patrick.net

During the bubble (and I would argue even still where I live) people are “monthly payment buyers”. In that they figure out what monthly payment they can make and that determines what they can pay for a house.

Makes some sense - add to that the fact that with loose lending standards many stretched themselves so thin that they are one unforeseen event from disaster.

Looking at the numbers for my area in 1999 roughly 20% paid over 35% of their income to hosing costs. By 2008, that number had jumped to over 40%.

I want to believe that prices will come down more, but wanting it and having the data to support the argument are two different things.

For the record I do not think that we will see rampant inflation. My theory (and its is only a theory goes like this). All of the big banks had bad loans on their books, to the point that some of the major players were insolvent. We all know more or less what happened.

The money was given to the banks under the guise of "priming the pump" but in truth it was a back-door way to keep all afloat, without divulging which banks were truly on the brink of collapse.

Fast forward to today - much of the so called "printed money" has not found its way into the real economy. Why? Because it was never intended to.

With the money not finding its way into people such as you and I, I do not see inflation as being a concern.

Troy says

Not necessarily. SOME sectors have pricing power — energy, government, medicine, insurance — some don’t. Overall the system has J6P over a barrel and his pants pulled down.
10% unemployment does wonders to keep wage inflation away.

That's the point though. You can't have monetary inflation with 10% unemployment.

RobertShiller says

If Paul Krugman is correct and we are heading into a third depression then the “wage increase” won’t be as effective when unemployment is 20%+

Yes, and there won't be inflation. It will be deflation.

Tenouncetrout says

Millions of barrels a day being pumped into the Gulf, and he
has little to say. Much talk little action the one time in his administration where he could have acted on something;

This made me laugh. First you say "he has little to say". Then in the next sentence you say "Much talk..."

So which is it?

in my most humble opinion:
Whoever the Prez was after this last election was going to have the economic train wreck meet them on their first day here. It is my gut feeling that the R's didn't want to lose anyone good to a gaurenteed bad term, so they put up Grandpa - knowing that he would not win the election. It is the same thought that put Barry in the race and not Hillary. The D's did not want to lose Hillary to this round of crap that was already in place.

Just as 9/11 awaited whomever was in place.

Now, as for what started this round of economic crap that was handed off to Lord Barry -- it goes back decades, and 9/11 was just the starting bell for the final round. The effects of liberal/progressive/socialist - isms took their toll on America, put us in a horrible place globally and locally and so here we are.

As for R's or D's .... they are all snakes, and will be viewed as snakes by all clear thinking people, until such time as they can be proven to be non-snakes. And on this point we may have some disagreement, because I am of the mind that a conservo does not accept part-snake just because the snake tends to vote pro-coservo. OTOH, a progressive/liberal/socialist does accept part-sanke as long as the sanke helps the push through incrementalism. For some reason, conservo's like me do not play the long-game as well as the other team. One thing that is obvious, the progressive/socialist/liberal team has lots of patients.

tatupu70 says

RobertShiller says

If Paul Krugman is correct and we are heading into a third depression then the “wage increase” won’t be as effective when unemployment is 20%+

Yes, and there won’t be inflation. It will be deflation.

They don't call Bernanke "Helicopter Ben" for nothing. The FED will fight deflation at all costs. When you fight massive deflation by printing money out of thin air, you will probably get hyperinflation instead of inflation. Deflation is possible if the FED fails to create enough money. Some people argue that the printed money is not circulating. This money is going to the banks and the banks are buying US treasuries. They are loaning the money back to the US gov't.

So the UN is saying to scrap the US dollar because it has been "unable to safeguard value". Isn't deflation suppose to make the US dollar strong? Isn't the UN trying to tell us that the US dollar will be weak therefore we'll be in an inflationary depression instead of a deflationary?
http://www.reuters.com/article/idUSTRE65S40620100629

Do you know something that the UN doesn't know?

justme says

Simcha, much more diplomatic than me, aren’t you. I just dont have much patience with Ray-Ray.

Translation = justme has nothing to say. LOL

Robert--

No--I didn't mean to imply that deflation would happen. Just that if Krugman's scenario comes to pass, then we'll have deflation.

I don't presume to know where the economy is headed in the next 5-10 years. I can only look at the latest reports just like everyone else.

RobertShiller says

Isn’t deflation suppose to make the US dollar strong?

No--where did you get that idea? Deflation means prices will decline--but it doesn't mean the dollar will be any stronger against foreign currencies.

No, Ray-Ray, translation is:

Many other posters already have pointed out the multitude of flaws in Ray-Ray's "thinking", so there is no need for me to elaborate at this point, but I would like to extend a hearty "thank you" to those who took the time and made the effort.

justme .... keep drinking that Obama Kool-Aid and everything will be just fine. Funny how people like you opposed the "illegal" wars under Bush, but are quiet as a church mouse under Obama.

lower prices is just the result of a stronger dollar.

I liked him until he was questioned by someone about where the money for the stimulus would come from and he said “umm it’s just paper money and chuckled”. After McCain picked Palin for VP I didn’t think he was fit to be President and voted 3rd party. At this point I just want him gone, and would like to see someone as president that I actually like which has never happened.

> Funny how people like you opposed the “illegal” wars under Bush,
> but are quiet as a church mouse under Obama.

Yeah well actually, not so much. The thing that gets me the most bummed about chatting with you folks about these left/right issues is how you guys just pull statements that have no basis in fact out of your asses and present them as the absolute truth.

For example if you go to DailyKos, which I'll count as a representative 'left' leaning site, and do a search simply for "Iraq" and limit the parameters to within one year you get almost 600 front line articles, many of which have titles such as "The Afghan Speech Obama Should Give (But Won't)" and "We Must Stop Not Talking About Afghanistan". But I don't want to cherry pick, go and make the search for yourself and do a bit of research before yammering some silly platitude.

One thing I've noticed about the 'left' and the 'right' in the US, and arguably this is a generalization but I think it'll hold, is that the left is willing to self-criticize while the right just attacks the left & pretty much blindly accepts the rationalizations and actions of its leaders. And I find its interesting how there's now this attempt to turn that failing back onto the left by presenting them as cult followers...

And here's a fun quote I'm fond of when talking about stuff like this:

"You can have your own opinions but not your own facts."

One of the biggest weaknesses of the left is that they are are actually willing to correct the course and change if they make a mistake.

But this is the U-S-of-A. You must always be right, all the time, no matter how wrong you are. Or else you are a wimp. No matter how right you are.

The Seattle bubble has what you're looking for:

http://seattlebubble.com/blog/2010/02/09/do-rising-interest-rates-lead-to-falling-home-prices/

Tim identified two periods of falling REAL home prices and found they indeed corresponded to periods of rising interest rates. However, if you scroll down you'll see that there were no nominal price declines in that time. Thus price-stickiness kept your 6% rates, 10% less expensive scenario from happening.

Of course I think we'll continue to see stagnant to falling interest rates and stagnant to falling home prices for at least another year or two.

When interest rates rise it will be because the economy is doing better, and thus that those with jobs are more secure in them and buying again, so by the time rates rise home prices are likely to already be flat or rising. Just my opinion.

(all previous correlation research on prices and interest rates had shown NO correlation or one in the opposite sense of the common wisdom. WHY? Because high interest rates also correspond to an inflationary environment in which it makes sense to fix costs now and you expect to be paid more in the future.)

What your friend hypothesized is the bump in demand that happens when buyers get spooked that interest rates are starting to rise on them significantly. It's transitory because it only applies to people who are already thinking about buying.

The wide availability of assumable loans in the 80s also changes the ball game a lot. Sellers with assumable loans can offer their buyers the same low loan payment that they themselves had. That's no longer the case for anything other than FHA.

kentm says

I don’t want to cherry pick, go and make the search for yourself and do a bit of research before yammering some silly platitude.

Here some "yammering" for you to check out: (Obama says that his first action as president would be to bring troops home from Iraq; Jan. 5, 2008).

http://blog.buzzflash.com/alerts/322

RayAmerica says

kentm says

I don’t want to cherry pick, go and make the search for yourself and do a bit of research before yammering some silly platitude.

Here some “yammering” for you to check out: (Obama says that his first action as president would be to bring troops home from Iraq; Jan. 5, 2008).
http://blog.buzzflash.com/alerts/322

But he has been bringing troops home. I'm not sure what your point is.

RobertShiller says

lower prices is just the result of a stronger dollar.

No it's not. That's assuming everything is imported, which is obviously not the case.

For a YouTube on Obama PROMISING to "withdraw the troops from Iraq by 2009" ....

http://www.youtube.com/watch?v=4WYTKj8pU5M

More YouTube proof that Obama is a liar:

http://www.youtube.com/watch?v=5ZvWilRn0L8&feature=related

Ray--

Again. Obama HAS withdrawn troops from Iraq. Here is an old article to refresh your memory.

http://www.nytimes.com/2010/02/17/world/middleeast/17briefs-Troops.html

What is your point again?

For a compilation of Obama's promises re: Iraq U.S. troop withdrawal:

http://www.truveo.com/search?query=obama campaign promises iraq war&flv=1#obama%20campaign%20promises%20iraq%20war%20

To me, he did lie. He gave alot of principled democrats alot of false hope, and sent many neo cons to def con 4 for no reason. What changed? The tone maybe, there is a hint of humility especially on the foreign relations front, but really. Health care reform? Bank reform? uh snooze button. pretty much more of the same. Why do you think people are so apathetic about politics. Theres people pulling in all different directions to achieve no overall movement. Technology has changed so much more than polititians, and the media has moved the overall culture some but its kind of glacial to me.

simchaland says

Let’s see:
Obama’s 1st 18-months:

Health Care Legislation

Wall Street Regulation Legislation (Financial Reform)

Credit Card Protection Legislation

Economic stimulus

Tobacco regulation

Student loan reform

Responds To Gulf Disaster In Timely Manner
And coming soon: A Real Energy Policy
G.W. “The Shrub” Bush’s 1st 18 Months (First term)

Fail to recognize warnings of an extremely deadly terror attack

Preside over the extremely deadly terror attack

Start an illegal war against Iraq

Start a misguided war against Afghanistan

Reverse budget surplus and start running deficits
And coming next term: Katrina - The Complete and Total Failure To Respond

And for the finale: Economic Disaster of Epic Proportions

I pretty much agree with this assessment. Overall I think Obama is doing a pretty decent job. the debt level isn't very reassuring, but none of the former presidents seriously dealt this this issue in the past either. I think the main difference here is when Bush was in office the economy was roaring along (even if was all financed on debt), credit was easy and people were making money hand over fist in the stock market and in real estate. Everyone felt rich, even if we were not. With Obama in office, people are unemployed, losing there houses, credit it tight, 401k's took a major hit. People feel poor. Obama could walk on water, people will still remember the good old days when Bush was in office.

Obama is at least trying to deal with the issues at hand, instead of politics as usual. He will probably fail, but at least he tried. He will most likely lose re-election, the guy in office at the time gets the credit or the blame depending on how the economy is doing.

RayAmerica says

For a compilation of Obama’s promises re: Iraq U.S. troop withdrawal:
http://www.truveo.com/search?query=obama campaign promises iraq war&flv=1#obama%20campaign%20promises%20iraq%20war%20

Again--are you arguing that Obama hasn't reduced troops in Iraq? How about you just write your point instead of making me sit through a video.

Can you even get an investor loan on property now days or is it cash buyers only? If you can get financing what is the % of down payment required?

Well yeah Ray & Co, ie "the giggle gang", so what is your point? That he hasn't been able to accomplish all that he set out? Okay. Is he the perfect liberal, all things to all people not-right? No, but hey, we go to war with the president we have not the president we want, ha ha ha.

And by "Obama" do you actually mean the Democratic majority? If so, then no, its all horrendous, the US system of government is pretty broken. But at least the current party in the majority has been trying to get some positive things done, are actually trying to govern instead of simply stripping the nation dry, and considering that they have a party in opposition that has unanimously abdicated all sense of responsibility in the pursuit of simply trying to break the current ruling party and get back into power, so they can continue stripping the nation dry I assume, I'm actually pretty amazed they've been able to get anything done at all.

But if you want something to giggle about I'll tell you a couple thing that I'm completely broken on Obama about and thats the failure to Prosecute Bush & Co and his continuation of the weakening of the Habeus Corpus laws. There you go. But its important to recall that these were issues that were set in place by the previous gang.

And anyway, stop trying to make this war into Obama's issue only. I can see what you're doing and its pretty dishonest. Though sure you're correct in putting forth that he now bears some responsibility for the issue this was a war (amazing how easily we throw that term around, isn't it?) (and anyway its not even a war under international guidelines, its an invasion and occupation - and a pretty brutal one too - anyone remember Falujah?) that was inherited from the previous bunch of goonies.

Anyway, at least the folks on the 'left' aren't talking about how great Obama smells or how manly he is...
http://www.cbsnews.com/stories/2004/09/02/opinion/main640485.shtml
http://mediamatters.org/research/200604270005
Now thats cult-ish and creepy.

So what would you have in his place? Keating McCain? Idiot Palin?

Damn, every time I write one of these things I tell myself its a complete waste of time and I won't do it again...

If interest rates jump up, why buy real estate? Why not bank it?

I think more houses aren't moving because the market it is being presented by the daily "Terds" up for offering, from the Bank, RE community. People aren't stupid, they see the better goods behind the auction curtain.

There's even houses that are available but aren't available, these are unattainable houses, not because any moron can't go to Home Depot and put in a $1200 kitchen, it wont be pretty, who says it needs 50K in escrow for a new kitchen. It's just on the market to fall in price for reach of the cash investors. While prolonging the price drop of RE overall.

Much like there is redistribution of Wealth, there is a bigger redistribution of homeowner class.
It's turning into relationships between a well funded companies and the City, rather than a community of citizens and accountable officials.

Interest rates may as well be 2% even when you are credit worthy. You can't always find a house. In many Cities the least desirable offerings are the ones with kitchens and fixtures to be eligible for these loan programs.

All of the Good ones that foreclose are given "The Treatment" and most buyers trying to buy find 90% of the decent stock for prices they can afford are told, they need cash only to buy these houses. Because these houses need out outrageous amounts for expensive kitchens and simple roof work. Who says you need to go all Bob Villa on it? Besides these houses are worth 2 1/2 times that historically before bubble prices. It's not like there isn't value in these houses, with no kitchens. They word "Distressed" like it's some Shot gun shack by railroad track not worth one penny more than the offering price.
But just by disabling the kitchen and bathroom these banks are able to project an illusion of Worthless shacks to the shareholders so Straw men get them for cash pennies on the dollar.

kentm says

But if you want something to giggle about I’ll tell you a couple thing that I’m completely broken on Obama about and thats the failure to Prosecute Bush & Co and his continuation of the weakening of the Habeus Corpus laws. There you go. But its important to recall that these were issues that were set in place by the previous gang.

Amen. I'm really sick of Republicans trying to claim the "high ground" on "Constitutional Issues" when they presided over the dismantling of the Bill of Rights. It's not just Habeus Corpus laws that suffered. Privacy doesn't exist anymore now that Homeland Security and AT&T tap your phone as a matter of course. The entire department of Homeland Security was the single largest expansion of government and government power in our nation's history bar none. We live in a police state now. None of this has been dismantled, reorganized, streamlined, or pulled-back.

The only part of the Bill of Rights the Teabaggers and the Republicans care about is the Second Amendment and their own perverted ideas about the Tenth Amendment.

Here's a refresher for all you wingnuts. There are 10 Amendments in the Bill of Rights:

First Amendment – Establishment Clause, Free Exercise Clause; freedom of speech, of the press, and of assembly; right to petition
Second Amendment – Militia (United States), Sovereign state, Right to keep and bear arms.
Third Amendment – Protection from quartering of troops.
Fourth Amendment – Protection from unreasonable search and seizure.
Fifth Amendment – due process, double jeopardy, self-incrimination, eminent domain.
Sixth Amendment – Trial by jury and rights of the accused; Confrontation Clause, speedy trial, public trial, right to counsel
Seventh Amendment – Civil trial by jury.
Eighth Amendment – Prohibition of excessive bail and cruel and unusual punishment.
Ninth Amendment – Protection of rights not specifically enumerated in the Constitution.
Tenth Amendment – Powers of States and people.

The Bush and Cheney crime families systematically worked to destroy the following Rights:

First Amendment – "There ought to be limits to free speech." GWB
Fourth Amendment - The entire "War on Drugs" is based on destroying this right.
Fifth Amendment - Guantanamo anyone? How about Abu Ghraib?
Sixth Amendment - Guantanamo anyone? How about Abu Ghraib?
Seventh Amendment - Guantanamo anyone? How about Abu Ghraib?
Eighth Amendment - Guantanamo anyone? How about Abu Ghraib?
Ninth Amendment - Need I continue to list the offenses against this one?

And the Teabaggers plus wing nuts pervert the Tenth Amendment to talk about secession when things don't go their way.

The only right that is left untouched is the Third Amendment.

RayAmerica says

More YouTube proof that Obama is a liar:
http://www.youtube.com/watch?v=5ZvWilRn0L8&feature=related

That's not nearly good as this 1994 classic of Cheney explaining why it would be insane to invade Iraq, and that it would lead to a quagmire. Of course he was being a good soldier for the wiser Bush senior. Later I guess he changed his mind, and of course Haliburton wasn't even a factor in his reasoning.

http://www.youtube.com/watch?v=6BEsZMvrq-I

As a tenant, I would never do this, because you're effectively giving up all your negotiating power. Say someone breaks the front door and the house no longer locks, or there's a plumbing or heating problem. How soon do you think the landlord's going to get around to fixing it? Not as fast as if you can call a contractor yourself and deduct the bill from your rent, that's for sure. And if they're not the legit landlord, but rather some scammer who broke in to a vacant house? You're out a serious bundle of money.

In a perfect world, sure, and I'm sure there are many landlords with whom this would work great. I might even consider it if a professional property management company were running the place. But I've seen too many onesy-twosy landlords who are all smiles and handshakes when you sign the lease, and then complete jackasses the moment you're moved in. Why give up the one bargaining chip you have?

alpine says

I might even consider it if a professional property management company were running the place.

I wouldn't. The "professional" company running my apartment complex, for example, treats it as a training ground for larger complexes and has given us a series of incompetent / lazy / hostile managers (I have given up on the current one, who is a complete goof-off with limited reading skills and zero management skills, and just email her boss at the office when there's something needing attention).

marcus says

That’s not nearly good as this 1994 classic of Cheney explaining why it would be insane to invade Iraq, and that it would lead to a quagmire.

Cheney no longer has a pulse. And yet he still lives. Literally. How weird is that?

RayAmerica says

For a YouTube on Obama PROMISING to “withdraw the troops from Iraq by 2009″ ….
http://www.youtube.com/watch?v=4WYTKj8pU5M

Um, where did he say all troops would be withdrawn by 2009? Don't just post some link to a 6 minute video. Give the direct quote you chickenshit.

That won't fly in many states. In California the most you can ask 3 months rent. First + security against damages and last month's rent should you need to give notice to vacate. Anything else is not a valid in a rental contract.

If you've got headaches collecting rent from somebody, you're not going to get 6 months rent up front from them anyway!!

Good question, to which I do not have a good answer for. My understanding is that the factors that drive mortgage rates up or down are numerous and complex. From what I have read, if it were not for the government intervention (buying the underlying mortgage securities), rates would be higher.

Loansafe is not only fun to read, the drama over there is non-stop. Moe has banned/chased so many people away he will soon run out of members. Only the kooks are left. The banished have headed over to shamethebanks.org and started their own forum at beingmiddleclass.org. Loansafe is dying. I will miss it when it finally goes.