Housing | timiacono.com

Tyler Cowen of Marginal Revolution notoriety points readers to two CBC News stories about the listing of the cheapest house for sale in the Vancouver market at just under $600,000 and its subsequent sale just two weeks later at almost $50,000 more than the sellers asked.

From the latter, we learn the following:

Vancouver’s cheapest listed single family home attracted large numbers to open houses, with two written offers pushing the final purchase price seven per cent over asking.

The house was the cheapest listing in Vancouver last week.

The price of the 100-year-old, 1,951-square-foot, three-bedroom, detached house at 2622 Clark Dr. was set low initially due to its smaller size and half lot site.

“It’s very rare, and that’s why all the excitement,” said RE/MAX realtor Mary Cleaver.

“I believe this house was, potentially, saved because it is on a different kind of lot, one that isn’t necessarily appealing to builders. So this has been a lovely family home for 100 years and, if well taken care of, could house a family 100 years from today,” she said.

Looking at the house and that lot, the excitement really is perfectly understandable.

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The latest Gallup survey on investment preferences in the U.S. puts real estate ahead of gold and stocks for the first time in at least a few years in yet another example of how most people (at least in the U.S.) simply follow established trends.

Interestingly, those favoring real estate as the best long-term investment rose to as high as 50 percent a decade ago when the prior housing bubble was inflating.

There’s also a breakdown of preferences by income, age, and political party affiliation. Not surprisingly, those with higher incomes favor stocks and real estate over other investment choices and the appeal of gold goes up as income goes down.

By a wide margin, younger Americans think more highly of Savings accounts/CDs than do other age groups, but the most interesting part of this survey (at least to me) was how views toward equity markets change  based on party affiliation. Some 30 percent of Democrats think stocks are the best investment, but only 26 percent of Republicans agree, yet just 19 percent of independents also see it this way.

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The Commerce Department reported(.pdf) that U.S. housing starts rose 2.8 percent last month, from an upwardly revised seasonally adjusted annual rate of 920,000 in February to 946,000 in April, however, this was below the consensus estimate of 955,000 that was expected, at least in part, due to better weather in the spring after a severe winter.

After jumping in February in anticipation of warmer temperatures in most parts of the country, permits for new construction actually declined last month, falling 2.4 percent from a downwardly revised rate of 1,014,000 to 990,000.

Both measures of U.S. homebuilding activity came in below consensus estimates that were a bit higher than they would otherwise have been, working on the assumption that there would be a larger spring bounce than usual, however, that was not to be.

On a year-over-year basis, permits for new construction – a key leading indicator for the industry – rose 11.2 percent, however, housing starts are actually lower than a year ago, down 6.4 percent, in what was the widest contraction in almost three years.

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Shiller on Bubbles and Busts

Rounding out today’s troika of stories on rapidly inflating financial bubbles (that in some parts of the world, for example the U.K., are seen as genuine progress for the economy) comes this Wall Street Journal interview with Nobel Laureate Robert Shiller who talks about the recent history and future of bubbles and busts.

Shiller minces no words in blaming his own (economics) profession, calling it “unnatural” when asked how to explain what we’ve seen in financial markets over the last few decades.

It’s pretty hard to argue with that assessment and it’s laughable to think that some dismal scientists still believe in such folly as “efficient market theory”, “rationale actors”, and the value of economists’ vaunted “models” today given the perverse incentives that are provided on Wall Street and condoned by the Federal Reserve where, once, it was believed that investment banks are “self-regulating”.

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