Rent Increases have outpaced Income growth 2 to 1 by Zillow

If rent is rising much faster than the growth of income there is only two possible outcomes in the long run. Either income will have to catch up with the debt load American families are taking on or the economy will force deflation to occur at a quick pace. Families will not be able to pay for the curent American lifestyle.

The world is facing a slow down. The economist say the main reason for the falling price of gasoline is because of slow down in demand world wide. The falling price of gasoline is not enough of a stimulus to drive an increase in spending in most parts of the world. Debt loads are way up everywhere. Because of the deflation and lower demand soon American exports will decrease and jobs lose will occur.. Very soon many oil well rigs will begin shutting down and a large number of people will loose high paying jobs. There are 1500 rigs drilling for oil in America today, but according T. Bone Pickens more than 30 percent of wells will lay down and layoff crews.

The question of the day is what will happen to rising house prices and will families and communities be able to cope with a decline in revenues?

Read More...

Cost of owning a home is spiking in 2014 By: Diana Olick CNBC

Supply and demand will balance out soon and I believe home prices will decline a small amount in the next two years before the next election. In order for a seller to find a qualified buyer two things must happen. A seller must be willing to a sell at both an affordable price and the home must appraise at the selling price. Second item the market must be big enough to attract dozens of qualified buyers with strong incomes and having good, well paying jobs.

Article by:  Diana Olick    CNBC

The sharp rise in home prices in 2013 caused two conflicting results: The return of positive home equity for hundreds of thousands of borrowers and considerably weaker affordability for an equally Read More... large pool of potential homebuyers.

While positive equity allows more borrowers to move, weaker affordability keeps them in place. So which will be the greater driver of housing this spring?

Read more...

‘Boomerang buyers’ could boost market by Kimberly Miller

JUPITER, Fla. — Some housing experts are trumpeting changes that allow foreclosure sufferers to buy back into the American Dream sooner than they probably imagined, calling 2014 the year of the “boomerang buyer.”
Revisions made over the summer to Federal Housing Administration guidelines and technical updates in November to Fannie Mae loan approval systems have opened the door for some former homeowners to buy again just one year after foreclosure.
Founders of the San Diego-based company AfterForeclosure.com said last month that millions of banned borrowers nationwide will be eligible for a mortgage this year, while Jupiter, Fla., mortgage broker Skip McDonough said his firm is already doing deals with homebuyers who were forced into default during the housing bust.

Read More ...

Republican Party Platform of 1956

This was a viable program and at the I was born this was the direction the United states of America was heading.


President Eisenhower has given the world bold proposals for mutual arms reduction and protection against aggression through flying sentinels in an "open sky."
We support this and his further offer of United States participation in an international fund for economic development financed from the savings brought by true disarmament. We approve his determined resistance to disarmament without effective inspection.
We work and pray for the day when the domination of any people from any source will have ended, and when there will be liberation and true freedom for the hundreds of millions of individuals now held in subjugation. We shall continue to dedicate our best efforts to this lofty purpose.
We shall continue vigorously to support the United Nations.
We shall continue to oppose the seating of Communist China in the United Nations.

Read More ...

Bitcoin Plunges as Exchange Halts Withdrawals Due to Technical Problems by Matt Egan

Bitcoin tumbled as much as 37% on Friday after the crypto currency’s leading exchange temporarily halted all withdrawals due to “technical” problems caused by increased withdrawal requests. The decision by Tokyo-based Mt. Gox to “temporarily pause” all withdrawal requests highlights the uphill battle facing the relatively young digital currency.

Read More ...

Report: Seriously delinquent mortgages persist across South Florida By Paul Owers

South Florida's seriously delinquent mortgage rate has declined over the past four years but still remains the highest of the nation's 100 largest metro areas, a new report shows. As of the third quarter of 2013, 15.8 percent of all first mortgages in Palm Beach, Broward and Miami-Dade counties were at least 90 days past due or already in the foreclosure process, according to the Urban Institute, a nonprofit research group based in Washington, D.C. The three-county region has posted the highest seriously delinquent mortgage rate since the third quarter of 2009, when it was 23.7 percent. The group began tracking mortgages on a quarterly basis in early 2009. RealtyTrac Inc., an Irvine, Calif.-based company, releases monthly figures on homes in some stage of foreclosure. The Urban Institute data go beyond that to include loans that are nearing the foreclosure process. While the housing market is improving, "it's far too early to say the crisis has passed," said Rob Pitingolo, author of the report.

Why the Housing “Recovery” is a Farce – Illustrated by Two Charts By: Louis Cammarosano

The economic recovery has been touted in terms of stock and real estate market gains while employment and wage growth have been non existent. During the housing “recovery” the home ownership rate has fallen to an eighteen year low.
We have blamed this unsustainable high price/low sales housing “recovery” dynamic on the Federal Reserve’s quantitative easing programs (QE) whereby the Fed buys trillions of dollars worth of U.S. Treasuries and Mortgage Backed Securies (MBS’s) from the Too Big Too Fail (TBTF) banks with money they print out of thin air with the ostensible purpose of stimulating the economy by keeping interest rates low. In reality, QE has been an enormous continuation of the 2008 Troubled Assest Relief Program (TARP) bailout whereby the Fed continues to remove MBS’s from the TBTF banks’ balance sheets by spending trillions of dollars to buy them from the TBTF banks.

Read More ...

'Time Is Short' On Debt Ceiling, Treasury Secretary Says By Mark Memmott

Warning that "simply delaying action on the debt limit can cause harm to our economy," Treasury Secretary Jacob Lew repeated Monday that he believes Congress should act soon to raise that limit so the federal government avoids even looking like it might default on its debts.
"Time is short," Lew also told an audience at the Bipartisan Policy Center, a Washington, D.C.-based nonprofit organization founded by four former Senate majority leaders — Republicans Howard Baker and Bob Dole; and Democrats Tom Daschle and George Mitchell.

Read More ...

What is the qualified mortgage? By Jim Gay

Oh boy, more government regulations affecting consumers seeking mortgage loans that are eligible for Fannie Mae, FHA and Freddie Mac pricing. Could this be the last? We can only hope. However, for now the letters QM or qualified mortgage need to be understood and dealt with, like it or not. It is one of the final pieces of the Dodd-Frank Act. Whew!
On Jan. 10, QM went into full swing. It contains two main terms we all need to understand: “ability to repay” and “qualified mortgage.” Ability to repay is merely a refocus, once again, on the borrower’s income, credit and liabilities. If you have a mortgage, you surely went through this taxing scrutiny. It is the name of the game. So, what’s new? Extra scrutiny on the borrower’s income calculations and a new limit of 43 percent debt-to-income ratio.

A qualified mortgage is defined somewhat differently than mortgages have been for the last three decades. Negative-amortization loans, interest-only loans, loans exceeding 30 years, and balloon loans are not allowed. Also, a limit has been set on the fees normally paid to the mortgage companies or banks and may not vary even for the benefit of the borrower. Generally, under QM, the limit of points and fees associated with a home loan is now 3 percent of the total loan amount.

What is wrong with this? It sounds like these new QM rules will keep consumers from making unwise mortgage decisions. Yes and no. Qualified borrowers have long enjoyed the options of interest-only loans, balloon loans with lower rates, and amortizations longer then 30 years, but not any more.

Remember, also, that these rules are only for loans eligible for Fannie Mae, FHA and Freddie Mac, which means that jumbo loans are not part of the QM definition.

Most of the details in the QM regulations test the resolve of lenders and homebuyers will never see the complexity involved. So what is the bottom line for the consumer? Associate yourself with a lender possessing experience and knowledge to guide you through any new regulation.

All regulations that make the lending world more complex have the result of shrinking the available lenders that can complete your home loan. For the last three to five years, mortgage companies and loan officers have been leaving the business. Eventually, this trend may result in higher costs for loans because of less competition.

For the family looking to buy or refinance, my continued advice is to find a trustworthy and knowledgeable loan officer as an ally and proceed to accomplish your goals. Ignore the new QM regulations implemented on a national level. Let your chosen loan officer deal with any changes in the mortgage world.

The Nation's Housing: Mortgage experts sound alarm at massive identity theft, data breaches by NewsOK

Downward pressure is being applied to home prices, however because new home starts have been at historically low levels prices may push higher. When new construction picks up in class B apartments in 2015 we may see a stabilizing effect. FHA buyers may take longer to get an approval in 2014.

Eugene Hoffman

The Nation's Housing: Mortgage experts sound alarm at massive identity theft, data breaches

  The numbers of affected consumers are as yet impossible to predict, but mortgage credit experts warn that the recent massive data breaches at Target, Neiman Marcus and other retailers could have significant side impacts on some real estate transactions in the coming months, as damaged credit files depress scores and jeopardize loan applications and home sales.
The Target breach alone could touch as many as 70 million credit and debit card customers, according to the company. Neiman Marcus said that data on 1.1 million of its customers may be vulnerable to fraud. Data security researchers report that at least six other merchants have experienced data breaches from point-of-sale malware similar to what was used in the Target thefts.

Read More ...

Paper Money vs. Gold Money by Michael Edward and Vincent Cate

This article is very easy to follow and states the facts about the future value of our fiat money printing.

In 1913 the US took a big step away from gold when it authorized the Federal Reserve to issue paper notes that were only 40% backed by gold while claiming they were fully convertible. This fell apart when people tried to exchange their paper money for gold in 1933. Instead of admitting the central bank was bankrupt, the government confiscated everyone's gold, made it illegal for them to hold gold, and devalued the paper to $35 per oz of gold. At Bretton Woods the US agreed that central banks around the world could redeem $35 US for 1 oz of gold. As countries tried to exchange their dollars for gold it became clear US did not even have enough gold to back the dollars returning from overseas. Instead of admitting the central bank was bankrupt, the US said it was "closing the gold window". In reality this was stealing from billions of people. By the time the dollar:gold ratio went from 35:1 to 800:1 the government was able to stabilize the dollar by buying up dollars using gold and raising interest rates to 20%.

"I'm not upset that you lied to me, I'm upset that from now on I can't believe you" - Friedrich Nietzsche.

Read more ...

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.

Read More ...

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.

Read More ...

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
Read More ...

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.

Read More ... 

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.

Read More ...

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.

Read More ...

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.

Read More ...

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:

Read More ...