Posts Tagged ‘housing’
Tuesday, June 4th, 2013
Posted by Leonard Steinberg on June 4th, 2013
Did large Wall Street firms save the crashed housing markets in the USA with PRIVATE STIMULUS? Some would say yes. Large investment firms have spent billions of dollars throughout 2012 buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. In a market driven by lower inventories, the purchase of these large swaths of houses has had a marked effect in some cities that at one point had dramatic over-supply. Now many of these same areas are beginning to experience bidding wars as buyers options dwindle. Some are already wondering if prices will slump anew if the big money stops flowing. Firms like Blackstone (bought over 26,000 homes) and Colony Capital (over 10,000 homes) have bought large chunks of inventory at bargain pricing, are currently renting those properties, and then plan to sell them once the markets are recovered in a form of privatized STIMULUS funding. The returns should be spectacular. The question I ask is: should the government have done this earlier to help prevent the markets collapsing, wiping out billions of dollars of net worth, tax income, millions of jobs, etc. Probably not: Wall Street would have considered this heinous, possibly socialism. The question I ask is how much was lost waiting this long for the Wall Street vultures to swoop in and buy this inventory at bargain-rate, pennies-on-the-dollar pricing?
Overall I think this vast purchasing spree has benefitted the confidence levels in the housing market, boosted building activity, job creation and the markets (and economy)in general. Every job created takes someone off the government payroll and adds tax revenue and a healthier (spending) consumer to the economy. How these Wall Streeters handle the unloading of these properties could impact the market in general too. Wall Street has certainly not been behind the purchase of most inventory in the New York markets, although many stalled projects were rescued over the past 4 years. Sadly it appears a big chunk of US consumers are now paying a monthly rent check instead of a monthly mortgage payment towards ownership in this super-low interest rates market, making Wall Street the beneficiary on two levels: cheap money and cheap property.
Saturday, January 26th, 2013
Posted by Leonard Steinberg on January 26th, 2013
The question keeps getting asked: why is the New York real estate market so incredibly strong this month (and the past few months too)? Yes, mortgage rates are very low, the wealthy are doing well and have more confidence, the election circus is behind us, the optimism of Spring is upon us and the mass media is spewing the message that the housing market has indeed turned and is heading back up (you know this trend started many months ago once the mass press starts reporting it!). One of the other answers may lie in the analysis of consumer debt. Mortgage and consumer-loan payments amount to the smallest percentage of after-tax income since 1983, according to quarterly statistics compiled by the Federal Reserve. The debt-service ratio was 10.6 percent of disposable income in last year’s third quarter. Five years earlier, the figure peaked at 14.1 percent. Could our bloated, inefficient, wasteful government learn a thing or two from the consumer maybe?
Household spending is poised to strongly contribute to growth this quarter and next. Consumers account for about 70 percent of the economy, according to Commerce Department data. While politicians have blamed policy and a host of other trivia for weak growth, pretty much every corporation will agree that the key driving force to growth is demand……and demand has been pretty weak to date. Now that is about to change. The nationally reported rebound in the housing market will also make consumers feel a bit richer and if anything, confidence is key to opening wallets. The end of a decline in inflation-adjusted wages, and a slowdown in debt reduction will help too.
Maybe what I am trying to say is that we are on the cusp of the PERFECT STORM for impressive growth in 2013, probably led and fueled by the housing markets. Now lets just hope the extremist political terrorists on both sides of the aisle don’t muck it up.
Tuesday, December 4th, 2012
Posted by Leonard Steinberg on December 4th, 2012
Our beloved Government claims that the US inflation rate is currently somewhere around 2.25%…..remarkably they do not include the cost of housing in this figure, probably the single most expensive line item cost in every American’s budget. As we all know the cost of housing is rising dramatically, especially in New York.
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time. So if you exclude housing from all of this, INFLATION is really not being measured valuably.
I would suspect the inflation rate in Manhattan is somewhere around 7-8%, based on the rental hikes, insurance cost hikes, rising staffing costs, raised MTA fares, raised cabfares, food , etc: I guess we will never know since the government has chosen to exclude the largest single cost to us all…..the cost to keep a roof over our heads.
Monday, November 19th, 2012
Posted by Leonard Steinberg on November 19th, 2012
The economy’s recovery is largey reliant on the housing market recovery, so today’s news from The National Association of Realtors that existing home sales climbed 2.1 percent last month to a seasonally adjusted annual rate of 4.79 million units, beating forecasts by Wall Street economists, comes as good news.
Strengthening demand for new homes drove an increase in a monthly measure of home builder sentiment, which hit a more than six-year high in November. Rising home prices and a faster pace of sales have shown the housing market has finally turned the corner this year. The market collapsed when a mortgage debt bubble burst in 2006, helping trigger the 2007-09 recession. With the US economy extremely reliant on housing, this is certainly encouraging news for the jobs market too: in New York the volume of construction sites is growing rapidly, with a massive boom expected in the first half of 2013….soon we will see a shortage of skilled labor and materials.
The data to-daysuggested the recovery in housing is advancing even faster than many analysts had expected. Watch Home Depot stock climb…. the real estate bug is back!
Wednesday, November 7th, 2012
Posted by Leonard Steinberg on November 7th, 2012
As the second super-storm “Athena”, a strong nor’easter, approaches our shores with the expectation of super-strong winds, rain, snow and storm surges, we have to look towards a potentially bigger storm…..THE FISCAL CLIFF. Unlike nature, this is a $ 7 trillion storm we can actually be prepared for and ward off……but only if our beloved politicians join forces, make some compromises (on BOTH sides), and get to work immediately.
Already, businesses around the country are making contingency plans for this ‘cliff’, and they are not pretty. They include large cut-backs on spending and investment, lay-offs, and a strong potential for economic decline in 2013, more than likely leading to another recession. Chances are real estate sales, construction and financing would be cut back sharply. We cannot afford this. The fiscal and human toll would simply be too great. And knowing that all it requires is compromise on both sides of the aisle to formulate practical, intelligent solutions makes it all the more important for all of us to join forces and apply maximum pressure on our elected officials to do the right thing.
Our President, Congress and Senate need to get to work to-day on this: not doing the right thing now (with urgency)would be in my opinion very un-American and worthy of impeachment. We know what to expect from ATHENA, just like we knew what to expect from SANDY. We have a very good idea what the consequences are of THE FISCAL CLIFF will be: If Governor Christie and President Obama can work together on ‘Sandy’, there is hope for this 3rd Storm too. Now lets get down to work!
Wednesday, June 20th, 2012
Posted by Leonard Steinberg on June 20th, 2012
We can now all agree on one thing about the economy: housing has been the # 1 driving force behind the meltdown. Too many people bought over-priced houses that they could not afford. There was a massive over-supply. And there were too many speculators driving pricing up artificially. The government encouraged bad behavior. The banks behaved badly, partly encouraged to do so by the government and were not watched closely enough. And many consumers behaved badly using their homes as ATMS….encouraged by the banks. Blame can be shared by all……it worked in South Africa in the TRUTH AND CONCILIATION process that ‘outed’ all the crimes by all the players.
Flash forward to June 2012: Several markets are rebounding while others are stagnating. The high end of the market is performing best. Along come the politicians…….Marco Rubio says that the American Dream is not home ownership…..really? So the man who claims he can fix the economy thinks that RESPONSIBLE home ownership should not be part of the AMERICAN DREAM when our economy is so largely dependent on the housing market? This is the same conservative guy who is saying that government should be smaller, yet he is living proof of the American Dream……by working for the government, getting paid with tax dollars. HUH? I guess the meaning of the word conservative has changed…..
Wednesday, June 20th, 2012
Posted by Leonard Steinberg on June 20th, 2012
As the “Great Greek Tragedy” unfolds, there are so many lessons to be learned. This is what I am seeing:
1) It is clearly evident that salaried people are those carrying the brunt of the tax burden in Greece: that burden will more than quadruple now to pay for those who don’t want to pay taxes. We scorn this, but the system isn’t all that different in the USA: the bulk of those EVIL Wall Streeters also earn their incomes via salaries, so they also do not have the numerous tax deductions that the self employed or corporations have….or the super-rich who pay lower rates. Why does Madonna not disclose her tax returns for all to see? So many laughed when Wall Street bonuses were cut dramatically only to discover that the coffers in Albany had much less income because of that….
2) The Greeks have come up with a REAL ESTATE SOLUTION for collecting taxes……by cutting off electricity to those not paying! Imagine if all the electricity was cut to APPLE because they paid under 10% in corporate taxes while the bulk of small businesses around the country had to pay more than triple?
3) The most important Greek lesson I learned: Talk of reducing the tax rates has made the number of tax filings GROW. AH-HAH: SO if you were to be certain to collect all taxes uniformly and fairly at the same rate, you could actually lower the rates for ALL and collect MORE? Now throw in less spending abuses….
Maybe in housing lies the answer to tax collecting: cut off basic services to those who abuse the system?
Friday, May 4th, 2012
Posted by Leonard Steinberg on May 4th, 2012
When Warren Buffet speaks, I listen: To-day he said the tepid economic US growth is directly related to the housing market. The minute construction picks up, so too will the economy as construction fuels job growth and spending. Right now I am aware of several thousand new apartments in advanced planning stages for New York: construction has either just started or is about to begin. That means unemplyment will drop and the New York economy should improve noticeably over the course of the next 12 months…..
Wednesday, April 11th, 2012
Posted by Leonard Steinberg on April 11th, 2012
Some things take time, unfortunately, especially economic cycles. We are currently witnessing the emergence of the housing market from a very deep recession (border-line depression) and if history matters, the slow recovery we are experiencing appears to be in line.
Housing bulls point to a stabilization of prices in many metro areas, overall sales at a 5-year high, a decline in the inventory of homes for sale, fewer foreclosures and record levels of affordability — thanks to rising rental prices, low mortgage rates and the steep drop in prices since the peak. Bears say national home prices are still falling, albeit at a slower pace, while buying a home is unthinkable for millions of Americans suffering from bad credit, tougher lending standards and high unemployment. In addition, many experts predict a massive “shadow inventory” of homes will come on the market at the first sign of a sustained bottom and believe foreclosures will spike again now that the $26 billion settlement with big banks has been finalized.
U.S. Housing and Urban Development Secretary Shaun Donovan, concedes there is no “silver bullet” to cure the housing market’s woes, but is optimistic about the outlook for housing and the government’s action to reverse the market’s downward spiral.
“There’s a broader sense we are poised for a stronger, consistent recovery,” he says. “If we can continue to see stronger sales, cut the number of folks falling into foreclosure [and] make sure adequate credit is available, then we’ve set the stage for a more sustained recovery starting this year.”
Housing skeptics will certainly disagree and note myriad predictions for a “bottom” in housing have all proven premature in recent years.
But Donovan sees “positive momentum” in the market for non-distressed homes and says President Obama is “doing all the right things” to help housing, citing, among others, the Home Affordable Refinance Program (HARP) and Home Affordable Modification on Program (HAMP), which have helped nearly 2 million families to date.
New incentives for Fannie Mae and Freddie Mac, among other lenders, to do principal reductions is another White House effort that could help the housing market. But the regulator for Fannie and Freddie, Edward DeMarco, continues to resist such proposals, citing the potential for moral hazard.
“This is not about some huge difference-making program that will rescue the housing market,” DeMarco said Tuesday at the Brookings Institution.
It appears the instant gratification we seek in all areas of our lives will not and has not happened for housing, and just like the past, a long, slow, but steady recovery is what is happening. But it appears we are at the tail end of the bad.
Saturday, November 19th, 2011
Posted by Leonard Steinberg on November 19th, 2011
As our beloved government teeters on the edge of another major meltdown with the ‘super-committee’ due to formulate a solution to our budget crisis by the middle of next week (something that could cause radical ramifications throughout the markets, especially the credit markets…. think housing), maybe its time for all of us throughout this country to re-direct the anger recently demonstrated by the rather un-focused, semi-kooky and often misdirected OCCUPY WALL STREET to a newer, more focused, more pertinent movement: OCCUPY WASHINGTON DC!
Yes, we Americans are sick and tired of the games Washington plays: remember lots of the bad behaviour and criminal activity associated with the Great Recession happened in great part because of certain action and in-action by government. Now of course they are all blaming one another, even though they are all to blame. Pretty much all government activity seems to boil down to 2 things: 1) money and 2) re-election.
Both the Democrats and Republicans are playing political games at the expense of the country: Republicans delusional pandering to those who receive un-warranted tax breaks while a vast majority of ‘the 1%’ pay their fare share is disgraceful. Remember just because the tax rate is the same for all does not mean all earning the same income pay the same taxes: the same is true for real estate taxes where the disparity between very similar properties is often very different. Democrats on the other hand need to acknowledge that we are spending much more than we earn: raising the retirement age and a host of other common-sense budget cuts are practical and essential, not cruel, and willing this committee to fail to blame the Republicans for the gridlock so that Obama can be re-elected is reckless at best.
I never thought I would see the day when I’d agree with Sarah Palin, but this week her editorial in the Wall Street Journal struck a chord…..and it may explain why we have the housing mess that ultimately caused the financial meltdown that we are still suffering from. In her article she shows how Congress, the lawmakers of our country, obey a different set of laws than the vast majority of us mere voters (and taxpayers!)…. Here are some examples:
Insider Trading – using government information not available to the public at large to predict which companies’ stocks will rise or fall.
IPO Gifts – While it is illegal for members of Congress to accept cash gifts from interested parties, there is no restriction on their being offered initial public offerings in firms, which can be very profitable.
Self-Serving Earmarks – Some members of Congress have submitted infrastructure earmark requests for their districts that appeared to increase their value of their real estate holdings.
Encouraging Campaign Donations – Palin calls this “subtly extorting campaign donations through the threat of legislation unfavorable to an industry.” She may know about this subject first hand with the oil industry in Alaska?
The insider advantages to being a Washington player are obvious, and the hypocrisy pretty astounding as witnessed this week by Newt Gingrich. Ms. Palin cites in this article that 47% of Congressmen are millionaires compared to 1% of the US…..very telling, but also somewhat hypocritical when she has parlayed her career from a lowly beauty-queen/sportscaster to a career politician of almost 20 years…..and now more recently she dumped low-paying government realizing the value of her time in ‘the club’, transitioning from governor to a very highly paid book writer, speaker, activist and correspondent for FOX TV, certainly roles that would not pay as well were it not for her lengthy political career.
Maybe it is time for us to OCCUPY WASHINGTON DC: This government is obviously in need of a major overhaul, and the loudest possible message should be sent to end the political game-playing that is taking place at the expense of 99,99999999999% of the country that have to foot the bill.
Some may wonder why a real estate blogger would be writing this political post: let’s face it, there won’t be much of a real estate market if we do not fix this government….fast!