patrick.net

anyone who bought homes after 1997 is getting so fucked

The solution is simple: put a new federal property tax in place on 2nd to 3002nd homes, say set at 2x mil rate. This will make rent seeking unprofitable, causing rent seekers to sell, the market to even out somewhere reasonable, giving everyone more money to spend (not on housing) but on growing the economy by purchases of goods and services.
Rent seekers would be free to put their money up for rent in mutual funds or use it to start businesses that contribute to employment.
Incompetent rent seekers would soon become renters.
Bliss!

Um, lots of people living in California and thus lots of competition for the "best" houses, which look like crap elsewhere in the country but have 90%+ of their value tied up in the land.

Housing is affordable to those living in those houses because they're the one with the incomes that are supporting those houses. If someone is unwilling to pay the huge prices, then move further away and spend that time commuting. It might take you 2+ hours a day extra to get what some would say is affordable housing.

Land is a huge premium in california, and people are always complaining they can't get 2+ acres in downtown LA for what they could get a ranch for in Texas. It's a massive, sprawling city where land values are high for hundreds of square miles due to population density.

And in other news, the earth is now believed to be approximately round.

Call it Crazy says

In the meantime, California officials have become too lax in figuring out how they can solve home affordability and work-access issues.

I thought that the way they were fixing the long commute for "affordable" housing in CA was to get as many people as possible on welfare and Social Security "disability".

A combination of a shit-load of money and low-standards means this isn't your father's California.

You could throw your empty TV box on a plot of land and it would sell for $200K minimum.

Call it Crazy says

Wow, how does someone fit inside a flat screen box??

Doesn't matter, the person in China that buys it sight unseen won't notice until after closing, and even then, won't care, as he's just gonna flip it or rent it out, anyway.

dfj said: I'm 110% certain that the Republicans have the moral high ground here
I have news for you DFJohn. In most cases the Republicans hold the high ground. A responsible party would bring the other side to the table and force some kind of grand bargain -- you know, the kinda that would put the country on better financial footing for the coming century. Instead the Republicans have been taken over by zealots who practice a kind of scorched earth policy. Grandstanding on Obamacare without a viable alternative does no good for anyone. They're going to burn this sucker to the ground (and then wonder where the first degree burns came from).

egads101 says

As compared to just continuing to rent forever? Of course you'd be better off, sell the home, pocket the profit tax free since it was your personal residence, and go back to renting...

Oh, you mean like timing the market - I stand corrected, you are also a genius if can time the market (any market: real estate, stock, etc..). As for me, Im not so smart.

At the end of the your scenario I go back to renting - right back to where I am now.

In the interim, banks, real estate agents, loan processors have all made their take and everything is hunky dory.

The minority party typically opposes debt ceiling limits until they are in the majority.

egads101 says

you should concentrate on what YOU get out of an investment, and nothing else.

Not buying 2 to 3 years ago was a mistake. BIG MISTAKE! there is no other interpretation for it.

How do you know my personal finances? How do you know if something was a big mistake for me? Answer: You don't. I could have invested my downpayment in the stock market and I would be doing better than buying a home, I would be more liquid and I wouldn't have to pay exorbitant commissions.

.

What? Any novice Redfin user could see many to most of the sales were investor flips, been that way for years.

We have the best government money can buy. Are you surprised?

Iwag says

anyone who bought homes after 1997 is getting so fucked

so...lets say its 1999...a family with 2 kids is in need for a place to live. 2 options...rent or buy. They decide to buy a CA 3bed/2bath 2500 sqft house in a decent neighborhood for $300k with a 30year fixed loan which they defy every time the interest is 1 point lower.

Explain how they are f-ed now in 2013...when the house is 800k and their mortgage is WAY below any amount that you could rent a doghouse for...HOW are they f-ed??

SubOink says

Explain how they are f-ed now in 2013...when the house is 800k and their mortgage is WAY below any amount that you could rent a doghouse for...HOW are they f-ed??

They're not f-ed.
Anyone that buys from them at 800K - expecting a repeat - is F-ed.

egads101 says

today, it really depends where you are...

Please elaborate, I live in the Yorba Linda area.

Hmmm, sounds like recently they said inventory was down, I bet after all this buying inventory is still doing just fine. Somebody I know just did a cash for keys deal with WF, certainly enough they are coming and going, but that's good, transaction costs.
You would think we would see the market wash out some, but not with these kinds of rates, and credit seems to be still loosening up. I was priced out, or taxed out myself, and don't see how others can swing it, the property taxes on the 1500 Sq./ft. home I sold are equal to about 6 months current rent, three years later.

SubOink says

so...lets say its 1999...a family with 2 kids is in need for a place to live. 2 options...rent or buy. They decide to buy a CA 3bed/2bath 2500 sqft house in a decent neighborhood for $300k with a 30year fixed loan which they defy every time the interest is 1 point lower.

Fantasy scenarios never interest me

Iwag says

SubOink says

so...lets say its 1999...a family with 2 kids is in need for a place to live. 2 options...rent or buy. They decide to buy a CA 3bed/2bath 2500 sqft house in a decent neighborhood for $300k with a 30year fixed loan which they defy every time the interest is 1 point lower.

Fantasy scenarios never interest me

...that's what I thought.

Heraclitusstudent says

SubOink says

Explain how they are f-ed now in 2013...when the house is 800k and their mortgage is WAY below any amount that you could rent a doghouse for...HOW are they f-ed??

They're not f-ed.

Anyone that buys from them at 800K - expecting a repeat - is F-ed.

It depends...if you have no choice but rent or buy you will simply look at payment to payment comparison.
In my neighborhood, rents have skyrocket. Buying is cheaper even after this runup. Except...there is nothing but one house for sale at this moment.

If house vs rent = a wash ...then...buying makes more sense IF you love the house/neighborhood and have a pretty good feeling you will stay in that neighborhood for at least 10 years. If you know that there is a big chance that your job may move to NY, you're on the brink of a divorce, may be without a job soon, want to move around then buying makes no sense. In that case buying makes no sense no matter where prices are. Some people enjoy the oakwood furnished apartment lifestyle. Full independence. Do what you want, no liability. BUT...simply speaking from a "whats a smarter financial move" its certainly not the winner. But who cares...life costs money. You can decide how you spend it. I have friends that live by that...invest in stocks and waste in rent because if the freedom of liability. But neither of them think renting is smarter than buying. It's a lifestyle choice in their case.

kashif313 says

Im not confused. Let me put it you again, if I want to buy a house to live
in...that's was the pretext of my last scenario and it has not changed. So if I
want to buy a home to live, if there is price appreciation I dont benefit unless
I choose to become a renter or downgrade. What part of that scenario dont you
understand?

You can still benefit if you sell and upgrade because you can assume that your "starter home" went up in value from 2011 to 2013 just as the "move up" home went up in value from 2011 to 2013. Assuming that both properties went up by same percentage in the last 2+ years, the gap between the 2 properties is not going to be a whole lot different compared to 2 years ago. Now if you were renting these last 2 years, the only way you could maintain this gap would be via spectacular investments results which is doubtful because normally people don't invest via leverage. That being said, selling 2 years after buying is typically not a good idea, the recommended time is at least 5 years, preferrably 7 because of commish on buy and sell. Better thing to do is to wait before "moving up", if the person is already in the market their place will move up/down over next few years just like the "move up" place, hence more or less keeping the gap in the same ballpark.

Well if you didnt want your date hacking your phone, usin your credit cards to order shit, going through your contacts list, and reading your email, then you had better not fall asleep after sex. It would be the easiest thing in the world for her/him to put your hand on the phone and unlock it while you snooze.
And what about hospital patients? Etc.

Vicente says

Dan8267
says

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

You really think that is enforced? It would be difficult to prove without
getting all UP IN the books. And we know the bigger/richer the corporation, the
more likely the lawyers and accountants have money & means to prevent
that.

Not to mention the free shit from the local/county government when they build a new store like turn lanes and utilities run onto the property that other businesses ever get.

My biggest complaint by far, and I have seen this happen in more than a couple of locations is the deals that Wal Mart makes with them keeping the sales tax for X amount of time. They run their competitors out of business and those businesses are then no longer generating/collecting sales tax, so the revenue from that sales tax plummets, and the taxing body with jurisdiction raises the tax rate to offset the drop, and Wal Mart gets a windfall.

Then there's the property tax abatements for 20 years, on average, and when they expire Wal Mart closes the store and builds a new store right next to it to get a new abatement. Ma and Pa Kettle across the street with a 1st or even 2nd/3rd generation business doesn't get that luxury.

Also there's the profit leak whereas the profits do not stay local, and I'm not even factoring in the rise in county services because their employees can barely afford food, but definitely not health care.

thunderlips11 says

Increasingly, Wallyworld is getting the bottom rungs of consumers; whereas
before they had a much more diverse (and profitable) customer base. With that
bottom rung base comes more security problems, as well. Walmart Parking Lots are
often huge black spots in otherwise crime free locales.

One of Wal Mart's biggest chunk of income is SNAP payments. Over half of Wal Mart's income is from food(around 53%) and in some locations 40% or more of their business is from SNAP recipients, and it's very high and common especially in the South.

The recent Farm Bill in congress had the food and farm portions of it seperated with some hard proposals to lower SNAP spending drastically. The way Wal Mart throws around lobbyist money, and the fact that the lowered spending will affect their profits, it won't ever happen. I thought that it was a ruse all along just to up political contributions, considering that 532 companies signed a petition against splitting the two parts.

egads101 says

AND... they happen to have a clear high resolution fingerprint... of the proper one of my 10 fingers...

Who needs to sneak around an pickup bar glasses, etc. I bet the surface of a iPhone -- perhaps even the FP sensor -- is a great source of fingerprints.

I bet phone thieves start holding iPhones by the edges and dropping them in little baggies.

egads101 says

AND, they happen to know how to make a fake of it, wait for it to dry and can use it to access my phone...

Impersonating people's fingerprints is pretty easy. Due to how lucrative phone theft is it would not surprise me if phone theft rings get setup to do this pretty quickly.

Oh yeah, well take this:

http://www.zerohedge.com/news/2013-09-23/housing-recovery-endgame-escalates

Another hedge fund says F it.

BE SCARED, SLUMLORDS, BE VERY SCARED!!1

leo707 says

Who needs to sneak around an pickup bar glasses, etc. I bet the surface of a iPhone -- perhaps even the FP sensor -- is a great source of fingerprints.

I bet phone thieves start holding iPhones by the edges and dropping them in little baggies.

Exactly. Fingerprints are such an obviously bad means of security because fingerprints are so commonly copied. That's why I use my dick print for security. With the exception of Anthony Wiener, most people's dick prints are not publicly accessible.

And yet you use CA and these 800k type houses for your examples...

he's already wrong.. forget about 2014..

home mortgage and sales jobs are the first to go... always are.. then new home construction.. then the restaurants will cool because there is less to talk about when your house is not making you rich... then auto sales and auto manufacturing will cool, just like in 2008 for the same reasons.. nobody really cares what you drive if you're not a wealthy homeowner any longer.... then home improvement jobs at the very end as people will do whatever they can with their remaining discretionary dollars to dress up those overpriced shacks to try and sluff them off on the next sucker... then repeat after the Fed figures how to kick prices up again.. next round won't be as easy as this one, though.. just like an addict .. need more and more junk each round to get that same high.. don't be surprised if they don't start buying homes directly from the market sometime in the distant future.. we got close this round with hedge funds.. next might be the big banks directly w/the explicit backing of the Fed and taxpayers.. its all good.. all normal .

From the article:

"With mortgage rates having risen to their highest in two years, applications to refinance home loans plunged in early September to their lowest in nearly four years"

Is the refinancing party over? Sure, rates have gone up. Is the purchase party over? Not in Denver, at least.

Refinancing business is *very* sensitive to interest rate change, purchases not nearly as much. It's obvious, isn't it?

It was a buyer's market until around March/April 2013. We were looking around that time and then all of sudden, it became "crazy" quoting my agent, as not like she had seen ever....it was the Investors with cash that were driving this increase, not your typical homeowner who plans to live there. With the huge influx of cash, othesr jumped in worried they would be priced out. Due to a personal situation, we had to drop out of the market for a while and were glad we did. Prior to that something would open and be sold the same day; we did not have a chance.

Now, homes are sitting, price reductions, and per my agent again, it 'dropped dead'....

So it may take a little while, but those that 'have to sell' will see a price decrease if they don't price their home at a good price.

I do not know if this will create a 'crash'; that remains to be seen. It will probably return to what it was like before the "frenzy" i.e. around January of 2013.

But it depends how much 'money' was keeping this afloat by the investors and if they cannot get anyone to buy their portfolio, then they will need to sell their portfolios...and that will create a major downturn if all that inventory comes on the market to "sell"....

We'll see.....

It's OK, the slope will never go negative. Etch the plus sign in your granite countertop.

See, everybody's playing nice.

In 2011 a Real Estate blogger in Seattle called a "bottom" to the Real Estate market. It caught on while the Fed started operation twist to drive down interest rates: http://www.npr.org/blogs/money/2011/09/21/140643696/operation-twist-explained-in-4-easy-steps

If you look at all the charts, and graphs you see a pretty steady increase in Real Estate pricing until the spike we had fro 1998 to 2007. Pick a chart any chart.

Then we had Case Shiller, at the "top" of the market come up with an Index of housing prices based on 20 Metropolitan areas.

What that did is set up a Zillow like scheme where the price of housing could be determined by the average person so they can buy mortgages.

Mortgages are the name of this game. That paper, those loan documents, become the financial instrument used to show those financial products are a safe investment.

We'll there is no top, or bottom to the housing industry. A Real Estate transaction is a personal thing between to consenting parties. The seller can have any motivation they want, but the buyer usually wants the best deal they can get, or that is the way it used to be.

Now buyer go crazy with internet searches, statistics, and data, like the were day trading stocks.

Stock usually come with a buy in the gambler can afford to lose, a home comes with a 30 year debt, for the price paid.

I've pointed out a number of times that the price of housing compared to wages, not wealth, but wages, is way out of whack, no matter who pays the ratios. My first sets of purchases were at a little higher than my yearly income, and I had to prove it. Now housing is three times the yearly wages buyers are brining to the table, some times more.

If we were in a period where we could generate hyper inflation, great, but I think we can all see that isn't coming.

All we have now is another mess to unwind.

Give me equity or give me death!

That's the key to preventing the revolution.

Prices can never go negative because real estate is a worldwide market now. It only takes one.

OK, sure, they can go negative in the very short term, but long term it's nothing but up, up, up!

All you have to do is zoom out enough to fit the point you're trying to make! lol

Seriously, who needs a mortgage anymore?

If you can't pay all cash, there are plenty who can. It's different this time.

Well, there is no discussion with three years of Real Estate hind sight.

Everything you are asserting is wrong, and misdirected.

You didn't address anything in my comment, but I will pull out a tid bit you keep missing.

Some sellers just want to sell. It's called diminishing returns, and obsolescence.

That differs from some stock that the individual has no control over.

Bob, if you have nothing to say, just move on.

exfatguy says

Seriously, who needs a mortgage anymore?

If you can't pay all cash, there are plenty who can. It's different this time.

There are millions of cash-flush twentysomethings positively salivating over the deals we're seeing in housing right now.

There will never be a better time to buy - it's different this time!