patrick.net

tdeloco says

If you're 27 years into a 30 year mortgage, then you're 90% into your term. There's just no way borrowers this close to paying off are underwater. Devalued, maybe, but definitely not underwater.

A lot of these have used their houses as ATM's. So they have plenty of HELOC's to bring them well under water.

tdeloco says

That makes your definition of "Chinese Elite" actually mean "Chinese Middle Class".

Yes, you're absolutely right. Chinese Elite have much better use of their money than sinking it into a dead investment like BA housing. After all, they didn't become "Elite" by making stupid moves like that.

dunnross says

If 50% of home owners are under water, and they are all mortgage holders (since only mortgage holders can be under water), and 50% (approximately) of all home owners are mortgage holders, then 100% of all mortgage holders are under water

I hope you're trying to be funny here--I honestly can't tell.

Real property sales prices GAPPED up 20% to 25% most years from 1974 to 2008.
WHY ? WHY ? WHY ?
3 simple reasons ; Women became creditworthy, Computers became appliances, Gubmint eased financing. Those 3 reasons that caused all the unjustifiable investing are now obsolete.
Why guess as to where values will end up ?
One formula is steadfast (2.5 times income) If incomes remain at current levels, National median sales prices will return to near $155K after the pendulum swings.

The pendulum swings.

Virtually Every buyer who purchased or refinanced during the housing bubble watched their equity IMPLODE.

65% of all homes for sale out east on LI are short-sales homes. this means the home owner owes more than the mortgage is worth and they are trying to get out. they are trying to negotiate with the bank on selling at a price much less than the remaining mortgage balance.

TMAC54 says

Real property sales prices GAPPED up 20% to 25% most years from 1974 to 2008.

Nominated. This thread is just full of great stuff.

dunnross says

If 50% of home owners are under water, and they are all mortgage holders (since only mortgage holders can be under water), and 50% (approximately) of all home owners are mortgage holders, then 100% of all mortgage holders are under water

You wrote this seriously? Come on. I don't believe it. This is Homer Simpsonesque.

When your logic yields an answer that is so absurd, then you need to recheck your assumptions.

(hint: 50% of all homeowners are NOT underwater)

tatupu70 says

(hint: 50% of all homeowners are NOT underwater)

Hint: I was not talking about today. I was talking about when we finally hit the bottom in prices. Although, in some parts of Detroit, it sounds like we may be pretty close to that. That's why, as you would notice, prices are already getting pretty close to 1975 levels. In fact, Detroit can serve as a pretty good harbinger of what's coming down the road for the rest of the country, including the Bay Area. And, I don't want to hear any more "Our sh*t don't stink" crap from any of you any more. I am getting pretty tired of these BS arguments.

dunnross says

A lot of these have used their houses as ATM's. So they have plenty of HELOC's to bring them well under water.

Are you also a pyromaniac that likes to watch things burn down to rubble? Honestly, I can't figure out why people keep saying such outrageous things. Not everyone has a mortgage, not everyone HELOCed themselves into hell, and the price of a house can not sustain a level less than it costs to build another one as the population continues to increase. A house will not be cheaper than an SUV no matter how much you wish it so.

EightBall says

Are you also a pyromaniac that likes to watch things burn down to rubble?

I am not a pyromaniac, because the housing bust is not the fire or the disease; it's the medicine which is now being dispensed to cure the real disease, which was the housing speculation and greed which led us to the point where everybody was HELOCed into hell.

Your argument that "the price of a house can not sustain a level less than it costs to build another one as the population continues to increase.", is the one which could probably be nominated as the most falacious argument on this blog, because prices in many parts of the country are already way below building costs, and, population growth has slowed down to a crawl, but, even more than that, wages are dropping like a rock.

Nomograph says

dunnross says

all the housing inventory in the shadow

Foreclosures are a matter of public record. There is no secret shadow inventory.

Jeez, you've been here how long and you still haven't learned the basics of how this works?

You understand that shadow inventory and foreclosures are two totally different things, right?

I'm not going to argue if it exists or not (there's more than enough evidence to show that it does.. and in massive numbers) but you're not understanding the difference.

I mean Jeez, you've been here how long and you still haven't learned the basics of how this works?

Oh and I'm pretty much a bear on RE, but 1975 prices? That's not going to happen.

I'll be happy when we go back to 2000 (and we're almost there).

CrazyMan says

Oh and I'm pretty much a bear on RE, but 1975 prices? That's not going to happen.

I'll be happy when we go back to 2000 (and we're almost there).

I am happy that most people here, don't think that the prices will drop that low, because, this just fortifies my argument even more that, when this bubble finally implodes completely, prices will tank much lower than 99% of the population think, even on a bearish blog like this. When gold prices hit $250 in 2001, that was way below mining cost of $450/ounce, let alone considering the millions of dollars it cost for exploration, so, do you think that most people honestly expected it to drop that low?

dunnross says

CrazyMan says

Oh and I'm pretty much a bear on RE, but 1975 prices? That's not going to happen.

I'll be happy when we go back to 2000 (and we're almost there).

I am happy that most people here, don't think that the prices will drop that low, because, this just fortifies my argument even more that, when this bubble finally implodes completely, prices will tank much lower than 99% of the population think, even on a bearish blog like this. When gold prices hit $250 in 2001, that was way below mining cost of $450/ounce, let alone considering the millions of dollars it cost for exploration, so, do you think that most people honestly expected it to drop that low?

I guess we could go back to '75 prices, but we'd have '75 average salaries. The economy is set up so that housing prices can't go too low else everything would crash.

StoutFiles says

I guess we could go back to '75 prices, but we'd have '75 average salaries. The economy is set up so that housing prices can't go too low else everything would crash.

Why? 2001 salaries where much bigger than 1980 salaries, but gold price in 2001 was 70% lower than in 1980. Salaries in 2006, were lower than they were back in 1998, yet house prices where 2.5 times higher. I do agree that there is a relationship between house prices and wages, but at the extreme points like 2006, and at the point of the housing bottom, they will not be inline.

dunnross says

Your argument that "the price of a house can not sustain a level less than it costs to build another one as the population continues to increase.", is the one which could probably be nominated as the most falacious argument on this blog, because prices in many parts of the country are already way below building costs, and, population growth has slowed down to a crawl, but, even more than that, wages are dropping like a rock.

What do you mean? I said it can't sustain it as the population increases. I didn't say it will never happen. The ebb-and-flow of people will raise and lower prices. If no one is building new in Detroit, the prices can easily stay below construction cost. Places where people actually want to live it can't keep dropping forever and will be equal or higher than it costs to build once the hangover from the last decade is consumed. There are plenty of examples of both sides of this - think of the current energy boomtowns now on the high side, factory closes up show in Smallville, USA on the downside. Supply/demand is how it works - not your pent up zeal to punish people caught up in the last housing boom/bust cycle.

I will admit, though, that I was wrong (or perhaps not clear) about this:

EightBall says

A house will not be cheaper than an SUV no matter how much you wish it so.

Better stated it should be:

A house will not be cheaper than an SUV in any decent area no matter how much you wish it so. If you want that, move to the projects or a mobile home park but you didn't need the bubble to burst to achieve this.

EightBall says

A house will not be cheaper than an SUV

In 1975 Soviet Union a 2brm apartment was much cheaper than a Lada (Soviet version of the 1970's vintage Fiat 134).

Dunross,

You realize your 1975 price prediction is basically an apocalyptic scenario right? I'm talking Mad Mex life-style in the U.S. The U.S. would be involved in a huge world war and NYC or LA would probably be nuked before what your predicting would come to pass. So planning not to buy a home for fear of 1975 home prices is kinda ridiculous.... Because the economic consequence of such an event would cause total collapse of our current civilization... or vice versa.

Los Angeles Owner says

You realize your 1975 price prediction is basically an apocalyptic scenario right?

Adjusted for inflation, not at all apocalyptic for many. We been there before if you recall when SoCal prices fell 30-40%.
Right back to 75 prices plus inflation....

http://www.housingbubblebust.com/OFHEO/Major/SoCal.html

Los Angeles Owner says

Because the economic consequence of such an event would cause total collapse of our current civilization... or vice versa.

I rather enjoyed my trips to LA back in the early 90s...the Sun was out and the babes were busty...

Los Angeles Owner says

You realize your 1975 price prediction is basically an apocalyptic scenario right?

No, 1975 prices is not an apocalyptic scenario. According to the long-term Case-Shiller chart, prices where already way below the mean back in 1920, and there was no "apocalypse" back then. You are assuming that the economy is always going to be 100% dependent on the housing, like it did during the boom, but the economy will learn how to live without housing, as, everyone realizes that housing is not the bread-and-butter it once was.

dunnross says

apocalyptic scenario

only the vested interest who gambled every dime they had will suffer.

Shadow inventory is going to get LARGER apparently.

Feds now have given squatters and extra 3 months free living. (on top of average 2 years to forclose, i guess it will now be 2 yr 3 months?)

http://www.housingwire.com/2012/01/06/freddie-mac-extends-mortgage-forbearance-to-unemployed-to-one-year

Game Over you should remove the swastika from the avatar.

Im putting u on ignore. I Cant have have that shit up at work whihle im slacking off on this site - and no one cares that you are probably not a nazi but 'calling the feds nazis'

I knew a guy that spend 4 months in jail for placing a snarky sign up on a government office calling them nazis. Well it turns out there are laws about the swastika you GO TO JAIL sometimes for displaying it AND it can be hate crime. really look it up.

He should be banned asap IMO but that is up to patrick.

That symbol means 'kill all jews' its startling to see it when it comes up - I dont care wtf the message is - it drowns it out anyway. he should be posting on storm front (dont visit that site unless u wann be on the terrorist watch list)

dunnross says

A lot of these have used their houses as ATM's. So they have plenty of HELOC's to bring them well under water.

Don't forget to add all the Refi's to the HELOC's. In my area in the last few years, many Refi'ed/ATM'ed at the same time for a lower rate in bubble land. Now, they are sitting with large NEW 30 year notes and no equity while their houses have lost 20% - 30% of value...

dunnross says

You are the one who is ignoring reality, by confusing facts with wishful thinking. According to patrick's latest charts, rents have not gone up at all. I am renting in West San Jose, and my rent hasn't gone up for 5 years.

Yours may be a special case. If I recall, you posted on a different thread a long time ago that you were paying some ridiculously high amount of rent.

tatupu70 says

Nominated. This thread is just full of great stuff.

Did you do the math ? Well then here you go .

It seems you LOST enough on your house, huh TAT ? It is amazing to note someones beliefs when their own equity is the topic.
What is your zip code ? Tell us when you purchased, I can wager what your home will soon sell for.

1978? 1968?

TMAC--

Well, according to your chart, 1997 real prices were the same as 1960's real prices. So I guess real estate prices didn't gap up at any point from 1974 to 1997, huh?

We had a bubble in the 2000's that popped in 2008. Prices have already fallen.

Not sure what you are getting at with questions about my house? I know what it is worth, but thanks for the offer on an appraisal.

Prices are locoOOOPS LOCAL. It's true. DETROIT//PHOENIX//LV//etc are selling for less than building cos by a huge amount. LA & SF are not.

StoutFiles says

I guess we could go back to '75 prices, but we'd have '75 average salaries. The economy is set up so that housing prices can't go too low else everything would crash.

Kind of funny when you think of it.

The 'economy is set up so...'

tatupu70 says

Well, according to your chart, 1997 real prices were the same as 1960's real prices. So I guess real estate prices didn't gap up at any point from 1974 to 1997, huh?

I had respected your comments in the past. But your nominated comment makes us realize you don't read what you comment on.
Need Proof ? Take another look at the chart.

If you would have read the chart notes, you might have realized why home prices look SOOO much more expensive before cars were invented.
People just like you are nominating our elected officials ?
What is a REAL PRICE ?
Nominate yourself !

tatupu70 says

TMAC--

Well, according to your chart, 1997 real prices were the same as 1960's real prices. So I guess real estate prices didn't gap up at any point from 1974 to 1997, huh?

We had a bubble in the 2000's that popped in 2008. Prices have already fallen.

Not sure what you are getting at with questions about my house? I know what it is worth, but thanks for the offer on an appraisal.

Inflation adjusted they were the same. The chart clearly shows the bubbles in the late 70's and late 80's. I remember quite clearly in 88/89 everyone was jumping in buying pre construction to flip, just like 2007. They got burned just like 2007. My boss had a 2800 sf townhouse with a dock on the water in NJ go from 580k to 220k. Things never change.

StoutFiles says

Banks would tear down and/or rent them out if prices dropped too low.

Um, no. They are not allowed to do that.

gameisrigged says

StoutFiles says

Banks would tear down and/or rent them out if prices dropped too low.

Um, no. They are not allowed to do that.

Why not? They own the house. If the loaner bails out, the bank can do whatever it wants.

GameOver says

I personally think that charts are USELESS. Your picking & choosing which ones are 'valid' and which ones 'aren't' simply CONFIRMS my theory.

I TRY to use the valid ones.

Don't get too critical though. A chart is just like a fuel gauge. You probably should not rely on it prior to take off.

( trust but verify )

If we could only find a chart showing the subject SHADOW INVENTORY. But who would verify those numbers. N.A.R. ? S.E.C. ? FRANNIE ? L.H.L. (loud hysterical laughter) I doubt wikileaks has access to that simple number. Don't you just love our transparent gubmint agencies ?
Snakes are more predictable !

Is our tax money being used to keep shadow inventory a secret?
Do you feel Gaped ? (no photo )

From my area it seems there is some shadow inventory..but not an atrocious amount. I follow my market carefully and see how long before some short sales that don't get approved come out as foreclosures and how long preforeclosures go before they hit market and how banks deal with selling them auction vs mls, pricing etc.. I am noticing short sales are going thru better and that banks once they foreclose and market house they are holding out for price where as before they would mark down every 30 days to the day. I am seeing in some no price drop for 6 months. Banks are slowing down and trying to get max out of house. I think they have the end of this tunnel in sight and they are back in money making mode.

I would also echo the sentiments of when you travel internationally. housing is pricey, rent or buy and quality and safety can be very low, in addition staples and food are higher price than we are, but incomes are low and infrastructure very poor, I don't think we have it bad... In my area inventories are low, the housing available is either by busy road, power poles, or over priced not alot of stuff in the sweet spot, In my area rents support generally prices,My prediction is I don't see things really going down too much farther and I don't see them going up drasticly. Just a stagnation and eventual following of inflation.

If your going to rent out your real estate purchase, I think you could do okay but maybe could do better and would be easier and more liquid with bonds equities??? and waiting for equities dip. If your going to live in it I think housing is ready or close to following inflation rates. Of course each geographical area has its own set of factors to calibrate the buying time/ price.

TMAC54 says

I had respected your comments in the past. But your nominated comment makes us realize you don't read what you comment on.

OK. Help me out. Here is your original nomination worthy comment.

TMAC54 says

Real property sales prices GAPPED up 20% to 25% most years from 1974 to 2008.

You said real (inflation adjusted) prices GAPPED up 20-25% MOST years from 1974 to 2008.

Looking at the inflation adjusted chart you posted, I see exactly no years where prices rose by 20% until the recent bubble.

So, please tell me how it happened for "most" years.

Press this for a census data on new home price averages for the pas few decades
http://www.census.gov/const/uspricemon.pdf