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Will America Ever Recover From The Housing Crisis - A Real Estate Infographic

Tyler Durden's picture




 

Back in March, on the back of the last gasp of yet another central bank-induced sugar high (in this case mostly LTRO 1+2), as well as economic data skewed by record warmth, a plethora of housing bottom callers (we would call them analysts but they are anything but) emerged from their hibernation and did what they do like clockwork every year: called a housing in bottom. Sadly, now that the market has topped out, at least for the current easing iteration, it appears that the housing triple dip as measured by Case Shiller will shortly be a quadruple dip. And so on, and so on, until the question becomes: will America ever recover from the housing crisis. We don't know, but we do know one thing - fixing an excess debt problem with more debt won't work. Period. Yet that is what continues to be the only "policy" in resolving the aftermath of the Great Financial Crisis. For everyone else seeking a more nuanced answer we suggest perusing the infographic below which provides a less jaded perspective and even has a Hollywood conclusion: "The end is on the horizon"... well, a Tarantino-esque conclusion: "...The distant horizon."

Will America Ever Recover From The Housing Crisis

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Tue, 05/15/2012 - 19:14 | 2429419 Colombian Gringo
Colombian Gringo's picture

What housing crisis? If you are a bankster, you gave out millions of fraudulent mortgages, (especially if you were a democrat with FMNA), were bailed out after the sub prime borrowers inevitably defaulted, and then get to kick out the poor saps and re-sell the homes to other suckers. The banksters became billionaires while millions of americans got tossed into the streets.  How fair is that to the tens of millions of americans who saw their retirement plans go up in smoke when their homes dropped in value like rocks, especially after their  401Ks were also looted by the banksters?

 

Who bails me out when I screw up?

 If we were going to bail out anyone, why not mortgage holders, instead of a criminal cabal who are filthy rich, screwing everyone else for their benefit?

 

Change you can believe in, Fucking Liar!

Tue, 05/15/2012 - 19:16 | 2429469 old naughty
old naughty's picture

The End is On the Horizon...The Distant Horizon.

This pain is lengthy...And the whole world is in it.

Tue, 05/15/2012 - 20:39 | 2429715 economics9698
economics9698's picture

Bush was a big supporter of subprime.

Tue, 05/15/2012 - 20:46 | 2429740 Dr. Engali
Dr. Engali's picture

It's Bushes fault... Got it. Keep telling yourself that, of that's what helps you sleep at night. But here is a dose of reality.... They all loved sub prime, it kept the illusion going for a little while longer.

Tue, 05/15/2012 - 21:20 | 2429825 EnglishMajor
EnglishMajor's picture

Reagan, Bush, Clinton, Bush, Obama...Permit me to issue and control  the money of the nation and I care not who makes its laws.

Tue, 05/15/2012 - 21:26 | 2429847 Dingleberry
Dingleberry's picture

Subprime did not cause the crisis. Securitazation plus ratings fraud did. Subprime was just the last to get into the game as all the "good" risks were already done. Subprime was also the first to pop, as it should have been. 

The Fed wants a slow bleed correction vice a deflationary collapse that drags other shit down with it even more than it has already. Therefore, the recovery will take that much longer. How long as the NASDAQ been around 2k????

Tue, 05/15/2012 - 21:47 | 2429912 smlbizman
smlbizman's picture

it will be over when large swaths of the country are smoldering......

Tue, 05/15/2012 - 22:11 | 2430005 TheSilverJournal
TheSilverJournal's picture

Housing going down another 70% in real terms. In nominally terms, it will probably never fall from here because of inflation.

When interest rates rise through the roof to make up for the last decade of ridiculously low interest rates, mortgage payments will soar. Also, when the US defaults, Americans will be much poorer.

Tue, 05/15/2012 - 22:31 | 2430049 AldousHuxley
AldousHuxley's picture

housing is only a worthwhile "investment" if it out paces inflation.

It is basically short hedge against depreciation dollar and that's it.

housing bubbles have 20-30 year cycles.

Too bad boomers are not going to retire off of their shithole home equity alone....your children can't afford it.

 

house is a liability once again.

Tue, 05/15/2012 - 22:44 | 2430067 socalbeach
socalbeach's picture

Not necessarily true.  Daniel Amerman goes over the numbers in the 70's where real estate didn't keep up with inflation, but if you combined the tax advantages plus the reduction in real mortgage principle due to inflation (a tax free benefit), you could have come out ahead.  I can dig up the link(s) if you or anyone else wants.

Wed, 05/16/2012 - 00:12 | 2430346 The Big Ching-aso
The Big Ching-aso's picture

 

 

I knew we were in trouble when Habitat for Humanity was putting model home flags out on the weekends.

Tue, 05/15/2012 - 22:31 | 2430051 fourchan
fourchan's picture

the federal reserve plan is to capture all the assets of the country

and enslave a free people to debt.

97 years after its start and the

program is not only working perfectly, its working too perfectly.

Tue, 05/15/2012 - 22:58 | 2430074 engineertheeconomy
engineertheeconomy's picture

Tyler gets himself all worked up and spun out like the Tasmanian Devil.

Let me simplify this for you all.

The dotcom bubble was caused by loans. The wall st bubble is caused by loans. The housing bubble was caused by loans, and when they stopped making housing loans, the bottom fell out because loans to the bottom of the economic pyramid create jobs.

Therefore, to fix the problem, if they wanted to, all they would have to do is start making real estate loans again and reverse the process. That would create jobs at the bottom of the pyramid and people would be able to make their payments again.

 THE REAL PROBLEM IS THAT THE BANKS MAKE MORE MONEY IN THE LONG RUN BY FORECLOSING ON OUR HOMES AND THEN RENTING THEM TO US

Also, keep in mind that every loan with interest is fradulent because usury is unpayable. Thats why we have interest rate/foreclosure ratio curves.

Now do you understand Tyler?

Tue, 05/15/2012 - 23:22 | 2430221 LongBallsShortBrains
LongBallsShortBrains's picture

 THE REAL PROBLEM IS THAT THE BANKS MAKE MORE MONEY IN THE LONG RUN BY FORECLOSING ON OUR HOMES AND THEN RENTING THEM TO US.....

I am no fan of the banks, but if you had to borrow money to buy YOUR home, then it isn't YOURS. If you can't or won't pay the mortgage to which you previously agreed, then maybe renting is the best option for you and the banks.

The problem is with letting the .gov buy these crappy mortgages, creating a moral hazard. If these mortgages had to sell on an open market with no .gov "buyer"', they would be priced appropriate to their risk. A higher credit risk borrower would have to pay a higher rate for a mortgage, thus reducing their buying power. Too bad for the whole country that pricing mortgage repayment risk appropriate to the creditworthiness of the loan applicant be racist n shit......

And some people wonder why there was a bubble......

Wed, 05/16/2012 - 02:18 | 2430527 ForTheWorld
ForTheWorld's picture

Regardless of whether you borrow money or not to "purchase" a home, there's still that pesky detail of land title. You pay all that money to get the title to the land. It still isn't yours to do what you want. You still keep paying ever increasing property taxes. Why should you pay taxes on something you own? It's absurd.

Tue, 05/15/2012 - 22:27 | 2430008 cranky-old-geezer
cranky-old-geezer's picture

 

 

They all loved sub prime, it kept the illusion going for a little while longer.

When are people gonna wake up and see it's all about creating more debt. 

More debt is more business for banks.  Bankers make money from loan fees and interest.  Then they make more money from the securitization process.

In the last decade housing was the chosen way to create more debt.  I say "chosen" because everybody at the Fed and everybody in congress was in on it.   Fed made lots of credit availabe and congress forced banks to relax their lending standards to the point where anyone with a pulse could get a mortgage on a $500,000 home.

Banks made boatloads of money from fees and subprime interest, then turned around and made boatloads more money on the securitization side, a brand new thing last decade that doubled or tripled what banks made from those loans and created the biggest securities trading boom in 40 years.

...until it all blew up in '08 when mortgages started defaulting like crazy and all the lending fraud was discovered. 

It was the biggest securities crash in 40 years, nearly bringing the American financial system down.

During the housing debt boom home prices were bid up to crazy levels.  Those prices have to come back down now to 2000 levels before any sort of recovery can begin.

Then they have drop another 50% to get in line with an economy that has collapsed 50%.

This decade the big debt boom is sovereign debt.  But only big banks can play that game, and sure enough, big Wall street banks and making boatloads of money trading sovereign debt securities (after being bailed out when all their housing debt securites collapsed).

And yes that sovereign debt bubble is gonna collapse too.  It already collapsed on MF Global (and cost account holders a billion dollars).  Now it's collapsing on JP Morgan, costing them a couple billion dollars (passed on to taxpayers no doubt). 

Now Greece is fixing to leave the EU and all their bonds are gonna collapse, and it'll start the dominoes falling, then the whole EU thing will collapse and trillions of euros of sovereign bonds will all come crashing down.

It'll spook markets so bad everybody suddenly loses faith in America's $16 trillion of debt bonds floating around out there and they all collapse.

All these debt bubbles collapse sooner or later.

When they collapse, prices that were bid up in the bubble collapse back down to pre-bubble levels.

In the case of housing, banks, real estate agents, and sucker underwater homeowners are trying to prevent that price collapse.

They're gonna fail.  Supply and demand market forces are way too strong.  Demand for bubble-priced homes has dried up, and prices WILL come down one way or another.

Sure, banks can keep boatloads of foreclosed homes off the market a while.  But those empty homes keep losing value as time goes along from not being occupied and maintained.  You're watching the value of your inventory drop further and you'll take bigger losses, so whatever, go ahead, keep 'em off the market, you're gonna lose either way.

Now banks are desparately trying to keep trillions of dollars and euros of sovereign bonds from collapsing.  It ain't gonna work either, especially with Greece starting the dominoes falling.

Debt bubbles always collapse sooner or later.  Always.

You think financial people would figure that out after a while and stop doing these debt bubbles.

But they're too greedy and shortsighted unfortunately.

 

 

Tue, 05/15/2012 - 23:12 | 2430186 Hubbs
Hubbs's picture

When they created FED, then politicians had a way to get money to pay for their promises, so they could get re-elected. As business grew in this Keynesian fertile window of opportunity (cheap and plentiful fuel, a young poulation, start of the industrial age winding up in the post WWII boom when the US and it's reserve currency status and industrial might made it top dog) businesses became profitable as well, and could afford to buy off the politicians and then even keep more of their profits as they exited overseas.

Two things about politicians: They need 1.)votes and  2.)money to buy votes and their wine, whiskey and whores.

So the FED fiat enabled the politicians to deliver to the public, who could never refuse a free lunch, and politicians were re elected, and became "established" and worthy of  corporations' lobbying.

 

The corporations/wall street fed the politicians. 

 

And that is how facism came to pass.

Tue, 05/15/2012 - 22:36 | 2430059 Vendetta
Tue, 05/15/2012 - 21:55 | 2429942 Freddie
Freddie's picture

http://www.youtube.com/watch?v=Yga7TlsA-1A

Maxine Waters and the Dems protecting Fannie and Freddie.

Tue, 05/15/2012 - 22:35 | 2430055 AldousHuxley
AldousHuxley's picture

most politicians are associated with profits from real estate either directly or indirectly.

 

Money for education and kids = construction projects in their city by firms part owned by themselves while teachers don't get shit.

Low mortgage rates = increase in asset prices of buildings they own

Mega public works = making their owned lands near by appreciate due to government parks, new roads, etc.

 

Wed, 05/16/2012 - 06:48 | 2430725 BeetleBailey
BeetleBailey's picture

Maxine Waters is a race baiting turd. The side-winding mouth of hers, as well as the hate spewing out of that sewer makes me want to bitch slap the taste out of her lying mouth. Gerymandered to her "''hood" - we will be forced to listen to this bitch for years - unfortunately.

She is emblematic of what ails Congress. A con-artist.

Tue, 05/15/2012 - 22:35 | 2430062 RafterManFMJ
RafterManFMJ's picture

...and too bad that horizon is an event horizon...by the time you see it, it's much too late.

Tue, 05/15/2012 - 19:35 | 2429528 PersonalRespons...
PersonalResponsibility's picture

How about no bailout for you or the banks.  Both are wrong.  Sorry.  You fuck up, then you fuck up.  Bailing out you bails out the banks.

Tue, 05/15/2012 - 21:49 | 2429920 hadriansnightmare
hadriansnightmare's picture

Too late- the stupid govt made the mistake of bailing out the banks (with Paulson pointing a gun to their heads) and now people are waking up to the fact that every 5 year old in the US is now saddled with 100,000 dollars in debt before they even open their first lemonade stand.  The moral compass is spinning and all bets are off for millions of Americans and millions more in the next few years (just wait till the pensions and 401k's get hit)  The new culture thanks to Wall Street is take what you can.  Anybody who makes payments for the next 20 years to get back to even with a securitized trust is just a fool.  I have respect for that guy, but he is still a fool.  Quit paying, cut your deal and move on- works for The Donald every seven years.

Tue, 05/15/2012 - 19:52 | 2429581 Arnold Ziffel
Arnold Ziffel's picture

 

 

"it's cheaper to rent," Shiller told Business Insider on May 14th. Shiller sees at least 20% further plunge in housing prices due to the 20 year Bubble.

Tue, 05/15/2012 - 20:18 | 2429648 Bicycle Repairman
Bicycle Repairman's picture

Markets will vary, but many will go down much more than 20%.  And they will never recover.

Tue, 05/15/2012 - 23:46 | 2430298 Arnold Ziffel
Arnold Ziffel's picture

Bicycle, I was deferring to Shiller, but I agree with you that many markets face a much steeper and longer plunge and I do not see recovery anywhere up ahead.

Some are just beginning to roll over like the Coastal areas of cali (as reported by Dr Huosing Bubble) and Texas (where the Austin Music hall was just foreclsed on).

Lots more pain coming.

Tue, 05/15/2012 - 20:38 | 2429708 WonderDawg
WonderDawg's picture

I thought I read last year where he was predicting 25-40% further downside. Either way, the bottom isn't in sight yet.

Tue, 05/15/2012 - 21:27 | 2429845 I should be working
I should be working's picture

Depends on where, some places are cheaper to own, others are not. But mortgage rates are so low and rents are going up. The fundamentals are there, so maybe housing will recover in 3-5 years. Don't hold your breath.

Tue, 05/15/2012 - 23:24 | 2430230 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

I'm sick of the expense and hassle of moving, I don't want to be subject to rent hikes or other whims of the landlord, and I'm not terribly interested in improving something I don't own (say with cisterns, a gun vault, solar power, food garden + chickens, etc).  I reckon if I can get a 30 year for about the same out-of-pocket as I'm paying to rent now I'd go for that.  That'd be about 1.5-2x my current income.  I'd highly consider an FHA even though I've got 20% socked away as it's subsidized and any cheese I can steal I will, as I learned from the banksters and their idiots in gummint.  The sooner leeches drain the host, the sooner it dies, to be replaced with something more honest.  And when the moochers and eaters riot, time for target practice with my 7x scope!

Tue, 05/15/2012 - 19:50 | 2429583 Silver Bug
Silver Bug's picture

It will. But it is going to take a very very long time.

 

http://jamesturkblog.blogspot.ca/

Tue, 05/15/2012 - 20:19 | 2429654 Seer
Seer's picture

Here we go again with pointless bashing of the POTUS.  Still pissed because McCain didn't sit his ass on the throne?

Anyway... this is the System's eventual conclusion.  With all the people who read the bible I'd think that it should be pretty clear that this shit ain't new, and that the word "Jubilee" had some realistic meaning.  Ain't going to make debt draws on the future disappear: we'll eat these debts as a society; the reason being is that if they fall on who they should fall (which I'd agree is morally proper) it would toast things such that you wouldn't recognize them, assuming that you don't get scorched (in to oblivion) yourself.

We all took part in this bad game.  If you even so much as mouthed "growth is good" you're part of this lunacy.

You're wanting a greater slice of the fiat (invisible) pie?  You wanna BE like THEM?

I've lived better than the overwhelming majority of humans on the planet (who subsist on $3/day or less), and the overwhelming majority who have EVER lived on the planet.  The party's over.  The pinata's whacked and there were very few pieces in it, and all are likely only good for the creation of cavities.

What's the phrase??? oh, yeah, who said that life was fair? (again, refer to the overwhelming masses on the planet and cry that tear)

Tue, 05/15/2012 - 21:19 | 2429821 oldman
oldman's picture

@seer

de acuerdo

minimalists do it with less

but, say what?    Life is not fair?  Now, what do I do with my time?

Oh yeah, I remember-------do nothing!

Thanks for the joy in your rant         om

Tue, 05/15/2012 - 22:05 | 2429983 Nigh Eve
Nigh Eve's picture

I agree.  These cycles last about 3 generations.  Hence, the year of Jubilee was set at intervals of 49? or 50? years.

As an aside... In my opinion, I think the intent of the year of Jubilee was more about creating a disincentive to lend during the last few years prior to the Jubiliee year (in contrast to merely forgiving indebtedness).   In other words, it was a pre-established time-table for credit contraction.  {However, I admit that I am not a scholar in this topic.}

Nevertheless, the problem (credit expansion / debt expansion cycle) has existed for as long as civilization has existed.   

Wed, 05/16/2012 - 01:13 | 2430438 valkyrie99
valkyrie99's picture

To my readings jubilees did create a disinsentive to lend torwards the end of the term as you say and did have some intention of checking usuarous credit contracts as well as to help the poor. 

I would say mesopotanian societies were free from credit bubbles as thier largest means of exchange were ox/wheat, which had natural limits on how much they could be concentrated amount the creditor class and reproduced which made inerest payment a lot easier. Additionally, credit bubbles seemed not to occur much in early full reserve banking systems through Greece and Rome; although as wealth and power concentrated the common people did become debt slaves it seemed to be a steady process without speculative price distortions.  It wasn't until fractional reserve banking where banks can expand and contract the money supply was born that we start to see the Tulip bubble, the south sea bubble, and the first great crashs we know of. 

Tue, 05/15/2012 - 20:30 | 2429689 Buck Johnson
Buck Johnson's picture

This is going to hurt the US big time.

Tue, 05/15/2012 - 20:32 | 2429699 LetThemEatRand
LetThemEatRand's picture

Really?  It's the Blue Team's fault primarily?   Come on.  Like the NFL that could give a shit who wins the Superbowl, the banksters own both the Blue Team and the Red Team.  They divide us by making us think one or the other is to blame for this shit.  The only change you can believe in is to stop playing their game.

Tue, 05/15/2012 - 20:40 | 2429716 WonderDawg
WonderDawg's picture

Hey, we agree on something!

Tue, 05/15/2012 - 23:54 | 2430321 FrankThinkTank
FrankThinkTank's picture

Says the guy who pulls the partisan card out when it's convenient.

 

Tue, 05/15/2012 - 20:54 | 2429755 DavosSherman
DavosSherman's picture

Change you can believe in, Fucking Liar!

Google this headline, the only change was which bank replaced which bank as WH Chief of Staff, (running the joint---into the ground):

 

Obama has up to $1 million with JPMorgan Chase

Tue, 05/15/2012 - 21:51 | 2429937 Tapeworm
Tapeworm's picture

I am a cheap SOB. I bought a house for my second daughter that cost less than 20% of the goomint assessed value. I dumped in enough dough to get it up to 45% of the assessment.  THE PREVIOUS SALES WERE OBVIOUS FRAUDS IF ONE LOOKS AT THE PROPERTY> f'in keyboard.

 I bought another that will pay itself at present rents in seven years. That was another fraud on the last sale.

 In this area (SE Wisconsin) it is easy to find nice accomodations for less than thirty ounces of gold, and that includes a fair amount to fix it up to nice enough standards with floors and carpets. A kilo of glod bought at 9500 will get you a solid house that has been repaired to good standards, and a considerable chunk of change to boot.

 These local pols are going to have a tough sell on their refusal to cut back on goomint promises to their employees. If houses sell on the open market for far less than half of their assessed value there will be big problems wuth the taxcows.

 Bring it on!

Tue, 05/15/2012 - 22:05 | 2429981 Tapeworm
Tapeworm's picture

I also got a decent 9mm auto pistol with conceal holster for my daughter that I included in my cost basis for her house. Including that and all other expenses of the house still makes it less than one half of the assessed value. The makeover of the house has all new floorings and eaal repairs where neccessary in a 108 year old house. It is really quite nice now, and far better than anything that I rented as a twenty something.

 My total in it comes to under 50k on a house that sold for 129k(fraud-GMAC) in 2008. How's that for collapse?

Wed, 05/16/2012 - 08:06 | 2430885 sessinpo
sessinpo's picture

Colombian Gringo                       2429419 

What housing crisis? If you are a bankster, you gave out millions of fraudulent mortgages, (especially if you were a democrat with FMNA), were bailed out after the sub prime borrowers inevitably defaulted

 

Comment:

I agree with what I think should not happen, bail out of banks for malinvestments whether it is derivatives or mortgages. However, I disagree with fraudulent mortgages. At some point the consumer, the buyer of the house and taking on the mortgage liability has to take some responsibility. Even if I only make $20K a year and get approved for a $500K house with no down payment. I must realize I am taking on more than I can handle and on the flip side, the bank should have so suffer for offering me a loan.

Tue, 05/15/2012 - 19:06 | 2429421 Council of Econ...
Council of Economic Terrorists's picture

The sheep were slaughtered.

Tue, 05/15/2012 - 23:27 | 2430241 Moon Pie
Moon Pie's picture

Pigs are slaughtered...

Tue, 05/15/2012 - 19:07 | 2429430 RmcAZ
RmcAZ's picture

Bank of the Internet? Sounds legit.

Wed, 05/16/2012 - 01:47 | 2430479 JohnKozac
JohnKozac's picture

 

 

"Bank of the Internet? Sounds legit."

 

Yeah, sounds ok...it's Central Office is in Nigeria. What can go wrong?

Tue, 05/15/2012 - 19:07 | 2429434 Debtless
Debtless's picture

I bet the oncoming currency crisis will make people forget about the housing crisis.

Tue, 05/15/2012 - 21:29 | 2429852 I should be working
I should be working's picture

Yeah because the dollars they owe on their mortgage in will be carted around in wheelbarrows. The housing crisis will be over once the currency has been diluted to worthlessness.

Tue, 05/15/2012 - 19:07 | 2429435 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

"housing in bottom"

"Well, it's a nice roomy place -- but there's a strange odor!"

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