patrick.net

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

More proof the Homebuyers' Tax Credits were a flop:

http://www.bloomberg.com/apps/news?pid=20601087&sid=adSkz7WCGd0o

RayAmerica says

More proof the Homebuyers’ Tax Credits were a flop:
http://www.bloomberg.com/apps/news?pid=20601087&sid=adSkz7WCGd0o

lol-- you must have a different definition of success than most sane people...

Yup, I saw that too, and laughed.

Tenouncetrout says

CNN.COM had the stones to print that “70%” of real estate is afordable.

CSC says

Yup, I saw that too, and laughed.
Tenouncetrout says

CNN.COM had the stones to print that “70%” of real estate is afordable.

Do you guys disagree with their methodology then?

I am not sure enough of their methodology to say ... but, I am sure enough of their motivation to maintain my doubts. Is that fair?

Bap33 says

I am not sure enough of their methodology to say … but, I am sure enough of their motivation to maintain my doubts. Is that fair?

I completely understand being a skeptic--usually a good thing. But, at some point, real estate will hit bottom and will be affordable. So, I just wouldn't dismiss the article out of hand...

Winter solstice, 2012.

The real estate market will have hit bottom when I can pick up a 3 story house overlooking the marina on Marina Blvd in SF for $1.5M I think that will be in first quarter of 1978. Now all I need is a time machine.

*sarcasm*

All real estate is local. Who cares what is happening in Las Vegas if you are in the market for a brownstone in the Upper East Side of Manhattan. You can't have the banks pull comps from Vegas. It just won't work out that way.

Prices are still falling in Phoenix
Everyone who bought last year is now underwater.
There are many, many empty houses.

I'm not sure there are many cities where there aren't alot of empty houses and apts. If someone tells you so, then you should go and check for yourself.

I wonder if insurance costs will affect rent and payments.
If people make 44,000 and pay 3500, it seems that it will cut into their rent/payment budget.
If they make more they pay more, so pple making 50,000 will have less budget too.
also if we get VAT it will make maintaining a house expensive. Paint costs 50-100 dollars a can in New Zealand and many houses are not painted for years.

alibeamish says

also if we get VAT it will make maintaining a house expensive. Paint costs 50-100 dollars a can in New Zealand and many houses are not painted for years.

There is no VAT tax in NZ. There is a GST (goods and services aka sales tax) tax of 13.5%. Everything is expensive here. NZ is 4 million people (about the size of the Philly metro area) living on 2 islands a very long way from anything (6000 miles Shanghai to Auckland), prices reflect the reality of shipping and handling relatively small quantities (no wall mart type purchasing power) of goods over long distances then distributing them in a sparsely populated country with a very limited road system (there is only 15 miles of divided highway in the entire country). That's 50-100 NZ at .66 NZ to the dollar as of last night by the way.

I've seen very few houses in NZ with poor paint. Houses in my area are mostly very well maintained. What part of NZ do you live in that has so many poorly maintained houses?

RayAmerica says

More proof the Homebuyers’ Tax Credits were a flop:
http://www.bloomberg.com/apps/news?pid=20601087&sid=adSkz7WCGd0o

tatupu70 says

lol– you must have a different definition of success than most sane people…

The only thing the tax credits program did is move up the buying date for buyers that would have purchased in the future. Now that those purchases have been made, what's the result? Predictably, a dramatic drop in sales activity. Also, an "unintended consequence" increased our national debt. When you add it all up, it sums up as just another government boondoggle that passes on more debt to future generations and accomplishes next to nothing.

RayAmerica says

The only thing the tax credits program did is move up the buying date for buyers that would have purchased in the future. Now that those purchases have been made, what’s the result? Predictably, a dramatic drop in sales activity.

Well, you're in the minority there from what I've read on this board. And really, looking at sales data, it's hard to defend your conclusion. The number of sales in the months preceding the tax credits program compared to the sales during the program is pretty dramatic, wouldn't you say? How many months of sales at the pre-credit rate would it have taken to equal what you ended up with? That's pulling ahead a lot of sales...

Ray America may be a minority here on this but IMHO he is perfectly correct here. The $8000 tax credit was horrible policy.

You can't just hand out $8000 to EVERY buyer without it distorting the market (ie supporting high prices).

Until we figure out that high real estate prices are a BAD thing in this country we'll never get our act together.

http://www.calculatedriskblog.com/2010/04/home-tax-credit-costly-failure.html

Congress spent $15B to keep home prices high in 2009 and part of 2010. What a great investment.

Is Ray America really a minority? I certainly agree with him.

Don't get me started on the mortgage interest deduction, LOL.

Troy says

Ray America may be a minority here on this but IMHO he is perfectly correct here. The $8000 tax credit was horrible policy.

I wasn't commenting on whether it was good policy or not--just whether it accomplished its purpose...

tatupu70 says

I wasn’t commenting on whether it was good policy or not–just whether it accomplished its purpose…

Distoration of market prices, a false sense of stability, cover up of mistakes by government programs... ? Why yes! It certainly did that.

same thing cash-for-clunkers did ... it made buyers out of stupid people with no money.

I was listening to Bob Brinker's "Money Talk" program on the radio yesterday. He had a substitute host on that had a "guest" that was advocating ... get this ... that the tax credits for homebuyers be "extended for the next 30 years!" He thinks it's a "wonderful program." Oh, by the way, he might have been slightly biased and self-serving being he owned a mortgage company. LOL

that might work on the local level, but Saudiman wants greenbacks today, gold tomorrow.

Bap33 says

same thing cash-for-clunkers did … it made buyers out of stupid people with no money.

It had the side-benefit of getting polluters and gas guzzlers off the streets; the credit was only good if there was a MPG gain in the replacement.

While not my cup of tea, policywise (destroying the old engines with sand was a bizarre part of the deal), it was a lot better than boosting used-home transactions, which do not involve any element of wealth creation, or reduce the consumption of natural resources.

No, vote for me. I want to give every American citizen $100,000. Illegals get the $50,000 as a reward for their gumption on getting here; speaking as a fellow immigrant, I know how hard it is assimilating in a foreign culture.

You have to be kidding? Give illegals $50,000 for breaking the law? I invite all cultures to this country, just do it legally.