patrick.net

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.

rentalinvestor says

according to supply and demand of investment grade properties, either rents have to fall in the area, or prices have to rise, because these homes are almost too good to be true, and investors like me are eating them up.

FWIW, rents will fall, as you note that heavy supply of rentals are on the market. I would suspect it may fall to $1000 per month. Rather makes more sense than prices of home increasing. Now why would they go up? Perhaps you need to go the Antioch public liberary and look up the archives to see what rents were back in mid to late 90s. Factor in inflation, since than and you get your number.

thomas.wong1986 says

It had nothing to do with “expectations” but rather rise in union wages, concessions over the strikes the nation saw. And there were plenty of union strikes across the nation. The vicious circle repeated causing spiraling inflation. Eventually it was stopped by jacked up rates by the FED.

It was caused by wage inflation. People had more money to spend. Not sure why you're linking it to unions though--that's a little random.

But I think Mark is probably correct that there was an incentive to buy before rates got any higher--got people who were considering buying off the sidelines.

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. 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.

You are 100% correct. However, have you noticed the infamous Haliburton is still doing business under our "Hope & CHANGE" el Presidente`?

Ray--

So, what exactly did you mean about Obama not reducing troop levels in Iraq? Do you realize now that he has done exactly that?

tatupu70 says

It was caused by wage inflation. People had more money to spend. Not sure why you’re linking it to unions though–that’s a little random.

Recall the union strikes in the Auto, Steel, Construction, and many other industries during the 70s. To end the strikes you had management concessions resulting in higher wages. You had other unions join in sympathy with striking unions workers. Teamsters joined the Steel union stikes by not crossing the Steel workers Union picket line, and not delivering/shipping goods. Putting pressure on mangement of Steel company.

And the result of higher wages inflated home prices. That resulting in another round of union strikes and wage concessions. It was a vicious circle repeating itself.

Troy has gone over this many times over.

tatupu70 says

So, what exactly did you mean about Obama not reducing troop levels in Iraq? Do you realize now that he has done exactly that?

Obama promised to withdraw "ALL combat troops" by March 31, 2009. He then revised this to "in the first 16 months." He has repeatedly lied to the American people regarding the Iraq war. Watch the videos I posted and see for yourself.

MarkInSF says

Um, where did he say all troops would be withdrawn by 2009?

How much more do you need when he PROMISED to make "bringing home the troops the FIRST item of business?" While our troops continue to die, along with Iraqi civilians, take 15 seconds of your time and watch your little messiah LIE:

marcus says

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

thunderlips11 -- that would have been the 50s and 60s, not the 70s and 80s. You can see even in Santa Clara County many home aged back to the 50-60s.

tatupu70 says

It was caused by wage inflation. People had more money to spend. Not sure why you’re linking it to unions though–that’s a little random.

We had stagflation... little or no demand for US products or services yet higher wages!
First taste of cheap foreign goods into the US markets.

burritos says

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

Well, the thought is that bank savings rates (or t-bills, or TIPS, or whatever) lag the real level of the inflation (queue shadow stats CPI underreporting stuff) while hard assets directly track the true level of inflation. Also, rents will track the true level of inflation so by buying a house you can fix your monthly housing costs (upkeep and taxes are variables of course) while paying it back with ever cheaper money and assuming you keep the house in good repair and pay the taxes the cash you put down will be "safe" from the corrosive effects of inflation. Any hard asset would work for this but for a regular person, housing allows much higher levels of fixed-rate leverage (where else can you borrow 96.5% at a fixed interest rate?) and you need a place to live anyway.

I think when the Fed starts to raise interest rates due to inflation, the prices of homes will start of drop even more. A property that had a monthly mortgage of $2K @ the super cheap rates we have, will not be worth more.

RIP Real Estate Bubble......forever!

thomas.wong1986 says

Recall the union strikes in the Auto, Steel, Construction, and many other industries during the 70s. To end the strikes you had management concessions resulting in higher wages. You had other unions join in sympathy with striking unions workers. Teamsters joined the Steel union stikes by not crossing the Steel workers Union picket line, and not delivering/shipping goods. Putting pressure on mangement of Steel company.
And the result of higher wages inflated home prices. That resulting in another round of union strikes and wage concessions. It was a vicious circle repeating itself.
Troy has gone over this many times over.

Sure, I'll agree that there were strikes and that the new contracts resulted in raises. But to imply that it was the cause of wage inflation is simply ridiculous. There was no vicious cycle....

RayAmerica says

MarkInSF says

Um, where did he say all troops would be withdrawn by 2009?

How much more do you need when he PROMISED to make “bringing home the troops the FIRST item of business?” While our troops continue to die, along with Iraqi civilians, take 15 seconds of your time and watch your little messiah LIE:
marcus says

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

Well Ray, I did listen to your videos and not surprisingly I interpret them differently than you do. For example, if you listen closely in one of them, he says (I'm paraphrasing) that we must be just as careful bringing them home as we were reckless in sending them.

Do you really think we could just all of the sudden bring everyone home and abandon the country that we destroyed?? Do you remember Colin Powell's famous Pottery Barn line? You break it, you own it? Well, we broke Iraq and now we own it. You can't undo this mistake in 1 day...

If we're not careful, then we'll end up with another Afghanistan or Iran.

RayAmerica says

How much more do you need when he PROMISED to make “bringing home the troops the FIRST item of business?”

And by the way--who can say that he didn't make it his first order of business? Were you in the White House? Troops are coming home. There is a timetable and a plan.

tatupu70 says

There was no vicious cycle….

Higher wages gets translated to higher prices,
back to strikes for higher wages, which resulted
in higher prices ...repeat cycle (Cost Push)
during the same period of high unemployment
and lower growth. Here comes the Toyotas and Sonys
well below domestic mfg costs taking away market share...

We need Mr. Bernie to print another 5T of USD for Treasury. Then every income tax payer get refund on their 2010 income tax. Basically don't pay tax in 2010 and may be 2011. Probably this will give it an initial boost.

thomas.wong1986 says

Higher wages gets translated to higher prices,
back to strikes for higher wages, which resulted
in higher prices …repeat cycle (Cost Push)
during the same period of high unemployment
and lower growth. Here comes the Toyotas and Sonys
well below domestic mfg costs taking away market share…

That's a common perception, but it goes against the laws of supply and demand. Price is set by the market, not by cost.

Unlikely to see jobs grow everywhere... it will take a miracle!

http://www.siliconbeat.com/2010/02/17/vanishing-public-companies-lead-to-the-incredible-shrinking-silicon-valley/

Vanishing Public Companies Lead To The Incredible Shrinking Silicon Valley

One of the most significant trends I’ve been watching over the past decade is the dramatic drop in public companies in Silicon Valley. Naturally, that number was artificially inflated during the dot-com bubble when it reached 417 in 2000. For our purposes, Silicon Valley includes San Mateo and Santa Clara counties, and the southern half of Alameda County.

But the number of public companies has dropped for nine straight years now. Even when IPOs briefly reappeared in 2006 and 2007, they weren’t enough to overcome the net loss of public companies through acquisitions or bankruptcy.

In 2008, the number had fallen to 261. We just updated our records and the latest figure is 241.

That’s not just less than the dot-com era, that’s well below the 315 public companies the valley had in 1994 when the Mercury News started keeping track.

> take 15 seconds of your time and watch your little messiah LIE:
> under our “Hope & CHANGE” el Presidente`?

> And by the way–who can say that he didn’t make it his first order of
> business? Were you in the White House? Troops are coming home.
> There is a timetable and a plan.

Nah, look, its useless. Obama/Democrats would wake up one day declare that the sun is shining and Giggles would attack it. And the replies are just going to get more hysteric and jumbled the more information is brought to bear. There's just nothing there.

As an aside, here's some interesting reading I've found lately that was very informative to me.

How facts backfire
Researchers discover a surprising threat to democracy: our brains

http://www.boston.com/bostonglobe/ideas/articles/2010/07/11/how_facts_backfire/?page=full

"It’s one of the great assumptions underlying modern democracy that an informed citizenry is preferable to an uninformed one. “Whenever the people are well-informed, they can be trusted with their own government,” Thomas Jefferson wrote in 1789. This notion, carried down through the years, underlies everything from humble political pamphlets to presidential debates to the very notion of a free press. Mankind may be crooked timber, as Kant put it, uniquely susceptible to ignorance and misinformation, but it’s an article of faith that knowledge is the best remedy. If people are furnished with the facts, they will be clearer thinkers and better citizens. If they are ignorant, facts will enlighten them. If they are mistaken, facts will set them straight.

In the end, truth will out. Won’t it?

Maybe not. Recently, a few political scientists have begun to discover a human tendency deeply discouraging to anyone with faith in the power of information. It’s this: Facts don’t necessarily have the power to change our minds. In fact, quite the opposite.

..."

EDIT: It just occurs to me on re-reading that "and Giggles would attack it" should have been "and Giggles would find a way to refudiate it."

RayAmerica says

MarkInSF says

Um, where did he say all troops would be withdrawn by 2009?

How much more do you need when he PROMISED to make “bringing home the troops the FIRST item of business?” While our troops continue to die, along with Iraqi civilians, take 15 seconds of your time and watch your little messiah LIE:
marcus says

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

What is with you wing nuts and "messiah"? I never said he was my messiah. Why do you make this crap up?

All I heard him promise was to bring the troops from Iraq home. They are. They've been drawing down for 2 years now. He even said MANY times that the withdraw would be "responsible" and take a lot of time.

He never made a firm commitment that you can hold him to. He's a politician. What do you expect?

Calling him a "liar" over that is really a stretch.

We need hyperinflation. Jobs will NOT be coming back anytime soon.

thomas.wong1986 says

Recall the union strikes in the Auto, Steel, Construction, and many other industries during the 70s. To end the strikes you had management concessions resulting in higher wages.

I agree w/ Thomas. Unions were a key component of inflation in the 70's. That is another factor that does not exist now. Over 1/2 of unionized workers are now government employees (state & local), and they are under fire right now big time, even from people who were recently political allies.

tatupu70 says

That’s a common perception, but it goes against the laws of supply and demand. Price is set by the market, not by cost.

Higher wages = more demand = higher prices.

If you've got more spending power you demand more. That's what drove housing costs up, though that spending power was from credit, rather than higher wages.

thunderlips11 says

Because the largest Generation in US History approached prime “Home buying/Young Parent” age - 25-35 in the 1970s and 80s.

No to mention women were entering the workforce like never before. 2 incomes, and what do you know? Housing costs go up.

Just like a lot of Boomers said “I’m from the city, a long way from the city, and that’s where I want to be right now”, their children are saying the opposite.

Yes that does seem to be a long term trend. Can't stand the burbs myself.

If you think housing prices will be coming back to 06' levels then you are living in a dream world. The housing boom which caused the high prices happened because of extremely loose loan underwriting standards and foolish borrowers who took loans out they couldn't pay. Borrowers are still foolish, but underwriting standards are now at the opposite extreme.

I have a coworker that bought in 2005 and is DEEPLY in debt and underwater by -60%. He's plans to hold onto it hoping we'll see a recover. He does not even look at the housing articles that I send to him because he thinks it's a waste of time to do any research. lol Idiots like him is what contributed to the housing boom.

MarkInSF says

Higher wages = more demand = higher prices.

That I'll agree with.

"when will housing return to 2005-06 levels?"

dude, PUT DOWN THE BONG.... :-)

2 things I see happening over the next 2-3 years.

recession ends and more high tech companies hiring
pent up housing demand coming off the sidelines

I dont think these are even debatable. They will happen
and will cause RE to go up.
So if you need to sell you might want to at least see how these
events play out and effect the housing market.

permanent_marker says

“when will housing return to 2005-06 levels?”
dude, PUT DOWN THE BONG….

Aww, but c'mon. They aren't making any more land. Prices only go up over time. The income tax breaks are totally worth it. Your home mortgage is like an automatic savings plan. You don't even need to put any other money toward retirement. All you need is a home, because prices go up forever.

MarkInSF says

He never made a firm commitment that you can hold him to. He’s a politician. What do you expect?

I guess he was just being a "politician" when he promised "Hope & Change" too. LOL !!

Where does he ever find the time to govern, with all of these lips firmly attached to his buttocks?
I bet he has a wet walk.

And I'd say to anyone throwing out his laundry list of Shove down/Pushed through legislation.
Historians are rarely kind to those administration.

> I guess he was just being a “politician” when he promised “Hope & Change” too. LOL !

Giggles, when you write it you have to change "LOL" to "GOL"

tatupu70 says

Well Ray, I did listen to your videos and not surprisingly I interpret them differently than you do.

Really? I'm absolutely stunned. Shocked. Who would have ever thought you would have an interpretation different from mine?

tatapu ..... I'll bet you stuggle with the definition of the word "is" too.

tatupu70 says

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?

I was expecting Obama to tell us of his Naval coordinated efforts, with NOAH the Army Corp of engineers and the EPA. Instead of letting investors and wall street for corporations of foreign countries having carte blanche un impeaded or intevention for 3 months. Progress just started happening when BP was forced to take out side help, it happened in a week. That how long this should have taken from the get go.

Not that I'm defending Bush, but if Bush allowed some Saudi country the same liberties Obama gave BP through out this whole affair. Most people here in America, Republicans to, would have called Shenanigans. Shame on you Libbies you're all "Racist" more so than the Tea Party and this really proves it. Oh the Horsey faced Brits can run Roughshod over the American peoples heads, and it's O.K. but any one else you guys would be the first to parlay this whole mess into the "Foreign dependency" cry, and use it further politicize the Green con.

You guys are giving this administration, not just Obama but the Administration as whole way to much lead way and a free pass.

Much like the Republicans were blind to Bush's faults and fraud. I was a rare minority when Bush first started his shit, every one was all Red and ready to kill some Terrorist and bomb desert villages where ever they were. Just as long as it made good copy and television.

Sure the Dems snapped out of it, after Bush's first 4 years but you were all right there all the way to Felusia to the Tigress river in Iraq. The Republicans never gave up on Bush, no matter how rotten he lead. Well he lead by greed, he actually pretty damn good at leading the way he wanted to. That's more credit than I can give Obama. As bad as I hated Bush he was successful at fulfilling his mission. Nothing was crammed or pushed, it was a Democrat Washington that made his most disastrous policies possible.

So please this is me, cut the crap...

Obama delivers great Monolgues little else. He throws the crap on the wall and he hopes it sticks or Washington will make it so. That is hardly a good leader.

RayAmerica says

tatapu ….. I’ll bet you stuggle with the definition of the word “is” too.

Huh? What exactly are you trying to say there?

How about this. Post a quote from Obama that you think shows him as a liar. Not a link to a video. An actual quote.

tatupu70 says

How about this. Post a quote from Obama that you think shows him as a liar. Not a link to a video. An actual quote.

I'll get back to you as soon as I have a couple of hours to kill. Thanks.