patrick.net

tatupu70 says

Los Angeles Renter says

I call bullshit on this statement…. Interest rates have fallen a full percent! That and the huge stock market rally from 6000 have stalled a drop in housing. People went from losing half their invested wealth to gaining it all back again in the past few years. (My stock portfolio is UP since 2008 crash). They also can afford to buy about $30,000-$60,000 more house with interest rates at 4%. Yet home prices didn’t rise by that same variable… So someone that waited until now to buy were able to afford more HOME than the person who tried to buy a home in early 2009 at higher interest rates. I don’t know how you don’t call that effectively a drop in price. (If you were a minority all-cash buyer in 2009 maybe you got a better deal.. but that’s a fraction of the home buying population.)

tatupu70 says:
That is the dumbest post I’ve seen in a while. You don’t call it a drop in price because prices didn’t drop.

Hey Tat,
My statement makes perfect sense... Home prices for average first time home-buyers did fall if the monthly payment for those average americans fell! It's pretty simple...If you're rent drops from $1800 to $1600 a month... Then your rent dropped in price. The monthly payment is primarily what people calculate when deciding on affordability.

THE COST OF BUYING A HOME ON A MONTH to MONTH basis dropped between 2009 and 2010 as interest rates dropped to near 4% from 5%.

I don't know how you don't understand this translates to a drop in home prices for those who sign up for fixed rate mortgages in at 4% in 2010.. vs. those that bought at 5% in 2009? This is what stalled the drop in housing. Now that interest rates are rising again we shall see what the market can really handle....

Should be an interesting summer buying season this 2011.... If interest rates hold steady at 5%-ish all summer... I"m predicting a pretty brisk market for Los Angeles area. If we climb to 6% I'm seeing up-front demand as rates are rising.. Then an avalanche of cancelled loans and hard stall out as rates settle around 6%.

People are STILL maxing themselves out to afford in the Los Angeles area....

toothfairy says

FHFA graph do you even know what you’re looking at?
it only counts loans backed by Fannie and Freddie. Which is fine for low

end Stockton but San Jose especially since

in 2008 they raised conforming loan limit it now includes higher priced

properties. So the numbers are skewed at best.

So Stockton isn't a buy?

Los Angeles Renter says

I don’t know how you don’t understand this translates to a drop in home prices for those who sign up for fixed rate mortgages in at 4% in 2010.. vs. those that bought at 5% in 2009? This is what stalled the drop in housing. Now that interest rates are rising again we shall see what the market can really handle….

I guess I'm just old school. A drop in home prices is when the price of homes goes down.

Stockton is not a buy for me because there's nothing there. You can find good deals even in San Jose
it just takes a little more work.

i wouldn't base my buying decision on that chart

The news keeps pouring in on housing, and it keeps going from bad to worse. The "bottom of 2009" is looking more and more like an old Twilight Zone episode.

http://globaleconomicanalysis.blogspot.com/2011/03/five-years-of-housing-supply-and-5-or-6.html?source=patrick.net

gameisrigged says

What Gore said is true. The right-wingers claimed he said he “invented” the internet, which is false, and is something that Gore never said.

Example how sound bites dont work.

"Invent" or "Create" which is interchangable was a poor choice of words.
Had he stated.. "I took the initiative in creating 'legal framwork in Congress' regarding Internet" would not have been a big issue. But he overstated his contribution. Anyway the question was regarding his Demo Opponent Bill Bradly.

thomas.wong1986 says

gameisrigged says

What Gore said is true. The right-wingers claimed he said he “invented” the internet, which is false, and is something that Gore never said.

Example how sound bites dont work.
“Invent” or “Create” which is interchangable was a poor choice of words.

Had he stated.. “I took the initiative in creating ‘legal framwork in Congress’ regarding Internet” would not have been a big issue. But he overstated his contribution. Anyway the question was regarding his Demo Opponent Bill Bradly.

I think that's splitting hairs. It's obvious he wasn't claiming to have created the technology; he was claiming to have taken the initiative in allowing the internet to be created. The crux of the matter isn't whether there's a difference between 'invent' and 'create', it's the difference between "I took the initiative in creating" and "I created". Those aren't the same thing. I suppose he could have used more passive wording such as "I took the initiative in the internet being created", but what do you want? It was an interview, so he had to come up with something off-the-cuff (which he is much, much better at than George W. Bush, by the way).

I mean, if I said, "Roosevelt took the initiative in building an atomic bomb", wouldn't it be fairly obvious that he didn't actually INVENT the atomic bomb, but rather put things politically in motion that resulted in it happening?

I wonder what impact the collapse of the first time home buyer market will have on home prices? Maybe it's time for Obama to enact another "1st. Time Home Buyer Stimulus" con? The first two programs were abysmal failures, maybe the third one will be the charm? What do you think Duckie Dude?

http://blogs.wsj.com/developments/2011/03/07/report-first-time-buyers-fade-from-market/?source=patrick.net#blognav_next

RayAmerica says

I wonder what impact the collapse of the first time home buyer market will have on home prices? Maybe it’s time for Obama to enact another “1st. Time Home Buyer Stimulus” con? The first two programs were abysmal failures, maybe the third one will be the charm? What do you think Duckie Dude?
http://blogs.wsj.com/developments/2011/03/07/report-first-time-buyers-fade-from-market/?source=patrick.net#blognav_next

Nah! Remember he said "money to buy the homes is already in the system","middle class does not matter" ? So investors will keep the system running without any expectations of decent return. :)

Very good article on the "Double Dip in Housing." Take particular notice of the photo of the Polar Bear on his back. It contains a message for our friend the Duck.

http://www.irvinehousingblog.com/blog/comments/as-house-prices-double-dip-pundits-debate-how-low-it-will-go/?source=patrick.net#blogtitle

i noticed bulls on other RE forums are posting less or gone entirely.

they were around for years and poof, suddenly gone.

MyPunanyIsBiggerThanYourPunany says

i noticed bulls on other RE forums are posting less or gone entirely.
they were around for years and poof, suddenly gone.

That's because the bulls have all bought houses and have moved on to bigger and better...so a once a month read here is all that is interesting.

SubOink says

MyPunanyIsBiggerThanYourPunany says

i noticed bulls on other RE forums are posting less or gone entirely.

they were around for years and poof, suddenly gone.

That’s because the bulls have all bought houses and have moved on to bigger and better…so a once a month read here is all that is interesting.

no.

they had already owned houses when they joined the forums so that's not it; and they were around for years regularly posting about how housing was a great investment.

i suspect, instead, even they started to realize housing isn't the amazing investment they were bragging about.

MyPunanyIsBiggerThanYourPunany says

i suspect, instead, even they started to realize housing isn’t the amazing investment they were bragging about.

Agreed. Hard to keep claiming housing prices are going up or that the bottom was two years ago when every month is a new post-bubble low.

Maybe they aren't posting these days because they sink every penny in their bloated, underwater mortgages and can't afford an Internet connection:)

klarek says

Hard to keep claiming housing prices are going up or that the bottom was two years ago when every month is a new post-bubble low.

Realestate will recover as soon as the jobs return and excess inventory including shadow inventory is exhausted. My guess is 2013 to 2014 we will see small appreciation.

Krazzykelly says

will recover as soon as the jobs return

Nada. Jobs with pay that supports the bubble prices and even that is not enough, we need to see return of some kinda exotic loans, of course backed by tax payers.

Krazzykelly says

Realestate will recover as soon as the jobs return

This is the mistake the Obama economic-political team made in early 2010, that the jobs "would return" like the butterflies of Monterey.

They were even seeing the census-driven hiring as a forward indicator of job recovery. Idiots.

The economy of 2006-2007 was receiving TWO TRILLION of private debt injection EACH year.

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

Notionally, that's supporting FORTY MILLION $50,000/y McJobs.

So yeah, dump $160B of new credit a month into the private economy and we'll see some broad consumer demand and hiring return.

Otherwise, we're going to slip into cross-default hell, right where we were in late 2008 and early 2009.

ChrisLA says

you are right, exotic loans won’t exist unless taxpayers are on the hook for them.

ChrisLA,

You do realize that no option-ARMs or subprime loans with 2 year teaser rates had taxpayer backing right?

Do you care at all about reality?

thomas.wong1986 says

Or when people learn how to make a deal. Ever watch “Pawn Stars” on history channel. Some guy waltz into a pawn store and thinks he can get $10K for some item. The owner laughs and says “not gonna happen, but I will give you $$2K for it”.

http://www.history.com/shows/pawn-stars/videos/no-stolen-goods#the-art-of-the-deal

Hey Thomas -- love Pawn Stars!

Have you ever seen "real estate intervention"? Basically the show is premised on the idea that sellers are priced wayyyy too high...and the intervention guy (Mike Aubrey) has to convince them (by showing comps, local prices, etc.) to drop their prices. He can be pretty harsh. :) Really a great show on seller psychology:

http://www.hgtv.com/real-estate-intervention/show/index.html

Usually I hate hgtv shows b/c they seem to be in bed with realty industry, but this one is great...

That is a good show, probably the only one on that dumb channel that I enjoy. It is fun to watch people wake up from their delusional fantasies, and hear the sort of bizarre shit they use to form their mentality (this house/street/town is special, etc). I also like it cuz it is in my area, and there are TONS of ppl here who think it is still 2006.

It appears to me that:

1. Most/All of 'Flyover' is at 1990's prices. AZ,NV, stockton, palmdale, etc.

2. Coastal CA is at 2000 or 2003 prices depending upon distance from jobs and how ghetto that area is.

3. THEREFORE it appears Coastal CA may in fact be following the lead o flyover down.

We are possibly headed for 1996 prices 5 years from now. It takes forever because the Feds have added 3-5 years to drag out the crash with HAMP,TARP, Loan Mods, cash for clunkers, cash for homes, etc and on an on.

The broke ass/underemployed squatters will eventually move to Vegas or Phoenix for the cheap rent. They won't be replaced by immigrants due to no jobs here. Also elderly cashing out is a LONG term drag.

I have read a few books that I tend to agree with (on a general level) and they are 'The Devil Takes the Hind Most', 'The Great Depression Ahead', and another that was about the stock market and that one escapes me right now. I think the economic chaos hasn't even begun yet. The following needs to occur before the housing market will stabilize...much less appreciate for any extended duration (a two-year of appreciation at minimum):
- Unemployment must decrease to below ~5%
- The many millions of bad home loans must be resolved
- Government entities (cities, municipalities, etc) need to go belly-up and re-establish (i.e. City of Bell, Compton, and maaaaaany others I'll bet).

My guess is we won't see stability til 2017. Really, my guess is the US housing market will become much like so many other developed countries. The majority of the middle class will need to resort to living with family and eventually inheriting a house because they will not have the means to buy on their own. I am a Realtor and the last three buyers have had to get (significant) help from family to buy a home here (in Southern California).

What is really scare me is that Ben Bernanke keeps saying that no double recession during his watch?
He will print money to save it.

Now ALL banks will stop lending and get more free money.

We will get a double recession, and the second one will be as big as first.

He is printing money during a meeting.

Nomograph says

What is really scary is the people who have been reading and following Patrick.net STILL have no idea what the Fed does.

http://www.youtube.com/embed/Oe0fGXzKb1o&feature=related

Mr.Fantastic says

When is Stockton ever a buy? I guess if I was a gang member of latino descent.

In that case why buy at all. Just move into an abandoned foreclosure. There are whole blocks empty right now. Think of all the places to hide you stash.

We will hit bottom when realtor commissions are not percentage based anymore. There will be a time in my life, when I will tell my kids about an organization once called NAR and the story will sounds very Mafia. Instead of breaking someone's knees, though, they just broke the savings of good families. It couldn't happen at a faster rate to me.

Property taxes continue to rise at higher rates than inflation, in addition to the added burdens on towns to raise even more money because states are cutting costs and passing those expenses onto towns to fund themselves. The additional shadow inventory that is yet to hit the markets, the eventual rise in interest rates, growing student loan debts preventing 20 something's from buying until they become 30 somethings, and baby boomers just waiting to flood the markets and "cash-in" their homes to fund their retirements.

There are so many downward forces that have yet to affect the markets, we aren't even close to the bottom outside of Prime-markets in the US. I'm targeting 2018-2020.

FortWayne says

To put it all in perspective, 1993 - everything was around 150-200.

Than bubble happened everyone decided their house is worth 1 million+.

bubble started going down, now everyone thinks their old shack is worth at least half a million or more. we got several years of this stupidity to go through before all the stupid money is out of real estate and finally back in economy producing something positive.

Quality Auto Repair Since 1979

So true.

“2018-2020.” Ahhh are you insane??? I’ll never be able to hang that long--- my rentals are eating me alive… er I mean…
HAHAHA! my Real Estate holdings will blossom into a DONALD TRUMP LIKE EMPIRE BY THEN while you pathetic renters wait forever to paint your walls any color you like!!! So sad.

APOCALYPSEFUCK isFrank Sinatra says

Mr Duckhead,

Tell us about the refrigerator box in the alley behind your office trailer in Concord you rent for $1000 per *month*!

It is such an inspiration!

Well,it is like 200K fantastic one - with granite counter tops and rents for 2400/month - at least that's what the claim(boast) is!

RayAmerica says

do you think residential real estate will bottom out

When prices reach early 1990's levels.

RayAmerica says

actually begin to appreciate?

Housing DEpreciates. Why would it magically stop depreciating and even more magically start going up?

You Lowlife says

RayAmerica says

do you think residential real estate will bottom out

When prices reach early 1990's levels.

RayAmerica says

actually begin to appreciate?

Housing DEpreciates. Why would it magically stop depreciating and even more magically start going up?

In a free market it won't until price points hit reality. In our government ran economy it's going to be heavily manipulated until the wealthy cash out. Rich people play margins with real estate, and when things go down they either take losses, or wait for a bailout.

xenogear3 says

He is printing money during a meeting.

That can be controlled and the prices inflated so easily its obvious. First only a GD fool would trade Gold for paper to begin with. I have over 300,000 dollars worth of gold. I bought in the 70s for 30,000. I'm not selling it to any gold dealer understanding what they are doing. Very few people understand gold. They think its like pork futures or rye. Gold is a simple thing. Iron and bauxite are just a precious. Whats contained in them is not very complicated to me. However most people don't understand. Whats being played now is a game for fools. Gold unlike cash is not a measurement of time. Money is time. Time that is measured to favor someone else. Gold really belongs where it is. Taken by people who are greedy. Who don't realize there the trail of their destruction begins.

Go Ask Alice says

"When will residential real estate hit bottom?"

Simple.

When prices reach early 1990's levels, inflation adjusted. We're a very long way from that level.

Prices Are falling.

Word!

Never. We have entered the new age of contraction.

The end of growth. A good thing since we have finite resources.

But the economic pain, including a house slowly declining in value forever, is part of it.

12-22-12 shhh.

91604 (Studio City, CA) has 136 properties for sale. There are 527 Bank-owned properties in the same zip code. 527! And that's not even including delinquent borrowers. Studio City is a pretty ritzy area. I wouldn't look for a housing bottom anytime soon - MUCH LESS any appreciation.

No one is going to buy into a losing proposition. So RE won't start to appreciate until it is worth it to buy into real estate.

American RE market priced America out of it and hence you are seeing this prolonged slump. Slump of people who bought into it waiting for a bailout, dicking around with banks. And buyers obviously in no hurry to waste their money as there is no good reason to buy right now.

On a positive note, at least capital won't be tied up in unproductive real estate flipping and might move into business ventures.