Cash for Clunkers cost $24,000 per car

Edmunds.com has analyzed the car sales numbers during the Cash for Clunkers program and estimated that the marginal cost was $24,000 of our tax dollars for each new car sold:A total of 690,000 new vehicles were sold under the Cash for Clunkers program last summer, but only 125,000 of those were vehicles that would not have been sold anyway, according to an analysis released Wednesday by the automotive Web site Edmunds.com. ...The Cash for Clunkers program gave car buyers rebates of up to $4,500 if they traded in less fuel-efficient vehicles for...

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What does a median-priced house look like?

The median price of a house in the United States is roughly $175,000. Here's what a house at that price looks like in different parts of the count...

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Shoddy construction

Discussing a recent New York Times article about shoddy condo construction during the boom, the Wall Street Journal's "Developments" blog writes:The story about shoddy construction during the boom isn’t just a NYC tale. As M.P. McQueen reported in the Journal this summer, the furious pace of home building from the late 1990s through the first half of this decade contributed to a surge in defects. It caused shortages of both skilled construction workers and quality materials. Many municipalities also fell behind inspecting and certifying new homes.The...

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Government intervention added 5% to home prices

Here's a summary of the analysis from Goldman Sachs:Uncle Sam’s interventions in the housing market have pushed home prices 5% higher on a national average than they would have been otherwise, Goldman Sachs estimates in a report released late Friday. ...But these artificial props won’t last forever and may have created a false bottom in the market. “The risk of renewed home-price declines remains significant,” Goldman economist Alec Phillips writes in the report, “and our working assumption is a further 5% to 10% decline by mid-2010.”Federal government...

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Classic!

I've heard that financial journalists sometimes get jealous of the Wall Street tycoons they cover, but this is ridiculous:Apparently CNNMoney.com staff reporter David Goldman wants his pay cut, too. My advice to Time Warner is go ahead, be generous, give the guy what he wan...

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MarketWatch: Kill the Credit

MarketWatch Washington bureau chief Rex Nutting argues against renewing the first-time home buyer tax credit:The tax credit is an extremely ineffective stimulus, and like the TARP, it mainly rewards the very people who got us into this mess. ... Also, the tax credit gets the economic incentives all wrong. ...The National Association of Realtors says about 2 million new buyers will take advantage of the subsidy this year, but the real-estate lobbying group admits that the vast majority of those buyers would have bought a home without any subsidy.Most...

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HUD unexcited about extending the tax credit

The secretary of the Department of Housing and Urban Development (HUD) appears unexcited about extending the first-time home buyer tax credit:The nation’s top housing official expressed doubt over the need to extend the $8,000 tax credit for first-time home buyers, and said that the Obama administration was reviewing whether the additional cost of extending the credit was worth any benefit in home sales.Shaun Donovan, the secretary of the Department of Housing and Urban Development, told a Senate hearing on Tuesday that there was “clear evidence”...

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The FHA failed a recent audit

Reckless lending practices are part of what got us into the current financial crisis, and the government's response has been...The Federal Housing Administration may be under-equipped to manage its exploding market share, according to an internal audit released last week. The report gave the FHA poor marks for its steps to screen lenders that are allowed to sell loans backed by the federal agency.The FHA’s market share has grown sharply as the private mortgage market collapsed over the past two years, and the FHA now insures around one-quarter...

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Breakin' the law in D.C.!

This is not exactly on topic, but:The Heenes may have violated FAA regulations barring people from flying balloons or kites within 5 miles of an airport, an FAA official said.Has anyone ever noticed the annual kite festival on the National Mall? That's only 2 miles from Reagan National Airport by my measurement. Somebody please arrest the Smithsonian Institution! Have FAA officials never been to D.C.?It turns out that there's a qualification:"…within 5 miles of the boundary of any airport…No person may operate an unshielded moored balloon or kite...

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Fiserv: Home prices to resume decline

Home prices are predicted to fall 11% by mid-2010:If you thought home prices were bottoming out, you may be wrong. They're expected to head a lot lower. ...Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years — though it underestimated the scope.Mark Zandi, chief economist...

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Commercial vs. residential real estate prices

From the CalculatedRisk blog, commercial real estate prices vs. residential real estate prices since 2001:Note that commercial real estate prices aren't getting subsidized via the first-time home buyer tax credit. As far as I'm aware, they don't qualify for FHA loans eith...

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BubbleSpere Roundup

Where the Hell is the Outrage? (Mish's Global Economic Analysis)Will a new law mean better home valuations? (OC Register)Alook at another job market number (Macroblog)U.S. Bank v. Ibanez: More fun with foreclosures (Calculated Ri...

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Lawrence Yun's Arlington condo

Here are photos of the Arlington, Virginia, condominium where Lawrence Yun lives. Lawrence Yun, as you recall, is the chief economist for the National Association of Realtors. He has repeatedly mislead the public by making overly-rosy housing market forecasts. His misleading forecasts are often quoted by the press and presented as coming from an authoritative source.Previously, I have posted a photo of Lawrence Yun's house in Centreville, Virginia,...

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More stimulus, but no more bubbles

Washington Post business columnist Steven Pearlstein gives his recommendations for strengthening the economy:...More money for extended unemployment benefits; more aid to the states so that they can maintain the most vital public services; and more money to expand mass transit, state college and university systems, efficient energy production and basic scientific research. The economist Paul Krugman estimates that for every dollar in extra debt that will be required to finance this fiscal stimulus, about 40 cents will be repaid almost immediately...

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Those dang mortgages!

Gee, I wonder why Ken Lewis announced two weeks ago that he was retiring as CEO of Bank of Ameri...

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A decade after the stock bubble

The Dow Jones Industrial Average has just hit 10,000, which is where it was a decade ago. Likewise, I predict housing prices will be at roughly today's level a decade from now, although the Democratically-controlled Congress seems intent on having another housing bubble in the interim.Things don't look quite so rosy for the S&P 500—a better measure of the stock market—which is below its October 1999 level:But don't worry. Some things have kept...

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What happens in Vegas...

W...

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Unemployment to remain high for years

According to a survey of professional forecasters conducted by the Philadelphia Fed, the unemployment rate is expected to remain abnormally high for at least three more years.When looking at the graph above, keep in mind that from the mid-1990s until 2007, unemployment generally ranged from 4-6%, with NAIRU (essentially the natural rate of unemployment) being about 5%. Furthermore, since 1947 there have only been three times when the unemployment...

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Is Bush to blame for the housing bubble?

I have always been amazed at how people can be blinded by their political affiliation. Far left-wingers often go out of their way to blame Republican politicians for anything they can. Far right-wingers often do the same to Democrats. Often they will have different opinions on similar circumstances based on which party is in power.An example of this political affiliation blindness is the fact that many people on the far left insist on blaming George...

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How to create better financial regulation

From the comments of Saturday's blog post:The trick is to have professional regulators who actually believe in the rule of law. Bush's fox-watching-the-henhouse approach was destined for failure.My response:Lots of people like to blame stuff like this on the opposing political party. For example, note how Republicans like to blame the housing bubble on the Community Reinvestment Act.The truth is that nobody of any political affiliation likes to step in and take away the punchbowl when everyone's partying. Just look at the failure of anyone to do...

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Constructive criticism of Obama's financial regulatory proposals

Fortune magazine asks several economists their opinions about President Obama's financial industry regulatory proposals. Overall, they're not impressed.Prof. Richard Carnell, Fordham University Law School:It places naive faith in regulation. Yet regulation failed disastrously over the past decade. Bank regulators had ample powers to keep banks safe but did too little, too late.Byron Wien, Vice Chairman, Blackstone Advisory Services:There are two areas where I think regulation is needed. The first is bank leverage. The rules are on the books and...

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Way off topic

Not being George W. Bush has its benefits, just ask Jimmy Carter and Al Gore.Now back to your regularly scheduled housing bust...

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Nouriel Roubini still bearish on housing and banks

Nouriel Roubini warns of more downside for real estate and financial markets:U.S. housing prices may still fall more than 10 percent, killing an incipient recovery, as demand from first-time home buyers fades, leading economist Nouriel Roubini said on Thursday.Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said massive losses in commercial real estate loans will add to the problem, forcing banks...

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My thoughts on a second stimulus

Some economists and politicians are advocating a second economic stimulus package. Here are my thoughts on a second stimulus.State governments likely have a better idea than Congress regarding what are high value spending projects within each state. On the whole, pre-existing state spending was likely already going to the highest value projects available. Since state governments are now being forced by circumstances to drastically cut back at a time when Congress's stimulus package is in effect, this suggests that Congress massively misallocated...

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If you have some articles, like Tips and Tweak, Quick fix, and Repair tutorials that you want to share with other people, you can submit it here and your article will be published along with your name.Use the following form to submit your article to us or mail me directly at patolakick@gmail.com Name*Email*Subject*Message*Image VerificationPlease enter the text from the image:[Refresh Image][What's This?]$('body').append('Powered byEMF Email Forms')$(function(){$("#emf-form").validationEngine({validationEventTriggers:"blur",scroll:false});$('.datepicker').datepicker({showOn:...

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Send your Computer and Printer problems hereIf you have computer problem that gives you headache let me know and i will try my best to solve the problem for you as soon as possible. It would be better if you provide as many details of the problem as possible include a screen shot if possible and mail it directly to patolakick@gmail.comName*Email*Subject*Message*Image VerificationPlease enter the text from the image:[Refresh Image][What's This?]$('body').append('Powered...

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Rents falling; vacancies rising

The Wall Street Journal says average rents are falling:Tuesday’s numbers showing that apartment rents still remain soft nationally is good news for renters and would-be renters. Those figures show that the apartment vacancy rate is still climbing, and reaching near record-highs since research firm Reis began its count in 1980.Effective rents, which measure rents after concessions such as one month of free rent, decreased for the fourth straight quarter—that hasn’t happened since Reis began tracking rents quarterly in 2000. At the same time, landlords...

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Ed Glaeser partially blames government for the foreclosure crisis

From Harvard economics professor Edward Glaeser:FEDERAL POLICIES bear some of the blame for the housing bust because they encourage leveraged bets on housing. Yet instead of reconsidering the public incentives that encourage real estate gambling, the federal government seems ready to double down, with another $35 billion in Treasury support for state agencies that subsidize borrowing, and the reauthorization of an $8,000 home buyer’s tax credit. The ship of state would do better to turn around and reduce borrowing subsidies, by lowering the million-dollar...

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Question of the day

The book SuperFreakonomics, co-authored by John Bates Clark Medal–winning economist Steven Levitt, is coming out later this month and will explore numerous interesting questions including:Which adds more value: a pimp or a Realtor?If the question made it into the book, you can probably guess what the answer is.Hat tip: Marginal RevolutionUpdate: It appears there may be problems with the book's global cooling chapt...

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Grrrrr

The Economist says, "Feed the bears":NOBODY loves a party-pooper. When asset prices are going up, most people are inclined to celebrate. The bears who argue that asset prices are about to fall tend to get dismissed as out of touch (dotcom sceptics supposedly “just didn’t get it”) or are likened to stopped clocks: occasionally right, but mostly wrong. If they dare to make money out of their beliefs by selling short (betting on falling prices) when a crisis hits, bears are decried as economic vandals and politicians call for their activities to be...

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More mortgages for financially-questionable borrowers

From The Wall Street Journal, via Cafe Hayek:The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials.The move would further cement the government's role in propping up the housing market even as some lawmakers push to curb spending at a time of rising de...

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You can send me your comment and suggestion through this form. And I would be thankful to you, for any suggestions or advice you give for the improvement of this blog ! Contact FormName*Email*Subject*Message*Image VerificationPlease enter the text from the image:[Refresh Image][What's This?]$('body').append('Powered byEMF Email Forms')$(function(){$("#emf-form").validationEngine({validationEventTriggers:"blur",scroll:false});$('.datepicker').datepicker({showOn:...

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Table of Contents

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