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The Truth About How The Fed Has Destroyed The Housing Market

Tyler Durden's picture




 

When observing the trends in the housing market, one has two choices: i) listen to the bulls who keep repeating that "housing has bottomed", a false mantra which has been repeated every single year for the past four, or ii) look at the facts. We touched briefly on the facts earlier today when we presented the latest housing starts data:construction of single family residences remains 46 percent below the long-term trend; the more volatile multifamily houses is 15 percent below trend and demand for new homes 47 percent below. This is indicative of reluctance by households to make long-term investments due to fear of another downturn in housing prices. Bloomberg summarizes this succinctly: "This historically weak demand for new homes is inhibiting the recovery of demand for construction workers as well, about 2.3 million of whom remain without work." But the best visual representation of the housing "non-bottom" comes courtesy of the following chart of homes in negative or near-negative equity, which via Bloomberg Brief, is soared in Q4, and is now back to Q1 2010 level at over 13.5 million. What this means is that the foreclosure backlog and the shadow inventory of houses on the market could be as large as 13.5 million in the future, which translates into one simple word: supply.

Here is Bloomberg's Joseph Brusuelas on this topic:

Approximately 13.5 million households hold negative or near-negative equity positions on their mortgages. Many of them will likely lose  those homes to foreclosures, which are again on the rise. At best, an increase in foreclosures will constrain a recovery in prices; at worst, a flood of inventory to market will put further downward pressure on prices.

In other words it is Bloomberg, not us, coming up with the perfectly logical idea that a number as large as the total number of underwater mortgages may and will end up on the market as foreclosures, which in turn will clog up the market clearance piping for years, if not decades to come.

So who is to blame for this ongoing market clearing failure, which lately is evident in every single market place where fair clearing is prohibited due to visible and invisible hands? Why the Fed of course. But don't take our word: after all when it comes to the Fed's endless (and catastrophic) attempts at central planning, we are "biased." Instead, here is Bloomberg again:

Counter-intuitively, the Fed’s low interest rate policy has probably reduced the cost of carrying non-performing debt and mortgages that are either underwater or soon will be. Low interest rates are probably serving as an incentive for those holding underwater mortgages or near-negative equity positions to refrain from selling their homes at discounted prices, which would facilitate in clearing the market.

 

Housing, along with autos, is one of the most interest-rate sensitive sectors in the economy. The blockage of the monetary transmission mechanism due to the overhang of supply has severely constricted the Fed’s low interest rate policy relative to what has traditionally occurred in post recessionary business cycles. Five years after the housing crash, perhaps it is time to ask hard questions about the efficacy of continuing the emergency policies that were appropriate in 2008-2009. The longer these policies remain in place, the greater the distortion they may cause in the housing market and the broader economy.

 

Conversations about what to do with the massive non-performing inventory sitting on the balance sheets of banks, the millions of households clinging to homes that are not in their economic interest to keep and the implementation of policies necessary to find the price at which the housing overhang begins to clear are long overdue.

Overdue, yes, and the hard questions and even harder answers will come but, sadly, not before the housing, and every other market, has had another forced liquidation to catch up to fair clearing prices, and to finally overthrow the Fed's artificial attempts at distorting this and every other market in existence. In other words, nothing at all will change until the next crash. Until then enjoy the game of musical chairs, in which the Pied Piper of Marriner Eccles has no choice but to keep playing until the bitter end. Chuck Prince said it best, a few months before the last great market crash: "So long as the music is playing, you’ve got to keep dancing. We’re still dancing."

 

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Thu, 08/16/2012 - 12:30 | 2710952 Divided States ...
Divided States of America's picture

I think the FED is ordering demolition companies to remove this shadow inventory asap. All the while the number of homeless people keeps going up.

Thu, 08/16/2012 - 12:37 | 2710972 Precious
Precious's picture

Fanny FED and Feddy MAC.

Thu, 08/16/2012 - 12:49 | 2711020 Xibalba
Xibalba's picture

And Dodd-FED-Frank will only make the problems worse.  

Thu, 08/16/2012 - 12:58 | 2711055 Richard Chesler
Richard Chesler's picture

Barney Frank, said in an interview that the defaults were, in essence, worth it.

“I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”

 

Thu, 08/16/2012 - 14:29 | 2711313 cranky-old-geezer
cranky-old-geezer's picture

 

 

Nothing is done to help the economy anymore. 

Everything is done to help banks. 

The housing bubble last decade was just another huge debt bubble, and debt bubbles are the only way banks make money these days.

It's not about housing and the economy.   It's about banks and debt, since banks make money on debt.  Interest, fees, securitizing, all that.

Fortunately there's no debt bubbles left.  The housing market is ruined.  No more debt bubbles there.  Unemployment is so high now, people are so afraid now, Fed won't be able to inflate another huge debt bubble anywhere else in the economy.

The only thing left now is government (sovereign) debt.  The last huge debt bubble.  The last big party for banks.

But it's not much of a party actually.  Interest rates on sovereign debt are near zero, banks aren't making much money in this latest debt bubble.

And yes, it's the last debt bubble.   And they'll keep it going long as possible.

This last debt bubble won't collapse like housing did.  Sovereign debt will be rolled over and over endlessly, because national governments can always tax their people and make those interest payments.

No, they don't care about ever getting the principal back.  They created it out of thin air anyway.

They want those interest payments.  It's how they make money.

No, this last debt bubble won't collapse.  When national governments need to borrow more money, central banks just print more money, very simple.

What WILL happen is hyperinflation from all that printing, followed by currency collapse.

Here in America federal government debt is 16 trillion now. It will grow steadily to 20 trillion, then 25 trillion, then 30 trillion, then 35 trillion, then 40 trillion, then 50 trillion, then 75 trillion, then 100 trillion, and keep right on growing.

The money supply will grow along with it as trillions of more dollars are printed to fund the ever growing debt.  M2, presently around 10 trillion admitted, more like 30 trillion actual, will grow steadily to 40 trillion then 50 trillion then 75 trillion then 100 trillion and keep right on growing.

By then a loaf of bread will cost $50, gas $50 / gal.

Later on a loaf of bread will be $100, gas $100 / gal.

Then $200 a loaf, gas $200 / gal.

That's hyperinflation. 

Somewhere in there the dollar will just flat collapse altogether.  Lose all value.  Just toilet paper.

 

Thu, 08/16/2012 - 14:45 | 2711572 NotApplicable
NotApplicable's picture

FTA:

"This is indicative of reluctance by households to make long-term investments due to fear of another downturn in housing prices."

Tyler, I no longer think this is a driving market force, but rather is driven by the total lack of "qualified" buyers, (as evidenced by the lack of activity in the refi market with the lowest rates ever).

Thu, 08/16/2012 - 16:15 | 2712028 Enceladus
Enceladus's picture

And a large part of this issue is those "lacking of qualification" are buyers who are qualified(under pre subprime standards) but have to enter a DMZ like area to ask will you please please please lend me money. I wouldn't be suprised if lenders start asking for blood and stool samples, in addition to 6 years of tax returns, and collateral note on your children.

Fri, 08/17/2012 - 14:32 | 2714844 FreedomGuy
FreedomGuy's picture

Barney likes Fannie and Freddie looks good to him, too.

Thu, 08/16/2012 - 12:44 | 2711009 khakuda
khakuda's picture

Only the government could find logic in destroying cars and houses to "add value"

Thu, 08/16/2012 - 12:55 | 2711016 Precious
Precious's picture

Germany makes it tax prohibitive to own old cars.  Japan tears down houses if the water heater goes out.  Planned obsolescence.  The key to corporate commerce.

Thu, 08/16/2012 - 13:15 | 2711118 Sofa King Confused
Sofa King Confused's picture

I would give you +100 if I could.  Planned Obsolescence is one of the greatest evils around.  Just imagine if your car could go for a million miles without anything breaking down.  Only buy one washer or dreyer in your lifetime. There is a movie on you tube called "The Light Bulb Conspiracy" that breaks this all down. The Centennial Light Bulb in Livermore California has been burning 24/7 for the last 110 years and has not burned out.  How many light bulbs have you changed in your lifetime?

Thu, 08/16/2012 - 13:49 | 2711248 Whatta
Whatta's picture

Next of kin - The recurring revenue item.

Give 'em a cheap printer and sell way overpriced toner to them. Give them a razor handle and sell them way overpriced blades. Make up diseases and advertise them on TV and sell them way overpriced drugs.

Thu, 08/16/2012 - 16:24 | 2712050 El Viejo
El Viejo's picture

Been runnin 12v DC or AC LED bulbs in my Malibu Landscape lights for over a year all night long. None have burned out so far. The low power flourescents were costing me $8.95 about every six months. Some sooner.

Thu, 08/16/2012 - 13:05 | 2711081 Headbanger
Headbanger's picture

I believe that actually happened in the Great Depression.  And when that wasn't enough, they started a war to really boost demand!

Thu, 08/16/2012 - 13:09 | 2711098 TBT or not TBT
TBT or not TBT's picture

Yeah, that little austrian guy was really pissed about the US housing market.   Hirohito too.

Thu, 08/16/2012 - 20:12 | 2712737 mmanvil74
mmanvil74's picture

Wanna talk facts?

Phoenix Metro Avg Home Sales Prices August 2011 $150,000

Phoenix Metro Avg Home Sales Prices July 2012 $196,000

 

Nope, no bottom here.... investors please look the other way.  Housing is a bad investment!! Phoenix homes have outperformed the S&P, US 10Y, and GLD over the last 12 months and that's not even counting rental yield which adds another 8%-10% net p.a. Real contrarians are buying in key US markets for the reasons I have mentioned in previous comments on this blog.  By the time national stats show broad price increases, you will have missed the opportunity to buy in key urban markets of CA, AZ, NV and FL.  This is the opportunity of a life time, US home prices are still among the cheapest in the world, particularly when 4% 30 year fixed interest rates are factored in.

Fri, 08/17/2012 - 14:46 | 2714892 FreedomGuy
FreedomGuy's picture

Everyone misses the real macro problem including the Fed. Because of classic resource missallocation (Austrian Economics), there are tooooo many homes-condo's-living units available. Unless you can get waitresses and doormen in Vegas to start pyramiding homes again like they used to see on late night infomercials you cannot reinflate the market. The population is not growing fast enough, boomers are downsizing, and illegals cannot buy very well.

Top it off that the job market stinks and friends of mine who used to make six figures are working retail jobs and there are not many with enough income to buy.

The third strike is that you cannot get any money out of your home to go buy the bigger and better McMansion. Even if you can, you may not because you know pinks slips may be just around the corner next year.

So unless Bernanke and the other central planners do direct injections into bank accounts and inflate the dollar about 50 too 100% (half current value) the market cannot come back. Too many homes were built and too many people were trained to build them. This is the utter train wreck that governements and politicians like Barney Frank create trying to "help" us.

Thu, 08/16/2012 - 12:35 | 2710966 Atomizer
Atomizer's picture

Burn baby Burn..


The Key to Fixing the Housing Market?

Fri 07 Oct 11 | 10:26 AM ET

 

Thu, 08/16/2012 - 12:40 | 2710986 adr
adr's picture

why does your link go to ZeroHedge?

Thu, 08/16/2012 - 12:46 | 2711013 Atomizer
Atomizer's picture

Cuz I done fucked up! Sorry about that, have to many windows open

 

The Key to Fixing the Housing Market?

Thu, 08/16/2012 - 12:45 | 2710993 Precious
Precious's picture

"Bank Owned" signs are an invitation for mischief.

Thu, 08/16/2012 - 14:07 | 2711361 hidingfromhelis
hidingfromhelis's picture

"Bank Owned" signs show mischief is already there.

Thu, 08/16/2012 - 12:59 | 2711053 tbone654
tbone654's picture

Ah... The Trammps...  Burn that mother down... +10

http://www.youtube.com/watch?v=A_sY2rjxq6M&feature=related

Thu, 08/16/2012 - 13:17 | 2711125 duo
duo's picture

possibly the best song of the disco era, with the exception of Heatwave's "Grooveline"

Thu, 08/16/2012 - 14:34 | 2711517 tbone654
tbone654's picture

agree... best disco song of the era...  I have my 7 year olds singing it around the house all the time...

love grooveline too...  good call, putting it on my website right now...

Thu, 08/16/2012 - 18:23 | 2712442 MisterMousePotato
MisterMousePotato's picture

I concur. I still listen to this song once or twice a week, especially when I need motivation to get something done. I find it inspirational like some do the theme to Rocky.

Curiously, the version I have (from the Saturday Night Fever album) has a barely perceptibly faster tempo than the YouTube video linked.

There were, though, a couple other songs from the era that have survived the test of time: MJ's Thriller and Billie Jean; BeeGee's Night Fever and Stayin' Alive; probably a few others. Not many, though, one has to admit.

Thu, 08/16/2012 - 12:36 | 2710970 max2205
max2205's picture

snap

Thu, 08/16/2012 - 12:38 | 2710977 madcows
madcows's picture

I think the FED is to blame, but not due to their current ZIRP.  Instead, I'd go back to Greenspan blowing the housing bubble back in the 90's.  Cheap borrowing back then led to the housing bubble, and it's resultant now... the oversupply of homes.  And, if you think it is bad now, just wait until the Boomers retire and try to reduce their cost of living by selling all those 2nd homes.

Thu, 08/16/2012 - 13:12 | 2711104 Carl Spackler
Carl Spackler's picture

That's right mad cows. the FED created the bubble, and it didn't effectively regulate the lenders...history is showing it to have failed in its responsibilities.

I wonder is this current spike has more to do with the foreclosure moratorium ending and the flood of new supply further depressing real estate prices.

Thu, 08/16/2012 - 12:38 | 2710980 adr
adr's picture

Don't worry about being underwater on your home. SHATNER IS BACK AS THE PRICELINE NEGOTIATOR!!!!

BTFD!!!!!!!

Priceline to $1200 a share!!!!!!

 

Fuck this fucking market with a fucking twelve foot fucking spiked pole up its fucking ass.

Thu, 08/16/2012 - 12:39 | 2710985 Piranhanoia
Piranhanoia's picture

 "Many of them will likely lose their homes to foreclosure, which are again on the rise".  This is an opinion piece by a hitman.

Now the clown court of bloomberg inserts opinion to justify fraud.  Why would you pass on an opinion op ed by the MBA as a news story?    Why would the TD's pass on such tripe?

 

Thu, 08/16/2012 - 12:43 | 2711002 Tyler Durden
Tyler Durden's picture

It is "tripe" that if one can not pay their mortgage payments, one should hand over the keys and let the bank foreclose on the house? Or is it tripe that said squatter should remain in his house mortgage-free, taking at least one house out of the "for sale" inventory, and in the process pushing prices for everyone else who wishes to buy, and pay for a home, ever higher?

Thu, 08/16/2012 - 12:50 | 2711030 adr
adr's picture

While I paid my mortgage payments a couple in their 50s two doors down from me stopped paying their mortgage. They didn't pay for two years and then got a government mortgage modification because the wife claimed disability for kidney problems. They got a principle reduction and a new 2% interest rate.

I found out that they paid the new payment for a couple months and then stopped paying again. They figured that they could go another two years without paying before they finally got thrown out of the home.

After five years of not making payments they finally just walked away from the house and left the keys. It turns out they were saving cash during the whole period to pay for a cheap condo since they didn't need the house anymore. You can buy a decent two bedroom condo for $30k where I live.

The only thing the government is good at is rewarding the irresponsible.

Thu, 08/16/2012 - 13:13 | 2711113 TBT or not TBT
TBT or not TBT's picture

Vote buying operations.    The last and fatal stage of democracy.      We need to go back to being a representative republic, constitutional, maximally unplanned and decentralized, or else end up as a tyranny.

Thu, 08/16/2012 - 13:15 | 2711121 BKbroiler
BKbroiler's picture

You can buy a decent two bedroom condo for $30k where I live.

Either you meant 300K or you live in Detroit

Thu, 08/16/2012 - 16:14 | 2712027 TimmyB
TimmyB's picture

Exactly who is the irresponsible party the government is rewarding here?  While you seem to claim the people living in the home, actually it is the lenders who are being rewarded by the government. 

Frankly, if I owned an underwater home, I wouldn't pay the mortgage either.  And when the bank finally forclosed, I'd strip the copper and everything else of value that I could sell from the home and sell it before I was kicked out.  Then I'd file for bankruptcy if I was unfortunate enough to live in a state where the lender could sue me for the rest of the mortgage. 

What that couple did was completely rational given the current system we live under.  Every rational person who owes more than their home is worth should do the exact same thing.  

Fuck the banks.        

 

 

 

Thu, 08/16/2012 - 16:20 | 2712040 Enceladus
Enceladus's picture

Do you live on the indian reservation? I would need to write a 30k check to sell my condo...

Thu, 08/16/2012 - 12:53 | 2711041 Precious
Precious's picture

Incentives to buy homes are distorted by government policy.  Incentives to go to college are distorted by government policy.

You want a bubble?  Government policy is ready and able.

Thu, 08/16/2012 - 13:17 | 2711127 Carl Spackler
Carl Spackler's picture

Nice forearm shiver, Tyler...and easy picking at that.

Socialists have no defense because that they understand how reality hits everybody.

Consequently, they're the "muppets" of Fight Club.

If only they were a convenient way they could be fed to Lloyd and the squid. Hmmmm.

Thu, 08/16/2012 - 13:20 | 2711133 JohnKozac
JohnKozac's picture

There is an infection spreading thru out culture sort of an ethical bankrupcty. Niall Ferguson addresss some of this in his recent book, "Decline fo the West" or something like that. When Enron collapsed from massive fraud, it was discovered that almost the entire management was delinquent. The Dean of Wharton was asked about it on TV an dhe said, basically, behavior flows from the top down. If the CEO is corrupt the next level will be and then the level under that an dso on...sort of like "follow the leader," he said.

 

We see that now with massive pervasive fraud and no regulation or indictments. This trickles down as we are seeing all aorund us. As Crazy Eddie summed up the other day in a RT interview with Lyster (as was replayed here on ZH), "There was never a better time then now to be a Fraudster in America."

 

I hope it changes but the prognosis is bleak.

Thu, 08/16/2012 - 13:35 | 2711193 Life of Illusion
Thu, 08/16/2012 - 13:38 | 2711208 redd_green
redd_green's picture

There's no one sentence 'sound byte' type answer.   It's way more difficult, but I'd have to say we need to take it on a case by case basis.   Many people on both side of the fence: those that knew they could game the system, and did, and screwed all of us that didn't,  and also, those that really did get screwed when they bough late in the run up, paid way too much for their homes, had a job loss or illness or two, and lost everything.   My feeling is that we should prosecute those that can be proven to have gamed the system.  But that means all of those mortgage brokers who took fees and ran knowing damn well that the people they put into homes could not make the payments, and banks that bought those mortgages and sold them to investment bankers to be rolled into MBS's, and collected huge fees along the way,  ...   we're focusing at the people at the bottom of the crime chain, as we usually do in the USA.     A jerk steals a bottle of wine from a liquor store and does years in jail, and a mortgage broker steals tens of millions and ruins many peoples financial lives and gets off scot free.

Thu, 08/16/2012 - 15:13 | 2711746 Blankenstein
Blankenstein's picture

If you lose your house to foreclosure you can go rent a place.  I've been renting for a looong time, it's' not ideal, but better than participating in the housing ponzi.  Most of the homes being lost are due to people paying way more than they could afford thinking they were going to "get rich" (remember all the realestate investor clubs, flipping infomercials, etc. during the bubble years).  People lost homes for reasons such as job loss and medical issues prior to the housing bubble when there were stricter lending standards and I never heard a peep about helping these people back then.   

This being said, there need to be charges brought against all fraudulent participants in the housing debacle:  bankers, underwriters, mortgage brokers, real estate agents, buyers, etc.  The ponzi required all of these players to occur. 

Thu, 08/16/2012 - 13:52 | 2711272 Stoploss
Stoploss's picture

Oh, no, no ,no... That's my gig.

I liquidate the son of a bitch out from under them.

Send a crew if need be.

Squatters beware..

Thu, 08/16/2012 - 13:10 | 2711100 Arnold Ziffel
Arnold Ziffel's picture

My GLD and SLV are up over 250%.....and steady....

My house is down 42% and dropping....

'nuff said.

Thu, 08/16/2012 - 15:41 | 2711875 Bay of Pigs
Bay of Pigs's picture

Why would you own GLD and SLV?

'nuff said.

Thu, 08/16/2012 - 12:40 | 2710988 fonzannoon
fonzannoon's picture

CNBC was just talking about a flash crash in dollar tree today.

Thu, 08/16/2012 - 12:42 | 2711000 Meesohaawnee
Meesohaawnee's picture

Bullish!! oh to be an Econ Professor these days..........id be depressed knowing the kids are paying huge money to learn about a complete fraud. Thanks to the Pres and the Bernak. Then again. they dont give a shit.

Thu, 08/16/2012 - 12:43 | 2711003 adr
adr's picture

I just read about a new trend for teenagers called Sharpie Parties. Word goes out on Twitter that there will be a huge party at foreclosed house X, hundreds of teenagers show up to drink, party, and destroy the homes.

Everyone gets a giant Sharpie marker to graffiti the walls, and then the rest of the mayhem starts. Turns out that many of the parties are planned by kids who were thrown out of their home when it was foreclosed.

The banks that own the homes don't really care about trying to fix the damage. They just leave it as is and lower the price. Most of them just remain in the shadow inventory.

The media is blaming the new phenomenon on the movie Project X.

Thu, 08/16/2012 - 13:07 | 2711089 Unbezahlbar
Unbezahlbar's picture

sounds fun, adr, what did you say the address is?

Thu, 08/16/2012 - 13:22 | 2711141 Seasmoke
Seasmoke's picture

sounds like i need to get a twitter account.......i will bring the keg !

Thu, 08/16/2012 - 13:53 | 2711232 TPTB_r_TBTF
TPTB_r_TBTF's picture

this is even more bullish than a broken window!

//youtube/sharpie-party

 

 "... and we employ a lot of people in the community, ... It's just a win, win for everybody," said Phillips-the-Foreclosure-Fixer.

Thu, 08/16/2012 - 14:31 | 2711504 Bicycle Repairman
Bicycle Repairman's picture

Much of the shadow inventory will never be purchased at any price and will have to be bulldozed with the taxpayer picking up the entire tab.

Thu, 08/16/2012 - 12:49 | 2711022 TideFighter
TideFighter's picture

Who knew that to promote the broken window theory you actually had to break some actual windows....

Thu, 08/16/2012 - 12:49 | 2711023 Flakmeister
Flakmeister's picture

The housing market was doomed much earlier but the Fed didn't help matters...

That lump of dirt is noticibly visible under the rug....

Thu, 08/16/2012 - 12:49 | 2711024 bankruptcylawyer
bankruptcylawyer's picture

don't fight the fed , boys.

Thu, 08/16/2012 - 12:52 | 2711034 Meesohaawnee
Meesohaawnee's picture

why not. The kids are learning thru things like Corzine today that laws go unpunished so why not punish on your own? Nobody seems to be willing to do it for them.! So they are learning early in life to hate banks? Tell me whats wrong with that. The earlier in life a child learns a snake bites and kills the better chance it has at survival.

Thu, 08/16/2012 - 13:55 | 2711289 TPTB_r_TBTF
TPTB_r_TBTF's picture

we need to teach those kids something useful, like ripping out the copper piping to sell...

Thu, 08/16/2012 - 12:54 | 2711044 Headbanger
Headbanger's picture

Sub-prime mortgage black swan deja vu all over again!

Thu, 08/16/2012 - 12:57 | 2711052 EricktheRed
EricktheRed's picture

Between July of 2004 to July 2007, the FED raised the rate too high and way too fast which trashed the subprime sector in their effort to slow the economy. It backfired! As a Realtor, I can validate that the reason property values are getting obliterated is because appraisers are allowed to use distressed properties (bank owned and short sales) as comparables. The appraisers claim that these are the only properties that are selling. Those properties and their value is only a function of what a bank is willing to write off as a loss....and there goes everyone's equity! The housing market would spike quickly if appraisers had to use tax assessed values from before 2008.

Thu, 08/16/2012 - 13:20 | 2711134 Umh
Umh's picture

Tax assessed values in much if not most of this country are fiction.

Thu, 08/16/2012 - 13:31 | 2711177 redd_green
redd_green's picture

True, there are vast differences depending on which geographical area you're talking about, but I can't agree with most of what you said, Erick.   The subprime market blew up because people were given mortgages who could not make the monthly payments.    There were many players involved in the scam.   You can't dump all of the blame on appraisers.   but a big part of the run up to unrealistic values were due to the banks pushing for higher and higher appraisals, after a while many of which made absolutely no economic sense.  

Fri, 08/17/2012 - 09:03 | 2711956 cranky-old-geezer
cranky-old-geezer's picture

 

 

"Realtors" are just as responsible for the housing mess as bankers. 

You leeches were happy to sell homes at inflated prices to people you knew couldn't afford them, make those fat commissions, not caring what happened after that.

Now those homes are sitting foreclosed and empty, dragging down home values around them. 

The housing market would spike quickly if appraisers had to use tax assessed values from before 2008.

No, the housing market would collapse completely. 

Nobody is gonna pay those 2008 assessed values when current market value is 50% lower.

See, you're fraudsters just like those bankers.  Your own words prove it.  You wana screw people just like those bankers wana screw people, selling homes for way more than they're actually worth in the current market.

Fortunately your industry is collapsing now and you're all going broke.   You deserve it.

And it's gonna get worse.  Housing has another 50% to drop before we even talk about a bottom.

Yep, we're looking at 75% drop from 2007 values, then we can start talking about a bottom.

That 200k home in 2007 will drop to 50k.  Then we can call a bottom.

Assuming it was lived in the whole time.  If it was foreclosed and vacant a couple years, trashed out, it might go for 25k.

And no, it won't start going back up.  We'll reach a bottom in housing and it'll stay there, because the economy is totally trashed, 35% - 40% unemployment, 100 million on food stamps.

...which by the way is why the federal deficit will be $5 trillion a year, and all the problems with that, massive money printing to keep the government going, rapid currency debasement leading to hyperinflation, then currency collapse ultimately.

Face it, you "realtor" leeches have no future.  Better go get a real job.  Good luck there too.  You have no job skills either ...unless you call screwing people a job skill.

Thu, 08/16/2012 - 13:01 | 2711069 Meesohaawnee
Meesohaawnee's picture

but but CNBC told me that more homes means homebuilder confidence is good. More homes means more supply means better prices.. but but ,,the blowhorn cant be wrong can they? but but henry blodget is on there. That must mean CNBC has its viewers in its best interest right??

Thu, 08/16/2012 - 13:06 | 2711079 Unbezahlbar
Unbezahlbar's picture

Several long term problems:

There are too-many-to-count empty houses on the market from what I see. Some listed but many with no "For Sale" sign for months, hiding in someone's shadow inventory someplace;

No sign of job recovery any time this decade;

Neighborhoods turnng to slums as more vacant houses have unmowed lawns, falling fences, etc.;

increased vandalism in almost all these suburbs now;

zero interest rates will not last forever. When mortgages regress to the mean, house prices will plunge even more.

Americans move on the average every 5 years so why woudl you buy a house when you know for a fact it will be worth much less in 5 years?

---an unknown is how the Bursting Bubble in other places, some just beginning like Vancouver and Australia, will affect the USA? Since the credit market is so interconnected i am guessing we will see a variant of the subprime/bank collapse globally.

 

Thu, 08/16/2012 - 13:08 | 2711096 rlouis
rlouis's picture

Blame?  It was intentional.

 

"The dogs will bark but the caravan moves on."

Quote of Montagu Norman, Governor, Bank of England, 1920-1942.  Moving force for the craetion of the B.I.S.

His policy was 'Never explain, never apologize.'

Thu, 08/16/2012 - 13:18 | 2711129 Seasmoke
Seasmoke's picture

Fuck you DeMarco !!!!!!!!!!

Thu, 08/16/2012 - 13:23 | 2711144 JohnKozac
JohnKozac's picture
As the Australian housing bubble bursts, prices could fall a lot further than people expect: Steve Keen(Australian Property Observer)

 

http://www.propertyobserver.com.au/residential/as-the-australian-housing...

Thu, 08/16/2012 - 13:25 | 2711152 redd_green
redd_green's picture

Regarding the premise of the article: The belief that the USA could base its entire economy on construction jobs building new houses for people to continuously trade up into, and finance and banking jobs based on bigger and bigger mortgages, is a major problem.    If housing starts reflected the tens of millions of high paying manufacturing, engineering and R&D jobs shipped overseas, when the crooks who really run the world dismantled the US manufacturing base, then housing starts would be a lot lower than they are right now.  

 

 

Thu, 08/16/2012 - 13:56 | 2711180 zrussell
zrussell's picture

Slaves don't own property. And slaves are what they are trying to making us.

And, I dare say, their (GB's) strategy is working phenomenally well.

                                            STRATEGY

Citizens are homeowners-    Collapse the housing market and take the

                                      property from the public.

Citizens save for the future- Make interest rates 0.01%.

                                       Substitute 401K/IRA balances with T-Bills

Citizens have jobs-             Place the public on welfare.

Citizens can reason-           Rease the modern public school system.

Citizens have food-             Release the Food Safety Modernization Act

                                       to bring on the GMOs. Take the heirloom

                                       seeds away. Replace with Monsanto seeds.

Citizens are in health-         HFCS to the moon! Irradiate all nutrients

                                      out of  all meat, dairy, veggies. Enact new

                                      medicalcoverage to destroy quality of

                                      healthcare and tax the population to

                                      the moon!

Citizens getting sick-           Saturate the population with drugs.

                                      Kill those who can't support the state.

Citizens have faith-            Make it illegal to worship anything but

                                      the State.

 

 

 

Thu, 08/16/2012 - 13:37 | 2711201 vincent
vincent's picture

I still have news articles from local publication predicting housing bounceback June 2009 (southern coastal USA).

I'm acquainted with several squatters who not only stopped paying nearly 3 years ago, but they're renting the places out while they rent in a gov't subsidized project. Pocketing bout 400/month.

A 3-5 year old, CBS, 3/2, 1600 sq. ft w/ 80x125 lot  in a nice neighborhood can be had here for 60 grand.

Older, wood frame dwellings are short selling and forclose selling for 30-40 grand.

These same homes were 240,000 and 160,000 at the  2007 peak.

Foreclosures are ramping up here once again, and economy is now affecting comfy middle class folks. Real unemployment here 15%, and cities/counties doing furlough days.

It's gonna get uglier here. Don't know how much further prices can fall.

Thu, 08/16/2012 - 13:56 | 2711294 daneskold
daneskold's picture

Huge paradox happening here.  Sixth floor of my building is a realtor.  I ask the realtor-idiots pretty much daily what's happing in Salt Lake City real estate.  They uniformly report very, very active.  One agent this morning told me she is thinking of hiring her own loan processor she is so busy.

 

On the other hand, I went through a divorce.  My home is $500k underwater.  I haven't made a payment since March 2010.  BOA has often threatened foreclosure, but has not pulled the trigger.

 

The latest is BOA offered me $30k to stay in the house until it short sells.

 

Err....ok.  Just paying utilities, living in 5,700 sq feet, 7 bedrooms, 4 baths, half acre lot.

 

How many others are doing what I'm doing?

 

Real estate boom and bust?  Yes

 

Schroedingers real estate market

Thu, 08/16/2012 - 13:57 | 2711304 johnjkiii
johnjkiii's picture

But wait! We're saved! Housing starts are up 20% YOY! Hip boots recommended:

http://finance.yahoo.com/blogs/daily-ticker/housing-starts-jump-20-one-recovery-ahead-says-171641759.html?l=1

Thu, 08/16/2012 - 14:26 | 2711479 Let The Wurlitz...
Let The Wurlitzer Play's picture

dance bitches.

Thu, 08/16/2012 - 15:31 | 2711824 Snakeeyes
Snakeeyes's picture

The Fed in conjunction with government housing policy.

Krugman doesn't blame the Fed or Clinton which is total hypocrisy.

http://confoundedinterest.wordpress.com/2012/01/26/krugmans-misleading-t...

 

 

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