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Will America Ever Recover From The Housing Crisis - A Real Estate Infographic
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."
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Cramer said we bottomed in 2009 . Housing will never recover. Confidence in the realtors ( in the shitter). Confidence in the home inspectors( in the shitter). Confidence in the lenders ( in the shitter). Confidence in your neighbor to pay their bills and not go into foreclosure( in the shitter). Ability to find higher pay job ( in the shitter). Education system ( in the shitter). I have confidence in my ability to grow food. I have no confidence in any of the "experts" who have been wrong for years.
I paid 155 K for my house in Dec 2002. One block over and 4 blocks down a house of similar size and style sold for 392K in 2006. I laughed and laughed and laughed. They are now underwater more than 100K. Commonsense isn't learned.
Kramer/Cramer? Which one?
Now that was the best joke of the day !.
Cheers !
I'm sure it wasn't 'assman' cosmo kramer but the assclown cramer
Like Steven Wright said experience is something you don't get until just after you need it.
It's "rein in" not "reign in." Thanks, Reaganites et al for gutting the US educational system. No royalty involved.
With all due respect. ( Reigning< in spending on Tuesday, comes to mind!
Land of the Plumed Serpent's New World Order version
of
''HoMEland'' Security
Corzine Madoff with Blythe.
http://www.youtube.com/watch?v=fmSBYnsswAg
Blaa haa haa haaa haaaa.
http://www.youtube.com/watch?v=FMM3IgQobOg&feature=relmfu
Orchastrative { M/H/D/}
Just like( energy) prices! Excluding coal/natgas?
There is one issue that nobody has addressed...... If you can sell your house for break even or a small profit after 1 year you are mobile. That has always been our advantage over any and every country. Until we gain that back we are no better than Europe or Russia or anybody else.
That is the one thing that keeps the USA ahead of everybody else............ You let the banks destroy this , then we are fuked...............
Go talk to your Sister! ( out of touch) , with reality!
In ten years...maybe.
Earlier if they mark to market.
"Reign in" as opposed to "Rein in". Stickler for proper spelling.
Don't worry, today there was good news for homebuilders. It's all getting better, and we're all going to be rich again for two reasons:
1. It was Bush's fault
2. Obama fixed everything
The fact that none of this is meaningful, true, or useful doesn't matter. It's what people want to hear and/or believe.
I was thinking the same thing! Mr. Sun Glasses...
The fancy graphics of the prognosticators are getting old and tired, and not one has the courage to include broken government, broken economy, broken trust, et al... in their now ridiculous presentations.
Let's dance around reality and squeek out a few bucks in the process... it is the way of the modern world, after all.
Lies by ommission, and nobody's minding the store.
Cheap credit brought this crisis to where it is today.
Deflation will continue and it will be punishing for many for years to come.
This is not over by a long shot.
When Ben Bernanke says he's an expert on the Great Depression he isn't kidding - he not only helped Greenspam recreate it, they did it better (or worse).
I find it interesting that anyone with a brain can actually believe a "recovery" is even possible given the state of affairs in the financial / monetary and legal systems we have had foisted upon us. The only way a recovery can occur is to liquidate bad debt. Everyone has to take a haircut and make a serious sacrifice in order to save our nation. If we can't all accept this, our only alternative is to see this system die a slow death.
the wifey got an earful from my brother about my 'big' position in phys pm's, he thinks I'm nuts ... I feel the same way about his ranting about putting more in 401k's. My PM position is huge because it is still double what I put in it even with the latest price takedown.... the banter will continue till the debt fattened lady sings.
Housing will come back when good living wage full time employment comes back, but in no way does that appear to be on the immediate horizon. The bottom earning 70% of households do need housing but, owning or renting, can realistically only afford the most basic, now at about 100 - 250 square foot per person. And if the bottom 70% have to deal with serious inflation, then they may seek housing on the order of 50 - 150 square foot per person, which isn't going to help the market.
The only thing I can think of that will really help housing would be to open the immigration floodgate and admit 5-10 million per year for the next decade, provided they have prospects, wealth or skills, and with the promise of citizenship path.
That's just how recessions/depressions work, and how economics works in general. One day everything's great, the next they're not. Sure, it's bad now and it has been for the last 3 years, but in 4 years from now, we'll be peaking.
Mr. Andrew Cuomo perpetuated this problem when he threaten to sue the banks for red lining and not giving mortgages out to the those who could not afford it:
Fannie/Freddie mortgage disaster, created by Andrew Cuomo, brought us Obama’s recession
http://www.coachisright.com/fanniefreddie-mortgage-disaster-created-by-andrew-cuomo-brought-us-obama%E2%80%99s-recession/#
Andrew Cuomo and his connection to the Freddie Mac/Fannie Mae Subprime Mortgage Scandal
http://scottystarnes.wordpress.com/2010/10/21/andrew-cuomo-and-his-connection-to-the-freddie-macfannie-mae-subprime-mortgage-scandal/
Franks Stopped Bush in 03 to regulate Fannie Mae 17 times!
http://www.sodahead.com/united-states/franks-stopped-bush-in-03-to-regulate-fannie-mae-17-times/blog-29077/
CARPE DIEM
http://mjperry.blogspot.com/2011/01/dont-blame-greed-for-housing-bubble-is.html
Maxine Waters And Dems Defend Fannie Mae & Freddie Mac
http://www.youtube.com/watch?v=IyqYY72PeRM
The Meltdownman
Y'know - all of these "right vs left" comments are an utter waste.
The politicians - all of them - are bought and paid for - by your "betters".
If that statement makes you angry - GOOD! It should!
Spread the word - you (we) live in a F'd up corrupt oligarchic society.
Try to do any/some of these things each day:
Work hard, Be honest, Learn, Live by the Golden Rule, have some principals, love your family and your god (if you have one). Don't stick your nose in other people's private lives. Be generous - give with both hands and an open heart. Don't pass judgement on your fellow man...
It absolutely had nothing to do with left v right.
It's the 1% vs. the 99%.
The 1% do not grow their wealth through work, innovation or luck. They grow it by lending or investing their money to and with those who work, innovate and are lucky. They collect a portion of the productivity of those workers, innovators and lucky souls as interest, dividends and captial gains. Their sole objective is to generate the highest risk-adjusted returns.
Failure is an essential regulator of this activity. Nobody likes to lose, but very few of us have enough money to corrupt the system so thoroughly as to avoid the consequences of failure --- to increase our return while, at the same time, lowering our risk.
Those who look at Frank, Clinton, Bush, Greenspan, appraisers, realtors, ratings agencies, etc. are simply identifying the weak and easily corrupted. The true cause of the entire fiasco is the notion that the banking system is a "business" that should be as free from regulation as any other business.
We need look no further than the Cajas of Spain and the worst real estate collapse outside of Zimbabwe to see this is true. Unfettered lending without Bush, Clinton, Greenspan, ACORN, Frank, Fannie or Freddie has resulted in an orgy of unregulated lending followed by the entirely predictable collapse of collateral values when the last, least qualified borrower has been skewered.
Bring back Glass-Steagal and free Wall Street to "innovate" to its heart's desire. Just leave our commercial banks alone to service the needs of our true captialists: individuals, small businesses and enterprising corporations.
You should read what this guy has to say......
http://market-ticker.org/akcs-www?singlepost=2937143
We are essentially completing the theft of the assets of the working American worker that started in the early 1980's with the "Reagan Revolution". In those days, the investment community was ruled by large pension funds who couldn't easily be hoodwinked by the banksters and a bought off Congress and White House.
Essentially large pension funds kept corporate executives in check with their large equity positions and the banksters fees under control. Glass-Stegall also controlled the banskters in areas where the pension funds couldn't get into because of regulatory concerns on the other side of the deal.
The leadership of banks and large companies of those days were being quickly replaced by a post-war, Ivy League MBA dominated by individuals who IMHO, were not as capable as those they were replacing and they had been trained in amoral business ethics where making money, not performing the common good was tantamount. This was also the beginning of the takeover of American mass media by corporate and political interests fueled by the ever increasing effectiveness of outlets like Cable TV and their rising costs in elections.
Wall Street quickly became a "What's in it for me" environment (even more than in the past) and the new media power allowed the sheeple to be kept blind while executives could hide behind a brand image and the mainstream media, making theft easier to perform and later with impunity once the politicians joined in to use their power of legislation and packing of the Supreme Court to let them steal with impunity in exchange for "contributions" and outright corruption.
Just like the Mafia did with the teamsters, the banksters and politicians realized the the money was in the private corporate pensions. They needed to release that money to create an age of "faux business expansion". The Democrats, of course wanted to free up the pensions to give Social Security a bigger role and the Republicans wanted to free these assets in order to fund their elimination of social security and the lining of the pockets of the American few which included Republican professional politicians and business "leaders".
So with a common goal, an insidious plan was hatched, first at Harvard Business School then moved over to business and lastly to Congress and the Supreme Court (needed there to seal the deal legally).
The first element was to sell the American people on the value of having your own nest egg, which allegedly was yours and which was portrayed as in your control. This was sold under the guise of rugged individualism, and the egos of Americans were used to pluck them clean. It just made good sense that it was YOUR pile of money, and yours to control and do with as you pleased, but that would not be the case. Thus the IRA, 401(k), and Roth, etc. were born. Oh, it was glorious, you'd have your money, you'd have the power to control your retirement and everybody would be a millionaire! What's not to like about this?
First, the democrats got their hands on it by making it taxable or not taxable when you finally got to retirement. and it also being taxable if you transferred either way. They added rules like the 59 1/2 age, etc. and now it's even being considered for double taxation.
Next, the banking interests loved it because rather than experienced fund managers now the retail dumb sheeple could be fleeced with rules and fees, which most pensions did not get charged. It was nirvana, new funds, financial tools and "financial retirement experts" like Bernie Madoff found their calling to fleece the sheeple, CNBC was now possible as a business and the financial advice industry flourished.
Corporate executives of companies that had private defined benefit pensions, knowing that this could become a source of money for their pockets and lull the shareholders into thinking that they were really productive entities instead of the truth that America was slipping behind, also loveed it. Now with J6P as an investor they could pit employee against investor and let them duke it out. Huge consulting businesses like Towers-Perrin etc. flourished by advising CEOs and CFOs on how to "convert fairly" annuity based pension funds to defined credit plans like cash balance and IRA plans and taking a huge slice of the pie for themselves because the average employee had no knowledge of annuities, the mathematics of investment and the actuarial science. All they knew was that they'd get a huge pot of money but they didn't realize that they'd been robbed blind.
Then came the piper to collect. First the government wanted more and more for their programs. then the once finely negotiated post-retirement medical plans of large multi-nationals became now a thing of the past. Next, Wall Street and the banksters wanted more and more of the action and thus lobbied hard to restrict IRAs and 401(k)s to be strictly a province owned and feed liberally by Wall Street. With all that money looking for return, hedge funds were born and the bubble business was back in full bloom, but the first problems were sensed and thus Glass-Steagall was repealed to keep the ponzi going.
Employers got stung when they tried to steal billions through a conversion of IBM's annuity retirement plan into an IRA/Cash balance plan. They messed with the wrong people then and the ponzi and theft was revealed. Soime IBM employees, along with Boeing, American Express and AT&T employees realized they were INDIVIDUALLY being robbed by sometimes as much as $800K in their conversions. A suit was filed, IBM lost, but when they went to the Supreme Court the Republicans and the business lobby put Justice Roberts in the bench and he killed off the lawsuit.
The ponzi to the average American worker continued, and the latest tool to steal more from the retirement save is the wide range of annuities the banksters offer today. Large fees, little returns and no safety are the hallmarks of the modern annuity, as KD has aptly said.
Then comes Alan Greenspan, Bendover Ben and the ZIRP environment. In order to save the banksters at the expense of the American worker, both the Republicans and the Democrats have endorsed the ZIRP environment and the protection of the banksters against the frauds they have committed. This is done to protect the government and the banksters from the sure to come anger when the sheeple realize that they've been had time and time again for many years, first through pension conversions, then outrageous IRA and other account fees, then band investments, and more recently annuities.
Unfortunately, there is a fly in the ointment. That fly is ZIRP, and it may be the trigger that blows up the ponzi. Most sheeple don't realize that in actuarial mathematics and annuity science the lower the interest rate and resultant returns, the more assets (cash) you'll need to keep the same annuity as with what you had in times of higher interest rates. The age of the annuitant is a factor in that as they approach the actuarial norm for age of death the pot of money needed for the annuity is reduced, but as medicine improves and average life span increases this also increases the size of the pot of money needed for a resultant annuity amount. As a matter of fact, a ZIRP assumption throughout the life of an annuity would mean you'd have to provide all of the money for the annuity, since there would be no growth of the investment during your annuity's payout period. This, of course doesn't include the hefty fees you need to pay to the banksters, brokers and hedge funds which would make an annuity in an ZIRP and no investment growth environment even more expensive than just pulling out a set amount and forgetting the annuity.
This leads to more gambling of your money by the banksters in search of a return, so you can be lulled into giving them your already diminished but hard earned money. Since gambling is risk, then the banksters want to have no liability. Since the government doesn't want to pay the bill for your loss either, here comes the covert legislation to screw you once again.
For more education, read "Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers" by Ellen Shultz. It's a mild, politically correct (after all she needs to keep her job as a WSJ reporter to fund her retirement) account of this sordid multi-decade Bankster, Republican and Democrat led theft of most (those with private pensions) American workers and later all workers who falsely believe in and depend on their IRAs and other retirement savings bankster theft enablement instruments.
http://www.usatoday.com/money/books/revi....
http://www.amazon.com/Retirement-Heist-C....
A large percentage of the population in the U.S. believes that we are a capitalist society and capitalism is good - we defeated the "evil empire" of socialism after all...they believe that capitalism is self-correcting and self-regulating...they believe a ton of b.s. that is our prevailing mythology.
The truth is - no "system", no organization, no hierarchy is free from the effects of individual/personal corruption. The current version of "Wall St." operating "hand-in-glove" with the politicians has skewed the incentives to the point where honesty, ethics or even morality has no place in the realm of "business". There is absolutely no dis-incentive for socio-pathic behavior currently.
"Greed is Good"
"Your only responsibility is to make money for the shareholders (and yourself)."
"All is fair in business"
What do you expect when people (99%) believe that complex problems can be cured by a bumper sticker slogan and a politician.
I believe that personal responsibility and individuals making moral choices is the first line of defense for society. Do business with your friends or people you respect - do not reward dishonesty - do not be a "victim".
I wish you and yours the best life possible.
Every Mortgage is fradulent any way, through fractional reserve lending. No real money was created to back the loan. Then no real money was created to bail out the banks. And yet the taxpayers are left paying real money and the banks wind up the the original mortgage monies, the bailout monies and the house on thier balance sheets. Then they put a bow around that turd and insured it and sold it like it was gold bars and hoped no one noticed, but not really, and then cashed in the insurance check. The recovery is far off in the distance? Do you really think the banks give a shit? They got paid like a broken slot machine, six times or more on the original transaction which they created out of thin air. Flatulence has more substance. A recovery will happen when they find a different way to rig the game.
Will America Ever Recover From The Housing Crisis?In a word, no. Not with these wage and debt levels, it won't and the owner's of the Western World sure seem just fine with that.
That "top five most miserable cities" map is messed up: 2 #5s and 0 #1s
You dont 'reign in' you 'rein in'
household formation and demographics have a lot to do with the future of the usa housing market. household formation has not recovered from the recession(down 3 years in a row for the first time even with the population growing 3 mil/year) and baby boomers are retiring and dying so they are done buying(anything). there are not enough good paying jobs to support a house purchase going into the future. add the student debt to those with a decent chance of getting a good paying job and they will not buy for several years down the road.
crunch the numbers into charts and you get a bottom with no growth for several years.
what the data can't count are the trillions of dollars in lost opportunity because the banks got greedy and sucked the life out of the economy(with the full participation of BOTH parties in .gov) for, probably, half a generation and maybe more if they don't wise up.
argentina lost access to credit as a nation state and a bottom smashed into place, expect something similar here. words like recovery and schiller or rebound wont exist and people will be happy theyre not dead or starving. thats the bottom. happy investing bottom feeders!
that is a cautionary tale for greece not the usa. the usa will inflate it's reserve currency way out of this mess. it will be bad but not argentina, russia, greece bad.
US Daily: 2012 April FOMC Minutes Preview
http://www.cnhedge.com/thread-4528-1-1.html
"Cry havoc and let slip the dogs of war..." - Willie Shakes
"....That this foul deed shall smell above the earth, with carrion men, groaning for burial." - Willie Shakes
looks pretty bleak.
I watch sailboat prices. As a luxury, they are sensitive to the health of the economy. They have substantially recovered in most parts of the country. So, I believe that the economy is recovering and at least some individuals are doing well.
But housing prices were way out of line. They haven't fallen enough yet to once again reflect their real value. Too many people are holding out for inflated prices. I suspect that many of them will only come down when the present owners die and their heirs sell them for whatever they can get. --- So, it might be another ten to twenty years before housing prices are once again reasonable.
But housing prices were way out of line. They haven't fallen enough yet to once again reflect their real value.
I disagree.
Take a look at the insurance policy for your home. The dwelling is insured for replacement value.
Replacement value is about 15% higher than market value.
There is no insurance on the land. How much is your lot worth without a house.
The bottom line is that market value is at least 20% below replacement cost. We are in a real estate depression. Until the banks are required to liquidate their collateral and recognize their losses, the situation will not improve.
There is no insurance on the land. How much is your lot worth without a house.
It's not so helpful to talk about the "value" of undeveloped land when there's inadequate price discovery. There's a cost to demolition, too.
Land-valuation was just as subject to the past 20 years of bubbling as the buildings. Pretending land valuations aren't artificially inflated through leverage adds some confusion, but not much insight.
Make good firewood.
Greece: when the lights go out
http://www.cnhedge.com/thread-4650-1-1.html
Deflation
The fact is that the housing crisis was created by the Government. The Government put a gun to the head of the banks and told them to lend money to people who were not financially qualified to buy the homes, creating the Subprime loan crisis. The banks tried to protect themselves by securitizing the loans and selling them to the market. The manner in which the did this was flawed, but their motive was not one of malice. But, the banks really had no choice but to make the loans. It was either make the loans to unqualified people, or be closed by the Government for not following it's latest dictate.
That said, the banks are not blameless for all the other shenanigans that they have pulled. I am no fan of the banks, but in this case - exactly what were they to do? Fail to make the loans and they would be closed, make the loans and they risked being bankrupted by failed loans, which they knew were going to occur. So, they hedged their risk by securitizing the loans.
The failure of the loans hidden inside of mortgage backed securities (MBS), made the MBS value to become unquantifiable, thus causing the collapse in 2007. The FED backstopped the banks, and began the QE process devaluing the currency.
This is history, but the main root cause of all this was the Federal Government and its attempt to force lending to unqualified people based upon the belief that these people were being "discriminated against" due to factors other than their financial status. This was proved to be incorrect. The fact is that the older financial standards as applied to real estate lending were not racially biased, but were based upon a sound analysis of the financial ability to pay by the borrowers. Yes this meant that certain groups had a harder time to obtain loans, but the decisions were not based upon race, color, or creed, but upon the ability to repay the loans. That ended when the Government changed to playing field and forced the banks to loan to unqualified borrowers.
imagine if the tarp 700B bailout had actually gone to pay down existing mortgages.....crisis averted, only 700B in new $ and an operating RE mkt.
the banks and govt learned thier lesson in the SL crisis...dont auction everything off to the public at firesale prices....just hold onto everything and when prices come back all the 'profits' will be ours this time.
Municipalities that are losing the tax monies owed on those residences should sieze them all, sell them for the tax owned. Problem solved.