patrick.net

Actually, it just occurred to me that this could simply result from declining inventories around the BA:

If the 'low-end' properties are the main ones selling, and they are getting purchased by the majority of buyers, what's left on the market is the overpriced 'high-end' places. Thus the distribution of prices is skewing to the higher end BECAUSE the low end is being depleted, AND NOT because (substantially) more higher-priced stock being added to the mix.

This idea should be relatively straightforward to evaluate. It predicts that avg/median current sale prices should be well below avg/median asking prices (would need info on pending sale prices), and that recently added listings (say last 1-2 months, I'm not exactly sure about the time period) are not 'high-end', high priced houses. These predictions are supported to some degree by the DQ report... Jumbo loans and houses sold above 500K make up the minority of the market (both ~ 30%). Any suggestions on an better, but easy was to check these predictions?

Nomograph says

dunnross says

Nomo, you want facts. Just read Dr. Housing Bubble Blog:
http://www.doctorhousingbubble.com/
Isn’t rising shadow inventory, rising interest rates, highest unemployment rate since the great depression, Southern Cal housing prices still in bubble according to price/rent & price/income, not enough facts for you? If after reading all that, you still think that housing prices will go up in the next 10 years, then, definitely the picture of the guy with his head stuck in the sand, is a picture of you.

You are making assertions, not posting facts. For example, the term “shadow inventory” refers to houses that will “probably” enter the market, and is a meaningless and undefinable term. Post actual numbers, figures, and statistics and then we can talk.
You haven’t made your case any more than the guy who tries to refute an argument by posting “LOL”.

Do you want me to cut and paste the entire Dr. Housing Bubble blog for you, because you are too lazy to read it over there? Or maybe, you don't want to see all the facts, statistics, graphs & actual data which Dr. presents, because they remind you, once again, how much money you are already losing with all the investments you've made so far.

Nomograph says

dunnross says

Do you want me to cut and paste the entire Dr. Housing Bubble blog for you, because you are too lazy to read it over there?

You really can’t expect people to run all over the Internet trying to prove your argument for you.
Post some data that refutes my position about the San Diego market, and then we’ll talk. LOL.

1 link is not "All over the internet".

As a psychotherapist I find it fascinating to watch this guy have psychotic break on television for all to see. What has changed in our social consciousness that allows a mentally ill person who is actually experiencing active psychosis to become an authoritative commentator for public consumption? What is it about this particular actively psychotic person that convinces conservatives to not only have any faith in or give any credibility to his insane ranting but to give him millions to give them these psychotic disorganized rants? I'm just asking questions. But I digress...

I find it endlessly fascinating that the conservatives actually welcome and encourage this gravely disabled man and support him when they constantly work to oppress marginalize, and impoverish this man's fellow disabled people, especially others like him who are living with severe mental illness. What up with that? Oooooo weee... What up with that? What up with that? Again, I'm just asking questions.

Then again, maybe conservatives are natural enablers. I mean, look at their choice for Speaker of the House. He's an extremely active alcoholic who does much of his legislating under the influence. But that's ok because at least he's not a pot head or coke fiend, right? I'm just asking questions that They just don't want us to ask.

The funny thing is that they willingly follow Glenn and John into their fantasy worlds riddled with inconsistencies, outrageous lies, distortions, criminal disregard for anyone but themselves, and disorganized thinking. What is this about? Ooooo weee... What up with that? All I'm doing is asking the questions that They want you to avoid.

Why is it that conservatives are so willing to dismiss, oppress, marginalize, degrade, and impoverish the disabled while supporting and encouraging an actively psychotic gravely mentally disabled person and an extremely actively drinking alcoholic? Perhaps it's because conservatives are mentally ill and disabled through active drug abuse. Often you hate and persecute others who have the same exact qualities that you hate about yourself. Hmm, could that be why conservatives are so active in persecuting and oppressing gay people? Well, I'm just asking questions.

SubOink says

you could wait until you buy a stock because it doesn’t cost you anything to wait - where with housing, it does. You have to live somewhere and renting costs money

I think there's more to it than that, because there's a sizeable "equivalent rent" in the PITI. You either pay the rent through your rent or you pay it through your PITI, but either way, you pay rent.

The point that anybody that posts a positive outlook here is trying to sell real estate, is a realtor or a mortgage broker is such a moot point. I could argue that all the bears are landlords trying to convince everyone not to buy but instead rent their properties...a silly argument.

I am loving reading thru this thread, like an old couple bickering...very funny indeed!

SubOink says

The point that anybody that posts a positive outlook here is trying to sell real estate, is a realtor or a mortgage broker is such a moot point. I could argue that all the bears are landlords trying to convince everyone not to buy but instead rent their properties…a silly argument.
I am loving reading thru this thread, like an old couple bickering…very funny indeed!

That's because most sane people on this blog can't understand why somebody would predict prices going up when we have 18 months of inventory in most areas (not even counting shadow inventory which is going through the belly of the python). Either they are indeed mortgage brokers or be in some way associated with NAR.

The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails

dunnross says

SubOink says

The point that anybody that posts a positive outlook here is trying to sell real estate, is a realtor or a mortgage broker is such a moot point. I could argue that all the bears are landlords trying to convince everyone not to buy but instead rent their properties…a silly argument.

I am loving reading thru this thread, like an old couple bickering…very funny indeed!

That’s because most sane people on this blog can’t understand why somebody would predict prices going up when we have 18 months of inventory in most areas (not even counting shadow inventory which is going through the belly of the python). Either they are indeed mortgage brokers or be in some way associated with NAR.

It's a lot about perspective.

I found for myself for example that when I am personally having a financial bad year and I am a little in the funk for that reason, everything feels just terrible. I start to ignore the fact that there are a lot of people that are doing well. I then go to the doom and gloom mindset because its rational for me that things are just friggin' bad...because I AM doing bad myself. And the same thing happens when I am doing well...I feel up and positive and look at the bright side of things. The fact is, there is always a bright side and always a dark side, you choose how you want to look at it. Glass is half empty or half full - both times the fact remains that there is only 50% of water in the glass...

If you go back to 1930-1934, do you think there was anybody that would have told you that things are going to be better? At that point, in the midst of a depression, everybody was beat down, jobless and hopeless...no future prospects. And if you were the insane person that would have said...ok, I think things will be better soon, everyone would have called you an idiot.

The world is just too complex for simple minded predictions alla inventory is 18 months so it has to crash, or jobless rate went from 9.8% to 9.0%..so we're going up from here - it just does not work that way. If it did, then you should be rich because you could invest all your money in the stockmarket and follow your own predictions, since they are SO obvious, easy thing to do, right?

There is something to be said about being a downer. Nothing good comes from negative thinking. An entire economy can go into the crapper because of it.

But at least there are some here that do offer perspective to the "other" side because there is always another side.

Ever think high end home sales are up because those who can afford them own 90% of the stock market and most likely have more money now then in 2007... Since the market rebound was so strong! Maybe high end home sales are more of a sign the rich are closing their positions in the stock market... I personally believe that in order to have a housing bubble again we would probably have to have a stock market crash... Everyone has all their money in the market.. I personally have more than 3/4 of my life savings in the stock market... When im ready to buy a house ill have to liquidate most of it... Even some of our retirement IRA money. If a rush into housing occurs... Too fast... The stock market will collapse again...

Well, if Glenn Beck hates Google, then I must blindly follow. Or did Nomo mis-spell and Glenn Beck has the Giggles? A Gaggle of goggles? It boggles the mind - does he have Bugles? Noodles? Blutos (from Animal House)?

I gotta go take my meds now. I mean, I'm a Glenn Beck follower...

>>>you could wait until you buy a stock because it doesn?t cost you anything to wait.

Maybe. If the price rises you then have a more expensive stock. The difference is the "opportunity" cost of waiting.

Nomograph says

Poking the bears is certainly interesting.

Long long way to go.... All the numbers we see posted by monthly sales/prices continue to support further price declines.

I doubt Glenn Beck is mentally ill. It's just an act. Meanwhile, he makes $32 million a a year, so at the end of the day he is having the last laugh (or the last cry).

Hi everybody. I just stumbled on this site and can't stop reading it.

I have owned a house since 1997. I saw it skyrocket in value during the bubble. It went from 204,000 to 630,000 or so. Now, it’s still apparently worth 550,000, although when I called Chase, they said it was worth just above 400,000 due to taking into account short sales and foreclosures when doing the comps. Last week I insured a real estate agent for auto insurance who said he works with investors who buy foreclosures and fix them up and resell them for a profit in a few short months. He said I needed at least 250,000 cash to get into the game, so I’m trying to refinance and get a loan for 380,000 at 4.875% on a 30 yr fixed, pay off the 130,000 I still owe on the house, and have around 245,000 to use to buy foreclosures and flip them. This website is scaring me, though. I need an additional source of income because my small business is having a hard time, so flipping properties seems like a good way to go, with prices on foreclosures being so low. I’d like anybodies opinion on if I’m doing the right thing. My mortgage payments will increase by about 300.00 per month, to 2,300.00.

On a side note, the real estate agent I’m “working” with lives in an apartment and drives an old car, and doesn’t at all appear to be up there financially . Also, I already sent all the docs the lending company asked for, such as mortgage balance, paystubs, tax returns, etc., and signed a short 4 page loan application. I just have to pay for the appraisal, about 350.00. It all happened so quickly. Does this mean I’m locked into the deal, or is there much more paperwork to fill out?

The agent made it seem like it’s so easy to make money flipping houses. Just buy the house for 50-100,000 below market value, and fix it up and re-sell it. But if prices are going to keep falling for years, maybe it’s best I just sell the house the house I live in and rent. Any suggestions you have will be appreciated.

I think that, on some level, he's nuttier than a fruitcake.

manolive72 says

I have owned a house since 1997. I saw it skyrocket in value during the bubble. It went from 204,000 to 630,000 or so. Now, it’s still apparently worth 550,000,

What cost $204,000 in 1997 would cost $271,504.63 in 2009... all said and done maybe 300K.
It took 15 years from 1980 to 1995 for prices to double, but that was during a rapid economic expansion in the SouthBay and Pennisula. Its a different story now that our local employers are shrinking and local employees (too costly) are not so attractive to hire.

But does flipping work? Are people flipping foreclosures a lot today and flipping them? Forgive me if I'm not as knowledgeable as you all. I've only bought one house in my life, and I could pay it off in another 8 years or so. But I need some cash flow, because my insurance practice is taking a hit.

dunnross says

Couple that with all the fundamentals of shadow inventory, high unemployment, rising interest rates, retiring baby boomers and spells a crashing housing market. The reality that we are seeing now, with prices falling for 4 months in a row, is a confirmation of technical analysis (graphs) + fundamental analysis (shadow inventory, high unemployment, rising interest rates, retiring baby boomers).

not to mention much more mature and shrinking industries in Techland, fundemental decline in local hiring vs ability hire without constraints elsewhere...

340 public companies in 1994, 420 in 2000 and today near 200 public companies...

And even worst, many unable or unwilling to take leadership in building the next decades industries. Something im not to happy with...

manolive72 says

because my insurance practice is taking a hit.

Stick to what you know! Miami is full of dead bodies of former flippers who though they
could make a quick buck!

look at 1997 on the chart again.. what do you see...

HousingWatcher says

What has changed in our social consciousness

Beck caters to the highest bidder. He is an artist and entertainer of the highest caliber. He mixes truth with exaggeration and acting to marginalize those who know truth and who agree with him (at least the parts that are factual).

Beck was one of Ron Paul's harshest (!!!) critics during the 2008 presidential election. Beck supposedly then had a 180-degree change of heart and decided to support Libertarian and then also, later, Tea Party ideals.

No adult man with such deep opinions does a 180-degree like that. No way. This was paid-for acting.

The man should be recognized for what he is -- a great artist and actor. He deserves an Oscar.

I haven't read the other comments but my reasoning is this...

I think the current recovery is a charade bought through trillions of dollars of govt spending. I think that as the govt cuts spending (because borrowing costs rise and/or the current crop of legislators grow a spine and start reigning it in) that the economy will resume its downward trajectory. We still haven't paid for the .com bubble and now we have the housing bubble. We need to experience a whole lot more pain to purge the excesses of these bubbles. Only then can we start a new march upwards.

No one can argue that credit is now more difficult to obtain than during the bubble - sure, down payment requirements are still too low but at least you have to have verifiable income to get a loan these days. That means that if unemployment rises and/or wages fall then house prices must drop.

Therefore, anyone betting on house prices going up from here are betting that Bernanke and friends can financially engineer a return to prosperity without completing the "bust" part of the "boom and bust" cycle. I don't see how this is possible and so expect another leg down in the economy - this will cause home prices to resume their fall.

Also, my analysis doesn't even account for other longer-term economic/housing headwinds - peak oil, baby boomers retiring, etc. When you throw those factors in the long-term outlook for house prices is not good.

theoakman,

Volatility depends on the way you look at the situation. When you value gold/silver against the fiat dollar, obviously there's going to be volatility - because these two metals are subject to human emotion more than anything else. The point is to look at gold/silver as real money and ignore their price variations with dollar. The metals are essentially a hedge against the fiat currency collapse. If the metals price falls, that just means the purchasing power of the dollar increased, but the purchasing power of the metals stayed the same.

Market cannot figure out what they are worth, because the market is trying to value money using manipulated money!

grywlfbg says

Therefore, anyone betting on house prices going up from here are betting that Bernanke and friends can financially engineer a return to prosperity without completing the “bust” part of the “boom and bust” cycle. I don’t see how this is possible and so expect another leg down in the economy - this will cause home prices to resume their fall.

sorry grywlfbg, put there will be plenty of 'vested parties' in RE who ignore all the variables influencing prices. yes you are right though!

BTW, Here is the link to the local rent/buy ratios. You can judge for yourself whether we've hit the bottom in affordability or not.

http://patrick.net/?p=28998

I lean toward the idea that he's crazy. He must know that there are many who "learn" from him and take him seriously. Therefore, if he has any humanity, he must in some way think that he is working for a higher good.

The man is indeed seriously disabled.

The ironic part is that that is what makes it possible for him to be far more entertaining than he would be if he were only acting.

If on the other hand it is an act, he is the lowest form of scum in existence, and no amount of gifts to charity can make up for the evil he does in the name of entertainment.

I think it's part showmanship - but that he truly believes the shit he shovels. I think he's narcissistic at the very least. However, so are many celebs. Normal people couldn't handle to shitstorm that accompanies celebrity.

cloud13 says

logic tells me that these poor asses which are hanging on to these homes, and driving beater cars won’t be able to resist longer.

Whoa fella, don't be so sure.

I have a beater-looking vehicles in front of my home, which I could pay off now if I wanted to (the home, not the beaters which of course are paid for).

But taking gains to pay off a 4.5% deductible loan doesnt figure in my logic.

Beater-looking cars, if they're mechanically maintained, are a good transportation value.

SF ace says

Nationwide housing affordability during the fourth quarter of 2010 rose to its highest level in the 20 years since it has been measured, according to National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) data released today.
This includes San Francisco, an index of 31, highest since data was recorded.
http://www.nahb.com/news_details.aspx?sectionID=135&newsID=12159

NAR's and the RE Cartel's idea of "affordability" is completely twisted. They use median monthly payments to compare affordability, not the actual price of a house. Naturally, monthly payments are very low now, because the gov-t is trying to support high house prices by artificially keeping interest rates low. When the house market hits the "true" bottom, NAR's numbers for affordability may actually be lower than they are today, but only because interest rates will be much higher.

dunnross says

as recently as 1995 a condo in the best area of San Jose which cost no more than $200K would easily rent for $1800 or more.

Yes, and it was soon after that when purchase prices skyrocketed. Not talking about the BushJr Ownership Society Bubble steep rise in prices that came later. There was also a big surge in prices in the late 1990's that is sustained.

wait, who are these poor asses who wont be able to resist? resist what?

dunnross says

A place where people who make an average wage cannot find housing affordable, can not survive on a sustained basis... a place like this, will soon find an exodus of good jobs to other cities where housing is affordable

Well let's see, our region has seen exoduses of good jobs and entire industries decade after decade but the prices are higher each decade. Kinda like, NYC I think. They don't produce anything there anymore, and haven't for a long time. But the cost of housing keeps going up over there. Kinda like that here.

sybrib says

dunnross says

A place where people who make an average wage cannot find housing affordable, can not survive on a sustained basis… a place like this, will soon find an exodus of good jobs to other cities where housing is affordable

Well let’s see, our region has seen exoduses of good jobs and entire industries decade after decade but the prices are higher each decade. Kinda like, NYC I think. They don’t produce anything there anymore, and haven’t for a long time. But the cost of housing keeps going up over there. Kinda like that here.

That's my point. Bay Area doesn't compete for jobs with New York city, or even Chicago. In New York City, 25 year old's who work for wall street banks make in 1 year bonuses more than what it takes a San Jose techie to make in his lifetime. If you want to compare the Bay Area to another city, compare it to a city like Austin, Texas, but not to New York.

sybrib says

dunnross says

If you want to compare the Bay Area to another city, compare it to a city like Austin, Texas

I like Austin, had a good time there each time I was there; considered relocating there before, and it may happen yet. Why would a Bay Arean like me want to relocate to a place like Austin? Because it’s not like the Bay Area! Sort of like, the businesses like Apple and Applied Materials who’ve moved operations to that area.
San Francisco Bay Area more like Austin than other crowded coveted (overpriced and expensive) metropolis’ in the world? More like Austin? I wish it were so, because in that case we would have a higher standard of living. But it’s not more like Austin/

No, Bay Area has the amenities and the jobs like Austin, but, with RE prices like New York city.

haha great avatar

Syphilis says

haha great avatar

Yes, I got this one because sybrib gave me an idea of foie gras.

Oh, those are the guys from Nigeria. I know them very well. They use fake cashier's checks. You can read all about them over here:

http://www.internetscamalert.com/

What do you guys think about home prices in the $1million price range in the Los Angeles area? Do you think this price range of homes has taken a large hit over the past few years? Do you think it will stabilize for a while?