patrick.net

Bellingham Bill says

Aside from the 1980s tho, the 2005 price plateau was driven not by interest rates -- negative-am allowed people to avoid interest altogether -- but the entire rotten edifice of mortgage lending, roping cherry pickers into $700,000 loans.

And what about the irrational behavior of consumers regarding real estate purchasing ? Why drive prices higher 15-20% year over year well above the historical mean. It was rather troubling to tell people that RE prices actually do decline and have declined in prior years, but the denial amoung buyers and journalists was , home prices never decline. Somewhere along that line, it just wasnt just the toxic loans.

Bellingham Bill says

not anything relative to demand. I'm aware of like 30 new SFH homes between 85 and Stanford.

scope needs to be much larger, since South Bay is much larger than that. LOL! the center of the Universe isnt Palto Alto.

Bellingham Bill says

shows how prices are now at pre-bubble levels (2003).

For most of the US, that OK. There is a bottom for those regions, but for most of CA, we started much earlier.

Yes, its a good time to buy in Miami...

http://www.housingbubblebust.com/OFHEO/Major/Florida.html

The many trillions of dollars that our government has handed to the military-industrial-financial complex (with minimal tangible benefit to our society) has been a heinous crime.

And what about the homebuyers who signed up for crazy prices?

thomas.wong1986 says

LOL! the center of the Universe isnt Palto Alto.

yes it is : )

thomas.wong1986 says

Why drive prices higher 15-20% year over year well above the historical mean.

If interest rates fall 20%, you can expect a 20% rise in home values.

When I was in the market in 2001, I was looking at a $350,000 place. Back then interest rates were ~7%, making the monthly expense ~$1900.

Drop interest rates 20% -- to 5.6% -- and that $1900 expense supports a $410,000 purchase price -- instant 17% appreciation!

Plus not all homebuyers were entering the market with nothing, millions had appreciation to cash in as move-up buyers, so any % gain was immaterial to them.

Of course, what was really happening 2003-2005 was the loss of loan underwriting -- Wall Street had the money to fund loans and the industry went out and got the borrowers to take that loan money.

The problem with housing wasn't some exogenous forces with the Fed, it was the industry itself running amok.

Again, we have an ideology problem here.

Private industry fucked up, and that's simply anathema to ideologues.

It's gotta be the Fed, or gummint, or something other than the Holy Free Market.

Bellingham Bill says

It's gotta be the Fed, or gummint, or something other than the Holy Free Market.

Bellingham Bill says

homas.wong1986 says
LOL! the center of the Universe isnt Palto Alto.

yes it is : )

And there you have the irrational reasoning...

Bellingham Bill says

The problem with housing wasn't some exogenous forces with the Fed, it was the industry itself running amok.
Again, we have an ideology problem here.
Private industry fucked up, and that's simply anathema to ideologues.

While we have demonized the banks, we havent heard a single mention of REA wrong doing or any fixes with the RE industry.

Have we really fixed anything ?

thomas.wong1986 says

but the denial amoung buyers and journalists was , home prices never decline. Somewhere along that line, it just wasnt just the toxic loans.

As late as 2005 I thought things would work out like the 1990s, a slow beat-down.

The difference between 2007-now and 1989-1995 was that the housing ATM had become a MUCH larger part of the economy during the Bush (jr) years, compared to Bush (sr).

The early 1990s sucked too, but it was an honest suckage, hell, they even raised income taxes substantially right in the teeth of the recession.

Then we got a flood of cheap stuff from China, built a lot of big-box retail to sell it in, and gasoline actually went UNDER $1, then the internet and Windows came out and we apparently had an economy again.

The 2000s was nothing like this.

http://research.stlouisfed.org/fred2/graph/?g=3rR

I didn't know back then how much of the economy was being levered on debt, 2003-2007. I had my house in order and I didn't know how the mortgage market had lost its mind.

I only started figuring that out in late 2006, when the Casey Serin story broke.

Bellingham Bill says

The difference between 2007-now and 1989-1995 was that the housing ATM had become a MUCH larger part of the economy during the Bush (jr) years, compared to Bush (sr).
The early 1990s sucked too, but it was an honest suckage, hell, they even raised income taxes substantially right in the teeth of the recession.

I would agree with this... but try to explain this to the buyers back in 2000 to 2005.. Good Luck.

thomas.wong1986 says

And there you have the irrational reasoning...

I was joking but PA is in fact the height of a civilized existence if you ask me.

Los Altos is similar, but lacks the density of greatness that is PA.

Mebbe the nice, $$$ spots of OC and PB are just as livable, but PA just has the centrality of access and perfect mix of residential to biz that the more outlying nabes lack.

tatupu70 says

Wait a second. You heard something from a guy down the street?? I stand corrected. All the supporting data is meaningless--you have certainly found the answer.

Just a quick question though--interest rates are very near historic lows. House prices continue to fall. Shouldn't they be rising?

...and how are you? Beggin yer pardon, but were we discussing something? I should think for me to have attempted to correct you on a topic of discussion would, at the very least, assume that we were engaged at some point in a discussion -- no?

Anyway...yes -- I think it could be argued that forsaking empiricism for chart porn is a somewhat facile method of interpreting the goings on around you. The inverse is also true. Yes, 'some guy on the street' -- some carbon-based bipedal life mass full of glands firing all kinds of chemicals fixating over interest rates during the run-up in housing is a point of reference for me, because it represents a snapshot of what the consumer psychology was during that time. Regardless of how unscientific such a metric may strike you, I find that real experience adds a touch of dimensionality when trying to ascertain a picture of the world around me. I know, I know, LOL, right? Unfortunately, I've not yet developed the ability to fit myself entirely under a rock in order to tune out information that does not jibe with official data dredged up on the Googles, nor fits neatly into a pie chart or a whiteboard or a spreadsheet -- sorry. I know I'll get there one day, and you can bake me a cake when I do.

RE interest rates and prices: according to the wisdom of the average contrarian like yourself, the bottom was in in 2009; prices are not falling, they are flat. However, if we are to assume for the sake of argument that prices are falling, I would suggest that there are several price supports that are working in unison with low rates to buffer and even temporarily suspend the rate at which prices continue to correct and likely over-correct to the downside. Whether that is a good or a bad thing is a subject for another discussion.

Bellingham Bill says

The problem with housing wasn't some exogenous forces with the Fed, it was the industry itself running amok.
Again, we have an ideology problem here.
Private industry fucked up, and that's simply anathema to ideologues.
It's gotta be the Fed, or gummint, or something other than the Holy Free Market.

Oh I am an idealouge. These hard core corporations blow kind philosophical feathers out of their ass in their daily doings in television and the other things they own. They are realists the owners of the work a world are. They haven't got time for nice bullshit. Unless its them blowing smoke up our ass. Its a simple math. They started with paper got labor and assets.

Guess what Bill I'm a hard ass to. I'm out to take their assets away from them. After all they have a lot of unoccupied vacant shit sitting around. I could just might.. get together with some local developers not doing anything. Instead of occupying some street corner. Go downtown talk to the right people and get some codes written. See how that works Bill? Mr. Opportunity has been saying to me this just might be the time to get very rich.

Difference between me and most. I'm not fooled, paper is asswipe. It's the assets that make you rich and they are out there now in a big way. PAPER DETACHES YOU FROM ASSETS. See I can go to the grocery store with a fucking cow asking to trade it for a box of hamburger helper. They won't do it. See my asset has no value theirs does. They have very successfully established the means of trade. They have warehouses full of paper they can print more freely and take anything and everything they want. They take labor and material. With credit and paper. Thats the game.

The Main problem is no one really bought anything but many think they did. ( they borrowed btw)
Most of you folks don't understand what "buy" means when it comes to housing
Had these folk actually Bought (paid for with cash) we wouldn't be hear.

Debt slaves think they actually own something.

And BTW your kids think you REALLY own your house too.

Teach the children well (to be debt slaves)

Austinhousingbubble says

I should think for me to have attempted to correct you on a topic of discussion would, at the very least, assume that we were engaged at some point in a discussion -- no?

Sorry, didn't know an invitation was needed prior to entering a discussion on the pat.net boards. My apologies.

Austinhousingbubble says

RE interest rates and prices: according to the wisdom of the average contrarian like yourself, the bottom was in in 2009; prices are not falling, they are flat. However, if we are to assume for the sake of argument that prices are falling, I would suggest that there are several price supports that are working in unison with low rates to buffer and even temporarily suspend the rate at which prices continue to correct and likely over-correct to the downside.

That's not an unreasonable position. But, it is at odds with the previous statements that interest rates were the cause of the bubble. If interest rates cause bubbles, then we should be in another bubble. They are lower than in 2005-2008. Obviously it's not that simple. Interest rates may have had a small effect by initiating a rational housing boom which affected people's psychology. B. Bill is right though, loose lending is the real cause.