Is the Housing Sector a Drag on the US Economy? by rcwhalen

The S&P/Case-Shiller 20 City Index rose at a 13.8% annual rate in November.  This proves that the US housing market continues to recover, right?  The headlines in most news stories and economic commentaries indicate that the housing market is continuing to improve and with it the US economy.  But if you dig into the numbers a bit, the reality in the housing market is a good bit more subtle than the headlines suggest.
Indeed, it can be argued that the US housing sector has not really recovered significantly and remains a major drag on US economic growth. Back in November 2012, I predicted that housing would be a drag on the US economy and could even drag us back into recession.  The reason?  The failure by Congress and federal regulators to restructure under water borrowers would eventually become a dead weight, limiting growth and job creation, as well as home price appreciation, as it did from the 1920s through until the early 1970s.

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LocatePLUS Announces the Next Generation Skip Trace Tools by PRWEB

LocatePLUS, the leading provider of cost effective, personally identifiable information in the US, is proud to announce the latest in affordable searches and reports in an easy to use interface. The latest data, and easy to assemble reports, empower customers to solve more cases faster like never before. An improved log-in experience features a convenient format that enables everyone to harness the full potential of the LocatePLUS proprietary data retrieval system.
Free VIP training and complimentary customer support are included with every subscription to guarantee a successful user experience. Skip trace professionals, law enforcement, collection services, attorneys, bail bondsman, financial services, repossession companies and private investigators please contact sales to find the right plan that fits a usage profile and budget.

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Housing Bubble 2.0: "More Flipping, Bigger Profits, In Less Time" With 156,862 Homes Flipped In 2013 by Tyler Durden

Late 2013 pending home sales may have been horrible, and were blamed on the weather (though as even Goldman notes "The broad-based declines by region suggest that colder-than-average weather was likely not the primary driver, given slightly warmer-than-average temperatures on the Pacific coast in December") , but it appears the weather had zero adverse impact on that other, most pernicious home "selling" activity: flipping.
The topic of home flipping is not new here ("Flip That House" In These Bubbling Cities, Housing Bubble 2.0 Edition: "25 Markets Where Flipping Homes Is Most Profitable", etc) - indeed that best-known flashback of the last housing bubble is easily one of the best indications just how fragile the current housing bubble truly is as investors gobble up real estate not with the intention of keeping it but merely to sell to the next greater fool, in the process setting marginal prices based purely on the availability of cheap money, money which has now been tapered by $20 billion in the past two months. However, to get the full picture on just how pervasive "house flipping" has become, we go to the source, RealtyTrac, which has just released its 2013 summary of this troubling trend.
In summary:

• 156,862 single family home flips — where a home is purchased and subsequently sold again within six months — in 2013, up 16 percent from 2012 and up 114 percent from 2011.
• Homes flipped in 2013 accounted for 4.6 percent of all U.S. single family home sales during the year, up from 4.2 percent in 2012 and up from 2.6 percent in 2011.

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Everyone In America Is Even More Broke Than You Think by the Huffington Post

The massive and growing gulf between rich and poor is one of the direst challenges facing the U.S. economy. Highlighting this gap, more than half of U.S. wage earners made less than $30,000 last year, according to an analysis released by the Social Security Administration on Tuesday. That's not far above the $27,010 that marked the federal poverty line for a family of five in 2012. We've created this infographic to help visualize the skewed income distribution in the country. Where do you stack up?

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Derivatives: The $600 Trillion Time Bomb That's Set to Explode by Keith Fitz-Gerald

Keith Fitz-Gerald

Do you want to know the real reason banks aren't lending and the PIIGS have control of the barnyard in Europe?

It's because risk in the $600 trillion derivatives market isn't evening out. To the contrary, it's growing increasingly concentrated among a select few banks, especially here in the United States.

In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report from the Office of the Currency Comptroller.

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We buy houses Orlando- Sell your house fast- stop foreclosure

Welcome...if you're Looking to Sell Your Property , you've come to the right place!

We represent a network of literally thousands of real estate investors and a handful of very specially trained Realtors that focus on "non-traditional" or "creative" real estate solutions ".

If you are like most sellers, you want to explore how to sell your property fast and hassle free. We can help! That’s what we do...

We Buy Properties Fast... regardless of condition, equity, or situation. We’ve handled just about every situation you can imagine. We buy with cash. We even have many creative solutions available. We are experts.

For example, did you know there are at least a 12 Different Ways to Sell Your Property that Realtors won’t tell you about?
 Most Realtors are not trained on these options and don’t know about them. Some Realtors know about some of these options, but don’t talk about them with you because many of these solutions simply don’t pay them a commission.

These transactions include Fast Cash Offers from investors, as well as wraps, options, auctions, swaps, shorts, assignments, and many more...

These transactions usually involve selling your property to our network of investors who compete to buy your property quickly, in any condition, and regardless of the amount of equity in the property.

Our investors buy properties for all different purposes including to keep as rental properties, or to resell, possibly after making improvements, or to resell with owner financing and/or on a rent-to-own plan, or even to just live in themselves.

We’d like to talk to you about your options! We'd Like To Buy Your Property!

Our offers can even sometimes be combined with traditional listings using what we call "combo plans" that allow sellers to work with specially trained real estate agents and investors simultaneously to provide property owners with both a plan A and plan B for selling their property.

Wanna hear more? Feel free to explore our website and Let Us Know How We Can Help!

 We can buy cash is part of a national network of investors and Realtors that specialize in buying properties FAST using advanced, non-traditional, real estate techniques that are squarely focused on the client. We’ve studied the market and created a website for you to use to help you pick the solution that best works for your unique needs. We would love to have a conversation with you so that we may understand your specific situation and work together to find a solution that best allows you to achieve your goals. Together we can come up with a targeted solution that helps you.

Traditional Real Estate involves hiring a Realtor to list your home on the MLS while waiting for a buyer, with a conventional loan, to show up with an offer.

Traditional real estate works for many, but it typically takes a long time, can be very expensive, and is less and less suitable for the millions of sellers that want or need to SELL FAST, don’t want the hassles of dealing with Realtors and a parade of picky buyers, and in many cases do not even have the equity, repair resources, or the luxury of time needed to pursue traditional real estate solutions.

If you want to SELL FAST, we can help and have methods for buying homes QUICKLY regardless of the home’s condition, the seller’s financial situation, or even the amount of equity in the home.

We specialize in solving difficult problems. We’ve seen it all and that’s why we know we are positioned to find your solution.

At we can buy cash, we are wholeheartedly focused on helping people that need to sell their homes and are having difficulty working through the traditional channels that don’t meet the needs of homeowners in today’s market. We offer truly unique solutions because each and every homeowner has their own goals and together, we can achieve them.

My opinion of inflation looking at housing prices. The Case Shilling History of Home Values

What is the True rate of Inflation

The inflation rate reported by the US Government has been more or less 3% since 1990. Three factors may effect our "Standard of Living" regardless of the CPI calculations. One is the rising cost of housing shown by the Case Shilling "History of Home Values. The CPI is calculated based on the "House Price - Rent Ratio. The second factor is the "Declining Median Household Income adjusted for Inflation". A Third factor  is the staggering cost of education.



 Housing cost almost doubled between 1995 and July 2006. The chart to the right is from The Case Shilling Report. Housing cost typically make one-third of a family's budget. If the biggest part a family's budget rises eight percent a year the "True Cost of Inflation" must be much higher than the 3% stated value of CPI the government is reporting. It is true that housing values came down fifty percent in many parts of the US, but in 2013 the median housing cost rose again by nearly thirty percent.

The American family's "Standard of Living" has been declining because of improving productivity (overseas jobs and robotics).  The chart below shows both the actual median income and the "True Value" after adjusting for inflation.

For more information
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Median Household Income in the United States inShare5 First off - what is median household income? According to the U.S. Census Bureau, "household median income" is defined as "the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount." The U.S. Census Bureau currently publishes median household income data from 1967 until present day. Year No. of Households Nominal $ Inflation Adjusted $ 2012 122,459,000 $50,099 $51,017 2011 121,084,000 $49,158 $51,100 2010 119,927,000 $48,415 $51,892 2009 117,538,000 $48,916 $53,285 2008 117,181,000 $49,406 $53,644 2007 116,783,000 $49,341 $55,627 2006 116,011,000 $47,317 $54,892 2005 114,384,000 $45,496 $54,486 2004 113,343,000 $43,544 $53,891 2003 112,000,000 $42,560 $54,079 2002 111,278,000 $41,624 $54,127 2001 109,297,000 $41,458 $54,766 2000 108,209,000 $41,262 $55,987 1999 106,434,000 $39,985 $56,080 1998 103,874,000 $38,127 $54,702 1997 102,528,000 $36,210 $52,784 1996 101,018,000 $34,704 $51,720 1995 99,627,000 $33,238 $50,978 1994 98,990,000 $31,338 $49,429 1993 97,107,000 $30,210 $48,884 1992 96,426,000 $29,473 $49,122 1991 95,669,000 $28,875 $49,529 1990 94,312,000 $28,506 $50,994 1989 93,347,000 $27,391 $51,681 1988 92,830,000 $25,693 $50,776 1987 91,124,000 $24,489 $50,389 1986 89,479,000 $23,339 $49,764 1985 88,458,000 $22,109 $48,063 1984 86,789,000 $20,948 $47,181 1983 85,407,000 $19,494 $45,760 1982 83,918,000 $19,032 $46,082 1981 83,527,000 $17,974 $46,205 1980 82,368,000 $16,542 $46,995 1979 80,776,000 $15,090 $48,520 1978 77,330,000 $13,575 $48,655 1977 76,030,000 $12,132 $46,842 1976 74,142,000 $11,311 $46,548 1975 72,867,000 $10,531 $45,788 1974 71,163,000 $9,921 $47,019 1973 69,859,000 $9,226 $48,557 1972 68,251,000 $8,520 $47,596 1971 66,676,000 $7,896 $45,641 1970 64,778,000 $7,651 $46,089 1969 63,401,000 $7,292 $46,449 1968 62,214,000 $6,673 $44,785 1967 60,813,000 $6,140 $42,934

A popular topic of conversation at the dinner tables in 2013 has been "the Rich are getting Richer and the Poor are getting Poorer". Huge blocks of people in certain demographics are being squeezed possibly on three fronts. Students graduating before 2006 were able to get a fair paying job, get married and then buy a house at double the cost(after adjusting for inflation) of the previous generation. Also the chances are in 2009, when the foreclosures started this same demographic had huge student loans along with a high mortgage.  Many of these same people lost their job in 2009 so they lost everything, including their homes. Why then does not the CPI rate of inflation show this triple threat to our "Standard of Living?


A possible answer is the CPI rate is based on the price of home rentals. The price of renting a home rose at a steady rate until 2006/07 rents started rising faster. When the housing market crashed in 2009 rents only slightly declined. Renters had leases that stabilized their rent price. In 2010 when it was time to renew their leases people moved in two directions. The group of renters that lost their good jobs moved their families in with family or friends. The group of people who kept their job upgrade their home but was able to keep the same rent price range. That means people without income did not rent and people with income paid the same amount of rent. Therefore the calculation of rent prices for the CPI indicator calculates the inflation rate of housing at a low rate of inflation.

The people hurt by this effect were low-rent landlords and people who had both a high mortgage payment and student loans. In 2010 when people moved out of the leases many people were able to move into a much nicer neighborhood with better schools for the same rent price. Thousands of low-rent landlords had houses they could not rent. Landlords had long term vacancies and were not able to sell their properties for any price. Remember nobody was buying houses in 2010, The pace of existing home sales fell twenty-seven percent.

In conclusion three factors destroyed the "Standard of Living" for millions of Americans. Any one of the three factors may have affected the financial prosperity of millions of Americans, but some people experienced all three. Whether paying too much for a house during during the feeding frenzy for a seven year period or loosing a job during the "Financial Melt-down" combined with debt from credit cards or student loans caused millions of Americans to live with lower discretionary income. The time may have come where paying for a college education will not provide the life style benefits as the previous generation did.

Take a look.


Cost of education in 2013 dollars. This is staggering rate of inflation not shown in the CPI inflation

rate.

Read more about college tuition.

from:
 

The Boom And Collapse Of America's 'Subprime Generation' by Chris Porter

Talk about an amazing reversal of fortune! This may be the most amazing, underreported demographic fact today.

• 30-34 year olds in 2012 had the lowest homeownership rate of any similarly aged group before them!
• Five years prior, this exact same group had the highest homeownership rate at 25-29 years old than any group before them!

Read more: http://www.businessinsider.com/home-ownership-rates-by-demographic-2014-1#ixzz2rKN2PBhb

Vancouver’s housing prices 2nd most unaffordable in the world By Peter Meiszner

An urban planning think tank says Metro Vancouver has the second-highest housing prices in the world when compared to local incomes.
Demographia compared urban areas with over 1,000,000 residents in OECD countries around the world.
They say Vancouver’s “strong urban containment policies” have caused the city’s affordability to “deteriorate markedly.”

The average house price in Metro Vancouver is $670,300, which would require 80 per cent of the average median household income to service the mortgage. That’s more than 2.5 times the 32 per cent guideline set out by Canadian Mortgage and Housing Corporation.

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Built-to-Rent New Homes on the Rise by Daily Real Estate News

Thousands of single-family homes are being built to rent rather than sell, The New York Times reports. More home builders and investors see it as an income-generating investment at a time when the pool of first-time home buyers is shrinking.
The percentage of homes built specifically as rentals was 6.2 percent in 2012 — a record high, according to Census Bureau figures.
For example, in the Atlanta area, a five-bedroom, three-bathroom new home that may have sold for less than $200,000 can fetch $1,300 a month in rent.
“New homes still command a premium with renters,” the Times reports.

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| -A A +A Housing Starts Soften After Last Month’s Highs by Daily Real Estate News

New-home construction posted its largest percentage decrease since April, a big fall after last month’s surge, the Commerce Department reports. Housing starts dropped 9.8 percent in December to a seasonally adjusted annual rate of just under 1 million units.
The drop follows a sharp rise in November, in which new-housing starts had accelerated to the fastest pace since February 2008.
Single-family home construction, which makes up the largest segment of starts, dropped 7 percent in December to a seasonally adjusted annual rate of 667,000 units. However, total single-family housing starts still mark the highest monthly total in 2013, except for November. Multifamily starts fell 14.9 percent for the month.

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High housing costs are killing the American Dream By Joshua Holland, Moyers & Company

Historically, economic and geographic mobility have been intertwined. Studies have shown that the number one reason that people pick up and move to another community is for work: Americans move out to move up.

But something has happened. In the 1980s, we began to stay put.

Here’s Timothy Noah in December’s Washington Monthly:

In the early 1950s, about 3.5 percent of all American households moved from one state to another in any given year. This proportion held up through the 1970s, and then started to fall around 1980. By 2006 interstate migration had dropped to 2 percent, and by 2010 to just 1.4 percent, or less than half the rate of the early 1950s. The latest available data, for 2011-12, shows interstate migration still stuck at a mere 1.7 percent. Though it may not square with our national self-image, America today is a nation of people who tend to stay put, with a population that is no more mobile than that of Denmark or Finland.

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UPDATE 2-IMF sees higher global growth, warns of deflation risks By Anna Yukhananov

WASHINGTON, Jan 21 (Reuters) - The International Monetary Fund raised its global growth forecast for the first time in nearly two years on Tuesday, saying fading economic headwinds should permit advanced nations to pick up the mantle of growth from emerging markets.
But the IMF warned richer nations were still growing below full capacity, and it added the specter of deflation to its long list of risks that could derail the nascent recovery.

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Wells Fargo to stop short-term cash-advance loans by McClatchy-Tribune

In November, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency directed banks to evaluate a customer's income, expenses and ability to pay before providing a deposit advance loan.

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Bove Slams Regulators' New Payday Lending Rules

 Why should banks be allowed to lend to consumers at annual interest rates as high as 300%?

Because the alternative is far worse, according to Rafferty Capital Markets analyst Richard Bove.

The Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency late last year issued new rules to govern "deposit advance products," which everyone else calls payday loans.  These short-term loans -- called "payday loans" by everyone else --   are made to checking account customers in anticipation of direct deposits of salary payments or other regular direct deposits.

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Foster Introduces Legislation To Reduce Burden For Underwater Homeowners by Congressman Foster

Posted By Rep. Bill Foster, Community Contributor 3:08 p.m. CST, January 14, 2014 Washington, D.C. – Today, Congressman Bill Foster (IL-11) introduced H.R. 3856, the Homeowners Debt Relief Extension Act. The legislation would reduce the tax burden for underwater homeowners by extending the Mortgage Forgiveness Debt Relief Act of 2007. “With millions of struggling homeowners still underwater on their mortgages, now is not the time to cut off this tax credit,” said Foster. “We shouldn’t be offering up millions in tax breaks to oil and gas companies, while leaving working families, still struggling to recover from the recession, with a bigger tax bill.” A recent report showed that a third of Illinois homes are still “deeply underwater,” meaning that more is owned on the mortgage than the home is worth. When homeowners receive loan modifications through their lender, or sell their home for less than they owe, the reduction or cancellation of debt is considered taxable income. Since 2007, Congress has extended this tax relief to homeowners who have received such modifications, so that they are not liable for taxes on the difference between the house’s value and the loan modification or sale amount. Unfortunately, this tax relief expired December 31, 2013, leaving struggling homeowners under more financial stress. The Homeowners Debt Relief Extension Act would extend the tax relief for underwater homeowners until January 1, 2016 for debt forgiven after December 31, 2013. These costs would be offset by repealing a break in taxes for oil and gas companies under the Internal Revenue Code’s Section 199. These deductions are no longer necessary for oil and gas companies, which are making billions in profit each year.

The Crisis in Pensions and Retirement Plans

Source: Accounting-Degree.org

Paperless Accounting: How to Streamline Your Real Estate Bookkeeping by Kenny Estes

Back in August our book keeper moved on to greener pastures and I figured it would be a great opportunity for me to take over his responsibilities: keeping records for 8 LLC’s and ~200 properties.  I wanted to learn the ins and outs of accounting and fix some inefficiencies along the way.  I told myself I’d do it through one tax season.  Turns out…bookkeeping sucks.
Somewhere along the way I decided to overhaul the system and roll out paperless accounting.

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Investor Animal Spirits Spread to Companies Worldwide By Simon Kennedy and Rich Miller

Companies around the world are starting to share the exuberance that inspired investors last year.
As executives gather in Davos, Switzerland, this week for the World Economic Forum’s annual meeting, business confidence is rising, with a weekly gauge compiled by Moody’s Analytics Inc. at its highest level since the survey began in 2003.

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Reasons Why Existing-Home Sales Slowed in November

Sales of previously owned homes fell 1.2% in November compared to one year ago, the first year-over-year drop in nearly 2½ years, the National Association of Realtors said on Thursday.
The report shows that the overall tally of home sales in 2013 will exceed last year’s level, even though December’s figures won’t be completed for another month. This is largely because of exceptionally strong sales gains during the three quarters of 2013. Sales have declined in each of the last three months at a seasonally adjusted annual rate.
Here are five reasons why sales have slowed:

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JPMorgan settles Madoff case for $2.6B, or 2 weeks revenue Scott Cohn CNBC

It will cost JPMorgan Chase nearly $2.6 billion total to settle allegations that it turned a blind eye to Madoff's epic Ponzi scheme. No individuals from the bank will be penalized, however, and putting behind one of its biggest scandals will cost the bank less than two weeks' revenue.

Why you may ask. 

Chase was Madoff's primary bank for years, and it structured and sold investment vehicles tied to his purported returns.

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Shadow Government Statistics Analysis Behind and Beyond Government Economic Reporting by John Williams'

Consumer Price Index Has Been Reconfigured Since Early-1980s
So As to Understate Inflation versus Common Experience

• CPI no longer measures the cost of maintaining a constant standard of living.
• CPI no longer measures full inflation for out-of-pocket expenditures.
• With the misused cover of academic theory, politicians forced significant underreporting of official inflation, so as to cut annual cost-of-living adjustments to Social Security, etc.
•  Politicians look to expand further the concept of artificially-suppressed cost-of-living adjustments in current budget-deficit negotiations, through the use of the Chained-CPI (see Special C-CPI Supplement at end of this document).
• Use of the CPI to adjust retirement benefits, private income or to set investment goals impairs the ability of retirees, income earners and investors to stay ahead of inflation.
• Understated inflation used in estimating inflation-adjusted growth has created the illusion of recovery in reported GDP.

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FHFA Recovers Nearly $8B from Banking Institutions in 2013

As conservator of Fannie Mae and Freddie Mac, theFederal Housing Finance Agency (FHFA), recovered nearly $8 billion on behalf of taxpayers in 2013 through settlements with financial institutions.

FHFA sued 18 financial institutions in 2011 alleging violations of the federal Securities Act of 1933 and in some cases, alleging fraudulent activity, related to sales of private-label mortgage-backed securities to Fannie and Freddie between 2005 and 2007.

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New titleholder? China says it is world's largest trader

China's latest trade figures show it is "very likely" to have overtaken the US as the world's largest trader. It would topple the position that the US has held for much of the last century and cross another milestone in rivalling the biggest economy in the world.

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New Mortgage Rules Won't Knock Out Many Borrowers By Peter Coy

Are you in the market for a house and worrying about whether it will be harder to get a mortgage after Jan. 10, when new federal rules kick in? Don’t fret. For most people the rules won’t make much difference. If the new rules do prevent you from landing a mortgage loan, it could be a sign that you aren’t financially ready for homeownership.

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Home Equity Gains Spur the Economy as Owners Buy Cars: Mortgages By Kathleen M. Howley

Americans flush with cash as they regain equity in their homes are spending more after years of pinching pennies.

The share of owners whose homes are worth at least 50 percent more than they owe on their mortgages rose to 18 percent in the fourth quarter as property prices gained, up from 16 percent in the prior three months, according to a report today by RealtyTrac, an Irvine, California-based real estate data firm. U.S. homeowners held $9.7 trillion of equity in the third quarter, a 4.5 percent gain from the earlier period, according to the Federal Reserve.

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Blackstone Funding Largest U.S. Single-Family Rentals By John Gittelsohn and Heather Perlberg Oct 23, 2013 12:31 PM ET

Steve Schwarzman’s Blackstone Group LP (BX) has spent $7.5 billion acquiring 40,000 houses in the past two years to create the largest single-family rental business in the U.S. The private-equity firm is now planning to sell bonds backed by lease payments, the latest step in turning a small business into a mature industry.

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Canadian House Prices 62 Per Cent Higher Than U.S. Prices: BMO The Huffington Post Canada | By Daniel Tencer

Canadians complain about the price gap between U.S. and local stores, but here’s the biggest price gap of them all: housing.
According to an analysis from BMO Capital Markets economist Doug Porter, Canadians now pay 62 per cent more for housing than Americans.
“A 62 per cent gap is simply not sustainable for long,” Porter wrote in a note to clients.
Until about 2006, Canadian and U.S. house prices tracked each other closely for at least 25 years, Porter wrote, but that all changed with the bursting of the U.S.’s housing bubble. House prices in the two markets have been moving in opposite directions for much of the past six years.

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