patrick.net

Well Bap, the 5% today may well swell higher soon enough !

Bap33 says

I expected the default rate to be higher. Maybe they defaulted on another car that they already owned to keep the CFC one? THat sure would be tuff data to collect! lol

Bap--just curious. Why would you expect the default ratio to be high on cash for clunkers? That would imply that banks hadn't learned their lesson and were still giving out risky loans... Could certainly be true--but what makes you suspect it?

tatupu70 says

Bap33 says

I expected the default rate to be higher. Maybe they defaulted on another car that they already owned to keep the CFC one? THat sure would be tuff data to collect! lol

Bap–just curious. Why would you expect the default ratio to be high on cash for clunkers? That would imply that banks hadn’t learned their lesson and were still giving out risky loans… Could certainly be true–but what makes you suspect it?

Just my personal evaluation of the program and those it targeted.
Does the 5% default seem low to anyone else? I would guess we should look at total numbers, and back out those that were not financed, but were just bought outright, there by not making the mistake of looking at total sales vs total defaults. We need total FINANCED (lets say, for more than 12 month term) vs total default. Heck, that may be what we already are seeing, I don't know.
New cars are the only ones that can get 100% financed. THe CFC was an amount just high enough to pay for taxes, license, and doc fees.
Most of those cars that were 100% financed still have 2 years of payments to go (in my best guess), so we shall see.

Bap33 says

Just my personal evaluation of the program and those it targeted

But who it targeted is not really relevant. The decision whether or not to approve someone for financing was completely out of the government's hands.

I agree. I "think" most new cars can be financed "in-house" by some extended function of the manufacturer, but I'm not fosho.

Roubini is now predicting another $1 trillion drop in real estate prices. I thought the market bottomed out in 2009?

http://dealbook.nytimes.com/2010/12/06/dr-doom-predicts-another-1-trillion-in-housing-losses/?ref=patrick.net#entry-328309

Does this sound like a prediction or data to you...

The United States “real estate market, for sure, is double dipping,” Mr. Roubini said. “The apparent increase in prices has been fully reversed, demand is falling, and supply is going to increase.”

Scores of mortgages, she wrote, will go bad, adding to the wave of foreclosures and short sales. For example, Goodman estimates some 70% of borrowers—those who previously defaulted on their loans but are now current—will run into trouble, again

Thomas--Let me help you out.

This is data:

thomaswong.1986 says

Sales of existing homes fell more than expected in October, down 2.2 percent to an annual rate of 4.43 million

thomaswong.1986 says

After rising in the second quarter, Standard & Poor’s Case-Schiller home price index fell 2 percent in the third quarter

While this is a prediction:

thomaswong.1986 says

The United States “real estate market, for sure, is double dipping,” Mr. Roubini said. “The apparent increase in prices has been fully reversed, demand is falling, and supply is going to increase.”

No not a prediction, but simply summarizing the data and inquires he made.
"Is" or "has" in past tense, and not "will be'.

thomaswong.1986 says

No not a prediction, but simply summarizing the data and inquires he made.
“Is” or “has” in past tense, and not “will be’.

Yes, it most certainly is a prediction. He summarized the data and then offered his OPINION on what this data means for the future of home prices.

I can't imagine prices stabilizing until the enormous inventory of foreclosed properties is eliminated from the market. That process, provided foreclosures dwindled back to normal numbers, would take a minimum of 3-4 years, IMO. The problem is that foreclosures are not decreasing, they are increasing. And unless the economy (JOBS) truly recovers (not the phony, ongoing "jobless recovery" nonsense), foreclosed properties will continue to be added to the already bloated inventory. This all points in one direction as far as prices are concerned; DOWN.

http://www.boston.com/realestate/news/blogs/renow/2010/12/foreclosure_mes.html?source=patrick.net#catHeader

When inflation comes, everybody loses.

Troy says

You can’t call bottoms with only a few months of data

We had a blip on the way up in 2001,
we will had a blip on the way down in 2009.
and so it goes...

http://www.dqnews.com/Articles/2010/News/California/Bay-Area/RRBay101118.aspx

Bay Area Home Sales Fall Sharply; Median Price Dips Below Last Year
November 18, 2010

La Jolla, CA.----Bay Area homes sold at the second-slowest pace for an October in more than two decades, the result of lost government stimulus, tight credit for pricier homes and lingering concerns about jobs and the economy. The region’s median sale price fell on a year-over-year basis for the first time in 13 months, a real estate information service reported.

A total of 6,122 new and resale houses and condos closed escrow in the nine-county Bay Area last month, down 3.3 percent from 6,334 in September and down 22.8 percent from 7,933 in October 2009, according to MDA DataQuick of San Diego.

Last month’s sales were the lowest for any October since 2007, when 5,486 homes sold, and the second-lowest since 1988, when DataQuick’s statistics begin. October sales fell 29.6 percent below the average October sales tally of 8,698. October sales hit their peak in 2003, when 13,392 homes sold.

“Part of what we’re seeing is the hangover effect from the expired home buyer tax credits, which spurred many to buy in the first half of the year. But that effect is fading. Now the real hurdles to more normal sales levels are the lack of meaningful job growth and the concerns many potential buyers have about job security and the overall economy. It’s why ultra-low mortgage rates, alone, haven’t turned things around,” said John Walsh, MDA DataQuick president.

“To really jumpstart the market, it’ll probably take a combination of at least the current level of affordability, a brighter economic outlook, and improved access to credit, especially for higher-cost homes.”

Last month the median price paid for all new and resale houses and condos combined in the Bay Area was $383,000, down 3.0 percent from $395,000 in September and down 1.8 percent from $390,000 in October 2009.

October broke a 12-month string of year-over-year gains in the median sale price, with those increases ranging from 1.8 percent to 31.0 percent. Last month’s year-over-year decline was the first since the median fell 8.8 percent, to $365,000, in September 2009.

So far this year, the median has peaked at $410,000, in both May and June.

That's not a good question, because question implies housing is an "investment" that has to go up. However it is not an investment, it is just a liability/convenience... whatever you call it... which also costs A LOT to maintain and support with insurance/taxes.

Housing prices aren't fixed as in "worth something", it's what a buyer is willing to pay for it. Essentially I can't give you an answer, because one simply does not exist.

ChrisV says

implies housing is an “investment” that has to go up

it does have to go up with rising nominal discretionary incomes, since housing is ~20% of the private economy or more and any where there's jobs there's a lot more demand than there's supply and renters have to bid against each other for housing every year, establishing price levels for the entire market.

So yeah, 20 years from now I mostly expect rents to be up at least another 100% from here.

But I think we're going to be going through Doomville before we get there, and it's no lock we will in fact get there since current prices have been established by a bubble fiction (Big Government) that's beginning to fracture.

Discretionary income is takehome pay less housing and other first-order necessities.

I see a lot of cost pressures coming on income -- more state & federal taxes, higher food & energy prices, higher health expenses, higher FICA & medicare taxes, but not any push on wages -- if anything state and local cutbacks will continue the damage that the bubble bust has done to wages.

Calling a bottom means we're out of the woods.

We ain't out of the woods -- no f---in' way. We're in deeper now than two years ago.

Troy says

it does have to go up with rising nominal discretionary incomes, ...

So at that point it is not an investment than that has to go up. By that I mean:
- It won't go up unless people will have extra money burning their pocket, therefore not a true investment.
- It won't produce anything in return and will be an expense on budget. [Unless it's commercial real estate]
- It will however require upkeep, maintenance, taxes, insurance to just stay there: more expenses.

What it does produce is rent which you eventually do not have to pay (still have to pay all other expenses mentioned in point 3 above which also go up with inflation)

I know what you are saying, RE goes up when people have money to spend on it (same goes with cars, electronics and other consumer items. But what I'm saying is that it's not real because it costs more than it returns (negative ROI) and it produces nothing in the process. I think this really won't change until the government gets out of the markets.

tatupu70 says

While this is a prediction:

thomaswong.1986 says

The United States “real estate market, for sure, is double dipping,” Mr. Roubini said. “The apparent increase in prices has been fully reversed, demand is falling, and supply is going to increase.”

If I say that it is raining, is that a prediction? Home prices are falling. Both the Case Shiller index and Clear Capital are showing this. That is neither a prediction nor a theory, it is a fact.

http://www.clearcapital.com/company/MarketReport.cfm?month=December&year=2010

klarek says

If I say that it is raining, is that a prediction? Home prices are falling. Both the Case Shiller index and Clear Capital are showing this. That is neither a prediction nor a theory, it is a fact.

OK--I'm not going to belabor this. The data he quotes is from the past. I interpret his quote to reference the future--not sure how one can be talking about the present. In fact he uses the verb tense is going to. I don't know why we are even arguing about this--it's completely ridiculous.

tatupu70 says

OK–I’m not going to belabor this. The data he quotes is from the past. I interpret his quote to reference the future–not sure how one can be talking about the present. In fact he uses the verb tense is going to. I don’t know why we are even arguing about this–it’s completely ridiculous.

Because uber-bulls have been trying to discredit Roubini for years and they're always wrong.

The BBC has a story on the real estate market in the USA ... claiming the downturn will continue until 2013. Personally, I think that is optimistic.

http://www.bbc.co.uk/news/business-11944737?source=patrick.net#page-bookmark-links-head

The wide-ranging effects of the continuous collapse in housing prices:

http://www.bloomberg.com/news/2010-12-08/plunging-home-prices-fuel-property-tax-appeals-swamping-u-s-cities-towns.html?source=patrick.net#related_categories_tags_top

Do I have a problem if I agree with APOCALYPSEFUCK?

APOCALYPSEFUCK says

It’s going to keep sailing down back to 1970s prices and lower as the US population discovers there are no new jobs to replace the old jobs, most of which were precipitates of a fantasy economy, like real estate brokering and Web site development.
We’ll be chopping up houses for fire wood soon and no one will have any doubts about what is more valuable when they’re depending upon scrap houses for heat.
Plant potatoes and teach wife and kids to fight and kill with a bayonet for the day when the ammo runs out.

You're hilarious! You really need to stop watching The Road on loop all day long! Or at least invite Troy over for some company. The two of you can discuss what a menace to society landlords are.

No need for bayonets, I can teach you how to make your own reload ammo for your guns and riffles.

I'm hoping a taxi to SFO is a workable plan.

Though relocating to Bellingham is in fact a close 2nd. if I moved to Point Roberts, it might even be doable to live in the US and work in Canada . . .

As they often say in the mutual fund industry..When everyone says sell, that's when it's time to buy...Scanning through all these post with all the gloom and doom mentioned, sure makes you wonder...must be buy time.

lazz234 says

As they often say in the mutual fund industry..When everyone says sell, that’s when it’s time to buy…Scanning through all these post with all the gloom and doom mentioned, sure makes you wonder…must be buy time.

Then you should go buy. Especially in the mid-high market 400K+.

See how well that works out for ya.

lazz234 says

As they often say in the mutual fund industry..When everyone says sell, that’s when it’s time to buy…Scanning through all these post with all the gloom and doom mentioned, sure makes you wonder…must be buy time.

Thats not true. When everyone was screaming to get off titanic onto a life boat they were right. Skeptics didn't survive.

Housing isn't an investment industry either, just for a while it turned into a tulip mania which crashed.
http://en.wikipedia.org/wiki/Tulip_mania

lazz234 says

As they often say in the mutual fund industry..When everyone says sell, that’s when it’s time to buy…Scanning through all these post with all the gloom and doom mentioned, sure makes you wonder…must be buy time.

I heard a lot of "savvy" investors saying that in 2007 and 2008, talking about the great 15% (from peak) discounts they were getting on their houses. Anybody whose market sophistication is approximated by that strategy deserves to get burned.

Jumbo and Conforming are separate now.

Jumbo Conforming is both too big for the secondary market and GSE-blessed.

http://www.homebuyinginstitute.com/mortgage/jumbo-loan-lenders/

Los Angeles Renter says

I call bullshit on this statement…. Interest rates have fallen a full percent! That and the huge stock market rally from 6000 have stalled a drop in housing. People went from losing half their invested wealth to gaining it all back again in the past few years. (My stock portfolio is UP since 2008 crash). They also can afford to buy about $30,000-$60,000 more house with interest rates at 4%. Yet home prices didn’t rise by that same variable… So someone that waited until now to buy were able to afford more HOME than the person who tried to buy a home in early 2009 at higher interest rates. I don’t know how you don’t call that effectively a drop in price. (If you were a minority all-cash buyer in 2009 maybe you got a better deal.. but that’s a fraction of the home buying population.)

That is the dumbest post I've seen in a while. You don't call it a drop in price because prices didn't drop.

In this report, you'll see that prices fell by $1 trillion in 2009 (the year the Duck Dude says real estate "bottomed"). In 2010, the losses will hit $1.7 trillion. In my opinion, 2011 will be even worse. The shadow inventory continues to grow and mortgage rates are rising. That's a very bad combination that will not support stabilizing prices let alone increases.

http://www.azcentral.com/arizonarepublic/business/articles/2010/12/15/20101215biz-catherine-house-bleak.html?source=patrick.net#fbLike

Same houses that have been empty for 3 years are still empty, plus now I see many more. I say 10 years before we hit bottom!

If I see a padlock, nowadays I see it just like that for long long time. I guess prices will head up even though they are unoccupied. LOL.

bubblesitter says

If I see a padlock, nowadays I see it just like that for long long time. I guess prices will head up even though they are unoccupied. LOL.

Excess supply along with higher interests rates equates to only one thing; higher prices. Such is the declared, absolute, irrefutable dogma by one daffy Duck.

Every time you read a news account on housing, it's more bad news:

http://www.centralvalleybusinesstimes.com/stories/001/?source=patrick.net&ID=17108

RayAmerica says

Every time you read a news account on housing, it’s more bad news:

LOL! thats because we had way way too much good news over a 10 year period.
Hang overs are a bitch.

Yep .. those housing prices sure "bottomed" out in 2009. The evidense keeps pouring in to suppot it:

http://centralvalleybusinesstimes.com/stories/001/?source=patrick.net&ID=17117

tatupu70 says

robertoaribas says

Housing is consumptive behavior, not productive behaviour,

One man’s consumption is another’s production. Not sure how you can separate the two…

I just ate an apple. Who needs the poop?

When I first commented in this thread, the house I bought September for 160K, was listed for 259K in February.