patrick.net

Yes, Los Angeles down 0.3% - just fierce!!

The end of all days is near...we'll approach it in 0.3% increments...but surely that's a falling knife...

Can you believe it...a 500,000.00 house is now only worth ...

$498,500.00!!!!

We're doomed!! It's obvious...

in our neighborhood it is still disgusting. in the boonies, old disgusting shacks with septic tanks are on the market for 500/600 thousand. Just disgusting what our society degraded to out of greed for a quick dollar.

I'm really starting to think that assessments that bubble will last another 20+ years were not far off. Prices are out on the moon still.

BBC World News is even talking about our double dip tonight... "Enormous Pressure on US economy", "Less tax revenue", "No end in sight"..

SubOink says

Yes, Los Angeles down 0.3% - just fierce!!
The end of all days is near…we’ll approach it in 0.3% increments…but surely that’s a falling knife…
Can you believe it…a 500,000.00 house is now only worth …
$498,500.00!!!!
We’re doomed!! It’s obvious…

Yeah, what's .03% per month for a $500,000 house? You're only losing $18,000 a year. Glad you're so calm about it.

The end is near!!

Send me $1000 and I will prepare you for it....

gameisrigged says

SubOink says

Yes, Los Angeles down 0.3% - just fierce!!

The end of all days is near…we’ll approach it in 0.3% increments…but surely that’s a falling knife…

Can you believe it…a 500,000.00 house is now only worth …

$498,500.00!!!!

We’re doomed!! It’s obvious…

Yeah, what’s .03% per month for a $500,000 house? You’re only losing $18,000 a year. Glad you’re so calm about it.

I used to spend 30k a year for my rental that was half as big....so, I'd rather loose 18k a year than throwing out 30k a year in rent. And what do you think, houses will keep falling 18k a year forever, so one day they will be free?? Makes no sense dude!! Our old rental house went on the market for $400 dollars more than what we paid (and I thought it was outrageous)...I couldn't believe it...was laughing...but then they found somebody. WOW!! Somebody is now paying $400 in rent more a month than I am paying in mortgage for a house twice the size in a much nicer neighborhood - Good for the greedy landlord!!

The end is near!!

So far, the house price does not go up, but it does not crash either. Something drastic needs to happen to make the house price crash. Banks have been very careful at releasing their REO. I've followed the inventory using the same criteria on Redfin at a city. I can see the inventory will shrink about 20% toward the end of the week and climb up to the same quantity again in the mid week. This has happened for good six months.

SubOink says

I used to spend 30k a year for my rental that was half as big….so, I’d rather loose 18k a year than throwing out 30k a year in rent.

Um, unless the house was free, that's not an appropriate comparison. You're losing 18K a year AND paying a mortgage.

And the word is "lose", not "loose".

And what do you think, houses will keep falling 18k a year forever, so one day they will be free?? Makes no sense dude!!

They won't be free, but they will be cheaper.

You almost had me convinced with all those question marks and exclamation points. Dude.

Our old rental house went on the market for $400 dollars more than what we paid (and I thought it was outrageous)…I couldn’t believe it…was laughing…but then they found somebody. WOW!! Somebody is now paying $400 in rent more a month than I am paying in mortgage for a house twice the size in a much nicer neighborhood - Good for the greedy landlord!!

LOL dude!!!!!! OMFG!!!!! Like, that is totally outrageous. Guess you told us.

gameisrigged says

They won’t be free, but they will be cheaper.

You are right, the 500k house is already only 498,500.00 now - too bad you spend $2500 last month in rent (if you live in a 500k house) so for you it would have been better to buy it last month than now.

Math is not your best friend I see...

SubOink says

gameisrigged says

They won’t be free, but they will be cheaper.

You are right, the 500k house is already only 498,500.00 now - too bad you spend $2500 last month in rent (if you live in a 500k house) so for you it would have been better to buy it last month than now.
Math is not your best friend I see…

Wow. My previous post about the inaptness of your comparison just went right over your head, didn't it? When you read stuff like that, do you just kind of hear gurgling noises in your head?

My home metro area, Minneapolis, is DOWN over 11% y-o-y - ditto for many formerly "stable" metro areas.

DOWN 11% is not flat - it is a significant decline, period, end of story.

This is still just the beginning, not the end.

Keep in mind that in addition to house prices declining over 1% per month per CS we are also seeing the dollar itself decline by a significant percentage y - o - y. The y-o-y losses in RE are significant, even in metro areas that have not fallen as fast as the majority.

Troy says

it’s impossible to catch the bottom of any market

Yeah, very possible when bottom is still way off cuz there are very few high paying jobs/exotic loans to support the current bubble prices.

schmitz_kris says

My home metro area, Minneapolis, is DOWN over 11% y-o-y - ditto for many formerly “stable” metro areas.

Formerly stable probably means they resisted price declines longer than other areas...perhaps?

gameisrigged says

SubOink says

gameisrigged says

They won’t be free, but they will be cheaper.

You are right, the 500k house is already only 498,500.00 now - too bad you spend $2500 last month in rent (if you live in a 500k house) so for you it would have been better to buy it last month than now.

Math is not your best friend I see…

Wow. My previous post about the inaptness of your comparison just went right over your head, didn’t it? When you read stuff like that, do you just kind of hear gurgling noises in your head?

It's pretty straightforward...your "inaptness" is that you don't realize it. Rent is throwing out money every month. You do have to live somewhere, don't you? - So in essence as a renter you lose that amount every month except you will NEVER own the house. I will own my house one day and my payment will be exactly what it is now until then. Renting only makes sense if you are paying way less for the same place then buying.

When the market is basically flat, your wait period is very expensive. If you buy a house for 500k now OR wait for a year, then buy it for 482k ( but spent 30k on rent in the meantime ) you are not doing well waiting. The wait cost you 10k!

I think we will stay flat for a while now. Keep throwing out that rent gamesrigged and tell yourself its a financial smart move.

The question is...what happens when the world does not end?

While I do realize that all markets are different, I'm seeing deals here in central Florida that are making my eyes pop. Deals that weren't in existence 6 months ago, much less in '08 or '09.

For example, on my other monitor I'm looking at a 5 year old 3/2 with 1346 sq. ft in a good neighborhood that shows no signs of foreclosure blight. It has 152 DOM (Days on Market) with an asking price of $52,900 - and it's not a short sale. I strongly suspect that at this point the bank will take $47,500...

At 152 DOM, the market is saying that this house is a crap deal, even though it's in perfect condition. If you take a step back and think about it, that's a pretty incredible thing. A brand new house for about the cost of a mid priced luxury sedan.

Not only is the housing collapse not over, it has entered a new phase. A phase where not only the stupid money has evaporated, but the smart money is gone as well. Nothing is moving. Everything is in paralysis.

Now I realize that my neck of the woods is not typical, (oh why the FUCK did I have to move to this shithole,) there is a saying that the way Florida goes, so does the country. I wouldn't be surprised if recovering markets in other parts of the U.S. aren't in for another 2 years of ass raping fun...

SubOink says

gamesrigged won’t give you a prediction. He just waits until some data comes out and then tells you that he told you so in hindsight. Useless.

Predictions ? See below.

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

SubOink says

Rent is throwing out money every month. You do have to live somewhere, don’t you? - So in essence as a renter you lose that amount every month except you will NEVER own the house. I will own my house one day and my payment will be exactly what it is now until then. Renting only makes sense if you are paying way less for the same place then buying.

So what words do you use to refer to the interest you pay on the loan you took to buy the house? Are you "throwing that away?"

SubOink says

When the market is basically flat, your wait period is very expensive. If you buy a house for 500k now OR wait for a year, then buy it for 482k ( but spent 30k on rent in the meantime ) you are not doing well waiting. The wait cost you 10k!

Many homes in CA before the bubble were half of 500K and some less than that. After all is done many will save well over 200K in future obligations and increase savings.

Or you rather have the same bubble inflate for self-serving purposes?

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

GOD i love people from LA.
Its all about getting $$$$$$$$$$$$$$$$.
especially when its someone elses.
LOL! Somethings never change.....

FunTime says

So what words do you use to refer to the interest you pay on the loan you took to buy the house? Are you “throwing that away?”

Yes, I am. To a point because they are a tax deduction. Here is a breakdown...my mortgage is about (I am gonna use slightly rounded numbers) $2400 - $1800 of that is interest that I am throwing out. That interest is a tax deduction so I pay 500/m less in taxes - I am effectively throwing out 1300/month. If I rented my own house, it would be $2850.- on the low side. (Both of my neighbors across the street have a slighly smaller house and are renting it for that) -

So would you rather throw out $2850 every month or 1300? If I go as far as putting in prop tax - okay there is more money I am "throwing" out...another 500-600/month (not even figuring in tax deduction) - still 1800 vs 2850 and over the years I am building equity and own the house one day. I don't care what its worth at that point because I live in it. I am not trying to get rich of it just don't want to pay somebody else's mortgage off.
Renters don't realize, you do have a mortgage. It's just not your own. Somebody else will one day own the house that you have paid of for them. In the meantime, my life quality is very different. Not worried about a landlord. I can improve the home. Have you ever noticed how rentals are in such shitty shape compared to primary residences? Look at the houses your friends rent, how they live and then look at houses that friends have that own. Renting vs owning cannot even be compared, its a whole other lifestyle. It's apples vs oranges. So I totally get people that choose to rent because they dig that lifestyle (for example not renting a house but a super nice apartment with gym and pool in the premises). But if you are renting because you think you are the "slick" guy that waits out the storm in hopes of picking up a 5000sqft house in Malibu with ocean views for 500k - Keep dreaming! Won't happen!! That's my predicition. (Disclaimer: Unless a big swell wipes half of CA coast down the ocean..)

I've done the math for owning in Minneapolis where I live. It's a better option to rent right now unless you're willing to buy a 1 bath property. Those are the only "deals" right now. I expect prices to continue to fall too for a few reasons.

First, gas prices are too high. The public transit routes don't go where consumers need them to go. 95% of this market is moved by fuel costs. I've toured neighborhoods that I am scouting. You can find a few on every block, but the mcmansion squatters stick out. You'll see four to five Jaguars, Lexuses, BMWs, or Mercedes packing the whole driveway and the yard will look like crap.

Prices will only fall faster once interest rates rise. I'd wager there's another 15-20% in price declines in Minneapolis.

thomas.wong1986 says

Many homes in CA before the bubble were half of 500K and some less than that. After all is done many will save well over 200K in future obligations and increase savings.

What's your point? You think that a $500k home in LA will sell for 200k..by when?? That is such a ridiculous prediction. About as ridiculous as a "buy now" statement. If a house in LA would sell for 200 that is right now 500 then EVERYBODY (a bagger at the grocery store even) could buy a house. That's why it won't happen.

thomas.wong1986 says

GOD i love people from LA.
Its all about getting $$$$$$$$$$$$$$$$.
especially when its someone elses.
LOL! Somethings never change…..

Well, we are having a discussion here about $$ and if its wise to buy or rent or hold or wait etc...has nothing to do with "people from LA". That's nonsense.

We all want basically the same. We just don't agree on how to get there...

Reading through the bi-polar nature of the discussion on this thread made me sit down and consider the realities facing real estate, banking and the economy. After 15 minutes of this, I started crying. Four shots into my bottle of Southern Comfort, I feel grounded again. So here's where I'm at.

In September of 2008 a lot of people, (including myself,) crapped their pants and declared the end of banking and the U.S. economy. And if you think about it, the people who panicked had a really good point. According to the rules, the big 5 or so banks were bankrupt. After all, they were hopelessly over leveraged and the collapse of the housing market would bankrupt them, unavoidably and irrecoverably. Right?

Fast forward to 2011. The banks are still insolvent. They are still producing the toxic sludge they were three years ago. And instead of snorting it like they used to, they're now mainlining it with a rusty needle and a charred metal spoon. Yet the banks are still chugging along and the economy seems to have stabilized. Confusing, no?

My take from all of this is that banking in the United States is a game with certain rules. And when those rules threaten to destroy the players, the rules are bent. Changed. Warped. Destroyed utterly. Remade anew.

In short, we play whatever game the big boys come up with, no matter how ridiculous or sad or pathetic. We play along because the alternative is utter and complete annihilation of modern life as we know it.

Will this new mutant form of capitalism survive? I don't know. I suspect it will in the short term. After all, how can you lose a game when the rules are as malleable as an 18 year old girl on prom night in the back of a limo? We all need this thing to work after all. The guys on wall street and just about every politician knows this.

In the long term... well, on a long enough time line, everyone's chances of survival drop to zero.

SubOink says

So would you rather throw out $2850 every month or 1300?

Aren't the numbers you're using only the beginning of the comparison though? If you do the "improvements" you talk about later in what your wrote, isn't that going to add to the amount you "throw out?" My friends who own spend additional huge sums of improvement money on top of the purchase price.

It just seems like huge amounts of debt-taking/spending with no numeric rationale whatsoever. The most uncomfortable part for me is the ratio of purchase price to income. That seems so fundamental and yet people just ignore it. It must mean living on a personal budget which includes savings is rare.

Yet the banks are still chugging along and the economy seems to have stabilized. Confusing, no?

Has it stabilised? All that has happened is to stabilize US banks the United States exported inflation to the rest of the world. We can't just throw shit beyond our shores without something coming back at us.

FunTime says

living on a personal budget which includes savings is rare.

That's okay. Dream of big time equity build up is the only thing that matters to the delusional. Negative equity in short term does not matter, it is even better then a $ sitting on hand earning 0% interest rate :)

Or do you think we’re in for a 15 year bear market?Is every asset that is "toxic" already known?

The problem with this crisis is it friggin huge. It's not just contained to one emerging economy like Russia, Argentina or Mexico. It's the reserve currency of the globe.

SubOink says

What’s your point? You think that a $500k home in LA will sell for 200k..by when?? That is such a ridiculous prediction. About as ridiculous as a “buy now” statement. If a house in LA would sell for 200 that is right now 500 then EVERYBODY (a bagger at the grocery store even) could buy a house. That’s why it won’t happen.

You do recall how prices in LA (not to mention Beverly Hills, Malibu) dropped by 40% back in 1991 and stayed down for a long time.

How many people jump back into RE when priced dropped back than. Nada! People were burned once and stayed away.

Yes, prices will go back down to their long term fundemental prices adjusted for inflation. Its happened before and will happen again.

Yes, prices were irrational in 2003. They have been irrational since 1998.

thomas.wong1986 says

Yes, prices were irrational in 2003. They have been irrational since 1998.

Prices were irrational in 2003 and since 1998. In most of the BA, prices are still above the 2003 prices, and way above the 1998 prices. Therefore, prices are still irrational in most of the Bay Area (period).

They are already talking about an end to subsidized mortgages. What happens when 4 years of no new construction turns into 6 and 8 and 10? You think the 1% annual increase in population will simply move to tents?

I think if the subsidized mortage market ends prices will fall even more with the reduction in credit worthy buyers. Banks may still lend, but it will be at higher rates.

The whole idea behind subsidized mortgages is to stablize the market. We now know that is obviously a load of crap since Fannie and Freddie were really just good at politicking their way through the DC minefield. Now that they are wards of the state I they might find new life in wheelchairs with square wheels so to speak.

Despite all QE1 and QE2, credit is still tight. Naturally, the herd - you might find this to be a mistake - is reducing their debt burden. They're recapitizing banks through savings, but they way financial markets now work is very different from the way they worked in the 80s. There's no such things as investment banks anymore. They're all commercial banks whether they operate 10,000 deposit windows or just one in the hills of Utah.

StoutFiles says

Why does everyone here care what he thinks so much

Because we've spent a long time listening to him talk about how the housing market has bottomed. We knew it would continue its downward trajectory when the tax credit ended, and form a new bottom, but he enjoyed the temporary condition of "hasn't happened yet" as his platform to deny the impending reality. Like having bet on a team that's now losing 20-1 in the eight inning, while taunting those who bet on the team that's inevitably going to win, asking them to pay up.

Furthermore there’s all the cash in the world to start a new bull housing market if rents continue to climb and vacancies continue to drop.

Really?

Do you accept capital for investment? I'm basically astonished you wrote this, but you seem pretty confident that you're right.

I got my number wrong. Seasonally adjusted for San Francisco, Feb/Jan, is "-1.6%" Same question though.

klarek says

SubOink says

When the market is basically flat, your wait period is very expensive. If you buy a house for 500k now OR wait for a year, then buy it for 482k ( but spent 30k on rent in the meantime ) you are not doing well waiting. The wait cost you 10k!

LOL

What about that $30+k you just spent on interest, brainiac?

$30k on interest??? HUH?

Please breathe in, exhale slowly - now read my post again, SLOWLY...Get it now?

I don't see the three-month moving average numbers in the press release, so I'm still not sure what numbers you're using. The numbers in the press release don't suggest what you're writing.
Also, you must be looking at seasonally adjusted numbers which Case Shiller warned against last April. It looks like they found an error in the way they were adjusting for seasons.
http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3DCaseShiller_SeasonalAdjustment2%2C0.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243679046081&blobheadervalue3=UTF-8

But wait! CoreLogic says prices went up last month. Here's the quote from Calculated Risk:
"CoreLogic: Home Price Index increased 0.7% between March and April

by CalculatedRisk on 6/01/2011 01:55:00 PM

Notes: Case-Shiller is the most followed house price index, but CoreLogic is used by the Federal Reserve and is followed by many analysts. The CoreLogic HPI is a three month weighted average of February, March, and April (April weighted the most) and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic® Home Price Index Shows First Month-over-Month Increase since mid-2010

CoreLogic ... today released its April Home Price Index (HPI) which shows that home prices in the U.S. increased on a month-to-month basis by 0.7 percent between March and April, 2011, the first such increase since the home-buyer tax credit expired in mid-2010. However, national home prices, including distressed sales, declined by 7.5 percent in April 2011 compared to April 2010 after declining by 6.8 per cent in March 2011 compared to March 2010. Excluding distressed sales, year-over-year prices declined by 0.5 percent in April 2011 compared to April 2010.
...
"While the economic recovery is still fragile and one data point is not a trend, the month-over-month increase based on April sales activity is a positive sign. ..." said Mark Fleming, chief economist for CoreLogic.

I was expecting the CoreLogic index to increase over the summer because it is not seasonally adjusted, however the seasonal increases usually start in June (when the Spring home purchases start to closes). This is just one data point, but it is possible this index will have small increases all summer..."

Schiller report doesn't reflect the truth of the housing market: analyst

BK Capital President and Fast Money contributor Brian Kelly says in a CNBC video above that Standard & Poor's Case-Shiller U.S. National Home Price Index does not really reflect what's going on in the housing market. Kelly cites what he calls more up-to-date CoreLogic statistics, used in a Toll Brothers report, showing regular (non-distressed) home prices in New York, New Jersey and Washington, D.C. up 10 percent. He attributes a fall in prices to the distressed sales market.

"I'm not talking about another housing boom where you can start flipping houses," he said. "I'm just talking about the bottom in the housing market and not only that, when you look at the distressed sales that are going on, that's actually become a shrinking percentage. That has kind of stabilized for the first time since 2009, so you're starting to see things turn."

http://therealdeal.com/newyork/articles/schiller-report-doesn%E2%80%99t-reflect-the-truth-of-the-housing-market-analyst-brian-kelly

HousingWatcher says

Schiller report doesn’t reflect the truth of the housing market: analyst

We're not talking about the truth, which would become quite philosophical. We're talking about specific ways to analyze sales data. I don't view any of them as the truth. Generally, though, I don't find Fast Money contributors or CNBC helpful toward meeting my goals since their main goal is TV ratings not helping me. TV ratings are based on appealing to the biggest number of people, usually with little concern for what causes the appeal.

CASH ON THE SIDELINES is a bunch of BS.
Are the unemployed paying cash for houses? Those lucky enough to still have jobs would take out loans. I have cash which I have been saving since roughly 2003, and guess what? I will be using the smallest possible downpayment amount, because should it all tank again is another cluster-fuck, guess who is walking away with his cash intact? That's right, me!