Housing Crash #2 Under Way?

[Jaskalas]

Republicans are going to keep yelling Inflation and blocking stimulus even as this country descends into a Depression style deflationary spiral.

Takes a real special person to speak of deflation in a time like this.

 

[Jhhnn]

Takes a real special person to speak of deflation in a time like this.

So, uhh, you're alleging that inflation is occurring when the world's economists generally agree it isn't, or what?

The enormous ongoing destruction of what seemed to be housing wealth more than offsets any sort of price appreciation in other aspects of the economy, and hoarding of liquidity at the top, refusal to invest and hire, prevents wage growth to compensate for those price increases.

It's not inflation at all, but rather screwflation, the endgame of Reaganomics...

 

[Zebo]

Worlds economists lol. You do realize they are paid shills, least ones you hear from, right? By same system and powers you deride, right?

One of my favorite shills Krugman "in Praise of Cheap Labor" 1997

http://www.slate.com/id/1918/

 

[LegendKiller]

I don't see how your statements above add anything to this discussion, just the same old indocrinated banker drivel plus personal attacks. Thanks for proving nothing.

What, you don't like your own patronizing and character minimizing tactics you use, used against you? Why don't you like that? Why are you angry about it? Turn about is fair play, you shouldn't get so upset at somebody throwing your own lame tactics back at you.

Calm down, stop being so angry, don't get so upset and come back when you've cooled off a bit. Then you can present info as I've done to back up your points.

 

[Acanthus]

So, uhh, you're alleging that inflation is occurring when the world's economists generally agree it isn't, or what?

The enormous ongoing destruction of what seemed to be housing wealth more than offsets any sort of price appreciation in other aspects of the economy, and hoarding of liquidity at the top, refusal to invest and hire, prevents wage growth to compensate for those price increases.

It's not inflation at all, but rather screwflation, the endgame of Reaganomics...

There is no question that there has been powerful inflation in almost everything but real estate due to recent monetary policy and oil speculation. All you have to do is look at COMEX.

 

[Svnla]

All I know is (from my own personal obervation) housing prices in the Southern part of the US (TX, LA, AR) are steady and not falling down at all.

Of course, those prices have not been going up in the double digits such as places in FL, CA (southern), NV (Las Vegas), AZ (Phoenix area), etc.

<<---has been looking for a house for a few years and about to buy one soon.

 

[Darwin333]

What makes their argument about unsustainability of current debt load invalid? I don't know if you read the entire interview, the argument is not about gold as cure all money system... it's more about inflationary turmoil and ways to hedge yourself from losing fruits of your labor.

Gold is a shitty way to hedge against inflation and carries virtually unlimited risk as an investment. There are much better investment vehicles with defined risk that can be used to hedge against inflation and they will payout much better should we get the "hyper-inflation" a lot of gold bugs are calling for.

 

[Acanthus]

All I know is (from my own personal obervation) housing prices in the Southern part of the US (TX, LA, AR) are steady and not falling down at all.

Of course, those prices have not been going up in the double digits such as places in FL, CA (southern), NV (Las Vegas), AZ (Phoenix area), etc.

<<---has been looking for a house for a few years and about to buy one soon.

Texas actually came out fairly well for two reasons... They have a decent manufacturing base still, so there are jobs. They also have very tight lending laws, which spared them from the housing crash because banks couldn't lend to people with bad credit, or over lend to people with good credit.

 

[Acanthus]

Gold is a shitty way to hedge against inflation and carries virtually unlimited risk as an investment. There are much better investment vehicles with defined risk that can be used to hedge against inflation and they will payout much better should we get the "hyper-inflation" a lot of gold bugs are calling for.

Even QE3 wont really give us hyperinflation.

 

[Darwin333]

So, uhh, you're alleging that inflation is occurring when the world's economists generally agree it isn't, or what?

The enormous ongoing destruction of what seemed to be housing wealth more than offsets any sort of price appreciation in other aspects of the economy, and hoarding of liquidity at the top, refusal to invest and hire, prevents wage growth to compensate for those price increases.

It's not inflation at all, but rather screwflation, the endgame of Reaganomics...

So you are saying that the worlds economists are arguing that a necessary price correction is offsetting very real inflation in other sectors and as such we are in a deflationary cycle? So in reality the price of everything we buy going up while housing prices decline is really a good thing because it is keeping us out of an even worse deflationary spiral? That is fucking stupid.

 

[Darwin333]

Even QE3 wont really give us hyperinflation.

I agree but it really depends on your definition, as far as the gold bugs like to talk QE 3 wouldn't even come close. However, at this point any significant inflation is just another kick in the nuts for the vast majority of Americans.

 

[Modelworks]

ABC news has a piece on this week about the trend now of people just walking away from, mortgages because the value on the home is lower than the mortgage is for. They said the trend now has become more acceptable where in the past many had a morale problem with it. Now though those same people are saying that they are not going to pay for something that isn't within their means with the result being a home that cost twice as much.

They quoted that some banks are so backlogged that people have quit paying for their homes 2 years ago and still have no foreclosure papers. I wonder what happens when this catches on more.

 

[DaveJ]

Texas actually came out fairly well for two reasons... They have a decent manufacturing base still, so there are jobs. They also have very tight lending laws, which spared them from the housing crash because banks couldn't lend to people with bad credit, or over lend to people with good credit.

House prices may not have dropped much here (although anecdotally my house value in FTW is back to 2002 levels), but we were still affected due to all of the California "investors" buying up cheap rental properties with their "equity". It got so bad that in 2009 and 2010 the city offered buyers up to $20k in cash to buy foreclosed properties in several zipcodes (including mine). There aren't as many obvious foreclosures around anymore, but there are still a few.

 

[Jhhnn]

So you are saying that the worlds economists are arguing that a necessary price correction is offsetting very real inflation in other sectors and as such we are in a deflationary cycle? So in reality the price of everything we buy going up while housing prices decline is really a good thing because it is keeping us out of an even worse deflationary spiral? That is fucking stupid.

That's not what I said at all. Without appropriate changes to tax, investment & corporate governance policies, constricting the money supply will just make our problems worse, not better. Republicans will make sure none of that happens.

When policy allows the creation of enormous false prosperity, as with the housing bubble, there are consequences. The simple fact that corps & the financial elite in general are hoarding liquidity, not hiring, not investing is prima facia evidence of deflation, of their believing that their money will gain value just sitting on it.

The fact that we're experiencing price increases for commodities just tells us that the money supply hasn't collapsed despite those efforts. Great wealth fares better in tough times than good, because that's when cash is king, and they're the only ones who have any.

If the amount of money we have shrinks faster than prices, a universal aspect of deflation & hoarding at the top, we're worse off- low prices are meaningless w/o money circulation, which is what happened in the 1930's.

 

[Trianon]

Gold is a shitty way to hedge against inflation and carries virtually unlimited risk as an investment. There are much better investment vehicles with defined risk that can be used to hedge against inflation and they will payout much better should we get the "hyper-inflation" a lot of gold bugs are calling for.

Maybe there are, I am by no means a gold bug, gold is not hedge against inflation, it's protection against uncertainty and volatility(or so it seems). Anyway, my argument is not about best way to hedge is gold, it's about discarded risks.

 

[Jhhnn]

ABC news has a piece on this week about the trend now of people just walking away from, mortgages because the value on the home is lower than the mortgage is for. They said the trend now has become more acceptable where in the past many had a morale problem with it. Now though those same people are saying that they are not going to pay for something that isn't within their means with the result being a home that cost twice as much.

They quoted that some banks are so backlogged that people have quit paying for their homes 2 years ago and still have no foreclosure papers. I wonder what happens when this catches on more.

That backlog is self imposed. Servicers don't want to foreclose, because they milk fees out of investors on delinquent mortgages, fattening their bottom line. It works for them so long as there are enough good mortgages in the investment vehicle pool for them to get their cut off the top.

The other side of it is that they get to conserve legal fees & obtain free maintenance on properties they'd otherwise have to at least minimally maintain while holding up resale value on foreclosed homes, too.

If every delinquent mortgage in America were foreclosed & the occupants evicted tomorrow, it'd blow the bottom out of the market in many parts of the country. Even if going slow only forestalls that, they're making money in the meanwhile, which is all they care about.

Florida, Arizona, Nevada & some others would basically become unsustainable shitholes. If it wasn't for foodstamps & free lodging, the economy of Florida would cascade downward into something like the third world.

 

[dmcowen674]

Texas actually came out fairly well for two reasons... They have a decent manufacturing base still, so there are jobs.

What is made in Texas?

 

[IGBT]

What is made in Texas?

Toyota has a plant there and the calif.Numi plant got out of calif.and moved to Texas. Numerous other Calif.mfgr's moved to Texas to escape the anti business dismal tide in Calif. further eroding Cal's tax and job base.

 

[Acanthus]

What is made in Texas?

A large amount of the worlds oil drilling equipment.

 

[dmcowen674]

Originally Posted by dmcowen674
What is made in Texas?

A large amount of the worlds oil drilling equipment.

That's true, it's all Texas fault for the high oil/gas prices causing everything else to be high. Add the corn belt in cahoots with the Texans and you have this mess.

The north should rise up and kick the asses of the south again along with the treasonous corn states.

 

[Fern]

More bad news:

Existing-home sales sink to their lowest level of the year

The crucial spring home selling season is almost gone and it has left a wounded housing market limping in its wake.

Sales of previously owned U.S. homes fell to a six-month low in May, prices dropped 4.6 percent from a year ago, supply rose, and first-time homebuyers slid to an anemic 35 percent of sales.

It all points to a real estate market that remains in a deep fog and is likely to continue to be an albatross around the economy's neck.

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What homebuyers can get for $300,000
.."This one report does not change our long-term view in that we still believe the housing market will remain a drag on overall economic activity in 2011 and likely into 2012," said Tom Porcelli, chief economist at RBC Capital Markets in New York.

The National Association of Realtors said on Tuesday sales slipped 3.8 percent month over month to an annual rate of 4.81 million units, the lowest since November.

It was the second straight month of declines in home resales, but less than the 5.9 percent drop to a 4.80 million-unit pace that economists had expected.

While the fall in sales last month -- which was telegraphed by a steep fall in pending home sales contracts in April -- was partly due to bad weather in some parts of the country, including tornadoes, it underscored the fundamental weakness in the sector.

Major Market Indices:

The report was also the latest set of data to confirm a sustained weakness in the economy through the second quarter, which has been marked by a sharp slowdown in regional factory activity, soft retail sales and anemic employment growth.

The report came as policymakers at the Federal Reserve started a two-day meeting. Officials are expected to acknowledge the recent slowdown in economic activity, but they are likely to stick to their view that the soft patch is transitory.

http://www.msnbc.msn.com/id/43477387/ns/business-personal_finance/

Fern

 

[Infohawk]

More bad news:



http://www.msnbc.msn.com/id/43477387/ns/business-personal_finance/

Fern

Housing prices are generally set up by the local job market. There's no evidence of wage increases or even meaningful employment increases. It seems like there's a lot of downward room for housing.

 

[spidey07]

Wife found our dream home, likely making an offer if I approve of the property.

 

[Svnla]

Toyota has a plant there and the calif.Numi plant got out of calif.and moved to Texas. Numerous other Calif.mfgr's moved to Texas to escape the anti business dismal tide in Calif. further eroding Cal's tax and job base.

Beside the Toyota Tundra truck plant in San Antonio, don't forget about the GM truck plant in Arlington. I watched ABCNews last night and it said about 1/2 of all the new jobs in the US were created in TX.

 

[Jhhnn]

Housing prices are generally set up by the local job market. There's no evidence of wage increases or even meaningful employment increases. It seems like there's a lot of downward room for housing.

There should be, but there really isn't as much as you'd think because of negative equity. Historically, lots of Americans move every 5-7 years, often upward by using their equity to buy into a more desirable place, keep reasonable payments & stretch out the payoff date.

Negative equity shoots that in the ass. Hell, it kills moving downscale, too, when owners have to give up cash to get out from under. And, uhh, no cashout refi for you to pay off other bills, either, which was a big part of the frenetic housing activity during the "ownership society".

It's a weird sort of lockdown, complicated by enormous unsold inventory & pending foreclosures, not to mention banking goofiness. In 2006, they'd lend money to any warm body, and today they only want to lend to people who don't need a loan.

Depending on locale, prices may edge up slightly over the next few years, but I wouldn't depend on it...

Denver never soared to great heights during the flimflam of the Bush years, largely because we were hit particularly hard by the tech bust 10 years ago, so our situation is relatively stable, which isn't saying a helluva lot...