That Was Quick! How The Fed Ravaged The Main Street Housing Market, Again - News and Current Events | futures io social day trading
futures io futures trading

That Was Quick! How The Fed Ravaged The Main Street Housing Market, Again
Updated: Views / Replies:190 / 0
Created: by kbit Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Thread Tools Search this Thread

That Was Quick! How The Fed Ravaged The Main Street Housing Market, Again

  #1 (permalink)
Elite Member
Aurora, Il USA
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
kbit's Avatar
Posts: 5,884 since Nov 2010
Thanks: 3,303 given, 3,334 received

That Was Quick! How The Fed Ravaged The Main Street Housing Market, Again

Now that the $5k suits are riding out of town on their John Deere lawnmowers, the “flash” boom in housing prices during the past 20 months is showing its true nature. It was the handiwork of the Fed’s free money gift to Wall Street. In less than two years more than 400,000 busted mortgages were scooped up by LBO funds on the theory that single family suburban housing had become a new “asset class”—-and that the “buy-to-rent” investment models put together by spreadsheet jockeys was the next Big Thing.

There was even going to be a new version of the Wall Street slice-and-dice machine—this time in the form of securitized rental payment streams rather than mortgage payments. That way renters in Scottsdale AZ could send their rent checks to Wall Street where they would be forwarded in pieces to the proverbial Norwegian fishing village retirement fund.

But the grand scheme didn’t attain lift-off—other than to drastically and suddenly inflate housing prices in the default-ridden lower-end of the bombed-out sub-prime housing markets. In some areas, prices exploded upwards by 25-50% in less than two years, but that wasn’t evidence of healing and recovery as was so loudly brayed by Wall Street and Fed economists. It was just fast-ignition hot money piling into another momentum trade.

All the other factors which were supposed to get better according to the spreadsheet models, however, didn’t track their appointed paths. In the real world the cost of rehabbing the foreclosures purchased in bulk on the courthouse steps ended up higher; vacancy rates fell more slowly than modeled; renter churn was greater; maintenance costs were higher; rents rose more slowly; and the Norwegian fishing villages were not quite so eager to buy the latest product from Wall Street’s meth labs.

Add to all the above, the 130 basis point surge in the home mortgage yields in recent months, and suddenly a whistle blew on the buy-to-rent stampede. It stopped nearly dead in the water during the past four months, and now there is growing evidence that Wall Street landlords may be trying to liquidate their hastily acquired properties—and not just because they have discovered crabgrass in the lawns, insects in the trees, mold in the basement and vermin in the attic.

The fact is, Wall Street’s financial models didn’t work—even if the LBO shops were able to carry their surging property inventories on cheap, Fed-enabled bank lines. Instead, prices fired-up to rapidly while all the operating variables of the rental models came out of the gates too tepidly.

So the monetary central planners have now created yet another mess in the Main Street housing markets. The flash boom slammed affordability for organic buyers—first time and trade-up alike—and thereby has generated “demand destruction”, not healthy recovery.

Under the economic rule that price follows volume, the next phase should be even more combustible than the flash boom. Namely, if housing prices head south again, the LBO funds will be forced to liquidate their inventories—-and they won’t be deliberate about it.

Perhaps then the torches and pitchforks will finally come out. Meanwhile, the three graphs below put a fork in the phony housing recovery narrative.

First, the March plunge of new home sales was not due to the weather. In fact, the bone-dry and seasonably warm West experienced a deep drop whereas the arguably weather impacted Northeast had a modest gain.

That Was Quick! How The Fed Ravaged The Main Street Housing Market, Again | David Stockman's Contra Corner

Reply With Quote


futures io > > > > That Was Quick! How The Fed Ravaged The Main Street Housing Market, Again

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

Wyckoff Hunting for Great Risk/Reward Ratio w/Gary Fullett

Elite only

Digging into the Details of iSystems w/Stage 5 & iSystems

Jun 5

Similar Threads
Thread Thread Starter Forum Replies Last Post
Wall Street’s New Housing Bonanza kbit News and Current Events 0 January 30th, 2014 08:11 PM
Minimum Wage Hike? Main Street Says Shove It Quick Summary News and Current Events 0 March 26th, 2013 03:10 PM
Bernanke to 'Wean' Markets Off Addiction to a Fed Quick Fix Quick Summary News and Current Events 0 November 1st, 2011 05:00 PM
The Rescue That Missed Main Street kbit News and Current Events 0 August 31st, 2011 06:57 PM
Inflation Hits Main Street: Small Businesses Are Raising Prices Quick Summary News and Current Events 0 April 8th, 2011 06:40 PM

All times are GMT -4. The time now is 07:27 AM.

Copyright © 2018 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432,
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2018-05-21 in 0.08 seconds with 19 queries on phoenix via your IP