News: Real Estate, Risk, Economics. Sept. 11, 2014

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Table of Contents
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1) Almost all American teens think they'll own homes (an yes, they know what it takes)

2) Mortgage applications plunge to 14-year low

3) History in ruins: Riverfront Mott House a total loss in Sunday fire | Crime | Columbus Ledger Enquirer

4) Gas explosion leads to partial collapse of Fairfield Inn in Lexington | Crime | Kentucky com

5) Robbinsville firefighters battle blaze, bees at house fire | NJ com

6) How China can avoid a hard landing – Forum:Blog Forum:Blog | The World Economic Forum

7) You Missed $1 Trillion Return Agreeing With Fed Naysayers – Bloomberg

8) US foreclosure activity rises for second straight month in August: RealtyTrac

9) CoreLogic Identifies US States at Highest Risk of Property Damage Loss from Natural Hazards

10) Kansas task force: No clear answers as to what's causing quake increase | The Wichita Eagle

11) America's Most Dangerous Volcanoes – Business Insider

12) Make an average $100,000+ flipping homes in these cities – MarketWatch

13) The Biggest Lie of the New Century – Bloomberg View

14) Antonio Fatas on the Global Economy: The Euro crash?

15) Russian demand for US real estate drops | Russia Beyond The Headlines

16) Speculators Go Online Chasing Profits as Home Prices Drop – Bloomberg

17) Could interest rates rise in the wake of a proposed Federal Reserve rule? | Economy Watch

18) A broken Union Jack? and Nomi Prins on the next crisis – YouTube

  1.    Almost all American teens think they'll own homes (an yes, they know what it takes)

    A new survey found that American teens overwhelmingly think that they will be home owners—a far cry from millennials who were much less sanguine about their fortunes in an earlier study.

    The study, conducted for real estate service Better Homes and Gardens Real Estate, found that 97 percent of those ages 13-17 believe they will own a home in the future.

    Add your comment.


  2.    Mortgage applications plunge to 14-year low

    Just a slight trend higher in interest rates was enough to stall both potential home buyers and borrowers looking to refinance their loans.

    Total mortgage application volume fell 7.2 percent last week from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association (MBA). The weekly index is now at its lowest level since December of 2000.
    ..
    …this cohort has had the most trouble participating in the housing recovery, due to tighter credit and weak job and wage growth. Even government-insured loans, which offer lower down payments, are seeing far lower application volumes, down 18 percent from a year ago.

    Add your comment.


  3.    History in ruins: Riverfront Mott House a total loss in Sunday fire | Crime | Columbus Ledger Enquirer

    One of the most historic structures in Columbus [Georgia] was left in ruins Sunday morning as an early morning fire destroyed the Calhoun-Griffin-Mott House on the TSYS downtown riverfront campus.

    Commonly called the Mott House, it was owned by TSYS and at the time of the fire was under a nearly $4 million renovation to put a conference center and boardroom in the structure. The project started almost a year ago and was scheduled to be completed in April 2015. Built in 1841, the house had survived the Civil War and the expansion of riverfront textile mills.

    Add your comment.


  4.    Gas explosion leads to partial collapse of Fairfield Inn in Lexington | Crime | Kentucky.com

    It's very fortunate that no one was seriously hurt or killed thanks largely to the very brave and dedicated actions of the manager and probably others.

    A car hit a gas meter and triggered an explosion that caused part of the Fairfield Inn in Beaumont Centre to collapse Sunday night.

    Parts of three floors sustained heavy damage.

    Although damage to the building was severe, there were no serious injuries, and hotel guests and others on the scene credited a hotel manager who knocked on doors to evacuate the building before the explosion. Two firefighters were taken to the hospital as a precaution after the explosion. Their injuries were not described as serious. An elderly man also reportedly had minor injuries.

    Add your comment.


  5.    Robbinsville firefighters battle blaze, bees at house fire | NJ.com

    We recently heard about people starting fires when trying to get rid of spiders. Now it's bees.

    …the fire spread up the rear exterior of the home, then into the attic. Firefighters had the blaze extinguished within 25 minutes — but not without cost, Schaffener said: about 10 firefighters were treated at the scene for bee stings.

    Schaffener said there were no further injuries and recommended that residents find alternative means to deter outdoor pests.

    Add your comment.


  6.    How China can avoid a hard landing – Forum:Blog Forum:Blog | The World Economic Forum

    Andrew Sheng and Xiao Geng:

    The recently-released Chinese Academy of Social Sciences (CASS) National Balance Sheet Report suggests that China is unlikely to undergo a foreign-exchange or national insolvency crisis. At the end of 2011, the central government's net assets amounted to CN¥87 trillion ($14 trillion), or 192% of GDP, of which CN¥70 trillion comprised equity in state-owned enterprises (SOEs). Moreover, at the end of last year, China's net foreign exchange position totaled $2 trillion — 21% of GDP — with gross foreign exchange reserves totaling just under $4 trillion.

    The concern is China's rapidly increasing domestic debt, which currently stands at 215% of GDP. Since 2008, SOEs and so-called local government financing platforms have been using loans to fund massive fixed-asset investments, while private-sector actors have been borrowing — often from the shadow banking sector — to finance investment in real estate development.

    This excessive dependence on credit stems from the lack of adequate funding and the relative underdevelopment of China's equity markets, with market capitalization amounting to only 23% of GDP, compared to 148% of GDP in the US. The debt held by non-financial enterprises amounts to 113% of GDP in China, compared to 72% in the US and 99% in Japan.

    But, given that the largest enterprises are either state-owned or local-government entities, their debts are essentially domestic sovereign obligations. With China's total government debt/GDP ratio amounting to only 53% — much less than America's 80% and Japan's 226% — there is sufficient space to undertake debt-equity swaps to tackle the internal debt problem.

    It's a strong argument provided the figures are reasonably accurate and the real-estate bubble doesn't represent much more of the economy than the bulls think. We aren't optimistic about either of those things but would be glad to be wrong.

    Add your comment.


  7.    You Missed $1 Trillion Return Agreeing With Fed Naysayers – Bloomberg

    Since the end of 2008, interest-bearing Treasuries of all maturities have returned 14.6 percent, index (SPX) data compiled by Bank of America Merrill Lynch show. That's equal to $1 trillion in price gains and interest from the securities over that span.

    This year alone, longer-dated U.S. bonds have rallied 14.2 percent, beating the 10.2 percent return for the Standard & Poor's 500 Index of American stocks. They have almost tripled the gain in gold, which some investors buy to preserve wealth when they foresee rising costs eroding the dollar's value.

    Add your comment.


  8.    US foreclosure activity rises for second straight month in August: RealtyTrac

    U.S. foreclosure activity jumped in August for the second consecutive month as banks started the process on more properties and scheduled more housing auctions, industry firm RealtyTrac said on Thursday.

    "It's not time to get worried about another tsunami of foreclosures hitting anything close to what we saw back in 2008 to 2010," Daren Blomquist, vice president at RealtyTrac, told Reuters. "However, it is reason to wake up and realize the housing recovery we've seen over the past two years is not as strong as it might have seemed."

    Blomquist said the increase in auctions indicated mortgage servicers were adjusting to the new rules.

    Well, the increase indicates that lenders see the handwriting on the wall that prices aren't going to continue skyrocketing, so they may as well get what they can now.

    Add your comment.


  9.    CoreLogic Identifies US States at Highest Risk of Property Damage Loss from Natural Hazards

    CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled services provider, today [Wednesday, September 10, 2014] released an analysis ranking Florida as the U.S. state with the highest level of comprehensive risk exposure to multiple natural hazards, with Michigan identified as the state with the lowest risk. The analysis was derived from the new CoreLogic Hazard Risk Score (HRS), an analytics tool launched today that gathers data on multiple natural hazard risks and combines them into a single easy-to-use score ranging from 0 to 100. The overall score indicates risk exposure at the individual property and location level.

    For every geocoded location across the U.S, the CoreLogic HRS is compiled using data representing nine natural hazards: flood, wildfire, tornado, storm surge, earthquake, straight-line wind, hurricane wind, hail and sinkhole.

    We'd like to see them also cover:

    • Avalanche
    • Falling object (meteorite, etc.)
    • Freezing
    • Ice storm
    • Insects
    • Landslide
    • Lightning
    • Vermin
    • Volcano
    • Weight of collected rainwater on a roof (likely simply rain volume)
    • Weight of snow or sleet
    • etc.

    What would you add?

    Add your comment.


  10.    Kansas task force: No clear answers as to what's causing quake increase | The Wichita Eagle

    A position statement issued in February 2014 by OGS said it has "long been recognized by scientists" that injecting fluid and withdrawing it as part of oil and gas activities "can trigger earthquakes."

    Kansas officials aren't ready to draw that conclusion for what's happening in this state.

    It is, however, likely only a matter of time.

    Add your comment.


  11.    America's Most Dangerous Volcanoes – Business Insider

    Since we mentioned volcanoes above:

    The United States has 169 active volcanoes — 55 of which are designated as serious threats by the United States Geological Survey's Volcano Hazards Program.

    Of these, 18 are "Very High Threats"— volcanoes that, were they to erupt, could disrupt air travel and threaten people's lives.

    A caveat: this is not a ranking of the volcanoes by their danger level.

    Add your comment.


  12.    Make an average $100,000+ flipping homes in these cities – MarketWatch

    While this is not a landlord-related piece, it does shed light upon local real-estate markets and financial-class differentials.

    …the best measure of where you can still make money flipping homes is the average gross return on investment. By that measure, your best bet is Pittsburgh, where the return on investment is 106%, followed by New Orleans at 76% and Baltimore at 73%.

    Add your comment.


  13.    The Biggest Lie of the New Century – Bloomberg View

    Barry Ritholtz pulls no punches.

    "…next time you hear the claim that 'there were no crimes committed by bankers,' just remember that this may be the biggest lie of the 21st century."

    Add your comment.


  14.    Antonio Fatas on the Global Economy: The Euro crash?

    Antonio Fatas:

    …in the period 2002-2003 Europe was in the middle of a recession with growth rates that were significantly lower than those of the US. Interest rates in Europe were coming down and remained at 2% until the fall of 2005. At the same time, US interest rates were climbing from a low 1% to 5.25% by the summer of 2006. In those years, the dollar not only did not appreciate but instead it depreciated relative to the Euro. In January 2002 the exchange rate was below 0.9 USD/EUR and by 2005 the Euro had climbed to 1.30 USD/EUR.

    Add your comment.


  15.    Russian demand for U.S. real estate drops | Russia Beyond The Headlines

    There's nothing definitive here. The "experts" disagree.

    Add your comment.


  16.    Speculators Go Online Chasing Profits as Home Prices Drop – Bloomberg

    To stem the downturn, 37 of the 46 Chinese cities that imposed limits on home ownership since 2010 to snuff out property flippers have relaxed or scrapped restrictions on the number of apartments one can buy as of Sept. 3. The nation's biggest lenders cut interest rates on first mortgages in Beijing and Shanghai.

    They're expanding the real-estate bubble again.

    Add your comment.


  17.    Could interest rates rise in the wake of a proposed Federal Reserve rule? | Economy Watch

    These are interesting proposals by the Fed. We'll need to keep an eye on them.

    We're not sure yet whether the assumptions are correct.

    Banks may find it more expensive to hold greater reserves in the future as the Federal Reserve plans to change regulations that would encourage large banks to downsize or reduce certain operations. The move would require large banks to have capital ratios of 11.5% or higher, reducing these banks' access to short-term funding.

    The larger requirements for big banks would encourage banks to spin-off or sell certain operations, while also encouraging banks to sell stock and issue less short-term debt.

    Add your comment.


  18.    [190] A broken Union Jack? and Nomi Prins on the next crisis – YouTube

    @ 3:53:

    …Erin sits down with Nomi Prins, author of "All the President's Bankers" and senior fellow at Demos, to talk about the current state of the US financial system. Her view: the derivatives that were at the center of the last crisis are as dangerous as ever. Their complexity and propensity to daisy-chain risk in the financial sector could be catastrophic yet again.

    Add your comment.


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