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Reckless Endangerment And A See No Bubble Mentality

A report from Reuters. “U.S. home builder confidence rose for a third straight month in August to match its highest level ever as record-low interest rates spur buyer traffic, data showed. But even as home builder confidence surges, more homeowners affected by the crisis have stopped paying their mortgages, a separate report showed. The delinquency rate for residential mortgages rose to 8.2% in the second quarter, up nearly 4 percentage points from the first quarter and the largest quarterly increase on record, according to the Mortgage Bankers Association.”

“Loans backed by the Federal Housing Administration, a program used by many first-time buyers and those with lower incomes, saw their delinquency rate jump to almost 16% – the highest since the survey began more than four decades ago.”

The Olympian in Washington. “After World War II, the U.S. government subsidized home ownership by providing low-interest mortgages through the Federal Housing Administration. ‘The thing about those great FHA loans: because they kept the interest rates low, your mortgage payments were low enough that for many working-class families, it was cheaper to buy a house and pay a mortgage than it was to pay rent, and that is true today,’ said Savvina Chowdhury, a faculty member at The Evergreen State College who teaches feminist economics. ‘Housing is the primary way that American working-class families have been able to build their wealth.'”

The Sentinel Colorado. “Aurora still remains one of the strongest housing markets in the country. ‘I would love to say that it’s people flocking to Aurora, but it’s people flocking to Colorado and Aurora offers the most affordable housing,’ said John Mitchell, of the Aurora Association of Realtors.”

“Aurora lands on RealtyHop’s list of most affordable markets at no. 34, with the average home price at $410,000 and the median income at $58,000.”

The Wall Street Journal. “Homeowners across the country are rushing to refinance at record-low interest rates. Many are finding that lenders have reserved their best rates for buyers. The spread grew even bigger after Fannie Mae and Freddie Mac last week levied a new fee on lenders for most refinancings to shield themselves from potential losses. Michael Menatian, president at Sanborn Mortgage Corp., said a number of clients called him late last week to try to lock in low refinance rates because of the extra fee. Many ended up with rates that weren’t as low as they expected or decided to hold off for now, he said.”

“‘It’s punishing borrowers who could really use this in these difficult, challenging times,’ Mr. Menatian said of the refinancing fee.”

“One of his clients, Kate Fensterstock, a teacher in Rockville, Md., approached him about a cash-out refinancing earlier this month. The rate on offer was 2.625%, which would have allowed her to keep her monthly payment the same and take out cash for home renovations on the three-bedroom she shares with her husband and two teenage sons. Late last week, Mr. Polland informed her that, because of the refi fee, her rate would instead be 2.875%. She is planning to go through with the deal but will take out less cash.”

“‘We’re not going to be able to do all the things we want,’ Mrs. Fensterstock said. ‘It’s really frustrating.'”

The Australian Associated Press. “Builders are warning of a looming housing industry ‘bloodbath’ without billions more dollars in government grants. Master Builders Australia is predicting a 27 per cent plunge in home building activity and 17 per cent slump in commercial construction this financial year. The industry body fears thousands of businesses will soon go bust without significant government stimulus. ‘Our industry is facing a bloodbath, there is simply no other way to describe it,’ MBA chief executive Denita Wawn said.”

“Labor’s housing spokesman Jason Clare said the figures were proof the housing industry was about to go off a cliff. ‘Instead of putting a guard rail at the top of the cliff, the Morrison government has put a mattress at the bottom,’ Mr Clare said. ‘Unless the government takes action, the only thing a lot of tradies will be building in the next few months is a longer line outside Centrelink.'”

From Cameron Murray, a research fellow at the Henry Halloran Trust at Sydney University and Josh-Ryan Collins is Head of Finance and Macroeconomics at the Institute of Innovation and Public Purpose. “Real home prices across Australia have climbed 150 per cent since 2000, while real wages have climbed by less than a third. what we are seeing is something different — a growing divergence between rents and the price of housing as a financial asset that’s increasing much more quickly.”

“In a working paper published today by the University of Sydney and the University College London Institute for Innovation and Public Purpose, we argue ‘rentierisation’ best describes the increasing use of housing to extract land rents, in the form of capital gains on property and rents from tenants — a process in which Australia is well advanced.”

“The graph shows the rise in home prices has been driven by rising land values rather than construction costs, which have grown at a rate closer to general price inflation. It’s tempting to ascribe the take-off in home prices to low interest rates. Low rates enable households to take out larger mortgages relative to their incomes. But rates were also low in the 1960s (close to rates in the 2010s, when home prices were soaring) and didn’t much push up prices then.”

“Low rates appear to be a necessary, but not a sufficient, condition for soaring prices. Among the other things that seem to be needed are increased access to finance, declining public involvement in housing, and tax breaks that reflect the political power of owners.”

“The return to land in the form of capital growth has climbed from around 3.5 per cent of gross domestic product before 1960 to 16.7 per cent of GDP since 2000. It has become so high as to rival and at times dominate wages as a source of household income.”

“More credit flowing in to a finite supply of land generates a feedback cycle as rising prices and collateral values stimulates more lending and higher prices. In Australia, mortgage lending grew from just under 20 per cent of GDP in 1990 to more than 80 per cent today. By way of comparison, business lending climbed 35 per cent to 40 per cent.”

“The investor share of new mortgage lending has grown from 10 per cent in the early 1990s to 40 per cent. Australia’s unusually generous tax concessions for investors helped. They are granted discounts on capital gains tax, while being able to deduct the full costs of operating their properties, (including interest costs) against income from any source. Where the deductions exceed rental income, the process is known as negative gearing.”

From Better Dwelling in Canada. “The head of Canada’s national housing agency isn’t done ruffling feathers. Evan Siddall, the CEO of Canada Mortgage and Housing Corporation (CMHC), a state-owned mortgage insurer, fired back at critics this morning. After his confidential email was leaked last week, some members of the real estate industry took to calling his statements ‘irresponsible.’ The CMHC agency responded by drawing a parallel between the US housing industry before the Great Recession. He then added, ‘vested interests are strongest right before the fall.'”

“Earlier today, the CMHC head returned fire at the real estate industry’s attempt to make him seem anti-ownership. Specifically, he was referencing the industry’s attempt to skew a letter he wrote to lenders last week. In the confidential letter, he asks lenders to curb their riskiest first-time homebuyers for now. That’s all the industry felt the need to leak.”

“Notably absent from the letter was almost a page of reasons supporting his concern. In the portion absent, he outlined why first-time buyers and the economy had a lot to lose. Despite this, the industry is proceeding, knowing borrowers have more to lose than the industry. He said this resembles the scenario explained in Reckless Endangerment, making it the first direct government comparison to the US housing crisis in over almost a decade.”

“Reckless Endangerment is an investigation into how watchdogs tasked with protecting homebuyers, actually exploited them. The book alleges the US central bank colluded with regulators, and lenders to pump home prices higher. Through a series of stimulus measures at the wrong time, they all made out like bandits. In the process, all of these organizations fostered a ‘see no bubble’ mentality.”

“In other words, they focused on dismissing the US housing bubble. Despite knowing it was risky, everyone in the chain realized they made more money by finding reasons why it wasn’t risky. It worked, until it hit such a high level, that it didn’t. Then it caused irreparable damage to cities like New York, and Los Angeles. You know, places where prices only go up.”

“During periods of robust real estate sales, mortgage stimulus isn’t required. You don’t want a single segment of the economy to run too hot, especially if you’ve been leaning on that segment for growth. Unfortunately, we’re seeing the industry assure buyers this is an optimal time to buy. All with the Bank of Canada’s support, during a period of market activity that resembles the downturn of the real estate cycle. Reckless Endangerment sure seems like an appropriate reference to me.”

The Globe and Mail. “David Rosenberg’s first day of work as an economist was Oct. 19, 1987 – Black Monday, when stock markets plummeted 23 per cent. The crash had a firming effect on the then-27-year-old Bank of Nova Scotia employee (especially as half his department was shortly let go). It taught him always to have a Plan B (and a Plan C), to be as up-to-the-moment as possible, and to stick to the data and resist the herd. He took time out last week to speak to The Globe and Mail’s Ian Brown about divining the financial future.”

“We had very poor preparation and overextended balance sheets. We just love to pat ourselves on the back in Canada over what a great national balance sheet we had, because we only focused on the federal government. But the provinces, I’d say outside of British Columbia, are up to their eyeballs in debt. Corporations are much the same; the private sector in Canada is massively overextended. The Bank of Canada, every single year in its reviews, would talk about how overextended Canadian consumers were, over 60 per cent of GDP. And yet we go into a pandemic with record low savings rates, and record high debt loads.”

“When you really think about it, society is hanging on by a thread. And the thread is called massive government deficits. We’re hanging on here because the government is borrowing record amounts of money that’s been largely financed from the central banks to pay people not to work. It’s necessary, but that’s really where the story is. There’s no way you can live with this situation. The glue holding the system together is the fact that unskilled, uneducated people laid off from their jobs were deemed to be non-essential. We learned how much of the economy turns out to be non-essential.”

“The government decided who was going to stay open and who was going to be locked down. So a bar, non-essential. Restaurant, non-essential. Movie theatre, non-essential. There were some parts of the production sector that were essential. The medical sector, some stores. It was really quite subjective. I never realized so much of the economy was non-essential. And that’s because we really built an economy that has hinged on conspicuous consumption. And I would say it’s probably even more acute in the United States.”

“And we’ve just scratched the surface of what this recession is looking like. And it has been muted, because the government has doled out so much money, the way they measure income in the national accounts is actually running stronger now than it was before COVID appeared. Look at the United States, because we have up-to-date numbers. In the United States, personal income is up 12 per cent so far this year, even though wages and salaries are down 17 per cent.”

“How is income up 12 per cent? Because government transfers to the personal sector have ballooned 230 per cent. It’s no different in Canada. The government is creating income by borrowing money and transferring it to the personal sector. Will the cupboard ever get bare? What if it does?”

“Keep in mind here: FDR [Franklin Delano Roosevelt], in the Great Depression, never ran a deficit in the 1930s of over 7½ per cent of GDP. Even the Democrats that started the New Deal knew when to say enough was enough. The deficit in the United States is going to be over 20 per cent of GDP this year. And this is with a Republican President. So that’s why I say it’s a castle built on sand.”

“There are some lessons here: about being prepared for the next pandemic from a health perspective, about just-in-time inventories and having stockpiles on hand, about the risks of maybe having too globalized an economy.”

Related Posts

Home prices are FALLING FAST

https://www.youtube.com/watch?v=FbmCxgJxyWc https://www.youtube.com/watch?v=SSgmeUqvYSs https://www.youtube.com/watch?v=w5afsrMtFAU

This Post Has 199 Comments

  1. ‘he was referencing the industry’s attempt to skew a letter he wrote to lenders last week. In the confidential letter, he asks lenders to curb their riskiest first-time homebuyers for now. That’s all the industry felt the need to leak’

    ‘Notably absent from the letter was almost a page of reasons supporting his concern. In the portion absent, he outlined why first-time buyers and the economy had a lot to lose’

    ‘Reckless Endangerment is an investigation into how watchdogs tasked with protecting homebuyers, actually exploited them. The book alleges the US central bank colluded with regulators, and lenders to pump home prices higher. Through a series of stimulus measures at the wrong time, they all made out like bandits. In the process, all of these organizations fostered a ‘see no bubble’ mentality’

    At this moment in time, we have the heads of mortgage guarantee in the US and Canada trying to pull this mania back. And it becomes clearer every day that the opposing forces are REIC and central banks.

    1. “…Reckless Endangerment is an investigation into how watchdogs tasked with protecting home buyers, actually exploited them…”

      I would categorize the former head of the FHFA, Mel ‘not so bright’ Watt as someone who had a fiduciary responsibility as a industry watchdog.

      1. Mel was just doing whatever he could to help people of color join the Ownership Society, the sure path to riches in America.

    2. And it becomes clearer every day that the opposing forces are REIC and central banks.

      I have been saying it for years – the FED needs to be stopped if we are to save this country. They are destroying it.

      1. Get rates up into the long term historic range of 12%-15% and most of these problems go away all on their own.

        1. “Get rates up into the long term historic range of 12%-15%”

          Not in this lifetime. How can Uncle Sam keep the printing presses going if they had to pay more than 0% interest…..

          1. And yet those 0% rates create moral hazard for even more borrowing to unprecedented levels of underwaterness, while Modern Monetary Theory cheerleaders assure us that we can spend Unlimited amounts of QE with zero cost to anybody.

  2. ‘Loans backed by the Federal Housing Administration, a program used by many first-time buyers and those with lower incomes, saw their delinquency rate jump to almost 16% – the highest since the survey began more than four decades ago’

    So the highest ever for all we know. FHA is subprime. It was cracking before the virus, and I could point to dozens of posts to prove that. Here’s just one you’ve likely seen before:

    March 26, 2020

    “As America heads into a deep recession, the $11 trillion residential-mortgage market is in crisis. Investors who buy home loans packaged into bonds are dumping even those with federal backing because of panic that millions might not make their payments. Yet one risky sector had started to show cracks long before the coronavirus pandemic sparked the worst financial meltdown in 12 years: the federal government’s largest affordable-housing program, whose lenient terms are geared toward marginal borrowers.”

    “As real estate prices soared in recent years, working-class adults everywhere have increasingly relied on mortgages backed by the Federal Housing Administration — and U.S. taxpayers. Since 2007, the FHA’s portfolio has tripled in value to more than $1.2 trillion, almost 11% of the market. While private lenders make these loans, they are packaged into Ginnie Mae bonds, common in mutual funds and pensions.”

    “Before Covid-19 started roiling China, a November FHA report found that 27% of borrowers last year spent more than half their incomes on debt, a level it describes as ‘unprecedented.’ The share of FHA loans souring in their first six months has doubled over the last three years to almost 1%.”

    “Not long ago, Alex Castillo drove his shiny black Infiniti SUV through an office park north of the San Antonio airport, along a busy seven-mile stretch of highway that loan officers call ‘Mortgage Row’ because of its abundance of small independent mortgage companies that dominate FHA lending. Castillo, who has the words ‘The Dream Starts Here’ stitched into his jacket, works for Pennsylvania-based American Residential Lending. Oddly, amid the pandemic, his business is booming. His customers locked in FHA mortgages after interest rates plunged this month — adding to federally backed mortgage debt.”

    “‘If the government tells me you’re good enough to get a loan, I have to trust and believe in the government,’ Castillo said. ‘Then we just hope and pray that the client doesn’t get foreclosed on.’”

    “In downtown San Antonio, scores of investors stood on a parched lawn beside the city’s historic granite-and-red-sandstone courthouse. It was the first Tuesday of February, the day of the foreclosure auction. Matt Badders, a San Antonio lawyer who represents lenders, auctioned off two houses. The failed mortgages remind him of the run-up to the financial crisis 12 years ago, when lending to customers with spotty credit nearly brought down the world’s financial system. ‘We’re almost back to 2007, when mortgage originators are waking people up on park benches, saying sign here,’ Badders said.”

    “At the auction, the crowd bid on 338 homes, a third with FHA mortgages, according to Roddy’s Foreclosure Listing Service. One house had dual master bedrooms, a game room and granite kitchen counters. It sold for $202,000 — $52,000 less than the homeowner borrowed only two years ago. The taxpayer-backed FHA insurance fund will take a loss.”

    “Dave Stevens, FHA commissioner under President Barack Obama and former chief executive officer of the Mortgage Bankers Association, said a recession will expose hidden risks in home lending. ‘This should be an alarm bell to policymakers,’ Stevens said. ‘Sometimes you get blinded by a good economy and suddenly look at it and see a bubble of defaults coming.’”

    “The federal government has decided it doesn’t want to pursue — and has asked a judge to dismiss — a lawsuit against Utah-based Academy Mortgage Corp. The judge refused. The suit claims the company’s staff would repeatedly feed information into an automated federal underwriting system, manipulating it until the computer gave the green light. ‘Decline is a curse word,’ Plaintiff Gwen Thrower, a former underwriter, quoted a manager as saying. ‘We don’t use it.’”

    http://housingbubble.blog/?p=3070

    1. The only explanation I can fathom is that the industry has bought into Powell’s implicit Unlimited Quantitative Easing pledge to bail out everybody.

      “FDR [Franklin Delano Roosevelt], in the Great Depression, never ran a deficit in the 1930s of over 7½ per cent of GDP. Even the Democrats that started the New Deal knew when to say enough was enough. The deficit in the United States is going to be over 20 per cent of GDP this year.”

      How far can this go before the U.S. financial system collapses into an empty hull?

      1. Remember when there was a flash crash in Japanese bonds years ago? It recovered but at the time I mentioned these people don’t know what’s going to happen and what goes too far.

      2. Pelosi and Dems working out details on 1.5 trillion stimulus now, and a much larger one in January.

      3. How far can this go before the U.S. financial system collapses into an empty hull?”

        Ask why Warren Buffet is buying a gold mining stock ?

    2. ‘Then we just hope and pray that the client doesn’t get foreclosed on.’

      Every time I read this, I wonder, what does he care? Was it just sarcasm or something? He got his cut and pushed the risk on to others.

    3. saw their delinquency rate jump to almost 16%

      When I was a kid my parents had an FHA loan, they were in their early 20’s when they bought the house, as were most of the neighbors, so I suspect that most in neighborhood had an FHA or VA loan.

      That said, the house cost $20,000; which was about 2X my dad’s annual income (he was a tool and die maker, mom didn’t work). The monthly payment was about 1/2 weeks pay. Curiously there didn’t seem to be any foreclosures in our neighborhood.

      Of course now the house is 5-10X of a couple’s combined income. My parent’s old house has zEstimate of almost 900K,.

      What could possibly go wrong?

      1. “now the house is 5-10X of a couple’s combined income”

        This is what happens when government stops building and facilitating the building of actual houses and apartments but instead tries to use financial smoke and mirrors to create the illusion of prosperity.

  3. ‘U.S. home builder confidence rose for a third straight month in August to match its highest level ever’

    Go ahead and stick your heads into that buzz-saw.

  5. Doesn’t Evan realize that whales die without plankton to feed on?

    “Notably absent from the letter was almost a page of reasons supporting his concern. In the portion absent, he outlined why first-time buyers and the economy had a lot to lose. Despite this, the industry is proceeding, knowing borrowers have more to lose than the industry. He said this resembles the scenario explained in Reckless Endangerment, making it the first direct government comparison to the US housing crisis in over almost a decade.”

    1. ‘whales die without plankton to feed on’

      REIC says bloodbath if we don’t save them. 6 months ago it was “you bitter renters will always be beneath the landed gentry” kinda thing. It’s a lie. We don’t need mortgage brokers. We don’t need builders throwing up $500,000 startershacks. This system is the problem. Look at the Australian GDP and shack loans. Where might that money be better invested?

      The most compelling issue is this cannot go on without collapse. It just can’t.

      1. “The most compelling issue is this cannot go on without collapse. It just can’t.”

        As long as the music is playing these guys will keep on dancing.

        It’s what they do. YOLO, and all that.

        Party on.

      2. This system is the problem.

        Regulatory capture, bought and paid for politicians, a central bank run amok that answers to nobody and serves the obscenely wealthy….what could go wrong?

        1. “a central bank run amok”

          It’s this. So many dislocations of the past 25 years (for our purposes here, actually much much longer) can be traced to this.

  6. ‘Loans backed by the Federal Housing Administration, a program used by many first-time buyers and those with lower incomes, saw their delinquency rate jump to almost 16% – the highest since the survey began more than four decades ago’

    ‘The thing about those great FHA loans: because they kept the interest rates low, your mortgage payments were low enough that for many working-class families, it was cheaper to buy a house and pay a mortgage than it was to pay rent, and that is true today…Housing is the primary way that American working-class families have been able to build their wealth’

    Hey Savvina, how about you call up one of these millions of freshly minted defaulters and ask them about their wealth creation?

    And note: no MSM articles talking to any of these borrowers either. Details of the loan(s) they have, what they put down, what their income was, you know, all the relevant things.

    1. “Hey Savvina, how about you call up one of these millions of freshly minted defaulters and ask them about their wealth creation?”

      No need to fear:
      Powell’s Unlimited QE bailouts are near!

      1. QE bails out the banks, not working class FBs. The Fed and its oligarch accomplices give less than a flying f**k about the pauperization of the middle and working classes due to the Fed’s “No Billionaire Left Behind” monetary policies and engineered boom-bust cycles in its Ponzi markets and asset bubbles.

      2. The FED’s balance sheet is already at $7 TRILLION and we haven’t even gotten started. How high do you think it goes, $20 TRILLION?

          1. Ask em’ in NYC or SF.

            Exodus, movement of Jah people (Oh, Yeah)
            Exodus, movement of Jah people
            Men and people will fight ya down, tell me why
            When ya see Jah light
            Let me tell you if you’re not wrong, and why
            (Everything is all right)

    2. Housing is the primary way that American working-class families have been able to build their wealth

      Lies.

    3. “…And note: no MSM articles talking to any of these borrowers either….”

      To wit: I don’t recall ever seeing a MSM article about the tremendous carry costs of an over-inflated sugar shack.

      Property taxes, local taxes, HOA fees, utilities, maintenance, insurance can eat your cash flow alive. (These costs only tend to go up and most [except property taxes] are deductible).

      Mortgage interest rates could go to zero, and I’ll bet 75% of all households couldn’t afford a $1mm sugar shack.

    4. Those FHA and VA loans should funding the development of modest but nice new homes. All too often used up garbage is dumped on buyers using FHA and VA loans.

  7. ‘I would love to say that it’s people flocking to Aurora, but it’s people flocking to Colorado and Aurora offers the most affordable housing’…Aurora lands on RealtyHop’s list of most affordable markets at no. 34, with the average home price at $410,000 and the median income at $58,000′

    So almost 10 to 1 loans. Sure there’s no bubble. And this price to incomes thing has been in crazy land for more than 5 years. Nobody did anything about it. Mel Watt thought it was fine and dandy.

    1. More like 3.5 to 1, if you assume that there are two median wage-earners in the house. Bubbly, yes, reckless, yes. Impossible, no. The days of owning an SFH on one income ended 25 years ago. The only reason I can afford mine is that I live in what was probably workforce housing during the cold war.

      1. I help buy a foreclosed shack for 12k last decade. The previous buyer paid over 100k just a few years before.

        1. $90,000 2 bd 1 bath
          996 Square Feet
          1933 Sea Breeze Ln, Bullhead City, AZ 86442

          https://www.zillow.com/homedetails/1933-Sea-Breeze-Ln-Bullhead-City-AZ-86442/8354662_zpid/

          “Just Reduced And Back on the Market!!! Huge Homesite double lots over 9,000sft! With separate Garage with 2 roll up doors! Plus Covered RV Carport attached to home! Lots of room for your toys with 2 rolling gates! Fully fenced with chain link! This unique 2 room home has an open feel with rear Kitchen, dining and living area’s! Has potential for expansion on this large lot! Handy? This home could use some love with your personal creativity. Perfect starter or vacation home! Owner Selling “as is” and prefers Cash.”

          I think the garage is more livable. There are bars on the windows, and door, for a reason.

          4. That whole town is creepy. How is that house even attached to the ground? Is it like a trailer, with skirting? It looks like all manner of desert rats could tunnel under there. And I understand it’s a desert, but there’s got to be something more attractive than gray gravel.

          5. From the Zillow write up: “Owner Selling “as is” and prefers Cash.”

            Good luck with that.

        2. A friend of mine “invested” in a older house he rehabbed as a rental. His first tenant committed suicide in the house. That did not improve its rental appeal. The second was a single mom who neglected to mention that her tweaker boyfriend would be living with her and making meth. The remediation cost him $40,000 and chopped at least half off the house’s value. Heckova investment, dude.

          1. My little sister ventured into landlording one of the three houses she and her ex acquired during the bubble years. Woman with kids turned out to be a drug dealer. She changed the locks and stopped paying rent. It took my sister half a year to evict her.

        3. Given the fact the long term metric is 2x annual income for a resale house and 2.5x annual income for a new house, prices hae a long way to fall.

          Irvine, CA Housing Prices Crater 13% YOY As Unemployment, Poverty And Crime Ravages Golden State

          https://www.zillow.com/irvine-ca-92618/home-values/

          *Select price from dropdown menu on first chart

          As one Los Angeles broker advised, “If you’re planning on selling, dump it soon because prices are cratering.”

      2. Nope.

        Table
        Population
        Income & Poverty
        Median household income (in 2018 dollars), 2014-2018
        $62,541

        Per capita income in past 12 months (in 2018 dollars), 2014-2018
        $28,854

        Persons in poverty, percent

         12.0%
        U.S. Census Bureau QuickFacts: Aurora city, Colorado – Census.gov
        https://www.census.gov › INC110218

        1. Per capita income of $28,854 and average home price of $400,000 just does not compute. And businesses wonder why they can’t find and retain employees. The land/housing bubble just distorts and perverts absolutely everything, and divides people into two groups: those who feel like they’ve got an “in” and are going to be “winners”, and people who feel like they are being raped by housing costs.

      3. More like 3.5 to 1, if you assume that there are two median wage-earners in the house. Bubbly, yes, reckless, yes. Impossible, no. The days of owning an SFH on one income ended 25 years ago.

        70% of that is bubble and us single people need a place to live too. The median income has just taken a significant hit. There’s a long way to go down from here.

    2. Aurora is a great place to live on the Front Range if you like getting your car stolen out of your driveway.

    3. Aurora lands on RealtyHop’s list of most affordable markets at no. 34, with the average home price at $410,000 and the median income at $58,000

      LOLZ. That’s some bastardization of “affordable,” I’ll say.

      1. It’s the same in here Monument and Colorado Springs. 250K shacks now going for 400-420. Forget Monument, 500K minimum now. I went and looked at new homes in the area, “Starter” ranch homes at 565K. I asked the agent how many ranch homes were sold without a finished basement (making it a 2 bed house) She told me over 50%. How the f**k buys a ranch home without a finished basement?

  8. how many over paid bureaucrats are assigned to worrying about housing?
    more coming under slow Joe

      1. Yesterday WaPo posted a puff piece about Biden’s “front porch campaign;” i.e., Biden campaigning from his home. Out of fear of coronavirus, of course. The Dems are clearly patterning this after William McKinley’s 1896 and 1990 campaigns, executed literally from his front porch in Ohio. It’s got such a down-home apple-pie feel to it, you know? #Hidin’Biden

        and the mattress back #OhGodYesPleaseMeToo

      2. All the newer houses Ive seen have cheap vaulted ceilings, noisy damn open floor plan, and muh precious White Cabinets with NO hardware knobs or pulls.

        Gag.

    2. Good luck to them. Hopefully they can help breath some life into dying towns and cities. But they better have lots of $$$ or the ability to work remotely because nice cheap old house are most often found in places with few local opportunities.

  10. ‘We just love to pat ourselves on the back in Canada over what a great national balance sheet we had, because we only focused on the federal government. But the provinces, I’d say outside of British Columbia, are up to their eyeballs in debt. Corporations are much the same; the private sector in Canada is massively overextended. The Bank of Canada, every single year in its reviews, would talk about how overextended Canadian consumers were, over 60 per cent of GDP. And yet we go into a pandemic with record low savings rates, and record high debt loads’

    ‘We just love to pat ourselves on the back in Canada’

    Yes you do.

    ‘When you really think about it, society is hanging on by a thread. And the thread is called massive government deficits. We’re hanging on here because the government is borrowing record amounts of money that’s been largely financed from the central banks to pay people not to work’

    And central banks don’t have any wealth. All they can do is steal. Why is counterfeiting illegal? Is the guberment saying there’s a downside?

    1. ‘The Bank of Canada, every single year in its reviews, would talk about how overextended Canadian consumers were’

      I was having a discussion a while back and touched on the matter of fixing problems in the good times, such that they were. Homelessness, inequality. But what did we get every single time shack prices went up and rents went up, for years? “Hurrah! We’re all gonna be rich, except those dumb renters they’ll always be poor, hurrah again!”

      Then a recession comes and exposes the whole sorry sham.

    2. And central banks don’t have any wealth. All they can do is steal.

      They steal the future from the non-asset holders. A more deranged system would be hard to imagine.

  11. ‘It’s punishing borrowers who could really use this in these difficult, challenging times,’ Mr. Menatian said of the refinancing fee’

    See Mike here is an angel, showering his “clients” with unearned, untaxed riches at no risk to himself. But he’s worried the fees, I mean the unearned riches, will end.

    ‘Kate Fensterstock, a teacher in Rockville, Md., approached him about a cash-out refinancing earlier this month…She is planning to go through with the deal but will take out less cash’

    ‘We’re not going to be able to do all the things we want…It’s really frustrating.’

    You know Kate, you have to pay that money back. In a recession, maybe depression. Did Mike explain that to you? I’d bet he didn’t. Why are we subsidizing cash out refi’s at all?

    1. ‘It’s punishing borrowers who could really use this in these difficult, challenging times,’ Mr. Menatian said of the refinancing fee’

      This whole debt = wealth thing is absurd. If you “need” to borrow money, you shouldn’t.

  12. ‘The industry body fears thousands of businesses will soon go bust without significant government stimulus. ‘Our industry is facing a bloodbath, there is simply no other way to describe it’

    Australia is oversupplied with shacks and airboxes Denita. We’re getting that “housing will lead the way through the recession” crap in the US too. It’s incomes, sustainable jobs, not phony make-work shack building that matters.

    ‘Labor’s housing spokesman Jason Clare said the figures were proof the housing industry was about to go off a cliff. ‘Instead of putting a guard rail at the top of the cliff, the Morrison government has put a mattress at the bottom…Unless the government takes action, the only thing a lot of tradies will be building in the next few months is a longer line outside Centrelink’

    It’s all fun til somebody loses an eye.

  13. The pair of ambulance-chasing Democratic donors who reaped what they voted when BLM showed up on their street and proclaimed their intent to one day occupy their house have supposedly seen the light and will declare their support for Trump. This comes after the Soros plant who is the local DA looked at prosecuting them for felony menacing for waving their guns at the BLM “protesters.” Personally, I think they’re vile people who deserve what they’re getting from the corrupt system they enabled and supported.

    https://nypost.com/2020/08/17/gun-toting-st-louis-couple-will-declare-support-for-trump-at-rnc/

    1. ‘they were filmed pointing a handgun and an AK-47’

      That doesn’t look like an AK-47 to me.

      1. To Real Journalists, AR-15s and AK-47s are indistinguishable. That couple, by the way, are poster children for idiots who buy guns but don’t know the first thing about gun safety or how to properly use them.

        Kalashnikov USA is bringing a 100% made in the USA AK-103 (modernized AK-47) to market. If Trump wins, I am so going to buy one to trigger my libtard niece’s SJW husband. If Biden wins, I think I’ll buy two.

        https://kalashnikov-usa.com/firearms/kr-103-rifle/

        1. Palmetto State Armory is also building AK variants including the 103. Or course everything is completely out of stock because most people trust the government through out the scamdemic and mock-downs.

      2. “That doesn’t look like an AK-47 to me.”

        I recall the San Luis Obispo – Tribune crime piece with a clear photo calling a breach loading shotgun a semi-automatic rifle. I wrote the story’s author about it, and he said the story first said a double barrel shotgun, but his editor told him to write semi-automatic rifle.

        1. On the other hand, California’s Ban on Large Capacity Magazines “Goes Too Far” — Ninth Circuit Strikes Ban as Unconstitutional

          1. I guarantee a million Californians who can write the writing on the wall are using the court’s ruling to order 30-round magazines for their “assault rifles” before the loophole closes again.

    2. One thing that is consistently absent from all of the reports on them is how they got that house and the history behind it. It’s actually quite an interesting story. It was originally built with Budweiser money and ultimately became abandoned. They restored the whole house to it’s old splendor over like a decade or so. That is the real reason they were outside waving guns around. There are some older stories on it from before all of this happened if you feel like doing a search. Lots of interior pics and such.

      1. That is the real reason they were outside waving guns around.

        They were outside waving unloaded guns around because they were idiots. You never point a gun at anything you don’t intend to destroy. Not to mention, a house is a better defensive position than roaming around your front yard.

        Again, these were hardcore Democrats who had donated substantial sums to the local party and candidates. So they should’ve had no problem with “redistribution of the wealth” or being disarmed by the Soros-supported DA, since that’s what they’ve been prescribing for others.

        1. a house is a better defensive position

          Besides, it was a fixer-upper when they got it.

          I once called my neighbor who was the sheriff and told him there was a guy on my property scoping out my house. I suspected it was my wife’s boyfriend or some such.

          He told me to make sure he was inside the house before I called the State Troopers. If necessary, call him first and he would help me drag him inside the house.

  14. But even as home builder confidence surges, more homeowners affected by the crisis have stopped paying their mortgages, a separate report showed.

    One of these things is not like the other.

  15. The delinquency rate for residential mortgages rose to 8.2% in the second quarter, up nearly 4 percentage points from the first quarter and the largest quarterly increase on record, according to the Mortgage Bankers Association.

    Is that a lot?

  16. “Loans backed by the Federal Housing Administration, a program used by many first-time buyers and those with lower incomes, saw their delinquency rate jump to almost 16% – the highest since the survey began more than four decades ago.”

    At the risk of sounding repetitive, is that a lot?

  17. I’m sorry but I just couldn’t resist posting this.

    Teen girl charged with plowing car into 5 pedestrians

    Updated 12:21 pm EDT, Tuesday, August 18, 2020

    NEW BRITAIN, Conn. (AP) — A teenage girl plowed her car into five pedestrians including a 7-year-old child on a sidewalk Monday in Connecticut while trying to run down her ex-boyfriend’s new girlfriend, police said. The young girl and another person were seriously injured, but are expected to survive, authorities said.

    The child and another person were taken to a hospital with injuries that did not appear to be life-threatening, police said. The other three victims were treated for minor injuries by paramedics at the scene.

    The second person who was taken to the hospital told WVIT-TV after she was discharged that she suffered abrasions to her rib cage, had a brace on her right ankle and was using crutches.

    Police said the accident was related to a “domestic dispute” and all the victims knew the driver. Police are urging any witnesses to contact them.

    https://www.middletownpress.com/news/article/Teen-girl-charged-with-plowing-car-into-5-15492334.php

      1. Watching an ex with a new gf is just slightly less painful than an infected root canal. Bonus points if the ex bf marries the new gf. Ask me how I know (no, actually, don’t).

        1. I had an ExGF try to break my leg in the grocery store when she saw me with someone else. The new GF turned to her and said “You didn’t tell me she was that ugly!”

          Priceless.

          3. “break my leg”

            Thus justifying the break-up. Funny how they never understand that, but crazy is crazy. Hope that version of crazy at least equated to good s@x for a while…

          4. Good grief! Thinking back to the halcyon days of my youth, when girlfriends sometimes overlapped, I think I lucked out…

          5. days of my youth

            I didn’t date much as a youth. I was married at 19 to my HS GF. I did find dating “for the first time” in my 50s pretty perilous.

          6. So I infer that this leg-breaking incident happened when you were in your 50s? I’m not surprised. Women will never outgrow jealously.

            The male coworkers I’ve spoken with see me with a house and car and a good job and salary and wonder; why would I be so distressed to be single? I try to tell them: A single man is a success; a single woman is a failure. They never quite understand this.

          7. Women will never outgrow jealously.

            My last gf had BPD. Scary. I had no idea, of course, she kept it well-hidden for a while. But the truth came out. She was disgustingly jealous – a real turn-off. Never again.

        3. You probably wont see this, Ox, but there’s someone who will love you. But also remember love is a repetitive action that takes an s-ton of effort. Theres no perfect person, just 80% forgiveness. I’ve got a husband who I regularly want to divorce, but I decide every time to choose love. And he does the same, probably more often than I have to.

          Godspeed, Oxide.

  18. ‘The thing about those great FHA loans: because they kept the interest rates low, your mortgage payments were low enough that for many working-class families, it was cheaper to buy a house and pay a mortgage than it was to pay rent, and that is true today,’ said Savvina Chowdhury, a faculty member at The Evergreen State College who teaches feminist economics. ‘Housing is the primary way that American working-class families have been able to build their wealth.’”

    “Feminist economics.” That would explain the assertion that buying an insanely overpriced shack is a way for working class families – the primary victims of the oligarchy’s pillaging of the economy – to build wealth. Wrong, Chowdhury: given the Fed’s asset bubbles, it’s a surefire way to meet your financial Waterloo.

    1. Savvina probably also teaches her students that it’s smart and good to pile on student debt for a “soft” degree.

    2. “So the fact that Black renters are being affected is an intersection of issues surrounding systemic racism that’s been at play for many, many years,” Brown said.

      The lack of investment and applied study toward cerebral development is not systemic racism.

  19. “‘We’re not going to be able to do all the things we want,’ Mrs. Fensterstock said. ‘It’s really frustrating.’”

    Stamp those Birkenstocks, Kate.

  20. “‘It’s punishing borrowers who could really use this in these difficult, challenging times,’ Mr. Menatian said of the refinancing fee.”

    Look at it as a tax on stupidity,Mr. Menatian.

  21. The Plunge Protection Team used to show up 30 minutes before closing. Now they show up at 10:30 MST on the dot, as well. Looks like more intervention is going to be required to prop up the Fed’s Ponzi markets.

  22. Millions of US Renters Face Eviction

    By Julie Taboh
    August 18, 2020 08:23 AM

    Currently, nearly 50% of renters in the state are at risk of eviction because they can’t pay their rent, KC Tenants Director Tara Raghuvee told VOA via Zoom. 

    “There were already tens of thousands of renters in the state of Missouri who were paying over 50% of their income to rent before the pandemic, and now…hundreds of thousands are unemployed or have been unemployed through some period of this pandemic, and the debt that has amounted in the meantime for a lot of poor and working class families is simply insurmountable,” Raghuvee said.

    https://www.voanews.com/usa/millions-us-renters-face-eviction

    1. Wait, weren’t they getting unemployment + $2400/mo? Were they all gig workers or immigrants not getting the $$?

      I wonder how many of them are simply skipping rent because they can. And then when most of the jobs come back, they’ll think they can just start back up paying without owing a penny for the year of squatting.

      1. Lots of states found lots of ways to deny a whole lot of claims. Or make it almost impossible to even apply — Florida I’m talking about you.

        1. “Florida I’m talking about you.”

          Man I know of at least 10 people in SE Florida who have recently gone back to work after the additional $600 a week unemployment punch-bowl was pulled away.

          1. It was fun while it lasted.They can reminisce someday about the three months they were paid to stay home, eat delivered fast food, play video games and smoke weed.

      2. I recently heard that you didn’t even have to be recently unemployed, that if you were long term unemployed but “looking for a job” you’d qualify. Good lord….

    1. Key Words
      His fund has lost $21 billion this year — now he’s warning investors could be in for even more ‘turbulence’ this fall
      Published: Aug. 18, 2020 at 12:37 p.m. ET
      By Shawn Langlois
      There’s been some cracks in Norway’s massive wealth fund this year. Getty Images

      ‘I think there is a slight disconnect between the real economy and the financial markets… We could be in for some turbulence this fall as things unfold, and whether or not the coronavirus pandemic recedes, or gains some force.’

      That’s Trond Grande, deputy CEO of Norway’s $1.15-trillion wealth fund, sharing his outlook with Reuters after he presented the fund’s brutal half-year results, which showed a $21 billion loss.

      Grande added that the coronavirus pandemic is not under control “in any shape or form” and it will remain the biggest issue for investors worldwide going forward.

      The coronavirus was certainly a big issue for his Oslo-based fund for much of the year, considering the record loss of $153 billion in the first quarter. The fund has rebounded since then but, as the results show, it’s still firmly in the red year to date.
      …

      1. loss of $153 billion in the first quarter.

        THAT is definitely a lot.

        I’m also trying to figure out how tiny Norway has such a huge wealth fund. Must be the oil money.

        1. Yes. As a well-respected Norwegian natural resource economist once said, “I study fish and oil. And the main difference between the two is that you need to include an additional three digits for reporting oil revenues compared to fishing revenues.”

      2. So sorry Trond. When you support your government’s stupid actions you get to win stupid prizes. I imagine the fund is heavily invested in their oil production for which world wide demand has been nuked by the lords of the lockdowns.

  25. No bubble here!

    The Financial Times
    Coronavirus business update 30 days complimentary
    Markets Briefing Equities
    US stocks set new record after rebound from March low
    S&P 500 has soared more than 50% as Fed and government deployed vast stimulus
    The US dollar fell 0.5% on Tuesday to a two-year low against a basket of half a dozen peers
    © REUTERS
    Colby Smith in New York, Adam Samson and Harry Dempsey in London and Hudson Lockett in Hong Kong 2 hours ago

    Wall Street’s benchmark stock index struck an all-time intraday high on Tuesday before paring back its gains, while the dollar extended its declines into a fifth day.

    The S&P 500 index briefly rose to a high of 3395, eclipsing the previous record that was reached in February before coronavirus fears gripped the market. By late morning, the index was in the red, however, by about 0.2 per cent, staying in the narrow trading range that has characterised the past five sessions.

    The barometer has soared 54 per cent since the low on March 23, fuelled by central bank and federal government stimulus, with the gains being led by America’s biggest technology companies including Apple, Amazon, Microsoft and Google parent Alphabet.

    The Big Tech rise has prompted concerns among some investors that these stocks — and therefore the market — may be vulnerable to a sell-off.

    “Fortunately, [valuations are] not at similar nosebleed levels, which prevents the market meltdown scenario of 2000-02,” said Tobias Levkovich, chief US equity strategist at Citigroup, referring to the dotcom bust. “But we still worry that investors have crowded into one area that might be ripe for some pitfalls.”

    Meanwhile, the US currency fell 0.5 per cent to a two-year low against a basket of half a dozen peers on Tuesday. Japan’s yen strengthened to ¥105.46 a dollar, while the euro advanced 0.6 per cent to $1.194 and the pound added 0.9 per cent to come within a hair of $1.32.

    “Recent price action is increasing the risk that the US dollar weakness could extend further in the near-term,” said Lee Hardman, currency analyst at MUFG.

    The US currency accelerated its losses after positive data from the country’s housing market, reflecting that a decline in the dollar’s value is typically a sign of global economic optimism. The rate of new home construction in the US climbed for the third consecutive month in July to 1.5m and was back at pre-pandemic levels, far exceeding economists’ estimates of 1.32m.
    …

    1. That was fast: New record$ hit the same day as predicted “by the end of August.”

      This is the parabolic blowout phase of bubble expansion. Buckle up for what’s ahead.

      The Tell
      Why the stock market will close at a record high by the end of August — if history is a guide
      Last Updated: Aug. 18, 2020 at 10:29 a.m. ET
      First Published: Aug. 17, 2020 at 11:00 a.m. ET
      By William Watts
      S&P 500, on average, has made new highs 8 days after closing within 1% of record, CFRA’s Stovall says
      …

    2. Clear the decks…she’s gonna blow!

      Mark Hulbert
      Opinion: The stock market’s comeuppance is coming, as bullishness gets extreme
      Published: Aug. 18, 2020 at 1:28 p.m. ET
      By Mark Hulbert
      The lesson: Keep enthusiasm in check
      Getty Images/iStockphoto

      The U.S. stock market’s five-month rally is coming to an end. Of course I don’t know when. That’s important to acknowledge, since this spring I presented arguments for why the market’s March lows could be retested in mid-June or mid-August. As many of you have emailed me recently to remind me, neither scenario came to pass.

      Nevertheless, conditions are even stronger now for a correction. One big reason is that short-term market timers have become extremely bullish, which is not a good sign from a contrarian perspective. This is illustrated in the chart below, which plots the average recommended equity exposure among nearly 100 such timers that my firm monitors on a daily basis (which is the Hulbert Stock Newsletter Sentiment Index, or HSNSI). This average currently stands at 65.9% — higher than 95% of all daily readings since 2000, when my firm began calculating this index.
      …

    3. Can someone please remind me what happened to U.S. stocks circa 1980?

      The Financial Times
      Coronavirus business update 30 days complimentary
      US equities
      The uneven rally that took US stocks to a record high
      Top-heavy, tech-heavy market still does not look expensive relative to bonds
      Technology shares have been joined in the latest leg of the rally by cyclical stocks, albeit fitfully
      © AFP via Getty Images
      Richard Henderson in New York and Brooke Fox in Kansas City 8 hours ago

      It was a small gain but a big milestone.

      When US stocks closed fractionally higher on Tuesday, they set a record and capped a powerful, if uneven, rally fuelled by central bank stimulus — one that has wiped away all the market losses from the coronavirus pandemic.

      The day was symbolic of the rally: more stocks fell than rose, but a few big tech companies pushed the S&P 500 over the line. Amazon was up more than 4 per cent on the day; Google’s parent company, Alphabet, was up 2.7 per cent.

      Add in Apple, Microsoft and Facebook and the five largest stocks in the S&P 500 together account for a quarter of the rally since the crescendo of selling in late March.

      The quintet now represents more than a fifth of the index, the biggest weighting for the top five since at least 1980.

      They have been joined in the latest leg of the rally by cyclical stocks, albeit fitfully. Investors have become more willing to place bets on a sustained rebound in business activity, amid hopes the pandemic could be peaking in the US.

      Yet a significant majority of S&P 500 members are still below their levels when the market last peaked on February 19; fewer than 40 per cent are above their level on that day, and the average company is down more than 7 per cent.

      “Wall Street isn’t a mirror of Main Street,” said Brad Neuman, director of market strategy for Alger, a New York fund manager. “The stock market has a much smaller weighting to the areas of the economy that have been hurt the most, like malls, hotels and airlines.”
      …

      1. The catastrophic US coronavirus response is allowing China to stake its claim as the world’s dominant superpower, former Fed chair Greenspan says
        Shalini Nagarajan
        Aug. 18, 2020, 11:33 AM
        Stefan Zaklin/Getty Images
        — The failure of the US to effectively limit the spread of the novel coronavirus has opened the door to China becoming the world’s dominant superpower, former Federal Reserve Chairman Alan Greenspan has said.
        — Greenspan said in a blog post for a wealth-management firm that the US looked as if it had “lost its way” while China was on track to achieve President Xi Jinping’s ambition to become a dominant superpower by 2049.
        — While the economist said the US would enjoy less dominance this century, he highlighted some reasons its economy was not entirely replaceable.
        — “For all its problems with populism, America has something precious that China lacks: a stable political regime,” Greenspan wrote.

        The failure of the US to effectively limit the spread of the novel coronavirus has “worsened” its road to economic recovery and opened the door to China becoming the world’s dominant superpower, former Federal Reserve Chairman Alan Greenspan has said.

        The economic landscape for the coming generation will be defined on the basis of the relationship between the US and China, he said in a blog post published Monday for Advisors Capital Management, …

        “The COVID-19 crisis has presented a real threat to the United States’ position of global dominance,” said Greenspan, a senior economic adviser to the financial-portfolio manager.

        Greenspan said the US economy had “lost its way” at a time when China was enjoying relative success and embracing its ambition to become the dominant world superpower by 2049.

        “China is endeavoring to wrench global hegemony from the United States,” he wrote of the Asian power, which was the first to see a rebound during the coronavirus pandemic.

        “The resurgence of the virus in the US threatens to forestall our economic recovery,” he said. “And as political tensions heat up between the world’s two largest economies, the balance of power that will result is still unclear, but becoming of increasingly greater concern by the day.”
        …

  26. Has anyone given up hope in buying a home where you live?

    I have cash to purchase of a home and prices aren’t sensible anymore in Austin, TX.

    It used to be you could buy decent properties in the $250k range within the city.

    These days, prices have doubled from what they were 5 or 6 years ago.

    I really wish I had bought them.

    This pandemic has only exacerbated people’s desire for a house with a yard within city limits and prices are through the roof

      1. Sure. And what’s the rest of population supposed to do?
        Move to another State bc Californians all of the sudden decided Central Texas is a cool place to live?
        Just yesterday a saw an MLS listing sold for $220k in Jan 2020 now being listed for $410k. This was in NE Austin which historically has been one of the poor areas of the city

    2. Has anyone given up hope in buying a home where you live?

      I’ve given up on more than that. Pricing for everything went through the roof. The higher prices on everything go, the more austere my lifestyle becomes. I’m not playing the game. I am saving every dollar I can.

    3. ‘It used to be you could buy decent properties in the $250k range within the city’

      I’m not saying you’re wrong, but to add some context I’ll repeat my experience. In 1998, I move to Austin (Clarksville IIRC) to participate in the dotbomb. My rent was 1.2k, the highest I’d paid up til then. Landlord lied and said it was a primary house, I got the mortgage bill, and I swear opened it not noticing it wasn’t to me. He paid $250k for this 2b 1b crap shack – (not even insulation) and was paying twice the rent monthly. I started to consider there was a bubble. He lost 5 shacks to foreclosure eventually. Austin crashed not long after, or so I heard, as I was long gone and sick of the crooks/traffic, etc.

      It boomed/crash last decade of course.

      So that was 22 years ago. The question is, which boom/bust do you wish you had participated in? The last one? I’m not a housing bull or bear – I’m a vulture.

      1. The best advice one can give younger people who are trying to make sense of the madness is that it all goes in cycles. The best thing you can do is learn how and why the cycle works the way it does and then focus on being in the right place at the right time. (It doesn’t hurt to become a cynical vulture either, in fact, you might just find what you’re looking for.) For now, be patient and spend your time learning about the past cycles and you will begin to see the pattern that you are currently in. An epic bust is on the horizon…

        1. Buy low, sell high.

          Except that at the low point
          in prices, most proles are overextended or unemployed. And they don’t automatically get access to free money from the Fed to snap up devalued assets at fire sale prices.

          2. at the low point in prices, most proles are overextended or unemployed

            And most emotional people are only interested in buying stuff when it is taking a moonshot.

          3. I’m pretty unemotional when it comes to investing. However, I find the Fed’s stimulus moves hard to predict. And they are the only game in town.

    4. “given up hope”

      LOL@ “hope” some of us rent for less than half the cost of buying, don’t need to work full time anymore, spend more time traveling (or reading books at home) than working.

      Debt is slavery. And guess what, it’s VOLUNTARY.

  27. ‘A few years ago, I heard a great National Public Radio story about an out-of-state student who completed six years of education at the University of California–Berkeley: four years to get his bachelor’s degree in art and then two more years to earn his master’s degree in art (I think he was an aspiring sculptor). ‘

    ‘During that period—presumably when he was 18 to 24 years old—he accumulated $250,000 in debt.’

    ‘I believe government should be in the business of creating market structures through which competition feeds innovation and drives down consumer prices. In 2010, outstanding student loan balances were $760 billion; in 2020, student loan balances have rocketed to $1.6 trillion—an 86 percent increase!’

    ‘Enter the concept of “fraudulent conveyance.” If a knowledgeable lender lends money to a business and that business subsequently declares bankruptcy as a result of that debt burden, then that lender, who it is deemed should have known better—is said to have fraudulently conveyed that borrower with too much debt. If that happens, an equity investor, for example, might be able to convince a bankruptcy judge not to allow the borrower to get paid back the money he lent and instead allow the equity investor to retain ownership of the business.’

    ‘My question is, how is it that a financial aid officer representing a major university can decide to facilitate a loan of $250,000 to a sculptor who has never earned any money as a sculptor? Why isn’t UC–Berkeley responsible to repay that loan? Why is that student responsible for that loan? And why is that student not able to reduce that debt through the bankruptcy process?’

    ‘Now, don’t get me wrong. I personally remember the rampant fraud being knowingly committed by mortgage borrowers during the 2005 to 2007 U.S. property bubble. People signed documents with data they knew their mortgage originators had just “made up.” People were borrowing 105 percent of property values, and bought boats and flat-screen TVs with the proceeds.’

    ‘During these weeks of political conventions, I would like to see proposals to fix the extremely broken system whereby adults representing major institutions are continued to allow to lend too much money to people who in many cases were still considered children just one year earlier.’

    ‘Of course, most families probably know enough about debt they should probably be held partly responsible for not working harder to point out the idiocy of borrowing such vast sums of money.’

    ‘But with all that: fraudulent conveyance at universities seems as widespread as the fraud that was allowed by many homeowners who knew what they were doing in 2005 to 2007. ‘

    https://www.theepochtimes.com/lets-help-students-not-destroy-the-real-estate-market_3465119.html

    1. ‘During that period—presumably when he was 18 to 24 years old—he accumulated $250,000 in debt.’

      I hate these people.

        1. CA state college and university fees were jacked up sky high after the Great Recession. Students responded by loading up on student loan debt.

        2. I think all bets are off for grad school.

          But even for undergrads, UC isn’t “cheap”. Yeah, it’s cheaper than Stanford or USC, but it isn’t cheap.

          1. When I went to grad school at Cal, it was expensive in terms of the opportunity cost of foregone fulltime adult wages. However, between financial support of on campus teaching opportunities, lots of free time to pursue gig economy work, and low tuition, we were able to make ends meet cashwise. And after the condo sale, we realized gains of $60K/year for HODLing during Housing Bubble 1.0.

            It seemed wrong, but it was definitely cheaper than renting. As Mr Banker would point out, you do what works.

        3. These days have to play the game right and not pay retail (just like at private colleges). My daughter got a BA from UC San Diego and a MSW from Berkeley and only had to borrow about 50K. Berkeley degrees still carry clout so she was management by the time she was 30.

          1. One of my sons just completed his associate’s degree at San Diego Mesa, and somehow has paid $0 in tuition while accumulating a tidy Roth IRA balance through the SBUX plan, working part time while completing online coursework right through the pandemic.

            I’m expecting him to do well in life.

    2. “People were borrowing 105 percent of property values, and bought boats and flat-screen TVs with the proceeds.’ ”

      They should have bought gold.

    1. Dave Portney looks to me like the Wall Street-Federal Reserve Looting Syndicate’s Judas Goat to lead the trusting Robinhood marks to the Wall Street slaughterhouse.

  30. I am capitulating yet again. We’re under contract on a house with 2+ acres outside a tiny village, with reasonable commutes to both our schools. 80M internet. Monthly is 14% of gross so we’re good money-wise. My wife and I had a talk about NYC equity locusts. It only takes 20 or so cash buyers from NYC/Boston to mess up the market here. It’s happening before our eyes and I have less time to wait than when I held out in Florida.

    Blue, what’s the toy advice? Four wheeler? Bowrider for the fam? Waverunner? Snowmobile? Or maybe dad buys a small cabin kit and build himself a small recording studio!

    I’m thinking Four wheeler. I can use it to plow as well as sling the kids around on a tube during winter. Boat season here is very, very short.

    2. This is The Housing Bubble Blog, for folks who see a bubble and realize how reckless it would be to buy a house right now.

        1. Some of us like the 4 seasons. I like putting on boots, a warm jacket and a stocking cap and going outdoors to do some work.

        2. You don’t have to move to SoCal to escape snow. Knoxville gets 6 inches of snow each year; Lexington 10, Ocean City 8, Bloomington IN 18. It’s enough snow to feel like a winter season, but not enough to be a relentless drag.

          Snowy-Muggy, congrats on your home. Even with the roller coaster of prices, if you can stay in the home 10 years, you will at least break even. You have a good debt-to-income ratio too. This is a home for you, not an ETF. You don’t have to feel guilty for not scoring some spectacular ROI.

          Land is great for kids. The two acres will serve you well.

          1. if you can stay in the home 10 years, you will at least break even

            Break even with what? Muggy is doing what he wants to do, fine for him. Is it likely that anyone who bought a house in the past ten years will recover what they paid ten years from now?

    6. “what’s the toy advice? Four wheeler? Bowrider for the fam? Waverunner? Snowmobile?”

      We had snowmobiles at my parents weekend place in Pennsylvania when I was a kid, they were nothing like these below but they were a hell of a lot of fun in the winter months.

      https://youtu.be/xEhSSui0TcU

      1. A woman at work said that after a couple of years of light snow pack at our ski slopes, she and her husband bought snowmobiles…and never looked back.

        1. I would hope that there are fewer fatalities on a snowmobile than on a 4-wheeler.

          My son’s best friend in PA was a 4-wheeler fatality in his teens.

        2. My brother had a Ski-Doo TNT Silver Bullet just like the one in the second video. The Arctic Cat is very similar to the other machine we had. The trail ride on the Lynx video and the sound of those machines snapped my memory back to those years in the early 70s so clearly I could almost smell those two-stroke engines when they fired up.

          1974 Arctic Cat Lynx

          https://youtu.be/A5ZOF_-rTsI

          1973 TNT Silver Bullet in Cape Breton

          https://youtu.be/dg2iKD1OV6s

  31. Glen Mills, PA Housing Prices Crater 23% YOY As Housing Prices Plummet In Outer Ring Suburbs Across US

    https://www.zillow.com/glen-mills-pa/home-values/

    *Select price from dropdown menu on first chart

    As one economist advised, “Sell whatever it takes to get out of debt and hold onto every dollar you’ve got. You’ll thank me later.”

  32. Question for the hivemind:

    We’re spending this month in the south in two different VRBO houses (2 weeks each). Strangely, we had some appraisers randomly show up at our door at the first house, wanting to check it out (unannounced to us). Sounded like maybe there’s a lawsuit in play.

    Strangely, the property manager at our new place just reached out to see if the owner and appraisers could come walk the house while we’re here. It seems uncanny to have this happen at both houses.

    Is there something going on in the industry? Or just a coincidence?

    1. I think it’s just one of those coincidences that’s hard to believe, though given the current state of the STR market I’d bet there’s a lot of that going on. Probably looking to do a cash out refi.

      2. We were recently visited by a Census worker who started in with a list of questions. When he queried about our house, “rental, mortgage, or owned?” he was astonished when I said, “own outright,” and I added that we have zero debt of any kind!

      1. It will be good news to the city fathers of the cities that Amazon moves to but, as for Seattle, not so much.

    2. Dallas, Detroit, Denver, New York, Phoenix, and San Diego.

      Hmmm. They would do better to expand into smaller cities* where there’s plenty of infrastructure just waiting to be revitalized. But I guess that’s too much of a leap for now.

      —————
      *I can’t really call it “flyover.”

  37. Gee, no bubble here…

    So many buyers, too few homes: Kitsap’s real estate prices hit new records

    “I’ve never seen anything like this. It’s mindboggling,” said Irene Garcia, president of the Kitsap Association of Realtors. “If you’re a buyer, you need to be prepared to compete for homes. If you’re a seller, you better be ready to move quickly.”

    And that frenzy is pushing the market to record territory. Kitsap’s median single-family home price surged from $383,500 last year to $428,193 in July, the highest level ever.”

    These prices had stalled out and started reversing 3 years ago, now they’ve blown up to record levels in a pandemic of all times. Unreal.

    2. A $40,000 increase in the median in 12 months’ time.

      Meanwhile:

      Income and Salaries for Kitsap County
      – The average income of a Kitsap County resident is $31,901 a year. The US average is $28,555 a year.
      – The Median household income of a Kitsap County resident is $62,473 a year. The US average is $53,482 a year.

      Yeah, 7x median household income is sustainable, in an area with higher than average unemployment and a transient population based upon military jobs and deployment.

      1. Magical things happen with rampant appraisal fraud……and remember…. Realtors are liars

        .Tampa, FL Housing Prices Crater 17% YOY As Guf Coast Housing Market Turns Toxic On Rampant Appraisal And Mortgage Fraud

        https://www.zillow.com/tampa-fl-33617/home-values/

        *Select price from dropdown menu on first chart

        As a leading economist advises, “Mortgage debt is the most toxic and damaging debt of all. Avoid it at all costs.”

    1. ‘The Home Depot had a warning for its investors on Tuesday. Despite posting a healthy $3.48 billion in profits for the second quarter, the home improvement giant cut its sales forecast for the full year. The company blamed the potential effects of tariffs on U.S. consumers for the slowdown, as well as deflated lumber prices. Lumber makes up about 8% of the company’s sales. Prices have fallen sharply since reaching record highs in 2018.’

      https://www.marketplace.org/2019/08/20/home-depot-blames-lumber-prices-drop-sales/

  39. ‘On the corner of Newport Boulevard and 19th Street in Costa Mesa, protesters touted American flags and signs that called for the recall of Gov. Gavin Newsom in the latest show of resistance against masks.’

    ‘Face coverings have been required in the city since March 12, but residents pushed back against the fines and some called their bluff. No citations have been issued, said Costa Mesa Police Department spokeswoman Roxi Fyad on Friday.’

    ‘Leigh Dundas, a human rights attorney in Orange County, said the event was organized “to bring awareness to the mask issue.” Dundas said she felt the fine was atrocious, arguing that, “I mean, if I’d come up to you five months ago and I said you have to wear a burka or you have to wear a Spiderman outfit, that would have been a violation of your basic human rights and constitutional rights.”

    https://www.latimes.com/socal/daily-pilot/news/story/2020-08-15/orange-county-reaches-800-coronavirus-related-deaths-as-anti-mask-protest-goes-on-in-costa-mesa

    1. ‘Harvey Mudd had expected nearly 500 students among about 835 enrolling for fall to return to campus housing. The shutdown of dorms will cost Harvey Mudd $12.3 million in room and board, contributing to a budget shortfall the college addressed in part by furloughing 71 of 247 employees, Klawe said. Other campuses also face steep declines in housing and dining revenue, including the University of California and California State University systems.’

      ‘UC campuses lost $310 million in March alone for canceled housing and dining contracts, facility cleaning costs and transitioning to remote instruction.’

      ‘By June 30, UC was hit by nearly $1.8 billion in lost revenue and new costs related to the pandemic, which was only partly offset by nearly $800 million in federal funding, then-UC President Janet Napolitano said last month.’

      https://www.latimes.com/california/story/2020-08-18/la-me-county-college-reopening-rules

      Is that a lot?

      1. I just had a shudder of relief that “Big Sister” Janet Napolitano is no longer in any government position. What an Orwellian totalitarian wanna-be she was. Right up there with Janet “We had to kill the Branch Davidian children in order to save them” Reno.

    1. Makes no sense to buy a used car when you can buy a new one for less.

      Last month I picked up a new Tahoe for $5k than any used tahoe within 500 miles.

      There’s nothing like falling prices to incentivize commerce and accelerate the economy.

  42. Well it would cost me twice as much to buy now even with record low rates due to overpriced California crapshacks in Sacramento and placer counties selling way over market value.

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