patrick.net

HousingWatcher says

as Prices Fall

I agree it will keep falling. Nothing further. :)

What good are falling home prices if houses become more unaffordable?

HousingWatcher says

What good are falling home prices if houses become more unaffordable?

Isn't that a rosy situation for would be buyers? Price keep falling until it becomes affordable? At some point banks will be more willing to lend as prices decline and economy improves enough to boost their confidence. That's when you buy. Do you think prices will shoot through the roof once economy,jobs and lending business improves? Absolutely not. So wait and watch is the best strategy.

Inform says

Homeownership rates in USA:

- in 1950 was 55%

- in June 2011 was 65.9%

Mortgages of households in USA:

- at the the end of 1950 were equal to 18.6% of GDP

- at the end of June 2011 were equal to 74.8% of GDP

So you can see how unsustainable is the amount of mortgages at the current levels.

http://www.federalreserve.gov/releases/z1/

http://www.census.gov/hhes/www/housing/census/historic/ownerchar.html

http://www.census.gov/hhes/www/housing/hvs/historic/index.html

too much government messing here. Even now they are bailing out prices, not ownership.

Nomo, government is bailing out the high prices, just like its bailing you out, welfare case.

It used to be we made stuff. Now we import more from China than we make here at home.

One wage earner households used to be the norm (even if said wage earner had multiple jobs) now two wage earners are the norm.

Comparing the regulation of the 1950's to the deregulation of the 1980's doesn't encapsulate the many factors that have influenced home prices.

Tightening lending standards was a good start - but all the banks really did (at least from my anecdotal evidence based on the recent experience of friends) is get rid of the "worst of the worst" practices. Turns you can still get a mortgage - even if it puts you to the limits of what you can realistically afford.

TBTB want prices high - otherwise TSWHTF.

They are going down to 1997 prices. Eventually they'll be more affordable. But, they will NEVER be affordable to some people. Oh well.

I am not of the belief that most people should rent. Their choices are their choices, but relatively responsible people who deeply desire to own and find it an impossibility; have every right to blame this screwed up world.

If we ever stop creating faux financial booms through credit and population booms through stupid uneducated people spewing out spawn; it will go back to a simple thing for ordinary people to accomplish. The saddest thing about our predicaments, all could be solved easily with minimal effort if people would wise up and oppose, or at least ignore those trying to dumb them back down.

Good comments on this thread, many homes in the area and surrounding counties where I live, the property taxes would be more than the house payments, and these are homes people won't buy because they cant afford to fix them up anyways.

Then you've got habitat for humanity putting people in homes who can't afford them anyways.

Sure, a house can get cheaper, but all the other inputs that go into that home have adjusted higher leaving you with the same steaming pile..

When the core of your economy is designed to basically suck you dry in the first place..

Nomograph says

We need MORE government regulation of the financial sector, not less. Whenever one person has control over someone else's money, you need to stand guard.

The banksters did not FORCE anyone individual to overpay for housing. Gubmint HAS FORCED (taxed) us and our grandchildren to pay tens of thousands of dollars because banksters own our gubmint. It is called Oligarchy. More gubmint regulation leads to communism.
We would NOT need to stand guard if gubmint stopped interfering with capitalism.
The problem is, Most lazy people sit on the fence hoping gubmint will save us.

Nomograph says

Fraud, insolvency, and the required bailouts by the Bush administration followed shortly thereafter.
We need MORE government regulation of the financial sector, not LESS.

Fraud ? as in Enron or WorldCom Fraud. People in that case were prosecuted and jailed. Or do you mean Frank Raines head of Fannie Mae who ignored all regulations even after SOX and was NOT charged with fraud even though, it was clear fraud was present. The losses were several times more than Enron and Worldcom put together. But Raines had crony friends in Congress by the names of Franks and Waters. And like the rest of the Liberals didnt want regulations.

And its all captured on video...

http://www.youtube.com/watch?v=_MGT_cSi7Rs&feature=related

Nomograph says

It's really hard to make an intelligent argument for deregulation when history proves that every time you deregulate the sector implodes within a couple of years. Don't let that keep you from trying, and from posting more unrelated and idiotic pictures

Your comment is pretty idiotic, there are plenty of markets that are not regulated and market prices are allowed to fluctate accordingly. But when market prices like gas goes up, liberals go ape shit blaming us oil companies who dont control prices.

Maxine Waters on her desire to "socialize the oil companies"

http://www.youtube.com/watch?v=SHJBDdkOnRc

Nomograph says

Keep voting Conservative and you will keep getting bailouts.
In the 1980's Conservatives deregulated the S&L industry through the Depository Institutions Deregulation Act.

http://en.wikipedia.org/wiki/Depository_Institutions_Deregulation_and_Monetary_Control_Act

The Depository Institutions Deregulation and Monetary Control Act, a United States federal financial statute law passed in 1980, gave the Federal Reserve greater control over non-member banks.
It forced all banks to abide by the Fed's rules.
It allowed banks to merge.
It removed the power of the Federal Reserve Board of Governors under the Glass–Steagall Act and Regulation Q to set the interest rates of savings accounts.
It raised the deposit insurance of US banks and credit unions from $40,000 to $100,000.
It allowed credit unions and savings and loans to offer checkable deposits.
Allowed institutions to charge any interest rates they choose.[1][2]
Required banks be charged Fed Float for use of funds received before clearing between depository institutions

By deregulation you mean what exactly ?.. or was that part of your left wing brain washing session.

If anyone wants to attach the Fed to an argument in this thread please read Secrets of the Temple which pretty much gives solid evidence of how much control the Fed has.
http://www.amazon.com/Secrets-Temple-Federal-Reserve-Country/dp/0671675567

If you want to admit to it or not he details that three of the major reforms that gave the reserve more power came from the left. Congress is supposed to regulate the money supply so this simply outsourced what they thought scared the crap out of them.

Carter deregulated the airline industry, trucking industry and rail industry. How exactly did each of those collapse?

With rail CSX is up over 1500% since then
http://www.google.com/finance?client=ob&q=NYSE:CSX
Same with Norfolk Southern
http://www.google.com/finance?q=NYSE:NSC
same with Union Pacific
http://www.google.com/finance?q=NYSE:UNP

Trucking lets see
http://www.google.com/finance?q=NYSE%3AFDX
Fed ex has done quite well

UPS went public around 2000..it is flat
http://www.google.com/finance?q=NYSE:UPS

Trucking well conway is here
http://www.google.com/finance?client=ob&q=NYSE:CNW
Up 5 fold since the deregulation

JB hunt up more than 2000% since the deregulation
http://www.google.com/finance?q=NASDAQ:JBHT

Werner Enterprises up more than 600%
http://www.google.com/finance?q=NASDAQ:WERN

If you want to talk about how great it was flying Pan Am back in the day and that the food was decent OK but the prices were much higher.

So no when things deregulate they do NOT implode. Regulation gives us a false expectation of safety and security but eventually we find out that is not the case.

Just because something is government run does not mean it is somehow cheaper and more efficient. I used to deal with shipping all the time and some thought the post office would be cheaper than UPS or fed ex...it wasn't..in addition the tracking was non existent.

Since comments above are talking about regulation v no regulation. I like to use the analogy of a football game.
The rules of the game are agreed on and enforced by some referees. The game itself is unregulated as to the outcome and the plays chosen, players chosen, etc.
Without referees or rules the game would descend into both benches clearing out and rioting.
With referees having TOO MUCH power, they would try to determine who won or who lost the game. This is Obama's version of a football game.
I glance at some websites about houses from time to time and have noticed that foreclosures are accelerating over the last 2 years.
The own v rent argument will continue forever. It's really a lifestyle decision not a financial one. James Bond doesn't live in a big house, rather an apartment in London, and mostly hotels when he is "working".
Mike Brady (the Brady Bunch) lives in a house so he can please his wife and keep those Wesson oil parties going. She wants a place to store her brood of brats.
If you have a LOT of dough, and you own a house, chicks dig it. They want to move in.
If you have a LOT of dough, and you live in an apartment, some chicks don't dig it. They will ASK many questions about why you "throw away" your money on rent.
I do not know any woman who has a lot of dough who didn't get it from a man sometime in her life: father, grandfather, ex-husband.
Has a woman ever bought a house for a man? Just curious.

bubblesitter says

At some point banks will be more willing to lend as prices decline and economy improves enough to boost their confidence.

I don't think you understand how banks work. Banks don't want to lend because there are better opportunities. Why lend to you at 4% when I can lend to the federal govt. at 3% and not have to worry about losing a single penny? Would you invest your money at 4% with a 50/50 chance of losing it, or at 3% with ZERO chance of losing it?

HousingWatcher says

What good are falling home prices if houses become more unaffordable?

This is an unbelievably stupid sentiment.

To make such a statement, one must assume that the higher price/lower interest rate combo is superior to lower prices/high interest rate combo.

I know we are supposed to be nice, but it really doesn't get any more fucking moronic than this. Want to know why realors get called realtard, realturd, and used car salesmen(not to mention plain ol scum of the earth)? Because they spew nonsense like this.

Low prices/high interest are mitigated by:

-Increased downpayment(which is incidentaly MUCH easier to achieve in this situation)
-Lower rents(due to lower purchase prices, thereby making it much easier for renters to save)
-Minimal effects of continually falling prices(IE a owner of a $200K home that was purchased with 20% down and declines in value by 20% is MUCH less likely to walk than an owner of a $400K home that was purchased with 3.5% down and declines in value by 20%)
-Simply much easier to pay off the lower loan amount sooner if a household's income rises.

Nomograph says

Don't let that keep you from trying, and from posting more unrelated and idiotic pictures.

That fence jpeg relates as some people who need regulation, do not think for themselves. So the rule "Do not sit on the fence" was posted. If there was NO sign, you would blame gubmint after you sat on it wouldn't you ? For your additional benefit; Do not touch any live wires.

Several generations ago people like yourself believed more government was best, but Russia, China, middle east countries finally learned their lesson and are adopting fewer regulations. What is taking NOMO so long ?

mdovell says

Carter deregulated the airline industry, trucking industry and rail industry. How exactly did each of those collapse?

This is silly. These industries had government agencies setting schedules, rates, operating parameters etc.. Deregulation didn't mean that trucks went unregistered and uninspected with unlicensed drivers or airlines could just send their planes wherever they want whenever the wanted with no air traffic control. These industries were made LESS regulated, not UNREGULATED. The financial industry was pretty much turned loose without any adult supervision after 2000. The results speak for themselves.

I would agree that Government POLICIES such as setting up Freddie/Fannie or skewing the tax code to jigger the system to favor one industry over another are a very bad thing. But regulations are a necessary evil.

Perhaps TMAC really believes jets should fly wherever they like at whatever altitude they like and just keep a look out for other planes. Didn't work so well over the Grand Canyon in 1956. Perhaps we should get rid of all those intrusive stop signs, traffic lights, speed limits in school or residential zones, and let everyone work it out themselves without the overbearing government. That should be fun.

HousingWatcher says

What good are falling home prices if houses become more unaffordable?

That is a wage and unemployment and cost of living issue that will eventually resolve itself when prices have fallen far enough. Or the government starts enacting pro labor and anti capital policies, which is very unlikely to say the least. Its just means recovery is even farther out than you or many others want to believe it is since home prices will have to drop massive in some areas still.

HousingWatcher says

Why lend to you at 4% when I can lend to the federal govt. at 3% and not have to worry about losing a single penny?

Eventually home prices will fall low enough that it'll make sense for the banks to lend again since the gains will be higher than lending to the government even if there is higher risk.

FortWayne says

government is bailing out the high prices, just like its bailing you out, welfare case.

No they're trying to prop up home prices to save the banks and to keep tax revenues up. To some extent its vote buying too since there are lots of fools out there still who believe their home should be worth as much as humanly possible due to residual social pressures from the housing bubble.

Its not working of course but they don't know what else to do since they're chumps who are only interested in helping the monied interests game the system. They don't actually know how to run a government properly.

We need the banks and financial institutions re-regulated and Regan's legacy of the "starve the beast" politics must be rolled back too if there is to be any hope of sustained recovery. Otherwise its just more boom/bust behavior all over again a la US in the 1800's that concentrated the wealth at the top and created the Gilded Age, which is exactly the sort of thing the government and Fed were supposed to stop.

EastCoastBubbleBoy says

It used to be we made stuff. Now we import more from China than we make here at home.

The US makes tons of stuff, the thing is that most production over here is automated.

All those blue collar manufacturing jobs have been outsourced or eliminated by machines. Even in China that is starting to happen.

TMAC54 says

The banksters did not FORCE anyone individual to overpay for housing.

No but they did encourage it where ever possible. They also lobbied to have all the old restrictions that were placed on them post Great Depression removed so that they could transfer risk and obfuscate their business practices as much as humanly possible so that they could keep selling and repackaging the same debt over and over and scraping more fees off each transaction.

Without NINJA loans, ARMs, OptionARMs, Neg-Am loans, and various wide spread documentation fraud the housing bubble never would've gotten so large or even formed at all. If that had been so the government never would've even had to try and bail out the banks.

Which they shouldn't have done IMO anyways but the banksters got their way there too.

The people in the government are the ones taking the bribes sure, but they're being bribed by the banks/monied interests. Both are in the wrong and if you go after only one of those 2 major groups you will solve nothing.

clambo says

With referees having TOO MUCH power, they would try to determine who won or who lost the game. This is Obama's version of a football game.

Obama is a Neo-Libral scum bag like Bush and Clinton were. He is deregulating businesses even more than Regan ever did. Stop looking at or listening to whichever sides' talking points. They're both lying to you.

tts says

No they're trying to prop up home prices to save the banks and to keep tax revenues up. To some extent its vote buying too since there are lots of fools out there still who believe their home should be worth as much as humanly possible due to residual social pressures from the housing bubble.

They aren't dumb, they know they can't keep the prices up forever, and they won't.

I think it's just a standard bait and switch, a transfer of bad private bank debt onto public. They got us all taxpayers with it, and have been pulling it off for a while now. They just can't do it all at once, otherwise we'll revolt when national deficit skyrockets out of nowhere. It's a steady process of the wealthy piece by piece screwing this nation.

I'll probably buy another rifle next week, just in case shit really hits the fan.

tts says

Its not working of course but they don't know what else to do since they're chumps who are only interested in helping the monied interests game the system. They don't actually know how to run a government properly.

Yeah, I read an article somewhere that these chums are no better at being right than a bunch of monkeys throwing darts at a board. Bunch of egomaniacs and psychopaths out there with too much money.

tts says

The people in the government are the ones taking the bribes sure, but they're being bribed by the banks/monied interests. Both are in the wrong and if you go after only one of those 2 major groups you will solve nothing.

I agree. Although, It should be easier to influence gubmint than banks. We can't stop the banks from offering bribes, could the bribe takers (gubmint) be jailed ?

But my point earlier about banks not FORCING us, was meant as a comparative. Gubmint is STEALING our money. Banks only allowed us to make RISKY investments.
Even citizens who did not buy real estate during the bubble are being FORCED to pay (via gubmint taxation) for all who profited OR lost. We can tell our grandchildren,,, "Yes, it is cold, but look how pretty those Gubmint offices and Bank buildings look" !

I think this article is sort of like a "well duh" sort of story. This sort of thing is something I've thought about for years. Simply put, places like SF, LA, NY, Boston, and so forth used to be totally different places operating via totally different economics formed by a socioeconomically diversified populace- aka, working, middle, and upper classes all having the ability to have their own chunks of the pie: Working class neighborhoods where people could buy ordinary houses on ordinary wages.

The Bay Area is such a classic, dramatic example of what happens when this balanced socioeconomic structure falls off a cliff. Instead of ordinary working or middle class people being able to afford certain areas of the city now they can't afford ANY parts of the city and instead now upper middle and upper class residents now shell out tons of money for homes originally constructed for the working folks who got priced out.

Looking at this from a broad perspective, you look at what this does to the overall country and it creates dramatic migratory patterns. Up until recently most of the economic and population growth happened on the coasts. For the last 15-20 years that growth has been heading inwards, to formerly under-appreciated cities and regions. Texas for all practical purposes is the "New California", with an enormous amount of people moving there. Its cheap. Its got jobs. Its got tons of new cookie-cutter houses for anyone who makes even a somewhat modest salary. A lot of the Southern states in general are doing well for the same reasons. Look on any relocation forum and you'd think half of NJ is moving to NC. So ultimately this means entire new regions of growth and perhaps future hotbeds of development and innovation since the average age of some of these "new" metros is younger, hence the potential for such innovation.

As far as the argument of whether the right or left did this or that to cause the bubble, or whether regulation or deregulation is good or bad, well the answer is yes. Simple as that. There was a lot of reasons the bubble inflated. It was caused by the combined influence and actions from Republicans, Democrats, the Fed, Banks, ratings agencies, the media, regulation, deregulation, and the buyers themselves. Everyone wanted a piece of that action. Humans are greedy and greed causes irrational behavior.

everything says

Good comments on this thread, many homes in the area and surrounding counties where I live, the property taxes would be more than the house payments, and these are homes people won't buy because they cant afford to fix them up anyways.

Sure, a house can get cheaper, but all the other inputs that go into that home have adjusted higher leaving you with the same steaming pile..

tts says

Without NINJA loans, ARMs, OptionARMs, Neg-Am loans, and various wide spread documentation fraud the housing bubble never would've gotten so large or even formed at all. If that had been so the government never would've even had to try and bail out the banks.

Na... with or without ARM etc etc loans the buyers mind set was and is twisted on buying real estate. Between 1998-2000 prices doubled fueling demand for exotic loans. We were in a bubble much earlier than you think.

edvard2 says

The Bay Area is such a classic, dramatic example of what happens when this balanced socioeconomic structure falls off a cliff. Instead of ordinary working or middle class people being able to afford certain areas of the city now they can't afford ANY parts of the city and instead now upper middle and upper class residents now shell out tons of money for homes originally constructed for the working folks who got priced out. ......Everyone wanted a piece of that action. Humans are greedy and greed causes irrational behavior

Bingo! you got it and many dont want to admit to all of this.

Nomograph says

Nominated for Stupidest Things said on Patrick.net.
Without regulation, you simply will have no stable financial sector. This means no small business loans, no car loans, no mortgages,

ironically, you just defined a very stable financial sector. No loans or mortgages means little risks to a financial sector. It would sure limit the credit driven growth, but as far as financial sector goes, it'll be a very stable one.

how would you like to nominate yourself now?

thomas.wong1986 says

Between 1998-2000 prices doubled fueling demand for exotic loans. We were in a bubble much earlier

Yeah I remember early 90's, it was already kind of starting to go. No politician or regulator wanted to rain on the bubble parade so they just kept on kicking that can.