patrick.net

What? Prices are falling? What a surprise!

Of course there is no "bottom". People think houses have some inherent, intrinsic value. It has value only in the sense that the people living near it have the ability to rent it or buy it.
If your location has 15% unemployment and the houses still cost 10X or 8X median income, you will see house prices falling.
If your location has a lot of foreclosures, you'll see prices falling.
Banks were holding off on foreclosures for fear of the whole "robosigning" baloney. They were blackmailed by Obama but NOW they can begin to foreclose again.

My homeowner friend in Redondo Beach, an affluent community south of LAX, told me last night prices are falling there. No research, (Frankly, why should I spend the time?) just what I'm told.

David9 says

My homeowner friend in Redondo Beach, an affluent community south of LAX, told me last night prices are falling there. No research, (Frankly, why should I spend the time?) just what I'm told.

I know someone living there and the condo that was bought in 2003 has lost value and I am still told,it is a good time to buy.

Hey Bob Jones, great to meet another person from L I who is watching the bubble deflate, I am looking on the south shore Babylon Area and watching prices fall here to.

clambo says

Of course there is no "bottom". People think houses have some inherent, intrinsic value. It has value only in the sense that the people living near it have the ability to rent it or buy it.

If your location has 15% unemployment and the houses still cost 10X or 8X median income, you will see house prices falling.

If your location has a lot of foreclosures, you'll see prices falling.

Banks were holding off on foreclosures for fear of the whole "robosigning" baloney. They were blackmailed by Obama but NOW they can begin to foreclose again.

Real Median income is tricky to determine in large cities due to wealth disparity being much greater than rural areas. You can have millionaires living blocks away from apartment complexes filled with 20-something wannabe actresses and assistants.

Santa Monica is a perfect example of median incomes not truly reflecting the wealth in the cOmmunity. Median income is like $69k in Santa Monica where as median incomes in many parts of the San Fernando Valley are much higher... Yet home prices dont reflect this at all. Porter Ranch for instance has a median income of $121k... Yet you can buy far more house for your money than in Santa Monica.

This is due to the larger inter-mingling of rental property and SFHs.

So pointing to Median incomes of an area and saying anything over 3x median incomes is overpriced seems very flawed.

clambo says

Banks were holding off on foreclosures for fear of the whole "robosigning" baloney.

Why is this robo signing baloney again?

http://www.youtube.com/embed/QmRKPjggQi0

robertoaribas says

The Phoenix graph looked pretty darn stable over the past 3/4 of a year.... AND the rapid clearing of everything under $150K would seem to me to have more influence on the median, than say case-shiller which has increased over the past few months...

Grasping for straws to justify what you want to happen. Used to be people ignored the under 150K and said that it had no effect on the high priced homes. That was proven wrong and now they see a foreclosure stall and proclaim victory. The stability of the last year was fake. It was because of banks waiting for the settlement with the government. Now the tap is open and we will witness the real damage over the next 2 years. Anyone holding cash will win, but they have to be patient because the real bottom is close but not here yet.

To help with your anxiety,
understand WHY Real Estate values rose at an unjustifiable rate in the first place.

In 1973 Both spouses were all of a sudden considered credit worthy. Home prices doubled by 1980 because of that policy change. To add to the increase, There were also programs to help first time buyers etc. This rapid equity expansion planted a seed in the minds of ALL Real Property buyers, buyers of houses, commercial properties, even bare land was purchased without justification of return.
The NEW justification /insanity/ was,,,,
"IT DOES NOT MATTER HOW MUCH YOU PAY FOR IT, IT WILL BE WORTH 20% MORE NEXT YEAR".
That same unjustifiable insanity remains today with the most greedy humans !
That magical profit by 1980 caused most people to believe that at any moment real estate prices will erupt again. Then the public was introduced to the Computer, around 1983, This added a significant number of highly paid Engineers, Marketing Executives, Construction jobs, etc. etc. Only a portion of society enjoyed this larger income surge. That portion of society raised real estate prices for ALL of society.
By 2008, that portion of newly created jobs went away.
When Gubmint stops propping up prices and land begins to appreciate on it's own, all markets will balance themselves out.
They will each return to their normal 3 to 7% rate of return.

I suggest we all sit back and let the train finish crashing. Gubmint knows it can't bail out a train wreck.

The robosigning baloney means that although the people were going to be foreclosed, and should be foreclosed, some sort of impropriety in the paperwork process gave Obama and the other states attorneys general blackmail opportunity. They used it and the banks are paying the blackmail to some people.
I didn't say that banks weren't fools and greedy or worthless.
The analogy I would use is the drug pusher (bank) gets busted by a dirty cop (Obama, Attorneys general) who steal his dope and give some of it to the loser drug addict (foreclosed house owner) who has no hope and will still be an addict when this freebie runs out.

TMAC54 says

The NEW justification /insanity/ was,,,,
"IT DOES NOT MATTER HOW MUCH YOU PAY FOR IT, IT WILL BE WORTH 20% MORE NEXT YEAR".

and the year after that and year after that .. etc etc etc.

sometimes that statment needs to be repeated just so many can recall why prices were unsustainable... yet not many in the media want to remind the public of that.

The Las Vegas Real Estate Market is the one I live and breathe 7 days a week. The Days on Market has hit a 6 year LOW of 20 DOM after being 47 DOM last year at this time, for houses under$299,000.
Also, Las Vegas is almost 40 miles E and West, while most of the employment is on the strip. In the era of $4.00 gas, the prices on the outskirts are taking a bigger hit than those inside the Beltway.
But most index lump all of Las Vegas prices into the pot, while my up-to-the minute research tells me there are really only 6 zip codes out of 60+ that are attracting the majority of the saels.
Finally, the unemployment figure is an unhealty 12%, but the employment figure is also UP year after year. More people have jobs, meaning they need places to stay and have the money to do that.
Sales for Jan were exceptional, attracting worldwide4 attention. This market is in rebound mode

David9 says

My homeowner friend in Redondo Beach, an affluent community south of LAX, told me last night prices are falling there. No research, (Frankly, why should I spend the time?) just what I'm told.

I live in Redondo Beach. There are two parts to the city, North Redondo (zip code 90278, less affluent and about 1-2 miles from the beach) and South Redondo (90277, more affluent and right on the beach). We bought in S Redondo in July and recently had our home appraised for a refinance (rates have dropped enough). Home is still holding its value here, but prices are dropping somewhat in North Redondo (maybe 5-7% or so since the summer). There is about 20-25% more inventory on the MLS in N Redondo than S Redondo.

Of course there is a bottom in sight. You just lack vision.

Seriously, We have over these past 6+ years seen and/or tried everything EXCEPT capitulation. All this time the ONLY thing we ever needed was capitulation. Back in '05 I was derided because I said this time there would be no stickiness. Feel free to deride again.

he's not taking into account are recent measures like

1. selling REOs in bulk to investors
2. latest principal reduction settlement
3. refinancing for underwater mortgages

You cant talk about delinquency stats without considering these
So I believe this guy is wrong.

With a 30% projected currency debasement by 2030, I think the housing bottom will be somewhat disguised and very, very lengthy.

Waitingtobuy says

We bought in S Redondo in July

Good Luck! :-) I am choosing to wait, or maybe a Pied-a-terre where I can't go too wrong..

does anyone else notice the RE cheerleaders are now suggesting we all ingnore the same numbers and graphs that they used to inflate the bubble? REwhores all suck.

Bap33 says

does anyone else notice the RE cheerleaders are now suggesting we all ingnore the same numbers and graphs that they used to inflate the bubble? REwhores all suck.

Let's see, why am I choosing to wait?

1.) Does anyone remember that buyer incentive sucker rally in 2010? LOL!
2.) We are currently short about 10 million jobs.
3.) There really is no data on the Shadow Inventory.
4.) Interest rates can only rise. Buy Low, Sell High. Simple.
5.) In general, doesn't the current inventory just stink like some
Bank's diarrhea? (If I see another 1 bath home or condo, I may lose it!)

David9 says

Waitingtobuy says

We bought in S Redondo in July

Good Luck! :-) I am choosing to wait, or maybe a Pied-a-terre where I can't go too wrong..

Thanks. Not a bad idea to wait. I can understand people being skittish.

We waited 4 years from the time we sold our last place in 2007 until 2011. My mortgage is less than renting the same place by at least $600-$700/month, not counting the part paid towards principal. Yes, we have property taxes, but I get almost all of that back in a tax deduction off the interest.

Of course, I could lose my shirt...but enough people want to live near the beach and city in a place with great schools to not keep me up at night.

Waitingtobuy says

David9 says

Waitingtobuy says

We bought in S Redondo in July

Good Luck! :-) I am choosing to wait, or maybe a Pied-a-terre where I can't go too wrong..

Thanks. Not a bad idea to wait. I can understand people being skittish.

We waited 4 years from the time we sold our last place in 2007 until 2011. My mortgage is less than renting the same place by at least $600-$700/month, not counting the part paid towards principal. Yes, we have property taxes, but I get almost all of that back in a tax deduction off the interest.

Of course, I could lose my shirt...but enough people want to live near the beach and city in a place with great schools to not keep me up at night.

You need to compare rent to principal, interest, taxes, maintenance, and insurance. At 600-700 a month less even with insurance and maintenance it's a good deal so why are you care about what a bunch of unknown people on the internet think.

How can you lose your shirt if you bought a home to live in for the long term with payments well within your budget not a leveraged house to resell in the short term? Even if prices drop further what does it matter? It's just a number on paper.

robertoaribas says

Well, I will make that entire collapse in rental income over the two years anyways.

You are talking about your ability to make money using the bottom of the market. I am talking about the crazy top of the market. I agree with your approach, and believe you are benefiting from the foreclosure and short sale situation. Will you have more opportunity, I think you will. Will these opportunities affect the high end market? Absolutely, as many of the same people that said they wouldn't are finally admitting. Buying into the

robertoaribas says

Well, I will make that entire collapse in rental income over the two years anyways.

You are talking about your ability to make money using the bottom of the market. I am talking about the crazy top of the market. I agree with your approach, and believe you are benefiting from the foreclosure and short sale situation. Will you have more opportunity, I think you will. Will these opportunities affect the high end market? Absolutely, as many of the same people that said they wouldn't are finally admitting.

Buying into the

Waitingtobuy says

We waited 4 years from the time we sold our last place in 2007 until 2011

HOw are you going to lose your shirt if you sold in 2007... You already locked in profits probably double the current price of your home you bought in 2011... I'd consider you in pretty great shape unless housing went to zero from here.

Oh there's a bottom somewhere. If there's no bottom where you are then stick around it get there.
My neighborhood went so low, that last week Trulia gave it a 50K boost.
The average home went from 145K to 195K in just one week. Of course that's listing price, and all that was needed was some of the investors that have bought houses for 30-45K over the last 3 years to list a few for 195K - 220K. Viola!

But Zillow still says the average house price sold last month dropped another 4K.

bob2356 says

Even if prices drop further what does it matter? It's just a number on paper.

It matters to me if I cannot sell at at break-even point, have to fork over $$Thousands to the bank, or have to rent it out.

bob2356 says

You need to compare rent to principal, interest, taxes, maintenance, and insurance. At 600-700 a month less even with insurance and maintenance it's a good deal so why are you care about what a bunch of unknown people on the internet think.

How can you lose your shirt if you bought a home to live in for the long term with payments well within your budget not a leveraged house to resell in the short term? Even if prices drop further what does it matter? It's just a number on paper.

Los Angeles Owner says

HOw are you going to lose your shirt if you sold in 2007... You already locked in profits probably double the current price of your home you bought in 2011... I'd consider you in pretty great shape unless housing went to zero from here.

Well, maybe the term losing my shirt isn't accurate. Yes, we did well from 1999-2007, nearly doubling the price of our place. I used 50% of the profits as a down payment on our current place. The rest is banked away for a cash cushion and some went to retirement.

However, I don't want to risk my down payment if we still overpaid for our place. Our friends down the street bought at the peak and likely have lost $300K on their home if they had to sell today. They aren't sweating it, probably because they are in it for their long haul. Any way you slice it, it is still $300K.

Waitingtobuy says

However, I don't want to risk my down payment if we still overpaid for our place. Our friends down the street bought at the peak and likely have lost $300K on their home if they had to sell today. They aren't sweating it, probably because they are in it for their long haul. Any way you slice it, it is still $300K.

Only 300k loss if they sell, otherwise it's zero. You keep saying have to sell, are you in it for the long haul or not? If you are so unsure about your ability to stay in the house for the 5+ years it takes to make sense buying then why would you be considering buying at all? I wouldn't even consider buying for less than 5 years in a market that was flat. After closing expenses on both ends you are better off to rent for any less time than that.

I'm pretty confident we will be here for at least the next 7-10 years. Want to see our kids graduate from high school before moving. Your point is valid--only a loss if you sell. I would rent the place out if I needed to in order to pay the mortgage.

RobDawg says

Seriously, We have over these past 6+ years seen and/or tried everything EXCEPT capitulation. All this time the ONLY thing we ever needed was capitulation. Back in '05 I was derided because I said this time there would be no stickiness. Feel free to deride again.

I agree. We need capitulation. What is there to deride in that?

everything says

With a 30% projected currency debasement by 2030, I think the housing bottom will be somewhat disguised and very, very lengthy.

Can you say more? do you mean that the value of the dollar will lose 30%?