Comments on: Housing Starts Slide to Record Low http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 22:17:29 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Latesummer2009 http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-147139 Latesummer2009 Fri, 20 Feb 2009 14:12:33 +0000 http://www.ritholtz.com/blog/?p=19465#comment-147139 The slope of this graph should scare anyone. Just another record drop in a slew of data coming out now. How can people ignore the facts and just rely on hope? Housing is accelerating to the downside and all levels, including the very high end are in for a huge decline. Here on the Westside of LA, prime neighborhoods are finally getting the picture. Undercutting of home prices will be the norm, as sellers rush for the exits, among rising inventories. Mortgage bailout does little for 90% of affluent homeowners. http://www.westsideremeltdown.blogspot.com http://www.santamonicameltdownthe90402.blogspot.com The slope of this graph should scare anyone. Just another record drop in a slew of data coming out now. How can people ignore the facts and just rely on hope? Housing is accelerating to the downside and all levels, including the very high end are in for a huge decline. Here on the Westside of LA, prime neighborhoods are finally getting the picture. Undercutting of home prices will be the norm, as sellers rush for the exits, among rising inventories. Mortgage bailout does little for 90% of affluent homeowners.

http://www.westsideremeltdown.blogspot.com
http://www.santamonicameltdownthe90402.blogspot.com

]]> By: call me ahab http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-146957 call me ahab Fri, 20 Feb 2009 00:15:35 +0000 http://www.ritholtz.com/blog/?p=19465#comment-146957 @ Ben & Otto- people do make decisions based on tax preference all the time. If all choices were tax neutral- people would buy a smaller home. I have seen it said countless times in financial advice columns for folks to buy the biggest most expensive house they can afford to maximize the tax benefit. I guarantee that average sq footage would drop if there was no tax benefit to buy larger. I reject the premise that homeownership should be a societal goal. I do believe that people will buy homes regardless of any tax preference- the government should be neutral. Will it reduce the percentage of people who own homes- possibly- but who cares. If folks complain about any move to remove this subsidy- then they should shut up about other groups in society who receive government benefits. @ Ben & Otto-

people do make decisions based on tax preference all the time. If all choices were tax neutral- people would buy a smaller home. I have seen it said countless times in financial advice columns for folks to buy the biggest most expensive house they can afford to maximize the tax benefit. I guarantee that average sq footage would drop if there was no tax benefit to buy larger. I reject the premise that homeownership should be a societal goal. I do believe that people will buy homes regardless of any tax preference- the government should be neutral. Will it reduce the percentage of people who own homes- possibly- but who cares. If folks complain about any move to remove this subsidy- then they should shut up about other groups in society who receive government benefits.

]]> By: DC http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-146953 DC Thu, 19 Feb 2009 23:54:10 +0000 http://www.ritholtz.com/blog/?p=19465#comment-146953 @ottovbvs -- My reference to social engineering was not intended to say if it's good or bad...simply to point out that the Kudlow crowd only dislikes social engineering (or government for that matter) when it doesn't fit their world view or narrow agenda. Kudlow's problem is that he's the living model of the hedgehog mentality. @MRegan -- Apparently the ones who built 'em were supposed to buy 'em. Undocumented workers built the housing boom and the home builders were thrilled with the cheap labor (How many INS raids were there on construction sites in the last decade? Home builders had better lobbyists than the chicken plants. And quite frankly some of those guys can really swing a hammer.) Then they headed down to the no-doc lenders to buy an American Dream. If the construction workers couldn't afford the McMansions they were building, they were probably able to buy a starter home from the yuppies who moved up to the (way too big) McMansion. No doubt there are dozens of merits to home ownership. I own outright and have no mortgage. Took every deduction I could along the way. But it just looks to me like the downsides to owning vs. renting, particularly the potential for declining values and the lack of liquidity, have until now not been adequately highlighted. Owning will continue to be a great course for many if not most, but setting it up as the consummate financial goal seems to make less sense today than it did in the 1950s. And Santelli's basically a loudmouth tool. @ottovbvs — My reference to social engineering was not intended to say if it’s good or bad…simply to point out that the Kudlow crowd only dislikes social engineering (or government for that matter) when it doesn’t fit their world view or narrow agenda. Kudlow’s problem is that he’s the living model of the hedgehog mentality.

@MRegan — Apparently the ones who built ‘em were supposed to buy ‘em. Undocumented workers built the housing boom and the home builders were thrilled with the cheap labor (How many INS raids were there on construction sites in the last decade? Home builders had better lobbyists than the chicken plants. And quite frankly some of those guys can really swing a hammer.)

Then they headed down to the no-doc lenders to buy an American Dream. If the construction workers couldn’t afford the McMansions they were building, they were probably able to buy a starter home from the yuppies who moved up to the (way too big) McMansion.

No doubt there are dozens of merits to home ownership. I own outright and have no mortgage. Took every deduction I could along the way. But it just looks to me like the downsides to owning vs. renting, particularly the potential for declining values and the lack of liquidity, have until now not been adequately highlighted. Owning will continue to be a great course for many if not most, but setting it up as the consummate financial goal seems to make less sense today than it did in the 1950s.

And Santelli’s basically a loudmouth tool.

]]> By: AGG http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-146949 AGG Thu, 19 Feb 2009 23:41:04 +0000 http://www.ritholtz.com/blog/?p=19465#comment-146949 WASHINGTON (Feb. 19) -A government lawsuit Thursday seeks the identities of tens of thousands of possible U.S. tax cheats who hid billions of dollars in assets at the Swiss-based bank UBS AG. A defiant Swiss president pledged to maintain his country's bank secrecy laws. In the suit filed in Miami, the Obama administration wants UBS to turn over information on as many as 52,000 U.S. customers who concealed their accounts from the U.S. government in violation of tax laws. "At a time when millions of Americans are losing their jobs, their homes, and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civil and legal duty to pay taxes," the acting assistant attorney general, John DiCicco, said in a statement. All you TBP readers planning on moving out of the country to avoid paying taxes: Forget it. Bite the bullet and pay back taxes. Being rich and having a numbered swiss account "don't work no more". Not only that but "the rich are the drivers of the economy" is being laid bare as the exact oppposite of reality. It's an electronic world, don'tcha know? WASHINGTON (Feb. 19) -A government lawsuit Thursday seeks the identities of tens of thousands of possible U.S. tax cheats who hid billions of dollars in assets at the Swiss-based bank UBS AG. A defiant Swiss president pledged to maintain his country’s bank secrecy laws.
In the suit filed in Miami, the Obama administration wants UBS to turn over information on as many as 52,000 U.S. customers who concealed their accounts from the U.S. government in violation of tax laws.
“At a time when millions of Americans are losing their jobs, their homes, and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civil and legal duty to pay taxes,” the acting assistant attorney general, John DiCicco, said in a statement.

All you TBP readers planning on moving out of the country to avoid paying taxes:
Forget it. Bite the bullet and pay back taxes. Being rich and having a numbered swiss account “don’t work no more”. Not only that but “the rich are the drivers of the economy” is being laid bare as the exact oppposite of reality. It’s an electronic world, don’tcha know?

]]> By: AGG http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-146942 AGG Thu, 19 Feb 2009 23:13:27 +0000 http://www.ritholtz.com/blog/?p=19465#comment-146942 PS THe US Government just ADDED 50,000 more names of rich tax dodgers to the 17,000 with numbered accounts in Swiss UBS bank. Hot Damn! I do believe the government finally figured out where to get some money. LOL PS
THe US Government just ADDED 50,000 more names of rich tax dodgers to the 17,000 with numbered accounts in Swiss UBS bank. Hot Damn! I do believe the government finally figured out where to get some money. LOL

]]> By: ben22 http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-146939 ben22 Thu, 19 Feb 2009 23:00:16 +0000 http://www.ritholtz.com/blog/?p=19465#comment-146939 WOW, More sound advice over @ thestreet: Stockpickr.com founder James Altucher tells TSC's Debra Borchardt that cash is king in this recession and to go borrow - but stash that money in the bank. The headline, and it's a video, is Borrow Against Your Home. unreal WOW,

More sound advice over @ thestreet:

Stockpickr.com founder James Altucher tells TSC’s Debra Borchardt that cash is king in this recession and to go borrow – but stash that money in the bank.

The headline, and it’s a video, is Borrow Against Your Home.

unreal

]]> By: AGG http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-146938 AGG Thu, 19 Feb 2009 22:59:17 +0000 http://www.ritholtz.com/blog/?p=19465#comment-146938 In regard to the VIX: It's about boredom now, not fear.; i.e. market syncope. A significant part of the investing public now sees wall street as a conduit for asset stripping rather than equity enhancing asset allocation. Devesting people of assets doesn't attract investing capital. In regard to Santelli: 17,000 rich American tax dodgers with numbered Swiss acounts is the real story. Santelli is probably one of them so he pounds the table about a tea party and mortgage welfare queens. I own my own home and I say the homeless unemployed should be PAID by HUD to be "house stewards" of foreclosed houses for a 5 year period. This would give them an opportunity to contribute to the economy rather than turn into wards of the state at a prison. At any rate, the public outrage at 17,000 millionares crapping all over America must be suppressed with some noise. It's how it works with these sick fucks. In regard to housing inventory and cost: The demand for housing is a function of wages which are a function of jobs in normal times. When capital gains were exempted from taxation on home sales and low interest rates combined with high liquidity, times ceased to be normal. Now the only distorting factor is the free ride on home sale capital gains. The other factors make that moot because of demand destruction. So when will demand return? When we have stable employment, government funded health care for all and housing is sold for what they cost to build plus a small profit and land values return to earth. To really, really see what a house is actually worth, look at the cost per square foot of a modern manufactured or modular home. It is about $35 a square foot. Add to that the land and you have a realistic price with a healthy market of demand. Otherwise, you can sit in your house and continue your elitist pipe dream. Or you can continue with financial innovation like those Pennsylvania judges who were paid millions in "fees" (the police, bless their soul, call them bribes) to incarcerate juviniles for petty offenses in private jails. The same "business model" can be used for house squatters. Hey, predators, it makes money don't it? Santelli would love it. In regard to the VIX:
It’s about boredom now, not fear.; i.e. market syncope. A significant part of the investing public now sees wall street as a conduit for asset stripping rather than equity enhancing asset allocation. Devesting people of assets doesn’t attract investing capital.
In regard to Santelli:
17,000 rich American tax dodgers with numbered Swiss acounts is the real story. Santelli is probably one of them so he pounds the table about a tea party and mortgage welfare queens. I own my own home and I say the homeless unemployed should be PAID by HUD to be “house stewards” of foreclosed houses for a 5 year period. This would give them an opportunity to contribute to the economy rather than turn into wards of the state at a prison. At any rate, the public outrage at 17,000 millionares crapping all over America must be suppressed with some noise. It’s how it works with these sick fucks.
In regard to housing inventory and cost:
The demand for housing is a function of wages which are a function of jobs in normal times. When capital gains were exempted from taxation on home sales and low interest rates combined with high liquidity, times ceased to be normal. Now the only distorting factor is the free ride on home sale capital gains. The other factors make that moot because of demand destruction.
So when will demand return? When we have stable employment, government funded health care for all and housing is sold for what they cost to build plus a small profit and land values return to earth.

To really, really see what a house is actually worth, look at the cost per square foot of a modern manufactured or modular home. It is about $35 a square foot. Add to that the land and you have a realistic price with a healthy market of demand.
Otherwise, you can sit in your house and continue your elitist pipe dream. Or you can continue with financial innovation like those Pennsylvania judges who were paid millions in “fees” (the police, bless their soul, call them bribes) to incarcerate juviniles for petty offenses in private jails. The same “business model” can be used for house squatters. Hey, predators, it makes money don’t it? Santelli would love it.

]]> By: ottovbvs http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-146936 ottovbvs Thu, 19 Feb 2009 22:44:44 +0000 http://www.ritholtz.com/blog/?p=19465#comment-146936 "they are thinking more along the lines of where the tv will go, what color to paint the rooms and where they will put the couch." ....Duh. Who ever decided the house they were going to buy on the basis of the tax deduction they were going to get. Nevertheless it encourages ownership which for most people is a good thing. It forces them to save if nothing else. Too many people here assume a perfect world in which everyone makes rational economic decisions. They don't. All that said I'm for encouraging home ownership..it encourages thrift and social responsibility. Hard to quantify but very real nonetheless. “they are thinking more along the lines of where the tv will go, what color to paint the rooms and where they will put the couch.”

….Duh. Who ever decided the house they were going to buy on the basis of the tax deduction they were going to get. Nevertheless it encourages ownership which for most people is a good thing. It forces them to save if nothing else. Too many people here assume a perfect world in which everyone makes rational economic decisions. They don’t. All that said I’m for encouraging home ownership..it encourages thrift and social responsibility. Hard to quantify but very real nonetheless.

]]> By: ben22 http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-146935 ben22 Thu, 19 Feb 2009 22:28:13 +0000 http://www.ritholtz.com/blog/?p=19465#comment-146935 DC, That is a good point you make. I'm like ahab and take the interest deduction I'm allowed but I would have bought my house with or without the deduction. I don't agree though that people buy a bigger house so they get a bigger deduction, that's ridiculous. Most people in this country have no clue how taxes work and the last thing on someone's mind when they are looking at a bigger house, "is how much more of a deduction will I get for this." they are thinking more along the lines of where the tv will go, what color to paint the rooms and where they will put the couch. To take santelli's side though, he isn't bringing that up because the people that now get bailed out from foreclosure are taking the mortgage deduction too. DC,

That is a good point you make. I’m like ahab and take the interest deduction I’m allowed but I would have bought my house with or without the deduction. I don’t agree though that people buy a bigger house so they get a bigger deduction, that’s ridiculous. Most people in this country have no clue how taxes work and the last thing on someone’s mind when they are looking at a bigger house, “is how much more of a deduction will I get for this.” they are thinking more along the lines of where the tv will go, what color to paint the rooms and where they will put the couch.

To take santelli’s side though, he isn’t bringing that up because the people that now get bailed out from foreclosure are taking the mortgage deduction too.

]]> By: Douglas Watts http://www.ritholtz.com/blog/2009/02/housing-starts-steep-downtrend/comment-page-1/#comment-146934 Douglas Watts Thu, 19 Feb 2009 22:24:19 +0000 http://www.ritholtz.com/blog/?p=19465#comment-146934 <i>The average house in Detroit is apparently priced around $15K.</i> cf. Millinocket, Maine. Also. Growth for the sake of growth is what cancer cells do. The average house in Detroit is apparently priced around $15K.

cf. Millinocket, Maine.

Also. Growth for the sake of growth is what cancer cells do.

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