HomeGuy
2014-05-21 04:25:13 UTC
More good news about the US economy and the american ho moaner:
For those Millennials who do manage to accumulate a down payment
by the time they are in their early 30s there is precious little
starter home inventory available. The Greenspan mortgage debt
serfs from the previous generation are blocking the way.
Nearly 10 million U.S. households remain stuck in homes worth
less than their mortgage and a similar number have so little
equity they cant meet the expenses of selling a home
In addition to the homeowners who are underwater, roughly
10 million households have 20% or less equity in their homes,
which makes it difficult for them to sell their homes without
dipping into their savings. Most move-up homeowners typically
use their home equity to cover broker fees, closing costs and
a down payment for their next home. Without those funds, many
homeowners cant sell.
==========================
The Greenspan Housing Bubble Lives On: 20 Million Homeowners Cant
Trade-Up Because They Are Still Underwater
One of the most deplorable aspects of Greenspans monetary central
planning was the lame proposition that financial bubbles cant be
detected, and that the job of central banks is to wait until they crash
and then flood the market with liquidity to contain the damage.
In fact, after the giant housing bubble crashed and left millions of
Main Street victims holding the bag, Greenspan evacuated the Eccles
Building, and then spent nearly a whole chapter in his memoirs
explaining how this devastation wasnt his fault.
Instead, he blamed Chinese peasant girls who came by the millions to the
east China export factories where they lived a dozen at a time cramped
in tiny dormitory rooms working 14 hour days. According to the Maestro,
they saved too much, thereby enabling Americans to overdo it on the
mortgage borrowing front. Yes, in so many words he said exactly that!
Lets see. The Maestro was allegedly a data hound. Did he not notice that
housing prices in the US rose for 111 straight months from late 1994 to
2006, and during that period increased by nearly 200% on average across
US neighborhoods. How in the world could this giant aberration have
escaped the notice of the money printers around Greenspan in the Eccles
Building?
How in the world could any adult thinker blame this on factory girls in
Chinathat is, a policy regime that caused excessive savings. In fact,
it is plainly evident that the Peoples Printing Press of China
attempted to protect is exchange rate from appreciating against the
flood of dollars emitted from the Eccles Building. It did this in
mercantilist fashion by pegging the RMB exchange rate and thereby
accumulating a massive hoard of US treasury notes and Fannie/Freddie
paper.
In short, China didnt save America into a housing crisis; the
Greenspan Fed printed America into a cheap debt binge that ended up
impairing the residential housing market for years to come.
So the problem with central bank inflation of financial bubbles is that
when they burst the damage is extensive, capricious and long-lasting. On
the latter front, new data from Zillow Inc. provide a dramatic case in
point.
Here we are 96 months after the housing peak, yet there are still 20
million households which are either underwater on their mortgages or do
not have enough embedded equity to cover the transaction costs and down
payment needed to move. Since there are only 50 million households with
mortgages, that means that as a practical matter 40% of mortgage
borrowers are precluded from trading-up.
It is no great mystery that historically trade-up borrowers have been
the motor force that drove the US housing market. Selling their existing
home for a better castle, trade-up buyers vacated the bottom-end of the
market so that first time buyers could find a foothold.
Now thanks to Washingtons eternal conviction that debt it the magic
elixir of economic growth, first time buyers are few and far between
because they are buried in student debt-about $1.1 trillion to be
exact. Each graduating class has more students with loans to carry
forward, and in higher and more onerous amounts. Fully 70% of the class
of 2014 has student loans, and they average of about $30,000 each. Both
figures are triple what they were just a decade ago.
In any event, for those Millennials who do manage to accumulate a down
payment by the time they are in their early 30s there is precious little
starter home inventory available. The Greenspan mortgage debt serfs
from the previous generation are blocking the way.
Monetary central banking is an economy wrecker. Here is just one more
smoking gun of proof.
Loading Image...
Nearly 10 million U.S. households remain stuck in homes worth less than
their mortgage and a similar number have so little equity they cant
meet the expenses of selling a home, trends that help explain recent
sluggishness in the housing recovery.
At the end of the first quarter, some 18.8% of U.S. homeowners with a
mortgage9.7 million householdswere underwater on their mortgage,
according to a report scheduled for release Tuesday by real-estate
information site Zillow Inc.
While that is an improvement from 19.4% at the end of last year and a
peak of 31.4% 2012, those figures understate the problem.
In addition to the homeowners who are underwater, roughly 10 million
households have 20% or less equity in their homes, which makes it
difficult for them to sell their homes without dipping into their
savings. Most move-up homeowners typically use their home equity to
cover broker fees, closing costs and a down payment for their next home.
Without those funds, many homeowners cant sell.
Its a sobering appreciation that negative equity is going to be with
us for a while to come, said Stan Humphries, Zillows chief economist.
Negative equity is central to understanding a lot of the distortions in
the marketplace right now.
Those distortions include the inventory of homes for sale, which, while
rising, is low by historical standards. It also helps explain why
first-time home buyers are having such a hard time cracking the market.
Real estate is in some ways like a ladder, Mr. Humphries notes, so when
underwater homeowners dont trade up it makes it harder for newcomers to
get in.
Click here for the rest of the article:
http://online.wsj.com/news/articles/SB10001424052702304422704579572261754798636?mod=WSJ_hp_RightTopStories&mg=reno64-wsjlick
http://www.zerohedge.com/news/2014-05-20/greenspan-housing-bubble-lives-20-million-homeowners-can%E2%80%99t-trade-because-they-are-st
For those Millennials who do manage to accumulate a down payment
by the time they are in their early 30s there is precious little
starter home inventory available. The Greenspan mortgage debt
serfs from the previous generation are blocking the way.
Nearly 10 million U.S. households remain stuck in homes worth
less than their mortgage and a similar number have so little
equity they cant meet the expenses of selling a home
In addition to the homeowners who are underwater, roughly
10 million households have 20% or less equity in their homes,
which makes it difficult for them to sell their homes without
dipping into their savings. Most move-up homeowners typically
use their home equity to cover broker fees, closing costs and
a down payment for their next home. Without those funds, many
homeowners cant sell.
==========================
The Greenspan Housing Bubble Lives On: 20 Million Homeowners Cant
Trade-Up Because They Are Still Underwater
One of the most deplorable aspects of Greenspans monetary central
planning was the lame proposition that financial bubbles cant be
detected, and that the job of central banks is to wait until they crash
and then flood the market with liquidity to contain the damage.
In fact, after the giant housing bubble crashed and left millions of
Main Street victims holding the bag, Greenspan evacuated the Eccles
Building, and then spent nearly a whole chapter in his memoirs
explaining how this devastation wasnt his fault.
Instead, he blamed Chinese peasant girls who came by the millions to the
east China export factories where they lived a dozen at a time cramped
in tiny dormitory rooms working 14 hour days. According to the Maestro,
they saved too much, thereby enabling Americans to overdo it on the
mortgage borrowing front. Yes, in so many words he said exactly that!
Lets see. The Maestro was allegedly a data hound. Did he not notice that
housing prices in the US rose for 111 straight months from late 1994 to
2006, and during that period increased by nearly 200% on average across
US neighborhoods. How in the world could this giant aberration have
escaped the notice of the money printers around Greenspan in the Eccles
Building?
How in the world could any adult thinker blame this on factory girls in
Chinathat is, a policy regime that caused excessive savings. In fact,
it is plainly evident that the Peoples Printing Press of China
attempted to protect is exchange rate from appreciating against the
flood of dollars emitted from the Eccles Building. It did this in
mercantilist fashion by pegging the RMB exchange rate and thereby
accumulating a massive hoard of US treasury notes and Fannie/Freddie
paper.
In short, China didnt save America into a housing crisis; the
Greenspan Fed printed America into a cheap debt binge that ended up
impairing the residential housing market for years to come.
So the problem with central bank inflation of financial bubbles is that
when they burst the damage is extensive, capricious and long-lasting. On
the latter front, new data from Zillow Inc. provide a dramatic case in
point.
Here we are 96 months after the housing peak, yet there are still 20
million households which are either underwater on their mortgages or do
not have enough embedded equity to cover the transaction costs and down
payment needed to move. Since there are only 50 million households with
mortgages, that means that as a practical matter 40% of mortgage
borrowers are precluded from trading-up.
It is no great mystery that historically trade-up borrowers have been
the motor force that drove the US housing market. Selling their existing
home for a better castle, trade-up buyers vacated the bottom-end of the
market so that first time buyers could find a foothold.
Now thanks to Washingtons eternal conviction that debt it the magic
elixir of economic growth, first time buyers are few and far between
because they are buried in student debt-about $1.1 trillion to be
exact. Each graduating class has more students with loans to carry
forward, and in higher and more onerous amounts. Fully 70% of the class
of 2014 has student loans, and they average of about $30,000 each. Both
figures are triple what they were just a decade ago.
In any event, for those Millennials who do manage to accumulate a down
payment by the time they are in their early 30s there is precious little
starter home inventory available. The Greenspan mortgage debt serfs
from the previous generation are blocking the way.
Monetary central banking is an economy wrecker. Here is just one more
smoking gun of proof.
Loading Image...
Nearly 10 million U.S. households remain stuck in homes worth less than
their mortgage and a similar number have so little equity they cant
meet the expenses of selling a home, trends that help explain recent
sluggishness in the housing recovery.
At the end of the first quarter, some 18.8% of U.S. homeowners with a
mortgage9.7 million householdswere underwater on their mortgage,
according to a report scheduled for release Tuesday by real-estate
information site Zillow Inc.
While that is an improvement from 19.4% at the end of last year and a
peak of 31.4% 2012, those figures understate the problem.
In addition to the homeowners who are underwater, roughly 10 million
households have 20% or less equity in their homes, which makes it
difficult for them to sell their homes without dipping into their
savings. Most move-up homeowners typically use their home equity to
cover broker fees, closing costs and a down payment for their next home.
Without those funds, many homeowners cant sell.
Its a sobering appreciation that negative equity is going to be with
us for a while to come, said Stan Humphries, Zillows chief economist.
Negative equity is central to understanding a lot of the distortions in
the marketplace right now.
Those distortions include the inventory of homes for sale, which, while
rising, is low by historical standards. It also helps explain why
first-time home buyers are having such a hard time cracking the market.
Real estate is in some ways like a ladder, Mr. Humphries notes, so when
underwater homeowners dont trade up it makes it harder for newcomers to
get in.
Click here for the rest of the article:
http://online.wsj.com/news/articles/SB10001424052702304422704579572261754798636?mod=WSJ_hp_RightTopStories&mg=reno64-wsjlick
http://www.zerohedge.com/news/2014-05-20/greenspan-housing-bubble-lives-20-million-homeowners-can%E2%80%99t-trade-because-they-are-st