Housing Bubble 2.0: U.S. Homeowners Made $2 Trillion On Their Houses In 2017

Americans who are lucky enough to own their own little slice of the ‘American Dream’ are about $2 trillion wealthier this year courtesy of Janet Yellen’s efforts to recreate all the same asset bubbles that Alan Greenspan first blew in the early 2000’s. After surging 6.5% in 2017, the highest pace in 4 years according to Zillow data, the total market value of homes in the United States reached a staggering all-time high of $31.8 trillion at the end of 2017…or roughly 1.5x the total GDP of the United States.
If you add the value of all the homes in the United States together, you get a sum that’s a lot to get your mind around: $31.8 trillion.
How big is that? It’s more than 1.5 times the Gross Domestic Product of the United States and approaching three times that of China.
Altogether, homes in the Los Angeles metro area are worth $2.7 trillion, more than the United Kingdom’s GDP. That’s before this luxury home on steroids hits the market.

This post was published at Zero Hedge on Fri, 12/29/2017 –.

What Has Made America’s Inner Cities Into A Violent Warzone

The stories coming out from Chicago and Baltimore paint an increasingly pessimistic picture: that America’s inner cities are transitioning into a warzone, where violence has returned to levels not seen since the drug wars of the early 1990s.
Take for example Chicago, five men were killed and at least 20 people shot over the four-day Christmas holiday weekend. Last year, 59 people were shot over the same period, leaving 11 dead.
Across the United States, homicides rose about 9% last year with more than one-third of the increase concentrated in Chicago neighborhoods, according to the Federal Bureau of Investigation (FBI). Despite the overall deterioration of American inner cities, there was some improvement in areas such as Los Angeles and Washington, D. C., where declines in violent crimes have been in downward trajectories since the 1990s.

This post was published at Zero Hedge on Thu, 12/28/2017 –.

Do The Double-up! As Rents Rise, More Renters Turn to Doubling Up (L.A. The Worst!)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
Zillow has a fascinating, yet troubling study. It says that rent consumes a growing share of household income in many cities, some people must relocate or find ways to offset rising prices. An increasingly popular way to cut costs is by adding a roommate. Nationally, 30 percent of working-age adults – aged 23 to 65 – live in doubled-up households, up from a low of 21 percent in 2005 and 23 percent in 1990.
Doubing up is a close relative of young adults continuing to live with their parents. Even though U-6 unemployment is at 8%, wage growth continues to be considerably lower than before the financial crisis. This offers a partial explanation for the doubling-up phenomenon.
Of course, doubling-up is typical is high cost of living areas like Los Angeles, San Francisco, New York City, Chicago and Washington DC. Not surprising is the doubling-up trend in Mexican border cities like El Centro California, Tucson and Yuma Arizona and El Paso and Laredo Texas.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ December 27, 2017.

Man Who Delivered Gift-Wrapped Horseshit To Steven Mnuchin Compares Himself to Jesus

An LA County psychologist who thinks President Trump’s tax bill stinks to high heaven, compared himself to Jesus after admitting he delivered a gift-wrapped box of horseshit as a Christmas present to Treasury Secretary Steve Mnuchin. Robby Strong told AL.com he dropped off the box of horse manure at Mnuchin’s house as an ‘act of political theater’ to hammer home the point that ‘Republicans have done nothing for the American worker.’
Boldly taking the Christ-analogy to a place it has never gone before, Strong told SoCal radio station 89.3 KPCC that “what I did, I would like to compare to what Jesus did when he went into the temple and overturned the tables of the money-changers, who were exploiting the people financially in the name of religion.”
‘In the long run, if we don’t do stuff like this, what are we going to have left?’ Robby told KPCC. ‘I feel like that’s what the GOP has done to the American people,’ added the man who, bizarrely, is a psychologist with the LA Department of Mental Health.
Things start to make much more sense, however, once we learn that Strong claims he was an organizer for the Occupy LA movement; predictably he sides with critics of the $1.5 trillion tax overhaul who say it favors corporations and the wealthy, CBS Los Angeles reported.

This post was published at Zero Hedge on Dec 25, 2017.

Here’s An Interactive Map Of Which Housing Markets Get Hit The Most By The GOP Tax Bill

With the Republican party (and the S&P 500 apparently) convinced they have the votes required to pass their tax reform legislation this week, the folks at ATTOM Data Solutions took a look at which housing markets will be most impacted by new limitations on mortgage interest and property tax deductions.
First, on the reduction of the mortgage interest deduction to $750,000 from $1,000,000, ATTOM found that nearly 99,000 single family home and condo purchases so far in 2017 involved a mortgage higher than $750,000. And while that represents a small 3.9% of all home purchase loans underwritten so far in the year, per the interactive map below, those 99,000 loans are concentrated in a handful of liberal counties in the Northeast, California and Southern Florida.
Among 2,022 counties included in this analysis and at least 50 home purchase loans so far in 2017, those with the highest share of loan originations above $750,000 were New York County (Manhattan), New York (63.8 percent); San Francisco County, California (58.0 percent); Nantucket County, Massachusetts (57.3 percent); San Mateo County, California (55.2 percent); and Marin County, California (50.o percent). Among those same 2,022 counties, those with the highest number of purchase home loan originations above $750,000 so far in 2017 were Los Angeles County, California (9,197); Santa Clara County, California (5,543); Orange County, California (4,450); Maricopa County, Arizona (3,723); and King County, Washington (3,715).

This post was published at Zero Hedge on Dec 18, 2017.

California Wildfires Don’t Have to be the New Normal

To call them devastating is an understatement.
There have been 8,771 wildfires recorded in Northern and Southern California this year, so far, burning an equivalent of 3,346 square miles. The economic costs, increasing by the day, are now over $13 billion, a figure that will double once the bills from SoCal come in.
The greatest costs are the human ones, especially the loss of human life.
There are, of course, certain characteristics about California that make wildfires more probable there than would be the case in South Dakota, but none of them mean that annual wildfires are inevitable. And yet, that is the message we receive from the life-is-hard-therefore-we-need-government crowd.
Consider this excerpt from the Los Angeles Times story:
So how did the Thomas fire become such a monster? Heavy winds are one factor. But another is the thick brush that has not burned in decades, providing fuel.
‘The fuels in there are thick and they’re dead, so they’re very receptive to fire,’ said Steve Swindle, spokesman for the Ventura County Fire Department.
The fuel can spread the fire even when winds die down.
‘Since it’s so dry out there, it doesn’t take much in the way of winds to create those critical fire weather conditions,’ said Robbie Munroe, a meteorologist with the National Weather Service. We’ll see wind gusts in that … area between 20 and 35 mph, maybe a few mountain sites might see up to about 40, but that’s the most we’re expecting right now.’

This post was published at Ludwig von Mises Institute on December 18, 2017.

California Moves One Step Closer To “Mileage Tax”; Could Require Tracking Your Cell Phone Movements

Just a few months after implementing a massive 60% hike in gasoline taxes, raising them from $0.297 per gallon to $0.417, the state of California is now one step closer to implementing a brand new tax that would charge drivers for each mile driven.
As a quick example of how shockingly misguided such a piece of legislation would be, the logical conclusion here is that poor people who have been forced out of cities like San Francisco, Los Angeles and San Diego due to rising rents would now be forced to incur yet another massive tax for simply commuting into city centers to do their jobs…in essence, in many cases, it would serve as a regressive tax on the poorest families…
So how did we get here? It all started back in 2014 when California passed Senate Bill 1077 calling for a mileage tax. The bill kicked off the California Road Charge Pilot Program which sought to design and test various strategies for implementing a mileage tax.

This post was published at Zero Hedge on Dec 14, 2017.

“It Was Like A War Zone” – Heavy Winds Push Wildfires Toward San Diego As Bel Air Burns

Images of charred palm trees and the burnt-out husks of multi-million-dollar homes flooded social media for a fifth day Friday as the SoCal wildfires that exploded into life at the beginning of the week showed no signs of slowing.
Instead, some of the largest fires have entered the heart of Los Angeles – America’s second largest city – and are menacing some of the most expensive homes in the country.
To date, six large wildfires have scorched 141,000 acres in the state, with the flames spreading as far south as San Diego, Cal Fire officials said. At least 5,700 firefighters from several agencies and at least nine states are working to contain the massive walls of flames. The fires have forced 190,000 people out of their homes in a hurry. Many took only their pets and a few choice mementos.

This post was published at Zero Hedge on Dec 8, 2017.

150,000 Flee Los Angeles As Wildfires Rage – “We’ll Be Fighting This All Week”

The gate to nowhere. Home destroyed. Now gas line is burning. #VenturaFires pic.twitter.com/3HUR68Urhc
— Sara Sidner (@sarasidnerCNN) December 6, 2017

In what sounds like a replay of the devastating fires that killed dozens of people and torched a broad swath of California wine country this past summer, at least five discrete fires barreled across Southern California with extreme speed, torching more than 65,000 acres as firefighters struggled to contain the simultaneous infernos.
The first blaze started at about 6:25 p.m. Monday in the foothills near Thomas Aquinas College in Santa Paula, a popular hiking destination. It grew quickly to more than 15 square miles in the hours that followed, consuming vegetation that hasn’t burned in decades, Ventura County Fire Sgt. Eric Buschow said, according to CNN.
Powerful Santa Ana winds and extremely dry conditions have fueled the wildfires, according to the Washington Post, adding hundreds of millions – if not billions – of dollars in damage to what has already been a devastating year for fires. The winds that caused the fires were part of the season’s longest and strongest wind event – driving down from the desert and mountains into the city of Los Angeles.

This post was published at Zero Hedge on Dec 6, 2017.

Hollywood Movie Director’s “Outlandish” London Home For Rent – Take The Tour

If you haven’t heard of Roland Emmerich, you will almost certainly have heard of some of his movies. Emmerich is the 62-year old German who directed Universal Soldier (1992), Independence Day (1996), Godzilla (1998), The Day After Tomorrow (2004), White House Down (2013) and Independence Day: Resurgence (2016). He is the 11-th highest grossing director in history. Besides directing, Emmerich also produced and wrote most of his movies. Emmerich owns homes in Los Angeles, New York, London and Stuttgart. As Wikipedia notes.
He likes to decorate his homes in a self-described “outlandish” manner, adorning them with rare Hollywood memorabilia, murals and portraits of dictators and Communist figures, and World War II militaria.
Emmerich’s London home is currently available for rent – anything from a few days to six months. As The Guardian newspaper notes,
the house is filled with communist iconography, taxidermy and potentially outrageous art. The property’s interior designer John Teall says:
‘Nothing is spared, from government and gender to race and religion – but there’s no manifesto. The idea was to provoke thought, amuse and maybe shock a little.’
If you’d like to take the tour, let’s go. Here is the outside on Brompton Square In London’s Chelsea.

This post was published at Zero Hedge on Dec 6, 2017.

California Residents Increasingly Ditching Their Massive Tax Bills And Unaffordable Housing For Las Vegas

Los Angeles residents have apparently had just about enough of their city’s excessive home prices, unaffordable rents, crushing personal and corporate tax rates, overly burdensome regulations, polluted air, etc. and are increasingly leaving for a better life in Sin City. As Los Angeles Times columnist Steve Lopez puts it, “the rent steals so much of your paycheck, you might have to move back in with your parents, and half your life is spent staring at the rear end of the car in front of you.”
As Jonas Peterson points out, his family made the move from LA to Las Vegas in 2013 and were able to double the size of their house while lowering their mortgage payment all while enjoying the added benefits of moving from one of the most over-taxed states in America to one of the lowest taxed.
Las Vegas is one of the most popular destinations for those who leave California. It’s close, it’s a job center, and the cost of living is much cheaper, with plenty of brand-new houses going for between $200,000 and $300,000.
Jonas Peterson enjoyed the California lifestyle and trips to the beach while living in Valencia with his wife, a nurse, and their two young kids. But in 2013, he answered a call to head the Las Vegas Global Economic Alliance, and the family moved to Henderson, Nev.

This post was published at Zero Hedge on Dec 4, 2017.

Is Fed Chair Nominee Jay Powell, Count Dracula?

A Date with Dracula
The gray hue of dawn quickly slipped to a bright clear sky as we set out last Saturday morning. The season’s autumn tinge abounded around us as the distant mountain peaks, and their mighty rifts, grew closer. The nighttime chill stubbornly lingered in the crisp air.
Like Jonathan Harker’s journey to Transylvania roughly 120 years ago, we also traveled eastward. Our route, however, did not take as through Vienna and Budapest. Nor did it take us upward into the Carpathian Mountains.
Instead, we traversed along the foothills of the San Gabriel Mountains, passing from the Angeles National Forest to the San Bernardino National Forest. Then we climbed upward to the mile-high Oak Glen village, up above the outermost rim of the Los Angeles Basin. We had finally outrun Southern California’s seemingly endless sea of concrete.
At this mountain hamlet, we didn’t witness a single stoplight or franchise drive-thru. Billboards, transmission lines, rail corridors, and graffiti art did not blight the countryside. The built milieu hardly scarred the natural landscape.
There was only a windy narrow mountain road and a smattering of apple orchards, which filled the gentle slopes that nestle between the larger and steeper topographic terrain. Upward we climbed, to where the pine woods canopied across the roadway and the sparse clouds danced to the glint of the sunlight.
Like Harker, our destination had a very specific intent. We had a date with Dracula

This post was published at Acting-Man on November 11, 2017.

The Size Of The Financial Avalanche Coming Grows Larger

Inflation vs deflation. The true economic definition of ‘inflation’ is the rate of increase in the money supply in excess of the rate of increase in wealth output. Inflation is monetary in nature. Rising prices are the manifestation of inflation. Someone I follow on Twitter posted an ingenious example from which to conceptualize the true concept of inflation using the game of Monopoly:
The players all start out with reasonable amounts of money to speculate on real estate. As the game proceeds, players collect $200 by simply passing Go and use this money to speculate on real estate. By the end of the game, only $500 dollar bills are worth anything, the whole thing blows up, and most players end up destitute. In a twist of irony, an original game board sells for about $50,000.
A fixed amount of real estate and continuously increasing money supply, with ‘passing Go’ functioning as the game’s monetary printing press. The monopoly analogy is readily applied to the current real estate market. The Fed tossed roughly $2 trillion into the mortgage market, which in turn has fueled the greatest U. S. housing bubble in history. The most absurd example I saw last week is a 264 sq ft studio in Los Angeles listed on 10/26 for $550,000. The seller bought it a year ago for $335,000. This is the degree to which Fed money printing and easy access Government guaranteed mortgages have distorted the system.
Here is monetary inflation as it is showing up in the stock market and housing markets:

This post was published at Investment Research Dynamics on November 10, 2017.

Smallest home in Los Angeles: 264 square foot studio selling for $550,000 highlights collective insanity.

People have once again lost their collective marbles when it comes to real estate. There is now a massive trend with momentum for non-stop housing appreciation. In other words, our housing bubble sins are now fully washed away making way for more aggressive risk taking. I’ve been traveling and seeing real estate from many different locations and thanks to ubiquitous sites like Zillow, virtually every large metro area is seeing massive housing appreciation detached from income growth and people are tracking real estate down like starving hyenas after an injured wildebeest. We are now in a market where potential buyers are in a panic to buy for no other reason beyond they feel they will miss the boat yet again. Today we highlight what is probably the smallest home we have ever featured on the site.

This post was published at Doctor Housing Bubble on October 31st, 2017.

California Clears First Hurdle In Effort To Split Into Three States

After several failed Calexit attempts over the past several months (see: CalExit 3.0: New Petition Calls For Cali Secession…3rd Time’s A Charm?), tech billionaire Tim Draper is pursuing yet another major shakeup in the Golden State. According to the New York Times, Draper is convinced that a state of 40 million people is simply “ungovernable” and has filed paperwork seeking a ballot initiative that would split it into 3 distinct states.
In contrast to the so-called Calexit movement, which aspires to secession, these proponents see California’s salvation in greater local autonomy within the union.
The three Californias would have roughly equivalent populations and wealth. A state of Northern California would include almost the entire upper half of the state, including San Francisco; a Southern California would contain most of the rest.
A third state, called simply California, would fold in Los Angeles and extend up the coast to Monterey.

This post was published at Zero Hedge on Oct 30, 2017.

The Most Unaffordable Housing Markets in North America

There are a lot of them. It’s called ‘crisis’ for a reason.
What is the most severely unaffordable housing market in North America as measured by local household incomes in relationship to local home prices?
By this measure, I’m happy to report that San Francisco, which sports the highest median home price in the US at about four times the national median, is off the hook. It’s off the hook because median household income is $92,100. It’s only in third place of the most severely unaffordable housing markets. California has four cities in the top 10 – San Francisco, Los Angeles, San Jose, and San Diego – but none is number one on that honor roll.
Number one is Vancouver, Canada, with a median home price of $1.11 million and a median household income of $64,000 (all amounts in US dollars at the exchange rate effective at the time of the study).
Toronto, whose formidable housing bubble is now under pressure, is the second most unaffordable market in Canada with a median home price of $471,600 and a median household income of $62,600. But it’s only in 13th place overall.
In second place overall? New York City’s borough of Manhattan, with a median home price of $1.27 million and a median household income of $77,600. Brooklyn is in fourth place, Queens in 11th place, and the Bronx in 16th place.

This post was published at Wolf Street by Wolf Richter ‘ Oct 26, 2017.

Vegas Gunman’s Brother Arrested For Child Porn; Laptop Hard Drive Missing

The story of Las Vegas shooter Stephen Paddock’s family just keeps getting weirder.
The Los Angeles Times is reporting one of Paddock’s younger brothers, Bruce Paddock, has been detained in North Hollywood on suspicion of crimes related to child pornography. Paddock, 58, was taken into custody Wednesday morning.
The LAPD said a man was detained in the 5300 block of Laurel Canyon Boulevard on suspicion of crimes related to child pornography. However the LAPD would not reveal the name of the man. Sandra Breault, a spokeswoman for the FBI in Las Vegas, declined to say whether Bruce Paddock’s detention was connected to the agency’s investigation into the concert shooting.
The Paddocks’ father, Benjamin Paddock, was famously revealed to be a former bank robber and con man who once made the FBI’s “most wanted” list. Paddock’s family has mostly avoided the media, though his youngest brother, Eric, spoke out when reporters descended on his Florida home in the days following the shooting. Eric Paddock said he wasn’t close with most of his brothers, but had once been involved in a lucrative real estate venture with Stephen. He said he was shocked to learn that his brother had been the shooter, and said his brother gave no indication that he might carry out such an atrocious act.

This post was published at Zero Hedge on Oct 25, 2017.

Robert Shiller: 1987 Could Happen Again

Oct. 19, 1987, was one of the worst days in stock market history. Thirty years later, it would be comforting to believe it couldn’t happen again.
Yet that’s true only in the narrowest sense: Regulatory and technological change has made an exact repeat of that terrible day impossible. We are still at risk, however, because fundamentally, that market crash was a mass stampede set off through viral contagion.
That kind of panic can certainly happen again.
I base this sobering conclusion on my own research. (I won a Nobel Memorial Prize in Economic Sciences in 2013, partly for my work on the market impact of social psychology.) I sent out thousands of questionnaires to investors within four days of the 1987 crash, motivated by the belief that we will never understand such events unless we ask people for the reasons for their actions, and for the thoughts and emotions associated with them.
From this perspective, I believe a rough analogy for that 1987 market collapse can be found in another event – the panic of Aug. 28, 2016, at Los Angeles International Airport, when people believed erroneously that they were in grave danger. False reports of gunfire at the airport – in an era in which shootings in large crowds had already occurred – set some people running for the exits. Once the panic began, others ran, too.

This post was published at Zero Hedge on Oct 19, 2017.

What the Headlines Got Wrong about Retail Sales

No, our American consumers didn’t suddenly perform a miracle.
As part of the data dump on Friday, the Commerce Department released its estimates for retail sales for September. If you just looked at the headlines, you’d get the impression that our American consumers suddenly had gone out to splurge, fired up by two powerful, destructive, and deadly hurricanes:
‘U. S. retail sales surge, driven by autos and gasoline purchases’: Reuters
‘Retail sales in September surge most in 2 years’: Los Angeles Times
‘Storms Surge and US Retail Sales Surge; Most in 2 Years’: New York Times:
‘U. S. Retail Sales Rose 1.6% in September: Strong car sales and higher gasoline prices power largest one-month increase since March 2015’: Wall Street Journal
‘U. S. Retail Sales Rise Most Since 2015 on Storm-Related Lift’: Bloomberg News
So US consumers performed one their infamous last-minute miracles and suddenly got on the internet and drove to the mall and to auto dealers and splurged? The headlines pointed at the hurricanes and replacement demand, but this is what you get into when the headlines draw big conclusions from seasonally adjusted month-to-month data that is trying to estimate a very seasonal and volatile reality.

This post was published at Wolf Street by Wolf Richter ‘ Oct 14, 2017.

California’s Housing is Bleeding Out and We Apply Band-Aids

Insider view on how to deal with the Housing Crisis in California.
Governor Jerry Brown just signed fifteen affordable-housing bills into law. A few might do a little good. Two senate bills will raise a bit of money. Senate Bill 2 will charge you a recording fee of up to $225 on any transaction not already subject to a transfer tax (e.g. a mortgage refinance). Senate Bill 3 is a $4 billion housing bond. Most of the money raised from these two efforts will go toward funding low-income housing.
Assembly Bill 1505 will allow cities to once again require an affordable housing component in new residential projects, a requirement that had been ruled unlawful by the Court of Appeal in 2009. Jerry’s other new laws are, in a word, fluffy, well-intentioned but toothless efforts to spur cities on to do the right thing.
About the money. According to the Los Angeles Times, San Francisco’s 700 unit Hunters View low-income housing project cost $450 million or $643,000 a unit. While appallingly high, that number sounds about right. Thus, if SB2 actually raises $250 million a year, California could add another 388 low-income units annually. And the whole $4 billion from SB 3 would be gone after 6220 new units. In a state which needs to add 100,000 new dwellings a year just to keep up with its population growth – and not allow the housing crisis to worsen – this is truly spitting in the ocean.

This post was published at Wolf Street on Oct 8, 2017.