Nurse, Bring Me RE's Charts

[don]

The drop in the homeownership rate is epic:



Housing affordability is all about the monthly nut. That is why the modest 100 basis move in interest rates last summer basically stopped the mania right in the middle of its slobbering delusion:



Household formation is at multi-generational lows:



Some might think that living at home is only for expensive markets like L.A. County or San Francisco but this is also a national trend:



Many are living at home because they are economically struggling:

[vt]

Re: Nurse, Bring Me RE's Charts

Very informative Don. Thank you.

It would be interesting to see EJ's take on this.


There does seem to be some concern with debt:

http://www.cnsnews.com/news/article/...ainable-levels


Fed Chair: ‘Deficits Will Rise to Unsustainable Levels’


May 7, 2014 - 5:27 PM

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By Terence P. Jeffrey
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Federal Reserve Chairman Janet Yellen (AP Photo/J. Scott Applewhite)

(CNSNews.com) - Federal Reserve Chairman Janet Yellen, referencing the Congressional Budget Office'slong-term budget projections, told the Joint Economic Committee of Congress today that under current policies the federal government’s deficits “will rise to unsustainable levels.”
In the 10-year budget projections it released in April, the CBO estimated that the federal government will run $7.618 trillion in deficits from 2015 through 2024. At the same time, the CBO projected that the federal government’s debt held by the public would rise from $11.983 trillion at the end of fiscal 2013 to $20.947 trillion by the end of 2024.
The debt held by the public is the part of the U.S. government debt that is not held by the federal government itself. It primarily consists of marketable Treasury securities, including bills, notes and bonds. It does not include what the government calls “intragovernmental debt," which is the money the Treasury has borrowed out of the Social Security Trust Fund and other government trust funds to pay current expenses.
The total debt of the federal government at the end of fiscal 2013--including both the debt held by the public and the intragovernmental debt--was $16.719 trillion. The CBO estimates that by 2024, the total debt of the federal government will be $27.159 trillion—of which $20.947 trillion will be debt held by the public.
If that projection holds up, the federal debt held by the public in 2024 would be more than four times the $5.035 trillion federal debt held by the public at the end of 2007.
Yellen made her statement about unsustainable deficits when she was question by Sen. Dan Coats (R.-Ind.). Coats remarked that businessmen in Indiana told him that their businesses were underperforming at this time because of the uncertainty they felt as result of federal taxation and regulatory policies.

“What recommendations would you give to us in terms of dealing with this uncertainty that is basically causing a lot of these businesses to underperform?” Coats asked.
“So, I agree with you,” said Yellen. “My own discussions with businesses, I hear exactly the same things that you are citing: concerns with regulations, about taxation, about uncertainty about fiscal policy.
“I guess one recommendation that I would give you is that long-term budget deficits, we can see in, for example, CBO’s very long-term projections, that they remain,” said Yellen. “There is more work to do to put fiscal policy on a sustainable course. That progress has been made over the last several years, in bringing down deficits in the short term, but that a combination of demographics, the structure of entitlement programs, and historic trends in health-care costs, we can see that over the long-term deficits will rise to unsustainable levels relative to the economy.
“And," she said, "putting in place a package of reforms—ones, I know these are very controversial matters--but that would probably help confidence.”

Coats later said to Yellen: “You join a long list of very responsible Americans who have the experience and the expertise to give us some warnings about what may happen in the future and our inability to act over the last several years now in addressing these major problems that are going to have significant consequences on the economy of this country and on future generations.
“I don’t know what it is going to take for us to summon the will to do what we all know that we need to do,” said Coats. “But I appreciate your adding your name to that long list saying you have a responsibility up here and you’re not fulfilling that responsibility.”
According to the CBO, “mandatory” federal spending will increase approximately 58 percent over the next ten years, rising from $2.32 trillion in 2015 to $3.664 trillion in 2024. Over that decade, total federal “mandatory” spending will be $29.737 trillion.
That will include $8.25 trillion on Medicare, $4.55 trillion on Medicaid, $9.9 trillion on Social Security, $1.78 trillion on disability insurance, and $728 billion on food stamps.

[Fox]

Re: Nurse, Bring Me RE's Charts

There does seem to be some concern with debt:

Blah blah blah, hypocritical spewing of a captive and vested bureaucrat

Fed wants inflation = more debt
Fed buys Treasuries = more debt
Fed suppresses interest rates = more debt

The solution to too much debt is for the FED to actually stop sponsoring more debt.

We had the same sort of BS from our last CB head (Mark Carney). He gave a serious mouth job to bringing down debt levels. He even tinkered with various regulations to try and reduce home prices. However the one thing that would ACTUALLY reduce debt and speculation, increase interest rates, he refused to do.

When I mentioned this to people they looked at me like I had three eyes. Clueless lemmings will never call the leaders to task.
The cliff awaits.

[don]

Re: Nurse, Bring Me RE's Charts

Debt, as we know, is the air FIRE breathes . . .

[flintlock]

Re: Nurse, Bring Me RE's Charts

Purely anecdotal I know, but my observations are that the wealthiest 10% or so of the housing market is detaching from the rest of the market. I see housing in relatively affluent areas going like crazy around here. Its like someone threw a switch. Just full bore new home construction as well as a huge increase in home remodeling and upgrades. But only for upper middle to upper class homes. The rest seens as flat as ever. People are getting in bidding wars on existing homes and repeatedly I hear my customers complaining that they settled because there was just nothing available. ( Granted they settled for a $800,000 home!) Home with prices under $200,000( still a nice home around here) don't seem as heated.

[Southernguy]

Re: Nurse, Bring Me RE's Charts

The endgame to this debt binge comes when nobody wants the dollar anymore.
The link posted here tells how things are unraveling between China and Russia. It's highly probable trade between them soar. How do they need dollars for?
http://www.bloomberg.com/news/2014-0...inum-gold.html

[BK]

Re: Nurse, Bring Me RE's Charts

Have you looked at the new mortgages of some of your customers homes. I see a lot of $800K-$1 million home sales in the Greater Boston area and then I llok at the county mortgage records (online) and discover the buyers taking out 60-80% mortgages.

[vt]

Re: Nurse, Bring Me RE's Charts

Both political parties are captured by FIRE; the FED printing of money and keeping interest rates low automatically has money flow to the well to do.

Stocks up, the middle class squeezed.

Inequality is partly the fault of both political parties enriching the elites.

Until we replace both with an independent new majority parrty we will only see more of the same.

[lektrode]

Re: Nurse, Bring Me RE's Charts

Both political parties are captured by FIRE; the FED printing of money and keeping interest rates low automatically has money flow to the well to do.

Stocks up, the middle class squeezed.

Inequality is partly the fault of both political parties enriching the elites.

Until we replace both with an independent new majority parrty we will only see more of the same.

or put TERM LIMITS in place to shutdown the political aristocracy that thinks they own the office to which they were elected - in some cases, DECADES/generations ago - which then makes them feel 'entitled' to horsetrade with it - ie: "you support me on my boondoggle and i'll scratch your back on yours..."

and they both 'win' re-election, decade after decade, as they give away the treasury buying the votes of razor thin slivers of the electorate to achieve their 51.8% margins of 'victory'

[BK]

Re: Nurse, Bring Me RE's Charts

Rule by the majority was never the intention of the Founding Fathers. There is lots of evidence that being ruled by the majority or the mob is as bad as being ruled by an oligarchy. I'm no accredited historian so please feel free to correct me. But, the founding fathers knew what happened to the Democracy of ancient Greece. I know lots of upper middle class who are giddy because of the increase in the value of their real estate and they can't connect the increasing cost of chicken with the rising value of their home.
Sadly, the financial illiteracy of the voters is killing the Republic and lets not forget if you ask 100 voters what form of Government is the United States they would reply Democracy!

[flintlock]

Re: Nurse, Bring Me RE's Charts

Have you looked at the new mortgages of some of your customers homes. I see a lot of $800K-$1 million home sales in the Greater Boston area and then I llok at the county mortgage records (online) and discover the buyers taking out 60-80% mortgages.

Yep, but an 60% loan on a $800,000 dollar home is "only" $2400 P&I month or so. Thats maybe only 10% of their income. Then factor in the interest tax deduction and a lot of these cats probably spend more on their cars each month. What really hits them is the taxes, utilities, the upkeep and repairs down the road. Many simply look at it like rent, with the company buying the house when they move and do it all over again. Crazy I know.

[flintlock]

Re: Nurse, Bring Me RE's Charts

Rule by the majority was never the intention of the Founding Fathers. There is lots of evidence that being ruled by the majority or the mob is as bad as being ruled by an oligarchy. I'm no accredited historian so please feel free to correct me. But, the founding fathers knew what happened to the Democracy of ancient Greece. I know lots of upper middle class who are giddy because of the increase in the value of their real estate and they can't connect the increasing cost of chicken with the rising value of their home.
Sadly, the financial illiteracy of the voters is killing the Republic and lets not forget if you ask 100 voters what form of Government is the United States they would reply Democracy!

Agree. What we've had in the last six years is just an inkling of what the founding fathers feared. People are selecting candidates based on their gay marriage stance or how they come down on gun control. Meanwhile Rome burns. Its not that these issues don't matter, only that their significance is out of kilter with economic reality. I honestly think more people select the President based on looks and charm than
his issues. It's like American Idol, only they give speeches instead of singing.

[sishya]

Re: Nurse, Bring Me RE's Charts

Hello Friends,

Long time since I have been here at iTulip. with a "mea culpa" from my side, I am going to close soon on a Home here in Pleasanton, CA. I have been actively looking for past 8 months and now only could I strike something. 1800 Sq. ft Single family home for around upper $700K's, with excellent schools near silicon valley/Oakland/San Francisco.

In 2011, I bought my Primary residence in CA and I argued with a few folks here that it is a good time to buy. I bought for $100/sq ft for 2007 build Home priced at $430K. Now the same House is going for $620K.
I laid out my reason very clearly that houses here in Cali was selling for less than construction cost, but most did not agree. These homes had steel structure and replacement cost alone at that time was more than $500K.

I ventured into another Home for my relatives. 30% of Home buyers here are from China with cold cash. Remember - all the dollar flooding back to USA. These buyers never rent the house also, but rather keep it as their vacation home to be used only during their visits to meet their kids studying in California. This way they lock out the houses out of both rental and real estate market. Also California has very low property tax(atleast for now)

I think both stock market and Real estate market is going to rocket up along with Inflation and I have been saying this for sometime now. I also believe that our wages will catchup to the Inflation "soon". I am buying a house from a seller who bought it for around $80K in 1972 paying property tax in just around $1200 per year.

[Thailandnotes]

Re: Nurse, Bring Me RE's Charts

It seems the only conclusions that can be drawn about real estate are local.

Annual rents in Pleasanton, CA are 3 - 4 % of purchase price instead of the target 8 – 9 % investors are told to aim for. Property taxes certainly are low, 60 % less than in many east coast cities and suburbs. I’m fascinated by the replacement cost threshold. I know places where you can build an 1,800 square foot house for 300,000 or less.

[sishya]

Re: Nurse, Bring Me RE's Charts

It seems the only conclusions that can be drawn about real estate are local.

Annual rents in Pleasanton, CA are 3 - 4 % of purchase price instead of the target 8 – 9 % investors are told to aim for. Property taxes certainly are low, 60 % less than in many east coast cities and suburbs. I’m fascinated by the replacement cost threshold. I know places where you can build an 1,800 square foot house for 300,000 or less.

- you add the property tax you save by buying in california and the Anual rents will come to approx 6% of purchase price. Also remember that California is the precursor to National markets in general, they lead mostly.

- The 500K replacement cost was for the 4100 sq.ft home I bought in 2011, which is well above purchase price. you should add this replacement cost with land cost(75K for outside Bay area and rising), permits, other fees etc...