patrick.net

sybrib says

Ray,
If realestate is up 100% in Oklahoma but down 50% in Oakland or Stuyvesant Village, just what do you mean?

Pockets of unusual activity have always existed in every real estate market, often between various neighborhoods, streets, etc. within the same city. I'm looking for the general, collective market bottom where it statistically states and the general consensus confirms that buying a home is again considered to be a sound investment (generally) due to reasonable expectations of future appreciation. The expectations now are basically negative, of course there are exceptions in various local markets. Again, I'm looking for the general, overall expectation of when the bottom will hit and why.

camping says

What’s the point? There is no “national” house. If nationwide prices hit bottom, but in your local market prices have already gone up 20% or are still falling, why do you care about what the nation as a whole is doing?

The bean counters do this thing, they take a look at the actual selling price of houses. Then they add these all up and average them together. It gives us an average sale price of a home in a given area. Lets call this area "The United States of America." Then they can record these average sale prices over a period of time and make a chart or graph depicting trend lines. The trend goes up and down. Following a housing bubble there is usually a "bottom."

Unless I am mistaken Ray asked a simple question.

I don't think get it. One underwater house in Cool and Hip Bay Area could cancel out ten more equivalent properties in equivalent neighborhoods in Oklahoma City.

One apartment complex called Stuyvesant Town in NYC could probably cancel out an entire county of properties in the black in Oklahoma.

Probably the overall magnitude in dollars or other units of capital is what really matters.

AdHominem says

why do you care about what the nation as a whole is doing?

sounds to me like a great argument for limited national government with more powerful state and local authority.

AdHominem says

AdHominem says

why do you care about what the nation as a whole is doing?

sounds to me like a great argument for limited national government with more powerful state and local authority.

lol--what doesn't sound like a great argument for limited national government to you?

The point of mine and others' posts is that a national price is basically meaningless to anyone thinking of buying a home. CA, NV, AZ, FL distort the national data so much that it renders it useless to someone looking for a house in IL or NH. Why would someone in the Northeast care if prices are still falling in Phoenix or in LA or in Miami? It has no bearing on the price of a house in Boston.

All real estate is local, almost down to the neighborhood. Ray, it's like you are asking if it will be snowing or sunny in America tomorrow.

what is the temp of the ocean

2015 at the earliest.

tatupu70 says

Why would someone in the Northeast care if prices are still falling in Phoenix or in LA or in Miami? It has no bearing on the price of a house in Boston.

I would guess that Ray was looking for a straight answer for philosophical/conversational reasons rather than investment advice.

tatupu70 says

what doesn’t sound like a great argument for limited national government to you?

not much

Yes but the Banks That "own " The loans are not local.

Danimal says

Yes but the Banks That “own ” The loans are not local.

So what you are saying is that a housing bubble in a few localized areas caused a national crisis? Hmmm.

Too bad Ben and the Maestro didn't see that coming (or so they say).

what was that federal program that BFrank and his boyfriend drempt up that mandated those "national" banks make loans in particular LOCALS? Cant seen to recall the name ... three letters I think .. hmmm ... darn it, what was it again .... lol

I forgot to add, it could be 2011 recovery if we GET THOSE DOZERS ROLLING! Ya gotta plow under millions of excess housing inventory, and keep them rolling until the last Baby Boomer has moved out of their rambling McMansion into the old folks home. Inventory bipping up again, ROLLING ROLLIN ROLLIN!

I estimate this would keep the Caterpillar company in great shape for at least 5 years.

2013-2015 in California. Most people here are still in denial about the value of their grossly over inflated property value. Some areas in the Central Valley and Southern Cal are coming close, but the Bay area has maintained somewhat, but 2010 and 2011 will be horrific times if the government doesn't intervene. If they do, it will pro-long the inevitable housing value corrections forthcoming to Nthe Bay area.

when everyone believes housing has crashed and the price will not back to 06 level, it is the bottom.

right now, some many owners are hanging and hoping the price will come back soon.

and, the banks are not unloading their inventory. tons of houses have been listed for month and years with the "day dreaming" price

2020

LandShark is right.
Greedy, stupid, dreamer, LoanOwners are holding hands in a circle with the REpukes and praying for those 2003-2007 prices. They are tossing money into a pit called RELobby. The media, politicos, and bankers all feed at the pit.

All the while, bitter renters like me stand off in the distance, point at them, and laugh like Boris Karlof.

In unrelated stories from Patrick's front page:

http://latimesblogs.latimes.com/money_co/2010/02/mortgages-sour-at-increasing-rate.html?source=patrick.net

"The rate of homeowners falling behind on mortgage payments surged unexpectedly in the fourth quarter, with home loans 60 or more days past due reaching 6.9% of all home loans nationally, 11.0% in California and a whopping 18.5% in Riverside County, according to a study released Tuesday by credit reporting firm TransUnion."

http://www.latimes.com/business/la-fi-mortgage-mods17-2010feb17,0,7573498.story?source=patrick.net

"As of December, 11.4% of California homeowners were 90 days or more late on their loans, according to First American CoreLogic, a Santa Ana real estate data firm. That compares with a delinquency rate of 8.4% nationwide."

Landru3000 says

All real estate is local, almost down to the neighborhood. Ray, it’s like you are asking if it will be snowing or sunny in America tomorrow.

No it's not, and THAT, is the fundamental problem in South Florida.
People with a 1200 sq ft 3 bed room shit hole in a lower middle class suburb on the west side of 95, are demanding the same price of a house East of US1.

The houses east of US1 do command 250-450K, they are blocks from the beach, streets are lined with 60 foot tall royal palms, and they have private Alley access.
Where as any house west of 95 are only 5 blocks from the most down trodden distressed neighborhoods, with dirt lots and box shot gun shacks.

Just because some 30 years ago, decided to build a 2100 sq ft house in a neighborhood of typical 1300 sq ft 3 br houses and even more 900 sq ft 2 br houses, doesn't make that 2100 footer worth the money that it would be worth if in a neighborhood of typical 2100 sq ft houses.

Take this house for example

http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?source=SEFMLS&cKey=d9tdb52q&listing_num=F1055588&mls=mls_miami

284? sure in Hollywood lakes, this house isn't even situated in Hollywood Hills.
And if you go to the Satalite view on the map, you'll see, just one block away is a warehouse district, that has typically been shared with the "Walefare" state crowd, rental units. If you park a car on 56 and Washington over night, it will just be metal frame the next morning.

http://www.bcpa.net/RecInfo.asp?URL_Folio=514207120250

This person paid 64K in '77, the 2009 taxes aprasied it at 210K, YET! this idiot claims in the MLS listing...
"not a "short sale or foreclosure", just a realistic seller ready to sell!"

Yeah about as "REALISTIC" as anyone claiming that all Real estate is local right now.

It has been what "Should have been the bottom" for many cities. The problem is, due to all of the fudging of numbers, price fixing measures by local governments, federal governments and the REA active interference of the free markets, will cause an "OVER CORRECTION" of those cities, towns or subburbs that have already fallen in line with a good historic price. With inflation adjustments factored in from 1999 to now that negates the last decade of growth, while allowing for proper 3% YOY growth from 1999.

Those homes will be less desirable as the last hold outs hopping for a miracle return of exuberant investors, abaindon this non sense and their prices start to fall in line. Will trickle those already down even lower, to make room in that price demographic for the hold outs.

It seems RE has bottomed, but really there are a lot of DOG properties filling the 150K-220K that have no business even listing over 120K.

But don't take my word for it, I'm hardly ever right. }:-}

I heard on NPR this morning, that in So Fla, 99% of the Foreclosures aren't even on the market. This was from the spouse of an RE attorney.

I can wait, INCOMING!

I can see some value in a high level view of the housing market.
For one thing, the Fed would start to put away the bazooka. It is just one metric.
Some folks here focused on the BA like it is the crown jewel.
For me, BA is like a freak show that has little connection outside of 50 mile radius.
Even my own city, it isn’t a good time to invest in rentals despite some bargains being under cost to build. That’s just my own view, I own rentals since 1987.
It gets old to be a landlord, dealing with other people’s problems. My houses are cash flowing positive but costs are rising faster than rent.
Reality is, eventually you will rent to the Adam’s family and it is a nightmare until they are evicted, separate you from thousands of dollars.
A national bottom would be useful as one indicator of entry to REITs.
I made good, effortless money in 2003-2005 in REITs. They are liquid and don’t need 6 months, a ton of work and expensive parasites to be paid off to liquidate.
The financial world is drastically altered, harder for the little guy. There are few long term trades when the market is run by hucksters, front runners that make money by manipulation of the markets. To counter that on a personal level, I need to be quick.
When the big boys move, my money must go with them, to anywhere in the world. And brick and mortar houses are SLOW money.

kt says

I can see some value in a high level view of the housing market.

For one thing, the Fed would start to put away the bazooka. It is just one metric.

Some folks here focused on the BA like it is the crown jewel.

For me, BA is like a freak show that has little connection outside of 50 mile radius.

Even my own city, it isn’t a good time to invest in rentals despite some bargains being under cost to build. That’s just my own view, I own rentals since 1987.

It gets old to be a landlord, dealing with other people’s problems. My houses are cash flowing positive but costs are rising faster than rent.

Reality is, eventually you will rent to the Adam’s family and it is a nightmare until they are evicted, separate you from thousands of dollars.

A national bottom would be useful as one indicator of entry to REITs.

I made good, effortless money in 2003-2005 in REITs. They are liquid and don’t need 6 months, a ton of work and expensive parasites to be paid off to liquidate.

The financial world is drastically altered, harder for the little guy. There are few long term trades when the market is run by hucksters, front runners that make money by manipulation of the markets. To counter that on a personal level, I need to be quick.

When the big boys move, my money must go with them, to anywhere in the world. And brick and mortar houses are SLOW money.

You just explained why I don't invest in this market. I'd rather take my chances in Vegas, at least they put up and feed losers. Or is that the Government that does that?

Now I'm confused, who's running thins again?

Guess I'm perplexed why housing would be such an important indicator of the health of the nation. Was our country healthy in 2006? Sure looked like it if you just went by the housing prices.

2013-2015 at the earliest.

"Was our country healthy in 2006? "

Absolutely not!

I was having mental wedgies on a daily basis.
I was fare more concerned about my kids future than how many cart loads of crap I could buy at the Big Box store. At that rate by the time most high school kids would have been at the home buying age, a house would have started at a Million dollars.

If that's healthy, then good Lord where are we headed next?

Tenouncetrout says

“Was our country healthy in 2006? ”
Absolutely not!
I was having mental wedgies on a daily basis.

I was fare more concerned about my kids future than how many cart loads of crap I could buy at the Big Box store. At that rate by the time most high school kids would have been at the home buying age, a house would have started at a Million dollars.
If that’s healthy, then good Lord where are we headed next?

That's my point. Many, except you, I and a 'few' others who were screaming 'OMG!', thought USA was on the road to riches, and that everything was fine and dandy. I mean, just LOOK at my home equity;O)

That's why I think looking for bottom, predicting bottom is just one of MANY indicators of economic/national well being.

But to play along...my prediction, another ugly dip starting now w/ a severe hemorrhage beginning in May (something about the $8K credit and the fed termination in buying toxic assets) leveling out in Novemberish 2010 and sliding along bottom for 2 years. Gotta have jobs to pay the mortgage but with prices so low folks will start to accept the new American way: single income households, 10 year old cars and vacations at Wolf Lodge, Busch Gardens, 6 Flags, if your lucky otherwise just a weekend at the lake in a tent.

It is hard to predict the timing and the possibility of double dip as an ordinary guy, so I'd better not talk about it. But something is bothering me when I think about things happened in US stock market this week, Obama on the TV and what Burnanke said... Looks like they are cheating altogether for something though, who knows... anyways...

Leigh says

Gotta have jobs to pay the mortgage but with prices so low folks will start to accept the new American way: single income households, 10 year old cars and vacations at Wolf Lodge, Busch Gardens, 6 Flags, if your lucky otherwise just a weekend at the lake in a tent.

The wife and I am already doing what you called "new american way" for years, so what should we do if it hits the bottom whenever it is? :)

AdHominem says

The bean counters do this thing, they take a look at the actual selling price of houses. Then they add these all up and average them together. It gives us an average sale price of a home in a given area. Lets call this area “The United States of America.”

No we bean counters do not roll up and average anything. Its the opposite we segregate out and provide detail analysis by component/element which provides relevant data for end user.

"The wife and I am already doing what you called “new american way” for years, so what should we do if it hits the bottom whenever it is? "

My husband got nailed a couple of times during the tech bust of ~1999-2001 so we've been living like we only have one income due to the instability of his temp jobs, part time jobs and career change/school. I'm a FT RN making decent money though we have the expense of two toddlers. So to watch folks live soooo far beyond their means these last 5-7 years has been so painful. I do wonder if we would have seen all the writing on the wall if my spouse was still making the big bucks in hi tech. Would we have been too busy enjoying the $$$ to care? I would like to think not but it's hard to say. What hardship we hard early in our adult lives has been a wonderful lesson to use the next 40 years. We sold just before the Portland peak but I do worry about having too much fear and analysis paralysis as we go forward. I'm just an RN, not a financial guru. I don't understand half the stuff I read on sites like Calculated Risk or Roubini's blog. And I have a hard time grasping inflation and how to overcome it.

Leigh says

So to watch folks live soooo far beyond their means these last 5-7 years has been so painful. I do wonder if we would have seen all the writing on the wall if my spouse was still making the big bucks in hi tech.

There are a lot of people being displaced in HT as well. Its nothing new to some like me who saw the 86-91, 1999-2001 tech bust, and current downturn due to recession. The higher up the latter you were in HT the harder to get a new job, but also there is plenty of staffers who are seeing their jobs vanish. Your right this will provide a lesson as you live out your lives. Keep your spirit high and good luck!

Leigh, what you've been thru is unfortunate, but very precious lession.
That's what happened to me too. Thanks to the wife who has stable job, frugal and full of heart, we're able to get back on the track in couple years. I owe her my life's worth of debt, and I will try to repay her as long as I can. Doesn't matter you understand financial mumbo-jumbos or not. You learned your lession, you can appreciate what is there with you, and you can support your family in hard times. So be proud of yourself, hang in there, keep your chin up because you're worth it.

***
Seeing -94 points already in DOW pre-market, what Burnanke said, and depending on how asian and european market will repond next week... it will be interesting.

Leigh says

Guess I’m perplexed why housing would be such an important indicator of the health of the nation. Was our country healthy in 2006? Sure looked like it if you just went by the housing prices.

It's important because as a "market," real estate (commercial & residential) swamps all other markets. If real estate prices continue to deflate, that directly effects banks, etc. and has a huge impact on the new construction and home improvement market. Deflating residential real estate also happens to be, for most Americans, their largest financial investment. When prices deflate, they feel poorer which translates into less confidence and has a direct impact on their spending habits, which has negative consequences for lasting economic recovery.

RayAmerica says

Guess I’m perplexed why housing would be such an important indicator of the health of the nation. Was our country healthy in 2006?

Appearances can be extremely misleading. Take the year 1928 for example. Everything "looked" great. The business community commonly made claims that there was "no reason why everyone can't be rich." Common every day people were making money in the stock market, etc. However, few noticed that many people purchased their stocks on margin (borrowed money) and their prosperity was shared with their “partners” the banks. As long as the stock market continued to rise, the banks had no problem lending out more. When stocks took a huge tumble in 1929, the banks called in their margin loans which further fueled the plunge in stocks. The smoke and mirrors appearance of prosperity was fully exposed by the Great Depression. The recent real estate crash has exposed our era as another phony prosperity. In my opinion, we won’t see prosperity as a nation again until this real estate mess is cleaned up.

When anything housing is most hated topic, then the bottom is in.
When Patrick gives up the Crash site and moves on.
When the government stop throwing borrowed money to rescue the debtors.
Even then, it will flat line for years in the US, no need to hurry.
Looks like a game of stalling. They trumpet a new program like HAMP, knowing it will take 12 months before we lose interest. Then the next program is waved in front of us. Nevada is getting $1.5B love today. Maybe CA is deemed TBTF so Obama is greasing the skids for states bailout. Wash and repeat, sooner or later the market fixes the problems. We will declare victory.
The issue for me is, there is too much unkowns to lock-in to anything. I care more about the return of my money. Too many shoes to drop on housing for my taste.
To those that thinks this is a great time to buy, I truly hope you're right.

RayAmerica says

tatupu70 says

Camping is correct. There is no national real estate market–all real estate is local.

Using your logic, if your local Ford dealer is having a bad year, does that mean Ford nationally is too?

Yeah, I notice when there's a shortage people start shipping their homes to high-demand areas.

zzyzzx says

2013-2015 at the earliest.

That's about right. Maybe longer.

When rent and purchase price reach a reasonable parity.

Determining "reasonable" is the hard part. It's easy to determine it isn't "reasonable" for mid-high where I live.

When it gets there I'll let you know =D

After their real estate bubble burst 20 years ago, Japan is still in a real estate slump. Yikes.

Things sure aren't looking up. So much for the "dead cat bounce" we got from the Homebuyers' Tax Credit programs. Like all Keynesian stimulus programs they end in a thud.

http://www.zerohedge.com/article/hard-truth-about-residential-real-estate?source=patrick.net#main