patrick.net

Lets not confuse national stats with coastal CA.

Vegas, AZ, non Coastal CA (and much of flyover) ARE at 1995 prices RIGHT NOW nominally.

You only need to use redfin.com and change the select options to show last 1 year of sales. You will see the destruction. (scroll down for sales history)

http://www.redfin.com/NV/Las-Vegas/5801-Evergreen-Ave-89107/home/29234195

http://www.redfin.com/NV/Las-Vegas/508-Carpenter-Dr-89107/home/29230090

http://www.redfin.com/NV/Las-Vegas/6120-Empire-Cir-89107/home/29197186

on and on it goes. these are random sales. I know that in Los Angeles condos are at 1989 to 1999 prices depending upon how ghetto it is.

Its very interesting.

itulip mentions massive govt intervention and bailouts on that page from 2005.

anyway....one scenario is that it takes 10 years for coastal CA declines to 'reach parity with vegas'.

PockyClipsNow says

itulip mentions massive govt intervention and bailouts on that page from 2005.

The page was first archived March 2006:
http://web.archive.org/web/20060317083515/http://www.itulip.com/housingbubblecorrection.htm

APOCALYPSEFUCK says

Plunging back to 70s prices!
I hear the screams of dying banks in the distance and it’s music, music I tell you!
DIE BANKSTERS DIE!

banks are on permanent welfare. they borrow money at 0.01% interest from the fed and buy treasuries at 2%. There was an article about this on Bloomberg businessweek.

Our current Fed system is one giant ponzi scheme.

The thing about housing vs say the crash of 1929 is there's only fast prices go down. It's not like someone in a house worth 300K wakes up and it's 100K. housingtracker illustrates many metro areas where there have been declines of 30% or more but it happens over the course of a year.
Major cities let's take a look
http://www.deptofnumbers.com/asking-prices/illinois/chicago/
Chicago still going down
http://www.deptofnumbers.com/asking-prices/new-york/new-york/
New York City still going down
http://www.deptofnumbers.com/asking-prices/pennsylvania/philadelphia/
Philliy slight pop over the past six months but not major
http://www.deptofnumbers.com/asking-prices/texas/houston/
Houston flat
http://www.deptofnumbers.com/asking-prices/california/los-angeles/
LA still down (mostly on high ended ones though)

Best market I see is Austin (I don't know why)
http://www.deptofnumbers.com/asking-prices/texas/austin/
and DC
http://www.deptofnumbers.com/asking-prices/district-of-columbia/washington/

Take a look at Phoenix. There's less units on the market then ever but yet prices KEEP falling http://www.deptofnumbers.com/asking-prices/arizona/phoenix/

Now there are places like Memphis, Cincy and OKC that didn't have a bubble but they are flat.

Banks won't lend funds because they don't want people to borrow on things that won't go up or at least stay level (who can blame them). The employment picture has to go up before anything else.

The only company I see that shows any confidence is Hyundai
http://www.autocreditexpress.com/blog/2010/01/07/hyundai-continues-with-lose-your-job-return-your-car-program/

From what I understand sales went up and few cars were returned (less than 100)

We are also still in a bubble which when it pops will push prices further down.

Its the federal deficit spending bubble. FHA is part of this. I looked at a new condo the other day. The builder is pushing near zero down (FHA allows seller to contribute 3% of purch price toward down payment). So PEOPLE ARE BUYING TODAY -RIGHT NOW- with a 1/2% (0.5%) down payment. The default rate on all these loans will be large - further surpressing prices (i read FHA defaults are 10% or so now - that would BK any real company)

It appears there will be permanently high foreclosures for a long long while due to Feds stringing out this crash as long as possible to maximize (minimize?) pain.

The real wild cards are that we cant accurately predict what the goverments will do and what interest rates will do or when......

Comparing prices in Bay Area to other countries doesn't seem useful. I have no idea how to compare them properly anyway. All real estate comes from the government and they set the price with thier policies indirectly - so what do I know about other countries politics?

It certainly is a complicated subject.

So what to do, how to live, in a 'declining forever' real estate market?

I suppose owning RE should be treated like owning automobiles. Buy as cheap as you can stand - anything other than that is a waste of money. (basically I've been doing this forever and I have prospered while others declare BK. Its conservative and boring which means I sleep well.)

PockyClipsNow says

boomers retiring?

Boomers are dying. That fear quote is ten to twenty years old already.
You do realize the boomers are in their late 60's and pushing 70 already right? At best Boomers have five more years playing into any meaningful statistic for home prices.

Tenouncetrout says

You do realize the boomers are in their late 60’s and pushing 70 already right?

You do realize that the baby boom lasted from 1946-1964, and that the expected lifetime of a 70 year old is about 18 years, right?

Real estate has further to fall before it comes in line with historical income to price ratios.

When I run places through the NYT calculator the break even point is always more than a decade away in my local market even though trulia thinks everyplace here is a steal.

Depending on the overall economy, I could definitely see real estate only falling another 5-10%, but that's a long way from "rising".

There were also tons of news stories on how rents are up in my market, yet I was apartment hunting last year and there are much better deals to be had at present.

I guess we'll have to just wait and see.

uffthefluff says

When I run places through the NYT calculator the break even point is always more than a decade away in my local market even though trulia thinks everyplace here is a steal.

What assumptions did you put in for appreciation and inflation?

Definitely looks like the price to rent ratio is still well-above trend.

http://www.calculatedriskblog.com/2011/05/real-house-prices-and-price-to-rent.html

http://www.demographia.com/dhi.pdf

Practically every city that Trulia says is "affordable" (the second greenest category) has a median multiple well-above 3.0 even though historically prices are below that multiple in America.

None of these measures even take into account a possible undershoot, which is quite common after an investment bubble. The fact that most prices are not yet fair according to historical norms, let alone once or twice in a lifetime deals, tells me that prices will continue to fall.

I use 1% for appreciation and leave the default 3% for rent increases.

uffthefluff says

I use 1% for appreciation and leave the default 3% for rent increases.

That's surprising. I didn't think rents and prices were that far out of whack in Chicago. What areas are you looking at?

tts says

That statement is just plain common sense. To say its bullshit means you don’t understand the economic responsibility that goes into owning a home. Because you do realize they break right? Roofs fail, foundations fail, siding fails, etc. THEY ARE EXPECTED TO. All that can cost thousands to tens of thousands to fix. If you look at the cost to fix that and divide it over the expected lifespan of a house (30-50 years) that “5-10% price of home=upkeep” is pretty much spot on.

Come on. You don't really believe you spend 5-10% PER YEAR on maintenance. That's absurd. You get a new roof every 20 years and it costs $5-10K. And that's probably the most expensive repair you'll have. 10% of a $250K home is $25K per year!!! Every year! Ridiculous.

I run the calculator on lots of Northside neighborhoods and it is almost always a better option to rent.

Not to commandeer the thread, but look at these:
http://chicago.craigslist.org/chc/apa/2425037351.html
http://www.redfin.com/IL/Chicago/916-W-Fullerton-Ave-60614/unit-916-3/home/13359651

Definitely not a good deal at a about 14 years to break even.

tatupu70 says

tts says

That statement is just plain common sense. To say its bullshit means you don’t understand the economic responsibility that goes into owning a home. Because you do realize they break right? Roofs fail, foundations fail, siding fails, etc. THEY ARE EXPECTED TO. All that can cost thousands to tens of thousands to fix. If you look at the cost to fix that and divide it over the expected lifespan of a house (30-50 years) that “5-10% price of home=upkeep” is pretty much spot on.

Come on. You don’t really believe you spend 5-10% PER YEAR on maintenance. That’s absurd. You get a new roof every 20 years and it costs $5-10K. And that’s probably the most expensive repair you’ll have. 10% of a $250K home is $25K per year!!! Every year! Ridiculous.

Unless of course you get water damage in your roof before you get it replaced and then uh oh, major structural damage...

Same thing with most repairs. People usually don't go replacing roofs or siding or plumbing until there is already a problem, by that point you have to fix the damage as well as the problem too.

Also he gave a spread of 5-10% so to be correct you'd have to have said $12.5K-$25K for a $250K house.

I think it only makes sense if Janzen meant to say 'maintenance AND upgrades' rather than just maintenance.

The only reason to own a home is to paint the walls red, install granite- stainless appliance, hard wood floors, etc.

I mean who here with a wife who owns a home can only spend 1% per year average on it? Its a constant spending orgy for most people I know (granted much much less now that MEW is impossible).

That makes sense - even though granite and stainless is not maintenance you DO PAY FOR IT and we all know now you WONT get that $ back in resale - thus its legit to call upgrades an expense of homeownership (with wildly varying degrees of spendyness).

Also, according to the just released Beige Book, there was slower growth seen in New York, Philadelphia, Atlanta, Chicago districts.

That doesn't seem to point to higher prices any time soon.

tts says

Unless of course you get water damage in your roof before you get it replaced and then uh oh, major structural damage…
Same thing with most repairs. People usually don’t go replacing roofs or siding or plumbing until there is already a problem, by that point you have to fix the damage as well as the problem too.
Also he gave a spread of 5-10% so to be correct you’d have to have said $12.5K-$25K for a $250K house.

My lord. Is this really what you want to argue about? OK, let's say 5%/year on a $250K house = 12.5K/year. Even if you have extra damage, you'll still get a new roof for ~12.5K. Which will last at least 20 years. So, now what expenses will cost 12.5K/year for the next 19 years??

It's completely absurd. When you argue something like this you lose all credibility.

tts says

The numbers are trivial and work out easy, just like I showed tat above. What is there to discuss about simple percentages. Also $10k for a 50 year roof? WTF? Is the roof like 5 or 6 squares or what? You know you have to use tile or metal to get a 50 year roof too right? EXPENSIVE FOR ANY HOUSE OF DECENT (ie. 1500 sq. ft.) SIZE. Shingles top out at 40 years, but that is just for the warranty, I’ve seen them fail far sooner than that.

I just installed a 50 year architectural roof. Shingles. And it was a bit over $5K.

If we adjusted for real inflation, the often-kicked-around charts would look far worse than they do and much closer to what they claimed (but offset a year or so). The current charts are floating on government debt and inflation. There really is nothing to keep prices up, they're simply sticky and slow to move.

The deepest fundamental issues are generational and they won't be fixed any time soon (sadly, it's likely to leave us a third world country). Roughly 75% of the next 10-15 years of first time home buyers is gone (priced out, unemployed, and/or deeply in debt; they will not be able to buy), which in turn means those moving up are gone (most action has been horizontal), so you will have a cascade starting at the bottom where layer upon layer of the cake collapses. The fix will take at least as long as Japan and will be primarily based on how rapidly baby boomers die off...

I think their estimates are low. The downturn will probably go well into the 2020s and potentially into the 2030s. There will be no real gains for at least another decade or so after that. Housing could even become a depreciating asset like an automobile, if this situation lasts long enough (realistically, they are very similar; the fact you change an engine or alternator doesn't make a 15-year-old car instantly worth dramatically more than an identical one with an old part). There are so many things that could cause this change in opinions on housing, and it wouldn't be the worst thing that could happen.

tatupu70 says

tts says

Unless of course you get water damage in your roof before you get it replaced and then uh oh, major structural damage…

Same thing with most repairs. People usually don’t go replacing roofs or siding or plumbing until there is already a problem, by that point you have to fix the damage as well as the problem too.

Also he gave a spread of 5-10% so to be correct you’d have to have said $12.5K-$25K for a $250K house.

My lord. Is this really what you want to argue about? OK, let’s say 5%/year on a $250K house = 12.5K/year. Even if you have extra damage, you’ll still get a new roof for ~12.5K. Which will last at least 20 years. So, now what expenses will cost 12.5K/year for the next 19 years??
It’s completely absurd. When you argue something like this you lose all credibility.

OK now add plumbing, foundation, siding, interior work (ie. drywall, carpet, paint, etc.), termites, etc. etc etc. That you keep focusing only on the roof as if its the end all be all of just goes to show how dishonest you're being.

Also if you think those shingles will last 50 years I have a bridge to sell you. Many 20 and 30 even 40 year shingles last only 10-15 years. Repeat after me: asphalt is asphalt is asphalt no matter what they say the warranty is. There are only 2 things that last that long: metal and tile. Everything else is BS. BTW you're probably also getting screwed on the warranty on those shingles which is how they plan to keep their money. Any quick and dirty google will show you this:

http://www.roofery.com/shingles/warranty.html

and here is another one too:

http://roofgenius.com/roofmaterialchoices.htm

"Many of the high end, man made roofing materials made in the last 10-15 years have failed prematurely. Most of these materials promised 50 year warranties. Many homeowners are stuck with failing high dollar roofs, and are involved in class action law suits Be careful in selecting materials that do not have a proven track record. Investigate thoroughly."

and if you don't believe that you can talk to any roofer and they will tell you the same. You only paid $5K because you're getting screwed out an extra $10K to $20K easy depending on how fast you replace the roof before the damage gets really bad. And that is just for the roof. If you get a black mold infestation going or the water gets inside the walls for only a few weeks than welp. Your $5K roof can easily end up costing you upwards of $30K. Happens all the time.

Hell you can even get your house condemned tat if you get a very bad mold infection. You know I argue with you and others all the time but I really feel sorry for you if that happens. You better not screw around and get that roof done properly over again within the next 10-15 years. I'm serious, asphalt, even the best asphalt shingles, are not very good at all. And get it done right. For $5K its pretty much a sure thing they half assed the roofing job unless your roof is tiny.

tts says

Also if you think those shingles will last 50 years I have a bridge to sell you. Many 20 and 30 even 40 year shingles last only 10-15 years

That's why I said it'd last 20 years. Can you read?

tts says

OK now add plumbing, foundation, siding, interior work (ie. drywall, carpet, paint, etc.), termites, etc. etc etc. That you keep focusing only on the roof as if its the end all be all of just goes to show how dishonest you’re being.

Sure--add them up. Show me how you get $12.5K/year out of those.

tatupu70 says

That’s why I said it’d last 20 years. Can you read?

Sure you also said this too.
tatupu70 says

I just installed a 50 year architectural roof. Shingles. And it was a bit over $5K.

Not my fault you double posted and weren't clear since "architectural" is also a marketing reference to shingle type. Did you mean to say structural?

tatupu70 says

Sure–add them up. Show me how you get $12.5K/year out of those.

Already gave you some simple examples if you can't figure that out you're wasting my time.

tts says

Not my fault you double posted and weren’t clear since “architectural” is also a marketing reference to shingle type. Did you mean to say structural

It was pretty clear to anyone who read it. It's a roof with a 50 year warranty, but I only assumed it would last 20 years.

tts says

Already gave you some simple examples if you can’t figure that out you’re wasting my time.

lol--Yes. The reason you won't break it out is because you know that they won't add to anything remotely close to $12.5K/year. Give it up already.

tatupu70 says

It was pretty clear to anyone who read it. It’s a roof with a 50 year warranty, but I only assumed it would last 20 years.

No it wasn't clear apparently and good on you for factoring in a good BS factor on your roof, now all you have to do is the same for the rest of the house to see where the rest of the costs will come from.

tts says

tatupu70 says

It was pretty clear to anyone who read it. It’s a roof with a 50 year warranty, but I only assumed it would last 20 years.

No it wasn’t clear apparently and good on you for factoring in a good BS factor on your roof, now all you have to do is the same for the rest of the house to see where the rest of the costs will come from.

I've done that. It comes up to about 1%/year. Defintely not 5%/year. 10%/year is just absurd.

5% is ridiculously high. Are you remodelling every year or something? Our property that is $450k - the roof that the neighbor just did costed $10k. $22500/year in maintenance?? You can probably redo the roof, kitchen, and bathrooms every year at that price. You'd only be able to get brand new appliances every 2 years though.

$ 209/ square foot for Cal. homes with tile roofs ( and pigeons that live in them ) + stone fireplaces + granite counters+ bay windows+ central air + in-ground sprinklers+ vaulted ceilings+ curved grande-staircases, mature landscaping +quiet location + new appliances, and a walk-to-the grocery store location, and near San Jose, or SF-Oakland-Berkeley is the absolute cheapest that I have ever seen homes go for in Calif in my entire life.

But you have to get clear, simple-for-morons, plunk-downable title. It has to be just like in Saskatchewan: where you plunk-down your clear and easy-to-read title at the land-titles office, and you walk out with a cheque.