patrick.net

Actually, affordability is relative. And buying a property in Woodstock, GA or Gallatin, TN (both nice areas w/quality living) may not offer much of a future return. Off the beaten path towns like these also realized over-building. Many have higher-than-average unemployment rates, and lost industry, possibly making recovery more difficult than the BA.

Not to worry. Real estate agents are working hard to help the situation by stabilizing prices through the implementation of highly skilled and professional sales techniques. Occasionally, buyers need a slight "push" in order to get them to make a decision that is in their best interests. This little "push" helps everyone, including sellers. In the end, we all win.

http://www.youtube.com/watch?v=_tnDdCWusOU

Just wait a couple of months - here are some spots where you can buy at:

http://finance.yahoo.com/family-home/article/110374/22-cities-in-danger-of-a-double-dip-recession

Realtors must be salivating at all those "buyers markets" being created, just keep pushing.

Sales may be down, but inventory is still trickling out. With their hands in the taxpayer's pockets, the big banks can wait a lot long than the rest of us. Count on supply being restricted for the forseeable future.

Why do you think we just experienced a mini-bubble, but none of the banks took the opportunity to dump all their properties? It would have been in any one banks interest to take advantage of the last selling opportunity likely to come in 5-10 years, wouldn't it? They're working together. Count on total frustration until something changes in Washington, where the big banks are being protected.

"It would have been in any one banks interest to take advantage of the last selling opportunity likely to come in 5-10 years, wouldn’t it?"

While the banks are stuck with growing inventories of distress and strategic foreclosures and bad loan buy-backs, they are also tightening loan qualifications on already uninterested buyers. They didn't release them because there are no buyers and no advantage gained from diluting performing home mortgages. BofA plops a foreclosure on my street at $50 less a sqft than mine...I'm quickly refinancing with anyone but them.

The banks are in pure shock. Any home "occupant" with a mortgage lein can hand the asset back to them. The banks own 100% of this mess and they're doing anything they can before the public wises up and bolts from a dead investment. Putting the homes back on the market will just decrease the values of "their" homes more. Yes, even your home is their home until it's paid off....and they don't trust that you'll put them above your kid's college fund.

If you bought a rock for $30 cash and its value plummets to $12, you're screwed.

If you financed a home for $500,000 and its value plummets to $225,000, given no lender recourse for deficiency judgments or tax consequences, the bank is screwed. Happy Birthday!

Common Sense says

If you bought a rock for $30 cash and its value plummets to $12, you’re screwed.
If you financed a home for $500,000 and its value plummets to $225,000, given no lender recourse for deficiency judgments or tax consequences, the bank is screwed. Happy Birthday!

that's a poor analogy. Better is to say if you borrowed $500k and bought stock. Then if it dropped by 50%, you can declare bankruptcy.

Unless I had taken a short-position on that stock. But wait...I was talking about our little housing problem?

But don't think there's not a huge wave of bankruptcies coming down the pike in recourse states. Let's see...carry this $200,000 in negative equity and write a check for it when I must sell or flush it without being fearful of the Jr lein coming after me later on. HAMP, HAFA, Mortgagee Letter...it's a way to divert owner's attention away from their losses while the administration and the banks try to figure how you can be both upside down and happy at the same time.

The sun is hot, Megan is a Foxx and someone is going to taking the ocean of lost value. It's either going to be the homeowner, the bank, or God forbid..the taxpayer.

Common Sense says

Unless I had taken a short-position on that stock. But wait…I was talking about our little housing problem?

exactly--just wanted to show the error in your thinking...

Common Sense says

But don’t think there’s not a huge wave of bankruptcies coming down the pike in recourse states. Let’s see…carry this $200,000 in negative equity and write a check for it when I must sell or flush it without being fearful of the Jr lein coming after me later on. HAMP, HAFA, Mortgagee Letter…it’s a way to divert owner’s attention away from their losses while the administration and the banks try to figure how you can be both upside down and happy at the same time.

keep in mind that the vast majority of largely upside down homeowners are in 4 states--florida, Nevada, California, and Arizona. Not sure if any of those are recourse...

tatupu...I love feedback. And where is the error in my thinking? I simply offered an example of what many homeowners are doing relative to being upside down in a non-recourse state and having tax relief if they lose their primary home to foreclosure. The bank takes it and they are clean.

Yet, your introduction of an off-topic stock purchase exposed an error in my thinking?

"keep in mind that the vast majority of largely upside down homeowners are in 4 states–florida, Nevada, California, and Arizona."

Yep, those were the problem children but all are also ghosts of Christmas future. If you think appraisers across this great land aren't scrambling daily with comps to support a contract's sale price, you're hugely mistaken. Short-sales are the comps with foreclosures coming soon. It's a national problem.

Like a Bowery bum when he finally understands, the bottle's empty and there's nothing left - Your Latest Trick, Dire Straits

Common Sense says

tatupu…I love feedback. And where is the error in my thinking? I simply offered an example of what many homeowners are doing relative to being upside down in a non-recourse state and having tax relief if they lose their primary home to foreclosure. The bank takes it and they are clean.
Yet, your introduction of an off-topic stock purchase exposed an error in my thinking?

Sorry--I read your post talking about a buying a rock and thought it said stock. I was just trying to illustrate that it wasn't an apples to apples comparison because one asset was purchased with cash and one with borrowed money.

Common Sense says

Yep, those were the problem children but all are also ghosts of Christmas future. If you think appraisers across this great land aren’t scrambling daily with comps to support a contract’s sale price, you’re hugely mistaken. Short-sales are the comps with foreclosures coming soon. It’s a national problem

I'm not so sure. All real estate is local as they say. There are many, many places where the bubble didn't really inflate very much and option ARMS or neg. amortization loans weren't used.

Ah, that makes sense. :) I used rock relative to housing values because they just both seem to sink at the same speed nowadays, don't ya know.

True, all realm estate is local. The temperature of the ocean off the coast of Florida isn't going to be the same as off the coast of Ireland. However...you currently have more factors than just supply/demand at work here. Sanding a few slightly oversupplied areas with a wrecking ball would be easy. But overall, there's no confidence in this administration and the threat to people's future discretionary income. We also have unemployment numbers that will most certainly remain high as long as the aforementioned threat occupies the White House. Corporations are hoarding their cash as not only a safety measure but also revenge for the voter's anti-Capitalist choice. You also have more and more people with damaged credit and those who simply are scared to get into the same problem they just emerged from. These are all national, not local. And these are most certainly going to continue chipping away at home values given inversely related supply-up/demand-down.

Common Sense says

True, all realm estate is local. The temperature of the ocean off the coast of Florida isn’t going to be the same as off the coast of Ireland. However…you currently have more factors than just supply/demand at work here. Sanding a few slightly oversupplied areas with a wrecking ball would be easy. But overall, there’s no confidence in this administration and the threat to people’s future discretionary income. We also have unemployment numbers that will most certainly remain high as long as the aforementioned threat occupies the White House. Corporations are hoarding their cash as not only a safety measure but also revenge for the voter’s anti-Capitalist choice. You also have more and more people with damaged credit and those who simply are scared to get into the same problem they just emerged from. These are all national, not local. And these are most certainly going to continue chipping away at home values given inversely related supply-up/demand-down.

I agree that unemployment is high and that has a negative effect on home prices. Not sure how you blame that on the current administration, however. Clearly it is a product of the previous one. And corporations don't make decisions to get back at voters--hopefully you were kidding there.

And keep in mind that home prices ultimately depend on supply and demand. People who were foreclosed will now rent the houses instead of owning them. It's a no net change in the supply and demand equation. Areas that were overbuilt will see price drops. But, like I said earlier, those areas are highly concentrated in Arizona, Florida, Nevada, and inland empire of California. So, I don't agree that those issues are national.

tatupu70 says

There are many, many places where the bubble didn’t really inflate very much

Where? There are towns in far, outstate Minnesota with fewer than 1,000 people that had a housing bubble.

Find Avon, MN on a map, for example. The little hamlet of like 1100 or so had developers come in and build neighborhoods designed for 600+ HOMES.

Those developments are completely empty - some of them have one completed house in them! It looks hilarious.

Detroit metro area - it's DETROIT for goodness sake - place is a CRAPHOLE, yet the metro area in the early 2000s was actually sprawling/booming because of all the easy-money crapola loans - IN DETROIT!

There is this ridiculous notion that the coasts experienced a housing bubble while the fly-over states did not. DREAM ON!

I blamed confidence, threat and revenge, not the administration directly. Reactions are sometimes far more damaging than initial actions. With 60% to 70% of the country firmly against just about everything coming out of Washington right now, The Law of Unintended Consequences is surely going to affect us all. Regarding the rentals creating equilibrium...who will be the owners/landlords? Right now there's 7 million, and growing, orphaned homes that the owners don't want and the banks won't put on the market. Some estimate this number to top 20 million if values continue to decrease while, of course, stategic foreclosures increase. I know the rest of the country...values are regressing everywhere. Trust me.

schmitz_kris says

There is this ridiculous notion that the coasts experienced a housing bubble while the fly-over states did not. DREAM ON!

No need to dream. There are readily available statistics to demonstrate it. Certainly there are areas outside of those four states where prices went up too high, but in general, it wasn't like on the coasts.

Sorry to burst your bubble (no pun intended) but one anecdotal example of Fort Avon, MN doesn't prove your point...

Common Sense says

Trust me.

I'm sure you're a very trustworthy fellow, but I tend to follow numbers and statistics over opinions.

"And corporations don’t make decisions to get back at voters–hopefully you were kidding there."

The revenge part was for drama but hovering at low profit margins because of a clear and present danger to higher earnings makes sense given the current government spending. As the tale was told to me, 3 out of 4 CEOs shot one across our bow during the primaries proclaiming an Obama presidency "shall" be bad for the economy. Presumably the economy they operate? Revenge, I don't know. But countering one action with an equal and opposite reaction does make a little sense.

I understand and can appreciate solid DD based upon reliable data. However, this administration and market-related interest groups such as NAR have been exposed for skewing the numbers in their agendas favor.

Common Sense says

I understand and can appreciate solid DD based upon reliable data. However, this administration and market-related interest groups such as NAR have been exposed for skewing the numbers in their agendas favor.

I hadn't seen that. To what are you referring?

tatupu70 says

There are readily available statistics to demonstrate it.

All of the readily available statistics indicate foreclosures continue to INCREASE in every state with two exceptions (see below) - we just had another big increase from June to July of 2010.

There are only two states which have been relatively unscathed - the Dakotas. I'm sure BOTH homeowners there are quite happy. Eyes roll.

What other stats are you talking about?

Well, "Jobs Saved" and the true cost impact of Obamacare are merely two blatant and unforgettable E ticket rides.

schmitz_kris says

tatupu70 says

There are readily available statistics to demonstrate it.

All of the readily available statistics indicate foreclosures continue to INCREASE in every state with two exceptions (see below) - we just had another big increase from June to July of 2010.
There are only two states which have been relatively unscathed - the Dakotas. I’m sure BOTH homeowners there are quite happy. Eyes roll.
What other stats are you talking about?

Of course foreclosures are higher than normal. We are either still in or very slowly recovering from the worst downturn since the great depression. That does nothing to disprove my point. The magntitude of the problem is vastly different in Kentucky as it is in California.

Are you really going to argue that?

Common Sense says

Well, “Jobs Saved” and the true cost impact of Obamacare are merely two blatant and unforgettable E ticket rides.

Well, jobs saved is an almost impossible stat to measure. Same with the true cost of Obamacare. Those are really just estimates.

I consider that different than # of homes sold or median home price. I would think that it would be much more difficult to fudge those numbers.

David Lereah & Lawrence Yun of the NAR have enjoyed the pump & dump award.

Estimates? They were actually delivered as selling points to modify public behavior and support. Anyone overspending by 1.3 trillion based upon loose estimates should lose their job. I over-ordered lettuce at my first job at Lucky's in high school based on an estimate. You'd have thought I was wearing a Safeway shirt! Bada bum!

tatupu...let's say I understand and agree with your point regarding California being one of the instigators and sinking-champs of this disaster. That said, if federal dollars ultimately go towards fixing what the other 49 states have relentlessly warned against for decades...I will personally be very disappointed and ashamed of my home state.

thomas.wong1986 says

dadab says

Theo says

The Job news today along with all these makes me think this winter is going to be a great time for prospective buyers like me :).

Home prices will continue to correct for some time to come. We have nearly 12 years of bubble prices to burn off. $600K may seem better today than $750K two years ago, but $400K in the future will be far better than $600K today. The magnitude of the housing bubble in the BA is often overlooked by many.

Jobless rate drops in 18 states, rises in 14

Unemployment declines in 18 states, fewer than in previous months, as job creation slows
http://finance.yahoo.com/news/Jobless-rate-drops-in-18-apf-2789684685.html?x=0
Nevada posted the nation’s highest unemployment rate for the third straight month, at 14.3 percent. It took the top spot from Michigan, which held it for four years, in May. Michigan’s rate, the second highest, fell slightly to 13.1 percent from 13.2 percent in June. California posted the third-highest rate, at 12.3 percent, the same as the previous month.

Based on this chart I'd be inclined to agree with you BUT .. the big green line used as a basis can be tilted one way or the other depending on what exactly is used as a criteria for the inflation numbers. Also the prices dont reflect the type of house, the type of buyer, or the condition of the house. Alot of these houses that are dropping in price are dilapidated poo-poo smelling houses

Based on this chart I’d be inclined to agree with you BUT .. the big green line used as a basis can be tilted one way or the other depending on what exactly is used as a criteria for the inflation numbers. Also the prices dont reflect the type of house, the type of buyer, or the condition of the house. Alot of these houses that are dropping in price are dilapidated poo-poo smelling houses

Great time to buy, you had better buy now or be priced out forever right marko? LMAO!!! You bulls are killing me!

Common Sense says

Estimates? They were actually delivered as selling points to modify public behavior and support. Anyone overspending by 1.3 trillion based upon loose estimates should lose their job. I over-ordered lettuce at my first job at Lucky’s in high school based on an estimate. You’d have thought I was wearing a Safeway shirt! Bada bum!

How could they be anything but an estimate? How do you quantify for certain whether a job would have been lost or not? You are basically predicting the future...

woggs1 says

Great time to buy, you had better buy now or be priced out forever right marko? LMAO!!! You bulls are killing me!

Woggs--You are completely ridiculous. Marko posted nothing even remotely implying that now was a good time to buy. All he said was that the graph that was posted was still open to interpretation and he questioned some of the conclusions from it. Are you that closed minded that you can't even listen to other views?

elliemae says

I don’t believe it’s that way everywhere. There are some places that are more than affordable. Just not California. People forget that there’s a bit of space between California & Florida.

A fact that has not escaped many Bay Area employers. As I stated in prior posts, many employers, small and large, have equal if not more employees outside of the Bay Area.