Apr202016
Could you live in a less than 300 square feet?
The tiny house movement is the extreme of housing and possession austerity. Would anyone with the means to live with more chose to live that way?
When builders and developers create new projects, they generally produce a variety of floorplans to meet a market niche where they can reasonably expect to sell their inventory in a short period of time. In a typical residential subdivision, condos will range from 900-1,600 square feet, and detached homes can range from about 1,600 square feet all the way up to the monster McMansions 4,000 square feet or larger.
In higher density projects, small studio apartments as little as 450 square feet are sometimes offered, but rarely do builders and developers make product any smaller because they have limited appeal, and they are difficult to sell, mostly because people don’t want to live in a shoebox without any possessions.
But some activists are trying to change that.
Tiny homes offer convenience, affordability to owners
Stephanie Dhue, Sunday, 10 Apr 2016
In America, size matters — but not for dwellers at the forefront of the latest housing trend.
The U.S. is in the throes of a boom in specialty housing, a trend euphemistically referred to as the “tiny house movement.” Spurred in part by the high cost of renting and owning, a number of homeowners are literally downsizing their residences to houses that are often a fraction of the size of a typical house. …
Realistically, most people consider this because they can’t afford anything else. Is it really a choice if they lack other options?
For 26-year-old Alicia Kathleen Mathias, living tiny gave her the chance to pay off student loans and travel. She hitched up her self-built 24-square-foot home to her truck to inspire others to live small.
Growing up with hoarders made her realize what’s important, “stuff doesn’t make your life happy and for me, happiness is the freedom to go where I want and do what I want because I’m not attached.”
Those that chose to live in such a small house probably do so out of reaction to some negative experience with possessions or larger houses in the past. As I will describe later, I could probably fit into such a home, but I wouldn’t want to.
DEAR PEOPLE WHO LIVE IN FANCY TINY HOUSES
Do you ever wake up wondering, “I’ve made a huge mistake?
Dear People Who Live in Fancy Tiny Houses…
Do you actually love living in a fancy tiny house*?
You look so freakin’ happy in that Dwell Magazine article or Buzzfeed post, but c’mon, you can’t tell me that you don’t lie awake at night, your face four inches from the ceiling because the only place your bed fits is above the kitchen sink which also acts as your shower, and think, I’ve made a terrible mistake.
Look, I’m not criticizing you. I commend you for making this giant leap. Since we humans seem comfortable with pillaging Mother Earth of all her resources, I believe more people should think like you. But 250 square feet? What the hell happens when your tiny house partner farts Mexican food farts, huh? Where do you escape to? Nowhere.
You have nowhere to run. All you can do is walk three feet to the other end of the house and pray.
Or maybe you can run out into the tiny forest surrounding your tiny house.
I f’ing love the idea of downsizing and living a “simple life,” but seriously, where do you put your shit?
A life with few possessions
In 2014 I moved into a 1,500 SF house, embracing many of the ideals of the tiny house movement. I didn’t have many possessions, so storing the few items I did value wasn’t a major concern. Although I wasn’t suffering for lack of storage space, I moved to a larger house after my lease ran out.
I like space. I don’t use it to fill it up with stuff, but I like large rooms in a large house—a particularly inconvenient preference in costly California. Below is a picture of my home office, actually a converted living room. My computer is the center of my universe. To my left, I can watch TV, or I can sit down and relax and play video games with my son. To my right I can see what my son is looking at on his computer, or I can look out the windows. It’s an efficient and comfortable layout.
Even though it takes up a fair amount of space, I have almost nothing in it. Those filing cabinets are empty, and as vestiges of a past I left behind, I may get rid of them when I move again.
A few months ago I was killing time in Costco (looking at stuff to buy), when I came across Marie Kondo’s book, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing. Scanning the book stirred something in me, so I bought it on impulse along with Spark Joy: An Illustrated Master Class on the Art of Organizing and Tidying Up. I read both books and set out to purge what few possessions I had down to the barest essentials. It was amazingly liberating.
I was never a hoarder, but I still had papers from my youth, old photographs, a bookcase full of books and knick-knacks, office supplies, housewares, and a variety of other possessions I rarely if ever used and that I mostly kept because I had some emotional attachment to them.
I threw it all out—and I mean all of it.
Marie Kondo proposes a simple test: if an object doesn’t bring you joy, discard it. Apparently, not many of my possessions filled me with joy because I threw it all out. Check out this vintage furniture dealer market place that will look amazing in your house. For those who love antique furniture take a look at https://www.forsale.plus/telephone-table-antique.
My office has a printer and a scanner so I can convert from paper to digital and back again if necessary. I have a computer, a TV, a Wii U, a DVD player, a few essential papers (checkbooks), and a few essential office supplies (pens, highlighters, scissors, tape), and that’s it. I scanned and shredded any essential documents, and I trashed thousands of pages of non-essential papers. If I ever need anything, I live less than a mile from an office supplies store, and so far I haven’t needed anything. I like writing with pen and paper on occasion, otherwise I would probably get rid of paper entirely.
My garage holds my car, a small toolbox (although I thought about trashing it too), and my golf equipment (plus a few boxes of Christmas ornaments). I used to have a large toolbox with screws, nuts, bolts and assorted items, but since I also live less than a mile from a Lowes, I just go buy anything I need when I need it, which hasn’t happened yet. Why store anything in my garage?
The only other category of items I own is clothes and toiletries, and I got rid of much of that. I only kept the clothes I liked, and that didn’t leave much.
If I were to pack and move everything I own (other than furniture), I would be done in 15 minutes, and everything would fit into a few small boxes.
What fascinated me about going through this process was how freeing it was. The more I discarded, the more energized I became. I felt like Kwai Chang Caine from Kung Fu who carried everything he owned in a small pack. I have no desire to fill my space with stuff. I’m not a monastic or a renunciant; if I find something I really enjoy (like the Buddha painting behind my desk), I’ll buy it.
In fact, the few purchases since purging were all more expensive and higher quality goods than I otherwise would have bought. Since my criteria is joy instead of inexpensive functionality, my buying habits changed radically. I don’t spend any more than I used to because I don’t buy much, but I get a great deal more pleasure out of the things I do buy.
The joy and happiness in life doesn’t come from possessions. If it did, I would probably have more of them, but since they don’t, and since joy was my criteria for what I kept versus what I discarded, I discarded almost everything.
I could live in a tiny house. As the author of the satirical piece noted, “but seriously, where do you put your shit?” Well, I don’t have any, so that’s not a problem.
The tiny home has its virtues, but the opulence of space has its appeal and its rewards. Perhaps my last attachment is to space itself, and when I’m ready to give that up, perhaps a tiny home would work for me.
However, the path I’ve chosen is not the norm, and since most people accumulate possessions like teeth accumulate plaque, the McMansion isn’t going away any time soon.
[listing mls=””]
There is another advantage to a tiny home I think you have over looked. A tiny home offers you the most valuable resource of all, time. You can clean and maintain a tiny home in minutes which frees up your life. The
That’s true. A small house with few possessions doesn’t take much time to clean and organize. I could see where this lifestyle would be popular with 20-somethings. At that stage in life, most would rather be out socializing than trying to maintain a large house with a lot of stuff.
In the new economy, the most valuable resource of all is mobility 😉
As a way to get around zoning laws, most tiny houses are built on trailers.
Overpriced trailers, to boot!
Every time I see one of the HGTV shows where people are building a tiny house on a 14′ trailer chassis for $65k, full of absolutely terrible compromises in the pursuit of smaller living space, I scratch my head and wonder why they don’t just spend the same amount of money on a nice 5th wheel camper.
If properly designed, a cardboard box can be folded up to fit nicely in a shopping cart. Mobility? Check. Affordability? Check. Desirability? Hell no – at least not for most.
BTW, is the “new” economy really that new? It kind of sounds like the old economy. I thought with the world being more connected and all, people could live anywhere and work anywhere via telecommuting, etc.
Now, the “new” economy requires even more ability to physically co-locate (a slow and arduous way to pull together a world-class team, if you can put together an incentive package to get them to move at all).
And once the project is over, they have to move to a new location with other individuals and restart the process all over again. In that case, “new” is the new stupid.
What San Francisco’s Tech Boom Means For Bay Area Real Estate
The current state of Bay Area housing bears resemblance to the years leading up to the dotcom bubble in 2000 and the 2008 housing market collapse. At the peak of the housing bubble in 2007, the median sale price for a home in San Francisco was $895,000 while renters were paying just over $2,400 a month on average.
There’s no doubt that the Bay Area real estate market is white-hot once again and it’s largely due to the surging tech industry. Over the last few years, San Francisco has begun looking more and more like Silicon Valley, with companies like Google, Twitter, Airbnb and LinkedIn scooping up office space.
Nine years since the 2007 peak, housing prices, home values and rental rates are once again climbing to unsustainable levels. In 2015, home values jumped by more than 14% and the median sale price, meanwhile, is hovering around $1.1 million.
According to the California Realtors Association’s Housing Affordability Index, just 20% of residents living in the nine Bay Area counties can afford to pay that much for a home. Renters aren’t faring any better, with the median rent for a one-bedroom apartment in San Francisco hitting a whopping $3,490 as of January 2016.
Residential real estate isn’t the only sector of the market to “benefit” from the rising tech tide. Office rents in San Francisco recently hit an all-time high, with the going rate for office space reaching $72.26 per square foot according to a recent report from CBRE Group. That puts it just ahead of Manhattan as the nation’s most expensive city for doing business.
The big question for 2016 and beyond is where the tech industry is headed and how that will play out in real estate. While whether or not the Bay Area is in the midst of a tech bubble is still being debated, there are some hints that the forward momentum can’t last forever. In fact, in March 2016, we saw the first year-over-year drop (1.8%) in San Francisco house prices since 2012. And the number of homes sold dropped by 22.1%, showing that fewer residents bought homes in March 2016 as compared to the same period in 2015. And this may be just the beginning.
U.S. housing data adds to signs of weak first-quarter GDP growth
U.S. housing starts fell more than expected in March and permits for future home construction hit a one-year low, suggesting some cooling in the housing market in line with signs of a sharp slowdown in economic growth in the first quarter.
Groundbreaking decreased 8.8 percent to a seasonally adjusted annual pace of 1.09 million units, the lowest level since October, the Commerce Department said on Tuesday. February’s starts were revised up to a 1.19 million-unit rate from the previously reported 1.18 million-unit pace.
Economists polled by Reuters had forecast housing starts slipping to a 1.17 million-unit pace last month.
The dollar fell against the euro on the report, while prices for U.S. government bonds were little changed.
Last month’s drop in groundbreaking pointed to a moderation in housing market activity and mirrors other data such as business spending, trade and retail sales that have suggested economic growth stalled in the first quarter.
The economy has been slammed by a strong dollar and weak global demand, which have weighed on exports. Lower oil prices are also a drag as they have undercut profits of energy firms, causing a sharp decline in spending on capital projects.
First-quarter gross domestic product growth estimates are currently as low as a 0.2 percent annualized rate. The economy grew at a 1.4 percent rate in the fourth quarter.
Still, housing market fundamentals remain strong against the backdrop of a buoyant labor market, which is increasing employment opportunities for young adults, and in turn boosting household formation.
Last month, groundbreaking on single-family housing projects, the largest segment of the market, tumbled 9.2 percent to a 764,000-unit pace, the lowest since October.
Single-family starts in February touched their highest level since October 2007. They fell in all four regions last month, sliding 4.9 percent in the South, where most home building takes place. Single-family started plunged 21.2 percent in the Midwest.
Housing starts for the volatile multi-family segment declined 7.9 percent to a 325,000-unit pace. Starts for buildings with five units and more fell to their lowest level in a year.
Building permits dropped 7.7 percent to a 1.09 million-unit
rate last month, the lowest level since March last year.
Permits for the construction of single-family homes decreased 1.2 percent in March after scaling a more than eight-year high in February. Multi-family building permits plunged 18.6 percent, with approvals for buildings with five units or more falling to their lowest level since August 2013.
Housing starts are in, and economic experts couldn’t disagree more
Housing Market cheerleaders feverishly spin the bad news
Housing starts are infamous for being volatile and portraying a muddy description of what is going on in the housing market, with the latest March numbers only further echoing this point as analyst comments range from ‘impressive’ to ‘highly disappointing.’
At its core, according to data released Wednesday by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, privately owned housing starts in March came in at a seasonally adjusted annual rate of 1,089,000, down 8.8% from the revised February estimate of 1,194,000, missing expectations. However, housing starts were 14.2% higher than the March 2015 rate of 954,000.
Reports last month applauded the fact that new residential construction reached its highest in five months.
But as a result, realtor.com Chief Economist Jonathan Smoke said, “It is highly likely that the less severe winter may have pulled forward more activity into February from March, thus juicing last month’s very positive report on starts and delivering this disappointing report.”
“Today’s housing starts data is further proof of the volatile nature of these reports. While an 8% drop sounds like a major hit to the housing market, it’s important to focus on the overall upward trend of growth showing opportunities for a strong housing market remain in place,” said Quicken Loans Vice President Bill Banfield.
For example, Trulia Chief Economist Ralph McLaughlin focused on the 12-month rolling total of new housing starts, citing that it “grew impressively, and the April 2015 – March 2016 period represents the best 12-month span for starts since August 2007.”
I think the Trulia method of looking at the data makes the most sense. The rolling 12 month total is the highest since August 2007.
With any volatile number a moving average is better. In my own reports, I take a six-month moving average and compare it to a six-month moving average from a year ago to get less volatile results. It makes the data less responsive to sudden changes, but I believe it makes for a more reliable analysis.
LOL LOL LOL! I love it!!! Now the GOOD weather in February is leading to a drop in March. The last couple years’ BS “It’s been a rough winter and that’s why things suck right now…”
I’m glad someone noticed that. The weather is the worst possible explanation for anything financial, yet realtors fall back on it all the time.
Home-builder confidence treading water just as sector counted on for growth
Home builder confidence has been treading water just as analysts are counting on the housing sector to boost economic growth.
A closely-watched sentiment index from the National Association of Home Builders was 58 for the third month in April.
That’s consistent with a “slow but consistent” pace of growth, the industry group said in a release Monday.
“Builders remain cautiously optimistic about construction growth in 2016,” NAHB Chief Economist Robert Dietz wrote in the release. “Solid job creation and low mortgage interest rates will sustain continued gains in the single-family housing market in the months ahead.”
http://ei.marketwatch.com//Multimedia/2016/04/18/Photos/MG/MW-EK506_builde_20160418100509_MG.jpg?uuid=8fe0b0ce-056e-11e6-9f8b-0015c588dfa6
NAHB’s survey has generally been a fairly reliable predictor of housing construction activity, wrote Joshua Shapiro, chief U.S. economist for MFR, in a research note Monday.
But now, Shapiro added, “there remains a big disconnect between what homebuilders are saying and what they are actually doing.”
Intel laying off 12,000 employees
http://files.shareholder.com/downloads/INTC/1917786812x0x886662/6D73A0D5-A8CD-48A2-96E7-5234880B6304/Press_Release_Q1_2016_restructuring_-_FINAL.pdf
These aren’t layoffs, they are “Restructuring Initiative to Accelerate Transformation.”
That sounds so much better than announcing the termination of 12,000 jobs and the end to their livelihoods.
For some reason, I heard the four-note Intel jingle in my mind when reading el O’s comment.
I’m sure Jonathon Smoke will have fun spinning this as something positive for the Bay Area.
Buyers Rejoice — Intel Restructuring Relieves Inventory Crunch in Bay Area.
I don’t know how many of those jobs are in Silicon Valley, but it really does have the potential to move the needle there.
The SoCal and Texas Real Estate Connection: Southern California middle class disappearing into Texas thanks to high real estate prices.
Typically at the height of any bubble, you have housing cheerleaders talking about a “new normal” as if they have magically figured out a new secret. California is a land of booms and busts. We just had a boom. So counter to all of the history we have and common sense, somehow there is no correction to follow, this time. That is the logic. First, you have the idea of ignoring income. Second, you have the idea of every area being a candidate for gentrification. Finally, you have the “if you can’t afford it, leave” argument. Forget about any Black Swan like events that are bound to happen. The middle class is already leaving, many into inland areas of California but many to more affordable states. Many house humpers use emotion to base their arguments. I understand this. Go to any open house and you have people looking like lemmings trying to buy a home. Most of the time, there is this deep source of desperation in their eyes. You do realize you are locking yourself into a crap shack for 30 years right? That is assuming many can compete which they can’t (hence the domestic out migration). Many are leaving to places like Texas. Texas as you know has incredibly affordable real estate relative to SoCal. And SoCal domestic residents have figured this out.
This reinforces the previous data showing that when SoCal crap shacks get out of whack on the values front, people start leaving the state. Now the majority don’t leave and that has created a boom in rental prices and we now have many more households that rent.
And companies of course are also following:
“(Zillow) Despite recent gains, homes in Dallas remain much more affordable than homes in Southern California, which may act as a natural draw for those Southern Californians willing and able to move and looking to reduce housing costs. The median home value in the Dallas-Fort Worth metro was $177,600 at the end of 2015, compared to an average of $451,300 across Southern California.
Additionally, a number of large companies recently announced plans to relocate or expand corporate offices in the Dallas-Fort Worth area, which is also likely to bring new residents from farther-flung and potentially more expensive markets, including Southern California. Car manufacturing giant Toyota moved its North American corporate headquarters from Torrance, California (just outside of Los Angeles), to Plano, Texas (northeast of Dallas), in 2014. Liberty Mutual Insurance, State Farm Insurance and Facebook are also among the larger corporate names to expand in the Dallas area in recent years.”
Torrance is crap shack central. So obviously extremely high home prices do have a larger impact on local economics as well. Of course some will say incomes don’t matter. Like most things in life, it doesn’t matter until it does.
One of my contacts from Plano is buying a house and told me he was recently outbid twice by all-cash buyers offering above asking price. Until recently, this was unheard of in Texas. Californians are exporting their bubble mentality and he is now scrambling to buy a place because he doesn’t want to be left out of the market. He said there are at least 12 construction cranes on the horizon working on different projects, but home builders can’t keep up with the demand. Toyota is flooding the market with 4,000 high paid workers from Torrance that are used to paying California prices, and they are rapidly converting local Texans to the “home prices only go up” religion.
Those California buyers will be in for a rude awakening when the property tax bills hit. Texas maintains lower house prices partly because they tax houses very heavily. If you own an ostentatious property in Texas, you pay dearly to show off to your neighbors.
Yep, the property tax rate is brutal, but realistically the actual dollar amounts will be similar to what they were already paying in California. It’s still a big savings over owning in California, and don’t forget that moving to Texas comes with a 14% raise because they have no income tax or other state deductions on their paycheck.
I work next door to Toyota. I’ve heard (second hand from a coworker who is trying to hire one of Toyota’s marketing staff) that the employees that make the move will keep their current salary for three years; after which they will have to take a pay cut.
The property tax in Texas is somewhere between 2% to 2.5% of property value.
In case you hadn’t noticed…
California has the lowest SFR cap rates in the nation
In California, single family residence (SFR) investors are wrestling with the lowest capitalization (cap) rates in the nation, according to a recent HomeUnion study appearing in commercial real estate news source, GlobeSt.
Real estate investors seeking to know a property’s investment potential look first to a property’s cap rate. For an investor buying property, the higher the cap rate the better, as this means a lower purchase price and a greater yield.
The highest cap rates tend to be located in the middle of the country. Memphis, Tennessee tops the list with an average cap rate of 7.3%. The lowest cap rates are along the west coast (plus New York City), with average cap rates of:
3.6% in Sacramento;
3.6% in San Diego;
3.2% in Los Angeles;
3.0% in Orange County;
2.7% in San Jose; and
2.7% in San Francisco.
A cap rate measures the annual rate of return produced by the operations of an income property, stated as a percentage of invested capital. In terms of rental properties, it’s presented as the annual yield — the continuing receipt of net operating income calculated for each year of ownership — from rental operations in relation to the seller’s asking price.
Low cap rates become acceptable to cash-heavy investors faced with few investment opportunities, as is the case in San Francisco and San Jose.
Judge Bitch-slaps Huntington Beach Nimbys
Judge orders Huntington Beach to open development for low-income housing
HUNTINGTON BEACH – Affordable housing advocates got a big win with an order by a Los Angeles Superior Court judge that the city “immediately comply” with a previous ruling that reinstated provisions for building 4,500 units of housing with potential sites for 410 low-income units.
In January, the Public Law Center, representing the Kennedy Commission, a nonprofit housing advocacy group, won a lawsuit that accused Huntington Beach of violating state law by changing its housing guidelines and eliminating low-income housing in a development plan for North Huntington Beach.
The city filed an appeal and asked for a stay of the ruling during the appeal process. On Friday, Judge Michael Stern denied that request and implemented a previously state-approved housing plan, primarily within the boundaries of the plan for Beach Boulevard and Edinger Avenue.
Sarah Gregory, attorney with the Public Law Center, said the ruling stops the city from delaying while dragging its case out through a lengthy appeal process.
“Basically the city found it politically convenient to take a position that didn’t comply with the law,” Gregory said. “What the court said is the city cannot evade or ignore the law because it’s popular (with voters).”
Matt Taibbi: Government secretly plans Wall Street takeover of Fannie, Freddie
Well-written nonsense is still nonsense
Taibbi writes that the still-sealed documents do more than show Fannie and Freddie weren’t actually in the supposed “death spiral” that the government claimed when it modified its conservatorship agreement with Fannie and Freddie to claim all the profits from the GSEs.
According to Taibbi, the documents not only prove that the government lied about the GSEs, the documents also likely reveal the government’s plans for the future of Fannie and Freddie and how the country’s biggest banks are conspiring with the government to takeover the country’s housing finance system.
Here’s Taibbi on the conspiracy:
Likely also buried in the still-sealed documents is a wealth of information about the government’s plans for future reorganization of Fannie and Freddie, a huge looming event in the history of American finance.
Many of the government officials who were involved in the decisions surrounding the GSE conservatorship are now in the private sector, working on proposals for much-anticipated GSE reform.
Without getting too deeply into the weeds of this even more complicated tale, government officials have been working with Wall Street lobbyists for years on a plan to have a consortium of private banking interests step into the shoes of Fannie and Freddie.
If this concept actually goes through, it would be the unlikeliest of coups for Wall Street. Having nearly triggered a global depression eight years ago, the usual-suspect, too-big-to-fail banks would essentially be put in control of the same housing markets they all but wrecked last time around.
According to Taibbi, the Wall Street takeover of Fannie and Freddie is a “nonstarter politically” and the “ultimate public-relations disaster,” but notes that Fannie and Freddie are “the only companies on earth” that are viewed with more disdain than the country’s biggest banks, making such a move somehow possible.
Is The GOP Risking Suicide?
Donald Trump has brought out the largest crowds in the history of primaries. He has won the most victories, the most delegates, the most votes. He is poised to sweep three of the five largest states in the nation – New York, Pennsylvania and California.
If he does, and the nomination is taken from him, the Republican Party will be seen by the American people as a glorified Chinese tong.
Last week, Ted Cruz swept 34 delegates at the Colorado party convention. Attendees were not allowed to vote on whom they wanted as the party’s nominee.
This weekend, Cruz shut out Trump in Wyoming the same way.
What does this tell us? Cruz has a better “ground game.” His operatives work the system better. Ted Cruz is the king of small ball.
But having gone head-to-head in some 30 primaries and caucuses, Cruz has fallen millions of votes behind Trump, and will fall millions further behind after New York, Pennsylvania and California.
Cruz will soon join John Kasich in being mathematically eliminated from winning the nomination on the first ballot. His fallback strategy is to keep Trump just short of the 1,237 votes needed for victory on the first ballot, and then steal the nomination on the second.
How? Poaching and pilfering. In state after state, he is getting Cruz loyalists elected as Trump delegates. After casting an obligatory vote for Trump on the first ballot, the turncoats will go over the hill and vote for Cruz on the second ballot.
Faithless delegates are preparing to switch to give Ted Cruz a nomination that he could not persuade Republican voters to confer upon him.
Like the 1919 World Series, the fix is in.
The rules are the rules, says Republican National Chairman Reince Priebus in defense of what went down in Colorado and Wyoming.
Priebus is correct. The rules are the rules. But what is also true is that the rules have been and are being manipulated by party elites to frustrate the expressed will of a Republican electorate, and to impose a nominee other then the clear winner of the primaries.
Republican elites are engaged in a conspiracy to frustrate and overturn the democratic decision of the Republican electorate.
Prediction: If Trump sweeps the remaining major primaries, comes to Cleveland with millions more votes than any other candidate, and then has the nomination stolen from him, the Grand Old Party will be committing hara-kiri on worldwide TV.
This political race ranks among the most exciting in American history. Seventeen Republicans entered the lists last summer in what party officials hailed as “the strongest Republican field since 1980.”
Then Trump came down the escalator, took them on, and bested them all. Can Republican Party elites think they will be celebrated if they substitute their wants for the will of the voters?
A Cruz nomination would be like taking the gold medal away from the man who won it, and handing it to a runner-up. The GOP elites would be about as popular as those Olympic boxing judges in South Korea.
The deeper problem here is the refusal of party elites to realize that the world has changed.
The Bush dynasty is done. Jeb Bush, the Prince of Wales, understands this. He will not be going to Cleveland.
The primaries have starkly revealed that a new era is upon us.
Even the neocons, the dominant element among the 121 foreign policy experts who declared in an open letter that they will never work for a President Trump, testify to this.
They see Trump’s victories as a repudiation of their legacy, and a Trump presidency as the end of their post-Cold War ascendancy.
And given the disasters they have produced for America, from Afghanistan to Iraq, Libya and Yemen, the nation would be well rid of them.
Indeed, Trump’s victories, and the energies he has unleashed, are due, not only to his outsized persona but to his issues.
People believe Trump will secure the borders, halt the invasion, embrace tariff and trade policies to reduce imports, and restart the production of goods, Made in the USA, by and for Americans.
In his first inaugural, Woodrow Wilson said, “The success of a party means little except when the Nation is using that party for a large and definite purpose.”
Bush Republicans saw their “large and definite purpose” as creating a “New World Order” and “ending tyranny in our world.”
Trump seems to see repairing, rebuilding and restoring America to greatness as the “large and definite purpose” of the party he would lead. And a new emerging Republican majority seems to agree.
If Trump had been routed, as first expected, then his message could rightly have been regarded as outside the mainstream. But Republican voters rallied to the issues he raised.
To either ignore the clear instructions of its electorate, or renounce their chosen messenger, would be for the Republican Party to forfeit its future, and cling to a discredited and dead past.
The plan at this point, should be to let Trump run under your party’s banner, do little to support him if anything, and hope he loses.
Parties hate to waste an opportunity to capture the Presidency. IMO, their best course of action is to suck it up and support Trump as the nominee enthusiastically supported by the largest block of voters in the party. If they support him, he just might win.
And then what … ?!?
Then we get to read 4 or 8 years worth of complaints from you.
I’ll always find something to complain about, regardless of Trump’s prospective Presidency.
It still amazes me that they thought JEB! would be viable, and actually the favorite to win the nomination. That shows just how out of touch the establishment elites had become. Everybody keeps saying that Trump will destroy the Republicans, but really it was Dubya that destroyed the party and Trump is the fulfillment of that legacy.
A lot of people forget that the Tea Party started as a response to Bush’s bailout of the banks. The news media has always tried to paint the Tea Party as a racist anti-Obama insurgency, but it started before Obama even took office. The Tea Party has continued to grow in power ever since, but everybody is taken by surprise when an insurgent candidate gets the nod for President riding that wave of anger.
Even if the elites roll over and decide it’s better to have Trump than Clinton, they will continue deluding themselves that they merely lost control of the message. They don’t want to conclude the truth that the Republican voters completely reject most of what the elites stand for. The average Republican voter doesn’t care what a “true Conservative” is. They don’t care about the Neo Cons foreign policy ideals. And they don’t care about the elites tax breaks.
Deep down they know why, but they’ll never say why.
It’s much better for the elites if the media labels these “insurgents” as “anti-establishment”.
If the media started talking about all the ways the elite wronged the 99%, then it would be game over for them.
Yep. The spin about losing control is probably more important to their agenda than anything else.
This is a great, long read.
The Secret Shame of Middle-Class Americans
…Part of the reason I hadn’t known is that until fairly recently, economists also didn’t know, or, at the very least, didn’t discuss it. They had unemployment statistics and income differentials and data on net worth, but none of these captured what was happening in households trying to make a go of it week to week, paycheck to paycheck, expense to expense. David Johnson, an economist who studies income and wealth inequality at the University of Michigan, says, “People studied savings and debt. But this concept that people aren’t making ends meet or the idea that if there was a shock, they wouldn’t have the money to pay, that’s definitely a new area of research”—one that’s taken off since the Great Recession. According to Johnson, economists have long theorized that people smooth their consumption over their lifetime, offsetting bad years with good ones—borrowing in the bad, saving in the good. But recent research indicates that when people get some money—a bonus, a tax refund, a small inheritance—they are, in fact, more likely to spend it than to save it. “It could be,” Johnson says, “that people don’t have the money” to save. Many of us, it turns out, are living in a more or less continual state of financial peril. So if you really want to know why there is such deep economic discontent in America today, even when many indicators say the country is heading in the right direction, ask a member of that 47 percent.
MORE
Interesting read. To his credit, he acknowledges the truth. He is not a sympathetic figure to use to illustrate Americans’ financial struggles. He has spent a lifetime making bad choice after bad choice (cashing-out your 401k to pay for your daughter’s wedding?!?). A single unstable income household is the type that should be extremely conservative. They were not.
It’s not just that most Americans are financially illiterate. They also don’t understand basic math. How can you understand compound interest when you don’t understand percentages?
This is where Ramsey does a great service. Daily for three hours, he will smack you in the face and make you acknowledge that you cannot afford everything you want. Choices must be made, and the long term must always be considered.
The author of this article needs to have his, “I’ve had it!” moment. Sell everything in his life, get his wife back in the workforce, and he needs to find additional income sources. There really is no alternative.
Yeah, the wedding and private school were unnecessary luxuries, but having his wife leave the workforce was the fatal blow here. He gripes that wages haven’t risen and that he works 7 days a week, morning til night, but fails to link those issues to the fact that his wife doesn’t work. I get that marriage dynamics can be complicated and he can’t tell her what to do, but he’s still not acknowledging the biggest source of their hardship in the article. Even if her skills are atrophied from being out of the workforce, she’s got to be bright enough to do something if she was once a TV exec.
There were plenty of bad decisions on evidence in the article. Each time the guy had a few pennies to rub together, he seemed to blow it on some extravagance. He had no commitment to saving. And as you noted, when he was finally in a position to get ahead, his wife quits work. Anyone who consistently reduces their income and increases their expenses is in for a tough time.
Fitch: Ability-to-Repay Borrower Claims ‘Nonexistent’
Sorohan, Mike [email protected]
April 20, 2016
Two years after introduction of the Consumer Financial Protection Bureau’s Ability-to-Pay rule, major residential mortgage servicers have yet to see any borrower claims, said Fitch Ratings, New York.
However, Fitch said that could change over time with certain non-Qualified Mortgage loans becoming more commonplace.
The ATR rule came into effect for applications on Jan. 10, 2014 to provide borrowers with greater protection from harmful lending practices. Under the rule, mortgage lenders must make a reasonable effort to determine if a borrower has the ability to repay the mortgage before the loan is made. ATR mandates a repayment analysis for closed-end mortgage loans and prohibits certain loan terms and conditions.
Fitch Managing Director Roelof Slump said the lack of borrower claims to date is not unexpected, noting that most loans, including all Fannie Mae/Freddie Mac-eligible loans, meet the definition of QM and receive safe harbor protection from the ATR rule.
In the non-agency sector, Slump said, few non-QM loans have been securitized to date. Of the more than 10,000 loans included in Fitch-rated newly originated mortgage pools since the start of 2014, only 14 have been classified as non-QM and are thus vulnerable to ATR claims.
“Of the small fraction of loans not eligible for safe harbor, the combination of tight underwriting and a supportive economic environment has kept default rates low,” Slump said.
Fitch said in newly originated Fitch-rated mortgage pools issued since the start of 2014, only three loans are currently more than 60 days delinquent, none non-QM. “Anecdotally, Fitch has been told default rates on non-QM loans that have not been securitized have been very low as well,” Slump said.
Fitch said because it expects ATR claims to generally only occur after a default, lower credit quality or non-appendix Q non-QM loans having a higher default risk may have a higher probability of a successful claim. Fitch is likely to apply increased loss expectations for these loans. Non-QM origination volume for these products, while still limited today, appears to be growing and could become more common in the future.
https://www.mba.org/mba-newslinks/2016/april/mba-newslink-wednesday-4-20-16/residential/fitch-ability-to-repay-borrower-claims-nonexistent
This makes sense given that almost no non-qualified mortgages have been underwritten in the last few years. Personally, I think it’s great that the fear of the inevitable lawsuits is preventing irresponsible lending. It’s a testament to the vision and success of the legislation.
It’s going to be cyclical. You won’t have many claims until the next recession hits and by then it will be too late to “regulate” lender behavior. Most will simply declare bankruptcy when faced with a wave of lawsuits. Starting a new company isn’t all that difficult.
The non-“bank” creditors, i.e. originators, can file BK and start new companies very easily. However, the risk remains with the owner(s) of the note. If they’re insolvent, decreasing the mortgage debt in a judicial proceeding is no different than awarding the same amount in cash.
That sounds unconstitutional to me, so there should be some interesting cases around this.
Assignee liability exists here. Whether the originator is insolvent is immaterial. Whether the owner(s) of the note are, matters.
A BK reorganization or discharge doesn’t necessarily mean creditors (mortgagor who wins an ATR claim in a judicial proceeding) won’t get paid. There’s just a complicated procedure that puts creditors on a priority list. The BK company’s assets will settle its liabilities, and notes are assets.
This is why TPR firms (third party review) are so busy after Dodd-Frank! The assignees want the loans they’re acquiring from the originators (non-bank creditors) to be heavily scrutinized because the assignee is the real fish on the hook.
Is the first domino (re underfunded state pensions debacle) about to fall? …
The pension crisis is brewing and the one state that appears to be heading toward a complete bankruptcy is Illinois. Clients should not own ANY debt from Illinois, be it city, municipal, or state.
Just get out before the curtain falls. The Illinois Constitution plainly states that pension benefits, once granted, “shall not be diminished or impaired.” Thus, taxpayers are absolutely screwed and this is not a place you want to own property.
Governments cannot negotiate to reduce pensions so state workers will be pitted against taxpayers. The Supreme Court has struck down any attempt to reduce liabilities based upon this clause in the Illinois Constitution.
https://www.armstrongeconomics.com/international-news/north_america/americas-current-economy/illinois-on-the-brink-of-bankruptcy/
I wonder how hard it is to change the state’s constitution.
That sounds like the next item on legislator’s agenda in Illinois. They can’t solve their fiscal problems with that provision in the the State Constitution. My guess is they will get flak if they try, but they will get even more flak if they have to raise taxes significantly to cover the cost of these pensions.
How long until it’s California’s turn?
California pension debt worse than acknowledged
http://www.ocregister.com/articles/billion-671195-financial-pension.html
The organization identified $150 billion in unfunded retirement obligations, including $63 billion in pension benefits and $87 billion in retiree health care benefits. But $111 billion of this amount was not reported on the state’s balance sheet, buried, instead, in actuarial schedules
The TIA report, further, found that California has $94 billion in assets to cover $328 billion of liabilities, resulting in a long-term deficit of $235 billion. This translates to about $20,900 per taxpayer
There will be some ugly battles when those bills come due, particularly with the unions for the police, firefighter, and prison guards. They’ve extorted outsized pensions for years, and citizens will be angry about paying some of those bills when the time comes.
I could easily live in a tiny house, given the following conditions:
1. I did not have a wife
2. I did not have 3 (soon to be 4) kids
When I think about it, most of my possessions are relegated to a few small areas: half of a small master bedroom closet, a moderate sized bookshelf, a small media center, and a tool bench. My wife and kids occupy the other 90% of the house.
With little kids it’s almost impossible to avoid having a cluttered existence. My wife and I continually declutter the house with several thrift shop runs every year, but still the possessions continue to grow. Most of it is not stuff that we buy, but gifts from grandparents and others to the kids. People love giving gifts to kids and it’s hard to say no to that without coming off as a bad guy.
On the other hand, if people want to give me stuff (like my in-laws constantly try to do), it’s much easier to say no. For instance, we were offered a tandem kayak for free awhile back and I said no. We didn’t have a good spot to store it and we didn’t have a vehicle to haul it (tandems are very bulky). Basically, it would just take up a lot of space and rarely get used.
Nobody could understand why I didn’t want that kayak, but for a few bucks I could just go down to Huntington Harbor and rent one and avoid all the other hassles involved.
My wife and son occupy 90% of the house as well. My wife is pretty good about keeping the clutter to a minimum. Our garage is nearly empty.
The appeal of a small house depends on the climate, the proximity to parks or other outdoor places, etc. If you are in a mild climate and have an outdoor area with some shade, then a small house would not be awful. In a very cold climate it would be bad because you wouldn’t want to go outside in the bad weather. Same in a very hot climate. I know an “empty nester” couple that built a big house in Colorado. I asked them why they were doing that and the guy said that in So Cal a small house is fine because you can go outside when you want to, sit on the patio, etc. In a cold climate you can’t go outside so much.
I believe the main reason studio apartments work in urban areas is because there is so much to do outside the apartment that the small accommodations aren’t too confining. When an apartment is merely a place to sleep and shower, it’s not so bad.