patrick.net

It was a buyer's market until around March/April 2013. We were looking around that time and then all of sudden, it became "crazy" quoting my agent, as not like she had seen ever....it was the Investors with cash that were driving this increase, not your typical homeowner who plans to live there. With the huge influx of cash, othesr jumped in worried they would be priced out. Due to a personal situation, we had to drop out of the market for a while and were glad we did. Prior to that something would open and be sold the same day; we did not have a chance.

Now, homes are sitting, price reductions, and per my agent again, it 'dropped dead'....

So it may take a little while, but those that 'have to sell' will see a price decrease if they don't price their home at a good price.

I do not know if this will create a 'crash'; that remains to be seen. It will probably return to what it was like before the "frenzy" i.e. around January of 2013.

But it depends how much 'money' was keeping this afloat by the investors and if they cannot get anyone to buy their portfolio, then they will need to sell their portfolios...and that will create a major downturn if all that inventory comes on the market to "sell"....

We'll see.....

It's OK, the slope will never go negative. Etch the plus sign in your granite countertop.

See, everybody's playing nice.

In 2011 a Real Estate blogger in Seattle called a "bottom" to the Real Estate market. It caught on while the Fed started operation twist to drive down interest rates: http://www.npr.org/blogs/money/2011/09/21/140643696/operation-twist-explained-in-4-easy-steps

If you look at all the charts, and graphs you see a pretty steady increase in Real Estate pricing until the spike we had fro 1998 to 2007. Pick a chart any chart.

Then we had Case Shiller, at the "top" of the market come up with an Index of housing prices based on 20 Metropolitan areas.

What that did is set up a Zillow like scheme where the price of housing could be determined by the average person so they can buy mortgages.

Mortgages are the name of this game. That paper, those loan documents, become the financial instrument used to show those financial products are a safe investment.

We'll there is no top, or bottom to the housing industry. A Real Estate transaction is a personal thing between to consenting parties. The seller can have any motivation they want, but the buyer usually wants the best deal they can get, or that is the way it used to be.

Now buyer go crazy with internet searches, statistics, and data, like the were day trading stocks.

Stock usually come with a buy in the gambler can afford to lose, a home comes with a 30 year debt, for the price paid.

I've pointed out a number of times that the price of housing compared to wages, not wealth, but wages, is way out of whack, no matter who pays the ratios. My first sets of purchases were at a little higher than my yearly income, and I had to prove it. Now housing is three times the yearly wages buyers are brining to the table, some times more.

If we were in a period where we could generate hyper inflation, great, but I think we can all see that isn't coming.

All we have now is another mess to unwind.

Give me equity or give me death!

That's the key to preventing the revolution.

Prices can never go negative because real estate is a worldwide market now. It only takes one.

OK, sure, they can go negative in the very short term, but long term it's nothing but up, up, up!

All you have to do is zoom out enough to fit the point you're trying to make! lol

Seriously, who needs a mortgage anymore?

If you can't pay all cash, there are plenty who can. It's different this time.

Well, there is no discussion with three years of Real Estate hind sight.

Everything you are asserting is wrong, and misdirected.

You didn't address anything in my comment, but I will pull out a tid bit you keep missing.

Some sellers just want to sell. It's called diminishing returns, and obsolescence.

That differs from some stock that the individual has no control over.

Bob, if you have nothing to say, just move on.

exfatguy says

Seriously, who needs a mortgage anymore?

If you can't pay all cash, there are plenty who can. It's different this time.

There are millions of cash-flush twentysomethings positively salivating over the deals we're seeing in housing right now.

There will never be a better time to buy - it's different this time!

The mathematical trend is for them to go negative. That is what is meant by phrases kike "growing more slowly. So ,egads, are you saying that trend won't continue and that, instead, prices will steady or trend up again suddenly for several months? I'm not a permabear. I just think some of us are saying the trend will continue because we can't think of a reason for it to stop.

egads101 says

FunTime says

The mathematical trend is for them to go negative. That is what is meant by phrases kike "growing more slowly

No, it is not. Any more than a skiier going down a fast part of the hill, who then runs into a less steep part of the hill.

His vertical velocity decreases. Is the mathematical trend for him or her to start going up the hill?

The oracle outlined what it took for prices to fall: HUGE supply/demand inequalibrium. Do we have that? Hell no, we still have historically low supply. AND, adding gas to the fire were foreclosures. Do we have increasing foreclosures? nope, they are literally vanishing.

Prices higher in September of 2014 compared to September of 2013.

yes

Lacking more information, one might say it is an unlikely outcome because of gravity.still possible if attached to a rubber band, for example.

bay area home prices dropped year over year in august from 2012 to 2013 and that was with lower inventory and better mortgage rates

some liar is about to get exposed

egads101 says

The oracle predicts homes will be several percent higher, in September 2014, than they are today.

saved

this way roberto cant go back and try to change his shitty prediction

Call it Crazy says

egads101 says

However, it is quite moronic that most permabears on here, which is the majority on here, seem to think that it is inevitable to go negative.

Like that didn't happen before a few years ago??? Weren't realtors saying in 2006, real estate ONLY goes up??

Who can ever forget ben bernanke in 2005 - I guess I don’t buy your premise, its a pretty unlikely possibility, we have never had a decline in housing prices on a nationwide basis

Here is the video: http://smaulgld.com/the-dark-side-of-rising-home-prices/

Call it Crazy says

egads101 says

oh no! the value of homes is going up, but more slowly? what ever will I do?!?!?!

Hmmmm... looks like the trend line has the seasonally adjusted numbers back to the same point as August 2012. But, CS reports as of July 2013, so add two months to the trend line for today...

Want to guess where it is now and where it is going??

Just FYI, since that is a rate of growth chart, its helpful to put that in terms of numerical values and you will see what a nothingburger you get for going slightly below the line in Oct & Nov 2012. For an apples to apples comparison here is how that chart (CS-20) played out, as well as the 6 months prior...

Month.............Value
Feb-2012.......134.08
Mar-12............134.07 (FYI, this is the bottom)
Apr-12.............135.98
May-12............139.20
Jun-12.............142.36
Jul-12..............144.58
Aug-12............145.81 (this is where your chart starts)
Sep-12............146.21
Oct-12.............146.02 (the Oct drop--still higher than Aug 12)
Nov-12............145.81 (the Nov drop--now same as Aug 12)
Dec-12............146.08 (prices rising--never saw Aug 12 again)
Jan-2013.........146.19
Feb-13............146.58
Mar-13............148.56 (rate of growth increasing)
Apr-13.............152.38
May-13............156.15 (rate slowing, still far above Aug 12)
Jun-13............159.54(rate slowing, even further from Aug12)
Jul-13..............162.49 (last value on your chart...)

So forgetting for a moment that the bottom was @134.07 -- if you were telling someone to buy, when on your chart was a better time --

Aug 2012 when prices were @145.81?
Oct 2012 when prices were slightly higher @146.02?
Nov 2012 when prices were falling but now even with Aug @145.81?
Today (i.e. Jul 2013) when prices are @162.49?

Bottom line, as you can see, with prices now @162.49, the trend will need to go from slightly negative to resoundingly negative to smash through the 145.81 value at the start of your chart-- to say nothing of the 6 months earlier bottom @134.07

Also, before you get all angry at me -- yes I realize these are not actual home values - just (like all indexes) representations of the underlying values. Also, yes this is not any particular city or any particular house...its simply the CS20 where (to my knowledge) your chart is derived. That said, if you wish to have a constructive debate on the merits of what I noted, please let me know.

Also, I just noticed your comment was regarding the seasonal values, whereas my numbers are the non-seasonal. I can re-create my post with seasonal values if you like, but I can tell you now, you wont like that result much either.

Edit - actually, I just looked at it -- you will like it less.

Call it Crazy says

CDon says

Also, before you get all angry at me -- its simply the CS20 where (to my knowledge) your chart is derived.

Two, things.....

First, It's not MY chart... it comes from S&P/Case-Shiller and was posted on MarketWatch... But thanks for giving me credit....

Second, I made reference to future trend lines of the chart, not actual points on the line, since CS lags by a few months....

Call it Crazy says

Want to guess where it is now and where it is going??

Noted on both points. And I appreciate the civil response.

That said, you see what a herculean task it is going to be to get from where we are now (2 months ago) @162.49 all the way back down to the beginning of that chart @145.81 don't you?

I've noticed quite a few price drops in MLS listings lately, property taxes are moving up again as well. I live in a condo community surrounded by a rental, walked over to one building the other day and they had 9 keylock boxes in a 42 unit. Even so, the RE market in my area is red hot, home buyer class attendance is up, sales up 17% yoy, and statewide median price - up 9%.

I think prices are moderating, or checking up because most of the action is in the summer months, and that time is over. Watch for listings to fall off the MLS and re-appear come spring time.

It's going to be a long cold winter, time to hibernate for a bit, save up, or come up with a down payment and with no tapering on the horizon, and if interest rates stay the same or fall back a bit we should be off to the races come spring time again.

The other data is tough to sort. Thats at least part of the reason we have differing views. Part of the reason supply is low is that investors have bought a signifcant number of houses. I know you(actually I'm not sure I've read much of your writing here) will say they've not bought enough to make a difference but I disagree. Investors will see those purchases in bulk. They won't mess around with individual houses for long. Thats why articles reporting on the issue often mention the Fed buying mortgage backed securities. Investors are watching that and if it looks lije free lunch is going away they'll go eat sonewhere else by buying another investment type.

FunTime says

Part of the reason supply is low is that investors have bought a signifcant
number of houses.

According to this article from March 2013: "Here in Orange County, nearly every home listed for less than $400,000 "is being pursued by institutional investor capital," he said."

I can't imagine why Los Angeles County would be immune to the same.

http://online.wsj.com/article/SB10001424127887324034804578346800317118568.html

John Bailo says

It doesn't matter housing goes up a bit or not.

The question is whether it goes up a lot in relation to other investments.

If not, then the impetus to buy is nil.

A person living in a low cost apartment, socking away money with some of it in Facebook, will be able to easily afford to buy something better later on and not have to get rid of a white elephant like the house his Dad and Mom are stuck with.

Liquidity is the goal of Gen M.

Facebook Inc
NASDAQ: FB - Sep 24 7:59pm ET
48.45+1.26 (2.67%)

As they said in The Office:

...I would buy one with thicker walls...

Speak for yourself there. Its interesting, in 2005-2006, some bull would gloat about the appreciation of their house, to which a bear would reply:

"a house is a place to live - NOT an investment"

With what you are saying here, the shoe is on the other foot...how ironic.

That aside, if you need housing to beat all other classes of investments before you buy, you will never buy, nor should you. Most people believe housing is basically an inflation hedge, and nothing more. Yet, if $$$ is the end all be all for you, go with growth stocks, and rent as cheaply as you can for the rest of your life.

Now all that said, there are (or at least were) a bunch of moderates here, who could afford a decent place, but were terrified to buy in large part because of bears like you who continuously said 2009 was "nowhere close to the bottom," and ever since then, its been nothing but crash crash, CRAAAAAASH!!!!! Case in point, look at what you posted here 2 months ago:

http://patrick.net/?p=1227587

You even had the temerity to add your own hyperbole based headline Crack In The Dam: The Flood Begins ...as if years from now, we would all look back at that one house in Kansas and say, Boy that John Bailo - he really nailed it there... that really was the beginning of the flood we all were worried about since 2009.

As it stands, it is now 2 months later, and that "Crack in the Dam" is looking as merely the latest in a never ending stream of nothingburgers from the bears.

And this is precisely why the 20:1 soccer score ass kicking is so appropriate here. You can try to reframe the debate as to "which investment will do best" if you so choose. But if you do, you cannot also post such irresponsible threads as the "CRACK IN THE DAM" and not expect people to call you out on it.

Say hey! This was in the Wall Street Journal on March 30, 1999:

Holy cow/interesting/compelling ...!

And where is it up to date??? Right here ... see the first chart shown in this thread.
Recent Dow day is Tuesday, September 24, 2013 __ Level is 98.0

WOW! It is hideous that this is hidden! Is there any such "Homes, Inflation Adjusted"? Yes indeed, go here:
http://patrick.net/?p=1219038&c=999083#comment-999083

egads101 says

Good thing Dumbross was here, to keep that duck in his place...

whew, had you listened to him, you'd have bought a home in 2010... go figure some people out!

So Roberto, are you buying again this fall or winter??

That's stunning, upisdown.

Basically, Wally is a welfare 'ho, they profit off SNAP.

Can you believe that companies are allowed to keep sales tax revenue? It's un-freakin' believable. The big boys who can afford it get out of it, while the old established mom & pops and smaller franchises pay normally.

I heard it's not only legal for the government to treat companies arbitrarily different than others, but to keep it a secret from taxpayers.

You know what the bulls are going to say: Walmart is the retailer of last resort, so people are trading up to more chic Target (pronounced "Tar-zhay").

Call it Crazy says

If Wal-Mart is missing sales goals, what's that say about the overall economy??

Possibly nothing.

/?p=1228272

Call it Crazy says

If Wal-Mart is missing sales goals, what's that say about the overall economy??

That house prices will continue to rise! They are foregoing their walmart purchases so they can buy homes with the money they save

APOCALYPSEFUCK is Comptroller says

Can’t get the items they want. Many shoppers complain that they go to Wal-Mart with a list but can’t get all the items they want on them. They leave with three of seven, or even worse, one of seven. Many of them complain that the store has empty shelves and spaces that will stay that way for a long time.

No one is there to help anymore. More than one of the shoppers said that they couldn’t find an employee to help them. I have experienced that many times.

Long checkout lines. Consumers from stores all across the country complained about check out times. The average amount of time was 15 minutes.

I think the first one causes the second one, since on the rare freak occasion WalMart has what I want in stock, I stock up since I never know when I am going to see what I came in for again.

thunderlips11 says

Basically, Wally is a welfare 'ho, they profit off SNAP

Wal Mart may have the (rightfully earned) rep of the low-life of the retailers, but their growth has matched the growth in SNAP of the last 13 years too. They are still a perveyor of cheap and mostly short-lived Chinese junk, but they morphed into a major player in the grocery business with a 25% market share that growing year by year.

thunderlips11 says

Can you believe that companies are allowed to keep sales tax revenue? It's
un-freakin' believable. The big boys who can afford it get out of it, while the
old established mom & pops and smaller franchises pay normally.

I have a friend who is now the 4th generation to run the family deli, and they have to compete head to head against Wal Mart on prices, and yet Wal Mart can advertise their very own "version" of choice and select cuts of meat. Factor in the slaes tax retention and numerous other advantages, it's not even a competition for my friends. They survive solely on reputation and name recognition, along with their same location for almost 50 years. They have little to no marketing because they just get undercut when the ad makes a full circle, but Wal Mart hurts Wal Mart the most because of their own reputation. my friends are in a catch-22 position whereas they are paying full taxes and such with an outdated building and location, but if they move Wal Mart will use political pressure to drive up all of their udate/relocation costs to put them out of business.

Back in the 90's quite a few of the small time mayors pushed pretty hard for the big box stores to locate to their cities/towns for the convenience and (now obvious) false sense of growth or revenues. Those part-time shit-pay jobs, along with giving away tons of perks to attract ANY retailers has not, or will it ever, pay for itself. One area nearby that did that can't even afford to fix the heavily traveled road where those box stores are located, and is fortunate that it is a state highway and the state picks up the bill. The citizens of the rest of the state just paid to redo that road and improve it with more turn lanes last year also, and ironically the mayor's time in office lasted as long as that road did.

donjumpsuit says

I wonder what happens when nobody wants to buy, and nobody needs to rent.

Possible scenario? How is it possible? Zombie apocalypse?

upisdown says

Back in the 90's quite a few of the small time mayors pushed pretty hard for the big box stores to locate to their cities/towns for the convenience and (now obvious) false sense of growth or revenues.

And for bribes. Don't forget the bribes.

Call it Crazy says

U.S. inventory growth at Wal-Mart outstripped sales gains in the second
quarter at a faster rate than at the retailer’s biggest rivals. Merchandise has
been piling up because consumers have been spending less freely than Wal-Mart
projected, and the company has forfeited some sales because it doesn’t have
enough workers in stores to keep shelves adequately stocked.

It was bound to happen to Wal Mart, just as it has to others whereas their actions begin to cannibalize themself. Unfortunately, some other bottom tier retail chain will pick up Wal Mart's general business operational plan and out-Wal Mart, Wal Mart. What will become of the new and rising entity will undoubtedly be a bigger and more vicious P O S than Wal Mart is now.

@Patrick

I have the same problem with quoted text having lots of extra "line breaks" as the post above by 'upisdown'.

Is there a way to fix the problem?

egads101 says

I tried to charge the birds in the tree rent, but they just fly away when I come to collect.

Not to mention the things they do to your car.

freak80 says

And for bribes. Don't forget the bribes.

Boy, isn't that the truth. A bar/liquor store nearby was run out of business when the mayor(who was the former police chief)informed the owner that his liquor license would not be renewed and to just sell his building. Come to find out, the mayor had already conjured up a deal with one of the big local gas station chains to buy the property, with some generous city gas purchase contracts and......relection money for the mayor. He was in a very tight race politically last election and barely won. Ironically that gas station is practically the only business on that street to make any money/pay any taxes because of all the BS, T.I.F. district status that the mayor fought for, and got for most of the businesses and buildings.
That gas station is the ONLY gas station in the whole area to have a full liquor department because of the mayor's approval of some moronic exception because the gas station sits on the property where the former liquor store was. No other gas station around, including any of that locla chains' locations, has that perk.

Call it Crazy says

Sure, stop quoting text..... :)

Fair enough. ;-)

There's no such thing as a first time buyer anymore. Remember, if you didn't buy back then, you were priced out forever.

It's different this time.

smaulgld says

Call it Crazy says

If Wal-Mart is missing sales goals, what's that say about the overall economy??

That house prices will continue to rise! They are foregoing their walmart purchases so they can buy homes with the money they save

This can't be emphasized strongly enough: even when people become homeless, it frees up resources for home purchases.

Cut costs in non-essential areas of your life, and put it toward a down payment - heck, fvck that! - get a no-down neg-am and plow that money you were spending on food, thorazine, and interferon into a mortgage payment!

Say hey! This was in the Wall Street Journal on March 30, 1999:

Holy cow/interesting/compelling ...!

And where is it up to date??? Right here ... see the first chart shown in this thread.
Recent Dow day is Wednesday, September 25, 2013 __ Level is 97.6

WOW! It is hideous that this is hidden! Is there any such "Homes, Inflation Adjusted"? Yes indeed, go here:
http://patrick.net/?p=1219038&c=999083#comment-999083

As awful as Walmart is, it's not going anywhere. Too many towns and small cities have little to no alternative for shopping except their local Walmart. The citizens of these blighted places struggle on year by year, subsisting on welfare and small income from odd jobs and seasonal work. Walmart is their mama, they go to her for nearly everything.