Central Perk: 20 oct. 2013

duminică, 20 octombrie 2013

Mish's Global Economic Trend Analysis

"Bubblicious" High End Flipping Up 350%, Overall Flipping Down 13%

Posted: 20 Oct 2013 09:10 AM PDT

Flipping houses went out of fashion around 2008, along with flip phones and sub-prime mortgages. But real estate data shows the practice is on the upswing — among million-dollar homes.

At the low end, where flipping might actually make some economic sense, flipping is down.

MarketWatch reports House flipping makes a comeback

For the market as a whole, flips of single family homes fell 13% in the third quarter, according to new research from RealtyTrac, with investors earning a gross profit of nearly $55,000 on each property. But at the higher end of the market, homes seem to flip as quickly as a griddle full of hamburgers. Flipping increased 34% among homes worth $750,000 and over, 42% among $1 to $2 million houses, and 350% for properties worth between $2 and $5 million.

Flipping tends to be most common in cities with a large supply of expensive homes. (To qualify as a flip, a home must be purchased and subsequently sold again within six months.) In fact, more than three-quarters of all high-end flipping took place in five markets: The New York metro area and Los Angeles, San Francisco, San Jose and San Diego.

What's behind these quick turnarounds? "Flipping happens when prices are rising rapidly even if price levels are low," says Jed Kolko, chief economist for real-estate firm Trulia.

It's possible to double the value of a home, says Jeff Salgado, a San Francisco-based realtor. Investors could buy a dilapidated home for $1.2 million, invest $600,000 and sell it for $2.4 million, he says. "Our buying community is driven by the biotech and high tech sectors. These people are brilliant at what they do, but a good portion of them don't know the difference between a screwdriver and a hammer."

Bubblicious

When asked to comment, Bernanke replied "It's not a bubble, it's bubblicious". Well ... not quite.

But signs of a bubble are all over the place. And just as in 2000 with the dotcom bust, and 2007 with the real estate bust, the Fed is 100% oblivious of massive bubbles now.

Alternatively, the Fed harbors a "We Just Don't Care" attitude, hoping employment picks up before the stock market, corporate bond market, and housing bubbles burst.

Regardless, bubbles never end well (except for bank executives and corporate insiders who cash out stock options and sell every share on the way up).

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Seth's Blog : The complaining customer doesn't want a refund

The complaining customer doesn't want a refund

He wants a connection, an apology and some understanding. He wants to know why you made him feel stupid or ripped off or disrespected, and why it's not going to happen again.

If you have a department that sends out form letters and refund coupons, what you've done is built the ability, at scale, to get rid of people who are giving you a second chance.

When the refund for the broken M&M's or the artificially flavored nuts that should have been delicious, or the $20 inconvenience fee in exchange for the torture you put a frequent flyer through arrives, you've basically sent a form letter that says, "goodbye."

Which is your choice, of course, but if you think that this expression of goodwill is going to be seen as goodwill, you're wrong.

Try candor or inviting them to an online focus group. Perhaps try being human. Try giving them a chance to be a voice of the concerned, energetic customer, a voice that needs to be heard by people who actually make decisions.