I now agree with the housing bulls. There is no housing bubble.
The bubble is no longer "is", it is now "was".
Yes, I think it's time to officially declare that there is no longer a housing bubble in USA. There was one, whose size, implications and aftermath are the only remaining questions. The MSM has jumped on the bandwagon. The bulls (NAR, CAR and their mouthpieces) have no clue as to how to describe the situation.
The depth and speed of the unwinding process seems to have surprised everyone. Take a look at the DQ charts for Bay Area.
San Mateo and Santa Cruz have -ve YOY gains for the median. Santa Clara is holding to a 0.1% gain. The price per SQFT is also rapidly trending downwards. Sales have fallen over the cliff. No matter how faulty and lagging these indicators are, they will make headlines. I was hoping to see that (-ve YOY median in Santa Clara county) happen by the end of this year. Seems like we are way ahead of schedule.
Maybe we all wish this to get over quickly, but we know it won't. Still, do you think it's happening faster than you had expected ? Or slower ? Or about the same ?
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FollowBefriend3 threads71 comments Mountain View, CA
But how low will it go before people on the demand side of things bite and keep the bottom propped up? There aren't many new houses popping up within a reasonable distance to silicon valley jobs. Supply and demand still rules, and there are way too many people making way too many Ha Ha's around here.
FollowBefriend1 threads6,749 comments Premium
That's a great (and relatively harmless) experiment to gauge sentiment. I must admit it's difficult for me to keep a straight face when saying "I just bought TWO houses" though!
As to thread's premise, I'll have to agree. Even the MSM has shifted away from; is there or isn't there or even debating if in fact it's popped. The focus now is on "what are the damages going to cost us".
What is unfolding will take some time to take hold. Some areas will hold up better than others due to unavailable land and prime location. BUt I think alot of areas which were nothing special before this all took hold could well see reductions of 50% possible more.
It is common knowledge now in the mainstream that we have a crisis the only question now is how long it will take to see the full impact and if it will take down the economy at large. 07 will be very telling....
That's actually a pretty revealing article. I've never heard of the National Mortgage Complaint Center but perhaps it's time I have.
FollowBefriend2 threads2,498 comments
Maybe we all wish this to get over quickly, but we know it won’t. Still, do you think it’s happening faster than you had expected ? Or slower ? Or about the same ?
I'm tracking Boston RE, where we moved out of last year after selling our place there. It's way ahead of the BA and CA, and I think it likely predicts what may happen in the BA, even the "nicer" parts. The city as a whole, and the state as well are (-)ive YoY with median prices, and the trend is continuing downwards. The consensus appears to be that the city proper has seen 5-10% declines in prices since last summer. Realtors there are clinging to the hope that the traditionally busier fall market will jump-start sales. The next few months will be interesting there. I think it's about a year ahead of the BA market in bubble kinetics - we shall see.
FollowBefriend (5)44 threads4,602 comments Los Altos, CAPremium
A number of homes I've been watching in S Marin in the 1M-3M range have been taken off the market in the past couple weeks. Probably 2/3 of them are gone. From what I can tell, though, transactions are still down.
So inventory is shrinking AND transaction volume is slowing.
This is a bit of what I feared would happen in some traditionally "prime" areas. Inventory is shrinking for probably two reasons:
1) Some sellers have decided to exit the market, because they don't need to sell and they can't get their price.
2) Some sellers are being rejected by agents, especially as more closely held markets shed the weaker (and often newer) agents. More professional agents are being more selective and not wasting time working with unrealistic sellers.
I'm sure there's some delist/relist going on as seasons change, but I've never seen this many homes drop from the market this quickly.
More disconcerting is that this phenomenon may be reflective of the state of the economy: The economy has been very strong, producing frankly record earnings, profits, and growth for the past few years. BUT, most of these gains have gone to the top 1%, meanwhile middle class folks have seen real wages decline in the face of automation and globalization, aggravated by growing inflation.
This means that the over 60% of fully burdened home equity that Americans own is concentrated almost exclusively with older folks and rich folks.
So, if this theory proves out, I'd expect to next see the remaining homes on the market in truly prime areas drop in price until the debt-rich (faux rich) are gentrified out of traditionally rich neighborhoods, and probably replaced by "truer" rich people.
FollowBefriend8 threads1,513 comments
The mania is over.
That doesn't mean there is no one is USA who believes prices will still go up. I am sure some "investors are still buying.
It also doesn't mean that ALL markets will stop appreciating. Some markets will, if they started participating late or have stronger fundamentals.
But in so many major markets, Florida, Boston, Arizona, South Cal, Bay Area, Sacramento - the top is clearly behind us. More importantly the psychology has changed dramatically.
The "pop" is not an instant. The bubble is over, not the pop. The pop has just begun.
I’m tracking Boston RE, where we moved out of last year after selling our place there. It’s way ahead of the BA and CA, and I think it likely predicts what may happen in the BA, even the “nicer” parts.
Yes, the nicer parts will suffer as well. I was quite taken by surprise by the DQ numbers. Cupertino is suffering more than average. I did not expect that too happen.
Bay Area is still behind the curve. But it's catching faster than I thought.
I found this posted on Ben's blog:
The U.S. Senate has the housing bubble on its schedule in Open Committee.
Wednesday, Sep. 13, 2006
Banking, Housing, and Urban Affairs
Housing and Transportation Subcommittee
Economic Policy Subcommittee
To hold joint hearings to examine the housing bubble and its implications for the economy.
The witnesses will be announced at a later date.
@ Mr Beach - I'm with you on the L.A Westside property lull.
Of the 50 or so properties I'm tracking, only one has had a reduction in price this week. Three or four have been made Inactive, and anecdotally I can see, from the basic search lists, that some properties are coming back on with new MLS#s and a reset DOM.
As I'm not saving most of these places in my 'My Homes' section, i haven't kept track of the number of these relistings - except to say that yesterday 8 new listings came on my "Westside" search, many of which have suspiciously familiar addresses....
After a couple of price increases, no one appears to be selling, so the properties are just sitting with the DOM clock ticking by every day.
One interesting thing I'm noticing is that some roads have several properties for sale, while others have none.
There seems to be a glut of places for sale in the Chandler Estates in south San Fernando valley, and in the streets just above the 101 between White Oak and Balboa in Encino. The same goes for properties just south of Santa Monica Airport in Santa Monica/Plams Mar Vista.
While the properties in SVF are starting to show reductions (600K+ in May/June to under 600K now), the places in SM/PMV still have 2005 prices (800K+ for a modest 2b/2b with approx 5K lot) and show little sign of reductions yet.
I don't know what to make of it, but its interesting to see on a map the concentration of places in certain areas.
From speaking with friends, I'm still hearing the mantra 'its different here'. Many of them still believe that prices will slow and then go up next year, albeit not at the nosebleed rate of the last 5 years. I have to assume that many Westside sellers believe this too, and will hold out for thier Asking Price, no matter what happens.
FollowBefriend660 comments Mountain View, CA
Equifax reckons the average mortgage and credit card/car loan was $136,000 or so for California and $154,000 for zip 94040, this seems way out of wack, shouldn’t it be much more? With all this talk of 100% finacning, heloc's etc I was assuming that people would be carrying mortgage debts of $500,000+
How accurate do you think this credit score malarky is?
FollowBefriend (4)117 threads17,655 comments Premium
Equifax reckons the average mortgage and credit card/car loan was $136,000 or so for California and $154,000 for zip 94040, this seems way out of wack, shouldn’t it be much more?
I have several cards with $0 balance and one "loan" with $14.95. Perhaps "averaging" can dramatically reduce the number?
Perhaps then they should be using the median like the houses, to give us a more accurate figure of how F'd every one really is :-)
My car trip computer told me that my average speed has been 17 mph. I am not a fast driver but I am not that slow.
I am not sure if the equifax study is really this flawed, but this is just an illustration of how useless ‘averages’ are when you don’t
know exactly how the average is being calculated.
How is it flawed? It shows that there is nothing to worry about.
Okay, so I went back and drilled down a bit more and found out from Equifax report that the average mortgage was actually $236,000 in 94040, I guess that is per person so a couple would have a joint mortgage of $472,000?
Still a little low I think, as most houses are on the market for +/- $1m
"How is it flawed? It shows that there is nothing to worry about.
Be happy! "
But I want every one to have huge mortgages, that means they're F'ed borrowers and are going to have to unload their houses and drop the comps.
Does it include second mortgages?
let's say someone buys a 1M home wth 80/10/10 financing (10% down). The two associated mortages are 800K and 100K. The average is only 450K.
That's a bit mean isn't it?
Actually I guess it is better for us if they don't have huge mortgages, it might mean they're more flexible on the prices as they will still get out of the game with some equity, even if it's not as much.
Robert Coté Says:
Silent Spring. Summer Bummer. Fall Maul. Winter of Our Discontent.
That's sweet. You should trademark this stuff. RE Boston, promptly after Labor Day, there are already 10 new listings (20% increase). I think the ebb in numbers of listings people observed over the last few weeks will quickly be reversed and more.
The Financial Times yesterday had an article about a study on US consumer and mortgage debt. Total mortgage equity measured by total outstanding debts against that equity (Primary mortgages, 2nds, HELOCS) is over 60%. The numbers, including the average family total consumer debt, does count everything, not each instrument separately.
I think people are forgetting just how big the population is, and how much of that population rents (1 in 3 nationally, higher in higher cost areas implying higher mortgage debts). Also, the total average consumer debt per family isn't really so interesting or informative -- especially since people tend to look at that number in the context of their own wealth&income. What is more telling is the percent of debt versus income + wealth per average family.
That is, since so many people are on the lower end of the income distribution, they normally have lower absolute consumer debt, but that debt is a dramatically higher percentage of their income + wealth.
I believe the Equifax numbers are fine. They just need to be taken for what they are.
You know, I have no idea how they calculate their figures, but I wonder how much it skews their credit scores?
Above should read: Total home equity measured by...
On average, Americans have over 60% equity in their homes.
FollowBefriend (1)119 threads4,785 comments HARM's website
I have several cards with $0 balance and one “loan” with $14.95. Perhaps “averaging” can dramatically reduce the number?
Yes. If a lake's average depth is only 3 feet, does this mean a f@cked swimmer in the deepest part of it cannot drown?
but I wonder how much it skews their credit scores?
None. The data isn't skewed at all (at least not substantially). They just apply it to the ratios to produce proper credit scores.
Yes. If a lake’s average depth is only 3 feet, does this mean a f@cked swimmer in the deepest part of it cannot drown?
Yes. If a lake’s average depth is only 3 feet, does this mean a f@cked swimmer in the deepest part of it cannot drown?
Yes, but if we take average depth to average swimmer's height (and assume normal distributions), we can get a reasonable estimation of how many people are "drownable".
You can drown in 3 inches, if can't get your face out of the water!
Btw, thread graphic courtesy of HARM-X Industries, Ltd.
The bulls (NAR, CAR and their mouthpieces) have no clue as to how to describe the situation.
Has anyone else read the NAR vomit from today?
"Realtors Expect Home Prices to Fall"
This year sales are slowing, homes are plentiful and sellers are negotiating," Lereah said. "Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory."
Where do they come up with a TEMPORARY dip in prices? Is that like how prices "temporarily" climbed at 20%/year over the past 5 years, completely out of whack with historical norms?
Actually, I think I've figured out the NAR's strategy for dealing with the downturn:
The forecasts are slightly below the group's projections from a month ago.
Compared with the group's forecasts at the beginning of the year, the expected declines in existing-home sales and housing starts for 2006 are about twice what was expected, and the expected drop in new-home sales for 2006 is about three times as severe.
They will continue to predict mild declines (the press will go along with them), and in retrospect, there will be a footnote saying how the NAR's forecasts were way rosier than reality. Let's keep feeding the masses happy juice while Rome burns.
If fate says you'll drown, you'll drown even with no water! (Perhaps in a bowl of pea soup)
Another bubblicious report from the WSJ (subscription needed):
Housing Slowdown Takes Its Toll
Economists Say Selling Prices May Stagnate,
Or Decline, in 2007 as Cool Down Continues
By PHIL IZZO
September 7, 2006
Economists believe cooling in the housing market to extend into next year and many forecasters in the latest WSJ.com survey predict no change -- or an outright decline -- in home prices next year.
Twenty-five of the 48 economists who answered the survey's question about housing predicted no change or a decline in a closely watched gauge of nationwide home prices during 2007. The average prediction for next year was for an increase of 0.43%, lifted by five economists who forecast gains of 5% or more.
(Much more follows this).
There's even mention of the possibility of breaching the hallowed OFHEO annual housing price index, which hasn't fallen YoY since 1975...
I especially like, "The average prediction for next year was for an increase of 0.43%, lifted by five economists who forecast gains of 5% or more." I wonder if those 5 economists would be, David Learah, Leslie Appleton-Young, David Wluka, etc etc.
My apologies if someone has already posted this, but... wow!
Scroll down to "Reported Attacked!" link.
*Granite slab provided by:
DinOR McMansion Reclamation Services, a proud sponsor of Patrick.net
Even if average depth is 3 ft. per HARM’s example, AND average swimmer’s height is 5 ft… then 100% are “drownable” if the max depth is 10 feet and the scope of the “drownability” study is lake-wide.
Only with a very very high alpha.
Only with a very very high alpha.
Not if the FSs (f@cked swimmers) believe that the lake bottom only goes up!
CNBC on in the background, and they are just hammering housing, and not just homebuilders stocks, but now all residential real estate in general. Some of these reports are coming across from MSNBC, so it's not all just market-geek targeted.
:) True, but then that wouldn't be a very "normal" distribution, but more of a bubble-shaped one.
Yeah, that was the infantile meltdown in San Diego. What was really weird was that the wife "Rosa" kept shouting "Get that f@cking camera out of my face" (but kept PERFORMING for it!). Did you check out that "walk" when she was going back to get a gun? Hubba hubba.
The reporter seemed to be hamming it up as well. The big fellow that had run-ins w/Mr. Scumbag earlier had him pretty much under control but the reporter continued to flail away on the ground. He also seemed to have just the right interval in his "conversation" w/Rosa (Mrs. Scumbag) to set her off! Nice job Rosa. Now everyone in the country with a TV knows you're a foul mouthed skank.
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