses up 15% yoy with less than 2 months of inventory.

 

Wed, 04/11/2012 - 14:20 | 2335223 Janice
Janice's picture

Location, Location, Location. The house next door has been on the market for over a year. First listed at $225k, now down to $175K. Still vacant.

Wed, 04/11/2012 - 14:26 | 2335261 rotagen
rotagen's picture

Using this logic I must assume that since it was colder than average in the state of washington, then the entire US was colder than average.  Good job!  Those stupid statisticians using meaningless terms like "average" and "median"....morons.

Wed, 04/11/2012 - 21:33 | 2336613 jerry_theking_lawler
jerry_theking_lawler's picture

yes. i bet 'dingus' has property in Washington DC.....here there is lots of free money floating around there....

 

Wed, 04/11/2012 - 12:17 | 2334754 Fox-Scully
Fox-Scully's picture

If this sale or housing market occurred in the greater DC area, then it is meaningless.

Wed, 04/11/2012 - 12:22 | 2334777 Joeman34
Joeman34's picture

It did not - Chicago area. 

But, you're right, the reality is, it's a waste of time to talk about real estate on a national scale.  National figures are meaningless in my opinion.  As the old saying goes, "real estate is always and forever a local matter."

Wed, 04/11/2012 - 12:26 | 2334785 Spastica Rex
Spastica Rex's picture

Why is it a waste of time? Can't see the forest for the trees?

Wed, 04/11/2012 - 12:38 | 2334828 Joeman34
Joeman34's picture

If you spend all your time staring at the forest, you may miss the fact one 'tree' is a better value than another. 

Wed, 04/11/2012 - 12:41 | 2334839 Spastica Rex
Spastica Rex's picture

OK, I think I understand. See my post a few spots below.

Wed, 04/11/2012 - 12:27 | 2334790 crawldaddy
crawldaddy's picture

point is, I can sell my house tomorrow as well if I price it low,  so our point, is you have no point.

Wed, 04/11/2012 - 12:58 | 2334901 jayman21
jayman21's picture

You are assuming there is a bid/ask with a functioning market.  What if there is no bid?  Does not matter what your price is.  No bid no sale.  MTM = 0.  There are a lot of historical references to this and is something most people do not price correctly.  The one historical reference that sticks in my mind is from the Great Depression...many high quality farms could not be sold as they were in a bid less market.  No one showed up at the auction.

Wed, 04/11/2012 - 12:29 | 2334797 Binko
Binko's picture

I have a hard time understanding the intense need of people to reduce everything to a personal level. Here's a great article about demographic and financial trends, and we get a string of idiots replying "Derp derp, my sister sold her house for big bucks" or "Big sales in my neighborhood". It's simply sad how desperately people strive to cling to their illusions.

Wed, 04/11/2012 - 12:41 | 2334836 Spastica Rex
Spastica Rex's picture

I think some are looking at this article from the perspective of real estate speculating - or investing, if they prefer. It's a short term personal gain perspective which is valid, as far as it goes. I certainly agree with you; I don't think that's what the article was about and to dismiss it out of hand because the perspective is different is lazy -- and potentially self defeating. 

Wed, 04/11/2012 - 13:30 | 2335019 riphowardkatz
riphowardkatz's picture

You can site all the demographic trends in the world. They are irrelevant in the face of facts. In addition everyone of these trends would apply to ANY and ALL markets. So the article leads one to ask , AND WHAT? 

boomers are liquidating (not just real estate, gold and stocks and everything)
young people have no money (OK they wont be buying gold then, or real estate or ipads or anything)
Interest rates have to rise (sounds good, then foriegn entities will be buying more and gold will lose some appeal, equities would go down as well)
But Governments cant have interest rates rise (ok then gold may not lose its luster)

Trends like the ones in the article really offer no guidance to what is happening. We are all speculators now and not long term speculators but rather traders. The antedoctal evidence offered by some here is valid in that trades are occuring and profits are being made.

Talk about generational stuff is nonsense. There are no investments there are only speculations. 

Wed, 04/11/2012 - 15:35 | 2335599 TBT or not TBT
TBT or not TBT's picture

The generational stuff comes out pretty silly from marketeers, but the actuaries looking at the demographic profile of the population in detail understand very quickly there will be long slow period thanks to aging and retiring of boomers...short of some technological advances not currently evident(though possible) OR, oh some cultural shift where boomers will sign their assets to the government and then check out Jim Jones style, or Logan's Run style.

Wed, 04/11/2012 - 17:00 | 2335923 smiler03
smiler03's picture

Young people will forego everything to get an ipad. It's a generational thing.

Wed, 04/11/2012 - 19:23 | 2336325 lenitivelea
lenitivelea's picture

You're talking about the market in a large city, and you're right; it's probably improving. The largest metropolitan areas will continue to improve as people flee to the hubs in search of employment, or to rent after being foreclosed upon. It's suburbia/country/small towns that are absolutely tanking and will continue to tank. 

The population will consolidate into the large cities, and most will rent. Smaller areas could very well turn into ghost towns, as many already have. 

Should be fun to watch. 

Wed, 04/11/2012 - 12:25 | 2334782 NotApplicable
NotApplicable's picture

Personally, I'd just say that the debt bubble has yet to pop there, and any viewable recovery is really just the same ole debt-fueled disease.

In my area for example (big college town), there are still plenty of student rentals being built, while whole new subdivisions decay. Which has busted a few local millionaires and a couple of banks along the way.

While things might look better on the surface, it is a mere facade to cover all of the deficiencies listed in this article. Ignore these facts all you want, but you cannot escape their ultimate consequences.

Wed, 04/11/2012 - 14:08 | 2335173 Milestones
Milestones's picture

A guess--Ft. Collins?         Milestones

Wed, 04/11/2012 - 14:28 | 2335269 MachoMan
MachoMan's picture

There is probably quite a bit of truth to this...  I'd also like to know the financial stability of local banks...  in that, many places are propped up by terrible local lending...  awaiting the day the bill comes due...  this, and many other factors must be known.

I think the big issue is that despite real estate being local, macro factors do impact it...  albeit sometimes to a lesser extent than others.

Wed, 04/11/2012 - 12:33 | 2334808 Stoploss
Stoploss's picture

1).        Your full of shit.

2).       One drop of rosy scent in a sea of rotting flesh doesn't change the smell at all.

           Froman.

Wed, 04/11/2012 - 12:50 | 2334879 Joeman34
Joeman34's picture

1). Why am I full of shit?  I knew my post would be controversial.  So, let’s think about this…  I posted a lie on ZH so everyone on the board could attack me, tell me what an idiot I am, and verbally abuse me over the internet.  Yeah, makes a ton of sense. 

 

 How about this – you’re full of shit you useless moron.

 

Wed, 04/11/2012 - 14:11 | 2335187 Jedi Longsabre
Jedi Longsabre's picture

You right JM34 RE is all local. If anyone on ZH wants to prove me wrong come down to Florida to Brevard County where the space program is shutting down and pay me 40 cents on the dollar for what I paid for my house in 2005. Go ahead take advantage of me I dare you! PLEASE! ok 35% ok how about a slighly used surf board then? I'd take that deal. 

Wed, 04/11/2012 - 15:13 | 2335506 ElvisDog
ElvisDog's picture

Joeman34, I think you're confusing highly-localized, anecdotal evidence for a macro trend. Just because your sister sold her house for 96% of the asking price does not discount what was written in the article. I don't think there is any question that boomer retirement, high student loan levels, stagnant job and income prospects for the under-35 crowd will dampen the housing market.

In my opinion, the two things keeping the housing market from dropping another 50% are ZIRP from the Fed and federally guarenteed mortgages through FHA and Fannie and Freddie. Take either of those two things away, and the patient dies. If you're investing in housing right now, you are assuming that both of those items will continue into the far future.

Wed, 04/11/2012 - 12:50 | 2334870 halleys5
halleys5's picture

Anecdotal Garbage.
It's not all doom and gloom, it's the reality of the macro market

Wed, 04/11/2012 - 14:01 | 2335138 boogerbently
boogerbently's picture

 The housing market will not recover until all non-paying tenants are removed, and those homes are foreclosed on and  resold.

And, existing inventory needs to be sold. Why would anyone buy a used house, when they can buy a new one for the same price?

Getting these existing inventories of homes properly assigned is the only way we will get a true read on the "health" of banks.

IF the market is dead for a "generation" or so, what do you want to bet some (well intentioned) politician suggests we lower the lending standards, to allow more Americans the ability to be homeowners. LOL

Wed, 04/11/2012 - 21:35 | 2336612 Freddie
Freddie's picture

The people of the NE should stay there and *****ng suffer.  Do go to the south and turn NC, SC, TN et al in to libtard hellholes likethey did to FL.

Wed, 04/11/2012 - 11:58 | 2334676 DeadBeat
DeadBeat's picture

I know what you mean, it is similar in my area, but I don't think that is consistent with the nation at-large. Just like in Moscow where a year ago home prices were astronomical while the rest of the country was destitute. The prices in hot areas become higher while the inequality increases.

Wed, 04/11/2012 - 12:16 | 2334749 uno
uno's picture

The only hot area I know of is the DC metro (surprise), is there any other?

Also there are a lot of homepath signs where you bid on a house, Fannie Mae REO homes for sale.  One I know of the tenents walked away last year (June) and bought a much larger home down the street for a lot less.  The house has damage (holes in walls, not painted) so this site seems to be make any offer AS IS.

Wed, 04/11/2012 - 12:15 | 2334750 gabeh73
gabeh73's picture

We have had 6 years of housing declines (2006-2012). Most here would agree that inflation is a definite possibility...most would also agree that the federal government needs to keep interest rates relatively low if the US is going to have any hope of making interest payments on 17-20 trillion dollars in debt we will have by 2013...I live in a nice Boston suburb and have seen that the contractors are busy here. Not crazy to think housing could be back in "outperform" mode again soon if we really are going to see dollar debasement.

Wed, 04/11/2012 - 15:16 | 2335520 ElvisDog
ElvisDog's picture

Dollar debasement has nothing to do with it at this point. That card (ZIRP) has already been played. What's more, additional dollar debasement will hurt housing because it will cause commodity prices (gas/food primarily) to rise. The key to housing at this point is income. Income is stagnant-to-downward trending. If you think housing will "outperform" you need to explain where the income gains are going to come from.

Wed, 04/11/2012 - 18:41 | 2336211 neidermeyer
neidermeyer's picture

Housing may "outperform" sometime in the near future but the way I see it the only driver will be inflation... When you combine no job market improvement with higher interest rates and inflation you get MAYBE one high priced sale making the "comps" look good while all the rest of the inventory stagnates , people are limited to 30% of take home and that's moving DOWN,, it's damn near impossible to make normal living expenses much less save for a down payment.

 

The banks need to be slammed with reality ... based on the FACT that they sold the mortgages in the creation of a security there are two undeniable facts ... 1.) The mortgages no longer exist as a function of the UCC rules meant to stop the fraudsters from selling a note to multiple entities. 2.) The banks are bankrupt if you mark even 10% of their so called colatteral to market.

I don't want to live in the same state as Japan (minus the radiation).

Wed, 04/11/2012 - 14:07 | 2335172 koperniuk666
koperniuk666's picture

I am puzzled by the down arrows?

Is this confirmation bias? Or are you posters stupid? Can you not learn anything from these posts? 

Why are you here? will you please go back to your turgid normality?

Thx JM - particularly if your post is accurate. I agree with Krastings detailed and informed assessment but we all need to pay attention to what the sheeple are (still) doing. Witness the down arrows to see just how many people are capable of saying ' housing will recover - nothing safer than bricks and mortar...)

Bless them! I love the stupid people! If they were any smarter there would be more competition for me ( and less space for me in this Swiss ski resort...... still snowing here..... and the imminent CHF peg break is about to make me another.............)

 

Wed, 04/11/2012 - 14:40 | 2335358 Its_the_economy...
Its_the_economy_stupid's picture

Aside from Wash DC, the mid-Atlantic region is still toast.

Wed, 04/11/2012 - 14:50 | 2335408 stuckpixel
stuckpixel's picture

Yeah, just because your sister-in-law was able to sell her home doesn't mean the market as a whole is in good shape.

My family and I are hopefully going to be in the position to buy a home to put down some roots in within the next few months. We started looking at houses just for the heck of it late last year.

Most of those same houses are still available. And they've lowered their asking price regularly. And they're still there.

I'm seeing this everywhere around where I live. Houses go up for sale (either a short-sale, bank foreclosure, what have you) - and they stay up. For a very, very long time.

People want to believe the market is coming back -- I've yet to see anything that shows that points in that direction.

Wed, 04/11/2012 - 11:55 | 2334662 ratso
ratso's picture

The impact of inflation on housing will be substantial as replacement costs climb and values start to exceed mortgages.  The time frame for this is about 3 years before the inflation genie cures the problem.

Wed, 04/11/2012 - 12:44 | 2334848 Binko
Binko's picture

True. Also there will be an accelerating decay in the condition of the housing stock. I live in a small, 50 year old early-suburban house. But I'm amazed by the incredible solidity and quality of the foundation and attic construction.

In contrast houses build in the last 20 years were simply conduits for maximizing profits. Shoddy construction and cheap imported materials were the norm. In our new low-wage society people will simply not be able to afford repairs and maintenance. I'd expect many of the mini-mansions built recently to be uninhabitable in a couple of decades.

Wed, 04/11/2012 - 13:02 | 2334914 Joeman34
Joeman34's picture

WTF?!?  From your post not more than a few minutes ago...  "I have a hard time understanding the intense need of people to reduce everything to a personal level...  Here's a great article about demographic and financial trends, and we get a string of idiots..."

So you post about how stupid it is to present anecdotal evidence and then proceed to post an anecdotal argument a few minutes later??  And I'm the idiot?? 

 

Wed, 04/11/2012 - 20:50 | 2336539 StychoKiller
StychoKiller's picture

One should not look for fish in the treetops.

Wed, 04/11/2012 - 13:22 | 2334977 HarryM
HarryM's picture

Historical House prices were moving along nicely with inflation from the 1970's until around 2000.

From 2000-2011 the cost of housing spiked throught the roof (pun intended)

Currently home prices are back inline with the inflation curve. 

here's a link to some nice charts

http://www.jparsons.net/housingbubble/

Wed, 04/11/2012 - 15:21 | 2335540 ElvisDog
ElvisDog's picture

The impact of inflation on housing will be substantial as replacement costs climb and values start to exceed mortgages.  The time frame for this is about 3 years before the inflation genie cures the problem.

Wow, at the risk of being impolite you really need to pull your head out of your ass. Inflation doesn't help housing. It hurts housing, because if you're spending more money on food, energy, education costs, insurance, etc. you have less money to pay a mortgage. Were you referring to wage inflation? If you were, then tell me where the wage growth is going to come from.

Wed, 04/11/2012 - 15:50 | 2335681 Joeman34
Joeman34's picture

Inflation helps housing in that existing owners with fixed mortgages payback principal with inflated dollars.  See repudiation of debt and learn something.  It’s the entire objective of Mr. Bernanke’s ZIRP.

Wed, 04/11/2012 - 18:05 | 2336093 ElvisDog
ElvisDog's picture

Time for you to learn something. Inflated dollars only help you if your wages are going up too. Got that, Einstein? Wages have been stagnant in real terms since the 1970's and have been falling in nominal terms for the past few years. In this situation, inflation causes your costs to go up while your income does not.

What's more, helping homeowners through ZIRP is the furthest thing from Bernanke's mind. The entire purpose of ZIRP was to bail out banks that otherwise would have been forced into bankruptcy after 2008.

Wed, 04/11/2012 - 12:07 | 2334714 fourchan
fourchan's picture

Habitat For Inhumanity are building homes in detroit lol

 

we have plenty of empty homes here

Wed, 04/11/2012 - 12:30 | 2334801 NotApplicable
NotApplicable's picture

I've always wondered why they so stupidly build new houses when there's far too many already.

They built some "low-income" houses in town about three years ago that went for $145k (before subsidies from other groups). Meanwhile, I lived in a solid middle-class house valued at $120k.

I did the math at the time, and saw that there was no way a low-income person could afford these houses. But hey, everybody got their picture in the paper!

Wed, 04/11/2012 - 15:22 | 2335551 ElvisDog
ElvisDog's picture

Builders build because that's what they do. If they don't build, they don't make any money. And if the government is paying them to build low-income housing it's a no-brainer to build.

Wed, 04/11/2012 - 19:39 | 2336374 lenitivelea
lenitivelea's picture

New Orleans too. Between it and FEMA and the rest of the clusterfuck of alphabet soup agencies blowing their wad building boxes with roofs and giving them away with no down ZIRP, we shouldn't be hitting full bottom in quite a while. 

Wed, 04/11/2012 - 11:40 | 2334619 riphowardkatz
riphowardkatz's picture

Japan has had relatively little growth in total money.

 

Wed, 04/11/2012 - 11:28 | 2334571 RiverRoad
RiverRoad's picture

Fer sure.  Take a ride through suburbia; take the blinders off and what you are seeing are not houses but headstones in a cemetery, sad to say.

Wed, 04/11/2012 - 11:47 | 2334638 fonestar
fonestar's picture

That which cannot be maintained, will not be maintained.

Wed, 04/11/2012 - 11:58 | 2334679 Abiotic Oil
Abiotic Oil's picture

They are trying HAMP 2.0 though.  It's that "great deal" where the feds take taxpayer money (mine) and give it to banks to reduce principal on mortgages so people can stay in their homes.  I'm the dumbass who paid off my place while my neighbors bought boats and tv's and vacations and crap like that and now since they can't afford their mortgage I get to help pay for their housing.

In a "keeping up with the Jones" sense I was always wondering how these folks afforded all that crap.  Turns out they couldn't.  TOTUS will bail them out though.

 

Wed, 04/11/2012 - 12:45 | 2334853 Shizzmoney
Shizzmoney's picture

Jesus Christ, look at those fucking charts. 

I'd even say they OVER ESTIMATE actual earnings.  Most of my friends make 25-40K/year...and thats in the Boston area, with high taxes, cost of living (which is rising due to vacancy rates), etc.

Most of us can't even afford cars.  I've never owned one.

The only friend I know who can afford is a house......and two kids....is an eye doctor. 

Plus, how the fuck can banks look at this and think, "OK, lets hand out some loans!". 

Oh wait, because they know they'll get bailed out by Uncle Sam...I forgot.

 

Wed, 04/11/2012 - 15:43 | 2335650 Chaos_Theory
Chaos_Theory's picture

Gotta love the new version of flippers....Chase REFI'ed me down from a 6% to a 4% fixed-rate, and two months later, sold the mortgage to....Fannie May.   Wash, earn a couple of grand in REFI fees, rinse (dump risk to taxpayers) and repeat.  I knew I should have just sold for a loss and bought that Zombie bunker in ND.

Oh, and to the guy saying everything in your neighborhood is the shizza right now because Sis sold for 95%...you do realize the tenor of this article has a timeline of 20+ years that we'll have to judge (in ~2032+)?  Of course a demographic and declining earnings-to-debt load trends require time to make their effects felt. 

Wed, 04/11/2012 - 14:15 | 2335203 Hohum
Hohum's picture

As a profitable business venture, single family residential housing is done forever.

Wed, 04/11/2012 - 14:24 | 2335238 rotagen
rotagen's picture

But...but people are buying beige IPODS and apple stock has done so well !!

Whoever believes this data is a lousy commie conspiracy theorist.

Wed, 04/11/2012 - 10:54 | 2334460 vmromk
vmromk's picture

I will live in the Bernanke household.

I intend to learn the art of printing from the Ponzi master himself.

Unlike Guttenberg, he has no bible to print, but he does have a shitload of Federal Reserve Notes that he can teach me his printing mastery.

Wed, 04/11/2012 - 11:18 | 2334547 brooklynlou
brooklynlou's picture

Well the Notes do say "In god we trust" on them, so its kinda sorta like printing the bible. Plus, fiat is all about faith anyways ...

Wed, 04/11/2012 - 12:10 | 2334721 fourchan
fourchan's picture

i print money by holding gold.

Wed, 04/11/2012 - 10:54 | 2334464 SheepDog-One
SheepDog-One's picture

Yep housing is done, and the funniest part is most all of the bank and FED 'assets' are the mortgages to the collapsed bubble.

Wed, 04/11/2012 - 11:11 | 2334522 Spitzer
Spitzer's picture

What is everyone talking about ??

Housing never goes down !  EVER

I am from Canada and I phoned my buddy in Australia and he confiermed what I believe..

Wed, 04/11/2012 - 11:57 | 2334671 hettygreen
hettygreen's picture

America. Want to feel like you've gone back in time? Say six or seven years? Just follow the excruciatingly stupid reporting of the housing 'zeitgeist' shamelessly proffered by the totally captured Canadian msm on behalf of their banking and real estate handlers.

Side effects may include smugness and schadenfreude.

Wed, 04/11/2012 - 15:39 | 2335621 Clark Bent
Clark Bent's picture

It is also rumored that most State pension funds are heavily invested in mortgage backed securities, value currently well disguised. There will be a cracking sound, and then a whhoshing roar like that of a freight train. That's how an avalanche is described when the mountain turns into a cloud of mist. We will have to learn again how to build value, and learn that only certain kinds of promises really have any value. 

Wed, 04/11/2012 - 10:55 | 2334466 junkyardjack
junkyardjack's picture

As a 30 something, I have no interest in buying a house.  In such an unstable job market it seems crazy to add such a high debt load to yourself.  When the economy picks up it would makes sense but you'd have to be crazy right now, its like playing with fire. 

Wed, 04/11/2012 - 11:02 | 2334494 ATM
ATM's picture

Make any cash offer and you might be surprised!

Wed, 04/11/2012 - 11:30 | 2334583 jomama
jomama's picture

because rising costs --> property taxes, maintenance and utilities don't matter!

Wed, 04/11/2012 - 12:44 | 2334847 Bam_Man
Bam_Man's picture

And don't forget homeowners insurance costs which have gone ballistic thanks to Bernanke's ZIRP. Insurance companies now earn peanuts on their investment (bond) portfolios and have to make up the difference with huge rate increases.

Wed, 04/11/2012 - 15:41 | 2335636 Clark Bent
Clark Bent's picture

That is a fascinating unintended consequence. What will happen to savings in this below zero interest rate fraud? No savings, no capital for investing. What will happn to that archaic metal that you can't eat? I bet property values in Chile start to increase dramatically. 

Wed, 04/11/2012 - 11:33 | 2334593 brooklynlou
brooklynlou's picture

I don't even think its about the cash offer anymore.

If you rent a house, you pay a landlord rent, and the responsibility and risk of owning the house falls on the owner.

If you take on a mortgage, you never really own the house until its paid off. The bank is your proxy landlord until the mortgage is paid but with risk of ownership placed squarely on your shoulders. Unlike leasing a car, you are responsible for maintaining the house. 

Owning a house made sense only if the price of the house increased relative to the amount of risk you took on in owning it and could be easily flipped if you divorced ro moved. The long term benefit came 30 years down the road when you paid the mortgage off and fully owned the house. (And thanks to home equity and reverse loans that day of closure can be pushed back indefinitely).

As long as the economy is volatile, and homes cannot be readily sold when needed by the mortgage holder, why would anyone buy a house? Its all the risk with none of the benefit.

Wed, 04/11/2012 - 11:49 | 2334647 piceridu
piceridu's picture

Do you really own your property? Try adding square footage, digging a well or cutting down a tree on your property without the permission of the overlords...how about stop paying property tax? You really never own (see allodial title) anything. It's just a glorified lease from the local, state and federal authorities.

Wed, 04/11/2012 - 12:39 | 2334833 NotApplicable
NotApplicable's picture

That reminds me, I gotta get a gate up at the end of my driveway.

At least I'm far enough out in the boonies (and in a rural county) that they don't know what I do. Just so long as I pay them rent, we're good.

Wed, 04/11/2012 - 12:34 | 2334815 Spastica Rex
Spastica Rex's picture

I went from paying my bank about $1,200/month for rent (a 15 yr mortgage) for a 2,700 sqr foot house with a view to paying my current landlord $1,300/month for a 1,200 sqr foot dump in the ghetto. Don't get me wrong: I feel fortunate to have sold my house. Renting from the bank was cheaper by the foot^2, though.

I'm not disagreeing with you, just offerening a personal observation.

Wed, 04/11/2012 - 21:44 | 2336632 Freddie
Freddie's picture

If you take on a mortgage, you never really own the house until its paid off.

In this country you never really own d*ck.  The county owns your property and you pay rent to the govt unionized employees.   You don't own sh*t in this country anymore.

 

Wed, 04/11/2012 - 11:06 | 2334508 LawsofPhysics
LawsofPhysics's picture

Good, keep paying us landlords rent.  This is going exactly as planned, no one else should ever try to become an owner ever again.

(do I really need the < sarc > flags?)

For reference, see George Carlin's "You have owners, they own your ass" bit.

 

Wed, 04/11/2012 - 11:36 | 2334601 Silver Dreamer
Silver Dreamer's picture

I completely agree.  However, they wrote "buy," not "own."  How many people out there actually own their homes?  Most people are instead renting from the bank (they never pay off the loan and usually have no intention of doing it either).

I'll certainly own a home one day, but I'll never rent one again from a bank!  Currently, I'm a happy renter too.  The owner didn't even raise my rent for the second year.  He's paying the inflation for me!  Now, that's a nice landlord!!

Wed, 04/11/2012 - 12:29 | 2334794 Tom Servo
Tom Servo's picture

Hate to break this to you, but if you "buy" a home, and pay off the mortgage, you still don't "own" it.  If you think you do, try to avoid paying your property tax.  In a few years, the real "owners" will show up.

One of the hardest illusions to break has been that, you really don't "own" anything.  The owners just let you possess the things you have.

Wed, 04/11/2012 - 13:14 | 2334960 Silver Dreamer
Silver Dreamer's picture

Oh, I'm fully aware of that fact.  If I pay taxes on something, it isn't really mine.  It's still best to "own" your property, not rent (from either a landlord or bank).  Most people's rent or mortgage payment is their largest bill each month.

Wed, 04/11/2012 - 13:27 | 2334999 Jumbotron
Jumbotron's picture

Second and third that Tom Servo.  NOBODY OWNS SHIT IN THIS ENTIRE WORLD!

You pay property tax you rent the land from the state.  If you own a mobile home you pay double tax....one for the tag and the other for property tax on the land you sitting on.

You don't own ANYTHING you pay credit for AND/OR pay tax on.  Which means you don't own your income, your car, your phone, your home, your RV, etc., etc.

And when you die.....there's inheritence tax just to let your children know that they as well as you are bought and paid for.

Ownership and freedom.....as George Bush supposedly said...."The Constitution is just a goddam piece of paper".  All we did with the Consitution was to free ourselves from the shackles of one tyrant and hand it over to several hundred spread out over Congress, the office of the Presidency and the Supreme Court.

Wed, 04/11/2012 - 11:39 | 2334614 turtle777
turtle777's picture

What the hell are you talking about, Lawofphysics ?

High debt burdens (no matter if mortage, college, revolving) is what is the PLAN to keep the sheeple enslaved to the current system. "Owning" a house with a high debt burden does NOTHING for you.

I could easily "own" a home, but there's no point in doing it. Renting is NOT a bad thing par se. What makes "owning" a home a losing proposition for most is that most people "own" far more home than they need. This normally doesn't happen when you rent, because for some reason, people throw out their financial smarts when signing a mortage.

-t

Wed, 04/11/2012 - 15:51 | 2335680 Clark Bent
Clark Bent's picture

I think very few people understand the real nature of the transaction of buying a house anymore. In recent years the borrowers relied largely on the agents and professionals who informed them that they could afford the property, and reassured them that even if they got into trouble they could expext to sell into a seller's market where they would likely gain and never lose on their investment. In the meantime they enjoyed a tidy interest deduction on their overtaxed wages. Experts filled the airwaves telling people that everyone was doing it and this was the way to get ahead. Borrowers in my experience did not have a clue and were taken to the cleaners. All the advantages were aimed at residences where the borrower actually lived, insuring the least savvy buyers were blandly submitting to obligations they had no understanding of. The brokers had no incentive in trying to make them understand the real nature of their obligation becuase that might have deterred them from signing. No signature, no fees, no fees no bonus. Our prolitical leaders told us home ownership was what it meant to be an American. 

Wed, 04/11/2012 - 11:08 | 2334518 Diet Coke and F...
Diet Coke and Floozies's picture

When silver hits 10,000 an ounce, I may consider buying a house... :P

Wed, 04/11/2012 - 11:55 | 2334667 Gordon Freeman
Gordon Freeman's picture

Home ownership does not appear to be in your future...

Wed, 04/11/2012 - 12:33 | 2334811 Likstane
Likstane's picture

prob more like an estate with horses and servants

Wed, 04/11/2012 - 12:00 | 2334683 Joeman34
Joeman34's picture

So when do you propose is a good time to buy?  When prices have recovered, there is no uncertainty left in the economy, and everything is rosey?  It will already be too late, then.  Buy when there's blood in the streets, my friend...

Wed, 04/11/2012 - 12:10 | 2334722 riphowardkatz
riphowardkatz's picture

he will want to buy when his rent is what 3 of today's mortgage payments would have been. As you mention it will most likely be too late.

 

Wed, 04/11/2012 - 12:15 | 2334748 trembo slice
trembo slice's picture

Unless you own PMs and you see the value of your savings launch into orbit (thanks in no small part to TPTB losing their ability to manipulate).  While, at the same time, the over-valued housing market tanks.

Wed, 04/11/2012 - 12:42 | 2334842 riphowardkatz
riphowardkatz's picture

And every argument here could be used to apply to gold. 

Boomers will be selling turning what they have into cash
Interest rates have to rise
Once interest rates rise more foreign demand for treasuries less for gold
No one was money to buy PMs
Taxes on Gold can go up

I am not saying gold is bad but the arguments used against real estate can also be used against gold.

Housing has what many consider utility (gold has this as well it is just less understood) Housing also allows for a huge short position on the dollar.

Wed, 04/11/2012 - 12:13 | 2334727 trembo slice
trembo slice's picture

I certainly wouldn't buy in the midst of a duct-taped deflationary bubble in housing prices. I'll wait till they bottom out.  My parents sold the house I grew up in a few years ago before TSHTF.  Through that process they learned that in our community in TN there was a 14 year supply of houses built in that price range.  Those houses still haven't cleared.

Did you read Brandon Smith's article today?  He provided some links referring to the $16 Billion in losses suffered by Fannie Mae in 2011.  Have you turned a blind-eye to the robosigning scandal?  This shit is not anywhere near bottoming out.  You must be in real-estate!

Wed, 04/11/2012 - 12:38 | 2334829 Binko
Binko's picture

My 30 year old nephew is buying a house. He got out of the Air Force on a partial disability and apparently there still exists some program allowing veterans to buy a house with zero down payment. To my amazement the seller is paying all the closing costs and the bank is giving him a loan where he has absolutely no stake in the property. So, my nephew, who is unmarried, has no real ties to the community, and is something of a dope, is getting a house for free. It completely baffles me that anybody would give this guy a loan.

Crazy levels of government intervention still persist in the housing market. And most people I know still dimly believe that buying a house is a good "investment" and once things turn around will make them some big bucks. The persistence of stupidity still plays a big role in the real estate market. But not as big as government price supports. Once these erode it's all downhill for the next 20 years.

Wed, 04/11/2012 - 12:46 | 2334855 Likstane
Likstane's picture

How is that getting a house for free?  You said he has a loan.  You think the banks are stupid? He is a slave.

Wed, 04/11/2012 - 13:08 | 2334933 Binko
Binko's picture

No, the banks aren't stupid. The loan creates no risk for them.

But the people of this country are very stupid. They will be picking up the tab after my nephew turns "his" house into a video game palace for his chums, trashes it and then walks away after a few years.

Wed, 04/11/2012 - 14:56 | 2335425 Likstane
Likstane's picture

Just like he prob walks away from any other committment.  A man will eventually be known by his word; maybe not in this world as much as the next. 

Who exactly is picking up the tab?  Ultimately it is anyone who pays taxes to gov to give it to TPTB.  You and I are paying for your nephews broken promise.  Don't feed the monster and it dies. 

If you can't afford a cash house, don't buy one.  200K @5.5 for 30yr=over 400k.  KILL THE BANKS-TAKE NO LOANS

I realize I'm talking to you and not your nephew.  The number of 'your nephews' I know is astounding.

Wed, 04/11/2012 - 16:36 | 2335846 Cugel
Cugel's picture

Yes, a man is known eventually by his word, and when the country finds out what kind of tool this guy is, he'll be punished with a free house, a snap card and a 99-week paid vacation.

 

Americans love a loser and will not tolerate a winner.

Wed, 04/11/2012 - 12:47 | 2334860 NotApplicable
NotApplicable's picture

"It completely baffles me that anybody would give this guy a loan."

That's because there isn't "anybody" with a stake in any part of the transaction. What there is instead, are fee collectors front-running one fedgov program or another. No to mention, "partial disability" equals guaranteed income from Uncle Sam which ends up in, let's say... Well's Fargo (or some other fine TBTF "financial" institution).

ZIRP demands the death of the banking system (as all of the increasing sovereign debt overwhelms private industry), so collecting fees is all that's left.

Wed, 04/11/2012 - 13:36 | 2335033 hidingfromhelis
hidingfromhelis's picture

No stake, no motivation, no recourse.  The buck stops nowhere.  As long as we consider housing in general to be TBTF, it's "party on" time.  

Too many entities benefit too much from the institutionalized worship and reverence for housing.  For some, it's a great emotional tool to keep people docile.  For others, it's the best possible tool for financial looting and risk offloading.  For these and other reasons, the charade will continue.

At some point, currency devaluation will make home ownership attractive as a hedge.  Arguments about truly owning due to taxes and restrictions notwithstanding, it is something tangible.  

Water will eventually find it's own level.  Entropy is a bitch that way.

Wed, 04/11/2012 - 15:54 | 2335699 Clark Bent
Clark Bent's picture

The powers that be can tell you that they don;t make money lending money to be paid back at interest anymore. The real market is in generating paper that can be sold as if it has real value. If you can;t find a sucker investor like a pension fund, then the government is likely to come in and buy it anyway (See Fannie and Freddie) with taxpayer promises. That's where the money is. The ability of the borrower to pay is beside the point anymore. For now. 

Wed, 04/11/2012 - 12:51 | 2334876 Shizzmoney
Shizzmoney's picture

+infinity.....I feel the same way.  I'm trying to ESCAPE from serfdom, not add to it.

It's a rentiers' economy....and 99% of us are just tenants.

Wed, 04/11/2012 - 10:55 | 2334469 buzzsaw99
buzzsaw99's picture

Don't worry, the big banks will be fine.

Wed, 04/11/2012 - 10:57 | 2334470 navy62802
navy62802's picture

If there had been no government intervention, it wouldn't take a fucking generation for the market to correct.

Wed, 04/11/2012 - 11:22 | 2334554 WestVillageIdiot
WestVillageIdiot's picture

We have a winner.  Everywhere we see disaster we see government smack dab in the middle.  And yet, for so many people, the answer to our problems is more government.  It is just mind boggling to watch the people around me and hear the ooze that drips from their mouths. 

As the government bubble gets bigger things get even scarier.  And we haven't even embarked on "free" healthcare yet.  I fear 2015. 

Wed, 04/11/2012 - 11:40 | 2334612 Silver Dreamer
Silver Dreamer's picture

The solution is to get the banks, our real government, out of housing entirely.  Can't buy a house outright?  Rent.  Otherwise, you're part of the problem and feeding the beast.  All personal debts need to be removed, and this damned grand ponzi scheme will finally come to an end.

Wed, 04/11/2012 - 11:47 | 2334628 rufusbird
rufusbird's picture

Yes! Ditto, There it is...."I am from the Government and I am here to help!"

Wed, 04/11/2012 - 12:54 | 2334886 Shizzmoney
Shizzmoney's picture

And yet, for so many people, the answer to our problems is more corporate government.

Fixed your post.

BTW, the healthcare in 2015, ain't free.  I live under a mandate system, and employers abuse the shit out of it.  I pay out of pocket for all types of shit.  But hey, I have "insurance".....like, I'm insured to get my wallet finger fucked in the ass everytime I go to the doctor.

Either way, what is this risk bullshit jive you suckas, talkin'?

Risk? Banks, insured by a fasicst corporate government, don't need no stinkin' risk!

Wed, 04/11/2012 - 12:14 | 2334740 Joeman34
Joeman34's picture

Exactly, in fact, Gov was the original cause of the problem pushing the notion every American should be able to own a home regardless of ability to pay for the home.  And then compounding the problem by holding interest rates artifically low through the early 2000s. 

Wed, 04/11/2012 - 10:59 | 2334472 Son of Laocoön
Son of Laocoön's picture

"Sixth, zero down no doc loans."

These zero down (or almost zero down) loans are still prevalent  Dr Housing Bubble web site confirms. No recovery until the Gub'ment gets out of the housing market. If a "generation" is still 30 years, then no recovery for 30 years i suppose.

Wed, 04/11/2012 - 11:04 | 2334501 ATM
ATM's picture

My son is trying to buy a place in Chicago. He is going to come out of pocket for 3%. WTF? Good deal if he can get it! It's almost no risk.

Wed, 04/11/2012 - 11:27 | 2334573 jomama
jomama's picture

i suppose there's one born every minute, after all?

Wed, 04/11/2012 - 11:34 | 2334599 Dingleberry
Dingleberry's picture

Tell sonny boy that his city is in financial crisis, using IOUs, and beyond broke.  And prepare to watch his taxes even go higher than the obscene rates that they are now. I mean truly obscene. Along with a decrease in services. And legendary corruption that has absolutley no end. Read Mish's blog sometimes. He lives there (I did too). Glad I got out when I did. 

Wed, 04/11/2012 - 15:34 | 2335593 ElvisDog
ElvisDog's picture

Karl Denninger wrote that the property tax on a house he used to own in Chicago is currently $21000 per year.

Wed, 04/11/2012 - 11:48 | 2334642 Silver Dreamer
Silver Dreamer's picture

This reminds me of an old neighbor.  He bragged to me that he got his place for 220K when I had purchased mine for 384K.  Who was laughing though when his value dropped to 130K along with mine?  He thought he got a great deal but put down 50K of his only many to get it.  I didn't put anything down to get mine.  Now, that is funny.

Wed, 04/11/2012 - 12:41 | 2334832 Likstane
Likstane's picture

Seems to me he is still on the hook for 170k + interest and you for 384k + interest.  Sounds like you are bound to the owner-man-bank-king for a lot longer than your neighbor.  I fail to see the humor from your point of view.

Wed, 04/11/2012 - 13:00 | 2334909 Silver Dreamer
Silver Dreamer's picture

Mine was in an "approved short sale" status with BoA for two years, but they foreclosed on it anyway even with 9 good offers.  The bank didn't want it to short sell.  That's fine by me.  Now I rent for a third of what I paid before, I didn't lose 50K of my own money, I do not pay the taxes, HoA dues, and long list of other expenses either.  The other guy?  He's stuck there paying all of that unless he walks away from his 50K.

Wed, 04/11/2012 - 18:04 | 2336122 Likstane
Likstane's picture

Are you renting or did you sign for a $384k loan?   A 5.5% 360 mos loan on 384K = $785K.   I'm still not getting the joke. 

Wed, 04/11/2012 - 19:41 | 2336381 CoolBeans
CoolBeans's picture

Have heard of similar short-sale horror stories...way to go banksters.  That and around here the bank-owned house prices have been jacking up recently...

Wed, 04/11/2012 - 10:57 | 2334477 TheSilverJournal
TheSilverJournal's picture

Housing is set to decline about 75% in real terms from here. Mortgages will be non existent when the dollar crashes, it will take ounces to purchase a house. When the dollar crashes, Americans will become very poor, bank accounts, social security, entitlements, section 8, government jobs, and pensions will vaporize. Most in the service sector will be out of a job. The cost of utilities, maintainence, and taxes on a home will rise. And to further drive down the demand for housing, many will save on housing costs by moving in with others, or move out of othe country altogether.

Wed, 04/11/2012 - 11:13 | 2334534 Spitzer
Spitzer's picture

House prices fall during hyperinflation because desperate people will sell them to get money to pay for food and energy

Wed, 04/11/2012 - 12:51 | 2334872 Bam_Man
Bam_Man's picture

House prices also fall during hyperinflation because there is no such thing as "credit". Everything sells strictly for cash. Imagine what house prices would look like if they only sold for "cash".

Wed, 04/11/2012 - 13:08 | 2334934 HarryM
HarryM's picture

Interesting , my grandfather, who lived in Germany, told me stories of people paying off their houses after slaughtering a hog.

 

 

Wed, 04/11/2012 - 15:32 | 2335588 misnomer
misnomer's picture

That's interesting.  Here, people pay off their houses after harvesting their grow op....

 

Wed, 04/11/2012 - 11:35 | 2334602 RiverRoad
RiverRoad's picture

The dollar's been crashing for awhile now and lotsa stuff's been vaporizing.  Globalization's turned all fiat currencies to junk in a mad race to the bottom; government bonds are next.  We're all third world now.  Ain't it great?

Wed, 04/11/2012 - 12:03 | 2334695 XitSam
XitSam's picture

Long on squatter's camps, disease and crime.

Wed, 04/11/2012 - 12:05 | 2334704 blueridgeviews
blueridgeviews's picture

Not out of the realm of possibilities.

I remember telling a friend in the early 2000's that housing prices have to come down.  They had doubled in less than 7 years. His response was: The gov't will do everything it can to keep the house values up. 10 years later, he is correct.

Unfortunately, I believe the Gov't and currency will collapse before we ever get back to an environment where the housing market is stable.

Wed, 04/11/2012 - 12:50 | 2334866 NotApplicable
NotApplicable's picture

"Collapse" implies death. I don't think we'll be that lucky.

I'm thinking "zombietized."

Wed, 04/11/2012 - 10:59 | 2334480 the 300000000th...
the 300000000th percent's picture

Done for a generation?? What is going to happen in the end of this generation, a robust recovery????? How will this happen, by what we are doing now????? More printing????? I'm afraid the only way we will EVER have a recovery, is some sort of messy violent revolution, and then A LOT of luck that what comes out the other side is real and just.

Wed, 04/11/2012 - 11:02 | 2334487 SheepDog-One
SheepDog-One's picture

Its funny how people talk about 'housing recovery'....well recovery to what? A ridiculous bubble where 1,200 sq foot cheaply built junk houses were selling new for $220,000 on a little quarter acre? Recovery to insanity is all it would be. 

Wed, 04/11/2012 - 11:16 | 2334542 crawldaddy
crawldaddy's picture

most new houses and those mcmansions of the last decade cracked me up. You can walk into them and think, I could tear this house down with my bare hands, there's nothing to it excpet cheap wood and drywall.

Wed, 04/11/2012 - 11:30 | 2334584 Mitzibitzi
Mitzibitzi's picture

I've done major rewiring jobs on some of the modern crop of houses here in the UK, and you quite literally CAN tear them down with your bare hands. Or nothing more elaborate than a 20oz Estwing hammer, anyway. And most houses over here still have brick outer walls, though the rest is drywall, fireproofing board and fiberglass.

On the plus side, I suppose they'll be easy to tear down when we want to return that land to agricultural use in the near future.

Wed, 04/11/2012 - 12:50 | 2334874 NotApplicable
NotApplicable's picture

Dandelions win every time.

Wed, 04/11/2012 - 13:20 | 2334978 Binko
Binko's picture

Not really even wood. Processed wood products. From China and Brazil. Wait until billions of sq feet of the stuff starts de-laminating in a few years.

Wed, 04/11/2012 - 16:00 | 2335727 Clark Bent
Clark Bent's picture

Here's a revolution for you, return to the gold standard. Get on board now. Tell your friends. 

Wed, 04/11/2012 - 11:00 | 2334481 Azannoth
Azannoth's picture

I will only ever consider buying a house outside of 'The West', I will not allow myself to become a milk cow for the deluded baby boomers and socialists

Wed, 04/11/2012 - 11:00 | 2334482 surf0766
surf0766's picture

In Dec 2002 I bought a house $155 K when the rest were going for 275 - 300K. I watched people a few blocks over pay at the height of the market 375 + for the same house, maybe an additional 500 sq ft. Mine needed work.

Now they are underwater and  I am still sitting on equity. You can't teach common sense.

Housing is done for more than a generation.

Wed, 04/11/2012 - 11:26 | 2334569 Zero Govt
Zero Govt's picture

well you've got 2-3 years to take your equity (profit) before housing more than halves again

Wed, 04/11/2012 - 12:55 | 2334888 Bam_Man
Bam_Man's picture

Don't feel too sorry for your "unlucky" neighbors who overpaid for their houses. They will be getting principle reductions on their mortgages, courtesy of "the government" (you and me).

Wed, 04/11/2012 - 11:00 | 2334483 csmith
csmith's picture

"With the Federal deficit skyrocketing, that sort of giveaway won't last long."

 

12 most dangerous words in the English language...

Wed, 04/11/2012 - 12:24 | 2334778 jplotinus
jplotinus's picture

Housing and all other middle class assets can and would recover IF the US decides to take on the military industrial complex (mic).

Is taking on the mic a reasonable expectation? A search solely within this thread (article + posts) will result in few hits for the words "war" and/or "mic".

Put plainly, the endless warring and the open $spigot given over to the mic on a no questions asked basis is bleeding us dry. What is worse, there is no political will, apart from some libertarians and some socialists, who are calling attention to the mic and it's impact on this society.

If we dismantle the mic, we will recover. If we do not do that, we will not recover.

It is to be hoped that an alliance among libertarians and socialists can be formed to take on the mic. Needless to say, the Democricans and the Republicrats and the corporatists of whatever stripe cannot be expected to help us at all.

Wed, 04/11/2012 - 11:01 | 2334488 Arnold Ziffel
Arnold Ziffel's picture

Tents sales soaring ...so I guess every cloud has a silver lining.

Wed, 04/11/2012 - 11:02 | 2334489 waylon153
waylon153's picture

Any idea why chart 1 NonFarm Business: Labor Share the index was set at 2005?  I see this is a chart from Fed sources but why set the index at 2005 and not some other time, say 1986, 1992, or 1975?

Wed, 04/11/2012 - 11:02 | 2334491 LongSoupLine
LongSoupLine's picture

"if"?

 

not one doubt.

Wed, 04/11/2012 - 11:03 | 2334495 icanhasbailout
icanhasbailout's picture

Let's not forget that fixing the royally fucked land recording system (thanks MERS for destroying 400+ years of land recording integrity in the USA) is going to take a generation just by its lonesome.

 

 

Wed, 04/11/2012 - 11:03 | 2334499 hankwil74
hankwil74's picture

Home ownership also limits one's mobility, and in an increasingly mobile economy, it simply doesn't make sense to be locked into one geographic area.

 

Wish somebody would have explained this to me in college.  Instead, I got the same "you have to own a home to build wealth, it's the American dream" bullshit that every impressionable 22 year old gets

Wed, 04/11/2012 - 11:29 | 2334555 Zero Govt
Zero Govt's picture

100% agree

since i un-pegged myself from a house and now live where the f i want when i want taking short-term leases or even Apartment-Hotels (no lease, deposit or hassles) it's been a blast

Wed, 04/11/2012 - 11:04 | 2334502 SheepDog-One
SheepDog-One's picture

So we get -200 points on huge volume spike, and recover almost all of it next day on basically ZERO volume. This is all such fucking bullshit. And they wonder WHY retail isnt showing up to buy hand over fist? 

Wed, 04/11/2012 - 11:17 | 2334545 Zero Govt
Zero Govt's picture

Dow, S&P and Nasdaq all dead cat bounced +1% today having lost -4% this week ...not time to write-off this dip (yet)

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