patrick.net

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.

It has, and will continue to do so. Wit until the 2011 ARMS adjust.

RayAmerica says

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

I turned it off when he has someone else on, so i cant comment on the May 29th show. But Bob has always advocated a market without government involvement like the GSE and crazy spending Congress programs like the Tax Credits. He often stated house purchased should be 20% down fixed loans when it makes financial sense. His sub for this weekend programs is a female journalist and SF resident. As such a heavily biased infavor of buying RE regardless of the consequences.

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.
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.

I agree!

thomas.wong1986 says

turned it off when he has someone else on, so i cant comment on the May 29th show. But Bob has always advocated a market without government involvement like the GSE and crazy spending Congress programs like the Tax Credits. He often stated house purchased should be 20% down fixed loans when it makes financial sense. His sub for this weekend programs is a female journalist and SF resident. As such a heavily biased infavor of buying RE regardless of the consequences.

Exactly right on all points. The sub was a SF journalist that was highly biased towards extending the Tax Credits, etc. She also had the head economist from the National Assoc. of Realtors on to spew his nonsense. Interesting that while he was on, they didn't field any questions from the audience. I had the feeling while listening to it that the program was financed by the real estate industry.

Troy says

No, vote for me. I want to give every American citizen $100,000.

You got my vote for now. Do I hear anyone promising $1,000,000?

Gina says

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.

Your right, there is denial, but it will not be prolonged. The govt may induce higher prices while our private industries will react by moving jobs elsewhere as we have seen over the past 10 years. So either way, prices will decline.