WARPED, DISTORTED, MANIPULATED, FLIPPED HOUSING MARKET

The report from RealtyTrac last week proves beyond the shadow of a doubt the supposed housing market recovery is a complete and utter fraud. The corporate mainstream media did their usual spin job on the report by focusing on the fact foreclosure starts in 2013 were the lowest since 2007. Focusing on this meaningless fact (because the Too Big To Trust Wall Street Criminal Banks have delayed foreclosure starts as part of their conspiracy to keep prices rising) is supposed to convince the willfully ignorant masses the housing market is back to normal. It’s always the best time to buy!!!

The talking heads reading their teleprompter propaganda machines failed to mention that distressed sales (short sales & foreclosure sales) rose to a three year high of 16.2% of all U.S. residential sales, up from 14.5% in 2012. The economy has been supposedly advancing for over four years and sales of distressed homes are at 16.2% and rising. The bubble headed bimbos on CNBC don’t find it worthwhile to mention that prior to 2007 the normal percentage of distressed home sales was less than 3%. Yeah, we’re back to normal alright. We are five years into a supposed economic recovery and distressed home sales account for 1 out of 6 all home sales and is still 500% higher than normal.

The distressed sales aren’t even close to the biggest distortion of this housing market. The RealtyTrac report reveals that all-cash purchases accounted for 42% of all U.S. residential sales in December, up from 38% in November, and up from 18% in December 2012. Does that sound like a trend of normalization? There were five states where all-cash transactions accounted for more than 50% of sales in December – Florida (62.5%), Wisconsin (59.8%), Alabama (55.7%), South Carolina (51.3%), and Georgia (51.3%). In the pre-crisis days before 2008, all-cash sales NEVER accounted for more than 10% of all home sales. NEVER. This is all being driven by hot Wall Street money, aided and abetted by Bernanke, Yellen and the rest of the Fed fiat heroine dealers.


The fact that Wall Street is running this housing show is borne out by mortgage applications languishing at 1997 levels, down 65% from the 2005 highs. Real people in the real world need a mortgage to buy a house. If mortgage applications are near 16 year lows, how could home prices be ascending as if there is a frenzy of demand? Besides enriching the financial class, the contrived elevation of home prices and the QE induced mortgage rate increase has driven housing affordability into the ground. First time home buyers account for a record low percentage of 27%. In a normal non-manipulated market, first time home buyers account for 40% of home purchases.

Price increases that rival the peak insanity of 2005 have been manufactured by Wall Street shysters and the Federal Reserve commissars. Doctor Housing Bubble sums up the absurdity of this housing market quite well.

The all-cash segment of buyers has typically been a tiny portion of the overall sales pool. The fact that so many sales are occurring off the typical radar suggests that the Fed’s easy money eco-system has created a ravenous hunger with investors to buy up real estate. Why? The rentier class is chasing yields in every nook and cranny of the economy. This helps to explain why we have such a twisted system where home ownership is declining yet prices are soaring. What do we expect when nearly half of sales are going to investors? The all-cash locusts flood is still ravaging the housing market.

The Case-Shiller Index has shown price surges over the last two years that exceed the Fed induced bubble years of 2001 through 2006. Does that make sense, when new homes sales are at levels seen during recessions over the last 50 years, and down 70% from the 2005 highs? Even with this Fed/Wall Street induced levitation, existing home sales are at 1999 levels and down 30% from the 2005 highs. So how and why have national home prices skyrocketed by 14% in 2013 after a 9% rise in 2012? Why are the former bubble markets of Las Vegas, Los Angeles, San Diego, San Francisco and Phoenix seeing 17% to 27% one year price increases? How could the bankrupt paradise of Detroit see a 17.3% increase in prices in one year? In a normal free market where individuals buy houses from other individuals, this does not happen. Over the long term, home prices rise at the rate of inflation. According to the government drones at the BLS, inflation has risen by 3.6% over the last two years. Looks like we have a slight disconnect.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/01-overflow/Case%20Shiller%20NSA.jpg

This entire contrived episode has been designed to lure dupes back into the market, artificially inflate the insolvent balance sheets of the Too Big To Trust banks, enrich the feudal overlords who have easy preferred access to the Federal Reserve easy money, and provide the propaganda peddling legacy media with a recovery storyline to flog to the willingly ignorant public. The masses desperately want a feel good story they can believe. The ruling class has a thorough understanding of Edward Bernays’ propaganda techniques.

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of.”

Ben Bernanke increased his balance sheet by $3.2 trillion (450%) since 2008, and it had to go somewhere. We know it didn’t trickle down to the 99%. It was placed in the firm clutches of the .1% billionaire club. Bernanke sold his QE schemes as methods to benefit Main Street Americans, when his true purpose was to benefit Wall Street crooks. 30 year mortgage rates were 4.25% before QE2. 30 year mortgage rates were 3.5% before QE3. Today they stand at 4.5%. QE has not benefited average Americans. They are getting 0% on their savings, mortgage rates are higher, and their real household income has fallen and continues to fall.

But you’ll be happy to know banking profits are at all-time highs, Blackrock and the rest of the Wall Street Fed front running crowd have made a killing in the buy and rent ruse, and record bonuses are being doled out to the men who have wrecked our financial system in their gluttonous plundering of the once prosperous nation. Their felonious machinations have added zero value to society, while impoverishing a wide swath of America. Bernanke, Yellen and their owners have used their control of the currency, interest rates, and regulatory agencies to create the widest wealth disparity between the haves and have-nots in world history. Their depraved actions on behalf of the .1% will mean blood.

Just as Greenspan’s easy money policies of the early 2000’s created a housing bubble, inspiring low IQ wannabes to play flip that house, Bernanke’s mal-investment inducing QEternity has lured the get rich quick crowd back into the flipping business. The re-propagation of Flip that House shows on cable is like a rerun of the pre-bubble bursting frenzy in 2005. RealtyTrac’s recent report details the disturbing lemming like trend among greedy institutions and dullard brother-in-laws across the land.

  • 156,862 single family home flips — where a home is purchased and subsequently sold again within six months — in 2013, up 16% from 2012 and up 114% from 2011.
  • Homes flipped in 2013 accounted for 4.6% of all U.S. single family home sales during the year, up from 4.2% in 2012 and up from 2.6% in 2011

The easy profits just keep flowing when the Fed provides the easy money. What could possibly go wrong? Home prices never fall. A brilliant Ivy League economist said so in 2005. The easy profits have been reaped by the early players. Wall Street hedge funds don’t really want to be landlords. Flippers need to make a quick buck or their creditors pull the plug. Home prices peaked in mid-2013. They have begun to fall. The 35% increase in mortgage rates has removed the punchbowl from the party. Anyone who claims housing will improve in 2014 is either talking their book, owns a boatload of vacant rental properties, teaches at Princeton, or gets paid to peddle the Wall Street propaganda on CNBC.

Reality will reassert itself in 2014, with lemmings, flippers, and hedgies getting slaughtered as the housing market comes back to earth with a thud. The continued tapering by the Fed will remove the marginal dollars used by Wall Street to fund this housing Ponzi. The Wall Street lemmings all follow the same MBA created financial models. They will all attempt to exit the market simultaneously when their models all say sell. If the economy improves, interest rates will rise and kill the housing market. If the economy tanks, the stock market will plunge, creating fear and killing the housing market. Once it becomes clear that prices have begun to fall, the flippers will panic and start dumping, exacerbating the price declines. This scenario never grows old.

Real household income continues to fall and nearly 25% of all households with a mortgage are still underwater. Young people are saddled with $1 trillion of government peddled student loan debt and will not be buying homes in the foreseeable future. Dodd-Frank rules will result in fewer people qualifying for mortgages. Mortgage insurance is increasing. Obamacare premium increases are sucking the life out of potential middle class home buyers. Retailers have begun firing thousands. The financial class had a good run. They were able to re-inflate the bubble for two years, but the third year won’t be a charm. In a normal housing market 85% of home sales would be between individuals using a mortgage, 10% would be all cash transactions, less than 5% of sales would be distressed, and 40% would be first time buyers. In this warped market only 40% of home sales are between individuals using a mortgage, 42% are all cash transactions, 16% are distressed sales, 5% are flipped, and only 27% are first time buyers. The return to normalcy will be painful for shysters, gamblers, believers, paid off economists, Larry Yun, and CNBC bimbos.

Facebooktwittergoogle_plusredditpinterestlinkedinmail
This entry was posted in General. Bookmark the permalink.
  • Tonto

    “[…] the rest of the Fed fiat heroine dealers.”

    JimQ, the word is heroin if you are talking about dope. If you are likening the dealers of “Fed fiat” to leading ladies, then you’ve made your obtuse point.

    People in their twenties, thirties and forties looking to buy their first home are being ripped off. The first problem is, the FED has floated loans to anyone remotely qualified (subprime loans) that wants to buy a home. AND, the FED has extended loans to every bankrupt bank in the country to help keep distressed real estate off the market. And hence, newly created credit money is competing with cash money, thus holding the price of real estate artificially high.

    There is a glut of real estate in the country. The first reason is demographic, the parents of the Baby Boomers are all dying. And, the Baby Boomers are down-sizing. The aging population bubbles are what have created the huge backlog of unsold housing. This is compounded by the foreclosure glut, which is a result of market effect of the demographic problem. There is simply no liquidity in housing, unless you are the bank, and you can extend some obscene loan. Cash sales are highly discounted sales. Cash sales are occurring at prices reduced on average 45% from the home-sale credit price banks are trying to get.

    The idiot young people in this country, who have been duped into supporting Obama’s illegal immigration policies, don’t understand that a good part of the reason behind the broad and largely bipartisan support for illegal immigration is, these illegals are expected to buy up some of the excess housing in the country.

    There’s nothing humanitarian about immigration reform at all. Immigration reform is just another back door bailout of the banking industry which ran up the price of housing to such levels, so few trying to buy a home can afford one.

    The other problem is, owning a home is no longer really affordable, given the last twenty years of yearly, massive, double-digit rises in municipal property taxes. If you’re buying a house that has property taxes of $3000 a year, you are going to pay $45,000-$60,000 over the next ten years in property taxes for the privilege of living in that home. Home ownership, in the last thirty years has been turned into a lease of a home, based on the ever increasing property taxes home owners are responsible for.

    Home ownership is a lifestyle choice, one that for the vast majority of Americans will keep them forever on the borderline of falling into abject poverty, if home ownership doesn’t toss them off a financial cliff.

    In this brave new world, there are wage slaves… And their are home ownership slaves too. The price of housing is still falling in most of the country. And in those areas of the country where real estate prices are rising, they are in grave danger of returning to the deflationary falling price scenario yet again, because the glut remains and the property taxes and the costs associated with owning a home keep rising.

    • But the other choice vs “owning” a home, is renting, and at least around where I live, rents are about double a mortgage. And I’m sure once the masters realize more and more people have to rent, the rents will go even higher.
      My house is worth $80,000.00. A 30 year mortgage (which is a ripoff in itself due to the “rule of 78’s” where the interest payments are all up front and you’re really paying interest the first half of your mortgage, who ever thought of that?) would be $381.00. Rents around here are around $650.00 (and that’s the low end price). So a mortgage on an $80,000.00 home is about half of renting a home. You usually have to pay utilities in both “owning” and renting, so that’s a wash. My taxes are $1,200.00/year, so that’s $100.00/month. That’s still only $481.00 compared to $650.00 rent. So a mortgage, at least around here, is significantly less than renting.
      And the way the ponzi scheme called capitalism works, then the more they smoke people out of their homes and they HAVE TO turn to rent, they will skyrocket rents knowing there’s no alternative.
      So what’s the alternative to “owning” a home? Renting? That doesn’t sound good, either.
      Throw in bad landlords or “slumlords” who don’t fix a damn thing ever, yet continually raise rents.
      So which is the better alternative? Neither? I’m not sure myself.

      • Dee

        Well you yourself did not mention a budget for home maintenance, Things do break and do need to be fixed .. even though we are not charging the MIL rent , the house is not owner occupied.. so taxes and insurance are different and higher than owner occupied and the insurance company requires a certain level of maintenance and overall condition as a condition of insuring it.. which is fine.. we would anyway .and we do the lawn etc.. I mean she is 80 after all, and this is all about making things easier for her. so I don’t claim to be a typical “landlord” .. But even with your Numbers and allowing for some maintenance and the difference in taxes and insurance.. should be pretty clear that nobody is going to get rich on the difference between the cost of home ownership and prevailing rent in your area.. you are already only $169 a month ahead without maintenance and insurance figured in… and then the central air goes out or you need a new roof? .. you also assume somebody with poor credit that has to rent would get the same mortgage rate as you.. I suspect not.. that narrows the gap even more.. and you have repairs and repaints at least between tenants.
        And you have taxes on the income.. sounds like a real money maker to me , using your numbers.

  • HS

    They may talk of taper, pretend to taper, maybe even begin to taper, but they can’t remove the punchbowl for long.

  • Dee

    How weird is this.. I have been reading Washington’s Blog for maybe a year.. never commented on an article before today, I am a big fan, and yet , here I am commenting in the negative, due to a lack of focus , clarity , and internal consistency on a article for the second time in one day.
    Let me share my confusion.. cash sales and distressed sales.. they do get a bad loan off a banks books.. but they certainly do not profit a bank as much as a full term conventional payoff by the original owner.. and I make no excuses for the behavior of banks making mortgages.. they pulled some truly despicable stunts.. but the folks that fell for them have to take their fair share of the blame ( and have probably suffered more than enough for it already). But I have no sympathy for jingle mail or the ones that gammed the foreclosure process to live payment free for years waiting to be evicted.. they did a lot of collateral damage to neighborhoods and housing values by their tactics trying to hit back at the banks. Not to many good guys in this whole thing IMHO.. Part of that suffering by the disposed former homeowners is loss of credit and your mention of the 4.5% mortgage rates is nowhere near reflective of what the folks with destroyed credit would be paying if they could come up with the now mandatory down payments, especially for those with poor credit. They will be renters for some time.
    And yet I do detect some longing for the good ol’ days of the ever rising housing market, individual buyers refinancing their equity and beyond to fuel a consumer based society. I might mention that there is some evidence that model does not work out well. Folks, even in the good ol’s days a few years ago were buying more house than they could afford.
    We have a chance here, in the cash and bubba-in-law flipper dipper market to make a few duplexes out of overly larger single family homes and provide some affordable yet profitable housing out of the ruins. We also have a chance to increase the density of people in a suburban setting and maybe reclaim a little arable land as green space, or heaven forfend , agriculturally productive land.
    I truly hate to fail in my duty to kneejerk dis the banks and bankers and the big exploitive money mongers.. but I have other priority concerns , everybody needs a place to live.. duplexing could provide a lower per family cost and use less land to house them, provide communities with a chance to create an appropriate amount of housing for the jobs and infrastructure in the area as well as the resources available.. if there was some serious planning on how to rebuild better.. zoning.. building codes… better energy efficiency , better community planning all around coulda shoulda woulda been part of the whole housing recovery .. and it still isn’t to late. just redoing what failed before , including reigniting the same aspirational goals of a family of four in 3000 sq feet sitting on an acre of formerly productive farm land mortgaged up to their eyeballs isn’t going to work better this time around.
    incomes are down.. I hate to be exploitive of folks that have lost income.. but it does provide an opportunity to push for a more sustainable housing model.. nothing too radically different.. a little zoning, a little planning, a little upgrade in standards .. could get you a more sustainable energy efficient and affordable housing model.. all the evil people in the world can make money and get kicked by the righteous for it, and the folks who need housing would have a better shot at affording it and maybe live next to a nice public park or community garden to make up for the loss of their spacious green rolling lawns suitable for a small herd of buffalo.

    • cettel

      JimQ bombs the Establishment via the numbers, and provides shocking charts to make them visual; and Dee finds “a lack of focus , clarity , and internal consistency.”

      • Dee

        well help me out then.. are folks buying distressed and foreclosed homes for all cash, or are the bankers using massive amounts of cheap credit to make a killing? Do folks need low cost housing or should folks not buy at a cash discount and remodel distressed housing and rent or flip them? And if you do not want the big money buying these homes or bubba -in – law flipping them.. who do you want to buy these otherwise usually uninhabitable houses? Do you want folks getting back into mortgages at ruinous rates because of their poor credit? Or do you just want the blight of abandoned homes?
        What exactly does the author want to happen, and who does he want to do it, and how does he want it done?

        • Tonto

          Like all of the inane authors here on GW blog, the author is simply writing to rile the ugly and ignorant masses. JimQ offers no solutions. If he were to offer a solution it would be along the lines of some socialist madness that would bring about a complete collapse of the economy and the installation of Marxist fools to run our government and the country into the ground.

          Like all the authors here, JimQ finds fault, where a stretch can be made to appeal to the lowest common denominator of blog reader, to make these ignorant folks who read here, angry at the “1%”. These articles are all about differentiating the so-called 1% from the so-called 99%

          It’s pure bullshit.

          The terms, 1% and 99%, are loaded. These terms express the collective delusion here perfectly. The widespread use of these terms is meant to foment socialist revolution.

          Cogency is never intended. The article is meant to lead fools in their anger is all.

          • Dee

            Well, I’m not going there.. there is a lot to be angry about .. between the bankers financial thugery and the buyers financial ignorance. The number show that the market has changed.. most of these homes have been on the market a while.. it isn’t like big money has been snapping them up as fast as they hit the market.. if individual buyers had wanted them , they could have gotten a good deal, if it would have been a good deal at all. Yes Big money and volume buying can get you a better deal.. But once you buy it, you got to make it livable and marketable, the banks that are holding them off the market have to maintain them , at least on the outside and pay the taxes.. and they end up selling them at a discount and they have to make them habitable and within code to sell them.. they are not cash cows for the banks as a general rule.
            We had one house in our neighborhood get foreclosed, it is next door to my daughter, she bought her house in the neighborhood she grew up in 3 doors down for ours.. this one was between ours and hers .. My son, spouse and I went thirds on it and got it for 2K more than the outstanding principle. spent about 20K updating and remodeling it and taking care of many small issues and moved my Mother-in Law down from the old home town in PA.. she is 80, husband had died, kids all moved away, friends mostly passed on and living in an old two and a half story farmhouse with a basement by herself with health problems common for her age. kids having to fly up to take care of her and her home , take time off work.. this is a nice( now) 1 story ranch with a walk in tub in a warmer climate with great grandkids next door and Us as well as son and daughter right at hand for any emergencies and family dinners.. when she passes we will sell it.. until then rent free.. our cost.. cheaper than air fare and worry.. we will make a profit.. helped property values in the neighborhood .. she will eventually sell the old farm house or it will pass in the estate.. she is not wanting to sell for sentimental and impractical reasons and that is fine with us. But we bought for cash.. I fail to see the evil. In fact other than the numbers showing the market has changed , I don’t see the evil in the numbers in the article.

          • Jake

            Thats the stats without references I’ve ever seen in one post. Congrats! I’m not here to stop you, but I did lose you at Hello! Let’s take these topics one at a time if you are serious about this conversation. Otherwise, I assume you are going for the PR.

          • Dee

            Are you responding to me? Stats? I don’t think I gave stats unless you want to see the deed and remodeling costs or maybe the grandkids birth certificates, spread sheet on air fare V non rent?
            PR? Not sure what the PR aspects would be.
            How about we take the topics one at a time and with a little clarity?

  • Dee

    I’m having a little trouble nailing down who wrote this article.. it seems to be popping up on a variety of Blogs and websites , but none seem to list an author.. all have “submitted by” attributions that vary some by website.
    Any reason the author isn’t taking credit?

  • Arizona

    Thomas Jefferson ,WARNED everyone ,IF private banks EVER got hold of the nations printing presses and could print the amount of money they wanted,EVERYONE IN AMERICA WOULD BE HOMELESS in just a few generations,AND THE BANKS WOULD OWN IT ALL,well its happening,and no one cares,maybe living in a tent with your children will help you understand,and just think,THE DAY will come when your friendly police gang will be ordered to hunt down and kill ALL THOSE PESKY HOMELESS people,cause their already doing that in FLORIDA,women,children,it don’t matter to them,THEY SHOOT EVERYONE IN CAMP…….your country has fallen to SATAN ,and only a few will survive to get back up……………..

  • EDJH

    Show people this, ongoingly!
    Real Homes, Real Dow
    http://www.showrealhist.com/RHandRD.html

    BUT your advertisers are opposed …