patrick.net

uni6jon2 says

So have they all been refinanced? Considering the dollar amounts involved according to articles in all the major newspapers(WSJ, NYT, WashPost), I’d expect more attention to the April milestone.

So here's part of the answer. Interest rates have stayed low and the indexes to which the ARMs are tied stayed low. So no large defaults. Seems the interest rates must go up as prices fall, so loan agents balance their returns.

http://seattletimes.nwsource.com/html/realestate/2014325127_realarms27.html

Zlxr says

And Thomas - what about the tripling of house prices between 1975 and 1985?

More like doubled from what saw I from 1998-2000 due to easy lotto winning from stock options/tech bubble.

I would say from 1980 - 1989 there was good reason why prices went up. The birth and expansion of local tech companies. Boom in industries led to boom in hiring and incomes with near zero global competition. We are talking about not only professional salary jobs but also hourly wage earners. So it effected all income brackets. We had plants working 3 shifts daily 6-7 days a week. Yes we had that here in Silicon Valley. Yes that maid/janitor would have made more if they worked in tech mfg and many did.

Overall back in the '80s we didnt see the tech stock and than housing speculation as we seen 1998 to present. It was more reasonable era back than.

klarek says

thomas.wong1986 says

OK 9 years ago…All that is left is the correction for prices doubling between 1998-2000.

Don’t think they doubled in that time period in any market.

Like dunken sailors, some who cashed out their stock options could and did pay any amount.
Plenty of uncashed stock options left, so lets party. Except the party ended back in Q1 of 2000.

It was very common to hear.. "its free money anyway, i never really earned it".

vain says

Put 20% down ($90k). You will need a loan of $360k. The mortgage for that is around $1800/month. Income requirement for a safe mortgage is $5400/month, or $65k/year.

Somebody is having nostalgia from the housing bubble, where people could magically afford a house 5.5 times their annual salary. And your assumption that someone at that income level would typically have $90k saved up is outrageous.

edit: that is an old post, I know, but the outlandish math being used to justify SF prices shows just how desperate people are to make themselves believe that it's anywhere near sustainable.

klarek says

vain says

Put 20% down ($90k). You will need a loan of $360k. The mortgage for that is around $1800/month. Income requirement for a safe mortgage is $5400/month, or $65k/year.

Somebody is having nostalgia from the housing bubble, where people could magically afford a house 5.5 times their annual salary. And your assumption that someone at that income level would typically have $90k saved up is outrageous.
edit: that is an old post, I know, but the outlandish math being used to justify SF prices shows just how desperate people are to make themselves believe that it’s anywhere near sustainable.

Few top reasons why home prices will not go up any time soon:

1) UE rare. Lack of abundant high paying jobs.
2) Zero chance of using HELOC to cover the not affordable mortgage in first place.
3) No more loans without that hefty 20% down payment, certainly not for the 20% of the current home prices.

SF ace says

A actually know someone recently, just got the keys, 20% with a 360K or so loan. It’s a little house on silver (800+ square feet with potential to spend 20K and add 400 Sq Ft) terrace. Small family with combined income around 90K and passed the underwriting test. Saved over 100K over tens years, 75% of it came from the stock market.

Saving $100k != Saving $25k + profiting $75k from stocks.

I was talking about people making $65k, not $90k, and the ability to pay a mortgage at 5.5 times their annual salary.

Thank you for the anecdotal story though. Hope your friends don't notice when their investment money goes up in smoke.

SF ace says

I agree, 65K is not doable normally.
But, if they made 65K, they are mostly likely looking at below market purchase program. (around 25% of market price) There must be about 10K of such units.
You see a major tower going up with 1.5M dollar penthhouse. Well, 15% is set aside for mandatory Below Market Program. In a housing project of 300 units, 45 will get in at 65K salary with the help of the city.

Follow the conversation back to vain's point.

klarek says

edit: that is an old post, I know, but the outlandish math being used to justify SF prices shows just how desperate people are to make themselves believe that it’s anywhere near sustainable.

It has amazed many how twisted the thinking/justification over RE prices has become over the past 10 years.

gameisrigged says

Are you for real? This is a joke, right? I mean, it’s hard to believe anybody is really that stupid.

Delusional, more like it.

thomas.wong1986 says

gameisrigged says

Are you for real? This is a joke, right? I mean, it’s hard to believe anybody is really that stupid.

Delusional, more like it.

or simply childish argument as he made to the redfin home sold price chart I presented to him, " not enough sales data to gauge the price decline since 2009" - ghost bottom.

There's a lot of debate in this thread as to how bubble should look on a chart, and I'm not really sure why. It's as though you're expecting to figure out where prices are going to go next year as soon as you can solve the puzzle on the chart and mark the 'X' at the bottom. It just doesn't work that way. It's true that market movements have certain tendencies and that over time patterns emerge. But you can't expect those patterns to generate predictions with any timing or accuracy. There are no 10/3 year rules, and there is no guarantee of symmetry in the markets. The best you can do read the picture price movement is painting and combine that with the fundamental information on hand.
Is the collapse over? I don't think so. The big panic has passed us, but the repercussions of the bubble haven’t worked their way out of the market. There is a massive amount of shadow inventory out there, and this is in no way a normal market. And there are still a lot of people in various types of option arm loans that are not going to be able to pay their mortgages when the payments reset, a lot of those houses will soon join that inventory. As these houses are leaked into the market how is that going to affect the charts? I don’t know, I don’t think anyone can. It’s not happening in a normal way, the gov’t and FED are pumping money into banks so that the banks can keep toxic assets on their balance sheets and still pretend they have reserves to lend against. And to keep their balance sheets up banks are being slow to reclaim nonperforming loans, thanks to recent laws they don’t have to claim the losses until the houses have been foreclosed on.
And even if you want to say that “the collapse is over” and technically we are done with the bubble cycle, where does that leave us? Look at the fundamentals. Wages are down, unemployment is up. Inventory is high, demand is down. There are no logical reasons to be optimistic about the housing market anytime soon, especially here in California.
In fact, here in California is where I’m most concerned. Prices in San Diego are still close to 160% of their 2000 price, according to the latest Case Shiller data. I look at the houses on the market and I just don’t like what, and with the fundamentals where they are right now it just looks insane. I can't imagine these prices holding over the next few years.

klarek says

All recent news is pointing exactly opposite of what you’re saying. Tanking prices, tanking sales, dogshit market, etc.

I guess to you everything is negative. If you find a $20 bill on the ground, that's bad because it should have been a $100 bill...

The last couple clear capital reports posted on various threads here have been very careful to say that there is evidence that the market appears to be turning around. That the data is older so it doesn't show it, but recent evidence shows the market strengthening. Not sure if it will turn out to be true, but there is certainly news out there that says the opposite of what you say.

tatupu70 says

I guess to you everything is negative. If you find a $20 bill on the ground, that’s bad because it should have been a $100 bill…

Tatupu - the ship is sinking.

The more time that passes, the bulls look more and more desperate. We've broken 2009 lows (yes, even for concord) and it's headed lower.

The only reason we had a headfake in RE is because of the tax credit. Too many are in denial that the tax credit pumped up prices, but the verdict is in.

O.K., fair enough.

joshuatrio says

tatupu70 says

I guess to you everything is negative. If you find a $20 bill on the ground, that’s bad because it should have been a $100 bill…

Tatupu - the ship is sinking.
The more time that passes, the bulls look more and more desperate. We’ve broken 2009 lows (yes, even for concord) and it’s headed lower.
The only reason we had a headfake in RE is because of the tax credit. Too many are in denial that the tax credit pumped up prices, but the verdict is in.

We shall see. You bears have a pretty solid record of gloating long before the verdict is in.

You might be right, but it's way too early to call it. Get back to me in July...

sybrib says

I agree that there ought not to be any stigma about where we live. But the other part, there is a whole lot of the USA between The Left Coast and NYC/DC. I don’t think so many of those folks are ready for the metamorphosis we’re observing in the Cool and Hip Coastal areas. If anything, as their standard of living declines in proportion to their dependence on gasoline for their Red State lives, they will get angry and start to look for scapegoats. Like us.

Agreed. Although somewhat thinly spread, there are a lot of people (and registered voters) in between the coasts. And neither Wall Street or Silicon Valley is generating jobs, wealth or stability for them.

dunnross says

There has never been a genuine bull market carried by speculator-only buying. That’s what we are seeing now in housing, and very soon, all these speculators will find out that there will be no people willing to live in their newly acquired investment.

much agreed.

tatupu70 says

You bears have a pretty solid record of gloating long before the verdict is in.

That's because - just speaking for myself - this was all expected, and it was pretty easy to approximate how far off prices were at the market's peak, and that the interruption in declines was driven by govt manipulation, breeding a false sense of recovery. I actually feel bad for the people that jumped in based on it, though they're much better off than those who bought in 2005-2007.

I am putting in crown moldings in my bull trap this weekend - very exciting!

klarek says

tatupu70 says

You bears have a pretty solid record of gloating long before the verdict is in.

That’s because - just speaking for myself - this was all expected, and it was pretty easy to approximate how far off prices were at the market’s peak, and that the interruption in declines was driven by govt manipulation, breeding a false sense of recovery. I actually feel bad for the people that jumped in based on it, though they’re much better off than those who bought in 2005-2007.

I think you missed my point. You are interpreting the data in the way that conforms to your expected result, rather than looking at it objectively.

Mr.Fantastic says

SubOink says

I am putting in crown moldings in my bull trap this weekend - very exciting!

Your life must be markedly unexciting.

Hater...:)

dunnross says

Look at the graph. The spring bounce is lower than it was last year and the year before. Bounces are getting smaller and smaller, while drops are getting bigger and bigger

Spring started less than a week ago and you're declaring the spring bounce over? Otherwise how do you know if it will be larger or smaller than last year?

tatupu70 says

dunnross says

Look at the graph. The spring bounce is lower than it was last year and the year before. Bounces are getting smaller and smaller, while drops are getting bigger and bigger

Spring started less than a week ago and you’re declaring the spring bounce over? Otherwise how do you know if it will be larger or smaller than last year?

1. Last year's bounce was smaller than the year before.
2. Last year's bounce was pretty much over by April, much earlier than 2009 which was over in June. I predict that this year's bounce will be even more fleeting.
3. Regardless of how long it will be, it should not break overhead resistance which is the 2009 low. This is because all those so called "cash investors" who bought in March, 2009, hoping to flip it for a quick profit, somehow got stuck with it, and want to unload at a break-even point.

dunnross says

I predict that this year’s bounce will be even more fleeting

That's fine. It's your opinion. The graph doesn't show it, you just think it will be the case. Just wanted to clarify.

tatupu70 says

I think you missed my point. You are interpreting the data in the way that conforms to your expected result, rather than looking at it objectively.

My view has been that housing was overpriced and that the "bottom" formed in 2009 was the result of the tax credit. which after its expiration prices will continue declining. People who have been adamantly denying that this was the case have a pretty hard time explaining the data. Something is not conforming to someone's expectations, but that's on your guys' end, not mine.

dunnross says

Why is it that I can get 100×1 price/rent ratio for commercial property in San Jose,

We can learn a lot more from individual people's anecdotes on a forum like this than about macro trends which are open to everyone's individual interpretations.

Dunross, please us how things are going with your commercial properties in San Jose.

dunnross says

Price is 100x of monthly rent. I can buy a 3000sqft commercial office in San Jose today for $300K which rents for $1/sqft.
Does anyone have numbers of commercial vs. residential vacancy rates for Santa Clara County.

Read several articles per San Jose Mercury regarding former R&D/Mfg space pinned between 20-25% vacancy. Milpitas having the highest at 25%. What was once R&D/Mfg are now Churchs and other off the wall small retail business. Seen couple other commercial locations are being converted to residential/condos/TH. I expect to see more of this.

klarek says

tatupu70 says

I think you missed my point. You are interpreting the data in the way that conforms to your expected result, rather than looking at it objectively.

My view has been that housing was overpriced and that the “bottom” formed in 2009 was the result of the tax credit. which after its expiration prices will continue declining. People who have been adamantly denying that this was the case have a pretty hard time explaining the data. Something is not conforming to someone’s expectations, but that’s on your guys’ end, not mine.

Nope--it's conforming to my views as well. I said that the credit expiring pulled ahead demand for a few months. Then we're into winter. If sales/prices continue to fall through summer, then I'll agree with you.

dunnross says

Completely ignorant comment showing a complete misunderstanding of market psychology and basic econ-101 fundamentals.

Technical analysis is pretty roundly discredited in Econ textbooks.

tatupu70 says

dunnross says

Completely ignorant comment showing a complete misunderstanding of market psychology and basic econ-101 fundamentals.

Technical analysis is pretty roundly discredited in Econ textbooks.

Another ignorant comment by Tatapu. Show me 1 Econ textbook which discredits technical analysis. Support and resistance lines are basic patterns of human psychology. How many times did you buy a stock, just to see the price fall, giving yourself the word that you will sell the day the stock gets back to your buying (break even) price. This is exactly why the price bounces, but only as far as the resistance. The same thing holds in reverse for support.

dunnross says

tatupu70 says

dunnross says

Completely ignorant comment showing a complete misunderstanding of market psychology and basic econ-101 fundamentals.

Technical analysis is pretty roundly discredited in Econ textbooks.

Another ignorant comment by Tatapu. Show me 1 Econ textbook which discredits technical analysis. Support and resistance lines are basic patterns of human psychology. How many times did you buy a stock, just to see the price fall, giving yourself the word that you will sell the day the stock gets back to your buying (break even) price. This is exactly why the price bounces, but only as far as the resistance. The same thing holds in reverse for support.

Me--never. I'm more of a buy and hold guy.

Applying technical analysis to housing is beyond ridiculous. Each house is different, the data is usually 2-3 months old before it's even available, and as others are so fond of pointing out, it's more than an investment. Your theory is that people follow the median price history charts and sell their house if they see a head and shoulders pattern?

tatupu70 says

Applying technical analysis to housing is beyond ridiculous. Each house is different, the data is usually 2-3 months old before it’s even available, and as others are so fond of pointing out, it’s more than an investment. Your theory is that people follow the median price history charts and sell their house if they see a head and shoulders pattern?

Most people don't follow technical analysis for stocks either, because they don't understand it. But, regardless of whether most people follow it, or not, markets always follow technical analysis patterns, because technical analysis is a psychological indicator. Claiming that real estate doesn't follow technical analysis is as akin to saying that the housing market doesn't follow basic laws of supply and demand.

klarek says

tatupu70 says
My view has been that housing was overpriced and that the “bottom” formed in 2009 was the result of the tax credit. which after its expiration prices will continue declining. People who have been adamantly denying that this was the case have a pretty hard time explaining the data. Something is not conforming to someone’s expectations, but that’s on your guys’ end, not mine.
Nope–it’s conforming to my views as well. I said that the credit expiring pulled ahead demand for a few months. Then we’re into winter. If sales/prices continue to fall through summer, then I’ll agree with you.
So I’m not molding reality to fit my views? Sweet.
BTW “a few” is a nice euphemism for several. Sales are still in the shitter.

No--you are still ignoring the parts that don't conform to your views. Like the verbage on the last couple of clear capital reports which clearly state that traffic is increasing and the housing market appears to be turning.

And a few means a few. Did you miss where I said it led right into winter? As you know, sales are usually down in winter.

dunnross says

Most people don’t follow technical analysis for stocks either, because they don’t understand it

No--most people understand it. They just know that it doesn't work.

dunnross says

All those comments which you make about technical analysis not applicable to the housing market really expose your ignorance and completely destroy your reputation.

That ship sailed a long time ago.

We're going sideways for a while...which means if you are in the market of buying, you gain nothing by waiting...except if you need a little time to save more downpay. It's not a bad situation. Nobody is in a rush, but if you have a job and have the money, you might as well buy now before you waste more money in rent.

And if this market drops 20% from here all over the US - trust me, you won't be buying then either because its going to be UGLY at that point. You probably won't have a job and things will be as bleak as they can be. Be careful what you wish for perma bears. Don't think you are safe when you're renting. Get ready to move, and move and move...

As most deals are cash offers these days, it sounds more like we are in the stealth phase than any other phase - LOL. Smart money is coming in the market. Institutional investors next...then the public and all you bears too. Right now there is public in the game so its hardly a Mania phase. You wouldn't have a crash forum in a mania phase because there would be no audience for it in a mania phase.

Just saying, not sure if those theoretical graphs are always 100% of the picture - but what do I know.

Have a great Sunday everybody!

klarek says

tatupu70 says
No–you are still ignoring the parts that don’t conform to your views. Like the verbage on the last couple of clear capital reports which clearly state that traffic is increasing and the housing market appears to be turning.
The irony of your remark is hilarious. Here are the last THREE Clear Capital reports:
* 03/10/2011
U.S. Home Prices Continue Slight Decline as West Region Drags Nation Down
* 02/03/2011
Clear Capitalâ„¢ Reports U.S. Quarterly Home Prices Still Down, But Showing Life in 2011
* 01/06/2011
Record Setting Volatility in 2010: U.S. Home Prices Down; Additional Drop Forecasted for 2011
Perhaps you’re due for a little bit of self-reflection.

Hmm. really? So, I say read the verbage of the report, and you quote the headlines? That's a little disingenious, wouldn't you say? Even so, you still prove my point. The Feb report headline says "showing life in 2011".

klarek says

but the YoY declines show that the credit didn’t just pull forward sales by a few months

How do you figure that? All the first time buyers were gone because they already bought before the credit ended. Is there a formula that tells you what the YoY decline should have been under that scenario? If so, please share it.

SubOink says

And if this market drops 20% from here all over the US - trust me, you won’t be buying then either because its going to be UGLY at that point. You probably won’t have a job and things will be as bleak as they can be. Be careful what you wish for perma bears. Don’t think you are safe when you’re renting. Get ready to move, and move and move…

Heard the same bullshit from 2005-2008 about how the market wouldn't drop 20% and if it did we'd be living in caves while eating our own feces. All that will happen is banks will get socked and the cost of living will be cheaper.

tatupu70 says

Hmm. really? So, I say read the verbage of the report, and you quote the headlines?

I should have copy/pasted the entire reports which you've presumably read into this thread, that makes much more sense.

tatupu70 says

How do you figure that? All the first time buyers were gone because they already bought before the credit ended. Is there a formula that tells you what the YoY decline should have been under that scenario? If so, please share it.

You can start by comparing it to every other year during this season and see that somehow buyers appear elusive, despite the belief amongst some that housing bottomed two years ago which would have stirred up confidence.

Mr.Fantastic says

Yeah, seriously. Is this a joke? tatupu once called St. Louis a high class community. Then we all saw the videos of his wife. That was comical.

It's a lot easier to score a laugh at somebody when he accuses others of warping their ingestion of data to suit their beliefs when he himself is trying to whitewash the tanking home prices. As for his wife being fat, I have no idea nor could I care.

klarek says

Heard the same bullshit from 2005-2008 about how the market wouldn’t drop 20% and if it did we’d be living in caves while eating our own feces

You're right, I forgot - everything has been perfectly fine in the last few years, the real estate market drop did not have any impact on EVERYTHING. You live on earth?