28 votes

You Read it First on The Daily Paul!

After insisting for a year there was a housing recovery....

July 2014: Fortune Magazine: Why The Housing Recovery Is Over


April 2014: Smaulgld: The Housing Recovery that Never Was is Over


April 15 2014 on the Daily Paul

Another case of the alternative media getting it right first!

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Most investors look to buy low and sell high.
Chart 1: we have 5 years
Chart 2: normal is good but we have a lot of room... 5 years for high
Chart 3: see comment 2
Chart 4: Serious uptick for the last 4 quarters? How is that bad? Looks roses for 5 years.

You heard it here first: hold for 4 years.

"Mortgage-backed securities looking good in 2014" (?)

"Both commercial and residential mortgage-backed securities will be great investments in 2014 as the Fed starts tapering and long-term interest rates rise, says a top hedge fund manager."

Deja Vu.... all over again.


"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

Recovery, Recovery, Recovery

Recovery, recovery recovery that is all the media parrots.

That is why I am very surprised the Fortune reporter called the end of the housing recovery. I noted that even the Fed has also thrown real estate under the bus.

I suppose it was too hard to tout a housing "recovery" when sales are depressed

The press and the Fed are now focused on promoting a "jobs recovery"

The same Fortune reporter had this to say re jobs


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Mortgage rates are still

Mortgage rates are still ludicrously low. When I bought my first house the mortgage rate was 8.625%. Given that people are struggling to afford their houses with the current rates you can imagine what will happen if the rates go up -- people with fixed rate mortgages will still be able to pay their mortgages but the value of their houses will plunge, since nobody will be able to afford the old price at the new higher rates.

There will also be a major banking crisis if rates go up. First, for the usual reason that banks lend long and borrow short, they will still be getting low interest on all those outstanding mortgages but will pay more interest for deposits. But another reason is that the money center banks all hold gobs of interest rate swaps where they pay a variable rate and receive a fixed rate. They made out like bandits on those swaps over the decades where interest rates only went down, they will crash and burn when the rates go up.

Add to all this the fact that the federal government will have massive increases in interest costs if rates go up. So all the political pressure is for lower interest rates (savers be damned). The Fed will destroy the dollar rather than let interest rates go up.

The Truth

"The Fed will destroy the dollar rather than let interest rates go up."

Or let the stock market go down.

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DJP333's picture

One thing I realized recently

is that the government loves helping the housing industry and feeding the real estate bubble because in the end it means more taxes of all kinds back to the government. More housing, more construction, higher asset prices all convert to higher taxes. All of them increase because of housing and real estate bubbles- sales taxes, property taxes, payroll taxes, insurance taxes, energy/gasoline taxes, cement production tax, motor vehicle taxes, capital gains taxes, environmental fees, telephone taxes, waste management taxes, zoning fees, workers comp taxes.....all of these go back to feeding the Beast.

In Texas it's going full force again, the amount of housing going up is ridiculous both single family and multi-family.

"It’s not pessimistic, brother, because this is the blues. We are blues people. The blues aren’t pessimistic. We’re prisoners of hope but we tell the truth and the truth is dark. That’s different." ~CW

There is no such thing as government...

but the principle you outline is even more evident at the county level. There are *individual people* who stand to profit from "taxation," i.e., slavery/theft at the county level. These would be school teachers, tax appraisers, county commissioners, developers, road crews, sheriffs, and the list goes on. If you confront them about it, they call it "progress." And for "progress," they need a bigger "tax base." This is precisely what you call reinflation of bubbles, and they applaud that reinflation, because they view it as beneficial to themselves at the expense of others.

Don't think of it as "feeding some Beast." It is feeding the criminal parisites. Of course, they are not all criminal. A few are simply trying to bring down the system. But most of them vote and participate in and support the theft. They encourage their family to do the same and all applaud your "Beast."

I would like to challenge your assertion that there is no such

thing as government...if you are up to it.

I've been seeing this assertion lately and I want to address it for any would be learners of civics.

There certainly is

There certainly is government. And unlike some of the anarchists here I see it as a necessary evil. But such government as is necessary should be as local as possible. Putting so much power at the federal level was never intended by the founders of this country and is disastrous.

I agree that there is government

Extremely limited is my speculated preference.

We currently suffer under governments of near, if not total, power.

DJP333's picture

Belgium is 3rd largest foreign holder of U.S. Treasuries

after China and Russia. Seems so unusual, until you realize that:

Belgium was a founding member of what has now become the European Union. Ever since, it has always actively campaigned for the development and deepening of Europe. Some leading Belgian politicians have also played key roles in European construction.

Numerous institutions that have to do with the European Union, like the European Economic and Social Committee (EESC) and the Committee of the Regions (CoR) are also based in Brussels.


These are some of the orchestrators of the one world government.

"It’s not pessimistic, brother, because this is the blues. We are blues people. The blues aren’t pessimistic. We’re prisoners of hope but we tell the truth and the truth is dark. That’s different." ~CW

Here's the complete list of who owns what

Treasury and Gold Holdings by country:

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...Yeah, I heard it too!

Thanks for posting this.Bumped & Bookmarked.

"Beyond the blackened skyline, beyond the smoky rain, dreams never turned to ashes up until.........
...Everything CHANGED !!

depends on where you live

in colorado it's still really crazy and rent is higher than last year if you can even find a house. you got 20-30 people filling out apps to rent a way overpriced house. it's worse than last year which was insane.

for the last year or so in west texas people have been living in storage units due to lack of available housing.

Official Daily Paul BTC address: 16oZXSGAcDrSbZeBnSu84w5UWwbLtZsBms
Rand Paul 2016

The question is, will I be

The question is, will I be able to buy a house at dirt cheap prices in the next 6 months? I would love to have a house instead of an apartment and as it stands I will have to move into one by years end. Can I get a cheap house instead?

To climb the mountain, you must believe you can.

Yes you can!

You just can't be afraid to make an "insulting" offer.

I've bought 3 properties in the past 3 years and NOBODY believed I could get them for what I did.

Remember, he who owns the cash makes the rules!

"It is difficult to free fools from the chains they revere".

It's hard not to be a menace to society when half the population is happy on their knees. - unknown

I dont think anyone implied

I dont think anyone implied about being afraid to make an offer.

To climb the mountain, you must believe you can.

don't think so primarily because there are so

many homes still underwater from the fed's last low interest rate fiasco in the early and mid 2000's that won't be selling.

What may help bring home prices down is if the market over powers the fed and no matter how low interest rates are they can't push home prices any higher because people can't afford them and investors who over paid have to lower their prices to sell them.

Home prices should have fallen after the bubble burst in 2008 and stayed down, instead the fed successfully reflated the housing price bubble and did the same with stocks.

Home prices have upper limits base on what people can pay so the end of the housing appreciation is probably here.

Stock prices have no limit to how high they can go as no stock becomes unaffordable. I think however we are also reaching the limits of sanity for stock market prices too! http://www.dailypaul.com/322763/is-the-stock-market-near-col...

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Shadow Market

There is still a large RE shadow market. The shadow market are toxic assets that the Fed allows (enables) banks to keep on their books. They are still buying mortgage debt.

In the next crash the market will over-power the Fed. They shot the bolt on the first round (08-09').

Set yourself up to buy and live in that house. It is a home, treat it as such. In that capacity you will extract intrinsic value and feel a sense of stability. Eventually you will build equity which is essential.

Do not buy until prices fall... period. Remember - you make money on the buy.

*Note: rental rates increase when people who shouldn't buy can't buy. Ownership rates are too high at the moment.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

Great job, Smaugld.

Great job, Smaugld.

"The United States can pay any debt it has because we can always print money to do that." — Alan Greenspan

Thanks Anti Fed

Ive exchanged correspondence with the reporter
He is a bit of a fan of the Fed :-(

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Top of Curve

What I see as a builder tells me it is 2006-8 all over again:

1. The building department is overwhelmed - permit applications spiked in 2013 and then again in 2014 from an all-time low. Deja vu.
2. People who know nothing about the industry of RE investing are "getting in to the game". Deja vu.
3. Construction labor shortage is driving down quality and driving up rates/building costs. Deja vu
4. As costs to build rise, "investors" don't seem to care about cost, only how fast can it be built/renovated. They "know" they can cover the inefficiency cost with high ROI(many are rookies). Deja vu.
5. False wealth effect is in full effect. People are looking at their homes as an ATM again rather than a home. Deja vu.
6. False wealth effect among trades - they are buying big trucks, campers and boats. Deja vu.

I give it two more years. Great for archs/engs/builders while you can get it. We are charging at 06-07' rates again and turning down projects.

The only way to win in this game to be a contrarian: to buy at the crash, hold until demand begins to rise, renno/build and sell before/at the top of the curve.

If you are "getting in the the game" now I will be buying your unfinished & unsold project in about 3 years...

"When the people are greedy be conservative. When the people are conservative be greedy" - Warren Buffet.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

You may be right!

The homebuilders need to be analyzed differently that the housing market itself as they constitute only about 105 of the market and their homes sell for $50-70K more than the average used home.

A big question I have is if the market crashes-would it really make sense to get back in?
Can the Fed really pick up the pieces one more time. Do stocks deserve even a valuation 30% lower than they are today?


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RE is still a local commodity with demand driven by factors other than the interest rates and stock market bubble.

1. Local economy - booming, growing and attracting educated young people + high net worth individuals?
2. Proximity to transportation?
3. Can you buy on the crash and rent at a rate that covers the note or spins off cashflow?
4. Demographics (generational). There are things we do during different phases of life. One of them is establish a home. Y is a big wave. They want a different product (small, urban and quality) but they will eventually want a home.

Let's differentiate:

Detroit: crash is not a crash, it is a free-fall, a catastrophe. Sign of a failed economy. Demographic is desperate.
Denver: crash is a market adjustment. The economy will re-bound. Demographic is young.

In RE investment and building speculation you make your money on the buy. The lower you buy, the higher your ROI. It is impossible to buy low and build with reasonable costs once well into the boom.

Because you can't anticipate the length of the crash you have to have staying power. Being able to rent and cover the note is key.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

Great analysis

More of the country is closer to Detroit than San Francisco

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It is Tragic

Honest, working communities have been devastated as we off-shored manufacturing, allowed an in-flow of cheap unskilled labor and stopped investing in skills. There are few chances for a comeback.

Compare to the German Mittelstand: http://en.wikipedia.org/wiki/Mittelstand

We had this at one time. Germany invested and we squandered.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

NY Times; A Recovery In Need of a Recovery

A recovery in need of a recovery

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