patrick.net

bob2356 says

Did you actually read the report, not the summary? You are really basing you argument on this? The 25% number include multi family, mostly apartments. Lots of multi family. Everyone here is talking single family houses. Your contention is 25% of homeowners will lose their homes.

Not only that their own examples don't support the 25% damage to private homes number.

My contention? So, in your 30 minutes you just poked a bunch of holes in a report done by some of the best in the field. Your incredible. Not believable, but incredible. Keep on your blinders. It'll do you well in life.

Crazy talk from all realtors and home owners. I'll feel for the innocent when this crap hits the fan, but for you and others that think their decision are so great to buy. You deserve it!

RentingForHalfTheCost says

Earthquake insurance seems like a no brainer to me. If you disagree then send me an email a few days after the big one, if it hits, and see if it has changed your mind. Your life.

Earthquake insurance only makes sense if you have more equity in your home than the ultra-high deductible. (Which runs $40K-80K). So say you have $60K in damage to your home from an earthquake and for 10 years were paying $1K a year for insurance.

The earthquake insurance still wouldn't cover squat and you'd be out $70K.. ($60K repairs + $10K in premiums).

If you own the home outright or have a very large equity stake.. THEN earthquake insurance makes sense. Otherwise you just walk away... accept your FEMA aid... and start with a CLEAN SLATE when the big one hits.

Maybe rent for 5 years and then buy when the housing shortage really kicks in when people start forgetting and migrating back to CALI, and half the homes aren't habitable and rents and homes skyrocket.... after being rebuilt with even better earthquake resistant codes.

BoomAndBustCycle says

If you own the home outright or have a very large equity stake..

But but but. There was a big argument back a few weeks ago saying that people with no equity (mortgage) do own their home? I'm confused. From what realtors tell me these are the different stages of housing.

Rent - own nothing, you are useless
Own - have no to some equity but large mortgage
Close to own outright - large equity and little mortgage
Own outright - house with no mortgage

I like my definitions better

Rent house
Rent money to use house while saving so one day you 'own house'.
Own house

Simple and makes more sense.

Own outright sounds like I am left outside in the cold. Brrr...

BoomAndBustCycle says

than the ultra-high deductible.

Spoiler ALERT!!! There are people that are paid to analyze risk. You know the ones trained in looking at probabilities, historic similar situations, analyzing liabilities and expenses, etc. etc. That is what they studied, not the any fool can pass the realtors exam. When they say that in order to provide you insurance there needs to be a high deductible, then what they are telling you hints at their conclusions. Listen to them as opposed to the realtor that wants/needs you to buy. There is money (their money) behind their conclusion. There is also money (your money) behind the realtors views. Let the realtor do what their job (not really sure what that is, but maybe something), and let the insurance company do their job. Insurance companies manage risk, that is their business model. If they have a high deductible it is for a reason. Beware.

SubOink says

I got a feeling the anarchy won't happen, but don't bite the messenger now...:)

Yah, lets ignore the giant elephant in the room. The US Debt that just won't stop growing. You don't think this will have an effect on housing? It is growing trying to stop housing from collapsing. At some point we have to pay the price for that and housing will not be spared.

http://www.usdebtclock.org/

RentingForHalfTheCost says

here are people that are paid to analyze risk. You know the ones trained in looking at probabilities, historic similar situations, analyzing liabilities and expenses, etc. etc.

Only 12% of Californians own Earthquake insurance... that might have SOMETHING to do with the high deductible. Imagine how high automobile insurance deductibles and premiums would be if only 12% owned car insurance.

And the Northridge Quake in CA happened in 1994... That put a lot of downward pressure on Real Estate in Los Angeles in 1994-1997... Which makes the 1997 values that so many quote as "FAIR prices"... more likely a post-disaster drop below fair value.

The funny thing is if prices fall to 1997 prices in Los Angeles.. We are really at 1989-1990 prices. Home prices in 1989-1990... were higher in most areas than 1997.

So in reality, home prices in Los Angeles, if we keep dropping will fall back to 1989 prices BEFORE 1997 prices... wrap your head around that!

RentingForHalfTheCost says

But but but. There was a big argument back a few weeks ago saying that people with no equity (mortgage) do own their home? I'm confused.

I recall that argument as well. ;-)

How does house insurance work? If I only own 10% of the house, than do I have to insure 100% of the house or 10% of the house? I thought I had to insure 100% of the house, even if I only had 10% equity.

wthrfrk80 says

How does house insurance work? If I only own 10% of the house, than do I have to insure 100% of the house or 10% of the house? I thought I had to insure 100% of the house, even if I only had 10% equity.

I'm really confused. Because earlier in the thread Renting made a big point about the difference between homeowner's insurance and renter's insurance. If I have a mortgage, shouldn't I be buying renter's insurance??

BoomAndBustCycle says

So in reality, home prices in Los Angeles, if we keep dropping will fall back to 1989 prices BEFORE 1997 prices... wrap your head around that!

Me likey. 1989 here we come!

I guess if you're worried about earthquakes, live in a mobile home. They have shock absorbers to smooth out any "bumps." ;-) And CA doesn't get too many tornadoes.

RentingForHalfTheCost says

Me likey. 1989 here we come!

If you add the past 23 years of inflation... to 1989 home prices... We may already be there.

My neighbors bought their home in 1983 according to Zillow. They paid $130K...

Zillow estimates the home to be worth $410K today.... that's an annual rate of 4% inflation...

Maybe a tad high, but not by a ridiculous amount... I'd say 3% appreciation isn't outlandish for premium cities, so maybe 4% appreciation is fair.

RentingForHalfTheCost says

I just went to an Open House 2 weeks ago and got fed the vomit by a realtor

Big surprise! A realtor tells you to buy a house...he gets paid that way. HELLO?

That doesn't mean you have to listen to it. A dentist wants to drill and fill holes, a showmaker wants to make shoes...an aspect of life, you gotta take everyone's opinion with a grain of salt, especially those that have an agenda. Mortgage brokers, realtors, doctors, insurance reps...blablabla

Everybody wants to make a living. It's your job to figure out what's best for you.

But just because realtors all wanna sell sell sell...doesn't mean buying isn't a good option if it makes financially sense in your own situation.

BoomAndBustCycle says

If you add the past 23 years of inflation... to 1989 home prices... We may already be there.

However, 1989 was the peak where prices declined 20-40% in various metros nationwide. After 1989 foreclosures spiked for several years. So skip using 1989 as base and look to mid 90s (1995-97) as a starting point.

thomas.wong1986 says

After 1989 foreclosures spiked for several years. So skip using 1989 as base and look to mid 90s (1995-97) as a starting point.

So Agree. But I'm not sure if prices will go that low, the fraudsters have done a pretty good job so far.

Yes, they are trying.. but even when we didnt have the intenet back in 1989-95 they couldnt stop the market from melting down.

it happens...$160 * 1.35 = $216 another 50K to go or so..

mid 90s prices... $160K

http://archive.dqnews.com/AA1997SCA05.shtm

inflation 35-40%

Current ...$264

http://dqnews.com/Articles/2012/News/California/Southern-CA/RRSCA120314.aspx

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

thomas.wong1986 says

However, 1989 was the peak where prices declined 20-40% in various metros nationwide. After 1989 foreclosures spiked for several years. So skip using 1989 as base and look to mid 90s (1995-97) as a starting point.

I did one better.. I went back to 1983.. (pre-late 1980s run up)... Like I said, my neighbors home sold for $130K back in 1983.. and is Zillow priced at $410K today. A pretty fair price considering it's 30 years later and assuming 4% annual appreciation.

Couldn't 1997 be an OVERSHOOT to the panic sell side? If historically we ALWAYS overshoot to the downside.. Then 1997 is by no means a starting point.. but a post-quake, post-bust, overshoot to the downside.

BoomAndBustCycle says

Couldn't 1997 be an OVERSHOOT to the panic sell side? If historically we ALWAYS overshoot to the downside.. Then 1997 is by no means a starting point.. but a post-quake, post-bust, overshoot to the downside.

Depends where you live..

I would say on the surface.. Florida looks appealing.

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

SubOink says

RentingForHalfTheCost says

I just went to an Open House 2 weeks ago and got fed the vomit by a realtor

Big surprise! A realtor tells you to buy a house...he gets paid that way. HELLO?

That doesn't mean you have to listen to it. A dentist wants to drill and fill holes, a showmaker wants to make shoes...an aspect of life, you gotta take everyone's opinion with a grain of salt, especially those that have an agenda. Mortgage brokers, realtors, doctors, insurance reps...blablabla

Everybody wants to make a living. It's your job to figure out what's best for you.

But just because realtors all wanna sell sell sell...doesn't mean buying isn't a good option if it makes financially sense in your own situation.

Very well said.