housing

‘What does a woman want?’ –Freud

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[T]he patient was a woman who, although she was being examined in my office at New York Hospital, claimed we were in her home in Freeport, Maine. The standard interpretation of this syndrome is that she made a duplicate copy of a place (or person) and insisted that there are two. […]

This woman was intelligent; before the interview she was biding her time reading the New York Times. I started with the ‘So, where are you?’ question. ‘I am in Freeport, Maine. I know you don’t believe it. Dr Posner told me this morning when he came to see me that I was in Memorial Sloan-Kettering Hospital. […] Well, that is fine, but I know I am in my house on Main Street in Freeport, Maine!’ I asked, ‘Well, if you are in Freeport and in your house, how come there are elevators outside the door here?’

The grand lady peered at me and calmly responded, ‘Doctor, do you know how much it cost me to have those put in?’ […]

Because of her lesion the part of the brain that represents locality is overactive and sending out an erroneous message about her location. The interpreter is only as good as the information it receives, and in this instance it is getting a wacky piece of information.

{ NeuroDojo | Continue reading }

The Game Cock clipp’d and arm’d for fight does the Rising Sun affright

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And so the housing “recovery” comes to a screeching halt, which is not surprising as there never was a recovery to begin with. Moments ago cheerleaders of the second housing bubble were shocked to learn that in July a tiny 35K new houses were sold (with just 3K sold in the Northeast, and just 19K in the otherwise strong South), of which 13K houses were not even started. This translated into a puny 394K seasonally adjusted annualized sales, missing expectations of 487K by nearly a massive 100K, and in addition the June print was revised much lower from 497K to 455K (which back in July beat expectations of 484K and was trumpeted as the highest print since 2008 - so much for that). Yet one thing that did not change is that the median home sale price decline continued, and in July dropped to $257.2K down from $258.5.

{ Zero Hedge | Continue reading }

This is Dopey, he don’t talk none

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From Bloomberg’s Jody Shenn:

Wells Fargo & Co., the largest U.S. mortgage lender, is offering 30-year fixed-rate loans at 4.5 percent, according to its website, up from 4.13 percent on June 18 and 3.88 percent on May 22, when comments by Bernanke to lawmakers and the release of the minutes of the last Fed meeting caused bonds to plummet.

So in one month, the average 30 year fixed rate mortgage has jumped by over 60 basis points. What does this mean for net purchasing power? […] Assuming a $2000/month budget to be spent on amortizing a mortgage (or otherwise spent for rent), it means that suddenly instead of being able to afford a $425K house, the average consumer can buy a $395K house.

This means that, all else equal, housing just sustained a 7% drop in the average equlibrium price based on what buyers can afford.

{ Zero Hedge | Continue reading }

Doesn’t it make you nervous to be in the same room with thousands of dollars worth of diamonds, and unable to touch them?

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REITs [Real Estate Investment Trust] are sold like stocks, and they’re held by many individuals and institutional investors. You might have a REIT in your retirement fund. REITs are trusts that own and develop property and earn rental income. […] “They are forced by law — a law created in 1960 — that provides that real estate investment trusts have to meet certain tests,” says Brad Thomas, editor of the Intelligent REIT Investor. “And if they do, they are forced to pay out 90 percent of their taxable income in the form of dividends.” Those dividends are a regular stream of income, and they’re what make REITs attractive to investors.

I put down $513.94 on a REIT index fund. It’s basically a smorgasbord of many different REITs. It contains what you might expect — REITs that own apartment buildings and shopping centers. But Thomas says the range of REITs today goes far beyond that, “from billboards to prisons to cell towers, campus housing. Even solar is on the horizon potentially.”

{ NPR | Continue reading }

related { Agents use a median 250 characters for homes listed under $100,000. For homes priced over $1 million, they go nearly twice as long, with a median 487 characters. }

related { If There Is A “Housing Recovery” Then This Chart Can’t Be Right }

The first little pig built his house out of straw because it was the easiest thing to do

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The airwaves are full of stories of economic recovery. One trumpeted recently has been the rapid recovery in housing, at least as measured in prices.

The problem is, a good portion of the rebound in house prices in many markets has less to do with renewed optimism, new jobs, and rising wages, and more to do with big money investors fueled by the ultra-cheap money policies of the Fed.

On my recent trip to Salt Lake City, Utah, after presenting to a bi-partisan audience in the Capitol building, a gentleman came up to me and introduced himself as a real estate agent.  He explained that he’d been seeing something very strange over the past six months, where very well capitalized, out-of-state private equity funds had been buying up huge swaths of residential real estate with cash.

The effect, not surprisingly, is that regular home buyers are being outbid and eventually priced out of the market.  Over time, these full cash offers at the ask get noticed and home sellers begin to raise their asking prices.

{ Chris Martenson/Zero Hedge | Continue reading }

[W]e were surprised to see an article in the very much mainstream, and pro-administration policies NYT, exposing just this facet of the new housing bubble. […]

Blackstone, which helped define a period of Wall Street hyperwealth, has bought some 26,000 homes in nine states. Colony Capital, a Los Angeles-based investment firm, is spending $250 million each month and already owns 10,000 properties. With little fanfare, these and other financial companies have become significant landlords on Main Street. Most of the firms are renting out the homes, with the possibility of unloading them at a profit when prices rise far enough.

{ Tyler Durden/Zero Hedge | Continue reading }

more { The Entire US Housing Market In One Chart }

She wasn’t always like this. She used to be happy. We used to be happy.

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A real-estate agent keeps her own home on the market an average of ten days longer [than she would for a client] and sells it for an extra 3-plus percent, or $10,000 on a $300,000 house. When she sells her own house, an agent holds out for the best offer; when she sells yours, she encourages you to take the first decent offer that comes along.

{ via Overcoming Bias | Continue reading }

NY rose me, most high chose me, let me know what I can, can, can, can do for you

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The most expensive apartment in the twin towered Art Deco masterpiece looking out over Central Park, the San Remo, rented for $900 a month. The tenant was a stockbroker named Meno Henschel who, according to what he told the Census Bureau, lived in his apartment together with his wife, a cook and two maids. Henschel had one of only two apartments that rented for more than $600. Another, with room for a family of five, plus the requisite cook, butler and maid, rented for $540.

The year was 1940, and that $540 is what would now generally be referred to as about $8,850 in today’s dollars. Except it’s  almost impossible to find an apartment like that to rent today. Like most  of the great prewar luxury Manhattan buildings, the San Remo has long since been converted into a co-op, owned by the residents.

Very rarely an apartment there will come up for a short-term rental. There is one listed now. The asking price is $29,750 a month.

{ Bloomberg | Continue reading }

‘There is nothing new except what has been forgotten.’ –Marie Antoinette

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“I would say we have a housing bubble…again.” […]

“It’s happening in the most speculative sub-prime markets, where massive amounts of ‘fast money’ is rolling in to buy, to rent, on a speculative basis for a quick trade,” he contends. “And as soon as they conclude prices have moved enough, they’ll be gone as fast as they came.” […]

Stockman argues the problem in housing is the two forces needed for a recovery, first-time buyers and trade-up buyers, are missing. With the combination of 7.9% unemployment and staggering student loan debt, he doesn’t see a young generation of new home buyers coming into the market. And with baby boomers heading for retirement with less than adequate savings, he thinks they’ll be trading down with their homes, not up. […]

“As soon as the Fed has to normalize interest rates, housing prices will stop appreciating and they’ll probably head down,” he explains. “The fast money will sell as quickly as they can and the bubble will pop almost as rapidly as it’s appeared. I don’t know how many times we’re going to do this, and the only people who benefit are the top one percent - the hedge funds, the LBO funds, the fast money people who come in for a trade, make a quick buck, and move along to the next bubble.”

{ Yahoo | Continue reading }

We burn day-light

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In 1979, Brenda and Richard Jorgenson built a split level home in the midst of a large ranch outside the tiny town of White Earth, North Dakota. […] For most of their lives the landscape of the region has been dominated by agriculture – wheat, alfalfa, oats, canola, flax, and corn. The Jorgensons always figured they would leave the property to their three children to pursue the same good life they have enjoyed.

Then the oil wells arrived. They began appearing in 2006, and within just a few years dominated the area landscape. Today at least 25 oil wells stand within two miles of the Jorgensons’ home, each with a pump, several storage tanks, and a tall flare burning the methane that comes out of the ground along with the petroleum.

Like most people in North Dakota, the Jorgensons only own the surface rights to their property, not the subsurface mineral rights. So there was nothing they could do when, in May 2010, a Dallas-based oil company, Petro-Hunt, installed a well pad on the Jorgensons’ farm, next to a beloved grove of Russian olive trees. […] Some 80 trees were dead by the summer of 2011.

{ Guardian | Continue reading }

artwork { Basquiat, Untitled, 1982 }

related { Ukraine Crushed in $1.1bn Fake Gas Deal | Thanks GG }

If someone eggs your house, burn theirs down

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If you’re a lawyer in New York, there’s no sweeter deal than getting assigned to an estate case in Surrogate’s Court.

The work is often routine — selling assets, paying bills, contacting heirs — but the pay can reach into the millions.

Landing such a gig requires currying favor with one of the city’s seven surrogate judges, who handle wills and estates. They have the power to appoint lawyers and approve their sometimes jaw-dropping invoices.

The jobs often go to the judges’ friends, associates or campaign contributors, court authorities admit. Looting of the estates can sometimes result.

The most recent example involves Bronx Judge Lee Holzman, who last week faced removal from the surrogate bench after he signed off on legal work that was never done.

The bills, according to the Bronx District Attorney’s Office, totaled $300,000 and went to the judge’s associate, lawyer Michael Lippman, a Democratic Party crony who ran Holzman’s campaign financing, raising $125,000, a court watchdog claims.

Lippman then got into money trouble himself, racking up $1 million in gambling debts and allegedly faking bills to cover his losses.

Prosecutors say they uncovered the cooked books and charged him with fraud.

Another alleged thief preyed on a lucrative and largely unsupervised part of the system — cases in which there is no will.

Such cases go to public administrators, who work with Surrogate’s Court judges in handling their finances.

In May, Richard Paul, the bookkeeper for the Brooklyn public administrator, was indicted for stealing $2.6 million from these estates, allegedly manipulating the check-writing process to get at the cash.

{ NY Post | Continue reading }

photo { Dina Goldstein }

Home always breaks up when the mother goes. Fifteen children he had. Birth every year almost.

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Rates are at historic lows of 3.53% for 30-year mortgages. Rents are at record levels all over the country, hitting highs in 74 markets tracked by real-estate-data provider Reis Inc. And housing prices appear to have finally begun increasing, with gains posted for three months in a row according to the index put out by the Federal Housing Finance Agency. So why aren’t more Americans buying houses?

The answer to that is rather complex, but one major factor is that trade-up buyers — folks who upgrade from smaller, cheaper “starter homes” to pricier properties, and who classically are a pumping piston in the engine that drives the housing market — are finding it difficult, if not impossible, to trade up right now. This key segment of the market is especially likely to be “equity poor.”

{ Time | Continue reading }

photo { Robert Adams }

‘Like everybody who is not in love, he imagined that one chose the person whom one loved after endless deliberations and on the strength of various qualities and advantages.’ –Marcel Proust

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