So did the double dip in housing begin? Why is everyone still bullish on housing?
Double Dip
By HousingBoom Follow Mon, 4 Oct 2010, 11:07pm 23,443 views 555 comments
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47 male
Lafayette, CA
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klarek says
Please link a house that you know is 20% overpriced according to fundamentals.
Shouldn't be hard right?
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Los Angeles, CA
klarek says
No, its not subjective at all. Ever heard of the Klarek index? When he thinks its overpriced, it must be. :)
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iwog says
I didn't say the market was overpriced by 20% you lying fuckhead.
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iwog says
Ha, ha - Iwog, you are such a troll. That is so grade-school.
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Mr.Fantastic says
select * from MLS-DB where distance
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dunnross says
select * from MLS-DB where distance
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select * from MLS-DB where distance < 50mi and city == 'San Francisco' or city == 'Los Angeles' or city == 'San Diego' or city == 'Washington' or city == 'New York' or city == 'Boston'
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select * from MLS-DB where distance < 50mi and city == ‘San Francisco’ or city == ‘Los Angeles’ or city == ‘San Diego’ or city == ‘Washington’ or city == ‘New York’ or city == ‘Boston’
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klarek says
That's why I asked you the question. You seem to think the world "overpriced" is defined and you use it like you'd use a price tag at the store. You also said "overpriced" can be determined by the fundamentals. Therefore instead of talking about the market, I'm going to allow you to talk about any house you want.
Taking you at your word, you should be able to examine the fundamentals and find a home that is overpriced.
Right?
Personally I think it's all crap. Nothing is overpriced or underpriced in any market. It's all priced according to supply and demand. Market judgments like this are just as bad and just as ignorant as saying "I wasn't wrong, the market was wrong, that's why I lost money". It's a fool's game.
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klarek says
Wait a minute...I am confused now.
I said, if we drop another 20% then the wheels will come off the economy. Then Klarek countered, NO, the wheels won't come off if we were to drop 20% because nothing at all happened in the last few years either. Only just a few banks went down, wallstreet and few idiots who got foreclosed on because they bought overpriced. Other than that, no biggie.
Then I ask, ok, then...if a drop doesn't affect anything, why would it drop any further from here? - Then Klarek says, it would drop because its overpriced BUT he is not saying that it actually is which means...it isn't overpriced, right?
Klarek says that when something is overpriced, it has to crash. Let's follow that logic.
OIL...it costs $8 to get a barrel of oil out of the ground - well, the price is 105 now...and has been for a long time. Even at 50 it was overpriced. It has not crashed somehow.
Bottled Water (which is tap water anyways) : People pay $3.5 for a bottle of purified tap water. Is there a water shortage? NO. Do we pay it anyways. YES.
...the list goes on and on. Is a steak at Ruth Chris really worth $55?? Is a bottle of vintage wine really worth $2000?
As long as somebody pays it - the answer is...yes it is worth it. (because somebody pays it)
So there is no such thing as an objective "overpriced" level. It is totally subjective and people overpay on thousands of things everyday - A starbucks cheese danish...$4.00 ??? Really? (I think cheese danish prices will massively crash next year)
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SubOink says
Oh god I hope so!
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SubOink says
It also costs about $20M to to pay for the smallest possible oil well before you can even start taking it out of the ground. And, that assumes that you own the land, in the first place.
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dunnross says
Are you considering drilling in your backyard? :)
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SubOink says
I was told by an oil industry person that the "lift cost" of oil is highly dependent on the site. She pointed out that for some (deep water?) wells the lift cost was in excess of $40 per barrel, and that "it hasn't been so long that oil was $14 per barrel", explaining why the industry had been reluctant to rapidly expand production into higher priced areas. Of course this is the production cost of a marginal barrel of oil -- not taking into account the capital investment of developing / acquiring the site. So are there some people making a killing on wells with an $8 per barrel lift cost? Probably so...but that incremental 1% of production (oil sands?) almost certainly have a total (amortized) cost much closer to $100/ barrel. So the supply curve is somewhat steep, which accounts for some of the difference between the "$8 per barrel production cost" and what the market price is.
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robertoaribas's website
Well according to IWOG and suboink, nothing is ever overpriced. Thats good, otherwise we could have seen housing prices drop. that might have been bad for the economy or something! good thinking guys!
Anybody want my : tulip bulbs? beanie babies? nifty 50 stocks? south sea trading company shares? Tokyo land from 20 years ago? tokyo stocks? pets.com?
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What the... nothing can be overpriced in a market you say?
So if I want to sell you gold for $2000 an ounce you don't think that it would be overpriced today? I don't think it would sell... so my asking price would be overpriced to sell until demand picked up more.
Let's say I have 2oz of gold that I have to sell, so I price at $1400, and only Iwog and SubOink are my potential buyers.
- Iwog buys 1oz because he has $1400 in the bank and he thinks inflation will be high.
- SubOink wants my gold, but has only $800 cash and can't get a loan for the rest of the cash. He can't buy.
Obviously, the sales price I strike with Iwog is $1400, but if I want to sell all my gold then $1400 is overpriced. Everything can sell, at a price.
Back to housing...
A) Are (real) home inventories falling? If yes then the force may be balanced and housing is priced right to sell, and maybe even a bargain.
B) Are (real) home inventories rising, or already too big for comfort? If yes then YES, I would say housing is overpriced _to sell_. Either asking prices need to fall more, or demand conditions need to improve (sufficiently).
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I think sales volume is a good indicator. Right now sales volume is still just around '07 levels, and we know what direction prices moved since then.
tatupu70 says
So incomes increased... but where is the part where you show how X% increase in income is enough to halt a Y% decline trend in housing?
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robertoaribas says
I think they mean nothing's overpriced/underpriced that sells.
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DQNews on Bay Area
http://www.dqnews.com/Articles/2011/News/California/Bay-Area/RRBay110317.aspx
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As I wrote on the other thread, condos have officially double dipped according to Jan. C/S SF Bay Area Condo Index.
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robertoaribas says
We need the likes of them to prevent the sharp dip in home prices!
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bubblesitter says
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robertoaribas says
You guys are a funny bunch. Show me the post where I am saying that nothing is overpriced...Once again, you completely missed the point and you obviously don't know how to read.
I was saying the exact opposite. There are TONS of things that are overpriced (my exact examples where Oil, Bottled Water, Cheese Danishes (LOL) ).
To clarify the point - just because something is overpriced doesn't mean it will crash. It could, but there is no built in mechanism where the universe ultimately makes everything that is overpriced crash.
Is Gold overpriced right now? I'd say yes...but maybe in 20 years from now, we realize that in 2011 it was actually cheap. Or the opposite, maybe we realize that it was way to expensive. You cannot know if something is overpriced at the current moment.
But if Roberto and the clan are so smart and know all the items that are overpriced, then you should be making a killing. If all things that are overpriced will crash then why not play the stockmarket accordingly. Should be easy for ya. Just short everything that is overpriced. Done. You're rich.
Email me when you got the money! :)
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Mr.Fantastic says
Definitely!
I think crown molding prices will crash.
:)
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SubOink says
This one: http://patrick.net/forum/?p=545652#comment-726836
SubOink says
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gameisrigged says
That's very different than saying nothing is overpriced. Duh!
I am saying that you cannot determine that something is overpriced as its subjective, not OBJECTIVE.
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gameisrigged says
Thanks for posting this...LOL
Please read again, Oil is overpriced, bottled water etc etc etc...
Funny!
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That's just confusing items that have high profit margins with "overpriced".
Mr. A (seller) thinks his nice house for sale is worth $1M is subjective.
Mr. B (buyer) thinks Mr. A's house is too expensive is subjective.
Mr. C (market observer) can objectively say $1M is overpriced if it is observed that it can't sell at that price.
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SubOink says
You can come up with ways to make predictions on the value of the house and then compare the prediction to the eventual selling price. Add up the cost of the materials and multiply by some number that you think represents the way houses rise in value for a given area etc, etc. Then you decide how objective your method is by how well you make predictions. Do that again and again until you have a method that allows you to take information on a house and predict its selling price.
That sounds like science, but in this case the laws are different than the one that allows us to accurately predict when a ball of known size dropped from a known height will hit the ground.
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The charts of past history are interesting, but there is no reason to believe that the future will follow that chart behavior. There are reasons for this. One reason is that since our economy in California was so heavily dependent on 1. spending home equity 2. construction 3. selling loans, houses, etc. This entire part of California's economy is vastly reduced or gone. The millions of low wage illegal aliens will tend to depress wages. If you are looking at houses in places where there are high tech and biotech (Bay Area), entertainment (LA), defense, high tech, etc. (San Diego), things could start to improve IF things improve economically. There is an interesting problem with the whole economy. Since the world needs the American consumer so much, once the American consumer is AFRAID to borrow/spend his money, the global economy slows down. The emerging countries were growing by selling to the Americans who were spending real estate bubble wealth. From now on, Americans will have to produce again to create true wealth. A lot of people are trying to stop it. Taxing energy production is one example. Letting gasoline become expensive because we cannot get our own oil is another. I fear that in many places we will have economic stagnation, with pockets of affluence and very little upward mobility.
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Hey! I didn't do that!
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46 male
Menlo Park, CA
Didn't do what? The double comment? Not a problem, I deleted one copy.
Or was it not you who wrote it?
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The double post, thanks for fixing it. (assuming someone notices).
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Dublin, CA
Cvoc13's website
Double Dips assumes, that the TAX credit was considered a uptick, when if you asked me, all that was, is a kin to the OPENING of a Parachute. from the free fall we had, now the first chute is being cut away, we fall faster for while (In Bay Area Ca. I am ALWAYS talking, East Bay even) then in 2013 we will have the back chute deploy. Leaving the MOST expensive homes in Brentwood for example no higher then 399,999 in the next two years, and most will be 279,999 299,999 and the Preserve Areas and Apple hill areas in the 329,999-399,999 and those are homes that sold in 2007 for 900-1.2m of course I am talking Track homes, not one off with acreage
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IWOG, Your userID indicates you live in Lafayette, CA. How about if you identify any property in Lamorinda that isn't at least 20% overpriced? Good luck.
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JackD says
Any house that sells is one that isn't overpriced.
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iwog says
yeah.. tell that to the folks who first bought drugs.com for like 20 million or something... it wasn't overpriced.
Tell that to all the buyers who bough in 2006. The home wasn't overpriced, because there was a buyer (you)
Do you ever get tired of saying provably stupid stuff?
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iwog says
Yeah, millions of underwater houseowners....
...But at least they didn't buy an overpriced house! After all, they didn't pay a penny more than they paid!
*whew!*
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robertoaribas says
Well yes......if there's a buyer, it isn't overpriced.
A house financed with fraudulent money isn't exactly a buyer.
BTW what makes you think I bought a house in 2006?
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SubOink says
I think everyone here EXCEPT you is speaking objectively, so your distinction between "objective" and "subjective" is irrelevant. They are saying that it IS objective. And no, it's not funny.