patrick.net

RentingForHalfTheCost says

Booyah! Down! This article is so biased I now have to go get a shower to feel clean again. Just sick stuff. Thanks for pulling me in there and justifying my claims. Ugh

Wow. So, I take it you didn't listen to my advice then:

tatupu70 says

Ignore the conclusions if you like, but the numbers don't lie.

The article actually contained a great deal of data. It didn't agree with your thinking, however, so it appears you ignored it. Which is your right.

One other thing that I did a doubletake on--it's bad reporting to conclude that lower inventories might lead to higher prices? But it's good reporting to claim that the shadow inventory gorilla is about to explode?? Really?

tatupu70 says

RentingForHalfTheCost says

Booyah! Down! This article is so biased I now have to go get a shower to feel clean again. Just sick stuff. Thanks for pulling me in there and justifying my claims. Ugh

Wow. So, I take it you didn't listen to my advice then:

tatupu70 says

Ignore the conclusions if you like, but the numbers don't lie.

The article actually contained a great deal of data. It didn't agree with your thinking, however, so it appears you ignored it. Which is your right.

One other thing that I did a doubletake on--it's bad reporting to conclude that lower inventories might lead to higher prices? But it's good reporting to claim that the shadow inventory gorilla is about to explode?? Really?

I didn't conclude that lower inventory leads to lower prices. They were the ones making the conclusions. I posted the actual factual results that prices are still dropping yr-to-yr. If you disagree with that fact, that that is your choice.

About inventory. We are not dropping in inventory Sherlock like the article is trying to say and the basis for all the positive comments. The inventory in California alone is at a 9yr supply. 9 yrs! We are all screwed in my opinion.

http://www.doctorhousingbubble.com/california-has-nearly-9-years-of-housing-supply-58-county-mls-supply-and-foreclosures/

tatupu70 says

The article actually contained a great deal of data. It didn't agree with your thinking, however, so it appears you ignored it. Which is your right.

I wish I had ignored it. It proves to me that people are dishonest. Maybe not solely intentionally, but it still makes it dishonest in my opinion. I have a EE degree, a degree in mathematics with a specialization on statistics. How the general public throws around numbers to make hair brain conclusions is amazing to me. What really pisses me off is that this main stream reporting is what all my friends and relatives use to make their purchase decisions in life. There are a small percentage of people that have enough critical thinking training to see through this stuff easily. However, the vast majority, most of my relatives and friends, don't have that training.

To me it is just like the denial of smokers in the 80's and early 90's. The real hurdle to get over was to actual convince people that smoking was bad for their health. Even after so much evidence that proved without any doubt, they still were bombarded by a few reports from people with a vested interest saying things were not conclusive. They hung onto them reports like it squashed all the good science that was already done. You know what it finally took? For people to have friends and family around them get seriously sick and die, unfortunately. Now, you ask anyone if smoking is good for you and everyone knows. Back then, it was 50/50. I wish everyone knew how to filter the data. It would make us all a little sharper and maybe stop or slow down these boom/bust cycles that almost kill us all.

RentingForHalfTheCost says

I didn't conclude that lower inventory leads to lower prices.

And I never said that you did.

RentingForHalfTheCost says

About inventory. We are not dropping in inventory Sherlock like the article is trying to say and the basis for all the positive comments. The inventory in California alone is at a 9yr supply. 9 yrs! We are all screwed in my opinion.

The article wasn't talking about CA. inventory, so let's try to keep with apples to apples. Do you dispute their inventory numbers?

RentingForHalfTheCost says

I just read and and got a little sick to my stomach in the process.

There is nothing wrong with that article. It is weakly positive, but positive none the less. No need to shun it. Just point to the mountain of data pointing in the other direction, otherwise you're discrediting yourself.

tatupu70 says

If you read the article instead of disregarding it, you would have seen the data. Ignore the conclusions if you like, but the numbers don't lie.

I read it and thought the article itself barely justified the headline. I won't argue with you or anyone about the article any further.

CrazyMan says

Tina, sounds like you're a RE agent that has something to lose as well.

Nope, not an agent. Just someone who agrees with SF Ace. I think he's smart enough to realize that a post on patrick.net is not going to affect the BA market overall.

tatupu70 says

Do you dispute their inventory numbers?

No, not at all. Although, they are ignoring the shadow inventory lurking but that is fine.

What I am disputing is that they are trying to say a bottom is happening. Now, when someone says a bottom, I am thinking in pricing. As a potential home buyer I just need to buy one home for a good price. How many homes are being sold (sales) is nothing to do with a bottom to me. It could infer that we are close to a bottom when you back date the data with historic patterns (never done in this article), or it count infer many other things also. Like for instance that many home owners who would be sellers are trapped and defaulting and living in their homes for years without being foreclosed. Hence, why the shadow inventory is important here. If you are going to grab at lower inventories as a positive then wouldn't it be good to understand why they are lowering? That is just how my brain works. They are not lowering because people are excited to buy. They are lowering because less people can sell (underwater mortgages). That is nothing but a negative. We know this because there is continual downward price pressure (medium values are down, 2.4% just in the last Q).

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

The people that can sell are dropping their prices to meet the buyers. That is not the sign of health, exactly the opposite.

So, my dispute is that they are highlighting a rise in sales, lower inventory and then jumping to incorrect conclusion about what to infer out of that data. Their data is actually fine. Good data, just doesn't mean what they think it means.

tdeloco says

RentingForHalfTheCost says

I just read and and got a little sick to my stomach in the process.

There is nothing wrong with that article. It is weakly positive, but positive none the less. No need to shun it. Just point to the mountain of data pointing in the other direction, otherwise you're discrediting yourself.

That is true. I'll refrain from the colorful language and just stick to facts. It is easy to try to add entertainment sometimes.

tdeloco says

tatupu70 says

If you read the article instead of disregarding it, you would have seen the data. Ignore the conclusions if you like, but the numbers don't lie.

I read it and thought the article itself barely justified the headline. I won't argue with you or anyone about the article any further.

I'm glad others see the disconnect. You see barely, and I see no where close. Maybe I'm a bit spoiled because I hold this type of reporting partly responsible for the mess we are in now.

RentingForHalfTheCost says

How many homes are being sold (sales) is nothing to do with a bottom to me.

As someone well versed in statistics, I am surprised you would say that. I can almost guarantee that there is a correlation between home sales and prices (especially prices 3-6 months later).

RentingForHalfTheCost says

If you are going to grab at lower inventories as a positive then wouldn't it be good to understand why they are lowering? That is just how my brain works. They are not lowering because people are excited to buy. They are lowering because less people can sell (underwater mortgages).

Well, that's certainly one opinion. You could be correct, but sales volume is rising. Regardless, supply and demand rules are pretty simple--as supply decreases (with constant demand), prices will rise.

RentingForHalfTheCost says

(medium values are down, 2.4% just in the last Q).

Do you mean median values? As you probably know, that's not a great indicator. Especially with a large number of distressed sales.

RentingForHalfTheCost says

So, my dispute is that they are highlighting a rise in sales, lower inventory and then jumping to incorrect conclusion about what to infer out of that data. Their data is actually fine. Good data, just doesn't mean what they think it means.

OK--you're free to disagree, but don't complain that nobody is showing you any data.

Any way you slice it, paying $500,000 for a crappy house in a bad neighborhood is crazy. I don't care how nice the weather is.

It probably costs less (per day) to vacation in California than it does to live there.

Want nice weather? Move to North Carolina or Virginia. For $500,000 you can have a mansion. Yeah, summers are humid but that's why there's air conditioning. And swimming pools. And at least the summer vegetation is green.

Take the money you save on housing and use it to vacation in California during the winter.

At this point we're all still guessing- and so too are those who write articles about predictions. There are way too many possible wrenches that could get tossed into the spokes. For example, what if gas prices continue to go up? What if interest rates are raised? What if the foreclosures clogging the market continues to be an issue?

Secondly, when they talk about prices rising they're talking about coming off of a median comprised heavily of foreclosures and short sales- which in many ways has masked the true nature of the housing market. Sure- perhaps a bunch of crappy foreclosures were sold but what about actual middle class type property? The median for the Bay Area last check was around $325,000. In other words, DRASTICALLY cheaper than reality for the types of homes you actually find for sale that any of us would want to live in. If the median for the area goes up another 5%, that makes the median around $340,000? Whoopee.

One more thing I'll add which is strictly ancedotal is that at least around where we live, which is your typical East Bay bedroom community- aka- the "Bay Area middle class" meaning they probably have a couple of cute-ish newer cars in the driveway, a couple of gadgets, smart phones, etc etc floating around the house and 2 kids who attend a respectable local school and thus parents paid more for the house to be near it.... so in other words, semi-affluent by national standards- is that there seems to be a recent spike in short sales and foreclosures - again, at least around our immediate area. This is surprising because we're talking about houses being put up as short sales owned by seemingly well-to-do professionals. Perhaps it doesn't mean anything, but if this somehow translates into a surge in foreclosures and short sales in more affluent chunks of the Bay Area then this too could have an impact on future medians.

I'm really glad that I bought last year. I may buy another rental property if I find something that works but there's no real pressure.

RentingForHalfTheCost says

Not really. It is closer to linear since 1960 and now is actually slowing. Many predict that we will be actually stagnant past 2030.

How can anyone with a straight face predict where housing will be in 2030?!... It's 2012.. that is 18 years away...

What was the world like 18 years ago... It was 1994.. practically no one had a cell phone, the internet was in it's infancy and people were just starting to dial up at 14.4 baud rates on AOL. This blog couldn't even really exist yet... except in BBS or newsgroup form.

The only certainty is that the world will be RADICALLY different in 2030... A ground breaking innovation in energy or technology could turn everything on its head in the next few years.

LAO says

How can anyone with a straight face predict where housing will be in 2030?!... It's 2012.. that is 18 years away...

The topic was about population growth and you can make a good prediction based on the drop in the growth rates of developing countries. House prices I agree, you are lucky to forecast out 1 or 2 years at best. Even then, most people get it wrong.

wthrfrk80 says

Want nice weather? Move to North Carolina or Virginia. For $500,000 you can have a mansion. Yeah, summers are humid but that's why there's air conditioning. And

As someone who endured 35 years of humid summers, I feel compelled to comment, lest someone unwittingly move to the subtropical southeast for the weather. I'm sure it varies greatly depending on the individual, but I don't believe anyone escapes the horrendous reality of a 90 degree day with 80%+ relative humidity. Sure, air conditioning helps (it's pretty much a requirement), but it doesn't prevent developing a sweat-soaked shirt walking from your car to to the entrance of the mall. Some will certainly think I'm exaggerating, but anyone who has lived in the region will be nodding their head knowingly. The degree to which the weather affects you will depend on your lifestyle. If you spend most of your time indoors, I guess it wouldn't be terrible. (though living indoors in itself would be)

I have said many times that if I were to return to the region, I would have to make a summer home elsewhere. It's that bad. September trough November is great, though.

Edit: Wow, I just noticed your handle. Weather freak? Indeed.

tatupu70 says

Well, that's certainly one opinion. You could be correct, but sales volume is rising. Regardless, supply and demand rules are pretty simple--as supply decreases (with constant demand), prices will rise.

Here is another take on the same data. Incredible how the same data can say so many different things. Notice how the author doesn't add his own color or emotion. All of that is added by quoting other people. That is good reporting to me. Keep it just facts. Let the reader decide.

http://money.cnn.com/2012/02/28/real_estate/home_prices/index.htm?iid=Lead

RentingForHalfTheCost says

Here is another take on the same data

Did you post the wrong article? I read it and it doesn't mention housing volume data at all. It really doesn't take any position. "We might be on the verge of a recovery, and we might not." Wow-now that's some serious insight.

Here's the latest data I saw today:

http://news.yahoo.com/sales-contracts-us-homes-2-pct-january-150313677.html

tatupu70 says

RentingForHalfTheCost says

Here is another take on the same data

Did you post the wrong article? I read it and it doesn't mention housing volume data at all. It really doesn't take any position. "We might be on the verge of a recovery, and we might not." Wow-now that's some serious insight.

Here's the latest data I saw today:

http://news.yahoo.com/sales-contracts-us-homes-2-pct-january-150313677.html

No, that was the correct article. Recovery seems to mean two different things to people. To me it has only to do with price. If I am selling I am interested in the price rising, if I am buying then dropping. How many people are out shopping obviously influence the price, but if you say recover then I think price. The original article did not say there was a sales recovery, it was using the sales to infer a recover that had yet to happen. The article I posted is using the same year of data and inferring the there is very little to infer, except price data that keeps going down.

tatupu70 says

Here's the latest data I saw today:

http://news.yahoo.com/sales-contracts-us-homes-2-pct-january-150313677.html

It is yet to be seen if the 2% increase in contracts is because prices are getting softer or there were more aggressive buyers. I think it will show the first. Sellers are getting aggressive and dropping their prices. We will know next month when we see the price data.

swebb says

The degree to which the weather affects you will depend on your lifestyle. If you spend most of your time indoors, I guess it wouldn't be terrible. (though living indoors in itself would be)

The human body adapts to weather... I've lived in So Cal for 10 years now.. So I'm much more thin-skinned and a breezy 60 degree evening requires a sweatshirt or jacket... I grew up on the east coast and remember that being shorts and short sleeve weather! :)

But i agree... once you've lived in a dry, low humidity climate.. It's very uncomfortable going back to high humidity areas.

tatupu70 says

OK--you're free to disagree, but don't complain that nobody is showing you any data.

I'm frustrated seeing that you didn't address the points made about the words used to write the article. It matters when someone writes"This week, there was a lot of housing data, all of it good" but doesn't admit that they are not writing about "all of housing data." In fact, that suggestion is not reasonable. How could a writer address all of the housing data for a week? Isn't that the suggestion based on the words the writer used?

This kind of writing suggests either a limited vocabulary or a limited understanding. Either make it really difficult to connect with observations. Observations are the goal of some data, like I want to observe all of the house prices for the last year. Of course, unfortunately, some data becomes disconnected from what it represents, such as during cases of voter fraud and house prices that represent listing prices rather than selling prices, but there are people out there working very hard to keep them connected.

RentingForHalfTheCost says

No, that was the correct article. Recovery seems to mean two different things to people. To me it has only to do with price. If I am selling I am interested in the price rising, if I am buying then dropping. How many people are out shopping obviously influence the price, but if you say recover then I think price. The original article did not say there was a sales recovery, it was using the sales to infer a recover that had yet to happen. The article I posted is using the same year of data and inferring the there is very little to infer, except price data that keeps going down.

I think the disconnect is that the articles were looking at different sets of data. Looking at last years data, it was undoubtedly a bad year. But looking at forward indicating data--Jan sales volume, Jan. inventories, Jan. pending contracts, it appears that 2012 will be better.

RentingForHalfTheCost says

Red hot

I suppose a declining RE(which he calls it flat) is RED HOT.

E-man says

we know that they will do whatever it takes to achieve their GDP growth objective.

Considering the things that they allow into the definition of "GDP", I think that they will achieve precisely the numbers that they are targeting while the American middle class continues to be ceaselessly gutted.

bmwman91 says

Considering the things that they allow into the definition of "GDP",

The Fed is serious about the output gap.

Output gap is the difference between actual GDP and potential GDP, where potential GDP is a long-term trendline growth.

They want to close this output gap, with whatever it takes.
Doesn't matter if its nominal or real :)

E-man says

Don't fight the Fed.

In the United States, aren't the people "the Fed?" So will there be a point where the people get it or will we return fully to rule by the aristocracy?

SFace, I would actually be A-OK with something in the $600-700k range. As of now, the only stuff in that price range in the South Bay is either directly in SJC's primary take-off path, within 50ft of a highway or major throughfare or a unit with serious structural issues. Houses, even if they are still kind of shitty, that are not on a major street or next to a highway are looking to carry an $800k minimum. Honest to god, the only houses that have appealing features and location to us are listed in the $1M to 1.2M range today. Too bad we didn't make a move a year ago when inventories were waaaay higher. Now we get to battle it out with all the other DINKs for the scraps.

We have a couple of relatives that are RE agents. Hopefully they can help us find something that hasn't hit the market yet. I'd be fine with targeting underwater owners in areas that we like to see if they would be interested in a short sale and negotiating that out. Our rental lease lasts until August, although we could just bail early if we found something decent.

And Texas? No thanks. Washington and Colorado are the two places we were looking at. Why? Life in the SFBA is hectic and full of douche bags with nothing better to do than make money and try to flaunt it. Over-the-top liberalism is also not on my list of favorite things, and CA in general looks like a sinking ship. Everything in life is a compromise, and at this point I think that the "people" here are more of a pain in the ass than the harsher winters in Longmont, CO. My wife has already said that she would be 100% fine moving to the Seattle area. Colorado...would be a harder sell lol.

Sorry about my bitching and moaning. It's annoying as hell to watch the already broken housing market become deliberately broken further, and ultimately at my expense.

Oh and SFace, you are probably right about me ending up in a $1MM house in the next 5 years lol. Given that we could put 20% down on one now, and I have a friend that can get me a below-market APR on a 30 year, it might just happen. Find me something on an 8000SF+ lot, 2 car garage (preferably detached), mature trees and a pool in Sunnyvale, Campbell or Mountain View and I'm sold. My friend in the lending industry keeps advising me to wait until after 02/2013 though...need to see how the fiscal cliff, QE4Eva and some other structural lending changes pan out or something. Gotta go visit him & have a beer to find out more lol.

bmwman91 says

Life in the SFBA is hectic and full of douche bags with nothing better to do than make money and try to flaunt it. Over-the-top liberalism is also not on my list of favorite things, and CA in general looks like a sinking ship. Everything in life is a compromise, and at this point I think that the "people" here are more of a pain in the ass than the harsher winters in Longmont, CO. My wife has already said that she would be 100% fine moving to the Seattle area

Yep. A Region of Fools. Welcome to Silicon Valley.

B.A.C.A.H. says

Yep. A Region of Fools. Welcome to Silicon Valley.

It is also called Silly Valley for a reason.

heh. be careful bmwman- I think you might have some of SFace's ass pennies in your pocket (or are you using the Black AmEx these days?)

https://www.youtube.com/watch?v=DO1Q7F23DxM

Haha. Ass pennies, classic.

bmwman91 says

Oh and SFace, you are probably right about me ending up in a $1MM house in the next 5 years lol. Given that we could put 20% down on one now, and I have a friend that can get me a below-market APR on a 30 year, it might just happen. Find me something on an 8000SF+ lot, 2 car garage (preferably detached), mature trees and a pool in Sunnyvale, Campbell or Mountain View and I'm sold. My friend in the lending industry keeps advising me to wait until after 02/2013 though...need to see how the fiscal cliff, QE4Eva and some other structural lending changes pan out or something. Gotta go visit him & have a beer to find out more lol.

I agree. WAIT. I empathize with you. You've worked hard, saved, but because of banksters and assholes who bought more than they should have and were entitled to nothing in the first place, your money is getting you much less than it should by all reasonable and historically projected accounts.

There is no real GDP growth; taxes on everyone are going up and most people here are already over-leveraged to the gills. Most people are going to be in a world of hurt come 2013.

robertoaribas says

RentingForHalfTheCost says

What I am disputing is that they are trying to say a bottom is happening. Now, when someone says a bottom, I am thinking in pricing. As a potential home buyer I just need to buy one home for a good price. How many homes are being sold (sales) is nothing to do with a bottom to me.

Feb 2012...wow you got that all backasswords last year, renting with half a brain!!!!

I was analyzing the report. Not making a prediction myself. I don't see how that is 'getting things backasswards'. Everyone is allowed to debate the facts. They were calling a bottom just because of inventory numbers.

In terms of pricing, there is still a lot of weakness to be found. I really don't know what to think anymore, except that fundamentally there is another shoe to fall soon. Even the Fed has limits and we are fast approaching the bluff game. Next year should be exciting. I'm ready...

bmwman91 says

the bust portion of the cycle starting around 2016.

That's an interesting stance. What will be the causes of this potential bust?

RentingForHalfTheCost says

Supply was at 9yrs in Cali at the time. Are you debating that? And we are all
still very screwed. Except Concord and Phoenix people I guess, cause everything
is so hunky dory according to the real estate bulls. Hope the Fed stays your
friend long enough for you to lock in some of them magnificent gains you crow
about non-stop.

Problem with all you shadow inventory types, is you would focus, way too much on the amount and never the disposition.

Every month with you guys it was some sort of apoplectic fit of hysterics "OMG!!!! - LOOK the shadow inventory is HUGE!!!!", with an assumption that it was all going to be puked up, all at once, en masse, in a "woooosh" type event, driving prices back to the stone age.

As far as I was concerned it matterd not if it was 3 months or three decades of shadow inventory, so long as it was metered, out, slowly, drip, drip, drip, style as it had been since early 2008. So long as that continued, it was only a matter of time before price declines decelerated, flatlined, and then rose, albeit slightly less than they would have if the shadow inventory had not existed. Still amazes me how you guys could not see that.

Other problem with you bears is you were focused on problems which matter not now, but 10 or 20 or even 50+ years from now. Make no mistake, when looking at demographics, national debt, etc, etc, etc, there is no doubt this country is indeed screwed. However, since It likely we will all be long since dead and buried before those headwinds get severe enough to worry about, many of the bulls will just simply continue to buy homes and live their lives, all to the frustration of the bears, many of whom will sit sidelined about macroeconomic worries til the day they die.

RentingForHalfTheCost says

Supply was at 9yrs in Cali at the time. Are you debating that?

nominated.

This one really makes me laugh. There can be no debate on this issue--the verdict is in. You were wrong. Own it.

What sort of appreciation are you projecting over the next 5-10 years for housing?

Do you see a "bursting point" over the next 10 years or so? Bursting point being when there is a strong pull back in home prices, think shades of 2010/2011.

As a non-home owner I'm hoping/banking on the stock market to also grow over this ramp up period as I'll be sidelined from the housing market.

Thanks, and this is a great thread.

Goran_K says

bmwman91 says

the bust portion of the cycle starting around 2016.

That's an interesting stance. What will be the causes of this potential bust?

I don't want to put words into their mouths any more than I have, so I'll give my take on it. Basically, it looks like all of the various measures taken to bolster housing prices are working, and will continue to do so. Eventually, many owners will have enough positive equity that they will want to sell, and inventories will rise at this higher price point. Even with rates as low as they are now, there just are not all that many people that are qualified to mortgage a house at that price, given RESPONSIBLE lending standards (20% DP, 46% DTI or less). At that point, I see 2 possibilities:

1) House prices stagnate and drop. While it is plausible that owners will just de-list and send us back to nonexistent inventories, I think that there is a mass psychology factor there and lots of on-the-fence sellers will panic because the strong seller's market that started last year will suddenly look like a buyer's market, and they will want to cash out "while they still can."

2) Lending standards loosen up again and that propels the bubble to new levels. ARMs blow up in people's faces and we get another delightful melt-down.

I would bank more on option 1 than option 2 though. Maybe I put too much faith into Wall Street, but I don't see them repeating last decade's mistakes again so soon.

robertoaribas says

RentingForHalfTheCost says

Supply was at 9yrs in Cali at the time. Are you debating that?

Yes, I care to debate that!

The 9yr figure factors in the shadow inventory, which as we all know is still being heavily manipulated. Will that end? Doesn't look like anytime soon. Thank the Fed and what will be 2 or 3 decades of lost progress for this country. We are almost through 1 decade already. I don't think anything has improved, just shits and starts.