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50% Of Americans Earn Less Than $28,031 - Median New House Price $259,000

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The Social Security Administration has just released wage statistics for 2013, and the numbers are startling. Last year, 50 percent of all American workers made less than $28,031, and 39 percent of all American workers made less than $20,000. If you worked a full-time job at $10 an hour all year long with two weeks off, you would make $20,000. So the fact that 39 percent of all workers made less than that amount is rather telling. This is more evidence of the declining quality of the jobs in this country. In many homes in America today, both parents are working multiple jobs in a desperate attempt to make ends meet. Our paychecks are stagnant while the cost of living just continues to soar. And the jobs that are being added to the economy pay a lot less than the jobs lost in the last recession. In fact, it has been estimated that the jobs that have been created since the last recession pay an average of 23 percent less than the jobs that were lost. We are witnessing the slow-motion destruction of the middle class, and very few of our leaders seem to care.


Having exploded 18% higher in August (driven by, um, record high prices), September's new home sales printed at 467k (against expectations of 470k) and August's surge to 504k was revised lower to just 466k (busting the biggest beat since 2005 meme) revised 7.5% lower. After August's reported 50% MoM rise in The West, the region saw the rate of sales slow in September. The median new home sales price (at record highs last month) fell 4% YoY to $259,000.

The US recovery is clearly on sound footing if these figures are accurate.....

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Add on the annual property-taxes for buyers too. Although not always applicable, like in Cali with Golden sarcophagus/ golden handcuffs (Prop 13) for older owners. A partial disincentive for older owners to cash in on $1m+ crap shacks and sell at mega inflated values, vs what taxes new buyers have to pay, assessed at new, much much higher purchase price. For California, 54 percent of households own and 46 percent rent (January 2014).

Older owners enjoying Prop 13 lower property taxes have got slightly more of an argument (only just)... than those on HPC who claim no incentive for UK oldies shuffling around in 4 bed family homes to put their homes on market at £1m and downsize... as stamp duty on new place would eat into their £half-million+ pure clean HPI profit, "and also see them miss out on future more HPI on the main home" under forever HPI.


Meanwhile, unless a serious above asking price comes in... some early signs of softening in SoCal. Culver City migh sound like dog area, but just siding on Venice Beach / Santa Monica, crap-shacks been selling for fortunes. The hpcers of SoCal enduring QE/zirp, investors/ Asian money, finding house prices ridiculous. (Fortunes... but at the low-prime end.. the same money would only get you a semi in Stockport on the rougher end by the A6 in areas where low ranking schools in the 'crashed north'.)

12 October 2014

3 bedrooms, 1 bath 982 square feet

10757 Kelmore St, Culver City, CA 90230

3 bedrooms and 982 square feet? Those must be some extremely tiny rooms. Let us look at the ad:

“Located in one of Culver City’s most sought after neighborhoods, this adorable home has been meticulously upgraded and is in absolute move-in condition. Fabulous cook’s kitchen features a Wolf stove, Jenn-air refrigerator, Miele washer & dryer, recessed lighting and LivingStone countertops! Bamboo floors and recessed lighting in kitchen, living room and dining area while all 3 bedrooms have oak H/W floors, recessed lighting and ceiling fans.”

Sounds like every top item from an HGTV upgrade was done here. Forget about boring wood floors. How about bamboo floors? Next we are going to hear about rhinoceros skin carpets and bald eagle pillows to welcome new buyers. I also love the name dropping here. All you need is the “Tom Hanks ate breakfast five miles from here” and you would be set.

Let us get another look at this home:

Google Maps always does a better job of showing us the full picture:



$825,000 for this place. Someone paid $780,500 back in 2013 during the mania. You factor in the commission to get this sold and you are breaking even here. But this place has a nice trip down memory lane. It was sold for $703,000 in the last mania in 2005. Then rational heads prevailed and someone bought for $599,000 in 2009. These are the big winners here selling the place for $780,500. Now someone looks like they want to head to the exits while one last sucker takes the bait.

Little by little it seems like the mania is waning. Sales volume is incredibly low and some sellers are being more realistic and chopping prices. Others are pulling back thinking 2015 will somehow be like 2013. Fall is definitely here and as expected the housing market has dramatically slowed. But hey, get that low mortgage so you can pay $825,000 for this 980 square foot beauty.


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SoCal, and other US prime markets, have been dominated by cash buyers, into the reflation. I guess some must be leveraged elsewhere.

9 May, 2014

RealtyTrac’s data shows that 42.7 percent of all home sales in Q1 of 2014 went to cash buyers, an all-time record. This is the core group of buyers in today’s housing market.

What we can take away from the report is this: (1) traditional buyers are being priced out even with low mortgage rates (2) cash buying although high as a percentage, is dropping in actual purchases (3) foreign buying is focused like a hawk on certain areas.

Let us look at the cash buyer data:


You can see that the big spike occurred in 2013 and has yet to subside. You will also notice that institutional buyers, those buying large blocks of homes, are starting to pullback especially in places like California. The cash buyer of today is largely buying investment homes, flips, or foreigners targeting certain cities.

The majority are not buying high priced properties:


You can see that the average price paid by all cash buyers is $207,668 and for institutional investors it was $128,747. Makes sense given the massive amount of buying in places like Arizona, Nevada, and Florida.

It is important to remember however that this is a percentage of all home sales. And existing home sales are pathetically weak:


This is why you see mortgage applications hitting levels last seen in 2000. The public is largely priced out. In overvalued California, 1 out of 3 families can actually afford to purchase a home at today’s prices.

The traditional home buyer is flat on his back. There is no surprise that California is largely becoming a renter state. When a poorly built condo in Irvine with mega-HOA dues is going for $500,000 you have to question what is truly going on. The above data helps to show us the true face of the market. The traditional buyer is done in high priced metro areas. Cash is king. The only problem is, most Americans don’t have the cash to play and many need to leverage to the hilt with ARMs or get from parents just to get into the game if they have any aspiration of competing in this market. But as it turns out, many of the younger buyers of today are so broke they are living with parents unable to even pay rent for a place, let alone venture out to compete with all cash buyers in inflated markets. This isn’t the housing market of mom and dad.

Whilst non-owners have waited during the boom, seen bailouts and reflation, and new peak prices, with so many buyers/owners complacent about debt, about money, about value... not even really casting a look at the unfairness of duel income couples, in their 30s now, in senior positions, totally priced out... some hpcs have overcome 'They wont' let it happen' in the past.

Total Inflationary Gain Wiped Out

A casual look at the Commerce Department data on home prices in the twentieth century would belie this conclusion, in part because US statistics are formatted to start with 1929 as a base year. For example, at the Department of Commerce the price index for private homes in twenty-two major US cities shows a fall from 100 in 1929 to 75.7 in 1933. This is a drop of 24.3%. It is hardly trivial, but it is more frightening when put into context.

The depression-era drop in US housing prices (understated in government statistics) wiped out the total gain during the inflationary boom dating back to World War I. In 1914, the index stood at 78.1 – higher than in 1933.

Similarly, the index of the average value of farm real estate per acre in the United States (1967 = 100) rose from 28 in 1914 to a high of 48 in the early twenties. It then tumbled to a low of 19 in 1933. The total gain in farm land from the inflationary boom was wiped out in the depression. At the bottom, land was worth 33 percent less than it had been before the boom began.

The twenties were a period of a tremendous building boom. A higher percentage of the total economy was devoted to housing construction than at any time in American history. From 1921 to 1930, approximately $61 billion (in 1929 dollars) was invested in the construction of new private homes. Another $4 to $5 billion was spent on additions and alterations to existing homes. In spite of the huge investment in new and improved housing, total nonfarm residential wealth in the United States tumbled from $108.4 billion in 1929 to just $81.3 billion as its low in 1935. This was 12 percent below the comparable figure for 1920.

-James D. Davidson

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Averages compared to mediums. Be consistent please. Zerohedge is alright, but...plenty, actually loads of crap targeted at brain dead fools. Anyone who traded on their advice over past 5 years lost money. Fact!

Aren't both stats medians??

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Why aren't houses cheap in America?

Loads more developable land. Much less restrictive planning permission laws.

Aren't those the two things we're told we need to lower prices?

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To be fair, 'new' homes in america tend to be a lot bigger than existing homes, with more amenities etc.

I bet if you looked at the US vs the UK housing bubble in sq ft terms it wouldnt be half as disturbing as our own.

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Why aren't houses cheap in America?

Loads more developable land. Much less restrictive planning permission laws.

Aren't those the two things we're told we need to lower prices?

By and large they are, for the reasons you give.

In unfashionable parts of Calefornia you will pay $100 - $200 p sq ft.

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