August 18, 2013

Around the Web: Useless Realty-Related Infographics

Maybe by 2014 everyone will be sick of these ubiquitous infographics, but for now they’re everywhere.  And not everyone is improved by the addition of spurious graphics. Realtards aren’t the only ones out there giving out self-serving information while suggesting they’re helping you.  Homebuilders also play many of the same games we know and love.  Here’s a fun infographic, if by “fun” we really mean “see how much fun you can have spotting all the misleading information in one image.”

Not only is “Myth One” a real hoot in the Bay Area (let alone the Real Bay Area), it isn’t even true without all the special pleading for tax exemptions and future streams of payments and other sneaky accounting tricks.  Remember, Richard Florida pointed out that in Opposite of the Real Bay Area, it’s actually cheaper to buy than rent, as in monthly payments there are lower than monthly rents.  Why?  Because everyone who wants a house has bought one, so there are few potential customers.  In the RBA, lots of people want to buy but can’t afford to, so prices stay high as they save up until they can.

We don’t even want to mention that unlike the Bay Area, there are many places in the US where it’s very difficult to rent a typical single family house, so comparative rent vs buy is almost impossible. Perhaps more people would rent if they could get a house instead of an apartment.

What’s your situation? Do you live in a SFH, a townhouse, or an apartment? Do you own or rent? What do you think if this silly poster?

Oh yes, NOW IS THE TIME TO BUY! NOW! NOW! NOW!

Comments (6) -- Posted by: madhaus @ 7:04 am






June 16, 2013

Fed Study: Angeleños really did use houses as ATMs

In the latest installment of Formerly Middle Class People Deserved To Lose All Their Money, the Wall Street Journal informs us of a study from the Federal Reserve Board’s Steven Laufer. Not too surprisingly, the paper says these longer-term FBs would have been fine if they hadn’t kept taking equity out of their houses just because they could.

Study: How Using Homes as ATMs Fueled Foreclosures

130614-la-townhomesBy Nick Timiraos, The Wall Street Journal
May 28, 2013, 11:58 AM

The conventional wisdom of the housing crisis goes something like this: Too many people bought homes as the housing bubble inflated. Some were unlucky in their timing, while others overextended themselves by putting too little money down. All of these top-of-the-market purchases led to an explosion of foreclosures once home prices dropped sharply and the economy hit the skids.

Amid the current debate about whether a new bubble is forming in the housing market, it’s worth looking at a paper published in March that challenges conventional wisdom by showing that a significant share of foreclosures came from people who bought their homes before 2004.

So why did so many people who bought their homes before the housing bubble fully inflated end up losing their homes anyway?

20130614-la-freemoneyThe paper concludes that if only California had laws like Texas (which forbids borrowing more than 80% of home equity), not only would fewer FBs gotten F’ed, but homeowners (as opposed to homedebtors) would have had more money to spend because houses wouldn’t have cost so much.

Which is ridiculous, because why do you think these FBs borrowed all that equity in the first place? They sure as heck didn’t invest it in infrastructure.  Heck, no.  They spent it.  We’re cheered to see Larry Roberts (OC Housing News) agrees with us.

Then again, that study also says people defaulted because (among other reasons) they assumed their home prices would keep going down. This shows why the study was in Los Angeles instead of the Real Bay Area. Everyone knows in the RBA, prices only go up.

There’s also a very important reveal in the paper. Laufer’s model shows that home prices would be 14% lower if all that equity extraction hadn’t taken place. And as we know, the Real Estate industry will simply not allow that to happen.  They might as well throw away tax-deductibility of mortgage interest too.

Comments (4) -- Posted by: madhaus @ 5:02 am

May 6, 2012

12 “facts” that “may” “surprise” you about the “housing bust”

While the parent company of the Wall Street Journal, News Corporation, is getting a proper punching across the pond, let’s see how Rupert Murdoch’s business-as-usual cheerleader reports on the causes of The Second Great Depression.

Twelve Facts That May Surprise You About the Housing Bust

By Nick Timiraos, The Wall Street Journal, May 4, 2012

120505-foreclosure-sign-wsjWhat if the conventional wisdom about the mortgage crisis is all wrong?

That’s the implication of a new paper from economists at the Federal Reserve Banks of Atlanta and Boston that’s bound to spark debate because, if their premises are correct, it sharply undercuts the justification for much of the new regulation that’s been erected over the past two years.

Three economists, Christopher Foote,Kristopher Gerardi, and Paul Willen, present two narratives of the financial crisis in trying to answer why so many people made so many dumb decisions.

The first view is that the financial crisis was an “inside job” where various industry players, from the mortgage lenders to mortgage traders, took advantage of unsophisticated rubes, from homeowners to mortgage investors.

They largely discard that view for a second one—the “bubble theory” where delusional attitudes about home prices, not distorted incentives, fueled poor decision making.

120505-mcmansion-broken-windowsThis is the Wall Street Journal.  Does anyone think for a New York minute that they’d get behind the Inside Job view of the housing debacle?  Of course not.  It was obviously the fault of strawberry pickers, the Community Redevelopment Act of 1977, Barney Frank, and undeserving minorities who never should have been allowed to own property ever ever ever.  (Uppity rabble might then expect the vote, too.)

And as for the origin of this paper?  The Boston Federal Reserve?  Everyone working there is hoping to get hired by one of those market manipulators, so don’t look for their facts to bear much relation to what really happened.

Here’s the authors’ abstract of the excuse for wrecking the whole economy report:

This paper presents 12 facts about the mortgage market. The authors argue that the facts refute the popular story that the crisis resulted from financial industry insiders deceiving uninformed mortgage borrowers and investors. Instead, they argue that borrowers and investors made decisions that were rational and logical given their ex post overly optimistic beliefs about house prices. The authors then show that neither institutional features of the mortgage market nor financial innovations are any more likely to explain those distorted beliefs than they are to explain the Dutch tulip bubble 400 years ago. Economists should acknowledge the limits of our understanding of asset price bubbles and design policies accordingly.

Translation: if we blame the meltdown on irrational exuberance, then none of our friends will have to give up their bonuses. Or their freedom.

120505-fed-theoriesThe above diagram is from the research paper, and it neatly blames the victims for believing housing prices only go up.  Notice who’s missing from the picture?  Realtards.  You know, the people who tell you that housing prices only go up.

Fact 1: Resets of adjustable-rate mortgages did not cause the foreclosure crisis.

120505-mortgage-ratesBanks weren’t wrong for issuing adjustable rate loans, borrowers are the problem for having crap credit.  Bad credit meant those borrowers could have an adjustable loan or remain renters. 

Hey, what do you expect when you loan to a bunch of deadbeats?

We’ve got 11 more of these delightful “facts” waiting for you after the break.

(more…)

Comments (16) -- Posted by: madhaus @ 5:15 am

April 14, 2012

Saturday Soak: Your weekend Open Thread

120413-lightning-bridge

This image from SFGate shows eight lightning bolts hitting the Bay Bridge on April 12th.  How did you enjoy nature’s fireworks Thursday night?

You can also discuss this New York Times piece observing that California’s North/South divide is overblown.  The real divide is West versus East, and we coastal huggers are doing fine economically.  Inland is a much different story.  Stockton is looking into bankruptcy.  People moved inland, but the jobs didn’t follow, and then the housing values collapsed.  The coastal regions are more politically liberal and more eager for environmental policies that inland residents object to.  And geographically, a beach is not a desert.

This is an Open Thread.  How’s your weekend going?  Seen any good Open Houses lately?  How about those local sports teams, eh?

Comments (8) -- Posted by: madhaus @ 5:03 am

November 26, 2011

Sawbuck measures Market Health, drunk-dials 911

imageThere are several real estate search sites out there that let you peruse homes on the Multiple Listing Service.  Regular Burbed readers may have have noted we’re partial to RedfinZillow gets noticed for their ZEstimate, an automated model that attempts to value most homes in the United States.  Some of our fans like Trulia, as I get the occasional submission pointing to their site.

imageI just took another look at Sawbuck when I put a recent feature together.  Sawbuck is a Washington DC-based site that partners with local agents in several regions, including the Bay Area.   Until I found their listing information last week, I figured Sawbuck links were just nuisances. Google searches for property addresses pointed to Sawbuck’s very silly videos that were animated frames for MLS photos and information. 

But this time they had a very detailed page on the house I was checking out.  The videos were gone, even when Google pointed to embedded players.  They also had something I haven’t seen on any of the other sites before.

Their pages for each city have a Market Overview, showing how many homes are for sale, the median list and sales price, ho-hum, seen it.  But I hadn’t seen a Market Health Score on a city’s real estate activity before, at least not on a site that links to individual home listings.  Altos Research does something like that called the Market Action Index (MAI), but they’re in the Useless Aggregate Data business.

So how is the market doing in the Real Bay Area?  Let’s have Sawbuck and Altos fight it out, after the break!

(more…)

Comments (1) -- Posted by: madhaus @ 5:04 am

June 27, 2009

The Housing Boom and Bust – Thomas Sowell

The Housing Boom and Bust

This is a plain-English explanation of how we got into the current economic disaster that developed out of the economics and politics of the housing boom and bust. The “creative” financing of home mortgages and the even more “creative” marketing of financial securities based on American mortgages to countries around the world, are part of the story of how a financial house of cards was built up—and then suddenly collapsed.

The politics behind all this is another story full of strange twists. No punches are pulled when discussing politicians of either party, the financial dangers they created, or the distractions they created later to escape their own responsibility for what happened when the financial house of cards in the financial markets collapsed.

What to do, now that we are in the midst of an economic disaster, is yet another story—one whose ending we do not yet know, but one whose outlines and implications are explored to reveal some surprising and sobering lessons.

It’s Saturday and that means it is time for Burbed’s book of the week.

Thanks to Burbed reader Butzi’s for this recommendation. It’s clear why this book was suggested – we in the Real Bay Area really need to do more to learn about the areas in the rest of America. The less fortunate areas, full of blissfully ignorant people, who don’t know what sushi is, or have never been able to experience the majesty of Fry’s.

Ideally we could invite Thomas Sowell over to the Bay Area so he could write about this amazing phenomenon. Perhaps it could be a sequel to his first book (“Basic Economics”) – he could call it “Paradign shifted economics.” Let’s face it, we have an economy here that defies all expectations. Whether it be $3 cupcakes, $500k condos in Mountain View, or Teslas, the economy here is rocketing forwards. It is the classic example of a perpetually New model of economics.

Finally, speaking of economics, if you’re looking to help this site out, click this link to learn more!

Comments (37) -- Posted by: burbed @ 5:19 am

June 6, 2009

Busted: Life Inside the Great Mortgage Meltdown

Busted: Life Inside the Great Mortgage Meltdown

The fiasco that sank millions of Americans, including one journalist, who thought he knew better. A veteran New York Times economics reporter, Edmund L. Andrews was intimately aware of the dangers posed by easy mortgages from fast-buck lenders. But, eager to buy a home and start a new life, he gave in to temptation and began a surreal adventure into the mortgage mayhem that nearly wrecked our economy. Busted weaves together the author’s own ride to the edge of bankruptcy with the tragicomic stories of his lenders, the Wall Street pros behind them, and the policymakers in Washington who were oblivious until it was too late. The story takes Andrews to the offices of Alan Greenspan, the mansions of subprime-mortgage millionaires in southern California, a despondent deal makers’ convention in Las Vegas, and Wall Street. Rich with on-the-ground reporting, Busted is a darkly humorous exploration of the cynicism and self-destructive judgment that led to America’s biggest economic calamity in generations.

It’s Saturday and that means it is time for Burbed’s book of the week. This week I selected this book because I think it is a must read. The reviews that is. You must read the reviews. And buy the book.

The reviews slam this book for being incomplete.

The fact is that this book highlights the pitfalls of buying real estate… in places that are not the Real Bay Area.

It serves this elitest, New York Times (which is no match for our SF Chronicle, San Jose Mercury News, or Mountain View Voice btw) writer to end up being financially wrecked by not buying in a place where real estate values double every 10 years on average.

Tough luck dude. Better start reading start reading this blog instead!

Comments (6) -- Posted by: burbed @ 5:17 am

April 4, 2009

The most important you need to read… ever!

Oh my! You must click the link and buy the book ASAP!

The Return of Depression Economics and the Crisis of 2008

Haha… just kidding. It’s a late April Fool’s Day joke – got ya didn’t I?

Depression smession. Have you been impacted by this downturn? Of course not! You live in the Real Bay Area. You work for a Real Bay Area company. Or you have your own. Or two!

Happy April Fools Day!

Buy the book anyway.

Comments (2) -- Posted by: burbed @ 5:40 am

August 19, 2006

Congrats CA! Affordability at a record low! 23%!

2Q 06 First-time Buyer HAI
The percentage of first-time buyers in California able to afford a median-priced home stood at 23 percent in the second quarter of 2006, compared with 30 percent for the same period a year ago, according to a newly developed index released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of first-time buyer households that can afford to purchase a home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.

The minimum household income first-time buyers needed to purchase a home at $482,000 in California in the second quarter of 2006 was $98,720, based on an adjustable interest rate of 6.48 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $3,290 for the second quarter of 2006.

Congrats California! Let’s try to aim for 10%!

Click here to post a comment -- Posted by: burbed @ 5:22 am