patrick.net

After the homeowners miss 3 months of payments after the lifting of the moratorium, then the Notice of Default can be filed. It takes anywhere from 3 additional months to 6 months or more before the banks can foreclose. So we won’t see the effects of this until starting this fall or winter.

Thanks for the typo notice Roberto.

OK, so whoever is hiding behind "Housing Prices Are Cratering", I suspect you are getting defensive and calling me an insulting name because your wealth is based on consumer confidence in the RE market. Please stop the name calling. See the link below “Comment Policy: Insult Another User, Get Suspended”

I am sorry but I doubt it is in the banks best interest to do any such thing. They will extend and pretend, keeping inventory tight.

Lynnettemarcene says

OK, so Roberto, I suspect you are getting defensive and calling me a vulgar name

Did I miss something? Where is the vulgar name?

It's right above my post were I asked him to stop. Maybe the word he called me isn't very vulgar but it sure is insulting and uncalled for.

Lynnettemarcene says

See the link below “Comment Policy: Insult Another User, Get Suspended”

If Patrick enforced that the only thing here would be the crickets.

Lynnettemarcene says

It's right above my post were I asked him to stop. Maybe the word he called me isn't very vulgar but it sure is insulting and uncalled for.

That wasn't Roberto. It was House Prices are Cratering.

I should be suspended just for making comments.

Lynnettemarcene says

The media cannot broadcast this because this information will cause potential buyers to hold off on buying properties which will further drive the prices down which will cause the banks to loose more money. Awe,

I'll happily go with word of mouth and speculation. Even that helps us make decisions.

In my mind, if someone is willing to let go of this property for only 64k above a 2002 price, someone else got a whiff of something too...

http://www.redfin.com/CA/Los-Angeles/1115-S-Elm-Dr-90035/unit-502/home/6810929

Call it Crazy says

the housing market here will be TOAST and prices will drop back to the early 1990's at best!!!

LOL! Someone is trying soooooo hard to avoid that.

1990 levels would be great. I'd love to buy a cash 3/2 in Santa Monica without blinking. :)

Considering family net worth has fallen to 1992 levels, it wouldn't shock me if housing did the same.

This I'm sure of...

Those expecting wait long enough to get their dream property for a fraction of the cost in their wildest dreams; and plans on doing so with bank financing. Will be on the outside looking in.

The current mode of operation, that has been the standard since 2008 when the bubble collapsed. Has been working for all parties(the Government, Banks, the Realestate industry) ect... and I don't see that changing. While it may be true that a flood of foreclosures are about to hit the market. You will need cash to buy them, and the powers at be, are hard at work, trying to bundle 10 or 15 properties a pop.
So yeah you'll see those 60 and 70K properties, but you'll need to buy up 10 a pop with cash money. 700K isn't anything to the wealthy that will buy them up, but it may as well be $5,000,000 for everyone else.
And I tell you something else, these investors wont be none happy, if every Tom, Dick and Harry are getting buying these properties driving the demand for rentals down, or the demand for flipping these houses at a good profit. After they own them all on their portfolio.

I think it's up to the American consumer, to say "when", and resuscitate the American dream. If we stay on the side lines, then "THEY" will win and end up with them all, and create the "Land owner" class. Everyone else can only dream a long distant dream that will be impossible at that point to ever own a home.

But don't take my word for it, I'm never right about these things.

robertoaribas says

Lynnettemarcene says

The media cannot broadcast this because this information will cause potential buyers to hold off on buying properties which will further drive the prices down which will cause the banks to loose more money.

yes, and the media are forbidden to ever write anything that might be negative to some group of people, or business...

your article referenced one from a month ago... another month has gone by, and still no flood. Phoenix inventory has dropped even lower over the month, filings of NTR (notice of trustee sales) while up over the past few months, are still running 30% less than last year, and 60% less than the peak...

Until there is some visible evidence of this tsunami, it is pure speculation.

lose, not loose btw.

The arguement that the media won't hold back information is kinda weak.

Currently the national media will not report race related incidents that are basically an epidemic in any place in the US not called California or New York. Thats evidenced by a simple Google search, where local papers report it, but these incidents are NEVER reported by any of the nationwide networks.

The notion that the national media has been requested not to run this story would not be an earth shattering revelation.

Housing Prices Are Cratering says

CaptainShuddup says

700K isn't anything to the wealthy that will buy them up,

Considering housing demand is at 15 year lows and falling, NOBODY is "buying them up".

Correction "Owner Occupied" demand is at a 15 year low.
Investment RE has never been higher.

Don't take my word for it, I'm just telling you what is going on in South Florida.

Houses are still selling lower and lower. How ever, MLS listing prices are actually rising now. Also trending up YOY at 6% or more is rent. While the city is actually appraising existing home owners lower.

Here's some fucked up math for you...

My house I bought in 2010 for 160K the city now appraises at 119K.

Yet! now get this, average listing price is going up already back at 225K in my neighborhood. The same neighborhood is still seeing houses sell for 79K give or take a few grand. How ever you'll need cash, and you'll need to buy a gross of properties to get those prices.

Think I'm nuts?

http://www.trulia.com/real_estate/North_Central_Hollywood-Hollywood/1956/

Housing Prices Are Cratering says

Give it time because 1990 levels is the bottom.

1990 home prices were higher than 1996 home prices in Los Angeles.. so calling 1990 a bottom doesn't really make sense.

Avg homes in my neighborhood were $175K in 1996.. but interest rates were like 8%. Now average homes are $365K...with interest rates a 3.75%.

2012 - About $2059...PITI 16 years later...
1996 - About $1413.. PITI

So about $600 a month more expensive to own a home from 16 years ago...

Yeah, what a painful bubble that needs to burst much further... that's about on par with inflation...

Now if rates rise.. (which i dont' see happening.. I see us going JAPAN style with rates). Only our housing fell a lot harder and faster than JAPAN ever did... so if we keep rates low for as long as Japan has... we already have a huge head start in price drops.

I don't see the downside being much more than 20% at MOST from current prices. And that would mean the economy would have to TANK hard.. and the FED would have to raise interest rates hard.

I do see the economy tanking hard.. but no way the FED is raising interest rates if that happens.

A long slow slide is the only viable scenario... People will lose money on homes.. but nothing catastrophic like in 2006. Renters will continue to be gouged in RENT increases.

And in 15 years.. renting vs. owning will be a wash at worst if you buy in 2012.

BoomAndBustCycle says

Avg homes in my neighborhood were $175K in 1996.. but interest rates were like 8%. Now average homes are $365K...with interest rates a 3.75%.

not to mention for some who can remember.. both prices and interest rates declined from 1990 to mid 90s. Lower interest rates didnt influence higher buying and prices.

Housing Prices Are Cratering says

Then you're going to be shocked.... stunned over the coming years.

in my area, some sellers and potential sellers Im sure are already shocked due to the recent facebook fuck up...

look at this idiot!

LOS GATOS, Calif. (KGO) -- A Silicon Valley couple is offering an unusual deal to sell their house. Their 11.5-acre estate on Forrester Road in Los Gatos, California is selling for $29 million. But if you're short on cash, the owners will also take pre-IPO shares of Facebook.

Housing Prices Are Cratering says

Then you're going to be shocked.... stunned over the coming years.

The side effects of real estate falling over 20% more nationwide would be shocking to you also. I'd watch what you wish for!

Housing Prices Are Cratering says

Uh huh. Right. Because we'll all come down with radiation sickness and the sun will rise in the west, right?

Our government has started WARS for far more trivial reasons than a collapse of real estate to 20 year lows.. and wiping out of the middle class via asset and wage deflation.

So "radiation sickness" may be a viable possibility.. things can get ugly fast when you got a lot of desperate, broke citizens spanning the globe... and broke governments with their fingers on nukes.

BoomAndBustCycle says

The side effects of real estate falling over 20% more nationwide would be shocking to you also. I'd watch what you wish for!

It happened before, the country didn't go into cannibal anarchy.

OMG, here Patrick, here is everything mentioned, only you didn't say it. ;-)

1.) Zombie, insolvent, bankrupt banks
2.) $1 Trillion in toxic, impaired mortgages
3.) Banks borrow for 0, zero percent interest
4.) Another pool of three percent 3% down sucker buyers

http://articles.businessinsider.com/2012-03-21/markets/31219076_1_shadow-inventory-insolvent-banks-real-estate-market

I inquired about a shared rental today, in asking questions, party told me they are in foreclosure and won't be booted out until the end of the year so is trying to recoup some money. Payment is 1240 + condo dues + property taxes, they paid 175k, now it's valued at 124k.

That's a fairly heavy debt burden, but a good one to get out from underneath.

Call it Crazy says

That article was right on the money....

Yes, thank you. :) There is no housing market. It's all about the banks waiting:

"until unicorns arrive and valuations return to bubblicious 2006 levels where the bank can unload them with no loss."

Call it Crazy says

We'll all be dead by the time that bubble returns....

Hopefully we won't be dead by time more reasonable, 'real' housing prices return. I don't want to use the term 'market' because it is anything but that.

Housing Prices Are Cratering says

Yet the truth is housing prices are still at 2003 levels.

Why deflect from that truth?

My reference was to your CALL for housing to fall back to 1990s prices.. or lower. I'm saying if that happened... The "fallout" could EASILY cause World War 3.

Goran_K says

It happened before, the country didn't go into cannibal anarchy.

that's because the stock market rebounded.. and unemployment is keeping people from starving. Austerity hasn't kicked in for the US yet....

Another crash and a republican presidency will guarantee austerity... then all bets are off..

Again, watch what you wish for...

Call it Crazy says

What happens if housing falls back to where it should be... 2.5 times wages? What year was that??

2.5x wages doesn't take into account interest rates... My home is approx 3.5x my wage... but i have a sub 4% rate.. if i bought a home 2.5x my current income in early 2000.. I would have been paying more per month upon purchase.

Refinancing would change things.. but 2.5x wages while safe.. isn't really the average for many major US cities. Even in high rate environments.

If interest rates stay below 4% for as long as they did in Japan... Then a long slow slide is all that will occur.. and eventually nominal home prices will rise.

BoomAndBustCycle says

2.5x wages doesn't take into account interest rates... My home is approx 3.5x my wage... but i have a sub 4% rate.. if i bought a home 2.5x my current income in early 2000.. I would have been paying more per month upon purchase.

And home prices shouldn't be the metric--it should be mortgage balance.

Margaret Has A HorseFace says

WRONG.
Prices are construction costs + profit+ lot costs less depreciation.
And don't you forget it.

Here's an econ 101 lesson for you.

Price is not a function of cost. It doesn't matter how much it cost to build a house, the price is a function of supply and demand.

Margaret Has A HorseFace says

When demand is met by new supply

Sure--when is that new supply coming? Housing starts are at all time lows, last I checked.

Margaret Has A HorseFace says

You better check again because we're building and we'll continue to build and sell at double digit percentages under resale housing.

OK--I checked again. Still near all time lows.

Margaret Has A HorseFace says

Whatchya think about that

I think I'm wasting my time with a troll.

Margaret Has A HorseFace @ #34,

Just read your comment about being "shocked". Being the spur of the moment & without links for backup,I can remember those that thought home prices would end in middle 1950's prices. This was around 2-3 years ago.

Margaret Has A HorseFace,
My Bad:adjusted for inflation.
http://boingboing.net/2011/03/04/us-house-prices-fall.html

I went to the open house this weekend. Nice community built in 1995. At that time there were selling these new homes for $245k (2,700 sq ft). Prices in 2005 were at $845k and now they are at $715k. I don't think they would ever go to 1995 prices but how much you think they would sell for when that bubble bursts completly?
I think that median family income in that area is close to or a little bit over $100k.
I still cannot imagine that these houses would go down as much as to $300k - $350k.

@Lynnetemarcene

Flood of Shadow Real Estate Inventory about to hit the market will drive prices further down.

Heard this story a couple years ago. How do we know it's gonna be for real this time?

People are still stretching to buy a house. Job loss is still a potent threat and globalisation and free trade are accepted as the gospel truth by both parties and Presidential candidates.

Housing will have to match the new reality. I remmebr back when a million dollar home was something rare. Then the boom came and every track home in places like Dublin and San Ramon came close to a million or more. 300-400k would be the right place-all things considered.

OK people, I believe you!

However, when I come to that web site I feel like I live in an alternate reality.

I put an offer on the foreclosure a month ago. It was a "multiple bidding" situation. I said "screw it I'm not going to go crazy and outbid myself and gave up".
Today this same house sold for $140k more than I offered and $100k more than selling price !!!

Tell me why we would have such a catastrophic downturn when everybody drinks that 'cool-aid' again?

Times are so crazy right now that I really need some kind of faith to stay rational myself. Just convince me some more. I'm losing it...seriously!

We try to be rational, calculate our price range, prepare our down payment, we make sure our credit score is good, we go through the lending process. We check comps, we check the neighborhood schools, inspect houses 4 times, talk to neighbors, research, and study the market conditions and current situation. We understand laws of supply and demand, we know inflation rate, we use buy vs. rent scenarios calculator. We consider additional costs of owning, pros and cons of renting.
We tried to buy a short sale house 2 years ago. Waited with our offer for four mounts and finally learning that the bank took someone else's offer which was about $20k lower than our offer and we were better qualified buyers anyway.
Now, this one was bought by someone for $140k more. Does it even make sense? Does even any logical, mathematical law apply in that type of environment?
You try to learn, you try to prepare, you do everything you possibly can and it still doesn’t work!
There is no book, no web site, no blog, no agent, no prescription which could help you to get the house you want at the price you feel is right. I feel it is just plain and ugly luck or a lot of cash which regular person doesn't have anyway.

Call it Crazy says

GraooGra says

Today this same house sold for $140k more than I offered and $100k more than selling price !!!

Tell me why we would have such a catastrophic downturn when everybody drinks that 'cool-aid' again?

Because one house or one situation doesn't make a trend!! Take a step back and look at the BIG picture in the COMPLETE country, not just your little local area of CA!!

I know. Our neighbors and friends are telling us "don't worry. If we were to buy our own house today we wouldn't be able to afford it".
It is still something you are yearning for and start obsess about after a while, especially if it is impossible to get.