Are You Horny For A House? Another Scary Look At The California Real Estate Market
Another wonderful look at the California real estate market from our friends at Doctorhousingbubble.com. I continue to maintain that you have got to be a special kind of stupid to buy anything in California today. Well, that is unless you think that buying a 1,036 square feet shit box built in 1953 for $689,000 is a sound investment/financial decision.
Who is buying?
Chinese investors, hedge funds, flippers and straight up idiots horny for real estate, hardwood floors and granite counterparts. Yet, all of them are about to find out what Japanese investors found out in the late 1980’s after buying up half of Hawaii and California….real estate doesn’t always go up. In fact, according to my mathematical and timing work the real estate market is about to embark on the most vicious “Stage 3 Bear Market Leg” of its decline (similar to the one experienced in our equities market between 2007-2009).
You can learn more about what is to come in my comprehensive report: Real Estate Collapse 2.0 Why, How & When
California is no place for the young home buyer: Homeownership rate for young buyers takes biggest hit in California. Domestic migration out, international migration in.California is slowly splitting up into two clear distinct market segments. A smaller segment of wealthy individuals with access to capital and debt and another larger segment of financially struggling households. People might think that the trend of Californians moving out of the state is fairly new but this trend has been going on for over a decade. The state gaining the most from this domestic out migration is Texas. Surveys looking at reasons for people moving out include lower housing costs and a lower cost of living. Yet the population is increasing. The big reason for the increase is international migration. As we have recently noted there is a heavy focus in prime California markets for foreign investors, largely from China. Young families have little chance of competing in many California markets. Because of this it is no surprise that you have 2,300,000+ adults living at home with their parents. This group is not the future home buyer, not at these prices. Most are at home because they have lower paying jobs, no jobs, or heavy levels of student debt. Many are unable to even rent, let alone buy a home. So when we look at Census data, it is no surprise that the homeownership rate for young Californians has taken the biggest hit since the housing market peaked in 2007. Is California a place for the young home buyer?
Falling homeownership rate for young in California and nation
The lower homeownership rate for young Americans is not only an issue hitting California. This trend is occurring all over the country. One big reason for this is student loan debt. The Federal Reserve just came out with their household debt figures this week and highlighted that total student debt is now up to $1.1 trillion. This is now the second biggest household debt sector behind mortgage debt. That is simply one aspect of the issue here. As we noted in a previous post, many younger potential buyers are also confronting a world of lower wages. Those 2+ million adults living at home in California are largely at home because of financial hardship. It is naïve to think that these younger adults are living at home because they want to reconnect with family. To the contrary, if we brought back no-doc no-income loans the market would spiral out of control once again as house horny buyers dive into incredible levels of debt. Since you have to document income in today’s market, the first-time buyer market has dried up in the California drought but large money investors from Wall Street and abroad have taken up the slack.
The homeownership rate for young Americans has taken a big hit over the last generation:
Source: Census data
I think the above chart is very telling. What it shows is that for the last generation, any gains in homeownership for younger Americans has been completely wiped out. The peak that was reached in the 2005-07 housing market was largely due to toxic mortgages and a predatory financial system. The end result of course is a graveyard of 7,000,000+ foreclosures (many purchased after the crash for rock bottom prices by large Wall Street investors with easy debt access from member Fed banks).
Student debt is merely one issue. If these young buyers had student debt but also high paying jobs, buying a home would be no issue. In California we see this trend as well:
Source: First Tuesday
The homeownership rate took a big hit across all age groups but the brunt of this was felt by those in the 25 to 54 year old range. There was little escape here even for baby boomers. What is interesting is that the homeownership rate went up for those 25 and younger. This is largely due to big down payment gifts from parents and wealthy young buyers (this is also a very small percentage of all homeowners in the state by the way). The largest group of homeowners is from the baby boomer and older group.
California is getting older
These dynamics are shifting how California will look. For example, California is quickly becoming an older state:
At the same time, domestic Californians are heading for the exits:
If it wasn’t for international migration, California’s population would actually be decreasing for well over a decade. In some markets a large portion of the recent price increases have come from international buyers. Young buyers are fully out competed here in combination with older households that may also have equity. Older home owners might live in a high priced home, but you have to sell or tap that equity out to generate income.
For example, let us take a look at a newer listing in Culver City:
11820 Juniette St, Culver City
Beds: 3
Baths: 1
Square feet: 1,036
I’ll first let the ad speak for itself:
“Location, Location, Location! This extraordinary area is called Del Rey and is next door to Culver City and The Playa Vista Development. Centrally located near Marina 90 FWY & 405 FWY. Just a short 12 minute bike ride to Playa Del Rey Beach & 4 minutes to Marina Del Rey Shopping Center.”
“This neighborhood also has a community garden to enjoy. Property needs a little TLC but has strong and solid bones.”
Solid calcium enriched bones baby! This home can also squat 600lbs on any given weekend. I always enjoy looking at the Google maps version of the street since it gives you a better feel of the area:Are You Horny For A House? Another Scary Look At The California Real Estate Market
What is the current price tag for this home? $689,000. This place was built in 1953, you know, when Dwight D. Eisenhower was President. A 3 bedroom and 1 bath home at 1,036 square feet is a starter home. Now tell me, how many young buyers do you think have enough to support a $689,000 home? No surprise that adjustable rate mortgage (ARM) usage hit a six-year high in the latest sales report for SoCal.
California is now dominated by investors, foreign buyers, and those leveraging every penny to buy to chase their house horny dreams of granite countertops topped off with a little hardwood floors. For the2.3 million adults living at home, I’m sure renting a home seems like a dream at this point.
Will The Bear Market Start With A Bang Or A Whimper? The Answer Will Shock You
The article below presents us with a very good overview of how you should approach today’s stock market. I highly recommend that you give it a few minutes of your time.
It brings up an important issue. Will the bear market of 2014-2017 (as per our forecast) start with a bang or a whimper?
It all depends on your definition of a bang. If you define a bang as a quick decline of about 10% or so (on the Dow), it might. If your bang is more like an 1987 type of a crash of 20-25% within a relatively short period of time, it’s not going to happen.
As per our mathematical and timing work the bear market of 2014-2017 will be structurally similar to the bear market of 2000-2003. A lot of volatility, a lot of ups/downs and a general downtrend. A very difficult market. It will NOT be similar to a more directional bear market of 2007-2009.
In short, this bear market will drive all….. bulls, bear, markets pundits and everyone in between up the wall. I continue to believe that only those with proper market timing will be able to walk away with any gains. Everyone else is likely to be extremely frustrated by the experience. If you would like to learn more, please CLICK HERE.
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Will The Bear Market Start With A Bang Or A Whimper? The Answer Will Shock You Google
Stocks are telling you a bear market is coming
Opinion: Expect a choppy, sloppy end to the six-year bull run
MIAMI (MarketWatch) — This is how bear markets begin.
Two months ago, I pointed out that the U.S. stock market had topped out and was going through a churning process.
Since that observation, the Dow Jones Industrial Average DJIA -0.61% has risen a bit higher but the Nasdaq COMP -0.72% and Russell 2000 RUT -1.61% indexes have dropped below their 50-day and 100-day moving averages. It’s only a matter of time before the Dow follows.
Bond yields may signal a warning
Yields on 30-year Treasury bonds have fallen this year, which could be a signal that economic growth will not heat up anytime soon.
Bear markets start with a whimper or a bang. When it starts with a bang, the first clue will be a major break in the market that no one can correctly explain. That will eventually be followed by a correction (or crash), and everyone will know that something bad has happened. The indexes will fall by double digits, investors will panic, and stocks get slaughtered.
Investors will be told to stay calm and not sell — but they will when the financial pain gets too great. They are also told that the market always comes back (although not all stocks will). Anxiety turns to fear as the market plunges. After a correction or crash, investors look for scapegoats while commentators ask, “Who could have known?” (Hint: Those willing to act on the clues and indicators were out of the market well before the most damage was done.)
But when a bear market starts with a whimper, it confuses nearly everyone. A meandering, volatile market is frustrating. At first, bulls are hopeful that the market will keep going up, but eventually, the market tops out and retreats.
I call this “death by a thousand pullbacks.” Instead of new highs, the market will make a series of short-lived but painful pullbacks. At first, the buy-on-the-dip investors will enter the market with new orders. As the bear market continues, the buy-on-the-dip strategy will stop working (along with most other long strategies).
Typically, a market making new highs is a healthy sign. In a looming bear market, new highs on lower volume is a red flag. That’s happening now. Also, leading technology stocks have gotten smashed, replaced by new leaders. After these new leaders fail there will be nowhere to hide.
You may have noticed that some financial analysts on television seem confused. One week they make a bearish prediction, then reverse course. This is typical as the market transitions to a bear market.
Many commentators are confused because what has worked in the past stops working. Also, the behavior of other assets such as bonds and commodities don’t make sense. That’s a clue the market is entering a danger zone. Another red flag: Investors are buying stocks on margin at levels higher than in the previous peak years of 2008 and 2000. Whenever margin reaches excessive levels, bad things happen to the stock market.
Short-term, the market could churn higher. As prices rise, a lot of people will be fooled, especially if the Dow continues to make all-time highs. Many investors will not sell because they think they can either get out in time, or buy and hold through the next pullback or correction. The most aggressive investors will buy on the dip because stocks “are so cheap.” I’ve heard some financial commentators recommend that retail investors avoid a bear market by being “better stock pickers.” Ridiculous.
Here’s some advice: Rather than trying to be a stock-picking genius, before a bear market shreds your portfolio, think about getting out of the market even if you’re early. I’d rather give up 5% potential upside than risk 20% downside (or more).
Right now, the strongest case for the bulls is the Fed. And yet, in the history of the stock market, no institution has been able to prevent a bear market. You can’t fool Mother Market.
Waiting for the pivot point
Eventually there will be a pivot (or inflection) point, and the market will snap. No one knows what the catalyst will be. It could be an economic event, a geopolitical crisis, or a spike in interest rates.
When the market snaps, nearly everyone but the biggest believers will realize the market is in trouble. By that time, there will be a mad rush for the exits as everyone attempts to sell at once.
No matter how many times you tell investors to be wary of a dangerous market, most don’t listen. Based on the clues, indicators, and personal observations, crunch time is getting closer. No one knows when, but I am certain: a bear market is inevitable — sooner rather than later. This is not doom and gloom. It is market reality.
Daily Stock Market Update. May 14th, 2014. InvestWithAlex.com
A substantial down day with the Dow Jones down 101 points (-0.61%) and the Nasdaq down 29 points (-0.72%).
The market has been stuck in a trading range since April 22nd (over the short-term) and since December 31st, 2013 (over the intermediary term). The question is….. why? Our mathematical and timing work continues to point towards “Energy Accumulation”.
Just as if winding a spring, energy tends to accumulate within a range bound market. When it finally snaps, the energy is released and powerful/sharp moves tend to follow. The real question is…… when and which way.
Well, looking at some of the fundamental indicators might give you an idea. For instance, VIX is scraping the bottom of its trading range, extreme levels of investor optimism, collapsing yields and flattening yield curve, non existing spreads, FED tightening, market highs, etc….. might point your perception in a certain direction.
However, if you want a more precise answer you might want to take a look at our mathematical and timing work. It will show you exactly when (to the day) and in which direction.
Once again, this mathematical and timing work clearly shows that the bear market of 2014-2017 is just around the corner. When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE
(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. May 14th, 2014. InvestWithAlex.com
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10-Year Treasury Note Screams Out “Recession Ahead”. Are You Listening?
On January 1st, 2014 I started heavy buying of a 10-Year Treasury Note. With most people at the time thinking I was on a crack cocaine binge, thus far, the bet has paid off handsomely.
More importantly, the 10-Year Note broke a significant support level today at around 2.55%. I continue to maintain that the 10-Year Note is one of the better investments over the next few years or until downside targets are achieved. Here is why….
Generally speaking, the BOND Market is more intelligent. Yields breaking down is indicative of what the bond market sees. What does it see? A significant recession and a possible bear market. That view is very much in line with our overall forecast and our mathematical/timing work predicting a severe bear market/recession within the US Economy between 2014-2017.
In addition, 30-Year bear markets in Bond Yields DO NOT end in a V shape fashion. Typically there is a double or tripple bottom. Finally, there is a number of large gaps in the 10-Year treasury, suggesting that the bond market will retest it’s 2012 and 2013 yield lows. Possibly taking the market as low as 1.5-1.6% in yield.
Impossible? On the contrary and that’s exactly what my extremely accurate mathematical work shows.
As the saying goes, money talks and bullshit walks. Well, the money in the Treasury Market is talking. The only question is…… Are You Listening?
Investment Grin Of The Day
The Shocking Truth About The “Great Rotation” Within The Stock Market
According to market pundits below, a great rotation within the stock market is underway. Out of small caps/growth and into value. There is only one problem with such a view…..
There is no value left.
And I am being totally serious. I always look for value, but as of today I cannot find any. ZERO. I did find a value/growth/turnaround play two months ago, RiteAid (RAD), but even that stock is up over 30% in a little over one month. Further, the P/E ratio that everyone points to is being highly distorted by a massive amount of credit within our financial system and cannot be relied upon. I have discussed that before.
Listen, there is no rotation. What you are witnessing is a rollover most commonly associated with market tops. Small caps and growth are simply leading the market. In due time, the Dow Jones or perceived value will follow this lead to the downside. It is as simple as that.
This is further confirmed by our mathematical and timing work. Again, our work shows a severe bear market between 2014-2017. When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE
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The Shocking Truth About The “Great Rotation” Within The Stock Market Google
Talking Numbers: Why there may be nowhere to hide in the market
The S&P 500 may be at record highs but underneath the surface, the Great Rotation of 2014 is underway. And, that could be bad news for stocks ahead.
According to TrimTabs Investor Research, there has been a “massive” rotation out of growth stocks and into value stocks this spring. Since the start of April, growth-oriented exchange-traded funds (ETFs) redeemed $5.6 billion while value-oriented ETFs issued $3.9 billion.
Broken out by size, $4.6 billion were redeemed out of large-cap growth stocks and $2.6 billion were issued in large-cap value stocks. Meanwhile, $750 million were taken out of small-cap growth companies and $150 million were issued in small-cap value ETFs.
| Growth | % of assets | Value | % of assets | |
| Large cap | -$4.6 billion | 4.9% | +$2.6 billion | 2.5% |
| Small cap | -$750 million | 5.9% | +150 million | 1.0% |
Source: TrimTabs Investment Research
Gina Sanchez, founder of Chantico Global, sees this as a trend that will continue.
“All of the defensive sectors have performed quite well this year,” said Sanchez, a CNBC contributor. “A lot of the highfliers and momentum stocks have just gotten destroyed. That’s going to continue.”
However, Sanchez sees this less of a move into value and more about the markets dumping momentum stocks. That could continue until those momentum stocks have more “realistic ranges” in value, she says. In the meantime, that could hurt the overall market.
“I think this defensiveness is going to continue,” Sanchez said. “We could actually see a correction in the market as a result of that continued concern.”
Richard Ross, global technical strategist at Auerbach Grayson, also thinks a correction is coming.
Although Ross’ charts show that the benchmark S&P 500 index has remained above its rising 150-day moving average in a well-defined trend channel since June 2013, it has been unable to break above the 1,900 level..
And, “The longer-term structure remains vulnerable,” Ross said. The S&P 500 may have stayed above its 50-week moving average since 2012 but Ross believes the index is starting to move far from its 150-week moving average, currently around 1,500. That could be a potential target.
“That has to be considered a possibility,” Ross said. “Yes, we can remain above trend and go even longer higher. But, I think that this move to value over growth – to bonds over stocks, if you will –tells you that the market is looking for insurance. It’s scared and, in the end, there will be nowhere to hide.”
Geopolitical Situation Continues To Deteriorate. Forget Ukraine, Watch China
While the Dow Jones is setting new bubble level highs, the geopolitical situation around the world is literally on edge. Two outcomes are possible. President Obama will get together with Mr.Putin, drink vodka and sing Kumbaya…OR…. the US stock market will snap. I will let you decide which one.
And while the situation in Ukraine continues to deteriorate a new hot spot is about ignite. After Mr. Obama’s recent visit and pledge of eternal support, both the Philippines and Japan feel particularly cockish….angering the Red Dragon. How long before Russia and China form a military alliance to counterbalance NATO? Not very long.
Here is the latest and what you need to know.
- Philippines says China appears to be building airstrip on disputed reef – Call Pentagon, they will take care of it.
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Russia Calls for Ban of US Military Launches Using Russian Rocket Engines – Wow, retards in Washington didn’t realize sanctions can work both way.
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Russia to deny US space station access – Whoever control the space controls the world. Only a nation full of idiots would cut NASA’s budget to finance wars and the NSA.
- Ukraine ‘Close to Civil War as You Can Get,’ Russia Says – The US now has a perfect track record. Iraq, Afghanistan, Syria, Libya, Ukraine, etc… How much more bloodshed will my tax money finance?
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Russia’s third largest bank moves money from Europe to Moscow for safe keeping – I love watching when the bureaucratic monkeys in the EU get their ass handed back to them.
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War of words erupts as John Kerry calls Beijing ‘provocative’ in South China Sea disputes – Due to the US foreign policy both Russia and China are now enemies. Make no mistake about it.
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Obama helps Syrian opposition wit h $1,7 billion aid to show support in ousting Assad – In a nutshell, the Obama administration is financing the same people who perpetrated 9/11. Disgusting doesn’t even begin to describe it.
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Son of US VP Joe Biden appointed to board of major Ukrainian gas company – The Obama administration is not even trying to hide their shenanigans anymore.
Daily Stock Market Update. May 13th, 2014. InvestWithAlex.com
A mixed day with the Dow Jones up 20 points (0.12%) and the Nasdaq down 14 points (-0.33%).
Let me ask you a question. When you look at the chart above, what represents the X and Y axis? Duhhhh, price and time. Exactly. And with 99.9% of Wall Street analysis concentrating strictly on the “price” part of the equation, let me ask you……
WHAT IS TIME & HOW CAN IT BE USED TO PREDICT THE MARKET?
I know it is a deep question. There are libraries full of philosophy and physics books that define time in a million different ways.
For our purpose, we have to ask a question. Is time linear or is it cyclical?
The stock market chart identifies time as linear (from past to present to future), yet if you begin to actually study what time is you will very soon come to a conclusion that time is anything but linear. Nature is not linear. Everything in nature is cyclical. It might look linear to an untrained eye, but once you look under the hood, the situation is completely different.
For example, you are born, you grow up, you live, you grow old, you die. The cycle is now complete.
Same thing is with time. Time does not flow at a constant rate nor does it flow in one direction. Time vibrates and cycles at its own speed and rate of vibration.
Before I get in too deep let me restate it from a much simpler perspective as it applies to the stock market or individual stocks.
Because time is cyclical (not linear) and has its own rate of vibration as it applies to the stock market or individual stocks, that rate of vibration can be determined and as such be used to identify precisely WHEN any given stock or the overall market will move in any given direction.
Yes, you have heard it right, my mathematical and timing work clearly indicates that the stock market can be predicted and timed to within daily resolution. Due to this, out sized returns can be achieved.
For instance, let’s take a look at today. This same mathematical and timing work clearly shows that the bear market of 2014-2017 is just around the corner. When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE
(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. May 13th, 2014. InvestWithAlex.com
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Ron Paul Asks: What The Hell Does The US Government Want In Ukraine?
We have been asking the same question over the last few months……..
The real question is why the US government is involved in Ukraine in the first place. We are broke. We cannot even afford to fix our own economy. Yet we want to run Ukraine? Does it really matter who Ukrainians elect to represent them? Is it really a national security matter worth risking a nuclear war with Russia whether Ukraine votes for more regional autonomy and a weaker central government? Isn’t that how the United States was originally conceived?
Has the arrogance of the US administration, thinking they should run the world, driven us to the brink of another major war in Europe? Let us hope they will stop this dangerous game and come to their senses. I say let’s have no war for Ukraine! READ THE REST HIS VIEW HERE.
Unfortunately, the US is no longer run by the principals it was conceived on. It is being run by the Industrial Military Complex thirsty for war and profit. And war is exactly what they are going to get. The big one is coming. Nuclear World War 3 Is Coming Soon.When, How & Why