patrick.net

Truthplease says

Inflation raises prices up.
Interest rates for this year could spark some people buying or keep people out. (neutral)
Excess inventory on the market drives prices down.

This has been the debate for the past several years on this board.

The biggest problem housing has, is if credit dries up - and they make 20% + down mandatory. You'll see home prices TANK as very few people even have 20%.

joshuatrio says

Truthplease says

Inflation raises prices up.

Interest rates for this year could spark some people buying or keep people out. (neutral)

Excess inventory on the market drives prices down.

This has been the debate for the past several years on this board.
The biggest problem housing has, is if credit dries up - and they make 20% + down mandatory. You’ll see home prices TANK as very few people even have 20%.

Your "if" is not reality. We just went through the biggest credit contraction in history, and we are right back to lending with 3.5% down. The chances of making 20%+ down is pretty much 0%. The gov't is hellbent on inflating away our problems, they are not all of a sudden going to restrict housing so that only the rich can buy.

ch_tah says

Your “if” is not reality.

That's why it's an "if."

ch_tah says

joshuatrio says

Truthplease says

Inflation raises prices up.
Interest rates for this year could spark some people buying or keep people out. (neutral)
Excess inventory on the market drives prices down.

This has been the debate for the past several years on this board.

The biggest problem housing has, is if credit dries up - and they make 20% + down mandatory. You’ll see home prices TANK as very few people even have 20%.

Your “if” is not reality. We just went through the biggest credit contraction in history, and we are right back to lending with 3.5% down. The chances of making 20%+ down is pretty much 0%. The gov’t is hellbent on inflating away our problems, they are not all of a sudden going to restrict housing so that only the rich can buy.

Government is actively restricting everyone from buying by artificially keeping the prices above what people can afford. However, they've done it for so long that an average person is ticked off at how government officials have handled this and don't want to be on the market.

With internet being free government can't keep people from finding out, communicating, and universally coming to a consensus that some officials are screwing us all for personal gain.

joshuatrio says

ch_tah says

Your “if” is not reality.

That’s why it’s an “if.”

But an "if" that has 0% chance of happening is not worth mentioning.

If the gov't hands everyone $1M tomorrow, then almost no one will be underwater on their mortgage. Is that really a concern of yours as a potential future purchaser? No, because the chances of it happening are pretty much 0.

Troy says

divingengineer says

How many people in the bay area make $463,246 / 3 ???

Troy says:
Tons, actually. Plenty to soak up any new supply really. Which is why only houses in the po’ areas are under $500,000 right now.

Average household income in the greater bay area is $65,052.
Average house in the greater bay area is $463,246

463,246 / 65,052 = 7.121 times annual income.

Am I missing some glaringly obvious point here?

divingengineer says

Am I missing some glaringly obvious point here?

yeah, inflation & Prop 13 basically. Not all homes are sold every year, so the median income is irrelevant.

Historically, 5% of the stock comes on the market every year, and the buying public has had to stretch themselves to get onto the "housing ladder".

Those who stay out of the market remain renters and have had inflation continue to kick their ass as rents rose to match inflation.

Buying power is also increased thanks to move up buyers transferring equity from old place to new.

It's the inflation element that makes the 3X annual income thing non-operative. People who stretched to buy 15 years ago are perfectly fine now.

So this can't end well.

ChrisLA says

Government is actively restricting everyone from buying by artificially keeping the prices above what people can afford.

I disagree with this. Affordability is orthogonal to what the government does and does not do.

At the end of the day what it comes down to is "how-much-a-month", plus the impetus of inflation creating a speculative premium that people are willing to pay. When Government intervenes to reduce the monthly expense for a given pricepoint, pricepoints just rise to compensate.

Houses will always be on the edge of affordable, since they are sold on the bid.

ch_tah says

But an “if” that has 0% chance of happening is not worth mentioning.

That's your opinion. And you know what they say about opinions...

You make is sound like a return to conservative lending standards is a bad thing.

Unless you're underwater, or have recently made a house purchase - a return to "sane" banking would be a good thing (long term) for our economy.

Edit: http://blog.useforeclosurelaw.com/2011/02/07/housing-debt-financing-is-disappearing/?source=patrick.net#post-233 this article today was a pretty good read. If financing becomes difficult in the future - and lending standard do tighten - I don't see any reason why they won't start requiring 20% down again - or at least a higher percentage.... Heck, if they are requiring 3.5% now - that's a huge leap from nothing during the boom. Even worse, if banks refuse to lend, it'll just make things cheaper. Granted, all we can do is guess at this stage in the game, but saying that the chance of lending standards changing is 0% is pure hogwash.

joshuatrio says

a return to “sane” banking would be a good thing (long term) for our economy.

I'm a happy renter and I'm not entirely sure about this.

There's this $6T mortgage bubble we've got to pay off . . .

http://research.stlouisfed.org/fred2/series/HHMSDODNS

joshuatrio says

ch_tah says

But an “if” that has 0% chance of happening is not worth mentioning.

That’s your opinion. And you know what they say about opinions…
You make is sound like a return to conservative lending standards is a bad thing.
Unless you’re underwater, or have recently made a house purchase - a return to “sane” banking would be a good thing (long term) for our economy.
Edit: http://blog.useforeclosurelaw.com/2011/02/07/housing-debt-financing-is-disappearing/?source=patrick.net#post-233 this article today was a pretty good read. If financing becomes difficult in the future - and lending standard do tighten - I don’t see any reason why they won’t start requiring 20% down again - or at least a higher percentage…. Heck, if they are requiring 3.5% now - that’s a huge leap from nothing during the boom. Even worse, if banks refuse to lend, it’ll just make things cheaper. Granted, all we can do is guess at this stage in the game, but saying that the chance of lending standards changing is 0% is pure hogwash.

Ok, I guess that's your opinion.

Be sure to let me know when 20% down is required again.

ch_tah says

Ok, I guess that’s your opinion.

Be sure to let me know when 20% down is required again.

That's all opinions are - opinions.

But completely dismissing an idea, just because you don't agree with it doesn't make it not worth mentioning. We may never see 20% down again, but we may never see 0%... Who knows? What if banks require 40% ? **gasp** People would actually have to save money again if they wanted the luxury of buying a home (when was that ever such a bad thing) !

You're on a forum - guess what you typically read on forums - you got it - "opinions."

Troy says

joshuatrio says

a return to “sane” banking would be a good thing (long term) for our economy.

I’m a happy renter and I’m not entirely sure about this.
There’s this $6T mortgage bubble we’ve got to pay off . . .
http://research.stlouisfed.org/fred2/series/HHMSDODNS

This! I am not sure why the 2009 bottom callers can't see it. Oh they pretend not to know it. I get it.

joshuatrio says

ch_tah says

Ok, I guess that’s your opinion.
Be sure to let me know when 20% down is required again.

That’s all opinions are - opinions.
But completely dismissing an idea, just because you don’t agree with it doesn’t make it not worth mentioning. We may never see 20% down again, but we may never see 0%… Who knows? What if banks require 40% ? **gasp** People would actually have to save money again if they wanted the luxury of buying a home (when was that ever such a bad thing) !
You’re on a forum - guess what you typically read on forums - you got it - “opinions.”

I'm not sure what your point is. I understand these are all opinions and predictions. I said the chances of your idea (20% down requirement) is pretty much 0% for the foreseeable future. If you want to live in fantasy land of unrealistic "ifs" that's your prerogative. I'd rather focus on what might realistically happen. I agree that requirement a larger down payment would be a good idea. It should have been the requirement all along. That doesn't mean it's going to happen again.

ch_tah says

I’m not sure what your point is. I understand these are all opinions and predictions. I said the chances of your idea (20% down requirement) is pretty much 0% for the foreseeable future. If you want to live in fantasy land of unrealistic “ifs” that’s your prerogative. I’d rather focus on what might realistically happen. I agree that requirement a larger down payment would be a good idea. It should have been the requirement all along. That doesn’t mean it’s going to happen again.

I will treat this, future and past comments posted by you as irrelevant and useless.

If you disagree with myself or others users on this board, no matter how radical ones "opinion" might be, consider yourself out-of-line and borderline criminal.

Going forward, please stop posting your opinion as most of what you state isn't worth mentioning to begin with :)

joshuatrio says

ch_tah says

I’m not sure what your point is. I understand these are all opinions and predictions. I said the chances of your idea (20% down requirement) is pretty much 0% for the foreseeable future. If you want to live in fantasy land of unrealistic “ifs” that’s your prerogative. I’d rather focus on what might realistically happen. I agree that requirement a larger down payment would be a good idea. It should have been the requirement all along. That doesn’t mean it’s going to happen again.

I will treat this, future and past comments posted by you as irrelevant and useless.
If you disagree with myself or others users on this board, no matter how radical ones “opinion” might be, consider yourself out-of-line and borderline criminal.
Going forward, please stop posting your opinion as most of what you state isn’t worth mentioning to begin with

That's fine. I do find it interesting that because I don't agree with your opinion, you view my posts as irrelevant and useless. You seem to be very hypocritical. As for not posting, I'll post what I like; if you choose to ignore it, that's ok.

Yes, yes, I'm sure all that capital will push all these foreclosures up to higher prices than 2009.

http://www.mercurynews.com/ci_17342795?source=patrick.net&source=most_viewed

ch_tah says

joshuatrio says

ch_tah says

I’m not sure what your point is. I understand these are all opinions and predictions. I said the chances of your idea (20% down requirement) is pretty much 0% for the foreseeable future. If you want to live in fantasy land of unrealistic “ifs” that’s your prerogative. I’d rather focus on what might realistically happen. I agree that requirement a larger down payment would be a good idea. It should have been the requirement all along. That doesn’t mean it’s going to happen again.

I will treat this, future and past comments posted by you as irrelevant and useless.

If you disagree with myself or others users on this board, no matter how radical ones “opinion” might be, consider yourself out-of-line and borderline criminal.

Going forward, please stop posting your opinion as most of what you state isn’t worth mentioning to begin with

That’s fine. I do find it interesting that because I don’t agree with your opinion, you view my posts as irrelevant and useless. You seem to be very hypocritical. As for not posting, I’ll post what I like; if you choose to ignore it, that’s ok.

LOL !! Classic example of the pot calling the kettle _____. Funny how I dismiss your comments as irrelevant and now I'm the hypocrite.

I rest my case.

You wouldn't know sarcasm if it slapped you on the face.

Troy says

ch_tah says

I said the chances of your idea (20% down requirement) is pretty much 0% for the foreseeable future.

You’re entirely right about this, of course, since 30% is much more likely:
http://wisecatrealtors.posterous.com/wells-fargo-now-asking-for-30-down-on-mortgag

I'm sure you read the entire article and saw this:
"If the 30 percent requirement does stand, some in the mortgage industry say it will drive more of the lending business from the private sector to the government. The Federal Housing Administration is exempt from the risk retention rules and offers loans with downpayments as low as 3.5 percent."

ch_tah says

The Federal Housing Administration is exempt from the risk retention rules and offers loans with downpayments as low as 3.5 percent.”

AFAICT they also want to change FHA back into a low-income thing -- like it was 10 years ago -- but with higher down payments (10%) too. The FHA limit was $240,000 in my area when I was in the market in 2001-2002.

Remember, they're making their money from the loan processing "fees", not the interest, because they don't keep the loans.

And now we're right back to that very bottom of 2009 in southern California:

http://www.bloomberg.com/news/2011-02-15/southern-california-home-prices-decline-to-their-lowest-level-in-18-months.html?source=patrick.net#related_categories_tags_top

It's just investors chasing yesterday's news that caused a tiny little temporary blip up, that's all.

The realtors are back to their old tricks of telling people the water is fine, jump on in.

Los Angeles Renter says

We shall see if banks decide to give strategic defaulters loans again…. What’s to stop banks and credit agencies from extending the WAIT period on strategic defaulters.. It’s pretty easy to look at someones credit history/score and see plain as day that they screwed a BANK in the past.. aka.. great credit everywhere except the default. Those living rent free may find the 4-5 year wait period may be extended for them to 10+ years wait before they can get another loan. Sure they could pay in cash… But any bank that would give a strategic defaulter another loan with a reasonable interest rate under 10% is not a bank I’d want to be invested in.

It only takes one or two banks scarfing up the business of the former SD's for the rest of them to fall in line.

Why were they defaulting on these loans anyway? Most likely (or highly likely) they were upside down. If they put money down on a house that isn't likely to go upside down then they (the punitive banks) are just passing the business to their competitors. The same thing happened with the crazy loans this past decade.

Stupidity is infectious. The only backstop to this is some sort of regulation but look at FHA now - they are still handing out low down payment loans. I am guessing someone would cry foul if the government mandated a "do as I say not as I do" policy.

While you might see the government entities implement some sort of policy against these people, other banks will probably not - even if you think they should. So the answer to your question regarding what is to stop them from implementing a penalty for a strategic defaulter is: MO MONEY!

Dunross--

Well, does the bull trap usually occur when the price is back at the mean? Like it is in most places in the US?

Now, I invite you or anyone else to look at the two graphs side by side, and tell me when this bubble started:

real estate prices will bottom when those prices reflect a realistic expectation that the loan will be repaid....as long as the gov and the federal reserve are propping up the markets, prices will continue to decline and can not bottom. tax payers bailing out bad loans is not a viable business model.........

the gov is actually propping up the market. i didnt say it was maintaining a certain level. if we didnt have ZIRP and massive freebies to the banks (ala POMO's) the market would be at ZERO.....!.... there would be no real estate market because the financial system would be locked up!

in this case 'propping' means stopping the free fall.....!

709hannah says

the gov is actually propping up the market. i didnt say it was maintaining a certain level. if we didnt have ZIRP and massive freebies to the banks (ala POMO’s) the market would be at ZERO…..!…. there would be no real estate market because the financial system would be locked up!
in this case ‘propping’ means stopping the free fall…..!

Well, I would still argue that, even in that case, both, the all-cash and the "priced-out-of-the-market-back-in-the-bubble-heydays" crowds would still come in for a "Bull Trap" experiment. You see, the purpose of the bubble is to suck in as many suckers as possible, both, on its way up, and on its way down. If the market went straight to 0 from the top, nobody would be suckered in on the way down, and it wouldn't be so much fun, now would it?

by bull trap do you mean in the RE industry...i.e. R.E. buyers coming in and buying thinking it is a bottom...?

i agree....i know at leat 10 people that have just bought a home.....some are already underwater numerically. 2 couples had to sell the new house and move (for job related reasons) and one lost a but load of money and the other still hasnt found a buyer and their listing price is less than their mortgage...sucks!

the old 'i dont care about price' and ' R.E. wil not go down in my area' really trashed these people....but when the wife says she wants a house..well...you buy.

Troy says

ChrisLA says

Government is actively restricting everyone from buying by artificially keeping the prices above what people can afford.

I disagree with this. Affordability is orthogonal to what the government does and does not do.
At the end of the day what it comes down to is “how-much-a-month”, plus the impetus of inflation creating a speculative premium that people are willing to pay. When Government intervenes to reduce the monthly expense for a given pricepoint, pricepoints just rise to compensate.
Houses will always be on the edge of affordable, since they are sold on the bid.

I think that is the problem, to an average person who does not consider long term it only comes down to "how much a month". Thats how cars are sold to the poor, houses follow. Not a very prudent way of shopping.

So as soon as government provides 30 year loans prices go up to match 30 year mark. If max loan length was 3 years prices would drop accordingly.

At least that's how I see it.

Mr.Fantastic says

No seriously, tatupu literally decided to take off. He sent me a long e-mail about how he hated me, and would have “people come after me” if he found out who I was.

Now that's funny.

Here is the chart. The fact remains that our own S&P has actually underperformed the Nikkei so far, in this dead-cat market rally:

LOL, Patrick, funny spam.
Russian hackers ad here.
Have they registered or just hacked in?

No no no, according to Shiller the bottom is now. LMAO

Get ready for decades of decline. We are following the path of Japan except we don't have the savings and strong industrial exports to do as "well" as they have.

LiarWatch says

pazuzu says

No no no, according to Shiller the bottom is now. LMAO

Get ready for decades of decline. We are following the path of Japan except we don't have the savings and strong industrial exports to do as "well" as they have.

They called bottom in

2007... prices fell.

2008... prices fell.

2009.... prices fell.

2010..... prices fell.

2011... prices fell.

2012... prices continue to fall.

Anyone telling you any different is a liar.

Hi Darrell,

Which idiot called 2007 the bottom? You can run, but you can't hide Darrell. Are you still renting from Roberto, or did he evict you? :)

LiarWatch says

Hiding? Running?I'm not a realtor here. That would be you..... hiding, running and screwing the public.

Darrell,

Actually, that was your ex-girlfriend. Not only did she screw the public, but she screwed you pretty bad before dumping you. Is that why you're so bitter?

Why are all the specuvestors on this site so vile? If it was such a gravy train, they'd be silently smirking in the corner counting all their free money. Instead, they spend time here, patting themselves on the back, trying to put down others, pimping for the NAR, and (at least in my observations) whoring for the democrats. Id ask how you people sleep at night, but its obvious, not very well

So sad. The worst will be these clowns will be crying foul when the market crumbles and they are crushed by their own leverage. It will be the evil GOPs fault and they will be demanding that the smart democrats throw the banks another trillion dollar bone to try and make them whole. Sucks for those of us that are forced to pay for this crap