patrick.net

thomas.wong1986 says

that is the whole argument behind the libs.. buy a home, Govt will help, and the poor will grow wealthy with RE. That is why Glass Stegall was repealed during Clintons era, why Clinton pressured Fannie mae to take on greater risk... why Waters, Franks and Dodds all denied a bubble existed.

Wow--you can't make this shit up.

Oh wait--you just did.

I just had to change my icon. lol

SubOink says

no one of you permabears is ever going to admit that a recovery is taking place.

Goran_K says

SubOink, what is driving this recovery? Is it employment? Are wages rising?

Anyone know what is driving this so-called "recovery"? I think SubOink has not-so-gracefully bowed out of answering that question.

Goran_K says

Some even argue that no true long lasting recovery occurred until U.S industry was mobilized for World War II.

Or more over the economy didnt recovered until after 1945, since we were the only standing economy rebuilding the European and Asian economies from our own factories. So 1933 was rather meaningless, and during the WAR we didnt have an economy since all means of labor and production were converted to fight the war. We simply produced as much bombs, fighters, bombs, tanks, ships until end of war.. no demand and supply curve need apply here.

The situation in the USA is not "worse" than the Depression in some ways, and in some ways it IS worse.
Also, the situation regarding house prices in the USA has to do with other factors, such as growth in the economy and demographics, and population growth and aging.
Without wage growth and without GDP growth over 2%, there can not be rising prices for houses.

clambo says

Without wage growth and without GDP growth over 2%, there can not be rising prices for houses.

Sure there can. All it takes is various low/no-down government loan programs and a large number of people that do not think about the ramifications of borrowing large sums of money. Virtually all of the economic growth we saw in the 2000's was illusory, stemming from massive infusions of reckless debt and leveraging.

Maybe what you meant to say was that SUSTAINABLE house price increases require solid fundamentals. Very little about our economy is sustainable, but we are so dependent on it that we seem unlikely to do anything other than find new ways to spend more money that we don't have, collectively, until something breaks beyond the financial engineers' control. Sure, consumers are deleveraging right now, which is good, but the government and its private backers are doing everything they can to goad people into borrowing again.

Just because so many of us on here WANT a reasonable system by which to buy a house does not mean that we will get it (even something as simple as an all-encompassing requirement for 30% down payments on all mortgages, leaving all the tax breaks and Prop 13 as they are now). It is far more profitable to far more powerful people and entities to have it be like it is now: nonsensical.

Oh Apocalypse, you are like the reincarnation of Hunter S Thompson. I LOVE it. I am going to go ahead and tell myself that Matt Taibbi has found and frequents Patrick.net, posting as APOCALYPSEFUCK.

Mick Russom says

I know you roll in dough, but the prices are still far out of reach of dual income middle class people

Maybe in very specific local markets, but not in the majority of the US>

Goran_K says

So if we're not creating more jobs, revenue, or wage growth at home

I'm not sure how you read those graphs, but we ARE creating more jobs, revenue and wage growth.

It's not at the same rate as previous recoveries, but you CAN'T deny that it's happening.

Funny, just stumbled upon this article during morning coffee.

http://articles.marketwatch.com/2012-07-01/economy/32488820_1_job-growth-dismal-jobs-report-new-jobs

Economists surveyed by MarketWatch forecast the nation added 100,000 jobs, with the jobless rate remaining flat at 8.2%. The unemployment rate rose in May for the first time in almost a year.

The U.S. needs to create jobs at more than double the pace, however, to bring down the unemployment rate. It takes slightly more than 100,000 new jobs each month just to absorb the number of working-age people who enter the labor force.

Some economists are predicting even smaller job growth in June. BNP Paribas, for example, estimates the U.S. gained only 85,000 jobs.

Not only is job growth not improving, it looks like it's actually starting to get worse.

Where's the recovery? I invite logical debate (based on empirical data). 3rd straight post without a response. Someone show me the way to prosperity. :)

Goran_K says

3rd straight post without a response. Someone show me the way to prosperity. :)

See--it's hard to have a discussion when you ignore everyone who might disagree with you... lol

WHEEZJEEZ so much focus on who’s lying who’s not lying and this GDP stuff, growth shmoth… listen to the DUCKHEADS buy a house, hell buy 10!!! ANYTIME IS THE RIGHT TIME TO BUY AND SELL A HOUSE. Besides that helps prop up prices in case my alligators get any hungrier and I have to unload some of my goldmines. BAZINGA!

duckhead says

WHEEZJEEZ so much focus on who’s lying who’s not lying and this GDP stuff, growth shmoth… listen to the DUCKHEADS buy a house, hell buy 10!!!

Best response yet.

Call it Crazy says

Wow, you've found ANY sustained economic "growth" in the US economy?? You must have a VERY powerful magnifying glass. :)

I admit, Apple sold more iPhones and iPads than I even anticipated. These gains slightly hedged the mobile devices market.

Goran_K says

Anyone know what is driving this so-called "recovery"?

I don't know what exactly is driving it. Maybe its just a natural cycle? Maybe people are sick and tired of living in complete frugality and feel a bit more confident that they will still have work next year...therefore they treat themselves to a new ipad/iphone, restaurant...vacation...slowly things are starting to go again. Who knows?

I am simply observing with open eyes. I see tons of new construction projects in my area, new buildings, new restaurants...the movie theaters are packed, restaurants are packed (all the way from Denny's to "the grill")...so it does not look like the great depression to me. Even house prices are higher than last year. That's all. Can it be sustained? Who knows? We can all have our theories as to why it can or can't be sustained. No one knows the future. All we know is history and history has shown us that things go up AND down...and to me it looks like things are on the up swing.

Then there is massive manipulation of data by either party. Democrats are in power so they will promote the fact that things are on an upswing, while republicans are painting the picture in a very negative way. Obviously, that's their angle...don't vote for Obama again because things are shitty. If republican's were in power it would be the same shit vice versa. Just a game.
That's why I don't pay too much attention to the BS...I just look around in real life and when I see activity, neighbors remodeling, people eating out etc etc, I get the vibe of a recovery. Period. I believe what I see.

SubOink says

I don't know what exactly is driving it.

All we know is history and history has shown us that things go up AND down...

I just look around in real life and when I see activity, neighbors remodeling, people eating out etc etc, I get the vibe of a recovery.

I'm glad that you are adult enough to admit that instead of trying to fudge numbers, or outright lie about economic indicators.

Anyone else?

Call it Crazy says

Not on the east coast...

I don't pay attention to the east coast because on the east coast things are always shitty :)

There's no such thing as a bottom.

Though I feel 80% of the market rebound news is pure speculative crap.

We have a mixed market in the US, more so than anytime in our history.
Most markets are flat, some are still falling, and a few are on the rise due only to local booming temporary economies. Like mineral booms, they can't last forever and those hang overs will hurt bad bad bad.

The market is going to chug along in this state for years to come, anyone waiting for a bottom will be missing the boat. In markets where housing is so low now, it would be pointless to wait even more, investors are buying them up, and renting them out. The quality of life in those neighborhoods are going to shit, as there is no pride of ownership from those investors. This will continue to plague many communities in Florida, Nevada and other hard hit states.

Why are investors buying these houses and not would be homeowners?
Because there are two initiatives for buying. The investor sees prices low enough, and the potential for rent so great, they don't have to think twice how much lower the price goes. It is a positive cash flow, and they are interested in doing volume. You get ten, twenty houses that are paid for in cash, giving you on average $1500 a month.

They can buy another house every two to three months just from the profits.

Where as would be homeowners are stuck in the stupid flipper mentality that is so 2002 Mambo #5 must be their favorite song. This lot is going to be sucking hind tit when the music stops and they realize the bottom was last week, last month, last year and they wont be able to buy a house at any price. Why on earth would the man with a gaggle of Geese that lay golden eggs want to part with even just ONE?

Or in areas that weren't bought up, those would be homeowners will be kicking them selves for not buying, even as far back as last year(when ever that may be).

But make no mistake there wont be a ticker tape parade, the blue angles fly over, a presidential address, or a televised special announcing the bottom.

Sit on the fence at your own risk.

Call it Crazy says

People definitely need their iThingy fixes....

A classic sign of a great depression...millions have $599.- for a completely unnecessary gadget...

Things are just THAT bad...

CaptainShuddup says

Why are investors buying these houses?

Because ZIRP.

SubOink says

A classic sign of a great depression...millions have $599.- for a completely unnecessary gadget...

Things are just THAT bad...

Yeah, it's not like people ever buy things they shouldn't. People always have their priorities in order. HELOC what?

There is no growth.

dunnross says

3.2% hiring growth in 1 year, considering there were massive layoffs prior to that is nothing, especial if you consider that Silicon valley employment and wages are nothing like they were in the 90's when an average house price was 1/2 or less of what it is today:

You have to be careful using when you use real vs nominal numbers. Houses can and will appreciate in nominal terms, but may not in real terms. Just as nominal wages will grow even if real wages are stagnant.

Well Obama was banking on Solar Energy and Electric Cars, then he learned that you can't create new jobs and industries without a business model that is profitable.

Maybe virtual energy, and virtual electric cars?

The US economy is growing. Projections are at around 2%.

http://www.bloomberg.com/news/2012-07-03/imf-lowers-u-s-growth-projections-to-2-percent.html

I'd describe it as wobbly, not holistic, and there are still lots of risks out there, but yes ... we have growth. I remain cautiously optimistic in outlook, but pessimistically doubtful with regards to my own economic decisions.

Aside : AAPL kissing the 600 mark today. Cool!

CaptainShuddup says

Liberal

I know no one really 'knows' me here, but I am not a fox news type conservative and have considered my self more liberal.

However, when it comes to housing I once heard Romney talk about 'orderly bankruptcy' for failed banks, as they did in the 80's with the Savings and Loan banks. Had this happenned we would not have the Japanese style 'zombie' banks pooping out one defective house at a time at a balance sheet wish list price.

This has made me question where I stand in the spectrum.

tatupu70 says

You have to be careful using when you use real vs nominal numbers. Houses can and will appreciate in nominal terms, but may not in real terms. Just as nominal wages will grow even if real wages are stagnant.

I am sorry, but silicon valley prices are up over 80%, at least, in both real and nominative terms since the 1990's, while both employment and wages are down.
This is exactly why silicon valley prices will continue to drop both nominally and in real terms, whether we have growth in employment or not.

Goran_K says

but they won't explain what exactly is driving this supposed "recovery". Because I think if they spent time actually analyzing what was driving this "recovery" they might figure out that there really isn't anything to drive home prices up at all, except for government props, and artificial market manipulation.

Goran_K: The data points about wage growth and unemployment further illustrate the divide between the haves and the have-nots. Unemployement is still low for those with higher education degrees. Wage growth has been higher for the top 3 tiers. The middle/lower middle class is struggling and has been for the last decade.

Currently homebuyers are investors with cash and upper quintile incomes. Private Equity is jumping into SFH like no time in history.

What's driving the recovery of home prices? Prices getting closer to rental parity have set a support and people unable/unwilling to sell their homes have contributed to low supply. Let's say that home prices either stay flat or dip from now until 2020. You'll have about 15 years of buyers that will be unwilling or unable to sell. That alone will help keep price from dropping as supply decreases. Every percentage drop in home prices will keep a percentage of homes off the market. A large portion of home sales will be distressed sales, similar to the current situation now.

Goran_K says

I just look around in real life and when I see activity, neighbors remodeling, people eating out etc etc, I get the vibe of a recovery.

Bay area folks living on massive credit. Take the credit cards away, and things will be a bit more austere.

Its amazing to see so many people in the red and spending like there is no tomorrow.

Wage slaves and debt slaves all in one. Fascinating. And the government is trying to get people to leverage more with 0% interest rates.

zesta says

What's driving the recovery of home prices? Prices getting closer to rental parity have set a support and people unable/unwilling to sell their homes have contributed to low supply.

I agree with this. Home prices in certain markets are getting close to parity with record low rates, and I also see some homeowners "stuck" because they are underwater.

The question then becomes, how long will they hold onto their overpriced home that has zero change of appreciating back to the bubble price they paid within the next 10 to 15 years?

Also, let's not forget, banks are taking TWICE as long to foreclose as they did in 2008-2009. So many of those homeowners may have already thrown in the towel, and are living rent free at the banks expense.

suboinK: “I get the vibe of a recovery” BOOMCHUCKALUCKA that’s the spirit go with the viiiiiiiiiiiiiiiiiiiiiiiiibe man!!! Credit where credit is due Mick, to the OINKER not Goran. Goran is too fixated on facts and stuff when what you really need is the “vibe” baby! OINKAOINKA and Mick you’ve seen the vibe in action: “Its amazing to see so many people in the red and spending like there is no tomorrow.” Yes these people are living for today, that’s the way to do it DUCKHEAD STYLE BOOMBA.

http://www.youtube.com/embed/hnFZsrs32Co

I love that song. Didn't grow up in that era, but I agree with many of the values.

In my part of Fremont they are much higher than $400K.

duckhead says

Goran is too fixated on facts and stuff when what you really need is the “vibe” baby!

Facts and Stuff?

LOL

Only time will tell. In much of the Bay Area, it looks like things may be on the rise again, despite the fact that it is an affront to many people's sensibilities. But, it is what it is for now. Will it be like this a year from now? Nobody knows, and anyone that claims to know for certain is a charlatan or fool.

Just from observing things, many people looking for their first home are panicking and trying desperately to buy. Investors and wannabe investors are all aboard the bandwagon. The herd is on the move. My general feeling is that it is totally unsustainable as history repeatedly demonstrates. The thing is though that the herd can keep the momentum up for a very long time, as in the better part of one's lifetime. Don't hold your breath for house prices in the SFBA to hit a low level where you can both buy a house and have disposable income for living your life with. It's one or the other at present, and likely into the foreseeable future.

I used to really want a house for all sorts of common reasons. Once I ACCEPTED that buying would be nothing more than a heavy list of compromises, I decided to forget about it and focus on living life day to day. Sure, it is hard and even heart-wrenching to let-go of an ideal that you have sought and invested a lot of yourself into pursuing. Recognizing when to cut your losses is an important skill though. Life becomes vastly more enjoyable when you stop pining away for something totally beyond your control.

Trulia says many markets are 'In the clear' regarding a housing recovery today.

http://economywatch.msnbc.msn.com/_news/2012/07/03/12537085-some-us-metros-in-the-clear-of-housing-crisis?lite

These are same people who send me an email with the Real Estate advice:

"don’t even bother trying to align your buy or sell with market peaks and troughs. It’s a better practice to time your transaction in accordance with your life,"

http://www.trulia.com/blog/taranelson/2012/06/timing_the_market_5_signs_it_s_the_right_time_to_buy_or_sell?ecampaign=cnews201206D&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2012%2F06%2Ftiming_the_market_5_signs_it_s_the_right_time_to_buy_or_sell

Goran_K says

zesta says

What's driving the recovery of home prices? Prices getting closer to rental parity have set a support and people unable/unwilling to sell their homes have contributed to low supply.

The question then becomes, how long will they hold onto their overpriced home that has zero change of appreciating back to the bubble price they paid within the next 10 to 15 years?

I think the answer for most of them is as long as they're at or below rental parity they'll stay whether it be 10, 15 or 30 years. Less people will trade-up. Does it matter if you're underwater if you're paying less than a comparable rental? .. If they're close rental parity and they HAVE to move, I'd think many people will opt to become landlords rather than foreclose or bring money to the table. It might not be the ideal scenario and an additional headache, but it could make financial sense.

For all your musings about stagnant wages, you didn't respond to my assertion that the top quartiles of Americans are doing very well, while the bottom quartiles are stagnant and facing high levels unemployment. If you just look at median income numbers and regular unemployment figures you might deduce that housing prices need to follow that trend. However, homeowners these days are going to be in the top quartile and aren't necessarily facing the same hardships of those in the lower tiers.

Perhaps we're looking at a trend of lower homeownership rates and a separation of income/housing ratios. Wealth is increasing as a whole in the United States but is sharply diverging away from the middle class. Home ownership could do that as well, don't you think that's a possibility?

zesta says

I'd think many people will opt to become landlords rather than foreclose or bring money to the table. It might not be the ideal scenario and an additional headache, but it could make financial sense.

That's a huge assumption, and one I'm not inclined to agree with.

As for your point of the "top quartile" of Americans doing well, I didn't respond to it because the amount of households that make $150,000+ is about 5% according to IRS data.

Is that what you feel is normal? 5% of the nation being perfectly okay with stagnant wages? I'm not sure what your point was to be honest.

zesta says

Perhaps we're looking at a trend of lower homeownership rates and a separation of income/housing ratios. Wealth is increasing as a whole in the United States but is sharply diverging away from the middle class. Home ownership could do that as well, don't you think that's a possibility?

What your describing is wealth disparity, and yes I do think that is happening, to the detriment of the majority of the people in the country. So if your point is that home ownership will become a rich man's game in the future and the U.S may become a failed nation, then yes, that's a possibility.

Goran_K says

As for your point of the "top quartile" of Americans doing well, I didn't respond to it because the amount of households that make $150,000+ is about 5% according to IRS data.

Is that what you feel is normal? 5% of the nation being perfectly okay with stagnant wages? I'm not sure what your point was to be honest.

The top 20% of Americans have not had stagnant wages. Those 20% are the ones that are buying homes, especially in metro coastal areas. Furthermore, it's that 20% that are investing either as small investors or in pools of money that are buying up multiple homes. We're trending towards more homes being held by fewer people.