zerohedge.com — The November Case Shiller is out and while not surprising to most, some of those calling for a near-term housing bottom may be advised to reassess (for the 5th year in a row)... the Seasonally Adjusted composite dropped to the lowest since February 2003, and is now a third lower than the housing peak in April 2006... Yet the worst news is that, even with a 2 month delay, the housing drop accelerated into the end of the year, and the sequential drop of 0.7% was the biggest decline since March 2011.
Jan 31, 2012 View in Crawl 4
garhentJan 31, 2012
I find the whole argument over housing prices hilarious. The US government has put policies in place (through trade treaties, tax breaks encouraging outsources and anti-union measures) that have outsourced all of the good paying middle class jobs overseas.
In 1980 the Middle Class earned $42K/year, which adjusted for inflation to 2010 standards would have been $93K/year. Now, the middle class earns $33K/year, which adjusted for inflation to 1980 standards is $14.6K/year.
So, you have workers whose real wages actually buy about 2/3rds less than what they did twenty years ago and you have greedy land developers trying their damnest to get whats left of the middle class to mortgage their lives away to buy overpriced homes for the US market.
f**k the land developers and f**k housing prices. No one in America has seen the final dive in housing prices and its going to be a douey. The richest 1% land holders in the US are going to get reamed and they earned it.
pivenJan 31, 2012Submitter
Remember Ross Perot when Bill Clinton signed NAFTA ?
* Listen for the large sucking sound as good American jobs are sent overseas *
garhentJan 31, 2012
George H Bush negotiated NAFTA, a Republican Congress and a Republican Senate signed NAFTA and a Democratic President Clinton did not use his veto and allowed the law to Pass.
The tax breaks and the union busting that the US government did is what hosed the US worker. If you look at Germany, they signed free trade agreement but kept their unions and their prosperity is significantly better than the US currently has.
The US has so much to learn from Germany on free market, industrialization, education and health care its ridiculous. All of Germany's listed benefit follow a smart and competitive path to wealth the US could have followed rather than going on forty year credit card till you default plan we started under Reagan.
MustardTigersJan 31, 2012
Yes, it is all Reagans fault. I guess I will never understand the argument that letting people keep more of their money has lead to the current decline. And somehow the only reason so many jobs are outsourced is because the corporate tax rate isn't high enough. Tax rates pre-Reagan were way to high, for everyone. Rates were lowered, tax revenues stayed about the same, and more people were able to keep more of their money.
This isn't about R v. D, and I don't care if you think tax rates should be higher or lower, lowering rates leading to economic decline and outsourcing makes no sense.
garhentFeb 1, 2012
Wow, so lowering taxes on the incredibly wealthy has led to the budgetary surplus that Ronnie promised? Trickle down theory has worked, we can all retire in our McMansions. Thank you MustardTigers for setting everyone straight. You are awesome at cognitive dissonance.
MustardTigersFeb 1, 2012
I didn't say that did I? I said revenues remained about the same (20% of GDP), which is interesting because that is about what they have always been regardless of tax rates.
I am not trying to prove or disprove trickle down theory. What I am asking you is how did lowering taxes create the current climate?
Do you honestly believe that it is acceptable for the government to have a top rate of ~70%? If so, why do you believe that you and your government is entitled to that much of a persons income?
Secondly, how does taxing someone that much benefit society? Especially since it doesn't generate higher revenue and interestingly, when you have tax rates that high there are suddenly less rich people, as a result the tax burden is shifted down to the middle class.
Since the rates have been lowered the top income rate the tax revenue burden has shifted up to the top. (which is fine)
And finally, if Reagans policies were not the cause of the 19080s economic growth and prosperity, what would you propose is? If you don't believe it is then I would say that it is safe to assume that the poor current economic condition is not a result of the Bush Administrations policies.
Loki520Feb 1, 2012
can i just ask...wouldn't higher corporate tax rates mean that they would invest more in their employees, infrastructure and equipment because that is better then paying uncle sam? letting people pile up obscene amounts of cash is in no way beneficial to the economy, and is actually dangerous to our freedoms. as far as the government being entitled to most of someones income, that happens to poor people every day. consumption taxes eat up a greater percentage of income on poor people compared to wealthy people, and please don't say that they can just not consume...food, fuel, telphone, heat, water, and other necessities of basic life.
MustardTigersFeb 1, 2012
If we had a 100% tax rate, assuming the company doesn't leave the country, then yeah they would spend all of that money.
Unfortunately, if the taxes are any lower than that then business finance is far too complicated to say that they would simply invest more in their business. A company will invest only if it makes sense, regardless of what the tax rate is, because they will still have a net income. Besides, companies already leverage debt to help reduce their tax liability.
By having high tax rates you either reduce capital for future investments, and expenses thus potentially making a company more risky and also lowering the value of the company. This makes their default premium rate go up, and it costs them more to borrow money. To avoid this, the company will have attempt to have the same net income prior to the tax increase, which will mean that they will have to have layoffs, cut salaries, increase prices, etc.
I do not believe that the government has any right to tell a privately held company how much they can pay their executives. BUT, what they should do is not allow a company to claim excessive executive salaries and bonuses as an expense. I believe this along with a lower tax rate would result in companies increasing employee wages and benefits.
Loki520Feb 1, 2012
well...im not going to pretend to be an expert on corporate finance, but i do know that in the game of monopoly one person eventually owns everything. hahah. that can't be what we are trying to accomplish, and surely is not what the founding fathers expected.
nerysFeb 1, 2012
Agreed. we are no where near the bottom of where home prices "SHOULD" be. even another 50% drop across the board is not quite enough.
Homes are so massively over priced its disgusting even BEFORE you add in the 85 to 120% INTEREST most of us will have to pay on that over priced home
phillymozartFeb 1, 2012
The reason we are in so much trouble is people will elect the guy who promises the free lunch (exacerbating the problem) over the other guy every time. Politicians are a reflection of the character of the people they represent.
pivenJan 31, 2012Submitter
The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/01/Case%20Shiller%20Nov.jpg
chordonblueJan 31, 2012
That might be because houses were so incredibly overpriced at the start of this thing.
pivenJan 31, 2012Submitter
Often still are now ?
ben7337Jan 31, 2012
yes, hence the continued decline.
x86bsdJan 31, 2012
Yes this is the market correcting itself, as it is supposed to work, if only we will stop interfering with the market and propping it up artificially. Housing is WAY over priced. And not just here in the US, globally. I mean when there are listings at daft.ie for small empty 1800's school houses that are one strong wind from collapsing going for $80,000 USD you know the pricing on the market is f**ked. Derelict buildings are being priced above my small home and that is completely out of bounds of reality. So I am glad to see the market finally working after decades of artificial inflation by government policies. Another thing that is a total scam that hurts the real value is county appraisers! They have a vested interest to keep housing prices higher than they realistically should be in order to reap more tax income from home owners. The housing market is so rigged and artificial and I am soooo glad to finally see they cant prop up their fake housing market anymore. Once home prices are reasonable again then the market will be flooded with buyers to buy up all these assets. Putting homes into the hands of the lower classes that can now finally afford them. Which is good IMO.
pivenJan 31, 2012Submitter
The US Federal government money printing and other bail out political schemes are only making this mess worse.
Loki520Jan 31, 2012
only thing is i doubt all those buyers are going to be people from the "lower classes". more like vulture capitalists who are going to use our own bailout money against us. which is bad IMO.
x86bsdJan 31, 2012
I agree there is no guarantee of that. And it is quite possible the vultures will buy up huge swaths of inventory (homes). But I at least think that at the very minimum the pricing will lower tot he point where lower income poor and lower income middle class people at least will have the opportunity to purchase a home. It will at least be in their realistic price range. But as time goes on we will see whether the vultures or the people get the better end of the stick. And I hope its the people but I am realistic. :/
Loki520Feb 1, 2012
x86bsd...i agree with all you have said, i just wish that the people who caused all of this misery would be punished appropriately and somehow we could make lemonade out of the lemons we have been given. i don't trust that the loans will be available to regular people when all these "bargains" finally come about. even right now i hear from friends in and out of the real estate profession that they have difficulty buying any of the really good deals from foreclosures if they don't have cash, because they are being scooped up by cash buyers who are given priority over someone who has to be approved for financing.
garhentJan 31, 2012
US workers are earning significantly less in 2012 compared to 1980 (about 2/3rds less taking inflation into account). There is no way that the current home owner prices are going to stand.
When your nation is full of the functionally poor and the nation is trying to get upper middle class prices for housing, you have a recipe for disaster.
I would not touch a home for ten years from now. It will take America that long to deflate the home market because the US government is interfering to keep home prices up to increase property tax revenue.
x86bsdJan 31, 2012
I bought my home in 2009 @ 5.25% fixed interest. I paid $64,000 in Wichita Kansas. Its a modestly small home ~800 sqft. I wanted a home that I could retire into it. That was small enough that I could heat and cool easily and cheaply. With a large back yard for gardening and the dog. The home is also small enough that it is cheap to fix up nicely. I can lay marble in the bathroom because its so small and not kill myself on material costs. Same goes for windows, doors, flooring etc. I tried to buy smart. And its in a decent neighborhood. Amazing blue collar neighbors. Do I think I over paid? Sure. The house is probably *honestly* only worth maybe $45,000? I have since moved with my wife out of state and we are just eating the mortgage until we figure out what to do. I may just turn it into a rental, who knows. But I agree that 10 years out seems a reasonable time table to see the bottom of the market. Although many things that are looming dangerously over the US are going to decide very soon how things play out. The dollar crashing, hyper inflation, the US defaulting, we are in serious trouble more trouble than most Americans realize. And I think several economic bubbles including our currency are going to be in very real danger of bursting soon. And government, short of ron paul, seems to understand that or care. None of them have clue one on monetary policy and are gleeful to let the illegal FED just inflate us into destruction. :/
eraptorFeb 1, 2012
@x86bsd
"...artificial inflation by government policies"?
Do you honestly think this is the ONLY artificial interference preventing a genuine market correction?
What about Freddie Mac's conflict of interest by betting against borrower's chances of refinancing their loans while simultaneously PREVENTING them from doing so.
What about the banking industry's:
1) abject refusal to renegotiate loans;
2) excessively high loan standards MOST SOLVENT borrowers can't meet;
3) foreclosure practices which are geared toward selling homes for a fraction of their value while refusing to consider alternative financing alternatives, thereby, driving real estate values into the ground; and
4) ongoing use of mortgage backed securities, credit default swaps AND destructive business practices which crashed the market in the first place?
THIS is PRIVATE SECTOR interference which is FAR more destructive.
eraptorFeb 1, 2012
True. The housing market WON'T recover until AFTER the labor market and wage levels recover enough to support prevalent market prices.
Since the labor market is in free fall, no one should be surprised that the housing market is following suit. They are linked to one another, like Siamese twins sharing a heart/brain. When one thrives or dies, so does the other.
amnesia10Feb 1, 2012
I agree. I have even seen a change of perspective from analysts. They are now using price to rent ratios. That does not mean that rents are reasonable. I think that US prices are probably still a conservatively 20% over valued. That might take a few years to become reality. The interesting thing will be what will happen to rents? With so much property about they should be falling as dramatically. Though that does not seem to be the case.
zbeastJan 31, 2012
Home's use to be that free money bank..
you got home owner discounts, you could use your home as a bank to
buy other things because collateral of your home.
Round about 2001 the wheels starting coming off this idea as the dotcom crash happen. Banks got your home and your life savings.
for them it was a great time. Then home sales slowed.. The bankers talked to congress and other law makers and trick them into changing loan regulations.
Soon every tom, dick and Larr, had there own home loan company.
1000sf shacks were selling for $300.000!
We all know what happen after that. "The Housing Bubble".
People who got talked into paying 23% on a home loan just walked away form there homes and loan's..
Home's who had inflated values of 1.2 million are now selling for $300,000 or less.
All of these is just reality coming back to home prices.
jimsmmJan 31, 2012
Good information. it sure does match with what is happening here in New Hampshire. I am Jim Bolduc and I am in the real estate industry see the status first hand. We are not at the bottom yet!
SophiaPuffJan 31, 2012
And they need to keep coming down until the average person can afford to purchase a home without mortgaging out their entire life into debt slavery.
mikewindekJan 31, 2012
For all the investors out there, remember the good words of Warren Buffett:
"Be greedy when others are fearful, be fearful when others are greedy"
http://ratracefreedom.net/category/book-reviews/
zbeastJan 31, 2012
That's great if you have lot's of money to start with..
starting at $0... i.e if you have less than $20,000 to loose don't
get suckered into the investments game.
iv'e seen a lot of millionaires becomes thousandnaires.
MustardTigersFeb 1, 2012
I like to stick my money in a mattress and let it depreciate at an average rate of 5% per year.
Everything is an investment, including money, they all have risks. The problem with money is that it only looses value, and if we keep going the way we are it won't be worth much of anything eventually.
jaketyson85Feb 1, 2012
good thing the taxpayers "bailed out" (donated) a little over $18k each to the big banks. it sure has helped.
Angry_MuppetFeb 1, 2012
Obama appreciates it, he's on track for record donations courtesy of Wall Street
profmnaimFeb 1, 2012
And that will add to equity and better way help the citizens in need of house.
alicei78768768Feb 1, 2012
crazy
awiniewskiFeb 1, 2012
http://www.mediarp.pl/acta/mapa-protestow !! Pan European map of protests ANTY ACTA!!
rahulrahulFeb 1, 2012
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papasandbeerFeb 1, 2012
Garhent- I liked your argument but I wish u posted both avg salaries respectively. The 20 year jump back for the lower salarie clearly made it seem minimalComment is buried, click here to see the rest.
rahulrahulFeb 1, 2012
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