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No Housing Bottom: Home Prices Decline For 7th Consecutive Month, Lowest Since 2003

Tyler Durden's picture




 

The November Case Shiller is out and while not surprising to most, some of those calling for a near-term housing bottom may be advised to reassess (for the 5th year in a row). According to the Top 20 City index composite, prices declined in 17 of 20 MSAs, with gains posted only in Phoenix, Denver and Minneapolis. At 137.52, the Seasonally Adjusted composite dropped to the lowest since February 2003, and is now a third lower than the housing peak in April 2006. Yet the worst news is that, even with a 2 month delay, the housing drop accelerated into the end of the year, and the sequential drop of 0.7% was the biggest decline since March 2011. Which means that except for that errant spike in home prices in April 2011, we have now seen 18 consecutive months of housing price declines since that "rebound" in late 2009. "Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall," David Blitzer, chairman of the index committee at Standard & Poor's, said in a statement. "The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand." Yet just like in Europe, the improvement is coming. Aaaaany minute now.

 

 

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Tue, 01/31/2012 - 10:21 | 2112487 Dr. Engali
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But Cramer just recommended stocks for the ongoing housing recovery.

Tue, 01/31/2012 - 10:28 | 2112505 hedgeless_horseman
hedgeless_horseman's picture

 

 

Once again, picking bottoms is for monkeys.

Tue, 01/31/2012 - 10:30 | 2112523 Dr. Engali
Dr. Engali's picture

I thought that Cramer is a monkey.

Tue, 01/31/2012 - 10:47 | 2112589 kito
kito's picture

cramer is one of those monkeys that have mutated as a result of an experiment gone awry........

Tue, 01/31/2012 - 10:53 | 2112604 Dr. Engali
Dr. Engali's picture

Cramer isn't bright enough to be Caeser. He must be one of the gorillas

Tue, 01/31/2012 - 11:41 | 2112782 goldfreak
goldfreak's picture

didn't a monkey beat Cramer in  a stock picking contest?

Tue, 01/31/2012 - 12:29 | 2112897 tekhneek
tekhneek's picture

Monkey(s) beat hedge fund managers, too.

It's true because Max Keiser said so.

Tue, 01/31/2012 - 10:27 | 2112514 Clueless Economist
Clueless Economist's picture

Cramer also recommended GM F and auto parts stocks, because people have lots of spending money because they are squatting in their houses and not paying the mortgage.

This is bullish for housing?

A big BOOOOYAH to you suckers!

Tue, 01/31/2012 - 10:46 | 2112584 mattu13048
mattu13048's picture

Thank you, Mr Change. This is clearly a change we can believe in.

Tue, 01/31/2012 - 10:23 | 2112493 oogs66
oogs66's picture

why let data get in the way of a good story?

Tue, 01/31/2012 - 10:27 | 2112512 Shocker
Shocker's picture

This is kinda surprising news... You mean housing is still going down. There is going to be no housing recovery until the Job market returns.

They kinda go, hand and hand

http://www.dailyjobcuts.com

Tue, 01/31/2012 - 10:23 | 2112494 kito
kito's picture

no matter how low the rates, you cant force demand in a deflationary environment. let housing be the canary in the coalmine to all things physical.........................................

Tue, 01/31/2012 - 10:31 | 2112529 fonzannoon
fonzannoon's picture

How about all things equities? For example banks or homebuilders? There is a disconnect. Equities rising as the underlying assets dropping. Stagflation? Disinflation?

Tue, 01/31/2012 - 10:34 | 2112544 WonderDawg
WonderDawg's picture

Hopium.

Tue, 01/31/2012 - 10:42 | 2112570 francis_sawyer
francis_sawyer's picture

Vaporization...

Tue, 01/31/2012 - 13:42 | 2113308 Poor Grogman
Poor Grogman's picture

Exasperation Desperation then Expiration

Tue, 01/31/2012 - 10:45 | 2112578 kito
kito's picture

@fonzannoon---banks have equity??????????

Tue, 01/31/2012 - 10:54 | 2112610 fonzannoon
fonzannoon's picture

I was referring to the bank stocks which should be choking on the underlying mortgages of these falling hard assets.

Tue, 01/31/2012 - 11:03 | 2112644 kito
kito's picture

i guess you would be correct if the banks were actually truthful about the value of these falling "assets".......

Tue, 01/31/2012 - 11:09 | 2112662 fonzannoon
fonzannoon's picture

yeah I know. It's true.

Tue, 01/31/2012 - 11:27 | 2112727 CPL
CPL's picture

That would require mark to market to be reinstated.

Tue, 01/31/2012 - 11:53 | 2112836 kito
kito's picture

.....shhhhhhh, not so loud............

Tue, 01/31/2012 - 11:05 | 2112649 FreeNewEnergy
FreeNewEnergy's picture

The reality is that the banks unloaded a lot of their bad stuff back to Fannie and Freddie and the Fed has picked up most of the toxic MBS at par or close to it, which is why the whole economy is still stuck.

Of course, the banks couldn't unload all of it, so they're still on the hook for a significant amount.

Dick Bove likes the banks for that reason - among others - but, like a broken clock, he's only right twice a day.

Tue, 01/31/2012 - 10:24 | 2112498 Dick Darlington
Dick Darlington's picture

Paging Cramer...

Tue, 01/31/2012 - 10:25 | 2112500 toady
toady's picture

another day, another dollar, ain't no need to fret ner holler.

Tue, 01/31/2012 - 10:25 | 2112503 Cdad
Cdad's picture

Pffft.  Housing.  Who cares?  After all, that is Average Joe's largest investment.

What really matters is the paper wealth held by banks.

/sarc f'n off

Tue, 01/31/2012 - 10:27 | 2112508 praps
praps's picture

Another 10 years of house price falls are already priced in.  No problem.

Tue, 01/31/2012 - 10:44 | 2112576 gdogus erectus
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Nice avatar!

Tue, 01/31/2012 - 10:27 | 2112509 lizzy36
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No worries. Priced in.

The fact that for 80% of Yanks there house is their biggest investement is beside the point. Rumor has it China PMI may be above 50.....#BTFD

Tue, 01/31/2012 - 11:13 | 2112675 FreeNewEnergy
FreeNewEnergy's picture

Having your home as your largest asset is the norm, though it is not great thinking that got the US into such a position.

A house is a place to live, but plenty of people have tapped into it with home equity loans and HELOCs and they are now at risk of not only losing their largest "investment" but also their living quarters.

Home equity loans should never have been allowed to exceed 70% of equity, but they went way beyond that and now the squeeze is on.

Really, why, unless in dire need for cash, would anybody in their right mind mortgage out 100% of their living space? Do they intend to live in a box on the street when the Ponzi collapses?

The housing boom of the 2000s was well-conceived by the banksters and not well understood by the peons.

HE loans should be capped at 50% of equity. Then there would be less of a crisis whenever the market tanks.

It's good if you have cash, though, right now. Residential housing for purchase is getting pretty cheap and rents have been going up steadily.

Greed is good, if you know what the hell you're doing.

Tue, 01/31/2012 - 10:27 | 2112513 GeneMarchbanks
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'According to the Top 20 City index composite, prices declined in 17 of 20 MSAs, with gains posted only in Phoenix, Denver and Minneapolis.'

Denver maybe, but Phoenix?

Tue, 01/31/2012 - 10:44 | 2112560 hedgeless_horseman
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Maybe the developers are running a promotion where you get a free gallon of water with every home purchase in Denver or Phoenix?

Wet Winter Can't Slake West's Thirst

Tue, 01/31/2012 - 10:55 | 2112613 Pchelar
Pchelar's picture

"By the tiiiiime I get to Phoenix, she'll be riiiiisin'!"

See, Glen Campbell called it 25 years ago...

Tue, 01/31/2012 - 11:50 | 2112817 Osmium
Osmium's picture

Actually quite a bit more that 25 years.  Campbell's version of By The Time I Get To Phoenix reached #2 on the US Country music charts in 1968.

Tue, 01/31/2012 - 17:13 | 2114214 toady
toady's picture

the talking heads on the news just shocked about that... when you break down the numbers it turns out that it was speculators buy up the cheap foreclosures.

Tue, 01/31/2012 - 10:28 | 2112517 lolmao500
lolmao500's picture

Screw a recovery.

Homes prices need to go down to 1-2x the average salary. That means under $100k for a 2 bedrooms house.

Tue, 01/31/2012 - 14:55 | 2113555 dirtbagger
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Average income to MAXIMUM amount of home one can afford - historically has been about 30% (3x).  At the height of the mania, average prices were almost at 5x income.  Unless you are moving to the sticks, with few job prospects, expect a long wait for a 1x-2x ratio.

Tue, 01/31/2012 - 10:29 | 2112520 francis_sawyer
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Just sold a house...

Caveat: DC Area (the area is full of government jobs~qualified buyers)...

The thing is this... In addition to the challenges in home prices (I was lucky to get close to asking price)... if you're selling an existing home, you have to go thru a great deal of expense to bring it up to any kind of standard that would make it attractive to a potential buyer...

I was lucky to have many things in my favor... great location, school district, many upgrades to the house, etc... STILL...STILL... One must probably imagine having to put in about 10% more (of the homes value), in terms of detail work just to attract a buyer... Otherwise it'll just sit there and get passed over...

So what I'm saying is that one should START with the numbers in this article, and expect to go out of pocket about 10% (at least) more if they want to know what their house is worth...

Tue, 01/31/2012 - 10:34 | 2112546 francis_sawyer
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PS... It sat on the market for about 2 months (albeit NOT prime home selling months ~ between Halloween & New Years)...

It took about 40 "looks" (visits), to finally hook a buyer who both liked the house & had all the credentials to buy)...

Tue, 01/31/2012 - 10:42 | 2112571 lolmao500
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Yeah my father tried to sell his house, took 2 years while he worked to improve it day in day out.

Tue, 01/31/2012 - 10:44 | 2112573 Village Smithy
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Thanks for the "Real World" take on this. So what you're saying is that as bad as these numbers are, it's actually worse because the homes that are being sold are being "subsidized" by the seller relative to what they may have been historically.

Tue, 01/31/2012 - 10:53 | 2112606 francis_sawyer
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That's precisely what I'm saying...

If you happen to be handy, you can do a lot of work yourself, but you still can't get around certain expenses because they have to PASS INSPECTION (& therefore REQUIRE licensed contractors to do the work)... I'll give you examples:

-roofing

-fire alarm systems

-radon detection (FUCKING RADON!)

-plumbing (including 'rooting' of outside pipes &/or septic work if necessary)

-all electrical

-HVAC

That's just the 'starter kit'... I'm telling you, the 10% number is probably realistic... IOW... If you're trying to sell a house in the $400,000 range, expect to go out of pocket $40,000 simply to bring it up to speed (for comparable NEW homes in the same area)... It probably scales evenly up & down from there, but that's just a hunch...

Tue, 01/31/2012 - 11:04 | 2112645 Lndmvr
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Gatting ready to sell as we speak. Going to try and take an RV as down payment. I am not too sure about repairs tho. I saw a house here with the roofing tarped sell last week. After 10 houses bought and sold, I still think it's price and not looks. Time will tell. Here in Iowa the banks just go online and look at the assessed value for information. Bought this one with no inspections by anyone, just accespted "as-is".

Tue, 01/31/2012 - 11:13 | 2112668 francis_sawyer
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I'm sure there are areas where regulations are more lax...

But this is DC/Md... (it's a pretty 'stuffy' area in terms of regulations)...

I can't even begin to imagine what the situation in a place like Vegas is (where there may be entire areas borded up)...

Tue, 01/31/2012 - 12:03 | 2112881 prole
prole's picture

Thanks for the on-the-ground report, but I think your 10% spruce-up costs are greatly misoverestimated. Putting that much in the spruce-up probably helps with the curb-appeal to sell it, but just my opinion here, most DC/Metro area homes are selling without that much, not near that much. Most homes around DC are pretty good shape in the first place. Feds have a lot of free time and high salary to spend keeping their personal bunkers nice.

Tue, 01/31/2012 - 13:36 | 2113282 francis_sawyer
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curb side appeal (to sell it)... is a big part of the equation (in terms of how close you end up to the 10% calculation)...

I just saw the writing on the wall and decided I'd do everything I could to make it sell FAST (which it did, mostly)... I didn't want to dick around anymore in an economy that it being held together with bailing wire... The sheep are still fairly ignorant (or SECURE, they think, if they're government workers)...

But the process of giving it more and more and more curbside appeal (based on the feedback I was getting on views) was a trip... My personal joke was that pretty soon I was going to have to put in granite countertops IN THE GARAGE... Then... no shit... One of the contractors that was doing some of the work told me that in another house he was working on they requested exactly that...

lol

Tue, 01/31/2012 - 11:05 | 2112648 serog
serog's picture

Multiple offers are becoming more common place in the minneapolis market.  Rather than putting 10% in to the homes to sell, sellers are just pricing realistically from the get-go. 

Tue, 01/31/2012 - 11:47 | 2112807 Slim
Slim's picture

Francis, thanks for taking the time to post an 'on-the-ground' experience from what has been the nation's strongest and most resilient housing market (for what it's worth I can't stand seeing Washington area do best when they played a huge part in causing this mess).

For what it's worth, I think you made a good move in getting out of there.  The government employment bubble at some point has to go and that area kept ripping and held when no others did.  An extra infusion of hot air does not mean it isn't a bubble too, and this one will definitely come down one way or another.

I think your experience is similar to most in that when the initial pop comes, it isn't seen in that rather than solid houses selling for above market (with crap selling at market), solid houses with upgrades begin to sell for market and others don't move at all.  It doesn't show up in the stats, but that's a significant hit to a market.

Appreciate the time.

Tue, 01/31/2012 - 10:30 | 2112521 rodocostarica
rodocostarica's picture

Hey MDB what do you think Obama and government should be doing to correct this housing problem?

 

I'm sure you have an opinion.

Tue, 01/31/2012 - 10:33 | 2112542 Dr. Engali
Dr. Engali's picture

They shouldn't be doing anything. Let the market naturaly correct. Prices will fall to a point where investors (not speculators)and  first time home buyers can get in.

Tue, 01/31/2012 - 10:40 | 2112563 francis_sawyer
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I'm telling you... The 'natural correction' which you refer to is WAAAAY below where the market is now (unless some kind of magical wage inflation takes hold)...

In the above story... I could have EASILY rented the place (for a pretty penny)... But I wanted to be done with it, & 'property taxes' in the area (especially modeling the future) had me scared shitless...

People want to RENT... Some want to BUY (but they're very selective & have to meet a boatload of criteria)... In this whole experience (which lasted the better part of the past 8 months), I'm convinced that buyers & sellers are FAR APART...

Tue, 01/31/2012 - 10:44 | 2112575 Dr. Engali
Dr. Engali's picture

My wife is in the real estate business. There are more house coming on the market. People are looking to buy but they aren't qualifying and the sellers are asking far too much. Based on what people are offering and what people are asking this kmareket has aout another 25 to 30 percent correction. At least in this area.

Tue, 01/31/2012 - 11:01 | 2112631 francis_sawyer
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Your estimates (25-30%) exactly match what I had in mind...

I'll verify this by putting it another way... if you read above, I mentioned "owner subsidized" selling... During the same time, there were several other houses in the immediate area that went on the market (& sold)... The ones that got the "asking price" were ones that the owners put in about 10% of upgrades...

Ones that were basically sold "AS IS or "FIXER UPPER" (that actually sold), were closer to your 30% discounted number (and they say on the market for much longer)...

Tue, 01/31/2012 - 12:30 | 2112955 tekhneek
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I'm looking at a fixer upper right now in a great neighborhood (3 - 1/4 acre lots near the lot I'm looking at) on the end of a culdesac. Guy's asking $75,000 for it. I've talked him down to $58,500 and I'm going to offer him $40,000 to see if he'll take it, if not I'll just keep looking. There's a house on it that needs some serious renovations but... there's no way I'm going near a $120,000 price tag when I know it's worth $80,000. Beside from that the adjacent lots are priced at $68,500/each so I'm already getting a good deal primarily because the house that's on it was built in the 1940s and looks like a shit hole.

Fine with me though. I'm looking at it this weekend and will determine if I make an offer or not based on that. He said they re-did all the framing inside, re-did the roof, re-set the foundation and a lot of other work but he just doesn't want to mess with it anymore so. One man's trash, right?

Tue, 01/31/2012 - 13:30 | 2113262 francis_sawyer
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A big consideration for me is PROPERTY TAXES...

How is the county (or parrish) that the plot is located doing? (or the State, for that matter)... Do they have cash cow operations (in terms of commerce), or is a crappy bloated bankrupt location (like Cook County, Ill)?

That kind of stuff...

It's the biggest reason I moved (from suburban Md.)m out to the boondocks...

Tue, 01/31/2012 - 13:30 | 2113229 freakscene
freakscene's picture

There is plenty they could do, but won't

Why not allow people a 1 time opportunity to transfer 401k to mortgage without penalty, as long as they bought another house with any money after they sold said property? that would bring houses from being underwater, increase refinancing, allow people to sell at market value, and then begin scooping up some houses sitting idle on the market.

id take that opportunity twice on tuesday

Wed, 02/01/2012 - 04:07 | 2115712 MarcusLCrassus
MarcusLCrassus's picture

That's a good divide and conquer strategy.  Wall Street would shit bricks at the idea and would exert all their powers to stop it. 

 

The real estate industry, however, would love it and would be showering congress with boatloads of bribe money- I mean- lobbying cash. 

 

Someone write their congressman and get this in front of congress for a vote, and let those two industries duke it out. 

Tue, 01/31/2012 - 10:30 | 2112524 Manthong
Manthong's picture

At least there will be plenty of people not working on the farm, as well as consumer confidence and producer products to put in those  homes that are declining in value. 

Tue, 01/31/2012 - 10:30 | 2112525 Gromit
Gromit's picture

Yes, at or near bottom (within 2-3%) for US residential real estate.

Because banks mortgage book must be saved at all costs, GoV will get around to offering accelerated depreciation like in 1981.

This wlil put real estate in strong (landlord) hands which will enjoy 7% tax sheltered yield and prices will move very slowly up from there.

When people realize how vulnerable financial asets are after MFGlobal etc., physical assets like real estate will get a bid.

 

Tue, 01/31/2012 - 10:32 | 2112539 LawsofPhysics
LawsofPhysics's picture

Exactly.  If you can't put your hands on it, you don't "own" it and there is a good chance it has already been stolen.

Tue, 01/31/2012 - 12:19 | 2112947 viahj
viahj's picture

and if you pays taxes on it annually, you don't "own" it either

Tue, 01/31/2012 - 11:17 | 2112690 francis_sawyer
francis_sawyer's picture

This wlil put real estate in strong (landlord) hands which will enjoy 7% tax sheltered yield and prices will move very slowly up from there

IMO... It's still too much hassle (unless you literally become a slumlord)...

In a declining economy? To worry about tenants? I'll pass on 'getting in' to that business...

Tue, 01/31/2012 - 14:32 | 2113481 MachoMan
MachoMan's picture

Depends on leverage.  If you have little or no leverage, you can easily pay a property management company to do the dirty work...  maybe ~7% of the rent for the pleasure.

On distressed property + remodels + rent, you can get ~15-20% return in my area (not sure how it compares to DC, but it's probably as good as there is outside of there) depending on how good you can haggle on the front end.  Chopping off 7% of the top is a pretty easy decision.

The trick is finding someone who you can direct/command as to how to manage them.  If you know they will do a good job, then you sleep soundly...  if you know they will dump any tom dick or harry in there, who will constantly have issues with the place (to try and get free rent), then you will have a headache.  Of course, if you're lucky enough to build a big enough book, then you can manage them yourself...

Just remember, the flood gates are about to open on shadow inventory (they're bursting at the seams now).

Tue, 01/31/2012 - 10:31 | 2112528 LawsofPhysics
LawsofPhysics's picture

How dare they allow defaltion?!  The next thing you know they might actually reward savers by allowing a true bottom to be found and allowing the savers to actually buy some more real assets.  < Sarc off >

Tue, 01/31/2012 - 10:31 | 2112531 Eally Ucked
Eally Ucked's picture

Forget about your house as an investment vehicle, for ages it was YOUR PLACE TO LIVE!!!!

Tue, 01/31/2012 - 10:32 | 2112535 Dermasolarapate...
Dermasolarapaterraphatrima's picture
When the global housing bubbles collapse like a row of dominoes – Canadian housing bubble at apex. Real estate markets from Australia, UK, Italy, and Ireland now into correction phases.

 

"Never in the history of our modern economic system have we had coordinated housing bubbles rage across the world like some sort of financial plague.

People never want to believe that their special niche market is not in some sort of bubble.

The nature of this housing bubble is global and the collapse of markets across the globe will have wide ranging impacts that are yet to be felt."

 

http://www.doctorhousingbubble.com/global-housing-bubbles-collapse-canad...

Tue, 01/31/2012 - 10:33 | 2112540 ZeroPower
ZeroPower's picture

Its all about inventory - too much thats been built that's just sitting there with no offers in sight.

In post-recessionary housing studies a typical peak to trough for housing lasts about 5-8 years. Were coming up on year 6 (mid-end 2012) so that might be a time to nibble, but personally id like to see this indicator turn upward and sustain that momentum for a few months at least.

Tue, 01/31/2012 - 10:48 | 2112595 ghostfaceinvestah
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I take it your review of studies excluded Japan.

We aren't even close to 2/3rds of the way through this, especially now that the government is paying to reduce principal.  Can you think of anything more deflationary than debt destruction?

Tue, 01/31/2012 - 11:40 | 2112780 ZeroPower
ZeroPower's picture

Absolutely excludes Japan. Since this is a US thread, i of course referred to US housing.

What's that, deflation you say? Most of the doomsayers here are all about hyperinflation a la Weimar. 

Say what you will, supply and demand drives the market. Soon as inventory starts being in low supply, youll see these stats start to creep up. 

Tue, 01/31/2012 - 13:49 | 2113333 blunderdog
blunderdog's picture

You actually think we're "post-recession" in the USA?

Tue, 01/31/2012 - 11:49 | 2112815 wisefool
wisefool's picture

Its all about inventory - too much thats been built that's just sitting there with no offers in sight.

Why is this so hard for people to understand? And we are not even to the stage where the boomers start truly downsizing (assisted living, public or with family)

They dumped tulips in the lakes rivers and oceans. They shredded flooz.com stock certificates. A bunch of over educated people can eventually self limit their pergorativeness. But these homes require infrastructure, upkeep, and take away from better land use. All of this requires taxation (literal) or shadow (inflation).

Tue, 01/31/2012 - 12:23 | 2112962 viahj
viahj's picture

In post-recessionary housing studies a typical peak to trough for housing lasts about 5-8 years.

nothing "typical" about this "recession" and the current expanding debt loads...last gasps of the global ponzi but the death may be delayed for quite some time but the patient will not recover.

Tue, 01/31/2012 - 10:39 | 2112559 HD
HD's picture

Now wait just a minute. Jimmy Cramer said housing bottomed in 2009.

http://www.cnbc.com/id/31388528/Cramer_Housing_Has_Officially_Bottomed

Why this man doesn't wear a red rubber nose and big floppy shoes is anyone's guess.

Tue, 01/31/2012 - 10:42 | 2112572 digalert
digalert's picture

I checked with captain Hindsight, he said we need a permanent "Cash4Clunker-Homes" policy.

Tue, 01/31/2012 - 10:56 | 2112617 Alex Kintner
Alex Kintner's picture

For the "Cash4Clunkers" Cars Edition, taxpayers paid car sellers to send their (perfectly ok and running) cars to the junkyard crusher. A real good use of tax dollars. Too bad FDR didn't think of that instead of building all the public parks that are still in use today.

In other news, Detroit is already bulldozing foreclosed homes worth $100K and up , just to fight urban blight. Who needs a "Cash4Clunkers" Housing Edition when the cities are just making them vanish.

Tue, 01/31/2012 - 10:45 | 2112582 Snakeeyes
Snakeeyes's picture

I call it the "red zone" of no recovery. And when Detroit is the big winner, you have to raise your eyebrows (in disbelief).

Wintertime Blues: Case-Shiller 20 City Index Down -3.67 YoY And -0.7% MoM In November, Housing Still In "The Red Zone"

http://confoundedinterest.wordpress.com/2012/01/31/wintertime-blues-case-shiller-20-city-index-down-3-67-yoy-and-0-7-mom-in-november-housing-still-in-the-red-zone/

Tue, 01/31/2012 - 10:46 | 2112586 ghostfaceinvestah
ghostfaceinvestah's picture

Just wait until all those underwater borrowers start defaulting to get a principal reduction.  The decline in prices will accelerate.

Tue, 01/31/2012 - 10:52 | 2112603 JTBfromtheWL
JTBfromtheWL's picture

Housing will bottom when gold/silver peaks. That is when gold /silver is near infinity USD.

Tue, 01/31/2012 - 11:30 | 2112647 Alex Kintner
Alex Kintner's picture

The simple Rule of Thumb For How Much House You Can Afford is twice (2X) your gross annual income. So if medium US income is about $40K, that means medium house price should be about $80K. We have a ways to fall yet folks.

Tue, 01/31/2012 - 11:09 | 2112657 Paul Bogdanich
Paul Bogdanich's picture

When something is priced such that nobody can afford it without counting on capital appreciation who is going to buy it?  The "free" market destroyed the notion that a home is an investment.  Now it's just a place to live.  Which is a change I agree with by the way it's just surprising what it took to drive that simple notion through people's thick skulls.     

Tue, 01/31/2012 - 11:09 | 2112661 marcusfenix
marcusfenix's picture

"home ownership" is a bit of a strange concept in America isn't it? do you ever actually get to the point where you truly own the house or the property it sits on? certainly not for the 15 or 20 or 30 years your paying on the loan. and even if you live long enough to pay off the house, you basically rent the land it sits on, there are so many different ways that can be taken from you these days, rendering ownership of the house that sits on it inconsequential.

private property rights have been seriously compromised in this country, but very few seem to notice or care, but how can you truly own your own home if you are at the mercy of the PTB's hoping they don't take an interest in the land on which it sits.

is there anything that we as Americans truly own, anything that these days can not be confiscated in interest of environmental protection, national security or finical stability?

Tue, 01/31/2012 - 12:11 | 2112916 prole
prole's picture

And we wept precious, we wept to be so alone.....

Tue, 01/31/2012 - 12:13 | 2112920 spartan117
spartan117's picture

but very few seem to notice or care

 

They care about the Giants vs. the Patriots this weekend, however!

Tue, 01/31/2012 - 12:28 | 2112990 tekhneek
tekhneek's picture

Agreed... but if I'd rather pay $2,500/year in taxes than $x/year on a mortgage.

The problem I've seen first hand with friends is they all buy a $250,000 cookie cutter-houses in a cookie-cutter neighborhood on 3,000 sq ft of land and take out a 30 year mortgage, or worse... they go with ARM or a ballooning mortgage.

My forumulae for what I can afford is literally my salary or a little above which puts me in the 75-150k range and I'd prefer $60,000 if I can get it in a good location in a good neighborhood but I'm not holding my breath. I have found a few gems though that owners just don't want to renovate. The task then becomes finding the lesser of these that won't become hungry money holes.

Wed, 02/01/2012 - 04:16 | 2115716 MarcusLCrassus
MarcusLCrassus's picture

You cannot actually own land in the United States.  You only rent it. 

 

You don't believe me?  Stop paying your property taxes and then you find out who really owns that land. 

Tue, 01/31/2012 - 11:14 | 2112677 Savonarola
Savonarola's picture

Housing still sucks because real estate taxes are way too high, and zoning regs are too oppressive.

I would like to put up a few Yurts on my property for my kids to live in, but the zoning regs don't allow it.  

I would like to put up a home windmill for power - nope.

You can legally let six dogs run wild, but you can't grow hemp. 

Ron Paul is the man.

Tue, 01/31/2012 - 11:16 | 2112681 Seasmoke
Seasmoke's picture

it started in 1997 and will go all the way back to those prices and beyond

Tue, 01/31/2012 - 11:23 | 2112711 tony bonn
tony bonn's picture

how can this be?? jim cramer told us that the housing bottom would happen on june 30th 2009

Tue, 01/31/2012 - 11:32 | 2112743 Cole Younger
Cole Younger's picture

My wife inherited a Condo in Palm Springs Ca. Its a nice condo but I can't give it away...I asked the realator what they were going for and we listed it. We had 1 walk through in 41 days. We reduced the price by 10K and no walk throughs. I am thinking about lowering the price some more. I really don't want to kill everyone's real estate value in the complex but this condo is like a boat...A hole in the water where you just throw money in. Its a bill and a liability I don't want. One other anomaly I don't understand. When it was listed higher, on zillow it was estimated to be about 10K less. We lowered it 10K and now it is estimated to be another 10K less..WTF? It's been on the market for 41 days...Lost 10K?

Tue, 01/31/2012 - 20:29 | 2114876 Kiwi Pete
Kiwi Pete's picture

3 week marketing campaign, then auction it off to the highest bidder. Done deal!

Thu, 02/02/2012 - 00:05 | 2118907 Jena
Jena's picture

Sales counts in the desert are up recently according to a recent newspaper account but many of the sales were foreclosures and short sales.  There was so much over-building there in the last decade and it seems that the era of second, third and fourth homes is over.  

When you check zillow.com, do you also look to see what the prices for recently sold condos are?  (They show up as yellow flags on the map.)  That might help you in deciding how to price it but be sure to note the dates so you're looking at the historical trend in the right way.

As for your condo neighbors, if they aren't moving then they aren't going to be hurt.  If they're looking to sell, I suspect they'd be rushing to sell before you.  If the property values do go down, they'll be moving to get they're taxes lowered.

The selling season is short there, while the snowbirds are in town.  Price accordingly.

Tue, 01/31/2012 - 11:36 | 2112767 tempo
tempo's picture

Housing will not recover until 250,000+ jobs per month are created on a consistent basis. BTW, increasing the number of people on food stamps is not a basis for a jobs recovery as argued by the SEC of Agr. yesterday. Our children and grandchildren must adjust to the harsh reality that their future jobs will be Foxconn jobs (maker of nearly all AAPL phones, pads, computers). About 750,000 workers are employed by Foxcoon working 12 hours per day, 6 days per week w/o health care, vacations, retirement benefits. They work for less than $5/hour and live in large dorms (3000 rooms) packed 20 persons per room. They are fed twice a day servings of pork and rice. No TV, WIFI, smart phones, twittering, facebooking, social networking. Just work. Most of The children of the EU and USA will become slaves and the elite 1% families are the slave traders. The coming adjustment for the 99% in the EU and USA from being self absorbed facebook addicts to working as a slave is nearly impossible to believe and comprehend. But its coming.

Tue, 01/31/2012 - 11:57 | 2112858 Cole Younger
Cole Younger's picture

Nothing of the sort is coming. Too many citizens have firearms and ammo.

Wed, 02/01/2012 - 04:22 | 2115719 MarcusLCrassus
MarcusLCrassus's picture

Here's some food for thought for you: there are now more Americans in prison or on parole than were in all of Stalin's Soviet Gulags.

 

Slavery simply changed its name to "incarceration". 

 

Now back to the cotton-fields for you Americans. 

Tue, 01/31/2012 - 12:21 | 2112956 prole
prole's picture

Uh, if 750,000 people are getting ripped off by Foxconn, why don't 750,000 people QUIT HELLO!?

Ahem, sorry. I would really like an answer to that because I'm not so smart but alot of people here are.

Are they imprisoned there against their will? Is Foxconn a prison, should someone notify the Chinese Government?

I would also like to know what the company next door to Foxconn is paying and why don't all the Foxconn workers

go there? I have a sneaky suspicion, that the company next door to Foxconn is paying One $Dollar per hour and that's

why 750,000 people applied for, obtained and continue their employment at Foxconn by their own choice.

But I'm not very bright so maybe someone else can help me understand what's going on

While you are at it why don't you tell us what people get paid in Bangladesh? Or since they don't make AAPL

products there is it not trendy to bash them?

Tue, 01/31/2012 - 13:58 | 2113360 blunderdog
blunderdog's picture

why 750,000 people applied for, obtained and continue their employment at Foxconn by their own choice

The other option was starvation.  It's a choice, sure, but it's not exactly purely voluntary--there's at least some element of coercion involved.

The Chinese broke the iron rice bowl awhile back, and the rural peasants have been driven to the cities because there's no hope of earning enough to eat in the rural areas.

Tue, 01/31/2012 - 16:26 | 2113938 unnamed enemy
unnamed enemy's picture

lets see if this makes sense to you - the employee usually is a person who has no land, no money, and no way to survive other than to trade his labor for a paycheck. there are literaly billions of employees due reproduction, mechanization, automotion, increased life expectancy, the way the organization of labor was implemented during the industrial revolution, etc.

the number of employers and available jobs is very limited because of the abovementioned reasons.

who has the upper hand when negotiating compensation, the employer or the employee?

foxconn is simply taking advantage of those unfortunate circumstances, foxconn is not a prison, the entire planet is. 

 

Wed, 02/01/2012 - 08:14 | 2115817 prole
prole's picture

why 750,000 people applied for, obtained and continue their employment at Foxconn by their own choice

The other option was starvation. 

(So Foxconn and by proxy AAPL have saved 750K people from starvation? Is this not admirable? In my life I don't think I have saves a single person from starvation-- I have a hard enough time saving myself from starvation)

It's a choice, sure, but it's not exactly purely voluntary--there's at least some element of coercion involved.

(You provide no evidence or even trace of this 'coercion' where is the 'coercion?')

The Chinese broke the iron rice bowl awhile back, and the rural peasants have been driven to the cities because there's no hope of earning enough to eat in the rural areas.

(Or exactly what happened in Europe and America "industrial revolution?" This has all been done before sheople, China is catching up, and when they, like Japan, Germany and Korea before them, when they surpas us, will the moaners still be clucking about Foxconn?)

lets see if this makes sense to you - the employee usually is a person who has no land, no money, and no way to survive other than to trade his labor for a paycheck.

(Do you know me? You have eerily described my very existence)

there are literaly billions of employees due reproduction, mechanization, automotion, increased life expectancy, the way the organization of labor was implemented during the industrial revolution, etc.

the number of employers and available jobs is very limited because of the abovementioned reasons.

(Oh- in the bustling and booming China whose trade and exporting is taking over the world, "very limited available jobs?" Dear sir or Madam, are you making some sort of joke here?)

who has the upper hand when negotiating compensation, the employer or the employee?

(IDK, But when the Chinese, like the Koreans/Japanese/Germans before them are making more than Americans, will you be singing a diferent tune? Or will you be bashing some company in Uzbekistan, once the Chinese are too rich for such chatter, which shouldn 't be long)

foxconn is simply taking advantage of those unfortunate circumstances, foxconn is not a prison, the entire planet is.

(I ask you to reconcile "taking advantage of" with the poster above you who made the point that Foxconn is saving a 3/4 million of Chinese from starvation)

(Would you feel better if Foxconn were shut down? Close the factory and then no more "taking advantage of" those poor poor Chinese. Then evidently they would starve to death and die? Would this satisfy?)

Wed, 02/01/2012 - 23:43 | 2118858 blunderdog
blunderdog's picture

That post should've been about 12 words, and should've just explained your opinion. 

Lighten up, Francis.

Tue, 01/31/2012 - 12:39 | 2113036 RSDallas
RSDallas's picture

Tempo,

Who knows maybe Obama will team up with Barney Frank and pass legislation that allows a food stamp recipient to use their EBT cards for a down payment.

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