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Home Prices Rebound

With Jane Clayson in for Tom Ashbrook.

Housing prices break out of their slump. We look at the rebound and what it means for the nation’s recovery.

A "Sold" sign is posted outside a home in Indianapolis, Tuesday, April 9, 2013.

A “Sold” sign is posted outside a home in Indianapolis, Tuesday, April 9, 2013.

Big new housing numbers out yesterday.  Home prices rising at the fastest rate in seven years – fastest in some of the markets hardest hit by the housing bust: Phoenix, San Francisco, Las Vegas

But much of the boost is driven by low inventory. And with credit still tight, home ownership is now at the lowest rate in nearly 18 years. So what does this all mean for the larger economy? For the average American who wants to buy a home? And will the tide keep rising, or could we even be headed for another bubble?

This hour, On Point:  decoding the housing market rebound.


Karl Case, professor emeritus of economics at Wellesley College. Co-creator of the Case-Schiller index, which tracks housing prices across the United States.

Christopher Mayer, professor of real estate and finance and economics at Columbia Business School.

Dave Tina, longtime Las Vegas realtor, president of the Greater Las Vegas Association of Realtors.

From The Reading List

The Wall Street Journal: Home Prices Score Highest Annual Gain Since 2006 – “Sharp drops in the number of homes listed for sale and growing demand for home purchases sent U.S. home prices up by 9.3% in February from a year ago, the largest growth rate in nearly seven years, according to a report released Tuesday.”

The New York Times:Today’s Dream House May Not be Tomorrow’s – “Economic and demographic changes may severely impair the value of a home when it’s time to sell, a decade or more in the future. Will a particular home still be fashionable then? Will social and economic shifts tilt demand toward new designs and types of communities —even toward renting rather than an outright purchase? Any of these factors could affect home prices substantially.”

MarketWatch: Despite recent gains, home prices sharply below peak in Las Vegas, Miami and Detroit — “Areas that were particularly hard hit by the housing market’s meltdown saw large annual price gains, but remained below bubble peaks. For example, Las Vegas saw  prices increase 17.6% over the 12 months through February. According to Tuesday’s report from S&P/Case-Shiller, home prices in Las Vegas in February remained 55% below a 2006 bubble peak.”

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  • Gregg Smith

    I am happy home prices are rebounding but don’t break out the bubbly. People don’t have jobs and the LFPR is still in free fall. I don’t see anything on the horizon to change that. This all should have been well behind us by now. This so called recovery is non existent. Look at GDP, some have called it a slow steady recovery, it’s anything but. It’s fits and starts, ups and downs and the ups are anemic at best.

    • Ray in VT

      So why should this have been “well behind us by now”?  The history behind such collapses/crises suggest that recoveries take a long time.

      • Gregg Smith
        • Ray in VT

          Those charts don’t disprove my contention.  I think that the most recent crash is much more analogous to the Great Depression than it is to, for instance, the bursting of the Tech Bubble.  This most recent crash saw almost as many jobs lost in 2 months as during the entire tech bubble crash, and I don’t think that that crisis saw the stock market decline by nearly 1/2, which is why I said “such crises/collapses”, as I think that this one is fundamentally different in some ways than what we have experienced is this country since the end of World War II.

          • Gregg Smith

            I disagree, I think this “recovery” has been prolonged needlessly. There are 11 recessions listed not just the tech bubble.

          • Ray in VT

            So, when one has a major housing collapse and over 7 million jobs lost, then things are just supposed to bounce back?

            If one looks at the recessions in the post World War II era, they are mostly relatively small when compared to this one.  There have been economists and commentators out there for years saying that this was going to be a 5-10 year recovery, based upon the matter of scale and the combination of financial and housing market crashes.  The IMF predicted 2.7% GDP growth for 2010 early in that year, and they were pretty much right:


            Also from this article:

            “Economists say this two-speed recovery will gather strength in 2010, but
            warn it will be a long, protracted process to recover prerecession

        • hennorama

          READERS PLEASE NOTE: This comment was previously twice “flagged for review” after I had edited it for formatting issues.  It is presented here unedited; my apologies in advance for its haphazard formatting -

          Gregg Smith – one must point out that the link you cite is not only three years old, it also only reflects changes in employment and no other aspects of economic recoveries.

          Also, going to the source of the data contained in your link, here:


          Now click the interactive chart, and check the [ ] 1990 box.  This shows that nonfarm payroll employment recovered faster after the Great Recession (GR) than after the 2001 recession, and a bit more slowly than after the 1991 recession.

          In addition, quoting that same source, 

          “Length of Recessions

          “The 10 previous postwar recessions ranged in length from 6 months to 16 months, averaging about 10 1/2 months. The 2007-09 recession was the longest recession in the postwar period, at 18 months.”

          This means the GR was more than 70 percent longer than average.  The cumulative economic damage over those 18 months was enormous, and expecting the economy to “snap back” is unrealistic at best.

          I’d also point you to this excellent resource called “The Legacy of the Great Recession” to give one some perspective:


    • Don_B1

      This is NOT “well behind us now” BECAUSE of the AUSTERITY that YOU claim does not exist but which YOU have supported in measures such as the Sequester, which is slowing employment growth as reported on NPR just this morning with projections of only 119,000 added jobs for the month.

      To see this, just view this blog:


      Of course, you will put out your usual meaningless gibberish with an unsupportable statement of denial, since you are unable to even contemplate that you could be wrong.

      • Gregg Smith

        I am neither radical nor is austerity even on the radar. With sequester we spend $15 billion more than we did last year. You have no idea how badly I want to be wrong.

        • Don_B1

          Did you even read the Krugman post that I linked? You certainly did NOT address the issues that post talked about! You met my expectations!

          From Bloomberg News on growth:

          “Government outlays declined for the 10th time in the past 11 quarters, restraining growth. Defense spending dropped at an 11.5 percent annualized pace following a 22.1 percent plunge in the last three months of 2012. That was the biggest back-to-back decline on average since 1954, when the military demobilized after the Korean War.”

          Note the relevant measure of government spending is as a percentage of GDP or at least on a per capita basis, NOT, repeat NOT, on an absolute dollar count, and even if I did believe your $15 billion number, it would be lost in the noise of a $17+ trillion economy.

          I know it is falling on “deaf ears,” but go take a macroeconomics course where you will fail but maybe that will wake you up?

          No, you are a great example of Upton Sinclair’s famous observation: “It’s difficult to get a man to understand something, when his salary depends on his not understanding it.”

          And even if you did understand it, there is no way you would admit it, as that goes to invalidating your “position” here, that of being a provocateur and dissembler.

          • Gregg Smith

            We spent $15 billion more than last year’s bloated, humongous speeding spree. It’s not arguable.

    • hennorama

      Gregg Smith – a few facts and a few questions for you:


      1. The Labor Force Participation Rate (LFPR) has been declining since the year 2000. The decline is not a new phenomenon.

      One can see this very clearly here (At the top, “Change Output Options” to the year 2000, then click (GO). For a long term view, change the year to 1950.):


      2. US Real GDP has been growing for 15 straight quarters (4 ¼ years). Slowly to be sure, but growing nonetheless.

      One can see this very easily here (on the left just below the graph, click [Edit Graph]. Then below “Line 1: Real Gross Domestic Product, 1 Decimal (GDPC1)”, change the Observation Date Range to 2000-01-01. Then click [Redraw Graph] near the bottom of the page. This shows that GDP has grown despite declining LFPR):


      3. The most recent nonfarm employment figure is 97.9% of the peak non-farm employment total of 138.056 M (2008-01-01), and is 1.1% higher than the 133.631 M figure from the beginning of the Obama administration (2009-01-01).

      One can see this very easily here (on the left just below the graph, click [Edit Graph]. Then below “All Employees: Total nonfarm (PAYEMS)”, change the Observation Date Range to 2008-01-01. Then click [Redraw Graph] near the bottom of the page.:



      1. What is the importance of the declining LFPR, and what factors are influencing it? Which of these factors can be quickly changed, if any, and how can these factors be changed?

      2. How do you square the fact that US Real GDP has grown in each of the last 15 quarters with your statement “This so called recovery is non existent.”?

      3. Do you know the difference between a “balance sheet recession” and a “boom and bust recession”? If so, how do you classify the Great Recession? Does the type of recession matter to your statement “This all should have been well behind us by now.”? Please explain.

      These questions are asked in the spirit of open and honest debate, with the expectation that you will answer them in order to promote mutual understanding.

      • Don_B1

        I think your exposition here is great and will be appreciated by those who take the time to follow it as they will learn a lot, particularly in how to get fundamental data from the Internet and how to investigate their questions.

        Unfortunately, Gregg and the other radical right-winger austerians can see that they might have to learn something that will collapse their worldview and thus will NOT even try to follow your steps. Thus the rest of us will have to suffer their repeated inane comments in the future, unfortunately.

        Maybe knowing that they are posting to a better educated audience will at least slow them down.

        Thank you!

        • hennorama

          Don_B1 – Thank you for your very kind words.

        • Gregg Smith

          “Unfortunately, Gregg and the other radical right-winger austerians can see that they might have to learn something that will collapse their worldview and thus will NOT even try to follow your steps.”

          I thought I did a pretty good job of showing how facts can be used to distort the truth which has always been my personal bugaboo. I call it honest debate. I end up getting lectured about individual facts as if I dispute them when I’m disputing their meaning in the larger context.

          I look forward to Henny’s answers to my questions and rebuttal of the meanings I derive from the facts. In the mean time feel free to answer my very simple questions if you please.

      • Gregg Smith

        Alright, I’m for honest debate and you didn’t call me any names this time so I’ll reply to the points.
        1) Your link did not work for me but I am very familiar with historical LFPT’s. I use this one:


        In 2000 we were at the end of a huge tech bubble. The LFPR reflects that. Bubbles work both ways. The bubble burst 3/10/2000 and the LFPR reflects. Then 9/11, how many jobs were lost on that one day? Despite that the rate remained mostly stable and the recession short. The free fall began in 2008 and continues today. Nothing before then comes close to the numbers we are seeing now. However, I don’t see the relevance to when it began at all. It is where it is now and it’s a problem.

        2) I’m sorry, not impressed. Growth is essential not a perk. The fact that we are not in a recession is nothing to brag about. Growth is anemic and anything but steady. Look at the quarterly GDP since 2009.


        Up and down. You can see 2010 was the most consistent but then look at quarter 1 of 2011 and you can see that it is because of hiring for the census which was temporary and the bill went to the taxpayers. It will take a decade of 4 to 5% growth in GDP to recover. Anything less is not a recovery.

        3) Fewer people looking for work in a shrinking universe of jobs equals lower unemployment rates. After that consider how many people took pay cuts or part time work and the picture is grim. Looking at the non-farm rate in a bubble does not change that fact.


        1) When a person has a job they pay taxes, when they don’t they receive help from those who do. The numbers work far far better work far better with more people paying lower taxes than the inverse.

        I call it Obamacare because PPACA is inaccurate. It is neither affordable nor does it protect the patient. Max Baucus (one of the Democrat authors) calls it a train wreck. Other Democrats have echoed that sentiment. Insurance premiums are going through the roof not down as promised. Businesses are cutting back on hours and even the unions are now bailing on it. It’s a disaster and the chief reason for our woes. It isn’t even fully implemented. Gazzilions of new regulations are another factor and the historical out of control debt another. There is no confidence and one would be crazy to put their money at risk in hopes of a return with looming threats of tax hikes and more regulations. An energy policy that wasted billions on solar while eschewing the pipeline and the NG boom is opportunity missed. 

        2) See #2 above.

        3) We are not in recession by the classic definition but we are in heap big trouble. All the signs are for it to get worse and Obamacare kicks in and baby boomers age into SS.

        Your turn: 

        Will Obamacare create or stifle job growth? 
        Does raising taxes create or stifle job growth? 
        Do more regulations create or stifle job growth? 
        How can government create a job and issue a paycheck unless it first takes that money from someone else, borrows it or prints it? 
        What would give you confidence to put your money at risk to create a job?
        How can there be a recovery so many people out of work?

        • hennorama

          Gregg Smith – TY for your response. Please be alerted to the considerable length of my reply.

          As to your Comments:

          1. Apologies for the LFPR link; it has now been corrected.

          One can fairly argue that technology continues to aid productivity, to the benefit of businesses and to the detriment of workers and jobs. Implementation of technological advances did not stop with recent market bubbles, crashes and various economic calamities. Quite to the contrary – businesses have figured out how to do more with fewer workers, which is why we see rising GDP even in the face of lower total nonfarm employment overall. We continue to be in a period where technological advances lead to greater productivity, and with labor productivity rising faster than the ability of other areas of the economy to absorb newly surplus labor.

          Whether the LFPR is “a problem” remains to be seen. The US got along just fine with the LFPR at much lower levels in the 30-plus year period from the late 1940s to early 1980s.

          One might also view the decline in the LFPR as moderating over the recent term. It can no longer be fairly characterized as being in “free fall”.

          2. I’m not impressed either, but growth is growth is growth.

          3. I was discussing TOTAL nonfarm employment and not the unemployment rate. We have fewer people employed than at the peak at the beginning of 2008, but total nonfarm employment is 1.1% higher than the 133.631 M figure from the beginning of the Obama administration (2009-01-01).

          This can been seen quite easily here:


          There is not “a shrinking universe of jobs”, and again, I was NOT discussing the unemployment rate but rather total nonfarm employment.

          As to your Answers (which you labeled as “Questions” in your reply):

          1. Your statement “When a person has a job they pay taxes, when they don’t they receive help from those who do” leaves out those who neither work nor “receive help from those who do”. Many retired persons live perfectly well on the fruits of their own assets, without help from anyone. They may “receive help” in the form of Social Security and/or Medicare, but could get along just fine with neither. There are also those who are independently wealthy but not retired, and those who are otherwise financially independent.

          Your response seems to indicate that the decline in the LFPR is due to Obamacare, “Gazzilions [sic] of new regulations” and “the historical out of control debt”, and perhaps also “no confidence”, “threats of tax hikes and more regulations” and “[a]n energy policy that wasted billions on solar …”.

          All of the preceding are short term economic factors and your response completely ignores demographic and cultural changes as factors in the decline in the LFPR.

          2. You seem to acknowledge that there is indeed a recovery in place. You simply are decrying the magnitude and speed of the recovery, not the fact that a recovery has indeed been in place for over four years.

          3. You failed to answer my questions regarding the differences between a “balance sheet recession” vs. a “boom and bust recession” in any meaningful way. Understanding these differences is important in understanding expectations for the recovery.

          Your statement “All the signs are for it to get worse and Obamacare kicks in and baby boomers age into SS” is a supposition that you failed to support by citing any empirical data or information.

          These failures are notable.
          On to the questions you posed to me:

          “Will Obamacare create or stifle job growth?” – On its own, Obamacare is likely to have little discernible impact on jobs. However, measuring its impacts will be extremely difficult, because attributing job creation or loss to any single factor is nearly impossible. This was shown quite clearly in the argument over whether the stimulus “saved or created” jobs. There will likely be some of both. Jobs related to health care will likely increase. Some employers will hold back hiring.

          A few economic facts since Obamacare was signed into law on March 23, 2010:

          Nonfarm employment up by more than 4.4 percent, from 129.474 M (2010-03-01) to the most recent figure of 135.195 M (2013-03-01). That’s 5,721,000 more people working now compared to when Obamacare was signed into law.

          Real GDP (in constant 2005 dollars) is up by more than 5.5 percent, from $12.9476 T (Q1 2010) to the most recent figure of $13.6654 T (Q4 2012).

          The above facts are not meant to indicate any cause/effect relationships, but merely to point out that one could argue that Obamacare has not hindered the economy.

          “Do more regulations create or stifle job growth?“ – Yes, and the net effect is likely close to zero. Some jobs are lost, and some are created. For example, there’s a brief discussion of the recent pollution regulations for power plants in a businessweek.com article from last February, which points out that various firms are hiring and are expecting to increase hiring to help power companies comply.


          “How can government create a job and issue a paycheck unless it first takes that money from someone else, borrows it or prints it? “ – Government jobs are paid for in a variety of ways, as you point out. If your premise is that government employment is unnecessary, that is clearly untrue. One also must point out that Federal civilian employment levels have dropped by 78,000 (2.8%) over the last year, from 2.830 million in March 2012 to 2.782 million in March 2013. And since the start of the Obama administration in Jan. 2009, Federal civilian employment is DOWN by 7,000.

          In addition, the soft Federal pay freeze that has been in effect since mid-2010 has saved a reported $60 Billion.


          Perhaps you meant something else by your question.

          “What would give you confidence to put your money at risk to create a job?” – I personally have created multiple businesses over the years, and have hired hundreds of employees. Hiring resulted from clear reasons for doing so – demand for products and services, a need for administrative and/or managerial help, employee turnover, etc. Hiring someone new was always a last resort, when there was no other way to accomplish tasks that needed to be done. I also have fired may people, for a variety of reasons. Most of my current economic activities are much more capital-intensive than labor-intensive, and any needs for labor are generally task-specific and short-term, making contractors the obvious choice.

          “How can there be a recovery [with] so many people out of work?” – First of all, there IS a recovery, albeit a weak one. Certainly it would be better if there were more people employed, but jobs and economic recoveries do not necessarily go hand-in-hand, as we have seen. This was largely true during the recoveries from both the 1991 and 2001 recessions as well.

          Generally speaking, changes in employment lag behind economic changes, both positive and negative. Employers can be reluctant to let workers go, thinking a downturn might be short-lived, and can be reluctant to hire, thinking an upturn might be short-lived.

          I’d like to challenge you to consider and answer my original questions about the nature of the Great Recession:

          [Do you know the difference between a “balance sheet recession” and a “boom and bust recession”? If so, how do you classify the Great Recession? Does the type of recession matter to your statement “This all should have been well behind us by now.”? Please explain.]

          Thank you again for your response.

          • Don_B1

            Great response to Gregg’s mostly non-response!

            As for some of the regulation, etc., questions Gregg and others raise, the following provides some useful graphics:


            As for the argument Gregg and/or others make about full economy performance, Paul Krugman makes some relevant comments in his discussion of the austerian’s attempt to use Baltic countries performance as examples of good results from austerity after their A-A and R-R papers have been shown to be fiascos:


            As for admitting that he knows what a “balance sheet recession” is, not to mention that the Great Recession was one, I suspect would be inadmissible to his role here so don’t expect it.

            While the economy is in an extremely slow recovery, the designation Lesser Depression still applies, as the growth rates of 6% and 7% during the 1934 to 1936 period cannot be said to have ended the Great Depression as most observers would agree.

            While President Obama has too readily ceded the austerity issue to the Teapublicans, it is not clear that he could have done much that would have resulted in a lot more of the needed stimulus to even approximate the high growth rate in those Great Depression recovery years.

            His only chance would have been to fight a lot more rigorously in the summer of 2010 for his PPACA and that the ARRA was effective but too small and short term to fix the worse than first measurements of the free-fall of the economy in the late fall of 2008 indicated.

            That might not have been enough to prevent the loss of the House of Representatives to the Republicans and, even more importantly, the loss of state legislatures and governorships to Republican control and the wild gerrymandering that has made extremely unlikely the Republicans losing the House until at least 2020 and the next redistricting.

            The Republicans have decided that a continuing Lesser Depression is in their interest and so far have successfully avoided the major blame for their austerity policies which are the driving factor between slow and strong growth. Avoiding the blame is what drives just about every one of Gregg’s claims about the economy.

            Finally, Gregg makes the claim that the current economy should be “recovered already”:

            “This all should have been well behind us by now. This so called recovery is non existent.”

            He presumably is arguing that it should have followed the pattern of the last three recessions, but ignores the nature of the causes of those recessions as if all recessions had the same garden-variety causes (see your question about balance-sheet recessions). But even the recoveries from those non-zero-lower-bound type recessions were driven by MUCH, MUCH higher levels of, ring the bell, GOVERNMENT SPENDING! See:


            which shows (from IMF) spending by all countries, not just U.S. spending, but still applies.

          • StilllHere

            I can’t believe you’re relying on discredited Krugman from that rag the NYT.  Pathetic.  All anyone has to do is see those links and know you are not serious.

          • hennorama

            Don_B1 – Thank you for your response and your kind words. I respect and appreciate your views.

            That treasury.gov link is indeed useful and is quite handy. The problem is in getting others to view it, and to get them to not view it as campaign literature. Oh well … the struggle continues.

            Using Latvia as an economic exemplar of anything, especially in comparison to the US economy is hilarious and typical. Calling it a stretch is itself a stretch.

            As to the rest of your post – you’re preaching to the choir.

            Well done, and thanks again for your response and kind words.

          • Gregg Smith

            Nope, never ever will we agree. 

            1) The gas light companies had to adapt when electricity came along. It’s alway been that way. Innovtion has a bigger upside than down side. there is nothing good about so many people out of work.

            2) 2.5% growth is stagnation level. Population alone can do that. Stagnation  is not growth.

            3) There are fewer jobs available, you can’t just write off the farmers and the many tentacles they affect.


            1) Food stamps are at an all time high. People were paid not to work for years. 47% do not pay taxes. and half of all households receive government aid. It never been like this. It’s awful.

            2) See #2

            3) You did not ask me to define them you asked if I one he difference and I do.IMO it’s an excuse and nothing more. Different problems require different solutions.


            Obamacare kills jobs. Regulations kill jobs. Even if you disagree you cannot make the case they create jobs. We must create jobs.

            Government is necessary, that wasn’t my point at all. There are only 3 ways government gets money, that’s it. No big variety. Printing, borrowing or taking it. All take money out of the economy.

            I’ll rephrase the question: Is there anything that would make you think putting your money at risk will give you a substantial return? I can’t see it.

            This is a result of Obama policies. He didn’t fix it. He made it worse.

          • hennorama

            Gregg Smith – TY again for your response. I appreciate you taking the time. Please again be alerted to the considerable length of my reply.

            Agreement is not terribly important. Knowledge and understanding are.

            1. Indeed we have far too many people who want to work and who are unable to find a job, especially far too many who have been out of work for an extended period. My point was that technological innovation is a significant reason for this. The resulting productivity gains have accrued almost exclusively to the benefit of business. Combined with the economic catastrophe of the GR, jobs are more scarce.

            But the LFPR’s twelve-plus year decline is due to multiple reasons, many of which you’ve completely ignored. LFPR is mostly influenced by long term factors – namely demographics and cultural changes. LFPR is only weakly procyclical. In other words, the LFPR changes are also related to the business cycle, but the strength of this correlation is much smaller than the long term factors above.

            -business cycle good = LFPR increase
            -business cycle poor = LFPR decrease

            The Great Recession’s magnitude influenced the LFPR much more than more typical boom/bust recessions. Economists are struggling to explain this, as I’ve noted on multiple occasions.

            Placing this twelve-plus year decline at the doorstep of any particular president or any particular policy or policies is simplistic and unrealistic.

            2. As previously stated, this low growth is far from ideal. However, 2013 has started off with the highest first quarter growth rate since 2006. And this low growth argues against the self-inflicted wound of sequestration, which will certainly reduce both economic growth and employment.

            As to your statement “Population alone can do that.” – not so much. The US population growth rate has been under 1 percent for an extended period, and is projected to decline further. This argues for increased immigration, especially due to the fact that foreign-born workers have a significantly higher LFPR than native workers, and tend to have a higher birth rate as well.

            Thank you for clarifying your view on the recovery while not acknowledging that there has been uninterrupted economic growth for over four years. There certainly is more to do. The year has begun fairly well, but sequestration will unfortunately hinder growth.

            3. You are completely and demonstrably wrong in your statement that “There are fewer jobs available …” unless you really extend the timeframe. Per the BLS, “The number of job openings in February was 3.9 million, up from January. (See table 1.) This was the highest number of job openings since May 2008.”


            And and older article that has great graphics:http://www.nytimes.com/interactive/2012/08/10/business/More-Openings-Fewer-Firings.html?ref=economy

            I did not “write off the farmers and the many tentacles they affect.” Rather, I am simply using the more commonly used “nonfarm” employment numbers. BTW, the term “nonfarm” excludes not just farmers and their employees, but also those in general government, private households, and many nonprofit organizations.

            If you have an argument that uses total employment or some other employment measure, feel free to present it.


            1. Your litany of the effects and after-affects of the GR is noted. One must point out a few things:

            -Increased nutrition assistance is unsurprising given the more than doubling of the U6 unemployment rate during and after the GR. Such increases in nutrition assistance tend to lag increases in unemployment, since many workers and their families can get by on their savings and UI benefits for short periods without the need for nutrition assistance. In the same way, there is an expected lag in the decline of the use of nutrition assistance as U6 improves and workers and their families improve their overall economic circumstances. There is an excellent chart that shows both U6 and “food stamp” participation here:


            -Unemployment benefits increase during recessions as employers let workers go and opportunities dry up. Again, not a surprise. Did you have a point here?

            -”47% do not pay taxes” is misleading as noted multiple times previously. That statement ignores payroll taxes, state and local taxes, gasoline taxes, sales taxes, etc. As to the the Federal Income Tax – this is largely by design, notably by the design of the Bush II administration. Obviously the GR had an impact, as do demographics.

            -”half of all households receive government aid” is also deliberately misleading and is inaccurate. The “half of” term refers not to the number of households but rather to the number of people. Get your misleading talking points right, willya? Your inaccurate parroting of this doesn’t promote open and honest debate. One also must argue with the basic premise of the term “government AID” as in this context it lumps Social Security and Medicare in with everything else.


            And one must also note that a CBPP analysis concluded, using data from 2010, that “Over Nine-Tenths of Entitlement Benefit Spending Goes to the Elderly, Disabled, or Working Households” (see chart below)


            The implication of your litany seems to be that millions of Americans suddenly got lazy in mid-2008, quit their jobs, then signed up for SNAP and other benefits, all because they saw Barack Obama become the Democratic nominee for President on June 3, 2008 and figured he would get elected and then “give them stuff”. Apparently millions all collectively said “Whoopee! Now we can get lazy and irresponsible and dependent on the government!”

            The problem with this “argument” is that Americans AREN’T lazy and irresponsible and dependent.

            An enormous calamitous economic upheaval occurred, and millions of people suddenly needed help. Many of these people who suddenly needed help had never thought they’d be in such a position. They had worked hard all their lives and had never asked for or taken any help from the government before. They simply got overwhelmed by an enormous tidal wave of negative economic outcomes.

            You sell them short at your own peril.

            2. Null response

            3. Indeed I did not ask for definitions, but I did ask you to classify the Great Recession, which you have repeatedly failed to do. Unless one can consider “IMO it’s an excuse” as a backhanded acknowledgment that the GR was a “balance sheet recession”


            -Merely repeating “Obamacare kills jobs” and “Regulations kill jobs” does not make these declarations true. Offer some evidence to support your claims. You’ve repeatedly said things like “Obamacare is … devastating the job market” and “job losses from Obamacare” and “there can be no recovery (as YOU define it, of course) with Obamacare” yet offer ZERO actual data to support your claims, despite numerous challenges. Is this “honest debate”? And please note that I have never even attempted to make a case about positive net employment effects of either Obamacare or regulation. I have offered some argument that in some instances, Obamacare will result in a greater number of jobs, but have not argued that NET results would be positive. Same with regulation.

            -If you agree that “Government is necessary” then you must also agree that the funds to pay for it are necessary. Your statements “Printing, borrowing or taking it. All take money out of the economy.” completely ignore the fact that government spending goes INTO the economy and recirculates. It’s not a case of government “ tak[ing] money out of the economy” and that money then simply sitting in government coffers.

            -I have been and continue to “put my money at risk” and have been and continue to receive “a substantial return”. The fact that you “can’t see it” does not mean that it is not occurring and that there are no opportunities for “a substantial return”. I personally have taken Sir John Templeton’s famous words to heart:

            “The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”

            -Again, your declarations that “This is a result of Obama policies. He didn’t fix it. He made it worse.” are offered without evidence and certainly “He made it worse” is demonstrably untrue. These statements are the counterargument to “it’s all Bush’s fault” and are equally inane.

    • StilllHere

      It’s the rate of decline in the LFPR that’s a concern, especially considering that we’re supposedly in a recovery.  Moreover, look at employed-to-population ratios to see some additional sobering numbers.  This “recovery” stinks, in fact, compared to the average recovery we should be experiencing consistent growth at twice the level we are currently.  Many current economic indicators are rolling over the way they do when a recession is imminent. 

      • Don_B1

        A lot of the decline in LFPR is due to the numbers of retirees, which was expected as long ago as 1983 with the Greenspan Commission on Social Security. As such it is not that worrying, except to people looking for something to scare other people who do not follow the issue closely and deeply.

        But it is the Teapublican austerity policies, notably blocking passage of the American Jobs Act proposed in September 2011 and forcing the Sequester to take effect that have taken between 2% and 3% of annual growth away from the economy, and denied the unemployed between 1 and 3 million jobs.

        When you decry the poor economy, look to your own failed policy recommendations and the way they have been implemented.

        • StilllHere

          Define a lot.  Look at the U-3 and U-6 rates and tell me how great it is.  
          It sucked before the sequester so you’re going to have to come up with another excuse for big government.
          You’re a broken record with the government is the solution to everything, look at Greece to see the failures of your policy recommendations and implementation.

    • StilllHere

      Great chart in the WSJ today titled Dropping Out that makes the case clearly to even OP listeners.

  • DrewInGeorgia

    “Home Prices Rebound”

    Thank goodness for all the vulture capitalists, vacation home buyers, and slumlords. Whatever would we have done if all those homes hadn’t been bought up for exploitative, investment, or leisurely purposes? Possibly have owned a home one day, that’s what. The “buyers” aren’t “middle class” families pursing the American Dream, they’re carrion pursuing the American Scheme.
    Right to Rent Nation. Great.

    Please discuss the fact that at no point since the crash has the HUGE number of empty properties effectively decreased. Anyone else noticed that the majority of those vacant homes are still vacant?

    Not listed? Not counted.

    • Gregg Smith

      I don’t get that, how is anyone prevented from buying a house? 

      • DrewInGeorgia

        By permanently being made unable to afford one.
        Or to qualify for one, take your pick.

        • Gregg Smith

          If you can’t afford a house don’t buy one or earn some more money. Nobody makes you poor.

          • DrewInGeorgia

            Increased Prices + Decreased Wages
            = Renter.

            Can’t make it any clearer than that.
            By the way, you forgot to add “and it’s all obama’s fault” to the end of your don’t break out the bubbly comment. I know how much you love it when I put words into your mouth.

          • Ray in VT

            And, as Drew suggests, that if in some areas speculators, banks and such are buying up lots of properties and jacking up the prices to the point where they are being priced out of the range of some people, then what?  Just make more money?

          • DrewInGeorgia

            You know it.
            Wealth is infinite but we’re making ourselves poor by taking care of (*cough* lazy) poor people.
            Same old.

          • Gregg Smith

            Buy them before the vultures do. I don’t know what it’s like in VT but there are 3 vacant houses on my street. We thought about buying one to rent out but didn’t want to get in the landlord business. It’s a modular home but a pretty nice one, 4 bedrooms 2 1/2 baths, jacuzzi, deck etc. The lot is a full acre. 

            It originally sole for $139K. After sitting empty for two years the bank that foreclosed on to listed it for $52K. It sold for less than 40. A single mom who works as a clerk for FedEx bought it. There are deals everywhere and they are not limited to vultures.

          • Ray in VT

            So, because income is a choice, then one should make that choice ahead of time so as to beat speculators to the market, and it is just tough luck if one doesn’t do that?

            Our housing market didn’t go totally crazy during the boom, although it was somewhat over-priced.  It also didn’t collapse like it did in some places.  The sense here is that the market is good and that it is picking up speed.  It helps that unemployment is 4.1%, but the tighter lending standards, which we really did need considering what happened in the run up to the crash, have made it harder for some people, so there are people around here who can’t qualify for loans and end up paying way more to rent, and there are some landlords who have taken advantage of that.

          • NrthOfTheBorder

            Ray, you might have to remind people that you live in Vermont. 

          • Ray in VT

            Maybe.  There are also enough Americans that don’t know that Vermont is a state.  The border that you’re north of is the U.S.-Canadian one, right?

          • NrthOfTheBorder

            It is.We probdon’tlive that farapart

          • Ray in VT

            Probably not.  I’ve lived within an hour of the border for most of my life, and I fondly remember the days when it was not a big deal to go across.  My father’s family was, once upon a time, from Philipsburg, QC, which is right on the border.

          • Gregg Smith

            Your assumptive question up top was about right but I’d put it another way. Live the life you choose and live within your means. 

          • NrthOfTheBorder

            Ray: https://maps.google.ca/maps?f=q&source=s_q&hl=en&geocode=&q=393+Chemin+Garrett,+Melbourne,+QC&aq=0&oq=393&sll=53.796105,-68.44248&sspn=42.414916,79.013672&vpsrc=6&ie=UTF8&hq=&hnear=393+Chemin+Garrett,+Melbourne,+Le+Val-Saint-Fran%C3%A7ois,+Qu%C3%A9bec&ll=45.633246,-72.125244&spn=1.546013,2.469177&t=m&z=9

          • Ray in VT

            I see.  I’ve never been to Sherbrooke, although I did get lost in Magog once.  We always meant to take the kids to the Granby Zoo, but we haven’t gotten there yet.

          • NrthOfTheBorder

            Sorry you didn’t get lost in Sherbrooke – there’s more to see.

            We try to get to Burlington
            as much as we can. We’ve yet to make to Granby.

          • JGC

            I’ve been looking for some investment properties. Maybe I’ll buy one and rent it out to Hennorama.  Howdy, Neighbor!  :)

          • hennorama

            JGC – my moniker gets mentioned in some of the strangest (and best)places …

            But I’m not in the market for a rental, quite the opposite, in fact.

            Investment opportunities are still out there, but I use the handy indicator of “if it’s on TV, the easy money has already been made”. That was a very clear indicator of the RE top when all the DIY house
            flipper shows first came out, and now we see the foreclosure flipper shows …

            Be sure the numbers work, and plan for 75% occupancy, max. And avoid holding property in your own name – use an LLC or other entity so your personal assets get some protection if things go south, and consider a land trust if applicable in the local jurisdiction.

          • JGC

            You guys have been going at it so much recently, I just could not resist! Thanks for the extra advice, on top.

          • hennorama

            JGC – this “going at it” is not a new phenomenon, but it has indeed taken a somewhat more ferocious turn of late after an extended hiatus on my part. One tends to object to the profanely libelous impugning of one’s honesty, dontcha know.

            YW as to the RE advice, and TY for the giggles.

          • notafeminista

            No no don’t you realize?  Someone ELSE gave you bad credit, someone ELSE made sure you didn’t graduate with any sort of useful education, someone ELSE made sure you didn’t pay your bills on time…

            It is NEVER your fault.  NEVER.

          • DrewInGeorgia

            Someone ELSE did give me bad credit. Someone ELSE did give me a false criminal background. I did graduate with a useful education in a couple of different fields. I NEVER made a late payment until the results of the first two statements came into play. I had perfect credit until the bill for the actions and inaction of others came due.

            What was your point again?

          • Ray in VT

            I’m sorry to hear that, Drew.  Sometimes people who are and who do good get really shafted.

          • DrewInGeorgia

            Thanks Ray I really appreciate it. I didn’t post up for sympathy though, the sole purpose of my comment was to debunk notalickosense’s tripe.

          • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

            Yep. I recognize yours as not a ploy for sympathy, but the idea that “it happened to me, it can happen to anyone”.

          • notafeminista

            That your particular example represents less than 10% of the population.  My point stands.

            Oh and btw, is it your implication and/or belief that someone was actually trying to keep you from buying a house?

          • DrewInGeorgia

            My situation is “rare”. Funny, that’s the same thing the Department Of Justice said, guess neither I nor anyone else should worry about it.

            I had a house instigator, you’re completely missing the point. Shocker.

          • notafeminista

            You’re deliberately obfuscating the point. Shocker.  It sounds as though you were the victim of ID theft or fraud of some sort.  And you didn’t answer the question. Do you believe that someone or someones was deliberately trying to keep you from qualifying for a house..as you stated?

          • Gregg Smith

            Someone broke the law, you were a victim of a criminal. Don’t you think that’s a little different?

            Look, you’ve written about this before and as tragic as it is you should move on. You are your biggest obstacle. What’s done is done, being bitter does not help you.

          • Don_B1

            How about the person who moved for a good job to one of those areas where speculation had led to a housing price bubble, and then when the Great Recession came along, the job disappeared, leaving no money for the mortgage payments?

            Remember, no one, with the exception of Mr. Case and his partner Robert Schiller and a few others, were screaming out about a housing bubble.

            The individuals who fall into the category you note are the minority of those who lost their homes.

            The above is just one of the ways many people were flimflammed by mortgage brokers into doing things that in hindsight were disastrous.

            But I celebrate your ability to navigate the waters where others failed; you are one of the relative few and gloating is not nice.

          • notafeminista

            The person who moved for a good job to one of those areas where speculation had led to a housing price bubble and then when the Great Recession came along the job disappeared leaving no money for the mortgage payments….

            1)Had the ability to live beyond paycheck to paycheck with that good job you describe.  Where were the savings?

            2)Wasn’t dragged by the hair in order to move for that good job.

          • Don_B1

            You make some untenable assumptions here.

            In the 2000s, the new job still might not be a lot better than the old job which was clearly dying, and in that case the individual just about was dragged to the new job, which unfortunately came with getting a house that nearly everyone was saying was not overpriced.

      • Don_B1

        In some places, at least, by being empty so long they have become moldy and possibly broken into, making them much less desirable.

        • Gregg Smith

          …and much cheaper.

          • Don_B1

            But still unlivable.

          • Gregg Smith

            As is but it doesn’t have to stay that way. Fixer uppers can be great deals.

  • Wm_James_from_Missouri

    Advancing housing prices are a disaster for young people just getting started. Continuously inflating housing prices distorts true value and ties up much needed capital for business investment. The real estate industry continues to mislead consumers as to what are true investments. Their argument is, to buy an overpriced house today and hope for a greater fool to come along and purchase your house at an inflated value so that you can go out and purchase a larger overvalued home and continue the debt cycle, in the John Hamilton tradition. Higher housing prices mean, higher real estate taxes, higher insurance premiums and higher repair bills. They tell you that these actions create jobs and wealth for the nation. What they don’t tell you is that billions to trillions of dollars are funneled AWAY from other industries, that could create new products and methods to accelerate our progress and reduce our work load. Somebody, somewhere is paying for this misappropriation of equity. Of course, you need not worry, the government will just increase “Section 8” payments, along with welfare and food stamp payments to compensate for the millions who have no hope of keeping up with the inflation caused by this type of thinking. Still, not to worry, we will just put these types of ‘even up’ transfer payments on future generations or create some sweat shop somewhere to offset these minor inconveniences. Dear people, let’s just short circuit all of this nonsense, here and now and for all time. I suggest you support a One Time payment to ME , for my home for the very fair price of 500 Hundred Trillion Dollars. I will make this solemn promise to create as many jobs has your little hearts desire !


    • northeaster17

      I had a simalar arguement/dicussion with a realtor recently. My point was that by relentlessly hyping increased housing costs the real estate industry was not doing buyers any favors.  His retort held the industry blamless. That it was the market that drove prices not the industry. I saw his point but not entirely. I still think too much of the industry is driven by future commissions.

    • Don_B1

      Here is a graph of the Case-Schiller Home Price Indices (I am surprised that On Point did not include it in the header material!):


      I don’t see ANY reason, except a return to bubble creation, to see housing prices return to the peak for a decade or two, when the normal inflation rate would get there.

  • ToyYoda

    I’ve been looking at buying a place in Orlando Florida.  I found a nice condo  and before I could put in an offer, it was bought in cash at the asking price.  When I asked my realtor about it, he told me that Orlando market had bottom out around mid 2012.  And that many of the buyers were from overseas or hedge funds.

    • Jim

      Just be careful with orlando… parts of that region might be overpriced. look, it is all about jobs… if you want to buy a place in orlando, it should be priced relative to the job prospect of the region. the demand might be artificially inflated by investors. just be careful.

  • NrthOfTheBorder

    This is good news. Maybe now that our worst fears about such an important part of the economy can take a break it’s high time to address the festering problems that got us into this mess in the first place.  

    “Too Big to Fail”, weak consumer protection, wrong-doers throughout the banking and home loan industry that need to be prosecuted and punished, distorted incomes of those at the top of the world of finance chopped down to size – are but a few. 

  • Jim

    there is a demographic shift. the baby boomers are moving to the city. New families and singles prefer to be near public transportation. the only way to offer is urban life. yes, the city. Many companies are relocating to the city as well, away from the suburbs.

    • Steve_the_Repoman

      Development patterns are often the unintended consequeces of laws/zoning/regulations/financing…

      suburbanization being only one example.

      The move back to the larger urban areas you describe will also have unintended consequences.

      Post WWII, people of means escaped the cities, leaving the poor unable to fund declining neighborhoods/schools ect…

      Now as peolpe of means rediscover cities the poor will be displaced to declining suburban/exurban areas.


  • DrewInGeorgia

    “We’ve got low supply, high demand”

    Let me try this again: Not listed, not counted.

  • AC

    what’s going to happen when gas taxes switch to vehicle miles usage fees, i wonder? it’s only a matter of time….

    • Don_B1

      It will put more pressure on people to move to the inner city where public transportation can lower the transportation costs, including the cost of owning multiple vehicles.

    • WorriedfortheCountry

      I hope you are wrong.

      I remember when Ray LaHood floated that trial balloon a few years ago and he had to quickly retract it due the public outcry on privacy issues, etc.

      • AC

        cars are becoming extremely fuel efficient (finally) & gas tax revenue is decreasing, even tho it’s going to be raised. i can’t see this trend not continuing, usage fees will HAVE to happen. it’s super expensive to keep up road maintenance, all states have their individual sets of seasonal/climate issues that makes this so. if you want transportation, you’re going to have to pay for it…..
        why am i not suprised there was outcry, it seems like it would target the poor, forced to move farther & farther away from work zones (hence where real estate values will start dropping like stones), but i beleive you could balance this with caps/living caps. & privacy? please, weak argument – you could do it doing yearly inspections, etc…distribution of collection is the toughest hurdle. it would have to be handled on a federal level for fairness….or you could just start building lots and lots of toll roads….

  • Matthew McKay

    The key question is: Sustainable versus Bubble? If the prices are sustainable in absence of the Federal Reserve, which likely means mortgage rates going up at least 1-2%, then great. Of course there is still the biggest threat to prices of the government closing the “loophole” of mortgage deductions.

  • DrewInGeorgia

    Risk based pricing?
    Those who can afford to pay the least are consistently required to pay the most.

  • MarkVII88

    People look at investors buying condos/homes differently than people looking to buy a condo/home to live in themselves.  When people talk about the housing recovery they’re really only concerned with families with 2.3 kids and a dog being able to buy a home to live in for 15-20 years.  Buyers of second homes or investment properties are looked at as sharks, speculators, and even crooks.  The caller earlier who said they couldn’t get a loan for a condo in Palm Beach, FL, despite their overall net worth and high credit score was looking for a loan on a SECOND condo not a homestead, hence she didn’t qualify because she’s clearly a shark.

  • MarkVII88

    If you have enough assests (aka you are wealthy), you don’t need subsidized loans to buy homes and it makes no difference.  But if you are a working family that makes a decent living (not wealthy, but comfortable) you aren’t going to be poor enough to get the loans that everyone advertizes as being family friendly.  Once again the middle class workers get the shaft. If you are lucky enough to belong to a good credit union, you may be able to get decent financing. But you’re just going to get screwed if you’re dealing with major banks or the government.

  • DrewInGeorgia

    Shadow stockpile of homes, rampant new construction…
    Gee, wonder where this is heading.

    • NrthOfTheBorder

      Drew, I wonder if – failing practical common-sense – dare I say it ‘regulation’ of the housing and esp home-loan industry we’re simply on the road to repeat history – or some discordant rhyme of it.  After all, not much has changed, structurally, since 2008.

      • DrewInGeorgia

        As disheartening as it is I think we are already a good ways into the next cycle. This from a tweet:

        We’re still cleaning up the wreckage from the last bubble burst yet some are gleefully blowing a new one.
        Get your wet suits on.

        • Don_B1

          @DrewInGeorgia:disqus @NrthOfTheBorder:disqus 

          Maybe its just optimism, but there have been almost five years of slowing then near no new housing built (exceptions being largely McMansions for the wealthy) so all those young people graduating and (too slowly) entering the workforce are starting to have enough money to consider starting a family and then owning their own home. This is the sign of that pent-up demand being enabled to actually attain the goals.

          I suspect that some of the publicity you cite is grasping at straws to see economic growth and a revival in the industry that has traditionally pulled the country out of recessions.

          The banks that give out mortgages are not showing signs of being willing to relax standards much from the overtightened rules following the bursting of the mortgage bubble in 2008.

  • Verulamium

    I think that the discussion among policy makers needs to re-prioritize affordable rental housing.  Most millenials do not want, and cannot even afford, a detached suburban home lifestyle.

  • http://www.facebook.com/people/Joseph-Rice/100000693874282 Joseph Rice

    I like hearing the prudent, well considered comments about this “good news”. But I would be curious as to what some of these same people were saying at the height of the bubble. Anyone got the tapes?

    • NrthOfTheBorder

      I was! But nobody was listening. Believe me. Lesson – boom times encourage all manner of denial and distorted thinking.   

      What’s distressing now is I sense we’ve still got a thirst for it – an addiction if you will – not only because those who profited still command the ear and pull the strings of those in power, but many, failing to see clearly, pine for living the life of a fairy tale. 

  • MarkVII88

    Home ownership as the proverbial “American Dream”.  A car in every driveway and a chicken in every pot.  These seem like nostalgic throwback notions from the 1950s.  Sure, it’s nice to own a home.  It may even be cheaper on a monthly basis than renting an apartment.  But the hurdles to jump over to get to home ownership are many and they may be too high to clear for many who would like to own homes.  I’m not saying whether that’s right or wrong, but I do question the idea that being able to own a home is somehow a right that we as Americans have.  There’s more to home ownership than paying a mortgage.  There’s insurance, ever increasing property taxes, maintenance, and upkeep.  It’s terribly expensive and, for people on a financial edge, it may not be a good idea.

    • NrthOfTheBorder

      The primacy of home ownership you speak of is the foundation of a materialistic society and is much of what the nation has become.  

      There is truth to matter that we are incentivized by the prospect ownership in a kind of “I owe, I owe, so off to work I go” sort of way. 

      But does owing a home, and commanding a salary able to do so – while garnering the respect of family and friends – really make someone a good or moral – or truly successful person?  

      All told, in light of the inequities, the uneven application of justice, a sick culture and the broken government we’re enmeshed in, I’m seriously beginning to doubt it. 

      • Human898

        I don’t believe the amount or size of one’s real property necessarily distinguishes them as a “successful” person as wealth or material wealth is not the only measure of success there is to many people, for all those that seem to believe it is.  I do however, believe that property ownership not only allows someone to both enjoy and use something, but build some equity at the same time, even if it is not necessarily huge or in the short term.   People are also empowered and somewhat grounded (no pun intended) by property ownership in the way they are not when not property owners.  They are more connected and more interested on average in the communities where they own their primary residence properties and in some cases where other than primary residences are owned.  They support and have an intertest in their schools and other community institutions and services and activities.  Not that renters do not, but to a different level.   Since we are governed by representative governments,  perhaps it is the society that elects those who represent them that needs some introspection.  

        • NrthOfTheBorder

          Well said.  

    • Human898

      The “American Dream” somehow went from something quite modest to the “Lifestyles of the Rich and Famous”.  Funny how we removed ourselves from an monarchy only to become a nation of people striving to build their own kingdoms and castles.   Everything in moderation?   We appear to have priced ourselves out of the market in a feeding frenzy of get rich quick schemes, turning what were once nest eggs into junk bonds.

  • Katorzhnik

    Jane, please ask your guests what effect the Consumer Financial Protection Bureau’s change in Total Debt Ratio to 43% (effective 1 January 2014) will have for people trying to get an FHA loan.

  • http://www.facebook.com/profile.php?id=100000570151428 Jo Bleaux

    I took a homebuyer education class about 10 years ago. One thing that really struck me is much the costs of maintenance and repair were downplayed. Many people who can make their notes — just — are in big trouble when their roof needs replacing or when the fridge and washer go out in unison.

    • adks12020

      That is a major reason why I haven’t purchased a home. I can afford a mortgage but I don’t have a lot of savings to cover regular upkeep and any possible disasters like plumbing, electrical, roof repairs and the like. I’m waiting until I have a good amount of savings before I buy.

      A lot of renters don’t think about the items they don’t pay for in their rentals: water/sewer, maintenance/repairs, taxes (which can, and do, fluctuate), etc. That stuff can really add up

      • hennorama

        adks12020 – your prudence in saving before buying is commendable. You should pay close attention to your credit report and scores as well.

        You may be aware of this already, but I’d like to point out to you and to everyone – you can get your credit report (not your FICO score, but the actual report) for FREE from each of the Big 3 reporting agencies (Equifax, TransUnion & Experian) every year, here:


        One simple strategy you can use is to request the free annual report from a different agency every four months, then repeat. This allows you to see the report 3 times/year FOR FREE. Any inaccurate info can be
        disputed, including background info.

        For more on understanding credit reports, and more general info on home loans, see:



        The website bankrate.com also has an enormous amount of info related to home buying and various other financial topics.

        As to home maintenance costs, one reasonable rule of thumb is to budget $1 per square foot per year. Put this into a savings account so it can build over time and be available when needed, especially for “the big stuff” such a roof replacement or if a sewer line goes out.

    • Human898

      Absolutely!   The higher quality and the larger the area of walls, floors, roofs, anything, the more the maintenance costs are going to be and if two people are stretched to make payments and one or both lose their jobs….When it comes to real estate, it seems like our appetites have been bigger than our stomachs our striving to think of ourselves as “successful” by displays of “big” and “opulent” “consumption” has us forgetting that a purchase cost is only part of the expense of owning a property. 

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        This is exacerbated by monoculture housing. If one wants to live where the “good schools” are, there are any number of forces at work to keep out the people who already “can’t afford” to live in that town or district.

        • Human898

          There are a number of conundrums and dilemmas.  Public schools cannot be as exclusive as private schools and must take nearly all children in a community regardless of their ability to learn or other concerns that would mean they would not be accepted to private schools.   Schools supported only by their local communities will reflect the average income levels of those communities.   There are some GREAT public schools in communities that are not wealthy communities, but at some point, access to cutting edge teaching tools, technology and infrastructure falls behind in the public schools of less wealthy communities and regardless of how wonderful some teachers are or how bright some students are.  This is somewhat leveled out at higher education levels where some institutions recognize the potential of some students who have not had access to all the same things their counterparts in wealthy communities have.

    • hennorama

      Jo Bleaux – Indeed. However, one very good thing that has been happening over the past several years is that consumers have been paying down their debt, leaving their personal balance sheets in much better shape.

      It’s true that many do not have sufficient savings, and an emergency such as “when their roof needs replacing or when the fridge and washer go out in unison” can push may into an economic crisis.

      However,when looking at the Debt Service Ratio (DSR) and the Financial Obligations Ratio (FOR), one sees an enormously improved picture.

      According to Federal Reserve Board data, the DSR was at 10.38 percent at the end of 2012. This figure is more than 26 percent lower than the recent peak of 14.09 percent from the end of 2007. This figure is the lowest it has ever been during the period of 1980 through 2012!

      The FOR, which includes many more financial obligations, was at 15.48 percent at the end of 2012. This figure is more than 18 percent lower than the recent peak of 18.98 percent from the third quarter of
      2007. This is also the lowest since 1981!


      Household Debt Service and Financial Obligations Ratios are the LOWEST THEY’VE BEEN IN MORE THAN THREE DECADES.


      These figures mean that households can more easily handle their debt load, giving them better ability to respond to financial emergencies.

      It also means that when we get better employment figures and consumers gain confidence, there is significant upside potential for the personal consumption portion of GDP. We are poised for more
      significant growth.

      The combination of lower interest rates, and increased debt repayments, even in light of declining median incomes, makes these figures very significant.

      Consumers will likely remain cautious. Jobs are still not easy to find. Credit is still pretty tight, with higher lending standards, especially for mortgages. And many consumers’ credit scores took significant hits
      over the last 5 years, which will take time to improve.

      Still, this is great news and bodes well for future growth.

  • Human898

    So how long before we fall back into the same thing and see another bust?   We’ve been here how many times? How about stable pricing? When Baby Boomers downsize and want to sell their huge homes and the cost of energy and maintenance is sky high, where are the numbers of people that will buy them, (even if they can afford them) who will want them at such high prices to maintain? I agree, homes should not be thought of as turnover ionvestments, but something to use and enjoy, any gain, a sideline benefit.

    • DrewInGeorgia

      “So how long before we fall back into the same thing and see another bust?”

      Not long, this quote from one of today’s guests says it all:
      “bid up by the very pressures that caused the boom in the first place”

    • MarkVII88

      I look at real estate, not as some sort of turnover profit-maker, but as a long-term investment.  I have young kids and I would like to help them with the costs of college education down the road but it’s not fiscally possible to really save for college while funding our retirement accounts (which we view as our priority) and living our lives.  One of most valuable assets homeowners and multiple-homeowners have is the equity in their real estate.  Keeping these properties long-term is how to grow that equity and be able to use it for something like helping to pay for college, something we just can’t foresee doing out of pocket.  The quick make-a-buck turnover game of housing is not the way to build value.

      • hennorama

        MarkVII88 – remember too that the owner-occupant derives value from getting to live in the home, as well as the potential long-term price appreciation.
        Most homebuyers would be best served by viewing their home as a nice place to live, with the potential for price appreciation over time.

        They also should only rarely, if ever, borrow against their equity.  Viewing one’s home as a huge ATM is not a smart long-term strategy.

    • OnPointComments

      Perhaps the government could be forgiven if it learned from its mistakes, but it appears poised to make the same mistakes again.
      “Obama administration pushes banks to make home loans to people with weaker credit”
      “Risky Loans Could Create Second Bubble”

      • Human898

        I believe there are ways to get people with weaker credit into their own homes.  It takes innovation and it also takes avoiding people who will innovate to make massive profits for themselves at the cost of the nation’s economy.  No law or encouragement forced any financial institutions to go against “safe and sound” business practices for their industry, but that’s just what they did.  
        Putting people with weak credit in homes that are priced way over their heads is a disaster.  Partnering with not-for profits who are interested in getting people into homes as a starting point and are not looking to maximize profits or commissions on sales is a place to begin.   Owning a home does build some equity and asking people to  put some skin in the game (a downpayment fitting incomes) helps people feel they have something to lose from the beginning rather than putting people in something simply because someone else thinks it is good for them.   There are ways to do it that will work.  As we have seen, there are ways to do it that will work, but not for homeowners or the overall economy, but for those looking to get rich quick off of schemes build on programs intended to lend a hand to people who can use one, not enrich con artists.

        • OnPointComments

          You are incorrect that “No law or encouragement forced any financial institutions to go against “safe and sound” business practices for their industry.”
          The Affordable Housing Act and Title XIII of the Housing and Community Development Act of 1992 set quotas for Fannie and Freddie to acquire subprime mortgages and to play a significant role in the subprime market. By 2008, before the financial crisis, the government held or insured 74% of nonprime mortgages. HUD instituted “Fair Lending Best Practices” to increase the number of loans that had lower underwriting standards, and regulators used new Community Reinvestment Act regulations to require banks to make more loans that did not meet normal lending standards. Subprime mortgages were the primary cause of the housing collapse, and the government was the primary cause of the massive increase in subprime mortgages.

          • Human898

            Have you read the actual laws concerning “safe and sound”?

            Read the CRA and look for the words “safe and sound”. In addition, what was behind the titel CRA? Large financial institutions were taking deposits from one local and lending them in other locales, essentially using money from one community to maximize lending, but outside those communities.

            No revisions in law or regulation since the AHA HCDA of 1992?


            (a) Duties
            (1) Principal duties
            The principal duties of the Director shall be –
            (A) to oversee the prudential operations of each regulated
            entity; and
            (B) to ensure that –
            (i) each regulated entity operates in a safe and sound manner, including maintenance of adequate capital and internal controls;

          • OnPointComments

            Is it your contention that government policies did not play an integral role in increasing the number of subprime mortgages?  Fannie Mae, Freddie Mac, Ginnie Mae, and others are government-sponsored enterprises that were created by Congress.  These GSEs, along with HUD and the FHA, have systematically reduced lending standards.  The government set a goal of increasing home ownership, not by instructing potential buyers how to make themselves credit worthy to meet normal lending standards, but by inducing or requiring lenders to lower the standards.

          • jimino

            Who made money from this set-up?  That’s where you need to look to place blame, if that is your intent.

            And it wasn’t the ignorant schmucks who borrowed more than they could afford and lost everything.  They were just the patsies.

          • OnPointComments

            “Here’s the deal.  Although your income is only $50,000, I can get you into a half million dollar house, with little or no downpayment.  You’ll have a variable rate mortgage, or one that requires interest only for the first couple of years, and you’ll be able to manage the payment.  When the mortgage terms adjust two or three years from now, if your income hasn’t risen enough to be able to afford the payments, you can sell the house for a profit and keep the money tax-free.  In the meantime, you get to live in an expensive luxury house.  It’s a sure thing — housing prices always go up.”
            Who made money?  Certainly the mortgage originators and lenders made money.  For a couple of decades, the home buyers made money.  It was only when housing prices didn’t rise that the whole scheme collapsed, and subprime borrowers walked away from their mortgages because they had little or no equity in the home.  Like all of the best scams, there is a perpetrator who is either unscrupulous or believes his own hype, and a schmuck who lets greed affect his judgment.

  • MarkVII88

    Let me convey some of my experience as both a past renter as well as a homeowner in the expensive Burlington, Vermont real estate area in the past 5-7 years.  On the whole, housing prices here in Burlington did not drop nearly as precipitously as the rest of the nation, but they did a little.  The relatively higher price of housing here coupled with somewhat lower earnings grew the number of people in the rental market.  With high demand for apartments, rental prices began going upward as the house prices dropped slightly, making it more difficult on those who couldn’t afford to buy or stay in their homes to find affordable housing.  People looking to buy homes thought, based on national data, that they’d be able to find a really great deal on a house but the people selling homes weren’t willing to drop prices to levels that the buyers were expecting.  This is ironic considering that our part of New England has some of the oldest, least efficient housing stock in the nation.  Many homes stayed on the market for a long, long time.  Available land is pretty scarce near Burlington and land prices here are incredibly expensive with outrageous permitting fees and zoning restrictions, so housing starts in all but outlying rural areas or by all but the largest developers were slow in coming.

    • Human898

      Vermont overall, did well in terms of foreclosures compared to many other places in the country.  Real estate is not inexpensive realtive to lots of other places in the nation, but there seems to be something about Vermont that kept people from getting over their heads, whether it was a lack of easy money.  State lending institutions looked for some ability of people to repay what they borrowed, Vermonters are more wary of getting in over their heads, something else or a combination of things.   The sources of Vermont income are different also.     In many parts of Vermont, affordable housing for people who are residents, versus non-residents, is a concern because of high real estate values due to non-resident owned properties.  Somewhat of a conundrum in some places as the higher property values also support higher property tax revenue.   Property values are related to a variety of factors.  Burlington, with Lake Champlain, the University of Vermont and being the largest city in the state, has a high location demand factor.  Vermont as a state has an appeal based on a numbr of factors that has some people desiring to be here over other places and willing to pay more to be here, but that makes it difficult in places where there is great income disparity, such as resort areas, where non-resident property owners drive up prices of property (while at the same time raising the revenue base) because compared to where some non-resident property owners come from, prices in Vermont are a bargain.   They still want and need services in those communities, but the pay for many providing such services does not allow those people to get into their local real estate market easily, if at all. 

  • http://www.facebook.com/gary.kay.7777 Gary Kay

    It means nothing really. It takes a lot of money to buy and maintain a home. The reality is that fewer and fewer people can afford homes. When my parents built a new home in 1955, it cost about $5000. At about $80 per month payments, that home was paid off in ten years. Now it takes 30+ years for most people to pay off a mortgage. And we’re talking those who actually have the income to take the plunge. The reality also is that many things can go wrong in a person’s life in 30+ years; things that are completely unpredictable at the beginning of home ownership. I would say that by the next century, perhaps sooner, home owners will be a minority.

    • JGC

      There are also all the ways the lenders and agents have added points and fees at every step of the process, so different from when my parents bought their home in 1960: there was only one fee of $25 to register the deed at the town hall.

      Compare that to now, with so many thousands and thousands of dollars paid beyond the actual purchase of the house. I have to also wonder about the integrity of the title search and insurance: with so many robo-signings of properties in the decade leading up to the housing crisis, how can anyone be sure there really is no claim lurking out there?   

      • Gregg Smith

        When I bought my first 20 acres of land I did it with owner financing and virtually no fees. It took some work though. There are ways.

        Two years ago we bought 16 acres on a river. The land was owned by 14 heirs. They did not have a deed. I researched public records back 150 years and felt quite comfortable with the quitclaim deed we got. It took passion and time but no money (other than the quarter per page fee for deeds, wills and copies of special proceedings). I know their family history better than my own. There are ways.

  • Trond33

    The whole industry and societies view of home ownership needs a redesign.  Time to scrap the tax advantages as a way to stabilize the market.  Standards for builders needs to be raised; a large portion of housing built since the mid-1980′s is subpar.  Being a “fly-by-night” builder should not be seen as a way to make millions.  Finally, home owners need to have more realistic outlooks.  Say you buy a home for $100,000, live in it for ten years, then sell it for $110,000.  You not only made $10,000, but you essentially lived free for ten years.  Most home owners do nothing to their houses until its time to sell, so the argument that there are costs involved in upkeep prove false.  

  • http://twitter.com/bextopia bextopia

    People aren’t taught to save and have long term goals. My spouse and I are an engineer and a lawyer, respectively. When we started making money we stayed in our shabby suburban apartment and drove the same cars we had in school. We also saved like mad, protected our credit and learned about the market. Five years later we bought a family home 13 miles outside of San Francisco. We got standard financing. We can afford it and three years later we have equity. We have money in the bank and now we can afford a solidly middle to upper-middle class lifestyle. Our colleagues bought BMWs and lived in hip lofts in the city. Now they want to buy homes and start families and they’re in a pickle. 

    • hennorama

      bextopia – Congrats.

      There are only three way to get ahead:

      1. increase income
      2. decrease expenses
      3. do both

      Live below your means and you can be financially independent.  This sort of freedom is priceless.

      • Gregg Smith

        I’d add, don’t drink or do drugs, don’t have children before you have a job, be reliable and ethical, nurture useful skills as well as contacts through networking, think, imagine and dream.

    • ExcellentNews

      Don’t worry – the oligarchy is coming after you next. You see, nothing spoils the day of a global billionaire more than seeing one of the peons living free and happy.

      So far, the plutocrats who really own the country have made their fortunes exporting blue collar jobs to slave-labor countries. But your turn is coming! Budding engineers from Asia, Latin America, or Africa will be more than happy to do your job at 1/10th the rate. And the new crop of hedge funds and global consultancies are licking their chops at the prospect of making it happen.

      As to the goofy advice that some offer you on getting ahead? This is how the oligarchs get ahead:

      1) Inherit, export jobs, run investment scams…
      2) Park your money offshore
      3) Buy politicians

      Anything else, you are just staying in place, waiting to be plucked, like the tens of millions of hapless middle class Americans who already have been plucked.

  • Gregg Smith

    After hearing this show I was left with the impression many think owning a home is a right. The concept of risk based pricing sounds completely reasonable to me. My first credit card (about 1979) was high interest because I had no established credit. I understand that. There was belly aching over people buying with cash. Are we really to the point where some think it’s unfair if others have more cash? I live in a tin roofed shack (I do have a big yard) but it’s paid for. I never felt  I deserved more than I could manage.

    • Tyranipocrit

       Owning a home might not be a right–but having a home is a right–or should be.  We are a society, a community–the same people.  Otherwise burn your flag and rethink patriotism or what it means to be a United states citizin.

  • Regular_Listener

    Home prices may be rebounding some, especially in the richer areas of the country, but I still see “for sale” signs everywhere I go.  And rising prices are not necessarily a boon for those who would like to own a home but have a modest income.  And let’s not forget, contrary to what one of the guests said about what a great deal it is that you don’t have to get taxed on all the benefits you get from owning your home, there are upkeep costs and property taxes, and those are very high in some places!  It is not enough to just be able to cover the downpayment… As one of the commentators pointed out, the biggest growth in recent years has been in rentals.

  • Ian Rossi

    When the 34 year-old woman called concerned that home-ownership as an investment goes
    against the central tenants that guide retirement investing: “diversity”
    and “reduce fees:”, I was like: finally!!! Someone finally asked this question. I was disappointed that the topic was not explored further. After seeing the crash of 2008 and the risk that such asset allocation can impose, I find it amazing that people don’t ask this question more often. On Point…. perhaps you should devote a show exclusively to answering this question.

Aug 29, 2014
Ukrainian forces guard a checkpoint in the town of Mariupol, eastern Ukraine, Thursday, Aug. 28, 2014. Ukraine's president Petro Poroshenko called an emergency meeting of the nation's security council and canceled a foreign trip Thursday, declaring that "Russian forces have entered Ukraine," as concerns grew about the opening of a new front in the conflict.  (AP)

War moves over Syria, Ukraine. Burger King moves to Canada. Nine-year-olds and Uzis. Our weekly news roundtable goes behind the headlines.

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Beyoncé performs at the 2014 MTV Music Video Awards on Sunday, August 24, 2014 in Inglewood, California. (Getty)

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Aug 29, 2014
Ukrainian forces guard a checkpoint in the town of Mariupol, eastern Ukraine, Thursday, Aug. 28, 2014. Ukraine's president Petro Poroshenko called an emergency meeting of the nation's security council and canceled a foreign trip Thursday, declaring that "Russian forces have entered Ukraine," as concerns grew about the opening of a new front in the conflict.  (AP)

War moves over Syria, Ukraine. Burger King moves to Canada. Nine-year-olds and Uzis. Our weekly news roundtable goes behind the headlines.

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