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  Real estate industry insiders deny that a new housing bubble is forming (their denial is largely based on the fact that we haven't reached 2006 prices yet), and they are correct on a national level.
   But on a regional level the same things we saw in the housing bubble days of the last decade have returned with a vengence.

  Let's look at the numbers:

 photo HomePricevsDisposableIncome_zpsfab97812.jpg

 Housing prices are rising at their fastest rate since April 2006, right before the bubble burst.

 Phoenix, San Francisco and Las Vegas had the biggest jump in home prices, with increases of more than 20 percent compared with a year ago.
The thing to notice here is that these were the same places that were at the center of the last housing bubble (note: southern California, Orlando, and Atlanta are also booming...again).
    Las Vegas is a great example of the bubble dynamics at work here. Contrast the fact that prices are rising at a 20% annual rate with this article.
 Roughly half of foreclosed homes in Nevada are “zombie foreclosures,” or properties flagged as vacant or abandoned, said Daren Blomquist, vice president for the Irvine, Calif.-based online listing service...
   One figure that stood out for Nevada is the 22 percent increase in “front end” inventory, or homes that have received a notice of default, Blomquist said. It’s up 22 percent from a year ago, to nearly 10,000 as of mid-March.
  So prices going through the roof in Vegas, while defaults are up about the same amount and rental prices are dropping. In Phoenix rental prices dropped 10% while housing prices rose more than 20%. Does that sound like a healthy market to you?

 photo NewHomes_zps2e72f90f.jpg

  As if we need more evidence that logic, common sense, and even short-term memory vanishes when easy money appears, most of the worst practices of the last have reappeared as well - with a twist.

Margin-loan financing

 Like the recent bull market? How about taking a home renovation to go with it? That apparently is what some investors have been doing with their stock gains.
   The recent run-up in the market, financial advisers say, has led to a resurgence of the type of loan not seen since the end of the housing boom -- cash out financing. But this time, though, people aren't tapping their inflated house for money. These days stock portfolios appear to be the well of choice.
   Borrowing against brokerage accounts hit an all-time high earlier this year, according to data from FINRA, and has continued to go higher. Margin loans outstanding totaled nearly $409 billion at the end of April. That compares to $381 billion back in July 2007, the last time stock-market-fueled lending peaked.
    Debt is often seen in bubbles, and loose lending was a key part of what led to the housing bust.
  While borrowing from one bubbly asset to buy another bubbly asset is certainly a sign of a bubble, the one characteristic that truly defined the last housing bubble was flipping. And its back. Big Time.
 House flipping is back in some local markets, especially in California and the Southwest, where homebuyers are making bids on almost anything they can find.
 The only difference this time is who is doing the flipping.
  In many cases, hedge funds and private equity investors are buying up large blocks of houses. Some may plan to rent them out for a period of time, but most undoubtedly expect to flip them for substantial profits in the near future.
 photo homeflips_zpsd967faf6.jpg

 House flipping has returned to 2005 levels while first-time buyers are priced out of the market. Does that sound like a healthy market to you?

   Of course the real element that defined the last housing bubble was fraud. Well, guess what? Fraud in the mortgage market is worse than ever.

Experian has published a report which finds the instances of attempted mortgage fraud reached record high levels over the course of last year.
   The firm’s fraud report revealed attempts at passing fraudulent mortgage applications have more than doubled since 2006, from an average of 15 in every 10,000 cases to 38 in 2012.
   Looking ahead, Experian expects fraudulent application attempts will rise to 43 in every 10,000 cases by the end of 2013.
 Imagine that. Fraud is now much higher than it was at the peak of the last housing bubble.

 photo fraud_zps46ff668a.jpg

   Didn't we clean up the financial market with Dodd-Frank? Oh, yeah. I forgot that it was all just kabuki theater for the suckers.

   The bubble dynamics of the real estate market are getting so obvious that even the rating agency, Fitch (which missed the last housing bubble entirely) has given a warning.
  So while small investors rush pell-mell into the bubbly market looking for a quick buck, the smart money is moving towards the exit.

  Healthy real estate markets don't suddenly jump or drop. Prices move slowly in healthy markets. In healthy real estate markets, first-time buyers aren't priced out of the market because first-time buyers are essential to the market. The only speculators have long-term outlooks, not flippers.
   Healthy markets aren't filled with fraud.

 photo Lumber_zpsef0d2238.jpg

  Interestingly, the biggest real estate bubble out there may be the one you are least likely to think of - farmland.

 That’s right, according to The Financial Times prices on U.S. farmland have doubled over the past decade, and are on pace to rise more than 10% again this year, even in the face of weaker grain markets of late. The main force that has been driving the increases in farmland prices has been a steady bull market in agricultural commodity prices. But according to the FT report, lately “big investors” have been dipping their toes into the farmland market in an attempt to take advantage of high agriculture profits and as a hedge against inflation...
   According to Bloomberg, the council warned the Fed in February that, “Agricultural land prices are veering further from what makes sense . . Members believe the run-up in agriculture land prices is a bubble resulting from persistently low interest rates.”
 That's exactly it. Most people seem to forget that there are consequences from the central bank forcing interest rates down far below natural levels. It means that deep-pocketed speculators can borrow cheap and buy up assets until they are over-valued.

 photo Farm-price_zps5378aaea.png

  Much of the weak growth that we've seen the past few years has been based on blowing bubbles in the real estate and stock markets. What's going to happen to both when the housing market regains connection with reality?

1:19 PM PT: It seems Bonddad still reads DKos, or this was just a big coincidence, because he has once again called used the "D-word".

I am constantly amazed at the doomers and their complete inability to look at data through anything but a "sky is falling" mentality.  Now there's talk of a new housing bubble forming.  Let me debunk this right now.
 His first and most important chart shows that housing prices are going up because of low inventory. His chart shows that housing inventory is indeed low.
 Economics 101: low inventory+higher demand = increasing prices.
  Of course it also shows that housing inventory was slightly lower in 2004-2005.
   I seem to recall something about a housing bubble in 2004-2005, so I'm not sure how he thinks that this means we aren't in bubble territory right now. But maybe he's in such a rush to insult people that he forgot that fact.
  Bonddad then concludes with this gem:
To make the argument that we're in the middle of a housing bubble when the economy is slowly growing (2.4% annual growth rate), with unemployment still over 7% is just ridiculous.
 Maybe Bonddad has forgotten but GDP growth in 2005 and 2006 (i.e. bubble years) was also below 3%. Once again, maybe he was in too much of a rush to insult people.
   Sure, we had lower unemployment then, but then we also didn't have hedge funds buying up neighborhoods back then either.

  Basically, Bonddad doesn't want to see a bubble, so he isn't looking for the dynamics that have always defined a bubble: panic-buying, short-term speculation, and heavy leverage.
   As long as he doesn't look for those things he will be safe from ever seeing them.

1:23 PM PT: I forgot to mention one other thing that always defines a bubble: fraud.

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Comment Preferences

  •  Gotta blow some bubbles (34+ / 0-)

    If Bernanke's going to slow down the flow of free money from the Fed, then Wall Street's going to have to go out and shake down some suckers again to keep those sweet sweet bonuses rising.  

    And if you don't like it, obviously you hate the president and America!  Both of whom are in Wall Street's pocket.

    If you want to cut Social Security, you're not a real Democrat.

    by Dallasdoc on Thu May 30, 2013 at 07:32:19 AM PDT

  •  haven't seen much (12+ / 0-)

    small investor interest, but big money from other places is really starting to buy stuff up locally, not enough to cause spikes of 20% in overall pricing, but they are eating up the low end housing.  Upper end is still not moving.

  •  There are many bubbles, with housing being one... (21+ / 0-)

    ...right now. (Student loans, auto loans, etc.) For sure.

    Per David Dayen, on May 17th, the housing future's so bright, everyone in D.C.'s wearing shades....up to and including a significant segment of Wall Street, and their minions in D.C. and over at Fannie and Freddie, now pushing to rebuild and, thus, reinflate Fannie Mae and Freddie Mac!

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Thu May 30, 2013 at 07:46:17 AM PDT

    •  It's getting harder to determine (14+ / 0-)

      what is a bubble and what isn't these days because there are so many of them so comparisons often don't work.

      “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

      by gjohnsit on Thu May 30, 2013 at 08:07:19 AM PDT

      [ Parent ]

      •  And, deliberate efforts to spin matters... (9+ / 0-)

        ...otherwise (by the status quo--especially when it comes to housing) don't help when it comes to obtaining clarity.

        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

        by bobswern on Thu May 30, 2013 at 08:10:53 AM PDT

        [ Parent ]

        •  You would think (11+ / 0-)

          that after the Dot-Com bubble and Housing bubble in just 15 years that people would be able to spot a bubble by now.
             But greed is obviously more powerful than common sense. America is all about the Quick Buck. We seem to forget that the people who make the real money aren't the ones chasing the bubble.

          “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

          by gjohnsit on Thu May 30, 2013 at 08:14:39 AM PDT

          [ Parent ]

          •  Appropriate quote (5+ / 0-)

            “No warning can save people determined to grow suddenly rich.”
            - Lord Overstone

            “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

            by gjohnsit on Thu May 30, 2013 at 08:47:21 AM PDT

            [ Parent ]

          •  Blowing bubbles is the only thing our elites know (15+ / 0-)

            at this point. They are totally and irredeemably indoctrinated with economic neo-liberal ideas and assumptions. They have no conception - and no experience - of what a healthy economy really is. They grew up in the 1980s and 1990s, when manufacturing was being destroyed and all the "smart" people went into finance, banking, and real estate. Something like 2/3 of Harvard grads each year for how many years now? All these misguided elites think that finance can create "value" and "wealth" in and of itself, and that manufacturing is a dying dinosaur. They apparently can't even figure out the connection between cutting budgets for maintaining and building infrastructure, and collapsing bridges.

            Their experience of prosperity are the dot com bubble and the real estate bubble of the Clinton years. The lesson Democratic elites (wrongly) learned from that was that getting the government's finances in order and letting the financial markets do their thing is how you generate general prosperity. And they never deigned to notice what was actually happening in the cores of big cities, and especially the hundreds of small and medium sized industrial towns like Fontana, California and Youngstown, Ohio. It breaks my heart to see cities like that: the incontrovertible evidence of the complete sham that the USA economy has become.

            Chicago is the exception that proves the rule. I grew up in Chicago in the 1970s, when US industry first began to be shut down. But the past decade or so, when I return for visits, I notice that much of the city has been rejuvenated. What is the cause? I firmly believe it is the futures markets: more money now flows through the futures pits of Chicago than through the stock and bond markets of New York.

            As Stirling Newberry noted a few years ago about Democratic Party elites, most especially those in the Obama administration, "the only life they've ever known is dipping a cup into the Niagara Falls of finance."

            So, of course, they're going to try and repair the economy by repeating what they think worked in the 1980s and 1990s. In this regard, the stupidity of supposedly very smart people is just astonishing. They simply are unable to conceive of any alternatives to blowing bubbles. They have no conception that a truly healthy economy MUST be based on rising incomes and living standards for all people, most especially the working class at the bottom. How can they not understand that is the basic idea of "the general welfare"?

            Because they really believe that wealth will trickle down. It really shows that Obama and Democratic elites are, at core, Reaganites. They really believe that if they can pump up the financial and real estate sectors again, there will be another general economic boom. Just like in the 1980s and 1990s.

            I still think the best summary of this entire issue was provided by Thomas Palley back in his February 2008 essay, The Debt Delusion:

            America's economic contradictions are part of a new business cycle that has emerged since 1980. The business cycles of Presidents Ronald Reagan, George H.W. Bush, Bill Clinton, and George W. Bush share strong similarities and are different from pre-1980 cycles. The similarities are large trade deficits, manufacturing job loss, asset price inflation, rising debt-to-income ratios, and detachment of wages from productivity growth.

            The new cycle rests on financial booms and cheap imports. Financial booms provide collateral that supports debt-financed spending. Borrowing is also supported by an easing of credit standards and new financial products that increase leverage and widen the range of assets that can be borrowed against. Cheap imports ameliorate the effects of wage stagnation.

            This structure contrasts with the pre-1980 business cycle, which rested on wage growth tied to productivity growth and full employment. Wage growth, rather than borrowing and financial booms, fueled demand growth. That encouraged investment spending, which in turn drove productivity gains and output growth.

            Palley has a new book out, which I think is probably the most important summary of the financial and economic collapses of the past five years, and the policies and programs needed to get out of the hole we're in.
            From Financial Crisis to Stagnation: The Destruction of Shared Prosperity and the Role of Economics

            And here is Philip Pilkington's interview of Palley about the book, from April 2012: From Financial Crisis to Stagnation: An Interview with Thomas Palley.

            A conservative is a scab for the oligarchy.

            by NBBooks on Thu May 30, 2013 at 09:14:18 AM PDT

            [ Parent ]

          •  Bubbles are very attractive to foreign investors (3+ / 0-)
            Recommended by:
            greengemini, shaharazade, greenearth

            ...with only financial and short term interests. Actual cities and residents with both tangible and intangible long term interests like retirements, lifestyles, civics, pride of ownership etc. are not as engaged in bubblemania IMO.

          •  IMHO, bubble economics (7+ / 0-)

            is exactly what big money wants.  Big money no longer invests in making products in this country.  Big money invests in investments and that drives the prices up until the bubble bursts.  Big money is like the house in the gambling casino.  The house (big money) always wins.

            "Growing up is for those who don't have the guts not to. Grow wise, grow loving, grow compassionate, but why grow up?" - Fiddlegirl

            by gulfgal98 on Thu May 30, 2013 at 09:32:47 AM PDT

            [ Parent ]

            •  Spending on capital investments (7+ / 0-)

              is down. Company assets are getting old.
                Spending on R&D is down. Payrolls have already been cut to the bone.

                However, stock buybacks and dividends is way up.

               In other words, making a quick buck is bullish. Long-term investments, not so much.

              “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

              by gjohnsit on Thu May 30, 2013 at 09:38:14 AM PDT

              [ Parent ]

              •  Everyone's trying to increase their rate of return (3+ / 0-)
                Recommended by:
                KJG52, gjohnsit, greenearth

                more desperately than ever, pension funds and private investors alike.

                Rates of return over the past 10 years have not been so great in most traditional havens, and where's that fat retirement fund/pension coming from?  Wait, nowhere...

                ...time to chase bubbles: bonds, options, real estate, commodities, you name it.  Just hope you're not the last person without a chair when the music stops.

        •  Considering how little traction this diary (17+ / 0-)

          is getting, I get the feeling that people don't want to hear about it...again.
             I remember my housing bubble diaries didn't get much attention until the housing market already burst in 2007.

           History repeating so soon?

          “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

          by gjohnsit on Thu May 30, 2013 at 08:35:50 AM PDT

          [ Parent ]

  •  SF Bay Area housing prices are booming . . . (14+ / 0-)

    jobs and wages are not.

    Smell a scam?

    Fake Left, Drive Right . . . not my idea of a Democrat . . .

    by Deward Hastings on Thu May 30, 2013 at 07:48:10 AM PDT

    •  San Francisco is one of the very few... (10+ / 0-) in the U.S. (similar to Manhattan), which is actually doing decently, even when one subtracts out the Wall St./investor-class money (usually cash transactions) that's artificially stimulating (most) other markets.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Thu May 30, 2013 at 08:01:18 AM PDT

      [ Parent ]

      •  SF housing market (11+ / 0-)

        Appears to me that the SF market's upward movement is based on legitimate supply/demand ratios. Demand is driven by swarms of super-bright young adults with tech jobs (or reasonably good prospects of same), many of them down on the peninsula, aka Silicon Valley. They would far rather live in hip, high-density San Francisco than be marooned in bored isolation somewhere in the suburbs.

        A friend of mine likened owning rental property in SF to owning an oil well in Saudi Arabia. When I asked him to explain, he said "Well, for both, the supply is already at its max limit, and demand will always increase."

      •  take another look at (2+ / 0-)
        Recommended by:
        gjohnsit, greenearth

        price to income ratio . . .

        Even in San Francisco (and throughout the Bay Area) the booming prices are driven by loan availability, not by rising income.  It's still bubblesville.

        I own in Berkeley, right across the Bay, so I'm aware of local real estate prices.  Their fluctuation has little to do with the state of the local economy or "desirability demand" (which is indeed high) and everything to do with what the banks will lend.

        Fake Left, Drive Right . . . not my idea of a Democrat . . .

        by Deward Hastings on Thu May 30, 2013 at 12:01:18 PM PDT

        [ Parent ]

        •  If SF is in a real estate bubble (2+ / 0-)
          Recommended by:
          gjohnsit, greenearth

          then why are rents exploding faster than sales prices? A lot of what is driving SF prices is that rents are completely bonkers right now.  Average two bedroom in the city is 4-5K.  That makes a lot of real estate look very attractive.  There is a lot of wage growth happening in SF in certain sectors.  Not saying everything is rosy - there is an overdependence on a tech market that will eventually shake out, hopefully not as painfully as it did in 2000-2001.

          "A liberal is a man or a woman or a child who looks forward to a better day, a more tranquil night, and a bright, infinite future." - Leonard Bernstein

          by outragedinSF on Thu May 30, 2013 at 12:47:55 PM PDT

          [ Parent ]

  •  "Two things are infinite: (13+ / 0-)

    Stupidity and the universe.  And I'm not sure about the universe."

    -- Albert Einstein

    What would Mothra do?

    by dov12348 on Thu May 30, 2013 at 07:54:32 AM PDT

    •  You can call it stupidity. (2+ / 0-)
      Recommended by:
      gjohnsit, greenearth

      But what other options do first time buyers have? My wife and I recently purchased our first home in Boston -- closing tomorrow -- and we couldn't imagine the changes we saw in the real estate market. When we started looking 8 or 9 months ago there was tons of inventory and a lot of places had been sitting for a good while. By the time we purchased there was a mad rush on almost all newly listed properties and somehow it has only gotten crazier in the time since we went under contract. So yes, this almost certainly is a bubble.

      But what are the options? Invest in the stock market? Owning property(ies) seems like just about the only surefire way to pass along wealth to your progeny; to flip the game and have the power of compounding returns start to work for you.

      It seems like the options are either purchasing a house or continually battling your way through your life with little to show for it.

  •  Banksters need suckers (4+ / 0-)
    but most undoubtedly expect to flip them for substantial profits in the near future.
    The housing market of today is vastly different from the market during the last bubble.

    Banks are unloading their toxic inventory to people with money. Dumb money.

    Investors are not long term holders, they will make their profit when it good and then sell .... or at least thats the idea.
    However, dumping 5000 shares of J&J is just a phone call ... trying dumping 5000 homes in one region.

  •  Yes, let's keep homeowners underwater (1+ / 0-)
    Recommended by:

    So some poor shmuck bought a home at the peak of the market, has had an underwater mortgage ever since, and has been trying to not sell at a loss for 5 years.

    Hell no prices shouldn't rise so he can get out.  He has to sit there with his underwater mortgage and just suck it up.  It's clear from this diary that as long as an investor somewhere is making a profit, it is very, very wrong for home prices to rise.

    •  clearly you missed the point (8+ / 0-)

      Its not about keeping the poor shmuck underwater, its about keeping the poor shmucks in debt ... forever.

      •  If he can't sell, how does he get out of debt? (1+ / 0-)
        Recommended by:

        Yes you can argue that the banksters love higher prices because they get to give out bigger mortages.

        But people who have been fiscally responsible will have paid down much of their current home, and can then afford to move and buy a larger home without taking on massive debt.  And if that lets an underwater mortgage holder sell and avoid foreclosure, if it lets that poor shmuck get out of debt, is that still a bad thing?

        •  That "poor schmuck" (5+ / 0-)

          (nice bit of sympathy, there, btw) will then be homeless, unless he is able to get so far above water that he gains enough equity to then buy one of those now more expensive houses. Is that likely?
          People who have been fiscally responsible are not speculators by definition, so they are irrelevant to either of these discussions. But if they try to profit from a bubble market, they will soon become relevant, because when the new bubble bursts, they will join the rest of the "poor schmuck"s, won't they . . .

          "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

          by bryduck on Thu May 30, 2013 at 09:46:39 AM PDT

          [ Parent ]

          •  Only if he's at the very bottom of the market (1+ / 0-)
            Recommended by:

            The thing is, at the low end, homes are selling.  I live in a modest neighborhood, and homes are selling.  Also, the homes are about double what a condo costs.

            So an underwater homeowner who still hasn't been able to sell is most likely in a larger home.  Most likely, the home is larger than the owner really needs.

            So after he sells, he can downsize.  He isn't forced to go out and buy the most expensive home he can find.

            Smart homeowners will try and offload homes bought at the peak of the bubble, and then go make an affordable, sane purchase.

            •  There are two problems with that (4+ / 0-)
              Recommended by:
              bryduck, coquiero, Lily O Lady, greenearth
              Smart homeowners will try and offload homes bought at the peak of the bubble, and then go make an affordable, sane purchase.
              #1) Most homeowners aren't savvy enough to know when a bubble market has peaked, and #2) You are still only passing the buck, because for that "smart homeowner" to get out at the peak, means some poor shmuck buys at the peak.

              “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

              by gjohnsit on Thu May 30, 2013 at 11:51:56 AM PDT

              [ Parent ]

        •  Indeed, I think of the elderly or hard hit who (3+ / 0-)

          have been locked into a home they want to sell, but can't.  Now they are out, the home is going to go to someone who wants it, maybe even some nonperforming loans are paid off.  At the first level of analysis, it's clearly good.  As to a bubble, well, those are hard to spot until after the fact, but I'm not seeing it.

          "We're now in one of those periods when the reality of intense pressure on the middle class diverges from long-held assumptions of how the American bargain should work" --James Fallows

          by Inland on Thu May 30, 2013 at 09:53:34 AM PDT

          [ Parent ]

        •  Out of debt? (5+ / 0-)

          You still insist that the idea is to help the "poor shuck"?

          Was any of the alphabet soup bailouts and backstops designed to help the poor shuck? It was about helping the insolvent banks. The banks need shmuckers ... lots of them.

          The best thing the poor shmuck could have done to help himself would have been to "reset". Just walk away and gave the underwater asset back to the banks.

          In order to understand what is going on one has to have a clear idea of what normality is ... 20% increases in house prices  ain't it.

          •  Fine (1+ / 0-)
            Recommended by:

            You know, for a home owner who is trying to save for retirement and not be dirt poor, it would be nice for him to not sell at a loss.

            But you're right, the home owner should just walk away, throw away every dime he's spent and just give everything back to the bank.  Because the banks will never, ever profit from that....

            •  Way too emotional (8+ / 0-)

              Lets rewind .... traditionally a home purchase was just that ... A HOME, not a house.

              A house is an investment a home is what people purchased to live in, raise a family, be part of a neighborhood and a community. That was all turned on its head during the early part of the decade.
              Historically the way people made money on their home was to pay off the mortgage. Home prices for the last 60 years or so went up less than 2% a year..... NOT 20%.

              If you are in a home that is underwater you have 2 choices, stay or walk away. If you stay then make it a home .... stop thinking about it as an investment, because as investments go homes are not really very good. They need maintenance, upkeep, upgrades ... all of which is negative for an investment.

              The Federal government and FED has done everything they can to tie the debt to the homeowner, refinancing was opened to everyone (including underwater) last year ... it doesnt help with the negative equity but can lower your payment and make sure you keep paying on an underwater asset.

              •  Refi was not open to 'everyone' who's underwater (3+ / 0-)
                Recommended by:
                joeshwingding, gjohnsit, greenearth

                We have been checking every new program and opportunity to refinance our underwater and overpriced mortgage for the past few years, and consistently found we're not eligible because our mortgage is not a federally backed loan, e.g., FHA. So I don't agree the government (congress) has done 'everything it could' to help all of us who need to refi at current rates to reduce payments and the risk of losing our home if we lose income and cannot keep our heads "above water" until home prices go back up enough that we have equity again and can refi it. It has been a harrowing few years and I keep hoping for either a recovery of prices or/and a program to help the rest of us who don't have government mortgages.

                Otherwise I agree with your comment, our house is our home, not an investment, and we are hanging on despite the financial costs because we have invested a lot into this place (not just money but work and time and sweat equity) and we love living here. AND walking away ruins your credit rating, making it more costly than it may appear at first glance. They don't make it easy to just walk away -- it costs you everything pretty much. In fact in our case since we had to pull equity out via a 2nd mortgage to survive a period of unemployment a few years ago, the lein holder on the 2nd would be able to sue us for the amount we still owe them, forcing us into a full bankruptcy if we 'walk away' so it really is not that easy to do in many ways.

                I for one am very happy to see prices coming back up. I don't know what the bigger implications might be for the overall market, but for us "poor schmucks" who are underwater, it is a good thing, whether we want to sell or simply get our payments down to a manageable level.

                •  Correction (1+ / 0-)
                  Recommended by:

                  Underwater mortgages who are owned by FNM,FRM,FHA,VA were able to refi. Those private label mortgages are up to the "banks compliance".

                  I don't know what the bigger implications might be for the overall market, but for us "poor schmucks" who are underwater, it is a good thing, whether we want to sell ....
                  Well now that is just it isnt it, "the overall implications for the market"? ... if the poor shmucks are suddenly above water who are they going to sell to?

                  Prices were put far out of reach of anything resembling solid economics that people could not afford a house any longer. To put those prices back in that same position is now good for whom?

                  •  Well if prices are going up, someone is buying (1+ / 0-)
                    Recommended by:

                    houses at those rates. Obviously. A huge number of people bought houses when prices were sky high. There were actual bidding wars on houses during the height of the bubble; a newly listed house would often have multiple bids, of more than the asking price, within 24 hours. This was true here in Tucson, where we bought a house in 2004, and the same was happening, even worse (or better, depending on your perspective) in southern California, where we sold our house in 24 hours to the highest bidder among several offers when we decided to get out of that craziness and move here. And that was at a ridiculously high price to be honest. I could not believe people were fighting each other to pay so much for a very basic house over there. It was nuts. But people were certainly buying houses. Lots of them. So prices going back up is good for underwater homeowners who need/want to sell or to refinance. Now people wanting to sell to "move up" will also pay more, but many would sell to "move down" or even rent at this point and be happy to get out of the higher priced house. People do buy them, for whatever reason.

                    •  the factor that drove the last bubble (2+ / 0-)
                      Recommended by:
                      gjohnsit, gulfgal98

                      was hi-bred mortgage instruments that are now largely illegal.
                      Neg-Am, Alt-A, Interest only, pick a pay .... etc.

                      That was a different market than today. Today investors are driving prices as they are getting good bargains BEFORE the houses are hitting the market and buying at wholesale prices.

                      They will leave the market just as soon as there is a better, less risky option for yield.

                      True ... the market will never totally freeze up

            •  One more thought (4+ / 0-)
              Recommended by:
              Sparhawk, gulfgal98, gjohnsit, greenearth

              If house prices rise to where everyone is in the black ... who are they going to sell to?

              The greater fool theory is what was in play last bubble.

              This time we have a certain amount of reality at least with lending (sans historic low interest rates). But what else do we have? Stagnant wages, a younger generation saddled with college debt, pathetic job market, service sector jobs are the main source of new jobs, rising COL expenses ...

              So who is going to be the ones to "pay up" for these inflated assets?

              •  Greater fool theory (3+ / 0-)
                Recommended by:
                joeshwingding, gjohnsit, greenearth

                I am so glad you brought that up because that is exactly what drove much of that last housing bubble in Florida.  Here, many of the homes and condos, particularly in coastal areas, were aggressively marketed as investments to be bought, held for a short while, and then flipped. Some were used as rentals while the owner waited to flip it.  However, anyone with a basic understanding of math soon realized that there was no way to begin to cover the cost of the purchase through rentals. It was a crazy feeding frenzy in some coastal areas with the last fool being the one who got stuck with it when the market collapsed.  Many of those last fool investors walked away from them and let them go into foreclosure.

                "Growing up is for those who don't have the guts not to. Grow wise, grow loving, grow compassionate, but why grow up?" - Fiddlegirl

                by gulfgal98 on Thu May 30, 2013 at 11:33:21 AM PDT

                [ Parent ]

              •  We're gonna sell to foreigners (3+ / 0-)
                Recommended by:
                joeshwingding, denise b, greenearth

                At least that was what I heard in 2005-2006. And I'm starting to hear it again today.
                    It seems foreigners are always ready to buy our over-priced McMansions.

                “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

                by gjohnsit on Thu May 30, 2013 at 11:56:31 AM PDT

                [ Parent ]

      •  Bingo nt (4+ / 0-)

        “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

        by gjohnsit on Thu May 30, 2013 at 09:20:13 AM PDT

        [ Parent ]

  •  Companies buying their own stock back (8+ / 0-)

    are the big purchasers right now; the large institutional investors are net sellers.  There's a good reason:

    1. Company borrows lots of "free" money from the Fed;
    2. Company uses money to buy back its stock ;
    3. Company retires the stock prior to stating earnings;
    4. Because there is so much less stock outstanding, earnings per share go through the roof;
    5. Because company bigwigs' compensation is tied to earnings, their stock options are triggered, and they receive large amounts of stock, or restrictions on stock they already own are lifted;
    6. Company bigwigs sell the stock to the suckers in the market and walk away with big paydays (usually while claiming "I took only $1 in salary this year").

    Notice that nothing actually happened to the company to make its earnings go up, except that it took on a boatload of debt.

    a. Your pension fund and IRA can't make any money because interest rates are so low;
    b. Inflation moves on and makes your savings worth less (contract those last two words if you wish);
    c. Because the cost of capital is so low, companies can buy robots to replace not only assembly line workers, but service workers (there are robots now that cost about $22K that can flip burgers 24 hours a day);
    d. Companies bring their operations back from China or wherever using those robots, and crow about repatriating jobs, while actually employing 1/100 of the people they had when the jobs left; and thus
    e. The companies get richer as you get poorer.

    So while low interest rates are slowly bankrupting you, go out and buy a McMansion in Las Vegas, and party like it's 1999.

  •  This diary is not factual (3+ / 0-)

    In San Diego the ratio of monthly mortgage payment and taxes to income is the lowest it has been since 1977 at less than 4%.

    Rising home prices are mostly good news, foreclosures are way down, short sales are way down and since not as many are underwater, they have options on what to do with their real estate investments.

    Jesus, I like this site but the bitterness and negativity of diaries like this are a real buzz kill sometimes.  In most areas if you can't afford a home right now it is because you have an income or credit problem (another issue entirely and quite real for many) not because houses are exorbitantly priced.

    •  Of course you failed to make your point (6+ / 0-)

      Your comment was totally about mortgage payments, something that I didn't address in my diary. Therefore your claim that this diary "ïsn't factual" is false.

        My reply is that everyone who was bullish on housing in 2005 also talked about mortgage payments as well.

        My other reply is that if you haven't learned why a housing bubble is bad for regular homeowners by now, you never will.

      “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

      by gjohnsit on Thu May 30, 2013 at 09:24:05 AM PDT

      [ Parent ]

      •  Smart money was not bullish on housing '05 (2+ / 0-)
        Recommended by:
        virginislandsguy, howarddream

        It was a suckers rally fed by fraudulent banksters and it was easy to see with a little basic research.   Anyway, if you were unlucky or greedy or stupid enough to buy back then there were relatively easy "outs" if you knew what you were doing.  The taxpayers paid for this I know but it's relatively ancient history.  Obama et al have done a great job considering how messed up the situation was.

        Bottom line: buying a single family house right now is a value proposition and the market is very healthy with mostly traditional sales and real down payments and amortized mortgages.  We will see what transpires but we are nowhere approaching bubble territory.

        •  Jeebus (4+ / 0-)
          Recommended by:
          shaharazade, gjohnsit, LucyandByron, KJG52

          "buying a single family house right now is a value proposition"

          Buying a single family house SHOULD NEVER be a value proposition, or any other proposition other than the basic economic consideration of procuring shelter for oneself and one's family. PERIOD.

          Your thinking exemplifies ALL that is wrong with elites' thinking in USA the past half century. Your thinking is exactly the thinking that has led us into destroying our industrial base, literally killing off the working class (life expectancies are frigging declining for those with a high school education or less, for Gods sake!), and I'll even go so far as to assert led us into two wars, one of which we definitely did not need to fight, and both of which we never properly funded by increasing taxes.

          Economics is NOT, as the textbooks asset, about allocating scarce resources. I assert that the most important economic activity any society undertakes is scientific inquiry, because that is how the technological knowledge is created to overcome scarce resources. Economics, as I have preached here before, is how a society organizes itself to procure, process, and distribute the material and immaterial goods and services required to sustain and reproduce the human species at ever higher levels of material, cultural, and spiritual levels of existence. You know nothing about real economics other than the monetarism that has sadly dominated the economics profession, and policy making, the maast half century.

          A conservative is a scab for the oligarchy.

          by NBBooks on Thu May 30, 2013 at 10:07:20 AM PDT

          [ Parent ]

        •  Traditional sales? (4+ / 0-)
          Recommended by:
          shaharazade, gjohnsit, LucyandByron, KJG52

          Right now between first time home buyers and all cash (no mortgage buyers) is making up nearly 70% of the market. Depending on the area.

          Those are not traditional sales. The largest driving factor of a normal market historically has been organic resales. Which stands today around 20% ... this is another speculator bubble market

    •  You want a buzz kill? I got plenty of 'em (5+ / 0-)

      I'm told by someone who has watched the Chicago real estate market closely for nearly 3 decades that in many parts of the city and close suburbs where the financial elites don't live, the people buying property are the people who have the money - drug dealers.

      I wonder how that's going to work out for the future progress of civic virtue in our cities.

      I just decided not to go peddle my books at a blacksmith show in eastern Pennsylvania this year because the few shows I've done so far have had sales 10 to 20 percent below last year, and I figure that all the money and income is going to the top one percent, not to the people such as my customers. When I contacted the event organizers to inform them I would not be a vendor (after nine straight years), they told me the sole remaining food vendor had also decided not to participate.

      A relative in a big midwestern city who has his own business distributing food to independent food stores and gas stations is still whining that he almost has to give his food away: it only sells if there is on sale and usually at a hefty discount.

      Yeah, things are so bad at the level I inhabit, that you can't even make money selling frigging food anymore. What level are you on? I think your view is all screwed up, plain and simple.

      A conservative is a scab for the oligarchy.

      by NBBooks on Thu May 30, 2013 at 09:37:49 AM PDT

      [ Parent ]

      •  Why attack him for relating his experiences? (0+ / 0-)

        Seems to me some problems and complaints are really regional in addition to being economic.  So people outside of your community just don't suffer the same problems you do, so what?  There's nothing wrong with anything he said as relates to a middle-class mega city in Southern California.  Looking for a good place to rent or own is definitely a value proposition...and it should not be a political dividing line.  I too own a home and extremely happy that prices are up so I can finally sell and downgrade to a lower cost home.  

  •  Farmland near large suburban populations (4+ / 0-)

    ..may be a good long-term investment.

    Just think of the killing someone could make renting out tent-spaces and coin-op porta-potties when the next bubble bursts.

  •  Doesn't make the case. (2+ / 0-)
    Recommended by:
    virginislandsguy, howarddream

    A twenty percent rise after a twenty percent drop doesn't bring you back the status quo ante.  Do the math yourself.

    The appearance of institutional investors doesn't mean there is a bubble.  They are planning on higher prices.  Sure, people have been wrong before, but that doesn't mean these investors aren't right with their chosen purchases at the moment.

    The article on margin loan financing admits that nobody knows if the loans on brokerage accounts are being used to buy housing.

    But most importantly, your grasping of something like flipping or sellers' markets is the worst mistake of coincidence: there were flippers and a tight supply before the bubble burst, and now, there are agains flippers and a tight supply.  Given that the market is now at 2003 levels, why is it a sign of a malfunctioning market that buyers are snapping up houses?  It could be a sign of good pricing, particularly given the low rates, which you don't seem to factor into the price of a house.

    And bottom line: who gives a shit about whether private equity or people with brokerage accounts or are in the business of buying and selling lose money?  I don't.  Everyone else should just realize basic consumer sense: don't buy a place you don'jt want to live in.

    "We're now in one of those periods when the reality of intense pressure on the middle class diverges from long-held assumptions of how the American bargain should work" --James Fallows

    by Inland on Thu May 30, 2013 at 09:51:30 AM PDT

    •  Re: (1+ / 0-)
      Recommended by:
       there were flippers and a tight supply before the bubble burst, and now, there are agains flippers and a tight supply... It could be a sign of good pricing...
      And bottom line: who gives a shit about whether private equity or people with brokerage accounts or are in the business of buying and selling lose money?
      I guess you didn't learn anything from the last bubble.

      “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

      by gjohnsit on Thu May 30, 2013 at 12:03:39 PM PDT

      [ Parent ]

  •  Very timely (4+ / 0-)
    Recommended by:
    gulfgal98, shaharazade, gjohnsit, KJG52

    Just this morning here in S. Az, I read in the local paper that a developer wanted to re-zone low density to high density residential to build 53 units on one 5 acre piece and 250 units on another 15 acre piece. Of course no consideration of over burdening existing roads, water and other infrastructure. Meanwhile just two blocks up there sits mostly empty condos from the last bubble burst. Fucking real estate developers. Greed heads all of them, not to mention the Mortgage companies and banksters.

    Society is like a stew. If you don't stir it up every once in a while then a layer of scum floats to the top. ~Edward Abbey

    by cosmic debris on Thu May 30, 2013 at 10:16:16 AM PDT

  •  OK - fun with numbers (0+ / 0-)

    The first chart, price of NEW HOMES versus income just seems to be comparing nothing.  How about new home cost versus new home buyer income would be a better and more fair measure.  Or cost of all home sales compared to income is fair too.

    BTW, a lot of those statistics shown on the ABC News website (surely you could have found a better one) are growth in home prices from the bottom of the market.  Sure it looks like a lot but it is like our lower income assistants getting the same percentage wage increase as the higher income managers.  The managers are still getting a lot more money.

  •  Our house dropped another $5K in value this year (0+ / 0-)

    Not going to complain because it meant our mortgage and escrow rates will go down AGAIN, but wherever the bubble is forming, it sure isn't this neighborhood.

    (Our house is where 2008 burst- a partially finished neighborhood: 8 houses and 100 PVC farms.)

    The Cake is a lie. In Pie there is Truth. ~ Fordmandalay

    by catwho on Thu May 30, 2013 at 10:23:04 AM PDT

  •  I'm pissed off about this (2+ / 0-)
    Recommended by:
    gjohnsit, KJG52

    My husband and I live with my ex husband in our condo, and we're planning to refinance and rent that out then buy a new house.  Unfortunately we can't just yet, and I'm afraid that by the time we can, there won't be any houses left in our price range in North Hollywood.  Speculators are snapping up the most promising properties the moment they hit the market, and since they have cash they crowd out the regular people like us.

    Republican threats amount to destroying the present if we don't allow them to destroy the future too. -MinistryOfTruth, 1/1/2013

    by sleipner on Thu May 30, 2013 at 10:25:51 AM PDT

  •  Housing Prices Have Gone Up 20% . . . (0+ / 0-)

    Because supply is lagging behind demand.

    Seems like economics 101 to me.

    I miss Speaker Pelosi :^(

    by howarddream on Thu May 30, 2013 at 10:28:37 AM PDT

    •  What if housing stock (0+ / 0-)

      is being deliberately kept off the market?

      This is why 101 doesn't always get the job done.

      •  Then I Guess NPR Lied to Me the Other Day. (0+ / 0-)

        Better go alert Ray Pensador!

        I miss Speaker Pelosi :^(

        by howarddream on Thu May 30, 2013 at 04:01:18 PM PDT

        [ Parent ]

        •  Did NPR lie? (1+ / 0-)
          Recommended by:

          or did they just put some "expert" on and encourage him to spout his opinions?

          I didn't hear it, but I've certainly heard plenty of people lying on NPR, particularly about economic matters.

          But maybe lying is too strong a word - maybe I should just say I've heard a load of crap on NPR that made me want to scream, on a quite regular basis.

          We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

          by denise b on Thu May 30, 2013 at 04:47:39 PM PDT

          [ Parent ]

  •  People, compare new home prices with sales (0+ / 0-)

    You'll see the number of sales are still in the lows because there are extremely few new homes being built.  If you want a new home, you're going to pay a premium because supply is down.

    Take a look at existing home sales.  Prices are also up and supply is down.  The lagging part of the market is multifamily/condo/townehome which is still being affected by foreclosures.

  •  My city, Portland is having (4+ / 0-)
    Recommended by:
    gulfgal98, gjohnsit, coquiero, KJG52

    a major crank up of the housing development bubble machine. This round of boom is a little different then the last round. In the residential close in neighborhoods commercial developers with city planners blessings and permits  are tearing down older homes and small neighborhood businesses and building large condo's with retail space on the street level.

    This is being done by mainly one company Urban Development a Miami based development corp. Entire blocks of our livable affordable neighborhoods are being bought up bull dozed down and dense 80 unit condo's with no parking space are being erected. This is touted as the only alternative to more suburban sprawl and freeways as it will provide housing to hipsters who will use bikes and public transportation. lol. They call this 'micro neighborhood development' as the neighborhoods they are developing are areas that have local small retail business are walkable, bike friendly and are neighborhoods that really are small communities within the city. 'The cool common places to connect' this article talks about are being bulldozed and forced out of the neighborhoods.

     Seems to me that they are killing the very things that makes these 'micro' neighborhoods a great place to live. The small coffee shops, book stores bike repair shops and restaurants are priced out and being replaced with suburban style up scale shops. They built one of these condo monstrosities on our main street right before the last bubble busted. It's pretty much a slum in the making as it has no businesses in the street level retail space and the apartments sit mostly vacant. This time instead of flippers and obscene prices for existing homes were getting developed by sleazy banksters and developers. Crazy part of this is it's touted as green as these buildings have no parking garages and yet 70% of the tenants in the completed units in other neigh hoods have cars.      

    Portland's Current Market Trends

    While Portland’s unlikely to make a cameo on MTV’s Cribs any time soon, according to many real estate agents our city’s luxury home market (homes over $600,000) is slowly clawing back from its shadowy nadir. “In 2012, there was a tremendous uptick in the more expensive properties being sold,” says Michael Hasson, founder of Hasson Company Realtors. “Part of what caused that was an abundance of inventory that was just sitting for three years.” But the trauma of the recession has left the luxury market, understandably, changed. “It’s not about the size of the house anymore,” says Jenelle Isaacson, owner of Living Room Realty, one of Portland’s fast-growing real estate firms. “It’s about lifestyle. People are willing to sacrifice a lot of square footage for a neighborhood that fits with their personality.” Beam Development’s Brad Malsin calls the shift a kind of Ace Hotel model of living: “People are willing to put up with less luxury in exchange for cool common places to connect.” As a result, builders who used to work solely in the suburbs, crafting showpiece homes, have begun picking off infill projects. “Now you’re seeing Renaissance Homes and Arbor Custom Homes in Portland,” says Mark Hepner, co-owner of Portland Residential Appraisals. “Ten years ago the only thing they built was a house in a suburb. Now, they’re looking around in the urban district like Sellwood and Moreland and Laurelhurst, buying lots and old houses and tearing them down.”  
    This sounds pretty dicey...
    In Portland’s low-inventory real estate market, money doesn’t just talk—it screams. Fully a quarter of all home purchases made in 2011 and 2012 were cash purchases. No financing, just dollar signs. “It’s basically investors getting into the market,” explains Jerry Johnson, principal at Johnson Reid real estate consultancy firm. “They see huge buying opportunities. When cash buyers come in, it typically means they’re reading bottom of the market.” It can be good business for builders, as Keller Williams principal broker Nick Krautter points out: “You can pay $250,000 to $300,000 for a house, tear it down and build another, and still make money,” he says. “That wasn’t the case two years ago.” The proliferation of cash buyers can be frustrating for buyers looking to finance a home, since cash deals are often more attractive to sellers. Krautter relates the story of a recent listing in the low $300,000 range that garnered six offers within 48 hours, all well above the listing price. Two of them were cash offers (and one of those won out). “Sellers are really looking at the bottom line,” he notes. But as the number of foreclosure properties on the market continues to decrease, Michael Hasson of Hasson Company Realtors expects to see cash sales level off.
  •  I believe you may have made an error . . . (0+ / 0-)

    The source for your chart at the top of the diary is based on new home sales only.  To see that, you have to backtrack to the source of the chart and click the "all time high" link there which takes you to this page Click the link to "census bureau" there, takes you tothis report.

    The Census Bureau report is based on new home sales only. In April 2013,  there were 454,000 sales.  The Census Bureau provides this link for existing home sales.  In April, there were almost 5 million units sold.  

    New home sales are less than 10% of total home sales.  Existing homes are priced substantially lower than new builds.  

    The article at ABC News is erroneously headlined "Home Prices Highest Since April 2006."   It manages to partially contradict the headline:

    Prices around the country rose the most since April 2006, though in most places they are still well below their peak in 2006, according to the Case-Shiller house price index, which includes data through March 2013.

    Case Shiller shows all markets have a long way to go to match levels during the bubble.

    You say that the bubble denialists' reasoning "is largely based on the fact that we haven't reached 2006 prices yet."  That holds true nationwide and in all individual markets, too.

    Phoenix AZ shows 22% appreciation from a year ago.  The market there is up 22% from a 50% decline.  A year ago prices were half what they were in 2006 so they'd have to double to get back to the 2006 level.  With a jump of 22% there's still a long way to go to reach 2006 levels.  

    To be clear, I started warning of a new bubble 11 months ago when Phoenix began its string of double digit appreciation.  People still don't believe it.  Home prices today are at their 2003 levels and there is an element of greed in our society today that believes the bubble can be replayed.   I wouldn't look to anyone in government to be concerned about it because it won't play out until after November 2016.

    On March 17, 2009, the President said:

    . . .  we can't go back to a bubble economy -- an economy based on reckless speculation . . .

    There is no existence without doubt.

    by Mark Lippman on Thu May 30, 2013 at 11:18:14 AM PDT

    •  Re: (0+ / 0-)

      I'm not sure I understand your point. You did a bunch of research and I respect that. Plus you are being very reasonable, and I appreciate that I great deal.
         But I'm not certain what exactly you are saying is the error.

      “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

      by gjohnsit on Thu May 30, 2013 at 12:15:07 PM PDT

      [ Parent ]

      •  Sorry - I was (0+ / 0-)

        busy for a while getting some work done.

        I meant to say that the chart at the top of the diary indicates that new home prices have risen compared to income so that they have reached a record in unaffordability.  

        If you remove the qualifier "new" and say that home prices have risen compared to income so that they are more unaffordable than ever, it's no longer a true statement.  All homes sold include new homes and resales of existing properties.  

        I was trying to point out a distinction that I wasn't sure you understood.  

        There is no existence without doubt.

        by Mark Lippman on Thu May 30, 2013 at 04:23:01 PM PDT

        [ Parent ]

  •  go read Bonddad.. (1+ / 0-)
    Recommended by:

    point for point and more he demonstrates with facts what is actually going on and seems to refute this entire diary.  I know why he left here, facts, don't need not stinking facts.

    Its supply and demand

    New home supply is at 50 year lows...

    Existing home supply hasn't been this low in 12 years...

    check it out Bonddad

    •  Of course (4+ / 0-)
      I know why he left here, facts, don't need not stinking facts.
      And I didn't post any facts in my diary. None at all. Didn't link to any articles. Didn't post any numbers.
        Thanks for pointing that out.
      New home supply is at 50 year lows...
      Existing home supply hasn't been this low in 12 years...
       And home supply and wasn't hitting all-time lows during the peak of the last housing bubble either.
         Thanks again for pointing that out.

      “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.” ― Upton Sinclair

      by gjohnsit on Thu May 30, 2013 at 12:25:43 PM PDT

      [ Parent ]

    •  Doesn't the growth in demand (2+ / 0-)
      Recommended by:
      TracieLynn, gjohnsit

      for housing have to come from young people forming new households, and aren't young people facing too much debt and too much unemployment to be doing this?

      All those 25-30 year-olds still living with their parents because they can't find jobs or can't make enough money to move out - if they're not buying houses then where is the demand coming from?

      I think we have a very manipulated market right now, and in a manipulated market no one knows what the real value of anything is. Maybe it's a bubble and maybe not, but I wouldn't trust anything about this market. It's not normal.

      We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

      by denise b on Thu May 30, 2013 at 05:16:06 PM PDT

      [ Parent ]

  •  Factors affecting housing markets (5+ / 0-)

    This is what I am seeing:

    1. A glut of condos on the market but not selling because being upside down in a condo affects not just the individual homeowner but the association as a whole. When people walk away from their condo units, they are leaving not just the bank but the condo association high and dry. As a result of so many associations being in poor shape, (not having enough cash reserves, etc.) financing a condo becomes problematic. Which means many are being sold cheap to cash buyers which drives down the value for exisiting homeowners, etc. Financing also involves not only on the health of the association but also the percentage of owner occupants. Look for condo sales to stay screwed up for the foreseeable future in many areas.

    2. Flood insurance changes have probably not been felt yet, but they will have a MAJOR impact on all housing located in special hazard flood zones that REQUIRE flood insurance to get a mortgage. Due to a recent law passed by Congress in 2012, federal subsidies for flood insurance will be ending. Current rates will be allowed to float upward at 20% a year for five years and then there will be no cap on further increases. This will be devastating to BOTH residential and commercial properties. Even propertied in "low to moderate" hazard areas will see increase, but at least the insurance is optional in these areas. In addition, there is a whole new classification of properties at risk from storm surge velocity which will reach deep into areas not previously considered flood prone.

    3. A shortage of properties from non-distressed homeowners, plain old vanilla sales, NOT short sales and not foreclosures. These sellers are caught in a bind with many choosing not to sell at this time because they feel their values are too impacted by shortsale and foreclosure comps. So, many people who would like to sell are "sheltering in place" hoping upon hope that the market will recover.

    4. Still a lot of "shadow inventory". Foreclosures that have not been dealt with. Some of this inventory is being sold very quietly in large blocks to deep pocket investors like hedge funds who have zero idea of how hard it is to manage a rental properties profitably, particularly single family houses. Rubberneckers will get to watch the "uh,oh, what have done" when the grisly truth becomes clear to these funds who will then probably cut their losses and sell to connected insiders who will continue the downward spiral with these properties. Flipping successfully is HARD despite what the TV shows show. So is actual property management.

    5. Mammoth building of massive apartment complexes as we transition out of the ownership society which is the REAL goal of the PTB. Read the white paper put out by HUD in 2011(I think) where the end goal was getting the GSEs out of the mortgage business and going to a model completely reliant on private financing requiring stellar credit and 20% down. No more American Dream of single family private ownership.

    So keep those seat belts fastened, because it will be a bumpy ride for a long time.

    If you want to buy in this market, buy what you can afford and don't get yourself caught up in a mortgage that is more than the market rental for the house. If you can rent the house, at least you will still maintain the flexibility to move if you have to.

    “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

    by Phoebe Loosinhouse on Thu May 30, 2013 at 11:43:40 AM PDT

  •  More proof we need a REAL jobs program. (2+ / 0-)
    Recommended by:
    gjohnsit, KJG52

    My theory: the Fed is keeping interest rates low to jump-start the housing market as a jobs generator.

    Why? Because the GOP keeps Congress from doing a damn thing to generate jobs. Not that the Dems are even really trying.

    If the government would spend $ on stuff we really need--like infrastructure, education, clean energy--then we'd have jobs. And the Fed wouldn't have to try to create jobs with another housing bubble.

    "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

    by HeyMikey on Thu May 30, 2013 at 12:36:19 PM PDT

  •  Iowa farmland has to do with DEMAND. (0+ / 0-)

    Imagine owning farmland where the water table is 200' down.  How about a chart showing the price of farmland in Kansas, Oklahoma, Texas, and Nebraska?

    Happy little moron, Lucky little man.
    I wish I was a moron, MY GOD, Perhaps I am!
    —Spike Milligan

    by polecat on Thu May 30, 2013 at 12:38:11 PM PDT

  •  I guess I am too simple minded (4+ / 0-)
    Recommended by:
    coquiero, gjohnsit, gulfgal98, KJG52

    But if the people who will need to live for the rest of their lives in these houses aren't the ones buying them, if speculators are the purchasers, we've got problems and bubbles again.

    It's just all more mayhem......sigh

    And college educations signed up for via loan packages, pushed by out of work used car salesmen, then being packaged into securities.....sigh.....just standing here watching train wrecks.  What else is there to do with myself?

  •  Great Diary (2+ / 0-)
    Recommended by:
    gjohnsit, KJG52

    and very relevant to me. Just two days ago a co-worker who has been saving for a couple years to buy a house was telling me there was a bubble happening here in San Diego.  Prices are rising and everyone is paying cash.  She blamed it on foreign investment groups, said they would buy lots of houses in a neighborhood, raise the medium price and move to another neighborhood.  Her mother-in-law is a professional house flipper (been doing it for years) and can no longer buy houses even for cash; she gets beat out every time.  So interesting to read a confirmation of my co-workers opinion.  She of course, blames it all on Obama. LOL.

  •  Late to the show.... Iowa farmland prices!! (1+ / 0-)
    Recommended by:

    OMG!!  Up in the northwest corner, land is going for as much as 12500 an acre and the south central part of the state has the lowest, topping out at around 9k an acre.  

    Using that average price per acre chart you have up there, we basically own a 750k to one million dollar farm right now.  It's 140 acres of trees.  100 is 'older' growth and the other 40 acres were planted around 1994 with white oak, black walnut, ash, and cedar.  We've joked in the past how the farm would be my sister's and my retirement fund.....

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