housing realestate

house home realestate

TND Guest Contributor:  Dave Kranzler

This commentary is from a subscriber to my Short Seller’s Journal:

The 3% down loans seem to have brought in a lot of first time buyers into the market. I live in the east bay area of California, which is more affordable than San Francisco, or the South Bay area but still painfully expensive nonetheless. Rents are now the same as a mortgage payment on a home in the exurbs.  So a lot of people seem to be buying for this reason. They only look at the monthly payments but overlook the fact that when financial markets seize up and the music stops, you could be left holding the bag on a hugely upside down mortgage and can’t get out of a 30 year commitment by selling.

A friend of mine, who is a borderline novice in financial matters, just bought a home. He has meager savings and has jumped on the 3% down bandwagon. This is the guy who until I told him to pay off his credit card balances because of the usurious interest rate, had no clue the damage they were doing to his finances.   He was making minimum payments on them because he wanted to build up his savings –  I explained to him how by earning 0.01% interest and paying out 18-24%, his savings were getting depleted every month.

The Bottom line is people who are not too financially savvy are being lured into the housing market by the banks. I don’t know how long this 3% crap has been going on, but it seems that Banks are desperate and looking for newer segments of people to swindle.

Everyone has probably seen the report on NYC high end real estate posted in Zerohedge –LINK.  While the suburbs in Denver are still hot because of the huge influx of people moving here from California,  I’m seeing the same price cuts and inventory build-up  in Denver that is described in the ZH piece.  I get listings on just one central Denver zip code. Yesterday alone i received two price changes of 5% on listings over $850k.The inventory in that price segment is bulging.  Over the weekend I was hit with more than 20 new listings and price cuts all across the price spectrum.  I have received six more today – 1 new listing and five price reductions.

Now that the NAR is begging the Government to give debt-bloated college graduates even more debt to buy a crappy starter home, I can smell the desperation to keep the housing market’s “gerbil” running on the wheel.  But the gerbil is like a meth-addict that has been overdosed for too long with near-zero interest rates and recklessly lascivious Government mortgage subsidies.  Like the gerbil, the housing market is about to seize up and re-collapse.  It will be an event that is much more horrific than what occurred in 2008.

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About Dave Kranzler:

Aspen1-dave I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics.  Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.

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house realestate housing jenga
It’s happening here too, NE Florida. Lots of inventory in higher priced areas (around $400k), lesser expensive areas are selling but at much reduced frequency. Lots of for sale signs out there and they’ve not come down. I see price reductions now, and still no traffic for sales. It looks exactly what I witnessed 7 years ago!  – A reader’s comment
TND Guest Contributor:  Dave Kranzlerhouse realestate housing jenga
While the NAR was pleased to report a gain in May over April for its statistically brewed annualized home sales rate for May, it also revised lower its original “guesstimate” for April sales.  In other words, existing home sales are occurring at a slower rate than originally reported.  I would bet that in July when June’s number is reported that the NAR will revise lower May’s report.
The data is distorted due to the “seasonally adjusted annualized rate” calculation.  In theory, existing home sales should be higher than May last year because, with lower interest rates (manipulated by the Fed) and easier access to Government subsidized mortgages (FNM, FRE, FHA, VHA, USDA), the monetary and fiscal policy implementors running the U.S. have made it as easy for someone to buy a home now as it was during the big bubble.  I would argue that the “increase” in reported home sales is fully attributable to “seasonal adjustments”  which become exaggerated when the number is converted into an annualized rate.
Interestingly, the first-time buyer segment of the market took big dip from April.  I have suspected based on my observations of the Denver market that the largest component of homebuyers are investor/flippers.  The data confirm this.  First time buyers were said to be 30% of the buyers in May, down from 32% in April.  Historically, first-time buyers are typically 40-50% of the buying.
Also interestingly, the inventory of homes increased. I would suggest, based in inferences from the data, this is flippers/investors listing their homes.  I have noticed recently signs posted on busy boulevards around Denver that say “Wholesale fix-up homes available.”  This suggests to me that “investors” are scooping up homes ahead of flippers and looking to flip them into flippers.  This is how the peak of the bubble in 2006-2008 looked.
Finally, and perhaps most disconcerting, is the fact that the NAR is now pushing policy proposals which would make it easier for student loan borrowers to take down a Government-sponsored mortgage to buy a home. Nothing like piling more Taxpayer funded mortgage debt on top of an unmanageable amount of taxpayer funded student loan debt in order to let newly minted college-degree’d bartenders and waitresses buy a home…

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About Dave Kranzler:

Aspen1-dave I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics.  Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.

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We have now gone full circle when it comes to California real estate.  The San Francisco housing market is blistering hot with all common sense being flushed down the Twitter tubes.  While the idea of “tiny houses” seems like a new thing, this already happened over 100 years ago although by a force more powerful […]

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Source: Real Estate

Real estate inventory is extremely low in this current market.  This has allowed the market to put upward pressure on prices even though sales volume is low.  The idea of real estate correcting has once again been washed away from the cultural psychology.  Home prices, the media, and house horny shoppers have once again turned […]

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Source: Real Estate

There seems to be a heavy rush into everything real estate.  This is to be expected in a low interest rate environment where the market is encouraging dramatic credit borrowing.  According to the Case Shiller Index US real estate values are up 28 percent since 2010.  That is a solid increase especially when income growth […]

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Source: Real Estate

housing bubble realestate

TND Videocast Spotlight:  Greg Hunter’s USAWatchdog.comhousing bubble realestate

Real estate expert Fabian Calvo says cheap money flooding into the housing market means we are nearing the end of the road for the current housing boom. Calvo explains, “What they have come up with now, through the Obama Administration and many other projects, is they have these down payment assistance programs, which is the federal government giving money to these local agencies.  So, in essence, it is a no-money-down loan to fuel this housing bubble, which is really starting to verge on a ‘hyper-bubble’ like we see in the stock market today.  It’s amazing to see what is happening and see it all repeat again.  It’s going to spill over into this election year, and we will continue to see prices go up.  We have these cheap interest rates and cheap money that has no value that is creating this artificial boom. . . . We are at the last and final stage of this current housing cycle, and that’s where the prices will take off exponentially as will the access to cheap money.”

Click here to read the rest of Greg Hunter’s write-up and to access the active comment section.

After the Interview:

You can find Fabian Calvo on Fabian4Liberty.com. He does regular commentary and proved free information on the markets and politics.  You can also find Fabian Calvo and on LinkedIn.

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About Greg Hunter:

greg_hunter1Mr. Hunter is the producer and creator of Greg Hunter’s USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. Greg Hunter’s USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows. Greg encurages feedback and welcomes comments. You may also support USAWatchdog.com by clicking here to donate.  Reprinted with permission.

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Every day that life goes by and there’s no disruption I consider that a bonus. – John Embry

TND Podcast Spotlight:  Shadow of Truthshadow of truth logo

We are currently sitting on the edge on another housing and commercial real estate market disaster. The financial system was never “fixed” or “reformed.” The banking sins which led up to the big housing bubble crash were merely erased with taxpayer funds and printed money. The laws passed were not designed to protect us from them but to better protect their ability to hide the continuation of the fraudulent banking activities that serve to transfer wealth from the general public to the elitists.

The Fed and U.S. Government have successfully succeeded in reflating the housing bubble. Housing prices have been fueled by low to no down payment Government sponsored mortgages and by the Fed’s near-zero interest rate policy. Go ahead raise rates, Janet, let’s see how quickly you explode the current housing bubble your people have blown.

The financial media heralded the announcement of Wells Fargo’s 3% down payment mortgage program like it was a new way to split to the atom. Lost in the hoopla was the fact that Wells Fargo’s program is just now catching up to the times. Fannie and Freddie have been sponsoring 3% down payment mortgages since early 2015. The Government agencies also signficantly reduced the required monthly “insurance” payment on low down payment mortgages. Same with the FHA, which has been doing 3.5% down mortgages since 2008. Th Government has become the new version of Angelo Mozilo’s Countrywide Mortgage company.

It’s nothing more than a reconfiguration of the exact same types of mortgages and the associated derivatives that took down the financial system in 2008. The “use your house as an ATM” programs have been reinstated. Need to pay for your wife’s full body plastic surgery makeover? Do a “cash out” refi and pay for that plus redo your kitchen and finish out your basesment. Leverage that “home equity” to the max.

After our conversation with John Embry about the silver market, the discussion wandered into the housing and mortgage market on an ad lib basis. Below is the Shadow of Truth’s bonus footage with John Embry about the forthcoming systemic debt collapse led by mortgage and auto leverage.

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About Dave Kranzler:

Aspen1-dave I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics.  Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund. 

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About The Daily Coin:

the daily coin

Rory Hall, Editor-in-Chief, The Daily Coin, has studied the precious metals market, economic and monetary policies as well as geopolitical events since 1987. I have written well over 700 articles and produced more than 200 videos. Beginning in 2014 The Daily Coin became my latest incarnation. Prior to launching my own website and YouTube channel I began working with Sean at SGTReport.com in 2012 and still contribute, daily, to his website.  The YouTube Channel, The Daily Coin, was launched in February 2014 and website TheDailyCoin.org was launched April 2014. My original articles have been published by such notable websites as Zerohedge, SHTFPlan, Sprott Money, Silver Doctors and The News Doctors just to name a few. I have interviewed some of the top professionals, in their field, from around the world, including Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Gerald Celente and Peter Schiff, to name but a few. The Daily Coin is enjoying global growth for both original works and delivering some of the best economic, precious metals, geopolitical and preparedness news from around the world.

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The topic of young adults living at home is critical to the housing market since it will impact future home building, renting, buying, and purchasing behavior for the foreseeable future.  It is interesting that Trump being the de facto candidate for one of our major parties is basically a real estate marketer/developer that pitches real […]

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Source: Real Estate

The kids are not moving out.  The high cost of housing is having a big impact on the Millennial generation.  In high cost areas you are seeing homes being sold to investors (including foreign buyers) and those that do buy as owner occupied tend to be a lot older than previous first time buyers.  Even […]

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Source: Real Estate

no banker left behind

no banker left behindTND Guest Contributor:  Dave Kranzler

I stated in 2003 that the insider elitists would hold up the system with printed money  long enough to wipe every last crumb of middle class wealth off the “table” and into their pockets.  If you don’t have enough cash laying around to buy your own Federal-level “elected” official, you are middle class.

It’s easy for Wall Street to get their share of the crumbs being swept off the table because it’s managed to infiltrate and control every nook and cranny of Capitol Hill.  Hillary Clinton is a Democrat? Really?  Then how come she and Bill greedily take millions from Goldman Sachs alone in “speaking” fees.  Quite frankly, ex-Presidents OR potential Presidential candidates should be barred from accepting paid appearances from any corporate or corporate-sponsored entity, but especially from Wall Street.

I want to call your attention to an investigative article by Wall Street On Parade titled “The U.S. Government [really, The Taxpayer] Is Quietly Paying Billions To Wall St. Banks.”   In the past for years, 2011 – 2015, Freddie Mac alone paid out nearly $12 billion in derivatives counter-party payouts.   These payouts resulted from losses interest rate swaps, 90% of which are owned by Wall Street banks. That money from Freddie Mac is actually Taxpayer money because the Government still owns FRE and FNM.  LINK

But it’s even more profound than the WSOP lays out.

Interest rates are held artificially low by the Fed/Treasury, which enable FNM/FRE to underwrite mortgages for people who otherwise would not be able to afford the mortgage. The Too Big To Fail banks make money off of this is several ways.  They source the mortgages and take a fee, they flip the mortgage to FNM/FRE and take a fee, they securitize the FNM/FRE mortgages and sell the mortgage pools to institutional investors and take a  fee and they sell interest rate swaps to FNM/FRE and take a fee.  When interest rates don’t go up because the Fed is holding them down, FNM/FRE lose money on the swaps and…Wall Street gets the money from the loss.

A close friend of mine was curious about how the housing market might play out, because – after I described what’s happening and why the mid-price homes in Denver are hot right now (while the over $800k housing inventory piles up like trash at the local dump) – I explained that the same mortgage bubble that fueled the big housing bubble has been reinflated.  The only difference is that FNM/FRE are now the underwriters of sub-prime mortgages that are disguised to look like conventional mortgages.  But they’re far from “conventional.”  If someone puts down 3% – or, more likely borrows the 3% – they are underwater on the value of their home after all closing costs are factored in.  These de facto LTV mortgages well in excess of 100%.   That’s what Countrywide and Wash Mutual were underwriting, only this time it’s well-disguised and backed by YOU, the Taxpayer.

The same dynamic has already occurred with auto loans and student debt.  Auto loans are starting to blow up, as are student loans.  These 3% (FHA) and 3.5% (FNM/FRE) and 0% (USDA and VHA) down payment mortgages are next.   We’re already seeing this occur in energy-heavy areas like Houston.   What’s going to happen to the Central States Teamster pension beneficiaries who need their pension payout to make a mortgage payment after their payout is cut 60%?  That’s close to half a million people, many of whom use that payout to fund monthly mortgage payments.

There’s another gigantic bail-out coming.  And Wall Street will get to keep all the $10’s of billions in Taxpayer money that was funneled to it while it was underwriting the current housing, auto sales and student loan bubble.

My friend then asked me what I thought be would be the event that collapses the U.S. house of cards.   The fact is, no one knows but it will likely be derivatives-related just like in 2008.   No one saw the de facto AIG/Goldman collapse.  Note:  the Martins reference AIG blowing up but Goldman Sachs blew up too.  The only difference between AIG and Goldman was that Henry Paulson, ex-Goldman CEO who was Treasury Secretary, was in a position to direct Taxpayer money toward a bail-out Goldman, while AIG and Lehman were left for dead.  Note also:  AIG was taken over by the Government because it enabled the Government to “dis-arm” – with the help of the Fed – all of the derivative bombs that would have completely incinerated Goldman Sachs.

The only way to protect yourself from what’s coming is to get your money out of the banking system.  The Fed’s inexorable suppression of the price of gold/silver is openly giving everyone a chance to convert as much paper monopoly money as possible into physical gold and silver at artificially low prices.

A Mining Stock Journal subscriber told me over the weekend that he was contemplating a 100% cash-out refi on on his house, which has a lot of equity in it, and buying gold and silver.  He asked me if I thought it was a good idea.  I said that as long as he was okay sending the keys to the bank and walking away when this thing blows – because I know of a lot of people who are going to do just that – that he would be an idiot if he didn’t do it.

This is exactly what Wall Street is doing with the Government’s blessing.   If you can’t beat ’em, join ’em…

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About Dave Kranzler:

Aspen1-dave I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics.  Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.

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