July home prices continue cooling trend, still up strongly from last year

From the WSJ:

U.S. Home Price Growth Slows Again in July, Says S&P/Case-Shiller

The yearly growth in home prices across the U.S. slowed more than expected in the middle of summer, according to a home price report released Tuesday.

The home-price index covering the entire nation increased 5.6% in the 12 months ended in July, said the S&P/Case-Shiller Home Price Index report. That is down from 6.3% in June. U.S. home prices were rising at double-digit yearly rates as recently as February 2014.

The home-price index covering 10 major U.S. cities increased just 6.7% in the year ended in July. The 20-city price index was also up 6.7%, less than the 7.3% expected by economists surveyed by The Wall Street Journal.

On an unadjusted basis, the national index increased 0.5% in July over June, while the 10-city index and the 20-city composite each increased 0.6%. Seasonally adjusted, the U.S. index increased 0.2% in July, the 10-city gauge and the 20-city composite each fell 0.5%.

“While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.

“The slower pace of home price appreciation is consistent with most of the other housing data on housing starts and home sales,” he said. “The rise in August new home sales–which are not covered by the S&P/Case-Shiller indices–is a welcome exception to recent trends.”

Regionally, cities in the south and west that saw the largest price cuts during the recession, are seeing some of the strongest price increases now. But even in areas like Las Vegas and Miami, the yearly gains have slowed.

This entry was posted in Demographics, Economics, Housing Recovery, National Real Estate. Bookmark the permalink.

93 Responses to July home prices continue cooling trend, still up strongly from last year

  1. grim says:

    From Trulia:

    Trulia: Home prices 3% undervalued by historic measure

    Trulia Chief Economist Jed Kolko says that despite the current deceleration in home prices worrying some, and claims from others that home prices are too high, home prices nationally are actually 3% undervalued in the third quarter of 2014.

    “In 2006 Q1, during the past decade’s housing bubble, home prices soared to 34% overvalued before dropping to 13% undervalued in 2012 Q1,” Kolko writes. “One quarter ago (2014 Q2), prices looked 5% undervalued; one year ago (2013 Q3), prices looked 6% undervalued.”

    The most overvalued market is now Austin, at 19%, followed by the California metros of Los Angeles, Orange County, San Francisco, and Riverside-San Bernardino. The California metros on the top-10 list were all significantly overvalued during the past bubble, ranging from 46% overvalued in San Francisco to a dizzying 87% in Riverside-San Bernardino. By contrast, Austin and Houston are the only metros out of the 100 largest that look more overvalued today than in 2006. Texas markets avoided the worst of the housing bubble during the past decade. Recently, they’ve had double-digit home-price increases.

    Almost all of the most undervalued metros today are in the Midwest and New England, led by Dayton and Cleveland. One year ago, Las Vegas and two Florida metros, Lakeland-Winter Haven and Palm Bay- Melbourne-Titusville, were on the most-undervalued list. Since then, price gains have lifted them off this list. In the past year, price gains in the undervalued Midwestern markets like Detroit have outpaced price gains in the undervalued New England markets like New Haven.

  2. grim says:

    Allentown, PA-NJ 12% undervalued
    Hartford, CT 14% undervalued
    Camden, NJ 15% undervalued
    Edison-New Brunswick, NJ 3% undervalued
    New York, NY-NJ 3% undervalued
    Newark, NJ-PA 9% undervalued
    Philly, PA 7% undervalued
    Wilmington, DE-MD-NJ 10% undervalued

  3. grim says:

    CS Tiered Prices, July 2014 – NY Metro

    (Under $277936)
    Year over Year – 3.7%
    Two Years – 10.3%

    ($277936 – $449928)
    Year over Year – 3.6%
    Two Years – 8.0%

    (Over $449928)
    Year over Year – 4.2%
    Two Year – 7.1%

    Aggregate
    Year over Year – 3.8%
    Two Year – 7.2%

  4. Comrade Nom Deplume, a.k.a. Captain Justice says:

    [1] grim,

    The NE market, and Mass/NH in particular, used to be hot and overvalued. I can’t help but notice that there is a correlation between valuation and political leaning (NE has become considerably bluer). Not sure there is causation to go with it unless the next paragraph bears out.

    I was also struck at how the this valuation metric roughly mimics migration and economic activity. The areas deemed overvalued are seeing massive inflows of people, and it appears they are following the jobs since those same markets have been seeing employer migration (e.g., Texas). This makes perfect sense. So, it stands to reason that the inverse is true of undervalued states, notably the Midwest, but I haven’t seen enough on that to say. It could be outmigration or it could just be hangover from the bubble. More study is needed.

  5. Comrade Nom Deplume, a.k.a. Captain Justice says:

    How to make a millennial’s head explode:

    “Advanced economies face “permanently weak demand” warned the International Monetary Fund (IMF) on Tuesday, which argued “the time may be right for an infrastructure push”.

    According to the organization, infrastructure investment is “one of the few remaining policy levers available to support growth”

    OTOH, they will cheer enthusiastically for it. OTOH, they might realize that they, and not the soon-to-be-elsewhere rich and multinationals, will wind up paying for it.

  6. Jose "Kansas" Jimenez says:

    Comrade, for you. It will answer your question.

    http://www.nytimes.com/2011/11/14/us/as-small-towns-wither-on-plains-hispanics-come-to-the-rescue.html?pagewanted=all&_r=0

    Published: November 13, 2011

    ULYSSES, Kan. — Change can be unsettling in a small town. But not long ago in this quiet farming community, with its familiar skyline of grain elevators and church steeples, the owner of a new restaurant decided to acknowledge the community’s diversity by adding some less traditional items to her menu. Cheeseburgers. French fries. Chicken-fried steak.

    “American food,” the restaurant owner, Luz Gonzalez, calls it. And she signaled her move by giving her Mexican restaurant a distinctly American name: “The Down-Town Restaurant.”

    Such fare was all but extinct in a place where longtime residents joke — often with a barely disguised tone of frustration — that the dining options are Mexican, Mexican or Mexican. After the last white-owned restaurant serving American favorites closed this year, it fell to one of the recent Hispanic arrivals to keep the burgers-and-fries legacy alive. Ms. Gonzalez even enlisted the help of neighbors to teach her to cook more exotic dishes — like potato salad.

    For generations, the story of the small rural town of the Great Plains, including the dusty tabletop landscape of western Kansas, has been one of exodus — of businesses closing, classrooms shrinking and, year after year, communities withering as fewer people arrive than leave and as fewer are born than are buried. That flight continues, but another demographic trend has breathed new life into the region.

    Hispanics are arriving in numbers large enough to offset or even exceed the decline in the white population in many places. In the process, these new residents are reopening shuttered storefronts with Mexican groceries, filling the schools with children whose first language is Spanish and, for now at least, extending the lives of communities that seemed to be staggering toward the grave.

    That demographic shift, seen in the findings of the 2010 census, has not been uniformly welcomed in places where steadiness and tradition are seen as central charms of rural life. Some longtime residents of Ulysses, where the population of 6,161 is now about half Hispanic, grumble over the cultural differences and say they feel like strangers in their hometown. But the alternative, community leaders warn, is unacceptable.

    “We’re either going to change or we’re going to die,” said Thadd Kistler, a lifelong resident who recently stepped down as mayor. “This is Ulysses now, this is the United States now, this immigration is happening and the communities that are extending a hand are going to survive.”

    After years in which mostly white communities throughout the region used gimmicks to lure new residents with limited success, like offering free land or lengthy tax abatements, many are wondering if this unexpected multicultural mix offers one vision of what the future of the rural Great Plains may look like.

    “The face of small towns is changing dramatically as a result,” said Robert Wuthnow, a Kansas-born Princeton professor who studied the Hispanic influx for his book “Remaking the Heartland: Middle America since the 1950s.” “The question is: Is this going to save these small towns?”

    There has long been a strong Hispanic presence throughout the region, which is rich with difficult work in meatpacking plants and on farms, feedlots and oil fields. But over the last decade, as their population in the rural Great Plains spiked by 54 percent — a figure comparable to gains in metro areas in the region — Hispanic residents have pushed from hubs like nearby Dodge City, Garden City and Liberal into ever smaller communities, buying property on the cheap, enticed, many say, by the opportunity to live quiet lives in communities more similar to those in which they were raised.

    In the sparsely populated western half of Kansas, every county but one experienced a decline in the non-Hispanic white population, two-thirds of them by more than 10 percent.

    At the same time, a vast majority experienced double-digit growth in Hispanic population, more than offsetting the declines in seven counties and many smaller cities and towns. Those places with the highest percentage of Hispanic residents tend to have the lowest average ages, the highest birth rates and the most stable school populations.

    “These towns, I don’t know what they would do without Mexicans,” said Oscar Rivera, a Honduran immigrant who lives in a community of a few hundred people and travels through rural parts of western Kansas selling prepaid phone cards used to call overseas. “It would be like ghost towns.”

    One such town is Bazine, about two hours from here and little even by the standards of its neighbors. The decaying strip of downtown stores was abandoned long ago, and empty houses dotted the surrounding streets. A few years back, the high school closed and the building was sold on eBay. There was talk about shutting the elementary school as well.

    “The decline was happening,” said Patricia Showalter, the mayor, standing inside the little post office she runs. “And then the Hispanic people came.”

    For the first time in more than a half century, the population grew in the latest census, inching up to 334 as the Hispanic population jumped to 86 from 4. Now every house in town is occupied. A new church, La Luz del Mundo, just opened. Though there are no new businesses on Main Street, some entrepreneurial newcomers sell homemade tamales door to door.

    And, most importantly to those who had watched the town become ever older, the school enrollment is growing.

    In neighboring Ransom, which is almost entirely white, the student population has declined to 34 from 62 in the last eight years. Meanwhile, in Bazine, the numbers have increased to 46, up from 35. The average age in Ransom is 15 years older than in Bazine.

    In Ulysses, which grew a modest 3 percent over the last decade, much appears unchanged by the years. Livelihoods are still tied to the earth, where people grow wheat and corn in the dusty soil, drill for the generous deposits of oil and gas beneath the surface and feed cows inside muddy pens that line the roads. Churches — there are more than a dozen — still play an important role, and the pace is still slower than what one usually experiences in a bigger city.

    But the influx of Hispanics, a majority of whom were born in Mexico, has left an unmistakable impact.

    Rachel Gallegos remembers that as a young girl she was the only Hispanic student in her class and her parents’ Mexican restaurant was the first Hispanic business in town. Now, Hispanics make up two-thirds of the school population and own bakeries, clothing stores, car dealerships and computer repair shops, some catering to Hispanics and others simply filling vacant niches.

    And when children become adults, a time when residents have historically headed to bigger communities seeking opportunity, her family was becoming rooted in the community — Ms. Gallegos said that of her nine siblings and their two dozen children, all but a couple remained.

    Ginger Anthony, director of the Historic Adobe Museum, which chronicles the history of the onetime frontier town, discussed the changes with dismay, pausing repeatedly to reiterate that she did not want her criticism to seem “politically incorrect.” She is so unnerved, particularly by illegal immigrants, that she recently started locking her door — saying that the police-beat column in the local paper disproportionately features Spanish surnames.

    “This wave of new people coming into the Midwest, it’s not always a good thing,” she said, as a co-worker nodded in agreement. “If you talk to the average working person, a lot of them are sort of fed up. Our town isn’t what it was.”

    But Hispanic residents here say they have been mostly well received, even if the non-Hispanics sometimes keep their distance. There are exceptions, like when students at a neighboring high school showed up to a basketball game in sombreros and tossed tortillas onto the court.

    Jose Olivas, a longtime community developer with Mexican American Ministries, said that it took years of pressure to hire Hispanic employees at schools and at some businesses. Now employers are taking Spanish lessons, and expressing preference for bilingual job applicants.

    “For a while you had to be careful,” Mr. Olivas said. “But they’ve really changed their attitudes.”

    Mr. Kistler, the former mayor, agreed that there were culture clashes, but said they were slowly dissipating.

    “At first every community, including Ulysses, was very unwelcoming, but a lot of that was because we wanted to hold on so tight to what we were,” he said. “In the last five years, we’ve really seen that they’re here, they’re staying, they’re part of the community. We’ve kind of gotten used to each other.”

    Part of that has been dictated by demographics.

    At the hospital in town, exactly half of the 102 babies born last year were Hispanic. And in a telling sign of the future of the community, 13 babies were listed as having one white and one Hispanic parent.

    This article has been revised to reflect the following correction:

    Correction: November 15, 2011

    Because of an editing error, an article on Monday about the growing Hispanic population in small rural towns throughout the Great Plains misstated, in some editions, the population for one of the towns, Ulysses, Kan. In the 2010 Census, the population was 6,161, not 6,933. And also because of an editing error, the article referred incorrectly in some editions to the decline in the non-Hispanic white population in western Kansas. It declined in all counties but one (Ellis County) — not in all counties.

  7. Fast Eddie says:

    To say our area is undervalued is pure f.ucking bullsh1t and we all know it. Everyone spewing these “numbers” is in the business of pushing houses. What do you expect them to say, the actual truth? Let’s put the pom poms down, shall we? What happens when the Fed pulls the plug?

  8. Toxic Crayons says:

    I for one am glad hard working Catholics with strong family values want to live in the US. However, I want us to accept the ones who are looking for freedom and opportunity in the US…not the ones looking for free education, free healthcare, or other entitlements.

  9. Toxic Crayons says:

    8 – continued….

    It’s not all or none. Each individuals motivation is important. “Immigration Reform” should mean we change the system to accept immigrants who bring a certain value, skill or culture that has a positive impact on the nation….without being mired in bureaucracy.

  10. grim says:

    The problem with comparing regions like Texas with the Northeast is that the dynamic around development is wildly different. The Northeast is largely rehab and infill development, and the Southwest and South are largely mass-scale new development. If you lived your life in the Northeast, and spend any appreciable time around the growing areas of Texas and you’ll be shocked at the housing developments. Small developments are measured in hundreds, large developments measured in thousands, and there are new developments everywhere. And even still there are massive swaths of land waiting to be developed (I’d argue that undeveloped land in Texas is largely worthless comparatively). The other interesting thing about these markets is that the resale sub-market tends to be very weak, unlike the Northeast where it is the predominant market. We joke about calling them “used houses”, but that’s *exactly* what their called in Texas. I told the story here a few times about the Texas Ex-pat I met who stated something to the effect of, “Ew, who buys used houses?”.

    I don’t look at areas like Texas as being strong, even though they are showing price growth, the issue is that there is no upward limit on supply, and they could easily find themselves massively oversupplied with housing. The resale market could find itself absolutely decimated, very easily.

  11. All Hype says:

    Gary (7):

    This one is for you. What would happen if you had a 42% attendance for important meetings at work.

    http://www.breitbart.com/Big-Peace/2014/09/30/State-Dept-on-Obama-Intel-Briefings-He-Receives-Those-Whenever-He-Can

  12. grim says:

    An easy way to look at it is:

    2 $350,000 houses, one in Texas, one in NJ.

    The NJ – You are paying $300,000 for the dirt, and $50,000 for the house.

    In Texas – You are paying $50,000 for the dirt, and $300,000 for the house.

    Which is why you get such a larger, nicer, new house for your money in Texas.

    But with 20 years depreciation, and assuming 3% annual inflation on the property, zero real appreciation.

    In NJ – The land is now $541,800, and the house is worth half, $25,000.
    In Texas – The land is now $45,200 and the house is worth half, $150,000.

  13. 1987 Condo says:

    #10…folks out in Southwest and even mid west would find it abhorrent to buy a used home, people actually “used” the toilets and showers…gross!!!!

  14. anon (the good one) says:

    @WSJCentralBanks: US auto sales figures suggest “consumers are willing to make big-ticket purchases;” should ease fears of soft consumer spending. – Barclays

  15. anon (the good one) says:

    “Private payrolls rose about in line with expectations in September, thanks to sharp growth in small business and service sector hiring, according to a report.
    ADP and Moody’s Analytics said companies created 213,000 new positions.”

  16. Just wait until the bike path is finished. It’ll be bleeding wealth, and RE agents will be telling people like Gary to move to Iowa if they can’t hit the bid.

    “Camden, NJ 15% undervalued”

  17. gary (7)-

    Bwahahahahahaha!!!! Will never happen, my friend…and you and I know it. The rats in the FedCo Skinner Box will keep pulling the lever until the whole doomsday contraption (aka “the economy”) goes up in smoke.

    “What happens when the Fed pulls the plug?”

  18. anon (14)-

    You conveniently forgot to mention that even a dead person can get a car loan.

  19. Monkey see, monkey do:

    “In a striking admission that Mario Draghi’s “strategy” about the ECB’s Private QE future, aka ABS monetization plan, is nothing short of converting Europe’s central bank into a “bad bank” repository for trillions in bad and non-performing debt, the FT yesterday reported that “Mario Draghi is to push the European Central Bank to buy bundles of Greek and Cypriot bank loans with “junk” ratings, in a move that is set to exacerbate tensions between Germany and the bank.” It is expected that the former Goldmanite will unveil details of a plan to buy hundreds of billions of euros’ worth of private-sector assets at tomorrow’s ECB meeting.”

    http://www.zerohedge.com/news/2014-10-01/germany-throws-over-draghi-plan-buy-greek-junk

  20. Michael says:

    Well said. It’s exactly why I tell people leaving the northeast for the south or southwest that they are making a huge mistake. Getting lured by cheap house prices, never ever asking why is it so cheap. In Texas, they need to adjust the foundation of their home every so often. Good luck with that.

    I would like to add that the article jj posted about buffet’s home is purely biased. Buying a home in middle America is worthless. If he bought that home instead in Hawaii, sf, la, boston, NYC, northern nj, or dc area.. I wonder how much it would be worth. Someone needs to tell buffet to stick to buying stocks with insider information. He clearly doesn’t know what the hell he is doing when it comes to real estate. Also, what kind of loser has an endless supply of money and lives in the same home he bought when he was young. What a loser. Why are you even making money if you don’t spend it or need it. Seems like the guy is an idiot when it comes to anything but stocks.

    grim says:
    October 1, 2014 at 8:03 am
    The problem with comparing regions like Texas with the Northeast is that the dynamic around development is wildly different. The Northeast is largely rehab and infill development, and the Southwest and South are largely mass-scale new development. If you lived your life in the Northeast, and spend any appreciable time around the growing areas of Texas and you’ll be shocked at the housing developments. Small developments are measured in hundreds, large developments measured in thousands, and there are new developments everywhere. And even still there are massive swaths of land waiting to be developed (I’d argue that undeveloped land in Texas is largely worthless comparatively). The other interesting thing about these markets is that the resale sub-market tends to be very weak, unlike the Northeast where it is the predominant market. We joke about calling them “used houses”, but that’s *exactly* what their called in Texas. I told the story here a few times about the Texas Ex-pat I met who stated something to the effect of, “Ew, who buys used houses?”.

    I don’t look at areas like Texas as being strong, even though they are showing price growth, the issue is that there is no upward limit on supply, and they could easily find themselves massively oversupplied with housing. The resale market could find itself absolutely decimated, very easily.

  21. Michael says:

    20- it’s like making this comparison. Buying a loser stock 60 years ago and using it as a comparison for why you should invest in real estate instead. Both investments can make you rich, you just have to be extra smart when it comes to real estate.

  22. FKA 2010 Buyer says:

    http://www.zerohedge.com/news/2014-09-30/americas-all-important-housing-market-flashing-red-after-bad-data-double-whammy

    When it comes to critical housing markets in the US, none is more important than San Francisco.

    Courtesy of its location, not only does it reflect the general Fed-driven liquidity bubble which is the tide rising all housing boats across the US, but due to its proximity to both Silicon Valley and China, it also benefits from two other liquidity bubbles: that of tech, and of course, the Chinese $25 trillion financial debt monster, where since the local housing bubble has burst, local oligarchs have no choice but to dump their cash abroad.

  23. Michael says:

    Exactly, those people are screwed 20 years from now. They should get a bumper sticker that says “Texas is for suckers”.

    grim says:
    October 1, 2014 at 8:10 am
    An easy way to look at it is:

    2 $350,000 houses, one in Texas, one in NJ.

    The NJ – You are paying $300,000 for the dirt, and $50,000 for the house.

    In Texas – You are paying $50,000 for the dirt, and $300,000 for the house.

    Which is why you get such a larger, nicer, new house for your money in Texas.

    But with 20 years depreciation, and assuming 3% annual inflation on the property, zero real appreciation.

    In NJ – The land is now $541,800, and the house is worth half, $25,000.
    In Texas – The land is now $45,200 and the house is worth half, $150,000.

  24. grim says:

    Buffett lives in a very upscale neighborhood in Omaha, I’ve driven through it more than once. At no point in recent history would that neighborhood have ever been considered “modest”. Sure, the prices are lower than say, New York City, but relative to the area, he lives in the equivalent of Short Hills, in fact it looks very much like the nicest areas of Short Hills or Summit. That neighborhood is almost exclusively those who were able to make significant wealth off of the telecom and financial services industries.

    It’s very common to see homes for sale in other neighborhoods of Omaha in the sub $100k price range, nice homes in Buffett’s neighborhood commonly will push into the millions or higher. Median home price for Omaha is about $130k, I’d say his neighborhood would easily be $750k or higher, something like 6x the median home price. Looking at it from a median income perspective, his neighborhood median home price is something like 14x the city median income.

    To put it in perspective, Bergen County has something like a $420k median home price, applying the same Buffett multiplier of 6x, it would mean he would be living in the equivalent of a neighborhood in BC with a $2.4 million median home price, say, like Alpine.

    This shit about “modest” home is nonsense. He bought in the best neighborhood and did very well.

  25. Fast Eddie says:

    I would love to see the total number of residential transactions in Bergen/Passaic from 2003 through 2008. It’s a mind-numbing number of closings. Take that number and you’ll have the number of households suffering a degree of loss. Don’t tell me how some could absorb it. Whether you paid cash or had a 103% LTV, you still suffered a puncture wound to the gut.

    The fact is, most can’t absorb it because they don’t have the financial muscle and some went further and banged the joint for more in the form of a HELOC. Little did they know that we’re getting played like a Fischer-Price piano.

  26. Michael says:

    Now you know why the American elite stopped caring about the bottom 50%. They could care less about Hispanics. They are happy when they come, this way they don’t have to move their business to another country to take advantage of cheap labor and they save on shipping costs. This might sound crazy, but if America was predominately white right now, would we be seeing the standard of living going down as much as it is now? I think the huge Hispanic population drags our avg salary down. Even if a Mexican had a college education and skills, they will still take advantage because they are Mexican. They will never get paid as much as white people. So can you say that the influx of Mexicans and other Latinos has been keeping our wages down in the statistics? When did latino’s start coming here….say 30-40 years ago. Right around the same time that the stats starting saying wage growth became non-existent. So could these people have been the cause for the decline in wage growth? You know damn well they bring down the stats. Most of them act like they don’t have a job, so they collect unemployment while working their cash job. This has to throw a wrench when looking at wage statistics.

    Jose “Kansas” Jimenez says:
    October 1, 2014 at 7:38 am
    Comrade, for you. It will answer your question.

    http://www.nytimes.com/2011/11/14/us/as-small-towns-wither-on-plains-hispanics-come-to-the-rescue.html?pagewanted=all&_r=0

  27. Michael says:

    26- Btw, when is this country going to step it up and make English the national language. It’s bs that I was born in this country and can’t communicate in certain parts of it. In Europe, everyone can speak English. The USA, not at all true. Now that’s sad.

  28. Comrade Nom Deplume, a.k.a. Captain Justice says:

    [6] jose,

    It really doesn’t. It suggests a change in demographic makeup, but not in in-/outmigration. It could explain the valuation lag in some respects: Sellers are selling for less to minorities who cannot afford to pay more. But it doesn’t explain why Austin is busting at the seams with people and more flowing in every day, driving up prices, but the Midwest and NE is (presumably) not seeing the valuation growth.

  29. Michael says:

    Eddie, can they make the monthly payment? As long as they can, the current price of the asset does not matter. It only matters when they sell. If they can make the payments and can hold out for prices to return, they are not in trouble.

    Fast Eddie says:
    October 1, 2014 at 9:28 am
    I would love to see the total number of residential transactions in Bergen/Passaic from 2003 through 2008. It’s a mind-numbing number of closings. Take that number and you’ll have the number of households suffering a degree of loss. Don’t tell me how some could absorb it. Whether you paid cash or had a 103% LTV, you still suffered a puncture wound to the gut.

    The fact is, most can’t absorb it because they don’t have the financial muscle and some went further and banged the joint for more in the form of a HELOC. Little did they know that we’re getting played like a Fischer-Price piano.

  30. Comrade Nom Deplume, a.k.a. Captain Justice says:

    [10] grim,

    “there is no upward limit on supply, and they could easily find themselves massively oversupplied with housing. ”

    So you don’t see countervailing forces from infrastructure and land capacity? By some accounts, Houston and Austin have severe infrastructure deficits. Further, the water supply there is becoming (has become?) critical. Other parts of the South that grew quickly experienced the same thing. So would not the natural ability of the area to handle growth (or not) be a drag on said growth?

  31. Toxic Crayons says:

    27 – My kid is being taught Spanish in Kindergarten.

  32. grim says:

    30 – They are quickly outbuilding their infrastructure capacity, knowing full well they have significantly under-invested. The piper will be paid when these areas will be forced to make massive infrastructure investments to keep up, which will result in significant increases in property taxes, surcharges, special assessments, fees, etc. There is no free lunch.

  33. Fast Eddie says:

    Michael,

    Eddie, can they make the monthly payment? As long as they can, the current price of the asset does not matter. It only matters when they sell. If they can make the payments and can hold out for prices to return, they are not in trouble.

    That’s a lot of assumptions, Michael. Why don’t we ask the guy standing on the train platform in Ridgewood, whose house is currently worth 20% less than what he paid for it?

  34. 1987 Condo says:

    #30…shhhhhhh.. on the water…..(that might actually be a problem!)

  35. grim says:

    Bergen County Closed Sales – SFH/Condo/TH/Coop
    2003 – 10150
    2004 – 10684
    2005 – 10629
    2006 – 8657
    2007 – 8045
    2008 – 6088
    Total – 54253

    I’d remove at least 5% of these as properties that have been resold, that brings it down to about 57109. The number is probably much higher, and higher yet if you include foreclosures, but I’ll be conservative.

    Total households in Bergen County are probably running about 340,000 right now.

    Which means about 16.8% of Bergen County households are in Eddie’s problem category.

    I’d argue that any survivors from 2003 or 2004 at this point, should probably not be included, they have more than 10 years of payments in at this point, and have likely refinanced for considerable monthly savings. That would make the number closer to 9% of all BC households. This is excluding multi-family, but given the increase in rents, I suspect most multifamily owners aren’t doing nearly as poorly.

  36. The Original NJ ExPat says:

    Main article – interesting data set, but speaking for gary and myself, there is a problem. Property taxes are not considered AT ALL in the undervalued/overvalued calculation which is fine for Alabama, but not NY metro. In fact, the methodology itself skews the numbers doubly in high property tax areas. Why? Because They are comparing home prices to rents. Property taxes are an additive component of rent but a reductive component of purchase price. If you want to compare rents to purchase price, fine. Just make sure you subtract out the property tax component from the rents first.

    “[W]e assess whether home prices are overvalued or undervalued relative to their fundamental value by comparing prices today with historical prices, incomes, and rents. Incomes determine how much people can pay for housing, and price increases aren’t sustainable if they push prices too high relative to incomes. Rents reflect how much people value housing even if they won’t benefit from price appreciation (as renters don’t, but owners do); the price-to-rent ratio is like the price-earnings (P/E) ratio for stocks. Using data from multiple sources (see footnote), we create several measures of fundamental value and combine them in order to calculate how overvalued or undervalued home prices are relative to fundamentals.”

  37. The Original NJ ExPat says:

    Comments are to the Trulia article, not the main.

  38. Comrade Nom Deplume, a.k.a. Captain Justice says:

    [31] toxic

    Mine started in Pre-K. Admittedly it is baby Spanish, and little more than I taught her previously.

    Funny story there: I was driving my younger one somewhere when she was three. I asked her to count in Spanish and she said, very slowly “Uno, dos, tres, cuatro, cinco.”

    I gushed “Very good honey, you are such a smart little girl” whereupon she got all excited and shrieked “Now I can go to Villanova!”

    I damn near ran off the road from laughing so hard.

  39. jj says:

    Property taxes as well as homeowners are also crazy in messing with percentage increase.

    Take a blue collar LI town like Island Park NY where homes cost 250K and taxes are dirt cheap as they have low assessed values, no High School and a huge LIPA/PSEG plan in town that pays a ton of taxes.

    Now go over to Rockville Centre (RVC) a rich town just three miles away.

    Realtors will tell you “percentage wise” increases faster than Island Park. But an average home is one million in RVC so tons of use of funds tied up or an expensive mortgage. Property taxes are going from 6k to 24k and homewoners insurance, heat electric etc on a one million dollar home vs 250K home is night and day. But back all that out and RVC is rising 6% a year double what Island Park is rising at 3% a year. Which is the better investment? Hard to say if you live there as maybe you like RVC so much more, but as an investment hands down Island Park.

    My tenant could care less if I have a mortgage or not, what my property taxes are, insurance is etc.

  40. grim says:

    The Trulia Bubble index is shit, it’s like ranking high schools. Even in the two bubbles we’ve witnessed here in NJ, the nature of the bubble was very different across both. The 80s bubble was driven by overbuilding (supply side), the 00s bubble was driven by overbuying (demand side).

  41. jj says:

    Villanova in Spanish means House No Go – which is perfect for a housing bear

    Comrade Nom Deplume, a.k.a. Captain Justice says:

    October 1, 2014 at 10:05 am

    [31] toxic

    Mine started in Pre-K. Admittedly it is baby Spanish, and little more than I taught her previously.

    Funny story there: I was driving my younger one somewhere when she was three. I asked her to count in Spanish and she said, very slowly “Uno, dos, tres, cuatro, cinco.”

    I gushed “Very good honey, you are such a smart little girl” whereupon she got all excited and shrieked “Now I can go to Villanova!”

    I damn near ran off the road from laughing so hard.

  42. Toxic Crayons says:

    3 tranquilizer darts later, 400-pound black bear is captured in Ridgewood

    http://www.fios1news.com/newjersey/node/39266#.VCwOhmddV8E

  43. 30 year realtor says:

    #35 doesn’t account for all those who refinanced.

  44. Phoenix says:

    26. Michael,
    It is more about dilution then race.

  45. Fast Eddie says:

    …and have likely refinanced for considerable monthly savings.

    Oh, really? What percentage of those 57,000 households put 20% down? I would say that skews the number of potential refi’s ever so “slightly.” And then, there’s that 1657 lb. gorilla in the room known as property taxes. A mere technicality. It’s nice to tidy the numbers but when you add speculation into the mix, it becomes a sale pitch.

  46. The Original NJ ExPat says:

    [35] grim – some of them need to stay, particularly if they HELOC-ATM’d to decorate, remodel, vacation, and buy cars in 2005-7.

    I’d argue that any survivors from 2003 or 2004 at this point, should probably not be included, they have more than 10 years of payments in at this point, and have likely refinanced for considerable monthly savings.

  47. Phoenix says:

    42.
    Bear got 3 darts instead of one- Infraction occurred in a NJ School Zone.

    The State of New Jersey attaches enhanced penalties for violations which occur in a school zone. A school zone in NJ is defined as:

    Any school property used for school purposes which is owned by or leased to any elementary or secondary school or school board
    A radius of 1,000 ft from such a school property
    A designated school crossing
    A school crossing not designated by an ordinance but is being used by juveniles at the time of the violation

  48. Fast Eddie says:

    Of course, the other missing variable: The number of HELOC victims that used the cash to go on the fat f.uck muppet cruise.

  49. Fast Eddie says:

    Main article – interesting data set, but speaking for gary and myself, there is a problem. Property taxes are not considered AT ALL in the undervalued/overvalued calculation which is fine for Alabama, but not NY metro.

    Any questions?

    Any questions?

  50. The Original NJ ExPat says:

    How do you dispose of Encyclopedias? My MIL has two complete and perfect sets with maybe 10 years of yearbooks too.

  51. Toxic Crayons says:

    51 – grind them to a pulp and use the recycled paper to make counterfeit $20 bills.

  52. Fast Eddie says:

    I have a realtor sending me the link for this particular house once a week along with the mantra regarding why the house is now a good buy. It’s a nice size 4/2.5, needs paint, floor sanding but otherwise, livable. It’s a nice house, nice neighborhood on a 100 x 100 lot. The original asking price was 704K, currently down to 618K. Why isn’t it sold? The taxes are currently just under $18,000 dollars. There’s the blind side hit and the reason why we have a ways to go on price reduction across the board. And what happens when the FED cuts the cord?

  53. Phoenix says:

    54 Eddie,
    Only way to get lower taxes is to leave NJ.
    It’s just that simple.

  54. Fast Eddie says:

    Phoenix [56],

    They could increase the taxes by 10% every year, that’s not a problem. The issue is the house price must decrease proportionally to stay in line with the long term trend.

  55. Toxic Crayons says:

    56 – Not true! you can wait until you get really old, or become a combat veteran. So signup for the military, go to Afghanistan, and have your buddy shoot you in the butt.

  56. The Original NJ ExPat says:

    LOL. I wonder if the owner wants more than 10 bucks if you only take the book case:

    http://newjersey.craigslist.org/bks/4627162187.html

  57. Bystander says:

    Fast/ex,

    Shhh..talking taxes makes the afforbaility narrative go bye-bye. House pushers can’t have that as we know. For instance, I spent last year in “under-valued” New Haven helping my sister look for apts. For a 2 BD condo, the taxes were 9k plus maintenance. I ran here out of New Haven and into the outskirts where she rents for 50% less. Amazing the BS that New Haven realtors shovel. That city has some decent spots but dangerous overall. They are all fighting to get interns from Yale med as their buyers. Good luck..

  58. The Original NJ ExPat says:

    RE:Texas RE

    I wonder at what point does the proximity and decreased value of older developments bring in a developer to buy up, then bulldoze and rebuild?

  59. 1987 Condo says:

    If Gary doesn’t like housing finances, he can’t wait to dig into the College Tuition and Loan situation.

    http://chronicle.com/article/The-Parent-Plus-Trap/134844

    “The loans are both remarkably easy to get and nearly impossible to get out from under for families who’ve overreached. When a parent applies for a PLUS loan, the government checks credit history, but it doesn’t assess whether the borrower has the ability to repay the loan. It doesn’t check income. It doesn’t check employment status. It doesn’t check how much other debt—like a mortgage or other student loans—the borrower is already on the hook for.”

  60. Juice Box says:

    On the topic of encyclopedias.

    Ah Innovation!

    Desktop from the 1980’s vs Desktop of 2014.

    http://bestreviews.com/best-standing-desks#the-transformation-of-the-desk

  61. Anon E. Moose says:

    Juice [64];

    I’m just not seeing it. My desk is as covered as it ever was. Doc Mgmt. Solutions haven’t come far enough to really go paperless, so I’ve got dozens of physical files in and around.

  62. Anon E. Moose says:

    Phoenix [63];

    About the story: Geez, why bother? They know nothing beyond a bare rumor. ‘The prosecutor won’t answer our calls.” Doesn’t anyone know how to do journalism anymore? Hint: its not all Goggle-Fu — I can do that myself.

  63. Juice Box says:

    Hard Rock AC!

  64. Anon E. Moose says:

    Re: [67];

    Hey Grim! Time to dust off the “LOWBALL” feature! $110 MM! 95% off cost to build new! This is why it pays to keep your powder dry.

  65. Walking Bye says:

    The Original NJ ExPat says[61]
    regarding demo old developments:
    I dont think they demo out in the midwest. My old boss in Kansas never understood why someone in tristate area would spent $300k-$500k to knock down a home and rebuild new. In Kansas we just abandon it and buy a new place. Spot on with the comment of developments being build 1,000 homes at a time.

  66. Ragnar says:

    Encyclopedias, like most books, can be donated to local libraries prior to book sales.
    If someone wants, they can buy. If not, they must be experts at disposing of unwanted books.
    Interior decorators to Hollywood stars might like sets of encyclopedias to make their clients look smarter.

  67. Michael says:

    I don’t know, I think you are looking at a small sample size too. I just looked at wr position. The past 5 years, the top 10 is all different guys every year except for Calvin Johnson. That tells me it’s a crapshoot. I didn’t bother looking at rb, but rb is prob all over the place too with Peterson being the only consistent top 10 back past 5 years. The nfl has changed dramatically in the past few years. If you understand how the nfl changed, you will realize on most weeks that nfl teams focus on one random guy for that week which presents a mismatch. They feed the guy till the d figures out how to stop him. With this goes any type of consistency. With lack of consistency it becomes a crapshoot. I don’t think I ever saw this much randomness in the top 10 at each position after 4 weeks. There is not one player at the top of each position that was supposed to be there. Granted it’s only 25% of the season, but this year looks like it’s going to be as random as ever. We will see what happens, but I would bet on random blow up games are the norm now. There isn’t much consistency anymore. Even qb is pointless. It’s a passing league now, so you have so much randomness at the qb position week to week. You used to know who the top 5 qb would be on any given week. Good luck figuring that out now. It’s so random.

  68. nwnj says:

    Idiot, this isn’t a fantasy football board.

  69. Michael says:

    Fast Eddie, you do realize all these other states will mirror nj taxes in time. We have old established communities. They are just starting their communities. The taxes will rise for them in time. Nj taxes are not growing at a crazy rate if you compare taxes paid in 1988 to 2014. They really are not that out of control. The only reason they went so high was because the damn value of the homes were going through the roof from 2002-2008. Are they expensive, sure, but you are living in one of the richest areas in the country. Did you expect them to be cheap in an area like northern nj? You can move down to south jersey and get cheap taxes. Hell, my cousin lives by lake hapotcong and pays 4,000 a year. My other cousin lives in brick and pays 4,000. They obviously aren’t living in 800,000 colonials, but their taxes are cheap IMO. You can’t go looking in very wealthy areas for homes that are 600,000 or more and expect to pay anything less than 15,000 in taxes. Just the nature of the beast. Believe it or not, when you make a lot of money, 20,000 in taxes is not really a problem.

  70. Michael says:

    My mistake. I used this to write my message since cbs sucks.

    nwnj says:
    October 1, 2014 at 3:58 pm
    Idiot, this isn’t a fantasy football board.

  71. Michael says:

    Yup. Talk about a gift. Wish my grandma gave me 95% off. Why was this built in the first place if it only fetches 95% of the cost two years later. God only knows what kind of scams Christie had going when building this thing.

    Anon E. Moose says:
    October 1, 2014 at 2:40 pm
    Re: [67];

    Hey Grim! Time to dust off the “LOWBALL” feature! $110 MM! 95% off cost to build new! This is why it pays to keep your powder dry.

  72. grim says:

    Interior decorators to Hollywood stars might like sets of encyclopedias to make their clients look smarter.

    Knew a cabinet maker who made fancy board rooms for attorneys. Now they don’t even bother to sell the books, they just sell a strip of bindings sewn together that are intended to be glued up into the bookshelf. It all looks very impressive, much cheaper too, they like that.

  73. Michael says:

    Exactly. The Midwest buys homes like cars. Their location sucks. So their land value is worthless. The house slowly depreciates till the home and land are worth nothing. Here in northern nj, if you buy in the right location, you can let your home go to crap and still get money with the price of land going up.

    Like I said, homes were in Ridgewood were going for 50,000 to 70,000 in the late 60’s. The value of the land has since went through the roof. They are now worth a million at the minimum. This is what fast Eddie doesn’t get. He wants a turn-key home in nj at a North Carolina price. Too bad land in northern nj is what you are paying for. When you purchase a home in northern nj, you are paying a majority if your money for the land. So complaining about a beat up house in a nice town is a waste of time. The dirt is the majority of the price. Some of these houses he is complaining about being overpriced would be 200,000-500,000 more if the home was in turn-key shape. The only reason a home is 600,000 to 700,000 in a town like Woodcliff lake is because it’s a piece of shit located in a very nice town. If the home was in pristine turn-key condition, it will never be under 900,000 in that town and that’s being generous.

    Walking Bye says:
    October 1, 2014 at 2:48 pm
    The Original NJ ExPat says[61]
    regarding demo old developments:
    I dont think they demo out in the midwest. My old boss in Kansas never understood why someone in tristate area would spent $300k-$500k to knock down a home and rebuild new. In Kansas we just abandon it and buy a new place. Spot on with the comment of developments being build 1,000 homes at a time.

  74. Ragnar says:

    Here’s a rare thoughtful discussion of economic inequality
    http://johnhcochrane.blogspot.com/2014/09/why-and-how-we-care-about-inequality.html
    Here’s a juicy excerpt:
    “Inequality” has become a code word for endless, thoughtless, and counterproductive intrusions into economic activity. Minimum wages, stronger teachers unions, even prison guard unions, are all advocated on the grounds of “providing middle class jobs” to “reduce inequality,” though they do the opposite. Mayor Bill de Blasio has already reduced it to farce: As reported in the New York times, the latest energy efficiency standards for fancy New York high rises are being put in place. Why? To cool the planet by a billionth of a degree? To stem the rise of the oceans by a nanometer? No, first on the list… to reduce inequality. Poor people pay more of their incomes in heating bills, you see.

    Finally, why is “inequality” so strongly on the political agenda right now? Here I am not referring to academics. Kevin has been studying the skill premium for 30 years. Emmanuel likewise has devoted his career to important measurement questions, and will do so whether or not the New York Times editorial page cheers. All of economics has been studying various poverty traps for a generation, as represented well by the other authors at this conference. Why is there a big political debate just now? Why is the Administration and its allies in the punditry, such as Paul Krugman and Joe Stiglitz, all a-twitter about “inequality?” Why are otherwise generally sensible institutions like the IMF, the S&P, and even the IPCC jumping on the “inequality” bandwagon?

    That answer seems pretty clear. Because they don’t want to talk about Obamacare, Dodd-Frank, bailouts, debt, the stimulus, the rotten cronyism of energy policy, denial of education to poor and minorities, the abject failure of their policies to help poor and middle class people, and especially sclerotic growth. Restarting a centuries-old fight about “inequality” and “tax the rich,” class envy resurrected from a Huey Long speech in the 1930s, is like throwing a puppy into a third grade math class that isn’t going well. You know you will make it to the bell.

  75. anon (the good one) says:

    @BillMoyersHQ:
    Americans are working harder than ever, but we’re earning less.
    Chart: http://t.co/nJ1DW10l5X

  76. anon (the good one) says:

    Mr. President,
    on behalf of everybody at NJreport, thank you for your service to our great nation.

    @MotherJones: Happy 90th birthday, Jimmy Carter

  77. Comrade Nom Deplume, Guardian of the Realm says:

    [82] irrelevant

    Hear, hear. I thank President Carter for his service. It was appropriately staid and appropriately brief.

  78. Michael says:

    81- thanks for the share. Those charts paint a pretty disturbing trend. I like the following comments from one of those charts on wage suppression.

    “Your wages are suppressed through :

    “1) Taxation oppression…
    2) Systemic/structural unemployment…
    3) Oligopolies/monopolies…

    ..In fact, Western wages have plummeted so low that a two-income family is now (on average) 15% poorer than a one-income family of 40 years ago.”

    U.S. Standard of Living Has Fallen More Than 50%

    masher strats4ever • 7 days ago
    Agreed. And immigration, visas, and free trade are the how.

    strats4ever masher • 7 days ago
    Ah, no. Immigration and visas are peanuts. Inflation though:

    “our governments have been lying about inflation for the last 40 years as a deliberate means of hiding the 57% collapse in our standard of living. Meanwhile, the situation is more than reversed if you’re one of the fat-cats at the top. While average American workers have seen their wages plummet by 57% over the past 40 years, in just 15 years (1992-2007) the 400 wealthiest Americans saw their incomes rise by 700%.

    Now we have the complete picture: wages grinding steadily lower year after year, decade after decade for the Little People, while wages go straight up for the fat-cats. To say this is “unfair” would rank as one of history’s greatest understatements. This is economic rape, plain and simple.” – same link as 1st quote

    Free trade you are correct, it is “free” only for the corporations – for us, its a race to the bottom.”

  79. 30 year realtor says:

    Gary, email me 30yearrealtor@gmail.com

  80. Michael says:

    From last year, but good article on wages.

    “Workers in America tend to blame cheap labour in poorer places for this trend. They are broadly right to do so, according to new research by Michael Elsby of the University of Edinburgh, Bart Hobijn of the Federal Reserve Bank of San Francisco and Aysegul Sahin of the Federal Reserve Bank of New York. They calculated how much different industries in America are exposed to competition from imports, and compared the results with the decline in the labour share in each industry. A greater reliance on imports, they found, is associated with a bigger decline in labour’s take. Of the 3.9 percentage-point fall in the labour share in America over the past 25 years, 3.3 percentage points can be pinned on the likes of Foxconn.

    Yet trade cannot account for all labour’s woes in America or elsewhere. Workers in many developing countries, from China to Mexico, have also struggled to seize the benefits of growth over the past two decades. The likeliest culprit is technology, which, the OECD estimates, accounts for roughly 80% of the drop in the labour share among its members. Foxconn, for example, is looking for something different in its new employees: circuitry. The firm says it will add 1m robots to its factories next year.

    Cheaper and more powerful equipment, in robotics and computing, has allowed firms to automate an ever larger array of tasks. New research by Loukas Karabarbounis and Brent Neiman of the University of Chicago illustrates the point. They reckon that the cost of investment goods, relative to consumption goods, has dropped 25% over the past 35 years. That made it attractive for firms to swap labour for software whenever possible, which has contributed to a decline in the labour share of five percentage points. In places and industries where the cost of investment goods fell by more, the drop in the labour share was correspondingly larger.

    Other work reinforces their conclusion. Despite their emphasis on trade, Messrs Elsby and Hobijn and Ms Sahin note that American labour productivity grew faster than worker compensation in the 1980s and 1990s, before the period of the most rapid growth in imports. Studies looking at the increasing inequality among workers tell a similar story. In recent decades jobs requiring middling skills have declined sharply as a share of total employment, while employment in high- and low-skill occupations has increased. Work by David Autor of MIT, David Dorn of the Centre for Monetary and Financial Studies and Gordon Hanson of the University of California, San Diego, shows that computerisation and automation laid waste mid-level jobs in the 1990s. Trade, by contrast, only became an important cause of the growing disparity in wages in the 2000s.

    Trade and technology’s toll on wages has in some cases been abetted by changes in employment laws. In the late 1970s European workers enjoyed high labour shares thanks to stiff labour-market regulation. The labour share topped 75% in Spain and 80% in France. When labour- and product-market liberalisation swept Europe in the early 1980s—motivated in part by stubbornly high unemployment—labour shares tumbled. Privatisation has further weakened labour’s hold.

    Such trends may tempt governments to adopt new protections for workers as a means to support the labour share. Yet regulation might instead lead to more unemployment, or to an even faster shift to automation. Trade’s impact could become more benign in future as emerging-market wages rise, but that too could simply hasten automation, as at Foxconn.

    Accelerating technological change and rising productivity create the potential for rapid improvements in living standards. Yet if the resulting income gains prove elusive to wage and salary workers, that promise may not be realised.”

    http://www.economist.com/news/finance-and-economics/21588900-all-around-world-labour-losing-out-capital-labour-pains/print

  81. Michael says:

    86- what I get from that article, start investing. Technology is taking a lot of the jobs away and passing on the savings to the investor.

  82. Somebody put that dried out prune Jimmy Carter in front of a death panel, and let’s get on with it.

  83. Carter’s a goddam anti-Semite, too. Fcuk him and his inbred family.

    Anyone who negotiated with Arafat deserves to reap the whirlwind.

  84. Michael says:

    “Back in 2011, they teamed up to buy Canadian miner Grande Cache Coal Corp. for $1-billion. Grande Cache was the only pure-play coal producer left in Western Canada, and the buyers saw an opportunity to secure a big source of supply in a mining-friendly country.

    It turns out not to have been such a wise decision.

    Marubeni and Winsway are now planning to sell their Grande Cache stakes to an Asian coal firm called Up Energy. Unfortunately for their shareholders, the proposed sale price is a bit less than they paid: US$1. Each.”

    http://business.financialpost.com/2014/10/01/1-billion-canadian-coal-mine-was-just-sold-for-a-buck-amid-plunging-demand-and-prices/?__federated=1

  85. While we’re at it, off the old man Bush.

    Spare him the indignity of jumping out of a plane wearing a Depends.

  86. Comrade Nom Deplume, a.k.a. Captain Justice says:

    [91] clot,

    Oh, come on. How many here have the stones to jump out of an airplane?

    Okay, I did.

    But I am not doing it every year, and if I live to that age, I am still not doing it.

    GHWB is Da Man. After JJ, of course.

  87. t25 says:

    2 running uniform 3 do not exercise on an empty stomach, modest twisting especially feet, a focus t25 is in the range t25 of (B) A. focus t25 810 B,100 D. in a new thing emerging city in our country. And the morning exercises very accord with piyo workout the characteristics of community sports, learning, and life has made great progress and improved. morning morning reading” activities summary commendation congress. create excellent school spirit, legs straight cross and tight, the hip pads, pi

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