Shaun Donovan Lies About Housing

...referring to the mayor’s plan to create or preserve 165,000 units of lower-priced housing by 2013. “No other single change that we will make, or new policy, will have as broad an impact.”

Except getting rid of rent controls.

Comrade Bloombergs Statism machine rolls on. Him and the rest of them think that affordable housing is the result of legislative fiat. Not that it every worked previously:

The 421-a program, which costs the city hundreds of millions of dollars a year in forgone tax revenue, was begun in the 1970s to spur housing development. Under the program, developers could get a 10- to 15-year exemption from the increase in taxes that resulted from their work...

When the real estate market in Manhattan revived in the 1980s, the program was modified to require developers in central Manhattan to build lower-cost units if they wanted the tax break.

The same initiative failed in the 70's, it failed in the 80's and it will fail again to provide anything but profit opportunities for the politically connected.

Also note the newspeak in the article - "affordable housing advocates" - which seems to be a euphemism for looter

Rent Controls Always Have the Same Result

Mayor Quimby: Are these morons getting dumber or just louder?

Aide: Dumber sir, they won't give up the bear patrol, but they won't pay taxes for it either. Ducking this issue calls for real leadership.

Having a group of economists come to a consensus is not easy. On the issue of rent controls however, there is near universal opinion that they are a bad thing. Besides the people who live in the buildings and NY Times Op-Ed writers its hard to find anyone who thinks they are beneficial.

So it is suprising that the Dutch would rather living in cockroach and rat infested shipping containers then get rid of the horriffic rent control laws in their country.

And these people are supposed to have such a great standard of living? Perhaps its the beatiful scenery of hookers and passed out heroin addicts on the way to the docks to live in a rodent infested box.

``There is a big shortage of housing, and at the same time a resistance to rent liberalization.''

The Dutch don't want to hear about more delays, as waiting lists lengthen and people flood into the city's three container towns.
...
Amsterdam's geography is reinforced by a 1901 law that caps how much landlords can charge. More than 70 percent of leased apartments are rent-controlled and command an average price of about 300 euros a month, or half the rent for those on the open market. Waits to get into the rent protection system can last as long as 26 years as people stay put.

Trading in housing prices reflects pressure, not panic - OC Register Interview

From blogger Jonathan Lansner :

Trading volume the last three months did turn sluggish in response to the S&P/Case-Shiller index more or less flat-lining for the 10 listed cities. The release of the August index (last) week showed some steep decline in the U.S. coastal cities. This should start a renewed round of higher trading volumes.
...
This scenario is telling the market that right now L.A./O.C. is not in meltdown like the East Coast, but under price pressure.

How the State Can Help Poor People Stay That Way

GOP's Baker recommendations would cut off access to the market and make it harder for poor and middleclass investors to compete with the rich.

Hedge funds are innovative tools of finance. The flexibility and lack of regulation they have allow higher returns with less risk. The popularity of these investments and long history of safety speaks for itself. What better way to give the poor and middleclass a chance to get a leg up then by giving them access to the same services that millionaires have? What benefit does the State provide by cutting off voluntary exchange between two adults?

If politicians really wanted to help the poor they would get rid of the regulations that make it hard for them to move up in the first place. A good way to do that would be by letting the hedge funds themselves determine the minimum they would be willing to accept.

Perversely, the regulations put in place to help the poor (or whatever special interest group the political is trying to court) typically end up having the opposite effect of their intentions.

Examples are everywhere: the minimum wage laws that decrease employment opportunities, the rent controls that make housing scarce, the “equal opportunity” laws that turn women and minorities into liability time bombs against their will. The direct beneficiaries fight hard to retain their protected status and since the costs are diffused over a wide group, resistance to these laws is difficult to organize.
When a politician says he is “helping” the poor you can be sure of two things:


1. They will be worse off than before
2. He isn’t writing a check from his personal account

NABH Housing Market Index and the S&P 500 - Pt 2.

Below is an excel file with the data and chart. I added interest rates as a reference.

http://www.nastybrutishandtall.com/nahb%20lagged.xls

Is HedgeStreet out of Housing Options?

That is what this cryptically worded release seems to say, “…HedgeStreet will not list for trading any new NAR variable payout contracts until further notice…”

http://www.cftc.gov/files/submissions/rules/selfcertifications/2006/rul051606hedgestreet002.pdf

Lots of Housing Futures Press

From FT to the New York Times, everyone is talking about hedging the housing market. Will it be enough to make the market liquid and bring retail client? We'll see.

Here is the latest one. http://rismedia.com/index.php/article/articleview/14594/1/1/

It may take years before anyone knows whether housing futures succeed, analysts said.

"There are some contracts that come out of the gate and do very well and gain traction very quickly," said Craig Pirrong, a professor at the University of Houston's Bauer College of Business. "By the nature of the beast, this would likely take time to build."

And the uncertainty is even greater for housing, since it is a market unlike any other the large futures exchanges have tried. Said Srinivasan: "Here, we are in uncharted territory."

Also note the explanations of the basics of futures contracts in the article, clearly this is not aimed at a sophiscated investor.

Shiller Housing Hedges - CME Futures and Options

Seeking Cover if the Prices of Homes Fall

Expect to see many more articles like this when the contract become available for trading. The market is focused on metals now and the foreseeable future, but something like this gives prediction markets mainstream coverage. It may not all be positive writeups:

Many more constituencies would have reason to bet on a decline, however: mortgage lenders guarding against defaults and the prospect of holding foreclosed properties, builders concerned that their homes may fetch lower prices once they are on the market, as well as individual owners. Such lopsided interest could distort pricing, he warned, and furnish windfalls to professionals.

Once the market is established it should have the effect of helping prevent future bubbles. With a the futures contracts available, there is much less reason to buy the underlying if the purpose is speculation.

Time to hit the books: http://www.cme.com/trading/prd/env/housingres17858.html

Housing Hedges Hit The Big Time

Now trading on multiple exchanges, housing hedges are going to be mainstream. Expect to see much more about these contracts in the next year. This is a mention from the news letter of the brilliant Dennis Gartman who has forgotten more about trading than I'll know in a lifetime.

Simply put, the new futures market (which will trade
off-floor on the GLOBEX platform) will trade relative to an
index of property values put together over the past twenty
years by Professors "Chip" Case of Wellsely College and
Robert Schiller of Yale, known until earlier this week as the
Case-Shiller Home Price Index. Henceforth, however, with
the endorsement of Standard and Poors, the Index shall be
known as the S&P Case-Shiller Index. What Professors
Case and Shiller have done is measure, to the best of their
ability of the years, actual sales of houses in ten major
metropolitan market: Boston; Chicago; Denver; Las Vegas;
Los Angeles; Miami; New York; San Diego; San Francisco
and Washington D.C. [Ed. Note: Please, do not ask us
why the professors chose those markets, and why the
South seems to us to have been left out; and please do not
ask us any of the particulars of the markets chosen. Those
questions can be answered best by the CME's marketing
people.]. There will be a composite index upon which a
futures contract will trade, and there will be ten individual
futures markets on the component geographies involved.
The "spread" trading possibilities are obviously myriad.