President's Day - Celebrate America (Foreigners certainly are!)

Wish we had a four day week here in HK.  But I wish for lots of things.  Speaking of,  one very lucky 22 year old Russian girl was gifted a U$88m Central Park West penthouse ( the most expensive home in New York).  I think I got a Banana Republic sweater and dined at TGIF for my 22^nd. Anyway I’m just jealous - lucky lucky lady! In other rants, UUGH- Brazilians get all the breaks!!  Ridiculous Gisele-like genes and Brazil recently overtook the UK to become the sixth-largest economy in the world.   Some potentially bad news for single NY women here (as if Manhattan men weren’t already spoiled-for-choice), Brazilians now binging on Manhattan (and Miami) real estate. 

What's all the fuss about American real estate? Wasn't it just recently when US housing was imploding?   Well, things are changing fast with some of the BIGGEST US Housing haters now saying ‘Beg/Borrow/Steal- Buy US homes now!’  John Paulson/ Marc Faber/ John Talbott and even Greg Lippman (from ‘The Big Short’) to name some of the more notable guys.  To put this in context – these guys were among the most outspoken ‘US Housing is Screwed’ prophets – so their conversion would be on par with Marilyn Manson finding the Lord.

Why do I side with the newly converted?  Record low mortgage rates (30 year FIXED sub 4%); tight inventory after a three year drought in building (2009 was actually the lowest since record-keeping began in 1959);  more affordability relative to income (means it will no longer take 95% of your paycheck and 100 years to pay back your mortgage) and things are simply cheap.    Quoting Lippman ‘many cities across the country are now selling for as little as $60 to $70 a square foot….a 50% to 65% discount to the costs you would incur if you tried to build a similar home today in these cities.’  Basically means even if you physically chopped up trees and built that house yourself (which we would never unless maybe it was with Ryan Gosling in the Notebook),  it still doesn't get cheaper. 

Meanwhile the Obama administration is working its butt-off to support the housing market (and of course get re-elected).  Obama’s Heal Housing Plan includes plans to allow home-owners to refinance at record low rates as well as a government supported Real-Estate Owned (REO) pilot.  This is basically a government supported plan to sell foreclosed homes to investors who in-turn promise to rent them back to the occupants. You see, as a home-owner you want an abandoned house (or foreclosed seller) on your street about as badly as you want a meth lab.  And this solution would hopefully help stop people from just going MIA.  Indeed still lots of skeptics (particularly Republicans) but foreigners seem to need far less convincing.  Well-tanned foreigners now account for more than 65% of all condo and home sales in Miami. At this rate, loud-mouthed Americans better brush up on their Portuguese.