Tag: real estate

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Warning: Real Estate Market Begins Its Decline

National Real Estate Propaganda Group (aka The National Association of Realtors) February report is beyond laughable.  Let’s take a look…

U.S. home resales dropped slightly in February to a 19 month-low as cold weather and a shortage of homes for sale continued to sideline potential buyers.

Damn, I forgot about that snow storm in California. In terms of shortage….. call Citi, Blackstone, Wells, Chase, Freddie, Fannie, etc… they should have at least a Million units of your inventory sitting on their balance sheet.  

Even though temperatures remained chilly in February, pinching sales, a modest improvement in inventory on the market indicates buyers are expected to jump in soon.

Sure, millions of buyers are sitting on the side line, waiting to jump in. Whatever makes you guys sleep better at night. 

If you want the truth, stop reading this BS and read my comprehensive Real Estate Report showing you exactly when, how & why our real estate market is about to crash……again. 

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Warning: Real Estate Market Begins Its Decline   Google

Existing Home Sales Edge Down to 19-Month Low in February

U.S. home resales dropped slightly in February to a 19 month-low as cold weather and a shortage of homes for sale continued to sideline potential buyers.

The National Association of Realtors said on Thursday home sales dropped 0.4 percent to an annual rate of 4.60 million units, the lowest level since July 2012, and in line with economists’ expectations. January’s sales pace was unrevised at 4.62 million.

Even though temperatures remained chilly in February, pinching sales, a modest improvement in inventory on the market indicates buyers are expected to jump in soon.

“The weather surely cannot get any worse,” NAR economist Lawrence Yun told reporters. “The new supply will help tame price growth.”

The median existing home price rose 9.1 percent in February to $189,000 from the same month in 2013.

Mortgage rates have risen almost a full percentage point in the past year and the increase in house prices has far outpaced income growth, making home-buying less affordable.

In addition, there has been a shortage of homes for sale on the market. Home resales have declined in six of the last seven months, having peaked in July.

The number of previously-owned homes available for sale at the end of February represented a 5.1 months’ supply, still tepid but up from 4.9 months’ worth in January. A healthy market has about a six-to-seven month supply.

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Warning: Trulia Is About To Blow $45 Million. Real Estate Market Top Is In.

As per BusinessWeek report below, Trulia is about to blow $45 Million on a national ad campaign. Read the article below and decide for yourself. If that doesn’t scream out “Market Top” at you, I have some Pets.com stock to sell you. Speaking of Pets.com, it seems as if Trulia’s brand new Chief Marketing Officer Kira Wampler had once worked at Pets.com and can spin BS with the best of them.  She states…..

“The company wants to take advantage of a hot real estate market and a wave of house-shoppers making the switch to mobile browsing. Only about half of house searches are done on mobile devices at the moment, according to Trulia, even though about two-thirds of people in the U.S. have a smartphone, and penetration among home buyers is probably even higher than that.”

Alright Kira, fair enough, what is Trulia’s revenue? $143 Million in 2013 with a net loss of $18 Million .  WTF? Are you telling me you are about to spend 30% of your annual revenue on a marketing campaign. Ahh, what the hell, it’s nice to play with “make believe shareholder money”…right? The lesson here is two fold.

First, the real estate market, equity markets and the IPO market are about to blow up. And not in a good way. Second, never trust a woman with $45 Million. Shoes, jewelry, purses, massive marketing campaigns…..its all the same.  And if you are to break such rules, you will find assholes like me considering shorting your stock (when the time is right) Ms. Kira Wampler. 

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Warning: Trulia Is About To Blow $45 Million. Real Estate Market Top Is In Google

 

Trulia Launches $45 Million National Ad Campaign

House-hunter or no, you may soon hear a lot more about Trulia (TRLA), the real estate listings platform.

This week the San Francisco-based company is launching a $45 million national ad campaign on television, radio, the Web, and mobile devices. In the marketing world, that’s not a huge sum; for Trulia, which hasn’t posted a profit since its September 2012 IPO, it’s massive—almost six times its entire 2013 $8 million marketing outlay. The cost of the new campaign represents almost one-third of Trulia’s annual revenue.

What’s driving this big, urgent ad buy? Trulia’s brand-new Chief Marketing Officer Kira Wampler says the company wants to take advantage of a hot real estate market and a wave of house-shoppers making the switch to mobile browsing. Only about half of house searches are done on mobile devices at the moment, according to Trulia, even though about two-thirds of people in the U.S. have a smartphone, and penetration among home buyers is probably even higher than that.

Courtesy Trulia

Still, Trulia also has some catching up to do.Zillow (Z) spent roughly $40 million on advertising last year and aired its first national commercial campaign in June.

The three television spots anchoring Trulia’s strategy have all the hallmarks of big, contemporary ad campaigns: high production values, witty humor, and chipper background music that sounds like ukuleles. The message in each, what marketing pros dub a “call to action,” is straightforward: Download the app.

“We’ve got [the product] nailed, now it’s time to pour on the gas,” Wampler said in an interview last week. “At the moment, no one has run away with the market, particularly in mobile.”

Trulia earns four out of five of its revenue dollars from realtors looking to connect with more potential buyers by listing on the platform. The more house hunters it has on its site, the more it can charge realtors. Last year the site drew about 40 million monthly unique visitors and almost 60,000 real estate pros paying for its services.

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What Happens When Blackstone Starts Dumping Real Estate At Market?

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In another sign that the “Dead Cat Bounce” for the Real Estate market is now over, Blackstone Group has announced that it’s real estate acquisition pace has slowed 70% from last years pace due to higher prices. In fact, this is the trend seen across the industry. Investors, hedge funds, institutions are all slowing down their real estate acquisitions to the tune of 70-90%.  

“The institutional wave has passed,” Gray, who oversees almost $80 billion in property investments, said in a telephone interview. “It’s at a much lower level than it was 12 or 24 months ago.”

What happens next?

Easy. The real estate market might hover here for some time. Not too long thought. As soon the Bear Market of 2014-2017 hits and the US falls back into a severe recession, you will see housing going down once again. Once investors realize where we are in the real estate cyclical composition (dead cat bounce and not expansion) you will see the likes of Blackstone trying to get rid of their properties as fast as possible. With investors heading for the doors, mass volume of real estate should hit the market. Collapsing existing values just as fast, if not faster, than their initial ascend between 2010-2014. 

Good luck selling your 43,000 rental properties Blackstone. 

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What Happens When Blackstone Starts Dumping Real Estate At Market?  Google

 

 

 

Blackstone Group LP (BX) is slowing its purchases of houses to rent amid soaring prices after a buying binge made it the biggest U.S. single-family home landlord.

Blackstone’s acquisition pace has declined 70 percent from its peak last year, when the private equity firm was spending more than $100 million a week on properties, said Jonathan Gray, global head of real estate for the New York-based firm. After investing $8 billion since April 2012 to buy 43,000 homes in 14 cities, the company has narrowed most of its purchasing to Seattle, Atlanta, Miami, Orlando and Tampa.

“The institutional wave has passed,” Gray, who oversees almost $80 billion in property investments, said in a telephone interview. “It’s at a much lower level than it was 12 or 24 months ago.”

Private-equity firms, hedge funds, real estate investment trusts and other institutional investors have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35 percent from the 2006 peak and rental demand rose from the almost 5 millionowners who went through foreclosure since 2008. PresidentBarack Obama credited the investors for helping put a floor under the plunging housing market and consumer advocates such as the National Community Reinvestment Coalition later blamed them for soaring prices in some cities.


Photographer: Victor J. Blue/Bloomberg

Blackstone Group LP Global head of real estate Jonathan Gray said, “The institutional… Read More

Foreclosures Fall

American Homes 4 Rent and Colony American Homes, the second- and third-largest single-family landlords, also have been scaling back as bargains dry up. Home prices have risen 24 percent since a post-bubble low in March 2012, which was about when corporate buyers started their buying spree, according to the S&P/Case-Shiller index. The rate of U.S. foreclosure startsfell to its lowest level in eight years in the fourth quarter as higher prices allowed more delinquent homeowners to sell without taking a loss, according to the Mortgage Bankers Association.

Jade Rahmani, an analyst for Keefe, Bruyette & Woods Inc., said large investors are focusing on fewer locations as they gain experience and prices go up.

“Home prices have increased, which narrows the acquisition opportunity,” Rahmani said. “In addition, these companies have done this for a certain amount of time and there are lessons learned.”

While institutional purchases nationwide fell to a 22-month low in January, corporate investors were more active in the Atlanta region, buying 25 percent of homes sold, according to data firm RealtyTrac. That helped drive up Atlanta prices 37 percent since the March 2012 trough.

Outbidding Homebuyers

Last week, a group of 80 tenant and neighborhood advocacy organizations, including the National Community Reinvestment Coalition and the National Consumer Law Center, asked federal regulators “to address first-time homebuyers being outbid, tenants being displaced, and neighborhoods undergoing dramatic changes as private equity and investor cash continues flooding into local housing markets.”

Gray, 44, said the influence of corporate investors on home prices has been exaggerated. They represent at most 10 percent of the 2 million homes bought by investors in the last two years, according to Rahmani, the analyst.

“There’s a narrative out there that institutional buyers are driving the market,” Gray said. “But the reality is that institutional buyers are in a relatively limited number of markets, their buying is tapering and yet home prices continue to go up at a pretty strong clip nationally — even in markets where institutional buyers haven’t purchased a single home.”

American Homes

At the height of its activity, Blackstone’s Invitation Homes LP made purchases that may have comprised as much as 6 percent of sales for several months in one or more of its 14 markets, Gray said. This may have had a short-term impact on prices, he added.

“We definitely helped alleviate excess distressed housing stock,” he said. “We weren’t 5 or 6 percent for a sustainable period of time in any market.”

After collecting more than 21,000 homes in 42 markets, American Homes 4 Rent (AMH) has slowed its buying in some locations, chief executive officer David Singelyn said at a March 5 investor conference in Florida. The benefit of being in 22 states is that the Agoura Hills, California-based company has the ability to move within many locations and “buy as the opportunities ebb and flow,” Singelyn said.

Colony Financial Inc. (CLNY), a REIT that invests in Colony American Homes, slowed its funding for acquisitions last year to focus on improving operations, CEO Richard Saltzman said in a November conference call. Colony Financial has been gradually allocating less to the landlord business and capped its investment at $550 million for the quarter ending Dec. 31, Saltzman said last month.

Slowing Purchases

Colony American, which owns 16,000 homes, declined to comment, according to Owen Blicksilver, an outside spokesman for the Scottsdale, Arizona-based landlord. American Homes 4 Rent Chief Financial Officer Peter Nelson didn’t reply to a phone message seeking comment.

American Residential Properties Inc., a landlord with 6,000 homes, slowed acquisitions by almost half in its latest quarter ending Dec. 31. It invested $104 million in 633 homes compared with $204 million on 1,251 homes in the previous quarter, the Scottsdale, Arizona-based company said in a statement.

“We intend to maintain the pace of our acquisition activity at roughly the same rate we had in the fourth quarter,” CEO Stephen Schmitz said in an earnings conference call yesterday.

Ramping Up

Some corporate rental companies are still focused on growth.

“We’ve been ramping up acquisitions,” David Miller, CEO of Silver Bay Realty Trust, which owned 5,642 homes as of Dec. 31, said in a conference call with investors last week.

“Looking ahead, we plan to acquire in Florida and Texas while opportunistically adding properties to our Atlanta market and perhaps other markets as well.”

While their acquisitions slow, Blackstone and Colony are extending their reach into the rental business by offering financing to smaller landlords. Last month, Blackstone’s B2R Finance LP originated its first loan for $5.7 million and Colony formed a joint-venture with plans to originate $1 billion in landlord financing this year.

Both companies plan to package the loans as mortgage-backed securities, similar to Blackstone’s $479 million bond issue in October, the first securitization of single-family rental properties.

Long Haul

That’s concerning to U.S. Representative Mark Takano, a Democrat from California. This month he called for the Consumer Financial Protection Bureau, the Department of Housing and Urban Development, the Securities and Exchange Commission and the Treasury to report on the possible risks of “the recent increase of investor owned rental properties and the development of single-family rental-backed securities.”

Institutional investors are not going away even though their size will remain a modest part of the market, Gray said.

“We’re not selling the homes. We’re building a long-term business,” he said.

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The Impact Of 7 Million Foreclosures

Believe it or not, but since 2006 top, the US Real Estate market plowed through 7 Million Foreclosures. So much for that real estate recovery…aka…dead cat bounce.  

Based on my calculations, that number represents 10-15% of American households who have a very bad taste in their mouth when it comes to real estate and “owning their own home”. The American real estate psyche is definitely changing.  That is one of the reasons behind why you are seeing the home ownership rate dropping like a rock. Given today’s rebound in prices, unaffordability levels and investor speculation frenzy, there is only one direction this real estate market can go. To see when our Real Estate Market will collapse again, please Click Here to check out our real estate report. 

7 million foreclosure-completions

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The Impact Of 7 Million Foreclosures  Google

There is little bragging that goes on when a poor financial decision is made.  You rarely hear about the person that invested a sizeable portion of their retirement account into AOL at the peak or going all in on Enron.  The same applies to housing.  We are seeing chatter reflect that of 2005, 2006, and 2007.  Justifications are different but some people seem to feel they bought at the “perfect” time.  Just for the sake of curiosity I ran the numbers of total foreclosures since the crisis began with the housing peak in 2006.  In total, 7 million Americans have been served with the bitter taste of foreclosure.  On the flipside, since we know that roughly 30 percent of all purchases have gone to investors and Wall Street, we can say that probably over this same period 2,000,000 homes are now in the hands of some sort of investors (i.e., big money, small money, foreign money, and second homes).  You also have to wonder how many of these people that lost their homes in foreclosure are itching to get back on the horse and buy again.  Credit standards are fairly tough for getting a loan today even though rates are low.  And those with the credit and income are battling it out in flippervilles where “all cash” is dominating the scene.  There are likely some permanent structural changes that are a result of a stunning 7 million foreclosures.

 

The 7 million club

From reading the mainstream press all you hear are glorious signs of housing resurrection!  Come one come all into the house of real estate where the almighty Fed will allow no harm to occur.  Just sign and pray and the next thing you know you’ll be the next Donald Trump.  The flipping, rehabbing, and housing shows are once again filling the space on a cable station near you.  The perception of the Fed being this almighty protector of housing makes a bit of sense but where was the Fed in 2007?  Last time I checked the Fed came into existence in 1913, over 100 years ago.  Frankly, the Fed on their list of priorities has: to keep member banks afloat, keep financials steady, a deep attempt to protect the bond market, and more importantly keep interest rates low on our massive $17+ trillion national debt that will never be paid back.  Housing is low on the list of priorities especially with many of the foreclosures now shifting to “stronger” hands.

You wouldn’t know it but since the peak in 2006 we have witnessed 7 million foreclosures:

foreclosure completions

Even in 2013 we had 1.4 million properties with notice of defaults, scheduled auctions, and full on REOs taken on.  Early in the crisis these stories were common since they were a novelty to the press.  Now however, many of these properties are shifting over to large investors pushing inventory up.  A clear consequence of this is a large pool of potential buyers that are unable to buy.  7 million households now have a marred credit history.  In many hot metro areas given the 2013 jump in prices to get the best rates you will need good credit.  Contrary to nonsense being spouted you actually need a solid income to compete in any high priced metro area.  Plus, we are assuming this foreclosed club is even interested in buying again.  Many are opting to go the renting route.

The assumption is that the market is being driven up organically by regular households and that is not the case:

first time home buyer

Source:  Wells Fargo

The number of first time buyers is pathetic because household formation is weak and many young Americans are living at home with mom and dad.  Forget about buying, they are having a tough timepaying higher rents to the new feudal landlords.  You would expect with the rapid rise in prices that existing home sales are off the charts but they are not.  For most people in the perpetual serf demographic, a mortgage is necessary to buy but look at requests for mortgages via applications:

mortgage apps for purchase

We are back to levels last seen nearly 20 years ago!  Only difference is that we have 50,000,000 more people today walking the streets of the U.S. of A. than we did back then.  Since access to middle class living is getting tougher thanks to weak income growth, more people are opting to rent:

rentals vs households

We continue to add a large number of renting households.  For the 7 million foreclosed souls, credit destruction might force their hand but many might have gotten a healthy vaccine from the “real estate only goes up” mantra.  We have new folks taking their chance at housing roulette with placing a massive bet on red and many diving in with ARMs to stretch their budgets to the fullest potential.  Some luck out but only if their timing aligns with bigger macro events.  They then back fill the narrative to justify their behavior.  Confirmation bias!  It might come as a shock that many things that happen to you, good or bad may have nothing personal to do with your decisions.  I’m sure we have some aspiring Trumps in Greece or Liberia but the environment isn’t setup for mad real estate speculation.  You also had many that escaped the last crash by tiniest of margins.  Say someone that made that last fabulous flip in Compton, Pacoima, Palmdale, Las Vegas, or any market that is eons away from the peak.  Where they masterful timers?  Unlikely.  They lucked out.  The massive bubble forgave their sins.  But it doesn’t forgive all.  The beauty of this QE juiced market is the Fed has turned us all into speculators whether we admit it or not.  By default you are playing this game whether you want to or not.  Cautious and have your money in a safe bank or CD?  Inflation is eroding your purchasing power.  Thinking of buying?  This might be a turning point:

us real prices

Gains are stalling out largely because investors are slowly stepping back and households are still trying to gain their footing in this new economy.  Those 7 million foreclosures are massive and those people walk amongst us.  It is unlikely that we will hear their horror stories in mass.  Even in the crash days of 2007 through 2012 (the trough) you were hard pressed to see people discuss this openly.  Yet the confirmation bias going on right now is frothy and does remind us of 2006 and 2007.

Want to see some of this insanity in action?  A commenter pointed this gem out:

la home

2125 VALLEJO St

Los Angeles, CA 90031

4 beds, 3 baths (listed at 3,500 square feet)

The house is currently listed at $598,000.  But let us look at the sales and listing history here:

sales history

They actually tried selling this place for $695,000!  The last sale price was $219,000 in 2013 which tells us some major rehab work went on here.  But $476,000 worth of work?  Come on now.  Even the sellers don’t believe this and that is why they have dropped the price nearly $100,000.  Thankfully Google gives us a bit of a glimmer of the home pre-makeup and Photoshop filters:

google streetview

People are pulling figures out of thin air here especially with that $695,000.  The schools in this area are sub-par so factor in tens of thousands of dollars to send the kid(s) to private school.  This home qualifies for a Real Home of Genius Award.  In the game of musical chairs, there can only be one winner.  It is about timing.  There are many signs showing a tipping point is occurring.  Unlike stocks, real estate turns around like a large cargo ship, slowly and surely.

While we may not hear much on those 7 million foreclosures, rest assured that many Americans are no longer in the camp that believes the Fed can do everything and anything to keep prices up.  For the big players, real estate is merely one tiny piece of their portfolio like owning a Rembrandt or fine jewelry.  Most of their wealth is in stocks and bonds.  Ironically Wall Street owning rental property is going to put them face to face with the proletariat and will soon come to realize that you can only raise rents based on local area incomes.  Try cash-flowing a property in Santa Monica or Pasadena at these rates.  Even flippers are starting to enter pricing purgatory one bad flip at a time.  At least someone will get a new granite countertop sarcophagus home built in the 1800s with hardwoods floors!

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California Middle Class Is Priced Out. What’s Next For California Real Estate?

Do not worry my dear friends. The upcoming “severe” bear market in real estate will fix this issue. To read my full report on this matter and to see the “why, how and when” please Click Here

While upscale places like Irvine and Pasadena approaching their 2006-07 highs, the middle class neighborhoods are still down to the tune of 30-40% with higher % of Californians not being able to afford a home.. Plus, over 30 percent of California buyers are cash investors (hedge funds, institutions, etc…). BTW, that number is as high as  75-80% in Las Vegas.

All of this is just another symptom of the enormity of the credit bubble juiced by the FED. While this might be the case now, the upcoming bear market in real estate will resolve this problem sooner rather than later. 

california-home-ownership-rate-investwithalex

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California Middle Class Is Priced Out. What’s Next For California Real Estate? Google

From our friends at DoctorHousingBubble.com 

California is a land of booms and busts.  Generations ago gold rush fever brought many to speculate and gamble for future glory.  In the 1900s the promise of uninterrupted sun and great weather lured families to the area.  This trend has only magnified with global forces becoming so dominant and people fully connecting and thinking alike on the technological hive mind.  In other words, people are seeking the same goals and dreams.  People also love speculating on real estate.  Language is hardly a barrier when documents can be translated in the click of a mouse button.  California housing is leaving many middle class families behind as the state gentrifies dramatically.  Reports are very clear, and that is only one out of three California families can actually afford to purchase a home at today’s prices.  Yet the market is attracting investors from all across the country and world.  People are willing to leverage their income with low interest rates and funnel upwards of 50 percent (or more) of their household income into real estate.  What is interesting is that in many “prime” areas housing prices are inching back close to their former peaks.  Yet working class areas, only a few miles away from these markets are still years away from reaching their former peaks.  California is a magnifying glass to the slow erosion of the American middle class.

Prime areas reaching peaks while other areas crawl out of recession trough

As mentioned in a previous article, housing is an odd industry where prices are set at the margins.  In the US, we have 81 million single family homes.  From the latest figures we have something like 2.2 to 2.5 million homes available for sale (existing and new homes).  What this means is that at any given point we have roughly 3 percent of all existing inventory on the market for sale.  This is nationwide.  In some prime markets, you have even lower percentages and this drives up prices especially if speculation is running wild.

Zillow has some great reports on markets across the US.  Let us look at a few Southern California cities in terms of the latest housing figures:
California areas

Source:  Zillow

This chart is very telling.  First, you’ll notice that places like Irvine and Pasadena are only 4 percentage points away from reaching their previous peaks hit in 2006-07.  These markets pull from local investors, global investors, flippers, Wall Street, and of course professional families.  But take a look at areas like Compton (still off by 38 percent from the peak), Inglewood (off by 32 percent), Santa Ana (off by 36 percent), and Santa Clarita (off by 26 percent).  Santa Ana is only a few minutes away from Irvine but this is like comparing two different worlds.  Of course the majority of people by definition live somewhere in the middle and that is why looking at household incomes is important.  Yet these are unlikely to be the current buyers.  Over 30 percent of California buyers for close to half a decade are coming from big money investors.  Many are stretching out with FHA insured loans but this is likely to be in more working and middle class neighborhoods.  Talking with colleagues in the industry they mention that FHA in prime areas is virtually a no-go for buying with sellers.

People might look at a home value of $749,200 in a place like Irvine and scratch their heads.  But with ARMs, interest only loans, and dual income families people are willing to stretch to buy.  Investors of course are willing to go deep into the game.

Yet we may be seeing a slowdown here, even in prime areas.  For example, in Irvine inventory hit a low of 400 late in the fall and is now at 620 (up 55 percent).  You’ll also notice that month-over-month prices dipped which is telling but then again, your typical California family is not going to swing a $750,000 home.  Which is really the big divide happening across the US, a gutting of the middle class.

Homeownership not available to everyone

I made the argument close to a decade ago that homeownership was not always the best option.  For most parts of the US, owning may be a good option (when the median home price is $190,000) but in high cost areas the math isn’t so simple.  Renting may make a lot more sense for those starting a career and looking for mobility for work.  Yet young Americans are facing a very tough economic climate.  Beyond the economics, the homeownership rate has fallen dramatically in California:

Even before the bust, the homeownership rate was already trending back to where it was in the late 1980s.  Not much has changed since.  In fact, with high levels of investors buying properties and lower sales figures, this trend is likely to continue.

For many families, the quick run-up in prices in 2013 has completely shut them out.  We are now seeing investors slowing down given that good deals are harder to find.  Some are venturing into lower priced areas but you also deal with lower incomes.  This may matter if you are looking at hiking rents or trying to flip to an actual potential long-term homeowner.

Housing starts and future trends

Even if housing were to erase the gains of 2013, California has essentially shut out a good number of middle class families from owning.  The market has hit a turning point recently:

CAR report

You’ll see that across the state, year-over-year prices went up 22.1 percent but fell 6.2 percent over one month.  Inventory is up 22 percent from last year and time on the market is up 20 percent as well.  More to the point, sales volume has fallen by 13 percent even in the face of rising prices.  At current price levels in more selective markets, you really have to be upper middle class to wealthy to own a home.  In fact, you will likely need to be in the top 15 to 10 percent of household income (meaning a household income of $150,000 a year is the minimum to play the game without leveraging your entire future on real estate).

California is largely leaving a good portion of the middle class out of the homeownership race.  This trend looks to be the case for years to come.

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Mortgage Origination Collapses, Cash Is King. What’s Next?

 I know, I know. You are just as shocked to the core as I am. Here is a quick summary: 

  • Loan originations declined to the lowest point since November 2008
  • Property sales remained relatively strong, supported by increased cash purchases…..
  • Approximately 709,000 HARP-eligible loans vs. 2,306,000 in Jan. 2013
  • 2013 home equity lending up 26 percent vs. 2012, but still down over 90 percent from 2006
  • HELOC performance in recent vintages is pristine, but new problem loan rates continue to rise for those beginning to amortize

So, loan origination is the lowest since 2008 and down 60% year-over-year, but investors are still buying hand over fist. Well, that’s dandy. If Blackstone Group is financing dentists and plumbers so they can find them investment properties it mean the real estate market is going through the roof. Right? Duh…Read my full report on collapsing Real Estate Here. 

USHOWN_Max_630_378

Black Knight’s January Mortgage Data Shows Further Declines in Loan Originations and Fewer Refinance Prospects  

But First Increase in Home Equity Lending Since 2006

March 04, 2014
 
  • Loan originations declined to the lowest point since November 2008
  • Property sales remained relatively strong, supported by increased cash purchases
  • Approximately 709,000 HARP-eligible loans vs. 2,306,000 in Jan. 2013
  • 2013 home equity lending up 26 percent vs. 2012, but still down over 90 percent from 2006
  • HELOC performance in recent vintages is pristine, but new problem loan rates continue to rise for those beginning to amortize

JACKSONVILLE, Fla. — March 4, 2014 — Today, the Data and Analytics division of Black Knight Financial Services released its latest Mortgage Monitor Report, looking at data as of the end of January 2014. Black Knight observed a general decline in the overall “refinancible” population of both traditional and HARP-eligible borrowers with associated loan origination volumes dropping in both categories as well.

“In January, we saw origination volume continue to decline to its lowest point since 2008, with prepayment speeds pointing to further drops in refinance-related originations,” said Herb Blecher, senior vice president of Black Knight Financial Services’ Data & Analytics division. “Overall originations were down almost 60 percent year-over-year, with HARP volumes (according to the most recent FHFA report) down 70 percent over the same period. These declines are largely tied to the increased mortgage interest rate environment, which is having a significant impact on the number of borrowers with incentive to refinance. A high-level view of this refinancible population shows a decline of about 13 percent just over the last two months. 

“Of course, in addition to higher interest rates, a good deal of this decline can be attributed to the fact that a majority of those who could refinance at historically low rates in recent years already have, and we see a similar dynamic in terms of HARP-eligible loans. The volume of HARP refinances over the past year has driven this population down to about 700,000 loans in January 2014, as compared to over 2.3 million at the same time last year. From a geographic perspective, outside of Florida and Nevada, we see the Midwestern states of Illinois, Michigan, Missouri and Ohio have among the highest percentage of HARP eligibility.”

However, while loan origination volume has declined year-over-year, property sales activity remained relatively strong through year-end 2013, with December’s monthly sales up 3.7 percent year-over-year and full year 2013 up 8.4 percent vs. 2012. Fourth-quarter sales were bolstered by a jump in the percentage of cash sales, to over 40 percent of the total, up from about 25 percent in the prior year.

The most recent data also marked 2013 as the first year in which home equity lending had increased since 2006 — though total home equity volumes (including both loans and lines of credit) were still down more than 90 percent from that time. Black Knight found that the current resurgence in home equity origination is concentrated in so-called “super-prime” borrowers, with average credit scores for first- and second-lien HELOCs at 786 and 779, respectively. This concentration has paid off in terms of loan performance: delinquency rates on HELOCs originated over the past four years have averaged at just 0.1 percent. At the same time, HELOCs originated prior to 2004 (and therefore in the amortizing stage of the loan) are seeing increased rates of new problem loans — up 27 percent year-over-year as of January.

           As was reported in Black Knight’s most recent First Look release, other key results include:​

​Total U.S. loan delinquency rate: 6.27%    ​
​Month-over-month change in delinquency rate: ​-2.96%
​Total U.S. foreclosure pre-sale inventory rate:  ​2.35%

 
​Month-over-month change in foreclosure pre-sale inventory ​rate:        ​-5.32%
​States with highest percentage of non-current* loans: ​MS, NJ, FL, NY, LA
​States with the lowest percentage of non-current* loans:         ​ ​MT, CO, AK, SD, ND

​*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

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Mortgage Origination Collapses, Cash Is King. What’s Next? Google

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Shocking News: 1.3 Million Homes In California Are Still Underwater

Even though the prices have surged 20-30% in some areas of California last year alone, incredibly, 1.3 million homes are still underwater. If you count the number of houses with 10% equity or less the number should easily approach 2 million homes or 20%.This should come as no surprise to those following this blog.

What is surprising to me is that this level of “undervaluation” still exists in today’s market. Even though the FED pumped in close to $1 Trillion into the US Economy over the last 3 years, this “dead cat” bounce in real estate is failing to impress.  With an upcoming severe bear market and recession within the US Economy, real estate market is bound to decline further. You can read both reports and timing associated with both markets Click Here.   

Just as quick summary, real estate market is completing stage 2 (bounce, aka…dead cat bounce). Once this stage is over, I believe it is already over, the real estate market will start its stage 3 collapse. Typically, this stage is more powerful and takes the market much lower than the one before it. Get yourself ready. 

underwaterhouse-investwithalex

Our Friends at Dr.HousingBubble: 

Does housing policy amount to price fixing from banks? Negative equity, accounting standards, and control of supply. 1.3 million homes in California still underwater.

Housing is an industry made and broken at the margins.  This is why in areas like Beverly Hills or Newport Coast, a small number of sales can skew prices dramatically.  Housing prices in more homogenous markets where many homes are built in cookie cutter fashion provide a better metric of future appraisal values.  How so?  If you have a builder building 1,000 identical homes in Las Vegas, it is hard to justify that your 3 bedroom 2 baths home at 1,500 square feet is valued more than an identical one next door even though you might think it is worth more.  Also, housing is the biggest purchase for most Americans.  You may buy multiple cars over your life but not many homes.  This is why the measures to control inventory by banks and the flood of investors has tilted this market into unfamiliar waters.  High prices in the face of very low inventory.  People struggling to pay mortgages yet banks having no issue buying up a large portion of single family inventory.  Given that the Fed is the mortgage market, are we seeing a minor (or major) portion of price fixing in housing?

Price fixing in real estate

First it may be useful to give a standard definition of price fixing:

“Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand.”

For housing, most of the definition is met.  Banks fully control distressed inventory and the Fed essentially owns the mortgage market.  Since real estate is not standard like say a farm product, there is little ability to set prices in a uniform way however by controlling inventory via stunted accounting rules and slowing down on foreclosures over the years, slowly real estate has moved from weak hands (i.e., American consumers) to stronger hands (i.e., Fed backed banks).  The main mission of the Fed was to protect member banks (many that owned overvalued real estate and derivatives).  All other economic results have been a consequence of this primary mission.

One of the most obvious ways this is revealed is through the number of properties that are still underwater across the nation.  First, take a look at how many properties remain underwater in California where home prices jumped last year in a way we have not seen since the last housing bubble:

NegEquity1

15 percent of California homeowners are still underwater despite the dramatic jump in prices last year.  Throw in those with less than 10 percent equity and you have nearly 20 percent of all homeowners underwater or near underwater.  A massive amount of California homeowners have no equity in their homes even though prices surged last year by 20 to 30 percent in some areas.

Yet price gains are tapering off.  Investors have lost some of their appetite in the market.  Investors buy with the intention of making money off rental incomes or flipping in an ever increasing market.  Prices today are stuck where they were back in the summer of 2013.  The ability for households to buy is constrained by weak income growth.  In California, only 1 out of 3 households can actually purchase a home today at current prices and with their actual earned income.

In California, we have a total pool of housing units of 12,552,658:

census data california

Of these 6,781,817 are occupied by “owners” although you will see from the previous chart that 1.3 million of these owners are fully underwater.  They are paying more on their asset than it is currently worth.  This is typical for a depreciating asset like a car but not a home.  Many of these people bought during the last bubble that ended more than half a decade ago!

Banking policy has worked well for banks and investors have done very well over the last few years.  Peppered throughout the mainstream press is the grim reality that over 5,000,000 households have lost their mortgaged properties via foreclosure.  Many of these homes simply shifted hands to Wall Street, hedge funds, and investors.  The single family home market has become a speculative vehicle once again simply in a different form.

We’ve already noted how many homes are “owner occupied” so it might be useful to see how many homes sold in the latest month of data:

January home sales for California:           25,832

Last month, only 0.38 percent of all properties in the owner occupied category shifted hands.  If demand, supply, interest rates, and emotions are playing into the trend then these few properties will set the market.  The average January sales volume is 31,393 dating back to 1988 in California so demand was much lower (despite more inventory and a much bigger population) yet prices were higher because of heavy investor buying.  Investors seem to be pulling back a bit and that is why we are seeing some more inventory creep in and sales inching back.  Price gains are also moderating.

It is safe to say that the current housing market has many forms of price fixing through a connection of government policy, banking regulation, and Fed monetary policy.  At the moment, this may not be in favor of future homebuyers but it certainly is in favor of current owners and banks.  The dialogue now seems to revolve around “do I speculate and jump in?” or “will market forces break through the control and shift prices?”  This of course assumes you want to “own” although many are opting to rent now.  I don’t buy the arguments from people saying that they simply want to buy for security and then whine how they “missed” the last opportunity and are now locked out forever.  If you really believe that thesis, why not buy today?  If you are buying for the “long run” meaning 30 years or so this minor jump up is nothing in the full scheme of things.  Similar to dollar cost averaging, if you have a long horizon why does the short-term matter?  Many however are speculating but don’t want to call it that.

This is fascinating from an economic stand point because we have never been in a situation like this especially with so much riding on housing.  Price fixing is not a dirty word necessarily but this is definitely going on to a certain degree.

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Shocking News: 1.3 Million Homes In California Are Still Underwater Google

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Real Estate Collapse 2.0 Why, How & When

 infographic 2 - real estate - main picture

If you ever want to ascertain the primary psyche of the American culture, just watch 1 hour of TV, paying particularly close attention to the commercial breaks.  Here is what “The Man Behind The Curtain” wants you to do. The worst part is… most people seem to comply.  

First, you must go to college, get a massive student loan and get a bunch of credit cards. After you graduate, buy your girlfriend a giant diamond ring, get married and she will love you forever.  Then buy a house, a new car, start a family, get a dog and drink a lot of beer.  Of course, the overwhelming pressures associated with all of the above will grind you into the ground. But not to worry, our top notch pharmaceutical and medical industry got you covered.  Bonner pills, ADD pills, depression pills,  high blood pressure pills, surgery and who can forget ….adult diapers.  And that’s your future, in a nutshell.  

In all of the above, one thing stands out. There is nothing more prevailing in the American culture than the notion that any self respecting, reasonable American with half a brain should own his/her own house. If you don’t, you are viewed as a failure. Now, before I destroy that notion with a few simple calculations and tell you why the housing market is going down the drain again (yes, it’s happening right now), please allow me to destroy the notion of home ownership with some simple common sense.

Reason #1: You Will Never See Your $50-100K Cash Down Payment Again:

Let’s say you are a responsible member of society and instead of getting Interest-Only-No-Down-Payment-I-Am-Never-Going-To-Pay-It-Back Loan, you get a typical 30-Year fixed with 20% down payment. In fact, you have worked incredibly hard and saved up $50,000 – $100,000 to do just that. Congratulations. However,  the stupidest think you can do next is to buy a house and get a mortgage. If you do, kiss that money goodbye. Under today’s monetary conditions you are never going to see it again.

“But Alex, my realtor is telling me that buying a house right now is an opportunity of a lifetime….if I don’t do it now, I will never be able to afford it again, recovery is here, the prices are about to go through the roof, blah, blah, blah…”  – Everyone.

Well, unless your realtors name is George Soros or Warren Buffett, tell your realtor to go pound sand.  What we have experienced between 1994-2007 in the real estate sector is not only atypical, but is truly once in a lifetime. More on that later, but if you are lucky enough to sell the house you buy today at a breakeven, you will still not see the down payment again. It will simply roll over into your next house.  From my point of view it is a lot better to invest that money into your future as opposed to park it in an illiquid asset that is likely to lose at least 50% of its value over the next 2 decades.  

Reason #2: Closing Costs, Maintenance & Property Taxes:

Finally got that house of your dreams?  Great, now bend over and take it like a man. Everything in this house will break down over the next 20 years and it will cost you a boatload of money to maintain.  Throw in closing costs and property taxes and you talking about real money.  Realtors themselves estimate you should budget about $8,000-$12,000 annually on a $500,000 house. Sure, there is an interest deduction on your taxes, but typically (based on your family’s tax structure) the costs above are never fully recovered.

housing bubble

Reason #3: It’s Not An Investment:

Stop saying that your house is an investment. Just stop. It’s a debt burden, not an investment.  Investments produce income and pay dividends. Your house doesn’t do either unless and until you rent it out.  Yes, your house can exhibit capital appreciation, but that is not an investment either. That is more accurately defined as a speculation.  What we saw during the housing boom was just that. Speculation.  Household incomes didn’t go up 500% between 1994-2007, but house prices did.  People who were in the real estate sector simply got lucky. Now, it’s time to ride this Cho Cho Train down.  

Reason #4: Your House Is A Trap:

Got that house of your dreams in The City of Compton, California? Congratulations, you are now trapped.  Even if you get a $100K job offer to wax dolphins in Fiji, you won’t be able to take it. You will be tied down and unable to sell your house at break even. Particularly over the next 2 decades and that is exactly where “Corporate/Government Interests” want you to be. They don’t want you to have the ability to move and get a better job elsewhere. They want you to be tied down, “to have roots”, to be paid less. That wouldn’t be the case if you could increase your salary 25-100% by simply picking up your things and moving across the country. 

And that’s just a few of the points. I can keep going, but I think you get the point. The housing myth is just that….a carefully crafted marketing message.  

Now, let’s get to the best part.

Here are the reasons why you should be mentally committed if you are even thinking about buying a house. Plus, why you should sell your house NOW if you are misfortunate enough to OWN one.

First, you must understand where we are and the cause/effect behind today’s market.

UNDERSTANDING THE HOUSING MARKET, ECONOMY, SPECULATION AND DRIVERS BEHIND BOTH.

Yes, I called for the real estate crash and credit collapse as early as 2005. While my call was a little bit early and premature, eventually it was right on the money. Now, I am saying that the housing crash is not over. 

Before we can understand where we are now and where we are going in the future we must understand where we came from. The Real Estate run up that we have experienced between 1997-2007 has no historical  precedent.  Real estate data going all the way back to 1890 clearly shows that the US housing market basically appreciated at the rate of inflation.  Yes, there were some bubbles and substantial declines, but overall, appreciation at the rate of inflation is an appropriate way to look at the US real estate sector.

us-history-home-values

A QUICK HISTORY LESSON:

All of that changed in 1997 when Bill Clinton signed The Taxpayer Relief Act into law, basically allowing $250,000 in tax free capital gains in real estate.  While real estate was already appreciating at a good clip at that time, that law added fire to the trend. 

Later,  fearing significant economic slowdown in 2002-2003 the Bush administration added a huge amount of jet fuel to the Real Estate Bubble by cutting interest rates and making mortgage finance available to everyone (yes, even to the dead people).  As people used to say, if you can fog a mirror you can get a mortgage. Of course, all of that led to the largest finance bubble in the history of mankind that “kind of” melted down in 2007-2009. I say “kind of” because most of those excesses are still within our financial system and will have to be worked through in the future.  

WHERE ARE WE NOW?

Issue #1: US Home Ownership Rate Is Plunging

On historical basis, home ownership rate in the US is in free fall. Take a look at the chart. I think it speaks for itself.  

USHOWN_Max_630_378

Issue #2: Real Estate Affordability Is Plunging

Take a look at the chart as it speaks for itself. The affordability index is in free fall as well. Most certainly, due to higher interest rates and rising prices. fredgraph111

Issue #3: Interest Rates Are Going Up             

The trend has shifted up and the 10-year rate is up 100% over the last 12 months. I gave detailed interest rate analysis here. Please take a look here.

Issue #4: US Economy & The Stock Market Is About To Turn Down (Big Time)

This has been the primary trend in our blog since inception. Based on our mathematical and timing work the stock market will go through a bear market between 2014-2017. Pushing the US Economy back into a severe recession.  To learn more about the upcoming bear market please Click Here and read the report.  With further job losses , lower incomes and an economic contraction it would be impossible for the real estate sector  to sustain any sort of a rebound. On the contrary, as the economy tanks real estate prices are bound to collapse further.

Issue #5: Who Is Buying All Of These Properties For Cash Today?

Chinese buyers, hedge funds, banks themselves, investors, speculators, etc…..  Who cares!!!  Remember all those Japanese investors buying everything they could in California and Hawaii in the late 1980′s. I wonder how that turned out for them.

In one of my previous reports I have outlined how large hedge funds, including Blackstone Group, are buying tens of thousands of real estate properties across the nation. With some hedge funds and financial institutions going to the extreme and investing in the likes of plumbers and dentist to help them find and manage properties(Click Here To Read). In Las Vegas alone 70% of real estate purchases over the last year have been done by investors. If all of this doesn’t not scream out “Market Top” at you, I really don’t know what will.

las-vegas-home-buyers-with-cash1

On a more serious note, notice that I didn’t say Average American Family. That is the only category that we should track if we want to accurately predict the future trend in the US Real Estate market. Every other category is irrelevant over the long run.  And guess what? They are not buying. See the charts above. 

Issue #6: Bear Market In Real Estate (sucks people back in)

As I have said in one of my previous posts (US Real Estate At A Turning Point), this is how the bear market works. This is the stage #2 bounce, before the big decline (stage #3).  The bear market tends to suck people back in, offer them perceived safety and a high return before slamming the door, ripping their head off, drinking their blood and taking all of their money. The US Real Estate market is topping in Stage #2 run up here. That is why you are seeing so many divergences. The market should turn down soon. Beware.  

Dead-cat-bounce-graph-yahoo-finance

FUTURE OF REAL ESTATE:

Real estate is not made of Gold.  There is a tremendous amount of land available in California, Florida, Nevada and all over the US.  There is no housing shortage. As such, expect real estate to decline significantly in order to revert back to its natural inflation adjusted mean. It might take a few years, it might be different for various cities, but one way or another the market will get there.

BubbleBurst investwithalex

HOW FAR DOWN?

Let’s do very simple math for the San Diego market.  It doesn’t have to be exact for our purposes.

Setup:

  • San Diego Median Family Income: $61,500
  • As Per Various Financial Guidelines Families Shouldn’t Spend More Than 30% Of Their Income On Housing.  That means a $1,500/monthly payment.
  • Median Home Price in San Diego: $425,000
  • Interest Rates: 30 Year Mortgage 4.35% (Rates as of 2/21/2014) 

With such fundamental input variables median house value should be $300,000 -OR – A 30% DECLINE     ($1,500x360month@4.72%)

What if interest rates go to 7% over the next 5 years, which can easily happen? 

The fundamental value of the median house drops further to $225,000 -OR- A 47% DECLINE

Also, don’t forget that markets oftentimes overshoot to the bottom, just as they set blow off tops. In such a case I wouldn’t be surprised to see a median price of $150,000- 200K -OR- A 65%-50% DECLINE

You say impossible….. I say study financial markets. Nothing is impossible. Here is another way to look at this. Have household incomes increased 500% over the last 20 years? Nope. They have barely moved. Therefore, real estate decline in excess of 50% would simply return the prices to their inflation adjusted base.

TIMING:

In one of my earlier reports “I Am Calling For A Real Estate Top Here“ I clearly outlined the fundamental reasons of why the real estate market has peaked and is now in the process of rolling over. I continue to believe that the nationwide real estate prices are in the process of setting in a top. Since real estate is local, it is much more difficult to identify exact tops. As such, we must go back to the stock market in order gage a better understanding of WHEN the real estate market will tank.

Typically, the stock market foreruns the actual economic recession by 6-12 months. In other words, the stock market prices break down 6-12 months before Economic Data confirms a recession. While real estate prices, in theory, should start breaking down in conjunction with the stock market, that is not always the case. As such, it would be prudent for us to say that the housing prices will start breaking down 6-9 months after the start of the bear market in stocks.

As you know, it has been my claim (based on my mathematical and timing work) that the stock market topped out on December 31st, 2013 ushering in the final leg of a cyclical bear market. If such is the case, we can safely assume that we will start seeing drops in real estate prices sometime in the summer of 2014. Once the market rolls over and confirms, we should see a significant acceleration to the downside in real estate price over the next 3 years (at least).

With that said, we already starting to see evidence that the housing has topped. Please see volume data from RedFin.com below. As always, the volume of sales is first to go. Prices tend to follow. 

california-sales

WHAT SHOULD YOU DO?

That part is somewhat simple. If you do not own a home and thinking about buying one…..just DON’T do it.  You will save a lot of cash (and your down payment) by renting and waiting for the market to come down over the next few years.

If you already own a home the situation is a little bit tricky. Listen, I am no fool and understand that your house is a home and is important for family formation/structure. If you are happy with you home and could care less what is going on in the real estate market……stay put. However, if you are thinking about selling your home, right now would be a great time to do so.

If you own rental properties that generate positive cash flow and they are not in any way tied into the upcoming real estate decline, keep them. If you are buying investment and/or rental properties as a “speculation” in hopes of capital appreciation or a “flip” you are better off liquidating all of your positions (right now) and getting out. 

CONCLUSION:

Now, I understand and agree that there are various market forces at play that make the picture a lot more complicated. Interest rates, timing, mortgage finance, cash buyers, the FED, foreign buyers, speculation, location, supply/demand, etc….    However, fundamentals will always prevail over time. Everything else is just temporary BS. 

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Real Estate Collapse 2.0  Why, How & When Google

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Why Is Donald Trump Freaking Out? He Knows What Will Happen In The Real Estate Over The Next Few Years. It’s Time You Find Out As Well.

housing bubble

Today’s 5-10 Minute Podcast Covers The Following Topics:

Reader’s Question: “I am thinking about buying a house, the prices are up significantly in my area over the last few years, should I do it now or wait?”  – Lili, Maryland. 

    • The Secret Behind Today’s Real Estate Prices. 
    • What The US Government Doesn’t Want You To Know About Real Estate. 
    • What Will Happen Next. Trust Me, It Is A 100% Certainty Now. 
    • What You Should Do To Save or Make A Lot Of Money Over The Next Few Years. 

Please tweet me your questions @investwithalex

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Why Is National Association of Realtors Trying To Destroy America …..Again

 CNBC Writes: Pending homes plunge, surprising economists

evil realtos investwithalex

Signed contracts to buy existing homes dropped 8.7 percent in December as abnormally cold weather hit much of the U.S., according to a new report from the National Association of Realtors.

The plunge caught economists by surprise. Economists polled by Reuters had forecast pending home sales would tick up 0.3 percent.

This pending home sales index fell to 92.4 from a downwardly revised 101.2 in November. These signed contracts are an indicator of sales in January and February, and are at the lowest level since October 2011.

“Home prices rising faster than income is also giving pause to some potential buyers, while at the same time a lack of inventory means insufficient choice. Although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors,” said the association’s chief economist, Lawrence Yun.

There is close to 1 million Real Estate Agents in the US. I think it’s time we give a serious consideration to rounding them all up and shipping them to Siberia.  Maybe we can make some sort of a deal with Mr. Putin in exchange for oil or natural gas.  For all I care, let them sell pine trees to hungry bears in Taiga and get paid with berries. We should start with Lawrence Yun.

Come on!!! Does anyone even believe NAR fools anymore.  Keep in mind, NAR  is the same organization that was cheering the housing bubble all the way until it blew up and killed all of those poor souls in Florida, California and Nevada who couldn’t fog a mirror yet each had 10 houses to their name. Now they are blaming the “cold weather” for a severe plunge of 8.7%.  Jesus Christ, I guess it was too cold for all of those Chinese investors and hedge funds with bags full of money to buy real estate in southern states.  

Unlike NAR, dear reader, I will not insult your intelligence.  You see, in my October post  “I am Calling For A Real Estate Top Here“, I clearly outlined a case for why the real estate market is finishing its “Dead Cat Bounce” and is about to roll over to continue its bear market that started in 2007.

What is a dead cat bounce? Allow me to present a powerful illustration I worked on for 2 days.

Dead-cat-bounce-graph-yahoo-finance

Such bounces exist, once again, to fool the masses. They act to suck people back in with the promise that the worst is over.  Fools rush back in only to have the trap snap shot right behind them.  On Friday I wrote about Hedge Funds funneling money to plumbers and dentists so they can become “landlords”. If that doesn’t scream out “Market Top”, nothing else will and you are on your own.

Today’s real estate market is not the function of economy, jobs, supply/demand, family formation or any other crap real estate propaganda machine (aka NAR) would like you to believe. It is a function of credit and speculation.

It is has been artificially driven up by over $3 TRILLION of monopoly’s money being pumped into our economy by Uncle Ben.  No, not the Uncle Ben that sells rice, but the one at the FED.

When the credit bubble goes, you will find the real estate bubble collapsing along with it…..again. 

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Why Is National Association of  Realtors Trying To Destroy America …..Again Google