patrick.net

It's pretty simple. Wall Street is a parasite to the real economy and they've tripled their take on the economy's profit since the 70s. They are sucking us dry for all we have. Even when they lost everything they had, we were forced to make them winners.

Those areas like Victorville, Hesperia, etc., that are out in the middle of nowhere have always been, shall we say in a polite way......... less than desirable. For folks not familiar with this area, it's in the middle of the desert (SW portion of Mojave Desert) and about 30 miles from Barstow, which is about 1/2 way between L.A. and Las Vegas on I-15. I have no idea what people were thinking when they bought houses out in the middle of nowhere, but I had many conversations with friends over the past 6 or 7 years when those new homes where being built (you could see them going up by the 100s from the freeway on the way to Vegas) and my feelings then were that these subdivisions in the far-flung exburbs would be the slums of tomorrow. I was right, it just happened a lot faster than I thought it would. There isn't even a train or public transportation to get to the metro L.A. area so I am not sure where people went to work at a decent job unless they commuted the 80 miles each direction to Los Angeles. There are only so many hospital and San Bernardino County government jobs out there.

Prices are still dropping in my area - exurbs of Minneapolis-St.Paul metro area. Every single RE publication I pick up has more and more ads that scream REDUCED PRICE, PRICE REDUCED AGAIN, etc. I keep a very keen eye on my exurb and local area - prices have gone down continuously.

Yet the Case-Schiller index states that the Mini-Apple is up 11%.

I've spoken with RE people from all over the region - nobody knows how that figure was derived. Everything they see screams the opposite. It may be that bidding wars for some inner-city hellhole shortsale dump did increase 11% from 100K to 111K or something ridiculous like that, but average homes in the suburbs have gone down in value and price in general. In fact, in my particular exurb the price declines seem to be increasing, not decreasing.

Keep in mind Forbes IIRC had an article detailing how Minneapolis has fared the best of any major US city in terms of employment losses since the Great Recession began in 2007.

about all I can say is... I am sure glad I do not live in CA... not that this is confined only to California,,, but CA is the world's capital of it.

The state, in reality, may not recover. It may only eventually consist of slave workers who work to pay rent on homes owned by the state and local government workers' pension funds (CALPERS) so those fine folks can live the life of Riley, retire at 50 on fuil pay, on the backs of the slaves.

Very sad. Have to blame the government 90% for this (as it advertised spiking house values and the GSE's gave away mortgage money to fund the spikes) and 10% to dumb, greedy home buyers

If you guys are interested in a specific area, property shark tells you how many homes have been sold in that area this current year, and gives you numbers for the previous years up to 1986. The area I am interested in, if it keeps its pace, will be the lowest since 1986. In 1986, prices were averaging around $200k. Now, it's averaging around $550k; with the investors picking up properties for under $500k, and the suckers picking up the flipped properties for $600k++

schmitz_kris says

Prices are still dropping in my area - exurbs of Minneapolis-St.Paul metro area. Every single RE publication I pick up has more and more ads that scream REDUCED PRICE, PRICE REDUCED AGAIN, etc. I keep a very keen eye on my exurb and local area - prices have gone down continuously.
Yet the Case-Schiller index states that the Mini-Apple is up 11%.
I’ve spoken with RE people from all over the region - nobody knows how that figure was derived. Everything they see screams the opposite. .

This is common throughout the US... I saw that San Fran shjowed an 18% price increase and there's not a soul in San Fran who believes that figure. the only way it seems C-S could be right is if they are taking the very tiny number of actual sales and calculating the overall local market based on those few sales

Anybody from the midwest here? CBOT trader still here? Any opinions about Chicago real Estate?
East Village Buck ...Town ect...Thanks

goatkick says

Anybody from the midwest here? CBOT trader still here? Any opinions about Chicago real Estate?

East Village Buck …Town ect…Thanks

I live in the west suburbs of Chicago (Carol Stream currently). I don't pay much attention to downtown since I have no intention of living downtown so I don't know there but I think the western suburbs still have a little way to fall. In the last couple of months there have been 4 foreclosures go on the market within about a 3-5 block radius of me and as I'm walking my dog I'm pretty sure there are a couple more that the banks haven't done anything with (nobody clearly living there, no for sale sign, grass not being mowed, mailbox missing, garage door beat in etc.)

The price to median family income is still a little high I think...

Nothing more than a sales pitch from NAR. We have hit the bottom. Buy now BS again.

So it sold for 62k...you need to rehab the whole house maybe what 30,000?
then how do you rent it? there's 6 of them for sale on the same street...the
three dogs next door are barking all day and maybe night... how do you rent it?
Sad story up in the high desert.

Vain says

If you guys are interested in a specific area, property shark tells you how many homes have been sold in that area this current year, and gives you numbers for the previous years up to 1986.

Thanks man but doesn't seem to cover Western Mass, only Boston (so what else is new, lol).

dhopp says

goatkick says

Anybody from the midwest here? CBOT trader still here? Any opinions about Chicago real Estate?
East Village Buck …Town ect…Thanks

I live in the west suburbs of Chicago (Carol Stream currently). I don’t pay much attention to downtown since I have no intention of living downtown so I don’t know there but I think the western suburbs still have a little way to fall. In the last couple of months there have been 4 foreclosures go on the market within about a 3-5 block radius of me and as I’m walking my dog I’m pretty sure there are a couple more that the banks haven’t done anything with (nobody clearly living there, no for sale sign, grass not being mowed, mailbox missing, garage door beat in etc.)
The price to median family income is still a little high I think…

Thanks dhop ! I'm just down the road in Clarendon Hills. Shit's been hitting the fan a bit here under the radar. I'm looking to buy a place downtown preferably East Village aka Ukrainian Village for my kid. Tons of stuff for sale was just wondering if anyone had any feel at this time...Thanks for your reply

Has Zillow ever made a profit? I heard they have not yet made one.

Craigslist is my favorite site to avoid the excessive 10% state sales tax. Patrick.net is my favorite site to avoid home purchasing urges.

So, this woman wrote a blog to say that blogs are bullshit? The very definition of irony.

Blogging is just a fad. Remember the 80’s? We used to have CB radios in our cars. 1040 big guy…what’s your 20?

Nah! more like the 70s. But so was crusing on El Camino between Mt View and Santa Clara on Friday/Saturday nites.

Who knows, maybe this interwebs thing will catch on. It might become a replacement for useless professions, like bitter realtors.

Many moons ago a friend of mine was selling Amway and tried to convince me to become one of his minions. This was early 80's, and Amway believed that people would want to shop out of catalogs because going to the mall wasn't any fun...

her picture on her -blog- looks like she has down's syndrome.
which would explain why she sounds retarded.

Letting the agent do the searching for you exclusively is like using a 14.4k internet connection instead of broadband.

Any chance that supply of money are from the responsible people that didn't jump into real estate back then? They just kept saving and saving. Will they stay responsible and not be lured by government?

I had just realized nobody I know that's my age owns a home. They never even considered it. As soon as they got money, they spent it on other luxories such as nice cars, vacations, and such. They can probably afford one now. But they're just not interested at these prices. The government is telling lots of phantom buyers that now is the right time to buy.

Why not print the m1/m2 charts for the last 50 years instead of just 2.
http://en.wikipedia.org/wiki/File:Components_of_the_United_States_money_supply2.svg
Why not also discuss the changes in calculations of M1/M2 that have happened over those 50 years that make a big difference in this chart? Also why use a chart of cumulative growth anyway?

M1 is flat but M2 is on the same line as it has been since 1995 so there is NO big spike, just a continuation of the current rise. The M2 growth rate has actually fallen from 10% to below 2.5% in the last 12 months so there is a sharp slowdown in the growth that isn't reflected in your cumulative chart yet.

Who does hold all this cash? Where is debt in your calculations? How is it that the assets backed by mortgages have dropped over 30% while the liabilities owed have not dropped at all? Increasing the money supply while incurring ever large amounts of debt is also a zero sum game. The miracle of fractional lending once again.

Don't get me wrong.. I'm tempted to buy soon.. But i'm just not in a rush and shouldn't be... My rather unscientific method of following the housing market in areas I'd like to buy is adding favorites on REDFIN and checking in on their prices from month to month... tracking their final sale prices and comparing that to new similar inventory hitting the market in those areas. While homes are selling.. The new inventory that comes in after them aren't selling for a premium over the previously sold inventory. Atleast, nothing significant when factoring in interest rates decreases over the past year.

In fact, condos in some areas are starting to look like good investments after tax deductions as compared to renting. Although HOAS are a nightmare unknown factor. But then again, my commute to work would increase from 5 minutes to 1 hour each way. That's a significant amount of time I could use to make money or spend time with my family, that i'm not willingly to accept unless the place I'm buying really kicks the ass of my current comfortable rental and exponentially elevates my leisure time on weekends.

Though I don't consider myself a Republican, I am admittedly far on the right side of the spectrum. I am far more interested in spending cuts than in my tax rate, because of the way the tax code works. For most Americans, tax cuts and raises amount to a very small change in disposable income (a 5% tax increase, though it sounds huge, is only about 15 dollars a week for the average family once deductions are taken into account; that fifteen dollars would be nice, but can be budgeted around). I will gladly vote for any candidate in any party if they promise a small tax increase coupled with a large spending cut, and I don't consider any part of the budget sacrosanct. I am left without a party that truly represents me, as neither party is serious about cutting spending. If we're not going to address what I consider to be the central problem of government (it spends too much), I would just as soon vote for the candidate that cuts my taxes, hopefully bringing the day of reckoning closer rather than meaninglessly pushing it a few years further down the line. In my dream world, we would cut spending enough to balance the budget on current tax revenues, then pass a constitutional amendment that implements a small tax increase (one or two percent) that goes into effect any time the government is in debt (not deficit, just debt) and remains in effect until the debt is paid off.

I too see no increase at all, let alone, 18%. The graphs and charts can make any claim they want. I am looking into my market and obviously there is no increase. It has been flat ever since 2008. I'm currently waiting on a short sale. But if I do not get the property, there won't be any hurt feelings. My offer is low enough for me to ignore any signs of a declining market. While I was holding back and not making any offers, it felt like I was the only buyer they are waiting for lol. I felt like I was in a police interrogation room, with 10 people behind the 1 way glass, anticipating for me to go make an offer on a home.

I think refinancing is very easy right now...... at least if it's only to get a lower interest rate, and not using the house as an ATM. A few months ago we re-fied a sf home rental with the same mortgage company that held the original loan (streamlined re-fi) and all we had to do was fax back 2 pages of paper signed, no appraisal and then 2 weeks later a notary came to our home to have us sign the big stack of papers. Very easy and simple.

About 3 weeks ago we re-fied a sf home rental with a second permitted house on the back of the lot for a lower rate and that is with CITI and we're signing those papers this week. Again, no hassles, no fuss.

Rob918,

Easy if you have equity in your home.. AKA if you bought over 7-10 years ago and didn't pull out any equity.. AND didn't lose your job or spouse didn't lose their job, and your credit score is immaculate.

Lots of ifs... Basically the wealthy and frugal can refinance easily. I'd say that's a small percentage of the American population :) haha

Los Angeles Renter says

Easy if you have equity in your home.. AKA if you bought over 7-10 years ago and didn’t pull out any equity.. AND didn’t lose your job or spouse didn’t lose their job, and your credit score is immaculate.
Lots of ifs… Basically the wealthy and frugal can refinance easily. I’d say that’s a small percentage of the American population haha

I get your point and agree, but who would even think about trying to re-fi an underwater property in these challenging economic times? I would venture to guess that there is more to the story in the case of the Santa Monica home owners trying to re-fi than they are letting on. Who knows, there could be dozens of reasons like too many rental units in the complex, underwater, but money is not that tight if one has a job and/or a source of income (Rental, retirement, etc.) some assests and at least a little equity in their home. I guess in some ways it's like my dad used to say when I was a kid in the 60s/70s and we were poor and he would attempt to get a loan for this or that....."The bank only loans money to people that don't need it."

The interest rate to price paid, in terms of TCO, is only valid you plan on staying the thirty years.
If prices drop more, because our policy makers are still playing calamity novice, and your house goes below what you paid. Then not only will you have to wait until the economy starts looking promising, so the Middle class starts buying houses again.
For what you paid now, you may have to wait a while, until the other end of the scale, better houses than yours, that sold for less after you bought. Surpasses what you paid for your house, before you can get your money back.
Either that or the waiting for the 30 year mortgage payoff.

How ever if you are committed, and aren't worried about where prices goes from here, then the interest rates are a great help to get as much house as you can, to offset the near future further losses, and gives you the ability buy up as much as possible.

"a guy who makes $1M as an investor each year is still going to pay the 6.2% on the entire $1M in income - not just on the first $90k of the $100k he pays himself in salary as a director in one of his companies."

Social security is taxed on earned income and is a custodial account. If you garnish earned income for SS without limit, then do you raise the SS payout cap as well? Otherwise, it is another form of income tax. And from what I understand, we already have a federal, most states and even some local that tax based on income already.

"We spent it like a tax, in the general budget, mostly on things that benefited the investor class (such as the burst of Defense spending in the 80s and 2000s, Reagan-era Tax Breaks, many Welfare Programs are administered by JP Morgan for a fee, etc), so we should recoup it like a tax, no?"

No, it is a custodial account between the US Treasury and covered citizens, it is not meant to be an income tax. If I pay tax based on 1M in earned income, the program should reflect an equilvalent payout, anything else is income tax disguised as SS tax.

Whatever the treasury does to move money between SS fund and general fund is irrelavant.

SF ace says

No, it is a custodial account between the US Treasury and covered citizens, it is not meant to be an income tax. If I pay tax based on 1M in earned income, the program should reflect an equilvalent payout, anything else is income tax disguised as SS tax.
Whatever the treasury does to move money between SS fund and general fund is irrelavant.

It is already a payroll tax. From Wiki

Confusion, or misrepresentation of the nature of Social Security has often muddied debate over the program. The payroll taxes collected for Social Security are neither simply "taxes" nor do they create "retirement accounts" analogous to investment accounts such as IRAs. Social Security is an insurance program funded through payroll taxes.

Social Security should really be a part of your retirement package, not all of it. Based on that mentality, Social Security is also a large net, that will help people cope with large and massive shifts in the economy, regardless of the economy. When things are going strong, people can easily rely on stocks, savings, bonds, etc. If you were retiring in 2006, you could have had your world turned upside down! Social Security should be there to just help keep the basics flowing for you in the even things go nuts.

That being said, it's obviously going to become more expensive in some decades and less expensive in other decades for the average tax payer. We're entering a time when they're about to explode, but correcting the issue only requires a minor modification, something like 1-2% extra taxed. 1-2% isn't dooms day.

and what's a domestic payroll tax for? Social security, Medicare and unemployment insurance. The employer portion is an indirect taxation to the employee as well. If I get taxed at 1M base and my SS benefit is the same as the person with the 100K base (In context to Thunder's scenerio), in substance, it is an income tax.

"I think the top 1% pay an average of 18% on their income. Compare this with a working stiff making $150,000 a year who will pay over 50%."

"Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent."

That's little misleading as Buffet earned book income, not tax income. Most of the 46 million are unrealized and deferred later. As with most ultra-rich people, they play the defferal game. There is no special treatment for state tax. In California alone, if you have a capital gain of 1M, you will be subject to 15% federal and 9.8% state rate at the minimum.

Capital income, dividends, interest are earned with after tax income and/or taxed already at the entity level. Effectively, the same income are being taxed twice, three or even ten times already. Most countries don't even attempt to tax the same income twice.

with regards to social security, wasn't the program a reflection of the promise that what you pay will be reflected to what you get upon retirement? So if input does not match equal output, it sounds like a broken contract and in substance an income tax.