Beware the False Idol

‘The housing market is improving…the housing market is improving’

Sadly, this is the banshee wail of the undereducated. Sadly, we have heard this non-fact based mantra going back to early 2009. Though accurately, on a broad-based view of the housing market, it remains mostly false. (this is not to say that there are some, but few pockets and areas of localized markets that are active with legitimate owner-occupied buying)

In what appears to be signs of improvement are in reality, just propped up indexes and figures. The Fed has financed nearly 3 trillion in bad loans and they continue to absorb the cost of defaults in nearly all of the FHA approved mortgages made today. (Read: Tax Payer money) Also, residential delinquencies are on the rise again, up 10.2% in Q4.

Approximately 80% of current delinquent residential loans were originated before 2008. In fact,
pre 2008 loans account for about 53% of all mortgage loans.

Then, there is the GSE’s one of the greatest scams are federal government had enacted- (guaranteeing private loans with public money) continues to dig a deeper and massive hole of debt- read: tax payer money to the tune of 190 Billion and counting.

A bit of historical data reveals that starts of multifamily housing stands at 15% below mean trends. Construction of single family residences is approximately 45%  below the long-term trend and demand for new homes is at 46% below the norm.

Additionally, there are approximately 14 million mortgages underwater. Mortgage net-equity has decreased in 4 1/2 years by a staggering 3.7 Trillion dollars.

There is a  massive amount of non-performing inventory sitting on the balance sheets of banks (in which the government and the Fed have ‘requested’ the banks not to release…) AKA, Mortgage-Stuffing, which has been ramping up in the past two years. There may be upwards of 5 to 7 million distressed assets not being disclosed by the banks. (part of the fraud-closure debacle)

Not too mention, the one trillion dollars of student debt, 16.7 trillion in national debt, 22% total under/unemployment, while the mean duration of unemployment is at 35.3 Weeks. (down slightly from a peak of 40.2, but up from last years average of 33 weeks)

The U.S. now has 48 million households on SNAP (UP by 17 million since 2008) all while housing subsidies have increased by a whopping 48%. Then there are salary and wages- (when adjusted for Real Inflation, are actually negative compared to the core rate) PCE, is flat and personal income is down -3.4%, the most in 20 years.

BUT! The big but…somehow, the average tax paying American has suddenly come up with new found disposal income to buy houses across the nation…amazing! Sadly, it is simply untrue. While there has been some activity in buying, it is mostly in the form of the governments ‘Central-Planning’ Reo-to-Rent programs, a flood of foreign buyers and phantom new start contracts.

And those “SA” Seasonally Adjusted prices you see? Fabricated. When all is said and done and you parse out the ‘noise’ prices are not truly appreciating and in fact in many states are declining once again.

“But the nar said so” Sadly, the nar (one of the largest lobbying groups in Washington) are nothing more than enablers of burden and debt to the tax payers. The nar are simply a fraud.

Question:
What is the primary job of a real estate person? If you think, buy and sell houses, sadly, you would be mistaken. The main function of any real estate firm and agent, is to act as a buffer between a buyer/seller and factual, relevant information. The industry itself is nothing more than a marketing-ministry of propaganda.

The agent acts completely in his or her own self-interest, despite the rhetoric they continually churn out. Upton Sinclair had a great quote- which explains the conflict that a real estate person inherently creates.  “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Housing Snapshot

By DataAnalytics

Admits the arm-waving and ramped up rhetoric being shouted by the msm/real estate/banking and finance industry, we would like to remind the stuffed-suits that housing is not improving, not recovering and will remain depressed for a long time to come.

Out of approximately 45 Million residential mortgage holders in the U.S. there are roughly 18 Million outstanding mortgages that are in negative equity territory. Previously, it was thought and published that there were 12 Million underwater mortgages, but as it happens, the two main firms who collect that data were incorrect. Turns out, that nearly 40% of all outstanding residential mortgages are actually  ‘underwater’

Counting all housing inventory; existing, new and both disclosed and undisclosed shadow assets (to the best of independent analysis), there is approximately 7.5-/+ Million homes available. That equates to a total absorption rate of approximately 24 months and that figure could be as high as
60 months

Housing is still unaffordable, despite the fact that overall, prices have fallen about 35%. In order for median prices to be on par with median incomes in the U.S. the median house price needs to be at approximately $144,000. Currently, the median price is about $164,000, which is +12% or +$20,000
too high. Forget affordability, forget the ‘talking-points’ that the real estate and banking industry perpetrate, they are grossly incorrect and deceptive.

The FACT is, that there is little to no borrowing and purchasing power.
One of the main causes is due to the extremely high unemployment rate of approximately 12% (U3). While the total underemployment/unemployment (U6) is about 23%. Wages are flat, credit risk remains elevated and household debt is increasing. The debt-to-income ratios for the majority of would-be buyers is above 35%- which places many potential mortgage borrowers at a high risk of defaulting.

The facts are indisputable, even though the real estate and banking muppets claim otherwise. Of course, all of their arm-chair analysis is predicated upon a paper foundation that crumbles under the weight of truth. Truth will always trump lies and deception, eventually the truth gets out. The truth triumphs.

The main take-aways here to remember: Diminished Borrowing/Purchasing Power AND Years worth of Inventory. An equation that nets very little market absorption. Plus, a myriad of ancillary factors; Including, but not limited to massive unemployment, elevated levels of household debt and
an eroding economy.

Forward

By DataAnalytics

“Forward”
Merriam-Webster’s Definition of FORWARD:

1a : near, being at, or belonging to the forepart b : situated in advance

2a : strongly inclined : ready b : lacking modesty or reserve : brash

3: notably advanced or developed : precocious

4: moving, tending, or leading toward a position in front; also : moving toward an opponent’s goal

5a : advocating an advanced policy in the direction of what is considered progress b : extreme, radical

6: of, relating to, or getting ready for the future <forward buying of produce>
— for·ward·ly adverb
— for·ward·ness noun

Looking closely at definition number 5a, its meaning becomes particular interesting in certain contexts and uses of the word- Forward.

For example one could easily sight the apparent radical financial actions of the U.S. government
and its agencies over the past 12 to 13 years that had been steadily gaining momentum and now, rapidly accelerating during this particular administration.

As well as the extreme ideologies of both the republican and democratic parties, which has manifested itself in the form of massive and unchecked corporate pandering and financial welfare being handed out to large investment banks, large corporations, along with the continuing erosion of personal freedoms of the American citizen. As they had (the U.S. government) stated, their goal was to “fundamentally transform America” and indeed, seem to have succeeded.

Definition 6, states; -get ready for the future, and in the case of the U.S. economy and the
immediate and mid-term future, it speaks more to the ‘get ready’ verbiage described. What it
does imply, is that the majority of United States citizens should be ‘getting ready’ for a future of a depressed economy, enormous fiscal/capital debt and monetary inflation, that well may last for a decade or possibly longer.

Now that we have established the various definitions of Forward, let’s examine the roots of the slogan “Forward” as a bureaucratic advertising catch-phrase.

The use of the word in the political realm is nothing new. In fact it dates back to the late 1800’s in the former Social Democratic Party of Germany. (which was an early Marxist-Based party platform)

Forward, or the German version, Vorwärts! Was a  daily newspaper published originally in Leipzig from 1876 to 1878 and then again in Berlin from 1891 to 1933. Vorwärts! was the voice of the European Marxist-Socialist movement and ideology, before being outlawed and crushed by the so-called Fascists of the Nazi Party (also a Socialist ideology itself, just that it was a Right-Wing movement rather than a Left-Wing movement)

Subsequently, during the reign of Nazi totalitarianism, Vorwärts! Vorwärts! (Forward! Forward!) was the Hitler-Youth marching song designed to rally and unite the German people with national fervor from the emerging youth.


Forward, was also utilized by the Soviet’s in the early 1900’s.  Translated from its Russian Marxist-Socialist political use, the term Vperedwas the first Bolshevik weekly newspaper, published in Geneva from Dec. 22, 1904 to May 5, 1905.

The name of the newspaper was suggested by then future Soviet leader, Vladimir Lenin.
Vpered was also a radical and extreme Marxist organization within the Russian Social Democratic Party, from 1909 – 1912. The slogan and context of Forward in political propaganda terms was also heavily touted and used in the Post WWII GDR/DDR and Soviet Union.

In more modern times, the European and North American Socialists define Forward
as “The way forward for anti-capitalism.” The caveat though, is that the U.S. government is not outwardly anti-capitalist, but they are without question, pro-corporatist. On the surface it would
seem that they are champions of free-markets, but when you dig deep enough below that surface
the evidence reveals a completely different and alarming truth.

In essence, a Corporatist platform of capitalism, is really nothing more than a form of Market-Socialism. When one considers what the government has done with tax-payer money or ‘printed’ currency, to “Bail-Out” dozens upon dozens of supposedly free-market owned companies.

The list is lengthy to print, but anyone who is able to search the internet thoroughly, can find the long list of companies and corporations the U.S. government has ‘loaned’ tax-payer money to. Although these so-called loans were nothing more than ownership stakes in said entities.  Thereby creating partially and loosely owned/controlled economies- which is one of the tenets of Market Socialism.

We will continue our look and discussion of Forward in Part II