From CNBC:
Improving Housing Market Driving Economy: Jamie Dimon
The U.S. housing market is very close to a bottom and there are already signs its improvement is giving a boost to the overall economy, JPMorgan Chase CEO Jamie Dimon told CNBC Wednesday.
“I believe we’re very close to the inflection point. People look at prices that are still coming down but all the other signs are flashing green,” Dimon said during a job fair in New York for hiring veterans.
Housing is more affordable and “the shadow inventory everyone talks about is lower today than it was 12 months ago. It will be a lot lower 12 months from now,” he said.
Distressed inventory “is actually coming down, not going up. Homes for sale are about half what they were four years ago. You could come up with a pretty bullish case. If the economy grows, housing gets better, quicker.”
He said the U.S. economy is “getting stronger all the time. It’s broad-based, companies are in great shape…Consumers are in great shape.”
…
Dimon believes the threat of a double-dip recession is behind us.
gm nj
This one was tagged as humor, have at it.
{He said the U.S. economy is “getting stronger all the time. It’s broad-based, companies are in great shape…Consumers are in great shape.”}
Well if Dimon says so it must be true, fu*ken thief that he is.
Grim posted before your 2 ,was thinking that was the case the other thought was worrisome.
JJ Fad – What’s goin on out there?
From CNBC:
Hamptons ‘Beach Pass Barometer’: Economic Rebound Sign?
The real estate blog “Curbed Hamptons” notes Monday that permits for the exclusive beaches in East Hampton are officially sold out for summer 2012. How early is that?
“It’s the earliest they’ve ever sold out.”
“Lipstick Indicator,” meet the “Beach Pass Barometer.”
In the heat of the recent recession in the U.S., sales of lipstick were closely gauged for signs of economic strength or weakness. Referred to as the “lipstick indicator,” sales were expected to soar during the recession, as consumers — presumably women — substituted more expensive impulse purchases for a few cheap thrills at the cosmetic counter.
Fast-forward to 2012, and it seems to be all about when — not if — the housing market will recover and when the bull market for bonds makes the turn. Every data point is parsed and pondered, examined for hints that we are near the bottom of the economic downturn. Higher gasoline prices have become not just an annoyance, but a hotly debated political issue that could cut into consumer spending and derail the economy.
Early sales of beach parking permits are “a small indicator that there is more interest in spending the summer in East Hampton,” says Larry Cantwell, East Hampton Village Administrator.
In East Hampton, there are 2900 beach parking permits available to non-residents, at a cost of $325 per summer. For the past seven years, the permits have gone on sale February 1; and this year, sold out about ten days earlier than usual or, about a month earlier than the worst of the recession. There is “no question that things are a heck of a lot better than they were three years ago, ” says Cantwell.
Lib from yesterday, “Mikeinperpetualwaiting” LOL ! if it wasn’t so damn long I’d use it.
Jamie Dimon:
“No one can forecast the economy with certainty”
The check is in the mail.
-Jamie Dimon
Wasn’t there some talk about tax liens lately?
From the Record:
Bergen County real estate investor snagged in bid-rigging probe
A federal investigation into bid-rigging at auctions of municipal tax liens has snagged the owner of a Bergen County real estate company.
Robert E. Rothman, owner of the Englewood-based Rothman Realty Corp., admitted his role in the decade-long conspiracy and pleaded guilty in federal court in Newark Tuesday in an agreement to cooperate with prosecutors.
Municipalities file liens when real estate owners fall behind on their property, water or sewer taxes. Municipalities then sell those liens at auction to investors, who pay the tax liability in full. They make money by collecting tax payments plus interest and possible penalties from the property owners. Lien holders can even foreclose on properties if taxes and other fees remain unpaid.
Bidders compete against each other by offering lower interest rates. But Rothman, an attorney who lives in New York, admitted that from 2000 to 2009 he and his co-conspirators predetermined “which tax liens each would bid on,” a practice that could keep interest rates high.
“The Antitrust Division’s investigation into municipal tax lien auctions is ongoing and active,” Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, said in a statement. “The division will not tolerate this kind of illegal conduct that harms distressed homeowners.”
…
Rothman, 59, faces a maximum of 10 years in prison on a charge of violating anti-trust laws. He is the sixth defendant since August to plead guilty in the scheme.
8 – Second only to “Trust me, I’m from the government, I’m here to help”
http://online.wsj.com/article/SB10001424052702303816504577309751684864454.html
Jon: Call your attorney , see if he’s in touch with the white house .
Jamie “do as I say not as I do” Dimon
Layoffs Watch ’12: JPMorgan
http://dealbreaker.com/2012/03/layoffs-watch-12-jpmorgan-3/
Had to get the money for that dividend from somewhere.
don’t jump all over Jamie…he did, after all, call the bubble and top of the housing market…hold on…i know i have the quote from 2007 here somewhere…i think it was in The Times…no wait, The Journal…or was it Forbes….my bad…i forgot…that was a different Jamie Dimon…this one is full of sh*t.
Mornin’ all…
Just got word that an offer we made was accepted. No realtor involved on either side. I’m concerned about missing something important over the next few weeks that a realtor might have helped with.
Any suggestions?
Any recommendations for a stellar RE attorney in western union co?
I will share all the details when I have a bit more time, it’s a good story and I couldn’t have gotten this far without this site. Thanks in advance njrereporters!
There is pent up demand to have some pants down fun at the beach this summer. People are tired of pretending to be poor.
grim says:
March 29, 2012 at 7:28 am
JJ Fad – What’s goin on out the
You will be missing out on paying realtors thier comission. That’s very important because realtors have your best interests in mind.
Thursday, March 29, 8:30 AM Q4 GDP (2nd revision): +3.0% vs. +3.0% forecast, +3.0% 2nd estimate.
8:32 AM Initial Jobless Claims: -5K to 364K vs. +2K consensus. Continuing claims -41K to 3.34M.
My family and I have two shore rentals booked now. One in Seaside Park, and the other in Wildwood. Gonna be a good summer.
15.Brass Balls says:
March 29, 2012 at 8:27 am
There is pent up demand to have some pants down fun at the beach this summer. People are tired of pretending to be poor.
My house in Vegas has already dropped 5% according to Zillow since I bought in early February. It might be because of my lowball sale.
Consumers are in great shape!!! Great shape really!!
Grim 10
I am!
Thank you for noticing Mr Three Bee! I’ve been working out and lifting the weights!
What a shiny happy day!
Brain 19 Doing Wildwood Crest week of 7/14, you? thought we could have a beer.
PS since first typo going with ‘brain”!
Where is Meat to much Sunshine.
20 – what is that “zestimate” based on on? what is the formula? they never seem to be close to reality for places i have owned, looked at, etc.
I cracked the Zestimate algorithm
Zestimate = Average neighborhood sales price * Random(-.25 to .25)
Metro,
Your house dropped a certain percentage because the economy is in the toilet, and not because Zillow said so. The sarcasm may have missed me or at least I certainly hope that was the case.
Moving on….
I stumbled upon “Too Big To Fail” on one of the premium channels last night, I gotta say it had me hooked for a while. They portrayed it as all resting on Hank’s shoulders. A decent cast for a flick like this too…
http://www.imdb.com/title/tt1742683/
20 Seif you can also use trulia as well, and to some extent Grim is right there seems to be alot of variability in a given neighborhood. Identical houses in my neighborhood still seem to have much higher prices (30K-40K)it is just my end of the street that is different.
Zeiba,
You are wrong, it is because a couple of people lowballed in the neighborhood and because these are shortsales the banks and sellers are selling them at a discount. I had to wait almost 7 months to close.
Grim [9];
I’m shocked, SHOCKED to find that gambling is going on in here!
30-yr assured me that tax lein sales were all on the up-and-up. Say it ain’t so, Goe.
Grim [28];
Makes about as much sense as the brown-fingered method most sellers use to price their properties.
“I believe we’re very close to the inflection point.”
– Jamie Dimon
You are indeed correct, sir. The structure is now entering complete malfunction… instead of just showing signs of fatigue.
Captain Sunshine says:
March 29, 2012 at 8:54 am
Thank you for noticing Mr Three Bee! I’ve been working out and lifting the weights!
What a shiny happy day!
http://www.youtube.com/watch?v=VU3CNb8g3nc
Heading down to Starbucks to get some Beetlejuice before they replace it with Red 40.
Nice story about problems with real estate I read all the blog post and comments and i really appreciate the author of this blog and i also want to bookmark this blog for future knowledge access and submit and discuss my queries.
RE: Beach pass barometer
It makes sense that as more people turn their backs on home ownership and the costs of such that the money they save is free to move into the economy. Haven’t you guys/gals been saying the economic recovery will come on the back of cheap housing?
guy near me just closed. bought 2006 for 617,500 sold 2012 for 480K. His “sweat equity” really paid off.
End result 11k taxes for six years is 66K, six years home insurance 12k, 137,500 loss on home. I know he painted whole house, sanded floors, few new appliances, tree removal and new fence so at least 20K in repairs.
So total loss of 234, 500. Not counting six years of mortgage payments and huge stress. Poor guy sold his tiny cape he owned almost outright to buy a large split at peak of bubble. Put down over 200K so he ate the loss. Now he is renting. If he just stayed in his little cape he could be trading up now for cash. But instead the money pitt has left him with no home and no savings. His wife is hot though.
http://www.zillow.com/wikipages/What-is-a-Zestimate/
What’s in this formula?
One eye of newt … Actually, it’s less wizardry than mathematics. When our statisticians developed the model to determine home values, they explored how homes in certain areas were similar (i.e., number of bedrooms and baths, and a myriad of other details) and then looked at the relationships between actual sale prices and those home details. These relationships form a pattern, and they used that pattern to develop a model to estimate a market value for a home.
Is that all there is to it?
That’s oversimplifying something that is incredibly robust and sophisticated, but it’s the basics. Hundreds of home details feed into the formula and the home characteristics are given different weights according to their influence in a given geography and over a specific period of time. And, because the details are always changing, the Zestimate is extremely timely – it indicates the value of a home based on the most recent data available in an area. We receive new data and update the Zestimate regularly to capture new sales in a neighborhood. However, there is a delay between when the county is notified of a transaction and when we find out about it. We might not know for some time about the sale of that house down the street from you that happened last week.
Just thought I would throw this in there. Zillow uses data from your municipality such as bedrooms, living area, lot size, etc. along with current sales to make an estimate of your property. Because reporting from municipalities can be wrong or late sometimes the Zestimate looks pretty shabby. You can correct the data for your house by going onto their site and manually entering it if you feel inclined. You can also go check the data down at the county recorder office or however it is done in your locale.
On a side note, Grim’s method probably seems just as accurate since the vast value of the property is the home that sits on it and Zillow can’t possibly know that you have all stainless steel appliances and granite counter tops. It probably doesn’t take into account that you have a pool or don’t have a pool if all your neighbors have pools. It certainly doesn’t take into account that your house is 30 feet from high tension power lines and doesn’t take into account that your home is adjacent to a swamp that is underwater in the spring.
In a word, Zestimate is just a starting point.
Brass Balls [39],
That example is one of the main reason why many of us post here. The RE industry from A to Z had a duty to illustrate the downside as well as the upside; especially in the mid 2000s when everything appeared to be rosy. They knew… and decided to throw people into a meat grinder regardless to accommodate their personal satisfaction. This blog has been a deterrent in the face of a tidal wave of bullsh1t.
Nicholas [40];
It certainly doesn’t take into account that your house is 30 feet from high tension power lines and doesn’t take into account that your home is adjacent to a swamp that is underwater in the spring.
It does to the extent that your neighbor’s comp values are also influenced by the power lines & swamp. But that is only influence, and only goes so far. Otherwise your observation is correct.
Gary [41];
I’m as hard any anybody on the used house flacks, but I wouldn’t go so far to say that they had a duty. What they did do was amply show their qualities, and rightly deserve the just rewards.
Moose [42],
Nor will that dirty little secret known as property taxes be discussed. That house with the taxes at $7,800 in 2005 is now at $12,000 today but, let’s not stress over details that don’t apply. $1,000 per month is a mere pittance to fork over to the shylocks in the Politboro when you’ve been deemed prestigious.
Con’t [43];
From Mayor Lenny: Being miserable and treating other people like dirt is every New Yorker’s god-given right. (http://youtu.be/yUC0YTaaQNM)
Moose [43],
Anyone in any industry with a semblance of a conscious should at least reveal two sides of the coin when peddling their product.
“all the other signs are flashing green”
Flashing green shoots!
All this talk of Zestimates and “too big to fail” reminds me of a poster from the old Zillow boards who went by the tag “too big to fail” … I think he was calling for flashing green shoots as early as 2008 :-)
“Anyone in any industry with a semblance of a conscious should at least reveal two sides of the coin when peddling their product.”
Ha! “semblance of a conscious?” You do know that we live in the almighty Capitalist Society, right? there is no conscience…just an invisible hand.
Nicholas [40];
That is absolutely correct that it is a starting point. Some of the other houses while being nearly identical in design do have some upgrades, but they don’t count for much when prices are falling.
http://www.zillow.com/homedetails/15022-Cherrywood-Dr-4M-Laurel-MD-20707/37446842_zpid/
Apparently 1990’s pricing is back in style.
That property is for sale at 70k and it was sold in 1993 for $88,875. That means we are now back into the 90’s on sale price.
Great post!! I really would love to have more information on this subject and be updated on any updates! Thank you very much for sharing!
Doomsday dating sites: ‘Don’t face the future alone’
http://money.cnn.com/2012/03/29/pf/doomsday-dating/index.htm?iid=HP_LN
That link was on the front page of cnn money. Doomsday prepping is more and more popular I guess. It’s getting to be a lifestyle….
Yale’s Shiller: US Could Have Japanese-Style Housing Slump
Thursday, 29 Mar 2012 06:58 AM
By Julie Crawshaw
Yale economist Robert Shiller says the United States could experience a Japanese-style housing slump that lasts for “years and years.”
“I’m worried that home prices have been declining now for about five years,” Shiller told Yahoo Finance. “There’s a lot of downward momentum,” with year-on-year and even month-on-month declines.
“On a seasonally-adjusted basis, it’s just flat.”
Editor’s Note: Wall Street Insider Exposes Death of Main Street America
The big question now, says Shiller, is if the market is poised to recover. “I give it a chance that it is,” he says, citing optimistic reports on consumer confidence and positive news on the employment front.
Shiller noted that many young people who might have been first time homebuyers are living with their parents instead of purchasing their own homes, and many others are opting to live in apartments and other rental housing.
Shiller says the shift toward renting and city living could mean “that we will never in our lifetime see a rebound in these prices in the suburbs.”
“If you’re young and you don’t need to buy, just think what kind of nice, new modern high rise apartment building, with all the exciting things built in you might get in the city. Maybe some people are thinking that way.”
“The big thing is that we haven’t resolved Fannie (Mae) and Freddie (Mac), says Shiller. “This inadequate demand you see is only there because of the government.”
Shiller says people sense that the market is becoming more and more political and are holding back. Technology plays a role as well: As we get better and better at making houses, prices go down. “People won’t want the old ones, so prices will decline,” Shiller says.
Investors, Shilling says, will do better to buying shares in a complex of some sort because “dispersed single family homes are a hard business model.”
Reuters reports there’s a growing list of big and small investors who see fat profits to be made in renting out foreclosed homes, especially now the U.S. government is moving ahead with a trial project to sell big pools of single-family homes that Fannie Mae currently owns in some of the hardest-hit housing markets.
A perpetually sluggish housing market, which Shiller believes has become “more and more political,” might push the country in a “Japan-like slump that will go on for years and years.”
Interview with Robert Shiller 3/27
http://finance.yahoo.com/blogs/daily-ticker/shiller-housing-chance-bottom-suburban-prices-may-not-161914444.html
Shiller should have just wrote this. —> Sell? Sell to Whom?
“Fed data show that only 9 percent of 29-to-34-year-olds got a first-time mortgage from 2009 to 2011, compared with 17 percent 10 years earlier. ”
http://blog.lifecourse.com/2012/03/why-young-adults-arent-buying-homes/?utm_source=rss&utm_medium=rss&utm_campaign=rss
#55 – good stuff. thx for that post.
See the full video and the context of Shillers comments in my post too seif.
http://www.zillow.com/homedetails/8007-Overfield-Ct-Bowie-MD-20715/37504864_zpid/
This property is a real gem. Look at the 9 seat theatre room, quality. I thought about buying this house and renting it out because it is such a great value. I noted that from the zestimate that it could possibly demand $2,446 per month in rent. When I came to the taxes I realized that at 30k per year that taxes alone would be $2,500 per month.
I haven’t laughed that much in a long time. It was a good laugh.
Umm Nicholas, taxes are only $1108/yr on that place.
29 to 34 year olds have trouble committing to a two year data plan let alone a 30 year mortgage.
Juice Box says:
March 29, 2012 at 1:10 pm
Shiller should have just wrote this. —> Sell? Sell to Whom?
“Fed data show that only 9 percent of 29-to-34-year-olds got a first-time mortgage from 2009 to 2011, compared with 17 percent 10 years earlier. ”
[54] brian,
Stockpiling a partner? Never considered making sure I got nooky when TSHTF.
Sounds like JJ’s kind of prepping.
Thanks Brian as I was looking at the assessed value you pointed out my mistake. Doesn’t mean I didn’t laugh alot though, that still holds true.
I usually follow along with “recent price updates” on trulia and zillow and it appears that many are making mad cuts to try to attact the spring market. I’m seeing homes throw down on 15% cuts to attract offers on stale homes. A HUGE number of forclosures have popped up as well as numerous “short-sales”. This market is in huge disarray and that means more price drops.
I saw a 200k condo going up for auction for 20k. I think things could be getting real sour real soon. Perhaps Meat was right.
Shiller’s prediction of a Japanese-like future is way too rosy.
We’re headed straight for Argentine-style default/bank runs/street violence.
Don’t buy any RE whose perimeter you can’t harden.
Nicholas [60];
Pee-Gee Coun-tee? Pass.
#39…did i read that right, $2k a year for home insurance.?
Gary, yesterday discussion, did the budget for our parish school, your numbers are spot on.
I live in PG county right now.
I was having a conversation with a co-worker that said he was aspiring to gentrify an inner city neighborhood. I gave him as deep an eye-roll as I could muster. I get the feeling that there are a lot of younger, afluent people who are making the move towards city living.
Gary, 1987 Condo buyer,
Each of our Abbott “students” are the excuse the government machine uses to spend $22,000.
I won’t send my kid to Catholic schools though, because we are pro-reason atheists. I know some Chinese who do this, and the kids end up thinking their parents are going to He11.
59 – thanks…and WOW, that is some really interesting stuff that shiller says in there. even more so when you can watch him say it…the body language.
http://globaleconomicanalysis.blogspot.com/2012/03/geithner-wants-to-throw-still-more.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29
Vote buying at its finest. More money for fanny and freddie
You know as a logical pro-reason atheist what you personally believe in has no bearing on what actually is. A devout Hindu, Devil Worshiper, Jew or Christian can worship til the cows come home but it won;t change anything.
My favority are the Ethnic Jewish Atheists. Reminds of a Vilage Voice ad I once read, non-practicing jewish single women seeking non-practicing jewish single man for long term relationship.
So they both want to not practice the same religion? Atheists are bit like that, they dont believe in any religion, and they want to no believe in anything as a group. It is like having a book club for people who don’t read books.
A.West says:
March 29, 2012 at 2:30 pm
Gary, 1987 Condo buyer,
Each of our Abbott “students” are the excuse the government machine uses to spend $22,000.
I won’t send my kid to Catholic schools though, because we are . I know some Chinese who do this, and the kids end up thinking their parents are going to He11.
I de-gentrified a neighborhood once. Lot more fun setting fires, spray painting walls and stealing bikes than planting gardens while crackheads pee on you. Meanwhile some people now have gentrified my old neighborhood. You know how hard I had to work to get some street creed with my graffitti tag, then some tree hugger paints it over. I like to pop a cap in this guy.
Nicholas says:
March 29, 2012 at 2:06 pm
I live in PG county right now.
I was having a conversation with a co-worker that said he was aspiring to gentrify an inner city neighborhood. I gave him as deep an eye-roll as I could muster. I get the feeling that there are a lot of younger, afluent people who are making the move towards city living.
Isn’t the Titantic at an inflection point?
For those who are so inclined (I will pass):
Madonna
Madison Square Garden
November 12
Due to overwhelming demand, pop superstar Madonna has added a New York show at
“The World’s Most Famous Arena” this November. She is touring behind her newly released album, MDNA.
A limited amount of presale tickets for this show are available TOMORROW, Thursday, March 29 from 10AM to 5PM, before they go on sale to the general public Friday, March 30 at 10AM.
USE PROMOTIONAL CODE: MADGE
BB [73];
Post of the day! Might as well knock it off early and get a good seat at happy hour.
BB aka JJ,
I don’t define myself by what I don’t believe. I’m pro -reason. But everyone doesn’t immediately recognize that if one is consistently pro-reason, one cannot be a theist.
I could consider a Catholic school that tought only from Thomas Acquinas with an emphasis on his Aristotelian roots, but that’s not going to exist these days. Most atheists I’ve met aren’t really pro-reason, incidentally. They’re just against something.
Of course I think most theists are hypocrites, not practicing what their religions literally tell them to do.
Anyway, privatizing schools would give both secular and non-secular schools the opportunity to compete for customers, rather than the current NJ system of wealth confiscation coupled with state run propagandization of children, union gang warfare, waste.
#68 1987
For interest, what % of the cost does the parental tuition cover and how much does the state/diocese/parish kick in to cover the shortfall?
Gary to close off yesterdays thread. With the closure off so many schools in the past few years you will not have enouugh kids feeding into the system so at least one if not more of the schools you mentioned yesterday will go the way of Patterson Catholic. The catholic/charter/ voucher model is not a viable alternative to the public system. The public system needs reform, not replacement.
BB aka JJ,
I don’t define myself by what I don’t believe. I’m pro -reason. But everyone doesn’t immediately recognize that if one is consistently pro-reason, one cannot be a theist.
I could consider a Katholic school that tought only from Acquinas with an emphasis on his Aristotelian roots, but that’s not going to exist these days. Lots of atheists I’ve met aren’t really pro-reason, incidentally.
Anyway, privatizing schools would give both secular and non-secular schools the opportunity to compete for customers, rather than the current NJ system of wealth confiscation coupled with state run propagandization of children, union gang warfare, and waste.
Hard to pay $100 bucks a ticket to see a 50 something women that 30 years would have blown me for free.
Shore Guy says:
March 29, 2012 at 3:09 pm
For those who are so inclined (I will pass):
Madonna
Madison Square Garden
November 12
Due to overwhelming demand, pop superstar Madonna has added a New York show at
“The World’s Most Famous Arena” this November. She is touring behind her newly released album, MDNA.
Doug Kass sees the RE market a little different than Shiller does.
(note: it was announced today that 60%+ of recent purchases were by investors…backing up shilling’s “why buy when you can rent” theory)
Residential Real Estate Is Ready to Recover
By
DOUG KASS
| MAR 28, 2012 | 12:00 PM EDT | ADD A COMMENT
• inShare0
Stock quotes in this article:
TOL
This commentary originally appeared at 8:39 a.m. EDT on March 28 on Real Money Pro — for access to all of legendary hedge fund manager Doug Kass’s strategies and commentaries, click here.
The housing market’s shadow inventory of unsold homes is starting to clear, certain areas of the country are experiencing signs of more robust activity, and, despite low levels of new-home production (based on historical data), homebuilders are even regaining pricing power in several geographic regions.
Stated simply, the U.S. residential real estate market is about to launch a broad and sustainable multiyear recovery. And, from my perch, the share price strength in housing-related equities is telling the real story of an improving and self-sustaining home market that could continue through the balance of this decade.
As proof of my emerging optimism, I would suggest listening to Toll Brothers’ (TOL) last two earnings conference call presentations and the recent observations made by CEO Doug Yearley in the media.
• Spring selling season is strong. Over the past five years, Toll’s early-spring selling season had sputtered out in late February/early March. In 2012, however, its sales activity is getting stronger as the year progresses.
• Homebuilder pricing power is returning. In fact, Toll Brothers is having its best selling season since 2007. Orders are up “significantly” and nearly 30% of the company’s communities have increased home prices. (A year ago, none had pricing power.)
• The sun shines in Florida. Miami, Florida, one of the epicenters of home speculation in the last cycle, which had been previously inundated with foreclosures two to three years ago, has turned around meaningfully, thanks to an inflow of South American and Northeast U.S. buyers. This turnaround has been in place for nine to 12 months.
• Shadow inventory is clearing. Surprisingly, even some areas of the country that have been adversely impacted by the weight of a large shadow inventory of foreclosed or soon-to-be-foreclosed homes, have improved measurably and are turning the corner. A good example is Phoenix, Arizona, which had over 15 months of supply for sale 12 months ago but now has a developing shortage of inventory (under three months of supply).
• West Coast land prices are soaring. In certain areas of northern and southern California, the raw land market is regaining a speculative tone as prices have risen dramatically. The strength of land prices, while well ahead of the health of the home price market, is typically a leading indicator of industry pricing and activity.
To refresh everyone’s memory, one month ago, I made the case that the foundation of the housing market was firming and the runway for a recovery is lengthy.
It is my expectation that both new- and existing-home prices, which suffered price declines of close to 34% from 2007 to 2011, face a better year ahead in 2012 and over the balance of the decade.
While the housing recovery of 2012 to 2020 will likely start out slowly, owing to the large inventory of unsold homes, still-restricted mortgage credit and the current preference for renting, there is now ample evidence that residential real estate markets have already turned in a national market that has grown bifurcated. Areas of the country that are unencumbered by a large supply of foreclosed properties — for instance, the Washington, D.C.-to-Boston corridor — are doing better. Cancelation rates are down dramatically, and some pricing power is returning for the homebuilders. By contrast, areas such as inland California, Nevada and the like continue to suffer in price and in sluggish transaction activity as a result of the indigestion of the last cycle.
In other words, the weaker regions are masking a developing national recovery in housing that has the potential to be more durable and healthier than the past cycle. (The Case-Shiller index results this week belie the improvement because it is an index of all home prices, not a regional study.)
With a hat tip to Jim Paulsen at Wells Capital Management for providing some charts as evidence, here are the seven main reasons why (in conjunction with the Toll Brothers comments) I expect a durable recovery (in demand, activity/transactions and in prices) in the U.S. housing market:
1. Housing affordability is at a multi-decade high.
2. Reflecting normal U.S. demographic trends (household formations of 1 million-plus per year) and a low level of 2008-2012 new-home production, there is plenty of pent-up demand ready to be unleashed.
3. As rental prices have risen and as home prices have fallen, the economics of home ownership has improved.
4. We have seen a decisive improvement in the jobs market.
5. Mortgage rates are at historic lows.
6. Housing surveys have turned positive.
7. Confidence is improving.
Doug Kass is a lightweight who lost all his cred when he hooked up with Jim Cramer. Funny how one of the biggest shorts of all time got the long religion overnight.
My guess – Fall 2013 is when it gets interesting:
http://www.bloomberg.com/news/2012-03-28/four-numbers-add-up-to-an-american-debt-disaster.html
1) 2.2 percent is the average interest rate on the U.S. Treasury’s marketable and non-marketable debt (February data).
2) 62.8 months is the average maturity of the Treasury’s marketable debt (fourth quarter 2011).
3) $454 billion is the interest expense on publicly held debt in fiscal 2011, which ended Sept. 30.
4) $5.9 trillion is the amount of debt coming due in the next five years.
For the moment, Nos. 1 and 2 are helping No. 3 and creating a big problem for No. 4. Unless Treasury does something about No. 2, Nos. 1 and 3 will become liabilities while No. 4 has the potential to provoke a crisis.
In plain English, the Treasury’s reliance on short-term financing serves a dual purpose, neither of which is beneficial in the long run. First, it helps conceal the depth of the nation’s structural imbalances: the difference between what it spends and what it collects in taxes.
Second, it puts the U.S. in the precarious position of having to roll over 71 percent of its privately held marketable debt in the next five years — probably at higher interest rates.
seif (80)-
My rejoinder to Mr. Kass:
1. Housing affordability is at a multi-decade high.
Clot: Housing was also this affordable when “Brother Can You Spare a Dime” was in the Top 10.
2. Reflecting normal U.S. demographic trends (household formations of 1 million-plus per year) and a low level of 2008-2012 new-home production, there is plenty of pent-up demand ready to be unleashed.
Clot: If only the pent-up demand could be persuaded to get a job that would support a mortgage and upkeep and leave Dad’s basement.
3. As rental prices have risen and as home prices have fallen, the economics of home ownership has improved.
Clot: The economics of home ownership have improved…only if you buy in North Dakota.
4. We have seen a decisive improvement in the jobs market.
Clot: Want fries with that?
5. Mortgage rates are at historic lows.
Clot: Mortgage rates were at historic lows on the day Lehman collapsed (see also: “pushing on a string”).
6. Housing surveys have turned positive.
Clot: Where else could James Cameron go once he hit the bottom of the Mariana Trench?
7. Confidence is improving.
Clot: That “confidence” is backed by the financial version of Ci@lis.
Serious Question. What is up with people job hunting with no Linkedin picture? I mean I have seen a few recently who are unemployed with no picture. Are they fatties or something. Plus when they show up am I supposed to go to reception and try to figure out who they are, what is this the old dating game or the TV show the Voice.
Do they think if you look like Edward Sissorhands if you dont put a picture up it helps. Really, everyone nowdays has access to digital cameras and most likely already have hundreds of digital photos of themselve. Pick the best shot out of 500 and put it up. Putting none means you are a lazy jobhunter or Jayson from Friday the 13
We’re all waiting for jj to post a pic of himself here…and for moose to disclose what he does for a living.
#JJ
I’ve seenn your linked in picture … :*)
83 – i agree with you. it’s amazing how pumped up and bullish he can be while at the same time Shiller is pretty much saying the opposite.
Here is a pic of our very own JJ the accounting savant.
http://i.dailymail.co.uk/i/pix/2009/08/07/article-1204985-05F9368A000005DC-127_468x729.jpg
Rex Ryan used that picture to get his job with the Jets.
But seriously, I know the age anyhow on most candidates as they have their college graduation dates sometimes. Most are normal looking. What is big deal for a person under 30 to post a picture? They blast thousands of shots on Facebook, but not one single on on their professional profile.
Here is a pic of our very own JJ the accounting savant.
http://i.dailymail.co.uk/i/pix/2009/08/07/article-1204985-05F9368A000005DC-127_468x729.jpg
Juice Box says:
March 29, 2012 at 3:58 pm
Here is a pic of our very own JJ the accounting savant
89 – they (don’t) do it just to annoy employers like you. i’ll let them know it is working.
#78 for the grammar school, we have no subsidy except from the parish and the arch diocese limits that amount and continually reduces it. So maybe 15% can come from the church revenues. The vast majority of high schools are totally independent in New Jersey, as opposed to NYC where the arch diocese subsidizes, to the tune of $10,000. My brother pays $6500 a year…i pay closer to $15,000.
As far as religious content, i don,t think they are taught enough in grammar school, and my son came out of SHP asking more questionsvthan he had before!
Nice property (foreclosure auction) in the precious borough of Montclair (http://www.auction.com/New-Jersey/residential-auction-asset/1314792-2124-195-Walnut-St-MONTCLAIR-NJ-07042-O186)
I like the bit about “BUYER ASSUMER RESPONSIBIILTY OF OCCUPANCY”. Deadbeat holdovers in Montclair? What is this world coming to?
64.
Nicholas,
I agree. Theres a brand new house by me that foreclosed in 2009. It wasnt listed for 3 years. It finally sold to an investor for 180k off the listing price. Someone got one heck of a deal.
If I was optimistic about our countries future I would be on the hunt for value as well. The problem is things are going to get much much worse.
70.
The Chinese grew up under communism which is the antithesis to religion. The communist religion is g_overnment. Now thats a holy war I could fight in.
That being said, we could use some of those Chinese over here to clean up this real estate mess.
78.
Fabius,
There are many problems with public education but the biggest is how it is funded. The school funding formula must be changed. My solution is to eliminate public education funding from property taxes. Let the Goddard school, Ranney, or any of the other private schools compete for kids by giving parents an education stipend from the state. The revenue would come from a consumption tax.
This is a big step towards eliminating property taxes altogether.
[83] “If only the pent-up demand could be persuaded to get a job that would support a mortgage and upkeep and leave Dad’s basement.”
Post of the day!
Hiiii fiveer
Go long debt.
I remember when back when Regan was president and 1 Trillion was a big number.
http://www.youtube.com/watch?v=gIp4JvKL9Oo&feature=player_embedded
Captain Sunshine for President
..Supermassive swirling solar tornado 5 times the size of Earth
..By Tecca
We’re not sure your standard tornado shelter will keep you safe from this one
Tornadoes can be absolutely devastating here on Earth, costing billions of dollars yearly in property damage. But even the most severe of Earthly tornadoes has nothing on this behemoth: Scientists have recently discovered a massive supertornado on the surface of the Sun five times bigger than our own planet.
The swirling gas was discovered by NASA’s Solar Dynamic Observatory satellite in September 2011. News of the tornado’s existence was presented to the National Astronomy Meeting 2012 today in England. Clocking in at 186,000 miles per hour, the speeds of this tornado absolutely dwarf those of a storm on Earth. Terrestrial storms don’t exactly get as hot as this tornado either: The solar storm’s temperature ranges between 90,000 and 3.6 million degrees Fahrenheit.
While scientists have viewed large solar tornadoes in the past, this one is easily the biggest ever observed. The cause of the storm is believed to be the twisting of the Sun’s magnetic field
Another day in hell.
#97 Al,
There is a lot of flaws in that design. The obvious is when you take this up to the state level, why should I subsidize your choice of school. On a more practical level, is the state paying to bus your kids to your choice of school or is that on your dime? What happens if you can’t afford the busing costs.
The big overriding issue is that Goddard/Montessori/Catholic school get to pick and choose what students they accept. Public schools have to take all comers even those that have been bounced out when their private school closes. When you bring in “for profit” into any system, you are then subject to the drive for shareholder value. Why should the for profit entity be in the market if there is not a good profit to be made. In all the discussion on Abbot schools, one big point gets missed. The biggest waste of funds is that they have to pay private sector providers and for the most part they are ripping off the system. One big difference between NY and NJ is that NY can shift the public school teachers through the system. So staffing the sh1t neighborhoods is not such a big problem. In NJ we have the 500 little fiefdoms. But with that, the choice for the fiefdoms is that of the people and is protected by the constitution.
Clot while getting ready for this weekend, do you remember this gem. I remember watching this game, while the score went against you, it was a fantastic game.
http://www.youtube.com/watch?v=6IyRjEErTbU
What happened with that nice guy Colymore?
195.
“The big overriding issue is that Goddard/Montessori/Catholic school get to pick and choose what students they accept”
We are long past the point of saving everyone. You will see this in spades very soon. Dont mistake me for an idealist. The idea of collectivism is crumbling to the ground in front of your eyes. If your want to wager against me buy a condo. I dare ya.
105,
To go further Fabius would introduce a Constitutional argument for which I no longer have the patience for. Its long past the time of verbal argument.
#107 Al
Well I see you missed the point of that post.
I don’t see you as an Idealist, I see you more of a James (anyone remember him?).
Moose, I never said tax sales were on the level. What I said was, the taxes are not discounted. Even the guys who rigged the bidding didn’t get discounts, they got higher interest rates.
If you are going to state that I said something, please get it right.
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