patrick.net

This does NOT mean that people will start seeing any real price appreciation - only that I expect the downward momentum has finally ceased, and expect future reports to bear that out.

http://finance.yahoo.com/news/housing-bottom-120000751.html

Morningstar agrees with you.

In which tier in which area? You really think that every tier in every market is within ~10% of its bottom?

lol

The comments in your link are pretty much spot om.

Are you assuming fixed mortgage rates in your prediction? How about another blow to the economy?

CrazyMan says

The comments in your link are pretty much spot om.

The comments in that article were hilarious. A lot of pessimism even on a non "housing-crash" site.

S&P/Case-Shiller San Francisco: Homes Dip, Condos Slip In November

http://www.socketsite.com/archives/2012/01/spcaseshiller_san_francisco_homes_dip_condos_slip_in_no.html

* the housing bust in the early 1990s took 6 years (1991-1995) before san francisco (and US) CS became positive and stayed positive. the housing boom/bust in the 1990s was much, much smaller than today's.
* this housing bust we've been in for 5 years so far (2007-2011) compared to 6 years of correction for the 1990 housing bust.
* there's almost no chance the most massive bubble in history corrects before the relatively tiny bubble of the 1990s. there are also a large number of other fundamental and technical reasons to believe we're still in the bust stage and will remain there for the foreseeable future.

side note:
both busts had a bear market rally, 1992 and 1994 for the 1990 bust, and 2010 for this current bust when prices went positive. all busts have some form of rally, some rally stronger, some rally weaker - but it's so common there's several names for it: dead cat bounce, bear trap, bear market rally. always expect one when there's a large bust.

* also the 1990 bust actually had two bear market rallies, not one.
* this is another entirely plausible scenario today - san francisco year-over-year prices go positive at some point, people call the end of the housing bubble (again like they do every year), only to be wrong when prices dip negative for another short period of time before prices go positive. i'm not predicting this will happen, but when y-o-y prices do go positive the prudent person will -not- call bottom until there's more confirming data. of course patnet bulls will call bottom like they do every year.

i find it silly, year over year price changes are negative in the bay area and people are calling bottom. prices can't bottom while prices are falling - this would seem like a reasonably simple logical conclusion that most children could make(which is why i fully expect the bulls to mention the 3 month lag in the CS index to explain why this isn't true). but i guess it's easy for people to be confused. it seems hope, not an understanding of data, is what drives most people to draw their conclusions.

We have been actively looking to buy in San Francisco for the past 2 months. Not because we think the bottom is here, but because we really need a place to live and the rents and PITI are nearly equivalent. We plan on staying in whatever we buy for 10+ years.

Decent places that are priced well are going for over-asking, with multiple bids. We put offers on 2 houses that ultimately went for 80K more than list.

Homes with fantasy asking prices are sitting on the market and getting downward adjustments. Inventory is low, and the asking prices are all over the map: 599K for a nice 3/2 in a decent neighborhood and 499K for a crappy house in a really terrible neighborhood. It's almost like there's no rhyme or reason to how people are pricing their homes, although I am glad to see many people lowering their asking prices.

Just my (perhaps anecdotal) observations.

You crazy haha! Would n't it be fun if we did 2001-2006 price increases all over again starting Now.
it would be Awesome to watch.

We'll most likely drag along this so called bottom for many many many many years. untill it go's down even more. ( what happens to housing prices when interest rates go up?)

save your cash (haha yeah right)

buy with all cash in five years.

Debt is slavery ( but it at least gets you laid)

Katy Perry says

You crazy haha! Would n't it be fun if we did 2001-2006 price increases all over again starting Now.

it would be Awesome to watch.

We'll most likely drag along this so called bottom for many many many many years. untill it go's down even more. ( what happens to housing prices when interest rates go up?)

save your cash (haha yeah right)

buy with all cash in five years.

Debt is slavery ( but it at least gets you laid)

Yeah, paying a mortgage is slavery. How right you are.

I'm calling you crazy too.

Yup, your crazy, Housing still has a long way to go. Some markets may see some price stability but thats only because they have dropped so much.
Once we get a job recovery, the housing will be right behind.

-

http://www.dailyjobcuts.com

-

Hysteresis says

prices can't bottom while prices are falling

speaking of understanding of data. When you smooth out the line you'll see that prices aren't really falling unless you're talking about a very narrow time frame.

John Bailo says

Your purchases are IN-SANE!

Go ahead and buy...prices could still fall 70 percent.

Why not 100%.. free houses for everyone... (You realize how close you are to sounding insane... only about 30% away)

ECBB,

Clearly,you are running out of patience. Try adding another 10 to 15 years of crazy stuff that has been going on since 2008. I mean,think about it,who has interest in keeping the prices inflated? Govt,sellers,realtors,banks etc. - except the buyers. It is sort of a huge cartel working against the laws of economics. You can't simple pay one debt by another debt and keep going on and on. We are screwed for a long,long time,buddy. Live with it.

OH great Soothsayer , Will gubmint crony's pick up and profit from shadow inventory that will soon be afforded to them exclusively ? Or will the people eventually be allowed to decide value ?

EastCoastBubbleBoy says

This does NOT mean that people will start seeing any real price appreciation - only that I expect the downward momentum has finally ceased, and expect future reports to bear that out.

Depends on where you live. The big gorilla in the room is the 70 million baby boomers that will be dying in the next 30 years. Something like 8 in 10 boomers own a home and 1 in 4 have multiple properties. You can't take it with you. Who is going to buy all the real estate they own? Gen x/y is much smaller and has less money. Immigrants legal/illegal are mostly poor when they arrive and will take a long time to reach house buying status. Something has to give.

If you are somewhere that lots of boomers will be retiring to then things probably aren't looking bad long term. If you are somewhere that boomers are retiring from then things could and probably will slowly sink for a long, long time.

Crazy prediction, because just theorizing that we stay stagnant in prices would be a tricky balancing act. At todays home prices every day more and more people fall into default. Job losses, depleted savings/401ks, etc. are putting the strain on many mortgage payments. People don't want to foreclosure, they plan to succeed. Moving your family to a smaller rental or back in with the in-laws in not succeeding and they will try their best to avoid in most cases.

So, lets assume home prices are stagnant and this is the bottom. Then each day we get more foreclosures from here. More downward price pressure because of the foreclosures. Banks want to be in the money business, not a real estate holding firm, and they are finally trying to unwind. This year will be the most telling now.

The only two directions are really up (not likely) or down (most likely). Up will protect many people because they can then get the proper appraisal that shows they are eligible to refi. Down will continue the negative feedback and cause more down. These bandaids and free money gifts given out by the government are small efforts to a large problem. They are trying to turn a ship with a little tug boat. It will not work, like all the other gimmics. Obama will try his hardest and most likely will hold back the flood until he is re-elected, but then, good luck to all.

I will still be renting and very interested in how people here explain the collapse. Some will say they knew it was coming, when they really didn't. Others will say the data is not correct and they can still sell into the market for insane amounts. It takes all kinds today.

toothfairy says

speaking of understanding of data. When you smooth out the line you'll see that prices aren't really falling unless you're talking about a very narrow time frame.

Not again? Ugh. Prices have been insanely falling since 2007. The brief reprieve was the product of 8K gifts, mortgage rate drops, many gov't helicopter cash drops to the banks, and many other gimmics. Our debt is growing because of these diving catch attempts. It is like someone slugged a home run out to the parking lot, and all the outfielders are still diving for the catch. The ball is gone! long gone! Next stop is down for 2012, again for 2013, same for 2014, then maybe we can reach some stability in this country. Enjoy the ride.

http://www.crgraphs.com/2011/10/house-price-graphs.html

Here is the graph that I meant to show.

tatupu70 says

http://finance.yahoo.com/news/housing-bottom-120000751.html

Morningstar agrees with you.

Yah, there is no biasing there. Why don't we check out what Wells Fargo things about the real estate market? They wouldn't try to talk things up. Why would they do that. Can't they make the same amount of money if things continue to go down. No? Damn, that puts them in a hard spot. Talk it up folks, your jobs are on the line!

RentingForHalfTheCost says

Yah, there is no biasing there. Why don't we check out what Wells Fargo things about the real estate market? They wouldn't try to talk things up. Why would they do that. Can't they make the same amount of money if things continue to go down. No? Damn, that puts them in a hard spot. Talk it up folks, your jobs are on the line!

I see a lot of people doing this. I agree that one needs to consider the source of the article, but if you think the source is biased, you should be able to dispute the data or the conclusion. Disregarding an article solely based on the author is lazy.

Oh I agree real housing prices are definitely falling

baby boomers will reverse-mortgage their houses and stay in them. That means those houses won't hit the market before 2045.

clambo says

baby boomers will reverse-mortgage their houses and stay in them. That means those houses won't hit the market before 2045.

http://money.usnews.com/money/personal-finance/articles/2011/06/29/big-banks-bow-out-of-reverse-mortgage-market

The reverse mortgage market it long gone. Banks want nothing to do with it. They are trying their hardest to get people to have more equity in their houses, not less! The problem is already in the trillions, lets not move to the quadrillion for crying out loud. Baby boomers, when they start selling in mass, will suck whatever life is left to the housing market. We better make a few worker efficiency breakthroughs n technology before it happens, or today will feel like a vacation. Ugh

I'm not saying that the fact that we've bottomed is a good thing. I'm just saying that my feel for the data is that things have bottomed out (measured by average home price on a national basis), more or less. Now the "upper tier" homes still have further to fall, but the lower tier isn't going down all that much more - all the stuff in between will find its own equilibrium - but if you look at the national prices relative to the typical HH income most, not all, but most areas have fallen back in line with historical norms. I'll try and come back and site data later... since I know there will be plenty that doubt me. If I'm wrong so be it. I’ve been wrong before - but as someone who has been bearish on housing for a long time... I think the light at the end of the tunnel has finally arrived.

tatupu70 says

RentingForHalfTheCost says

Yah, there is no biasing there. Why don't we check out what Wells Fargo things about the real estate market? They wouldn't try to talk things up. Why would they do that. Can't they make the same amount of money if things continue to go down. No? Damn, that puts them in a hard spot. Talk it up folks, your jobs are on the line!

I see a lot of people doing this. I agree that one needs to consider the source of the article, but if you think the source is biased, you should be able to dispute the data or the conclusion. Disregarding an article solely based on the author is lazy.

So, my approach is to never trust sources that are tied to a particular direction of the subject they are covering. That way all my sources start from the same unbiased place. 99% of what we read about real estate is from the biased sources. I don't need to go through them all and investigate their true intents, that is not lazy, that is just efficient. If I read something from the 1% of potentially unbiased that I think is good facts then I will investigate the source and intent. The other 99% can eat my shorts for all I care. They are in the money business and will always behave badly. Some people in this world just suck. I used to think that everyone had good intentions, but then I grew up.

Here is a dispute to the argument of a recovery. Last quarter saw another drop in prices. Article attached.

http://www.bloomberg.com/news/2012-02-23/home-prices-in-u-s-decline-2-4-as-focus-shifts-to-distressed-properties.html?source=patrick.net

Last month, saw another drop in price action (in article) 162K to 154K! Crap

Screw sales increase, it means nothing but sellers starting to adjust down to meet buyers. Sellers are desperate and will continue to adjust down. End of dispute.

bubblesitter says

Clearly,you are running out of patience. Try adding another 10 to 15 years of crazy stuff that has been going on since 2008.

Not sure to whom this comment was meant, but it does describe us.

If I was in my 20's or 30's (and without kids and pets) I could sit on the sidelines and wait a little longer but in the meanwhile we've spent more than a quarter million dollars renting and we are not getting any younger.

Rents are high and our landlord is an a-hole. Bouncing around from rental to rental with a family is not an option.

2002 prices are fine with me, at this point. It's about then that I first felt ready (life, career, family, etc.) to buy, and then the market went crazy and I said no way.

But waiting another 5-10 years for baby boomers to start dying? Sheesh, I'll be almost ready to retire by the time that happens.

Some of us just need a place to live. Housing as an investment is just as effed up as health care for profit.

1sfrenter says

we've spent more than a quarter million dollars renting

Some people lost that and more in 3 years by owning. ;) Think on the bright side of things.

RentingForHalfTheCost says

If I read something from the 1% of potentially unbiased that I think is good facts then I will investigate the source and intent.

Just curious--what are the 1%?

Hey, if you find something you like and the numbers work, and it makes you happy, go for it.

Do I think it's a bottom? Depends on where you are. I think Las Vegas and South Florida are close.
Just remember, at these interest rates you sign on for 200K (as an example what ever) and the price drops for whatever reason, you still owe 200K

APOCALYPSEFUCK is Tony Manero says

It's never been a better time to buy!

Ha!

Hahaha!

Hahahahahahahahahahahaha!

Why so skeptical Tony ?

Baby boomers won't all sell, many will reverse-mortgage. I know some who are planning on this exact thing when they hit the magic age of 62: collect social security, medicare, and reverse mortgage their property. Tough shit for their kids, let them eat MTV.

clambo says

Baby boomers won't all sell, many will reverse-mortgage. I know some who are planning on this exact thing when they hit the magic age of 62: collect social security, medicare, and reverse mortgage their property. Tough shit for their kids, let them eat MTV.

You not listening. Reverse mortgage are gone like the dinosaurs. Your friends will have to sell if they want to use their houses for cash.

http://money.usnews.com/money/personal-finance/articles/2011/06/29/big-banks-bow-out-of-reverse-mortgage-market

toothfairy says

Oh I agree real housing prices are definitely falling

http://www.calculatedriskblog.com/2012/01/real-house-prices-and-house-price-to.html

(snip from the above link about real house prices);

Real House Prices

The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to Q1 1999 levels, the Composite 20 index is back to April 2000, and the CoreLogic index back to February 2000.

In real terms, all appreciation in the '00s is gone.

Back to Q1 1999! Not long now before we get back to 1997 and we have then completed the retracement back to where we started. Then guess what? No bubble correct in history has ever just gone back to the beginning, they always over-correct. Not just my words.

SHILLER: Those things have come down a lot. I don't know exactly where the middle is but it's not like we're overpriced anymore. Now the question is whether we'll overshoot, which is a common thing that happens after bubble burst.

From this link.

http://finance.yahoo.com/blogs/daily-ticker/robert-shiller-housing-bottom-thinking-134116144.html

You want someone in the 1% of unbiased group. I'd add Shiller to that group. I'm sure there are a few realtard that would take a shot at him if they could.

tatupu70 says

RentingForHalfTheCost says

If I read something from the 1% of potentially unbiased that I think is good facts then I will investigate the source and intent.

Just curious--what are the 1%?

This site. A lot of blog sites that use web snoopers to collect data that NAR would like to keep under wraps. Things like DOM (real ones) and price adjustments. I'd put all the flipper in trouble sites in that category.

http://flippersintrouble.blogspot.com/
http://phoenixflippers.blogspot.com/
http://seattleflippers.blogspot.com/

This site.
http://www.calculatedriskblog.com/

There are lots of people collecting data that shows what is happening. Over the years it is absolutely amazing the disconnect in main stream media and what is actually really happening. Your see some guys chasing the market down in Sacramento losing a life savings in the process on the flipper site, and then the next day you'll heal some realtard saying sales are fierce in Sacramento and everyone needs to buy! Just idiotic and the worse things got the crazier the realtards screamed buy. Really what I hear is, "Help, my SL500 payment is up this month and I need your money to pay for it!". Scum

1sfrenter says

But waiting another 5-10 years for baby boomers to start dying? Sheesh, I'll be almost ready to retire by the time that happens.

Who recommends to rent for life? DO IT if it makes financial sense to you. You lost 250K in rent? Try buying a $2 mil property and if it looses 500K in value how much have you made? Just a example. Math has been clearly explained in Patrick's calculator. Run the numbers and if you think it makes financial sense(rent v/s buy) then go for it. GL to you.

robertoaribas says

and most bubbles overshoot on the way down.

name a single one that has not.

1sfrenter says

We have been actively looking to buy in San Francisco for the past 2 months.

Buying any place in SF or BA in general today, resignation is your friend and guiding light. Just accept that there are worse fates than paying too much for a house and get on with your life.

Here is a dated looking little bunny hutch I grew up near as teenager that is on the market and pending for over a million dollars.

1167 Pimento Ave

Sunnyvale, CA 94087

Looky what this bad boy sold for in 1999 - a damn good year for industry in America!

RentingForHalfTheCost says

This site. A lot of blog sites that use web snoopers to collect data that NAR would like to keep under wraps. Things like DOM (real ones) and price adjustments. I'd put all the flipper in trouble sites in that category.
http://flippersintrouble.blogspot.com/
http://phoenixflippers.blogspot.com/
http://seattleflippers.blogspot.com/
This site.
http://www.calculatedriskblog.com/

No offense, but it looks to me like you're falling into the trap where sites that agree with what you think are unbiased and those that disagree are biased.

Gentle Readers,
Bottoms, anyone? Link:http://img.metro.co.uk/i/pix/2008/11/sloggibumcompEPA_450x464.jpg
Regards,
Roidy