Feeling rich through debt: Modern banking has replaced real economic prosperity with massive levels of debt. Housing affordability reaches multi-decade highs while household incomes retreat to 1990s levels.
One of the biggest headlines right now is how the housing market is pulling the entire market up. Housing prices are soaring while the stock market is making record highs. Yet a large portion of the housing run-up is being caused by easy money that has been created by the Federal Reserve. Banks are out-bidding [...]
Inflation unchained: US dollar down 23 percent from 2000, Tuition up 72 percent, and home values up 44 percent. Incomes adjusting for inflation are back to 1990s levels.
It is hard to believe that people in the US are still denying the obvious impact of inflation. The slow erosion of purchasing power has occurred for many decades now. What people tend to forget in a completely fiat based system is that the Fed can print as much money as it likes. And they [...]
The great deleveraging – US households see access to debt diminish. Housing affordability and reversion to the home price to family income ratio.
Households in the US continue to face a painfully slow process of austerity via debt deleveraging. In a debt based system like the one we live in access to debt is viewed by many as access to money. That is, your ability to finance a car, home, vacation, or even a college education is largely [...]
This recession has been unmercifully brutal on younger Americans. Many are entering the most difficult employment market in generations with a flood of low wage jobs saddled with record levels of student debt. Many have never even witnessed how it is to live in a bull stock market. Of course this is assuming they had [...]
The compression of generations – 25 million adults live at home with parents because they’re unemployed or underemployed. The crushing cost of a college education today.
The thought of moving out on your own and making your individual way in the world is very much an American trait. Certainly movies and television shows almost always assume every American has moved out on their own once adulthood is reached. What this recession has taught us is never take anything for what is [...]
The desert mirage of easy housing profits – Phoenix Arizona home prices on track for four consecutive years of year-over-year home price declines. 55 percent fall from peak and nominal home prices back to 2000 levels. What happens when investors dominate the market?
The foreclosure epidemic in states like Arizona and Nevada is breathtaking and incredibly disheartening. Prices have cratered much more quickly than the methodical rise up in the last decade. Home prices in Phoenix now sit precariously where they did in 2000 without adjusting for inflation. These desert communities largely built on a dream, fast construction, [...]
The banking gears of housing – Bank of America sells mortgage servicing rights on large loan pool to Fannie Mae. 400,000 loans shifted to Fannie Mae with $73 billion in unpaid principal.
Things just seem to get more perplexing with the housing market. Back in August the Wall Street Journal discussed a deal between Fannie Mae and Bank of America. The deal is odd even for the current banking system we have in place. It was reported that Fannie Mae purchased the servicing rights to 400,000 loans [...]
The 20 year financial depression in American real estate. Why housing will remain a poor investment well into 2020.
The American housing market is floundering like a fish out of water. The economy is puttering along as middle class Americans confront a quality of life that is declining. Household incomes have fallen for well over a decade yet the dialogue from Wall Street and their political partners seems to focus on home prices rising. [...]
The four horsemen of the middle class apocalypse – what does it say that we as a nation bailed out the financially wealthy too big to fail banks yet failed to bail out the middle class?
What made the U.S. the envy of the world was the belief that if you worked hard enough and had the right kind of grit and intelligence that you would be able to enjoy the fruits of your labor. This is what built the solid middle class after World War II. The majority of people [...]
Scorching the desert housing markets – Arizona and Nevada real estate blossomed with cheap fuel and easy access to debt. For last two years 40 percent of buyers came from all cash purchases. What happens when the well runs dry in the financial desert?
The Arizona housing market is a perfect example of what happens when the housing religion spirals out of control and implodes in dramatic fashion pushing up against environmental limits. I remember driving in the blistering summer heat through Arizona before all the housing mania launched out of control in the late 1990s and thinking that [...]