patrick.net

Sorry, I was being sardonic.

Moderate Infidel says

Foreclosures are going up because houses in the US are TOO CHEAP®.

People refuse to pay a mortgage on something that is TOO CHEAP®.

or if the mortgage rate is too low

Make sure when using it to spray explicit epithets from your mouth like a machine gun (technically this also is legal).

Yes it's Because of extraordinary government meddling, intervention, protectionism, fraud, lies, and more underhanded double dealing than can be mentioned that the housing market recovered before reaching market equilibrium. Who could have predicted that? Certainly I didn't see it. It wasn't until this year that I saw the system behind the system that made the second housing bubble not only likely but inevitable. There was never any doubt that the banks would not lose. That the government housing debt would not fail. That prices would have to return to bubble levels (at least in some places) so that the financial industry would get the final bail out it needed. Everything has been done. It's over.
The American people lose.
The wealthy consolidate their power, enhance their empire, and insulate themselves from future risk of any kind while creating a system of permanent impoverishment for anyone who wasn't quick enough to hop on the billionaire bus.

Just in time for back to school!

Quigley says

Certainly I didn't see it. It wasn't until this year that I saw the system
behind the system that made the second housing bubble not only likely but
inevitable.

Thank you Quigley. A reply was swimming around my head, but you put it together more eloquently.

patrick could indeed retire today if he bought a 4 bedroom home in palo alto when he was writing his book telling people what a sham buying a house is. (09? 10?)sooooooo ironic!!!!!!

http://www.amazon.com/The-Housing-Trap-ebook/dp/B009DRL91K/ref=sr_1_1?ie=UTF8&qid=1379113383&sr=8-1&keywords=patrick+killelea

Got it, so the spending continues unchecked, what happens when the ability to pay ends?

Heraclitusstudent says

For most people there is never a link between what they want (services, wars, retirements) and the resulting debt or taxes.

There should be an official website tracking each dollar and linking each law they passed to a price tag, updated-in real time. There we would see the price of attacking Iraq. The price of social security, Obama care etc...

Its because there isn't they "buy"everything and raise the debt ceiling later

Dan8267 says

FortWayne says

Walmart business plan is simple. Come into an area and dump products at break even or less until everyone around goes out of business.

Selling for less than cost to run competition out of business is called price dumping and I believe it's illegal in most states.

Legal or illegal, they do practice dumping cheap Chinese garbage all over the place until they run everyone out of town.

sbh says

Honest Abe says

what happens when the ability to pay ends?

It doesn't, in theory. If we default on our debt we will just have to inflate even more. It's not a solution, it's macho bluster. Spending has to be reformed, but that's done outside of default.

That doesn't work anymore when the rest of the world stops buying your debt.

egads101 says

U.S. FORECLOSURE STARTS DECREASE 8 PERCENT IN AUGUST TO LOWEST LEVEL SINCE DECEMBER 2005

Yes foreclosures must at some point start to decrease-but just as a decrease in initial jobless claims doesn't mean any one got a job, a decrease in foreclosures doesn't mean more home sales or higher prices
http://smaulgld.com/initial-jobless-claims/

Bitter because I make enough money to buy a multimillion dollar home? Okay. Entitled because I want to get a good deal on my purchase? Okay.

some more background
http://money.cnn.com/2013/09/12/news/economy/debt-ceiling/index.html?iid=HP_LN

mell says

Honest Abe says

what happens when the ability to pay ends?

It doesn't, in theory. If we default on our debt we will just have to inflate even more. It's not a solution, it's macho bluster. Spending has to be reformed, but that's done outside of default.

That doesn't work anymore when the rest of the world stops buying your debt.

Or the Fed stops buying our debt! http://smaulgld.com/why-the-end-of-quantitative-easing-may-be-bad-for-the-dollar/

RentingForHalfTheCost says

Inventories up, mortgage applications down, price reductions outnumbering price increases.

I didn't predict it either.

And there is evidence of continued "recovery" in housing?

It's over.

I was being sarcastic- I clearly predicted it back in June
Google real estate supply and demand or click here
http://smaulgld.com/the-coming-supplydemand-real-estate-inventory-reversal/

Call it Crazy says

Which guy would that be, he seems to have multiple personalities??

That split personality issue is really getting out of hand ;)

It's sad to see old guys gloating about how they made like bandits by screwing the next generation, and convinced that the current outcome is a valid solution in the long term.

Imagine what shostakovich could have done with advanced technology and a drum machine

sbh says

You want to be able to buy a home at a lower price.....I get it.......and you're willing to scalp the value of others' homes in order to achieve that.

The house is worth what someone will pay for it. I'm trying to "scalp" the value that is perceived by the seller.

sbh says

JH says

If the price point was set at the market value (i.e., what someone will pay for it immediately), it would have sold before it hit the market.

Real estate is an illiquid highly localized commodity: it doesn't trade 24/7 on a global market like the fractional ownership of companies. There is no constant market "price" for unique custom homes like there is for an S&P contract.

But any house about to hit the market passes through the realtors' agency and his personal and business contacts. If it is set at a good investment or a good purchase price, it sells or has offers before it's even listed.

"Spraying bullets" LOL Sweet!! More Libtarb Propaganda!! Slidefire stocks have been around for years and they are lame, they look cool but that is about it..............nothing new here that is unless you are completed clueless regarding firearms...........but never the less...

I agree with Apocalype...........every ASSHOLE should have at least 12 of these "Redneck Machinegun" Stocks!

It's a correction within a correction. Probably .. within a correction.

sbh says

Why would the act of government repression of home values reflect or engender a growing middle class? Special taxation is simply crony consumerism.

Because it is the exact opposite of what has happened since 2008. Low interest rates and withheld inventory have propped up home values. Special deduction from taxation or significant decrease in taxation for specific groups is also crony consumerism. This behavior is engendering a shrinking of the middle class.

Therefore, as a middle class individual with children who will also be middle class, I would appreciate a reversal of this behavior.

egads101 says

Quigley says

Yes it's Because of extraordinary government meddling, intervention, protectionism, fraud, lies, and more underhanded double dealing than can be mentioned that the housing market recovered before reaching market equilibrium. Who could have predicted that?

When the US beat Mexico in world cup qualifiers, did the mexicans whine scream and cry like babies? it was because the ball bounced funny? the grass on the pitch was not to our liking? the refs were bad?

wrong is wrong. get over it!

In a democratic country I hope for better.

egads101 says

yeah, maybe. But much more likely they just keep making money, and you keep being yoU!

Is this because investment bulls always make money, and investments always increase in value?

Looking around my area, plenty to be had, condo's are still cheap too. Not sure why inventory seems to be building, still a few foreclosures around yet.

egads101 says

veruca says

I'm confused. Why are they laying off so many employees if posters here are saying the housing market is strong and prices are going to keep going up due to strong demand. Serious question to those guys

Well, maybe posters here are more knowledgeable than you? for the past years 65% of all loans have been REFINANCE LOANS.

as rates rise, refinance loans tank; Purchase loans have been relatively stable when compared to last year.

Serious answer to you. the oracle is never wrong; housing is going to lull into the spring, but prices will be higher next year.

I know others are more knowledgeable. That's why I asked the question. Why are you so nasty?? I see why you have such a low rating as a teacher at your college. Unbelievable, how you treat people. Thank you to everyone who answered politely and unbarbaric.

Beep, beep, beep...........................this is a public service announcement to the fellow board members (aka nitwits): There are outlets and professional services available to deal with anger management issues. I can assure you Patrick.net will not be your source of healing. Let me know if you need any assistance locating such services in your local area.

sbh says

JH says

Low interest rates and withheld inventory have propped up home values.

Yes, I agree. Now, substitute "middle class wealth" for the words "home value". Now, how might you rectify your statement;

sbh says

If you view home values as a measure of wealth you won't assail home values. But if you view home cost as a consumer cost you'll assail home values as a detriment to middle-class capital formation.

Yes, I see homes as a cost to the middle class for 30 years (from, say, age 35-65). Then after 30 years (at, say, age 65), the home becomes a measure of wealth. As long as it is on my monthly balance sheet, it is a cost to me. That is, if I am middle class, my wages are stagnant, I make the median for my neighborhood which is $70k where I live. If that is my income and I drop $400k for a median home in my neighborhood, where am I going to get any money to make other investments? OK, sure I could move, get a better paying job, etc, etc. But we are talking about middle class, so we are staying at the medians.

Now this projection for age 65 makes three huge assumptions:
1. the borrower did not take out a single HELOC (that he didn't pay off)
2. the borrower did not refinance in a way that makes the house like an ATM; ie, didn't extend the 30 year loan
3. the borrower was able to use his savings or natural increases in income to make upgrades to the home in order for it to maintain value.
4. we agree that, historically, middle class homes gain value with inflation IF and only IF the home is maintained using #3 above.

sbh says

if you view home cost as a consumer cost you'll assail home values as a detriment to middle-class capital formation

If we are talking about "median" (ie, middle class), I think they (we) have a very difficult time with capital formation. And once an investment (say, a home) increases in value, the middle class starts using that value to pay for things...thus eroding at its value over time. That is the difficulty with areas that make the middle class house poor and why I am on the side of "homes are an expense" rather than an asset. It will be interesting to see boomers retire, and then eventually Gen X and Y, and see how many retire with house payment bills still coming to their mailboxes...

Diplomacy today with Russia, and the United States deciding the fate of Syria.

We'll see,

Tim Aurora says

I predict a quiet Winter. Price increase holds but barely as booth sellers and buyer go back to trenches. Come spring , we may see another spurt and house prices increase another 10% nationwide.

Of course Fed is an X factor

It may not be quite quiet and sanguine. The Fed and free money has a lot to do with the surging prices. Incomes have not gone up - but prices are almost back to what was considered an unprecedented bubble. I think deflation and correction is probably more likely than another spurt.

http://www.mercurynews.com/business/ci_24089191/bay-area-housing-market-cooling

sbh says

The difference between paying and owning is largely a function of time and its relationship to the transaction.

So from my standpoint it's difficult to hear policy makers talk about how we need to "restore" home values to their peak levels (or some fraction thereof to keep banks and owners above water). Being on the paying side of the time function, this is difficult to hear and reconcile with my budget. If I were on the owning side, it would be music to my ears. "Restoring" value to these assets helps a certain portion of the middle class and shits on the younger generation (just my opinion there...;-))

sbh says

even with small rates of return, the formation is relentless.

Absolutely. My argument regarding RE, however, is that if I plan to purchase and eventually own one parcel of RE that I live in, then there is no immediate, liquid return on that investment. (Except a HELOC, but we know how that often ends up...) If I plan to be a landlord, then I can HELOC or turn the investment income into a cascade of assets. As I said before, if homes are 100-200k, I could do this in the middle class. But if homes are 500k-1M, then it's more difficult.

sbh says

I don't perceive the ability to get on the right side of time as being withheld from the American middle class by virtue of any absolute level of "median" income. I think the middle class simply ends up spending rather than owning due to a whole collection of persistent habits that put it on the wrong side of time.

So my personal viewpoint is that we have to consider the collective...or the natural tendencies of people. To say that the "median" home value is not affordable for the "median" income I think is a fair statement in some communities. In OC where I am, it's fair. This is the crux of my argument. Not what should the middle class do, but what does the middle class do. Fair to the upper class? Probably not...haha.

We have tried lowering interest rates and offering teaser loans, but that was an epic fail. While we tried making homes more affordable for the middle class, prices simply rose (and one might argue they rose in concert with monthly payments...that monthly payment philosophy on RE). To me that says something. I don't know enough about economic theory to know what that means...but it's as if there is a floor to RE prices. Anytime we try making it more affordable on a monthly basis, it just gets more expensive in terms of absolute purchase price.

sbh says

As exceptional as Americans think they are, they aren't very good at doing the hard part.

Despite all my arguments, this is absolutely the problem. It is the root cause, and it is the reason that the American middle class will not grow. People have to sack up, work for a living, pay their bills, etc. And until they do, we will have a shrinking middle class that we blame the 1% for. Hell, I'll probably continue to blame them...and I think that is partially justified by their policies. But in reality if the middle won't do their part, then the middle will continue to get destroyed by bear markets, crashes, etc...

Lol were something like 35% of the way through the cycle. We'd be fully done by now, but ya know...printing money and buying bonds by the fed...that whole thing.

Last time an executive branch and fed did this crap it resulted in unmitigated disaster. High unemployment, gas shortages, and a worldwide disrespect for the US resulting in foreign affairs nightmares. Wow does that sound familiar.

I know who the economic autistic are on the site, and its not me.

RentingForHalfTheCost says

This is a long game, being extended by many manipulators. The final score is what really matters, and I am still in the bear camp.

You remind of the monthy python flick where the knight fights another knight and gets one limb after another cut off while screaming "come on! we're not done yet" - snap! here goes leg 2...in the end he lays on the floor, without arms or legs and still screams "I am gonna get you, its not over yet"

You have been wrong as of now. Wrong is Wrong. Such a lame game. Prices could go up for 10 years and you would still say...yes, but crash is coming...at what point do you realize that you misjudged everything and simply don't have a clue what is gonna happened next.

The Professor says

SubOink says

you misjudged everything and simply don't have a clue what is gonna happened next.

Does anyone have a clue what will happen next?

My guess is as good as yours. We can only look back and see who made the right decisions in hindsight.

What if you're bullish on yams, belt-fed weapons, and property with a large kill-zone perimeter?

RentingForHalfTheCost says

Your comment about prices going up for 10 years has no base.

I wasn't saying that prices would go up for 10 years. I was making a point about you and others not willing to admit that they have been wrong. IF (hypothetically) prices were to go up for 10 years I doubt that you would admit that you were wrong. You would have all sorts of excuses why it did and that its BS and that its manipulated and not normal...blabla...just like you do now.

egads101 says

other than that, the ENTIRE POPULATION of bears on here have been 100% wrong on everything.

What's 100% wrong is this premise that the bears have been wrong. Just because the bulls refuse to see reality, doesn't make the bears wrong. The bears have been 100% correct during the recession, and then again correct during the 1st double-dip, and they are still correct now. In fact, it is the bulls who are clinging on to the last vestige of hope that this dead-cat bounce is, in fact, real. The bulls are the ones who have no arms or legs to fight this battle. Last month we saw 17% MoM drop in new home sales, after a shocking 27% drop in July. Inventory is going up in all cities and prices are starting to fall again, the bulls are totally blind to these facts. They are still out there, partying like it's 1999. But, when the music stops playing, we will all see who's been swimming naked.

dunnross says

In fact, it is the bulls who are clinging on to the last vestige of hope that this dead-cat bounce is, in fact, real. The bulls are the ones who have no arms or legs to fight this battle. Last month we saw 17% MoM drop in new home sales, after a shocking 27% drop in July. Inventory is going up in all cities and prices are starting to fall again, the bulls are totally blind to these facts.

The problem is this. The bulls are not wrong until 3-6 months after they are wrong.

Whether the fundamentals have shifted or not, the bulls have been right for the past few years. Kudos. I will give you the lead in this game.

Unfortunately, if suddenly there is a shift in the economy and we get bear markets in RE, stocks, commodities, etc, those charging bulls will be left with their pants down. The great thing about being a bear is that we can let the bulls think they are winning 20 to 1. If all the bulls pulled out early, the crash would be less spectacular. =) It's much more fun to watch if the bulls push the line aggressively!!

egads101 says

Had he bought a home the day he started this website, he would be several hundred thousand dollars to the positive.

not possible.. he would have been competing with people who hit gold with the recent IPO tech stock mania bubble back in the late 90s. No crazy IPO stock bubble no house buying. That is why many were priced out of the market very very early on. Of course those who paid top dollar for the stock so the stock seller could pay inflated prices also were taken to the cleaner and lost 90% of their net worth.