patrick.net

HousingBoom says

Yup, that's a possibility. The fact that central banks are trying to hoard as
much gold as possible tells me that they are losing faith in the system. The
system does not have to fail for home prices to fall another 20%+. That is all I
am expecting at best.

I fully expect you see your 20% - however, as has been the case for the last 3 years, I fully expect you see it in the form of nominal stagnation while inflation slowly works its magic and the remaining slack in the system is removed. You have very little upside risk in waiting IMO.

The Professor says

If the crash happens those with property and precious metals will be ok, not
great, ok. Those in paper (401k, stocks, bonds, etc.) are screwed.

If the crash happens all asset prices will get crushed. Cash is king when credit is collapsing.

yup1 says

That is graphing business cycles it is not even showing the 2008 crash, HAHA

Did you look at the x-axis? The chart is a little dated, I'll grant, but it clearly shows underwater was very, very wrong.

yup1 says

The Professor says

If the crash happens those with property and precious metals will be ok, not

great, ok. Those in paper (401k, stocks, bonds, etc.) are screwed.

If the crash happens all asset prices will get crushed. Cash is king when credit is collapsing.

It's going to be a crash but we don't know if it's a deflationary one (stock market collapse) or inflationary (bond market and/or dollar collapse). The job market is the biggest factor for home prices. All I know is that the job market will be in a world of hurt when this occurs. This will not be a soft landing like most bulls are predicting. The longer it doesn't happen, the bigger the bubble and the bigger the collapse will be

tatupu70 says

HousingBoom says

Wages are falling so any price increase is not sustainable IMO

http://news.yahoo.com/personal-income-posts-biggest-gain-eight-years-133706758--business.html

That is from early dividend payouts for tax purposes. It will not continue.

yup1 says

That is from early dividend payouts for tax purposes. It will not continue.

Maybe, maybe not. But to say that incomes are falling is not right.

tatupu70 says

Maybe, maybe not. But to say that incomes are falling is not right.

That payroll tax just killed any hopes of an increase in wages. lol

tatupu70 says

Maybe, maybe not. But to say that incomes are falling is not right.

Sorry on that point you are incorrect.

http://beschloss.blogs.mydesert.com/2013/01/07/flat-per-capita-incomes-weigh-on-us-employment-sector/

HousingBoom says

That payroll tax just killed any hopes of an increase in wages. lol

You got that right!

yup1 says

Sorry on that point you are incorrect.

I didn't know your timeframe was a decade. I figured you were referring to present time

robertoaribas says

54k down to 50K sounds about right for the crisis

I was only linking to show the income drop I did not read his crappy blog :D

tatupu70 says

I didn't know your timeframe was a decade. I figured you were referring to
present time

Oh yes more long term, short term gains are too volatile. And that is the average which is dragged higher by the high end. A better statisic would be median incomes which are hopelessly low, 26k is the median single wage in the US, DOH!

HousingBoom says

This will not be a soft landing like most bulls are predicting.

While written today - this could have just have easily been written 3 years ago.

For the last 3 years, despite you continuing to call for a "collapse", it has been the soft landing as each crisis turns into nothingburger after nothingburger. So again, is there any point in the next 0-50 where you decide to re-evaluate your conclusion? Is there any point in the next 0-50 years when you say, "gee, I guess there is not going to be a second collapse after all"?

And if not a date, how bout an event? If the DJIA hits say XYZ then you will change your tune. Or perhaps if unemployment hits ABC then you will reconsider...

BTW - if the answer for you is "I dont know" so be it. It just seems to me that anyone this "certain" of something, despite the some or even any evidence to the contrary, is setting themselves up for a lifetime of disappointment.

CDon says

For the last 3 years, despite you continuing to call for a "collapse", it has
been the soft landing as each crisis turns into nothingburger after
nothingburger. So again, is there any point in the next 0-50 where you decide to
re-evaluate your conclusion? Is there any point in the next 0-50 years when you
say, "gee, I guess there is not going to be a second collapse after all"?

I guess I would ask why do you believe that 2008 cannot be repeated? What has changed to stop that from happening? Nothing. Do you think that the Fed can bailout everything if everyone decides to sell? When will you get concerned with the Fed balance sheet 5 Trillion, 10 Trillion, 50 Trillion?

yup1 says

I guess I would ask why do you believe that 2008 cannot be repeated?

Because he's a mental midget!

yup1 says

I guess I would ask why do you believe that 2008 cannot be repeated? What has changed to stop that from happening? Nothing. Do you think that the Fed can bailout everything if everyone decides to sell? When will you get concerned with the Fed balance sheet 5 Trillion, 10 Trillion, 50 Trillion?

Lots of reasons why 2008 can't be repeated anytime soon:
Home prices are not overpriced anymore. They are under priced.
Recent home purchases are not leveraged with zero downs. Many were all cash.
Interest rates are a lot lower.
Economy is not sinking anymore, but making a slow come back.
The worst is over, the future is bright.

Raw says

Recent home purchases are not leveraged with zero downs.

So 3% FHA loans do not happen?

Raw says

Home prices are not overpriced anymore.

So says those that own, those that rent believe the opposite, some of those that own (me) still believe the opposite. Home prices are being supported by low interest rates. What happens if rates rise?

Raw says

Lots of reasons why 2008 can't be repeated anytime soon:

You saying it can't be repeated shows your ignorance. Lehman, Bear, Wachovia, WAMU, Countrywide, Merril, have been absorbed by the remaining big 5 banks. They are now much bigger than before the last crisis when Lehman ALONE destroyed the credit markets. You keep smoking that it can't happen again crack pipe.

yup1 says

Raw says

Home prices are not overpriced anymore.

So says those that own, those that rent believe the opposite, some of those that own (me) still believe the opposite. Home prices are being supported by low interest rates. What happens if rates rise?

If rates rise, that means unemployment will certainly have fallen and incomes will be up. So house prices will probably be rising as well.

tatupu70 says

If rates rise, that means unemployment will certainly have fallen and incomes
will be up. So house prices will probably be rising as well.

The last housing bubble was caused by what? Artificially low payments with crazy subprime loans. Interest only, pick a pay, you name it. Rising rates do not lead to higher home prices.

yup1 says

CDon says

For the last 3 years, despite you continuing to call for a "collapse", it has
been the soft landing as each crisis turns into nothingburger after
nothingburger. So again, is there any point in the next 0-50 where you decide to
re-evaluate your conclusion? Is there any point in the next 0-50 years when you
say, "gee, I guess there is not going to be a second collapse after all"?

I guess I would ask why do you believe that 2008 cannot be repeated?

No absolutely, it can be repeated. I continue to look for risk pricing in the bond market, or in the a1/p2. As they both sit there, while we print with wild abandon, I dont think twice about it. If they start to rise, like we saw in 2007 - absolutely I will be changing my tune - and fast.

Yes. Unequivocably. Again, I am operating on the assumption that they realize how serious this is - and if push comes to shove, they would much rather risk a global conflict with our creditors than they would see rioting, tanks in the streets, and the risk they could be dragged thru the streets, mogadishu style.

And therein lies the risk with changing course. There is so so so much debt out there - if called simultaneously, like we almost had in 2008, some very very very powerful players on the worlds stage will be very very screwed. And everyone knows this. Hence, no one is willing to pull the trigger - instead they wail, and shout, and then readily gobble down more of our debt.

So in that regard, honestly, there is no notational limit that we cannot exceed. Its kinda like the 500 billion dollar bill (zimbabwe dollars) I got as a gift. The guy got it for $4USD on ebay. Mugabe would rather destroy his country's ability to be a member of the worlds stage than risk dying at the hands of his countrymen. When push comes to shove, I am pretty sure which way our PTB will decide too.

yup1 says

Rising rates do not lead to higher home prices.

Of course not. It's not cause and effect. But rates also don't rise and fall randomly. They rise when there is an expectation of inflation and fall when there is an expectation of deflation.

So, if you are saying that rates are rising, that means there is an expectation of inflation, which implies higher incomes and lower unemployment.

CDon says

Its kinda like the 500 billion dollar bill (zimbabwe dollars) I got as a gift.
The guy got it for $4USD on ebay.

Dude whoever bought that got robbed my buddy got me a 100 Trillion dollar one for 4 bucks, ROFLMFAO!

CDon says

Hence, no one is willing to pull the trigger - instead they wail, and shout,
and then readily gobble down more of our debt.

So in that regard, honestly, there is no notational limit that we cannot
exceed.

At some point mathematics takes over and the amounts of debt cannot even be serviced, then what? If you are just printing money to make fake reserves you are doing nothing. If that money does not get into the real economy the increased debts will eventually default. I guess you could go with a 0 interest rate, all of that money is fake anyway.

I guess that is the point, do we all not understand at this point that it is all fake. A large group of people being "poor" while an individual person is "rich" when ALL of the credit money ever created is fake is pretty rediculous.

If the population in general ever comes to truely understand the nature of credit money, no one will ever pay back another debt again, EVER!

tatupu70 says

But rates also don't rise and fall randomly. They rise when there is an
expectation of inflation and fall when there is an expectation of deflation.

That is what they used to mean, I agree. If you think that is what rates mean in todays ZIRP environment I believe you are wrong.

tatupu70 says

Of course not. It's not cause and effect. But rates also don't rise and fall
randomly. They rise when there is an expectation of inflation and fall when
there is an expectation of deflation.

So, if you are saying that rates are rising, that means there is an
expectation of inflation, which implies higher incomes and lower
unemployment.

Bill Gross from PIMCO said in 2010 that without Uncle Sam backing mortgages rates would climb by 3 to 4 %. I wonder what home prices would be with 7-9% mortgages?

You guys understand that Zimbabwe was never a stable global superpower with reserve currency status right?

yup1 says

Dude whoever bought that got robbed my buddy got me a 100 Trillion dollar one
for 4 bucks, ROFLMFAO!

LOL - I stand corrected it was actually a 500 trillion note. Is yours the one with the 2010 redemption date?

yup1 says

I guess that is the point, do we all not understand at this point that it is all
fake.

Yeah , pretty much. If there was any doubt, the world realizes it is all a big ponzi scheme right now. But like all ponzis, once you recognze its a ponzi and all of you will lose, it behooves you to pawn it off on someone else - in this case the next generation (who will then have their own 2008 minute whereupon [unless someone calls their bluff] they will pawn that ponzi on to the next generation.

yup1 says

A large group of people being "poor" while an individual person is "rich" when
ALL of the credit money ever created is fake is pretty rediculous.

At the end of the day, money is just a representation of resources, (be them natural, political, or otherwise). In 2008, the worlds pool of bullshit was drained, and we were all exposed as swimming naked. Still, we, here in the US were still recognized as being the biggest, strongest, pack of grenades across its chest... So when we said "why dont we re-fill this pool, and lets all pretend it didnt happen" everyone else, recognized how powerless they were they nodded in agreement.

It wont always be this way. Eventually China or someone else will be big enough to call the shots. Im just not so sure that is going to happen while I happen to be on this planet.

yup1 says

Rising rates do not lead to higher home prices.

Real or nominal? In nominal terms, the record is not as clear as you think it is.

I dont have a graph for the US, but I do have tabular data, if you want to confirm it for the whole US. Either way, Im sure the people back in the 80s who decided to wait as interest rates hit 14-15-16 percent, watched in horror as nominal prices continued to slowly lurch upward.

underwaterman says

yup1 says

I wonder what home prices would be with 7-9% mortgages?

The market would collapse. Removing govt supporting 90% of all new mortgages underwriting or increasing interest rates or dumping shadow inventory at once will dramatically impact the housing market to the downside. We saw how quickly it dried up once the home buyer credit expired. It needs govt support to survive at all.

Yup! Watch the bond market. It's in the largest bubble in over 200 years and WILL burst because ALL economic bubbles bursts. The sheep won't know what hit them. Bonds have an inverse relationship with rates so you know what that means

Contrarian conjecture aside -- you're right, YUP1.

There will be no middle class income growth in America in the next decade. (Why would there be?)

tatupu70 says

yup1 says

Raw says

Home prices are not overpriced anymore.

So says those that own, those that rent believe the opposite, some of those that own (me) still believe the opposite. Home prices are being supported by low interest rates. What happens if rates rise?

If rates rise, that means unemployment will certainly have fallen and incomes will be up. So house prices will probably be rising as well.

Call it Crazy says

The only way house prices can rise with rising interest rates is if wages rise
accordingly.... and we know where wages have been all these past years.

Yep, and we know where interest rates have been all these past years. That's the point.

If you are betting that interest rates will rise sifnificantly while wages stay stagnant, then you are betting on a very unusual event occurring.

Just so you understand that you are the one predicting against history.

JodyChunder says

There will be no middle class income growth in America in the next decade.
(Why would there be?)

lol. US productivity continues to rise. The only reason there is no median income growth is because it's all going to the 1%. If Obama continues to make taxes more progressive, median income growth will return.

The FED has pretty much admitted that they will keep rates low until things/unemployment gets better. The current QE, they didn't even set a time limit-they can buy junk for all of eternity. There is no risk in the market for the big players.

The only thing that can happen, is if the dam breaks and the flood is large enough to bury even the FED. While unlikely, it may happen-but chances are slim. I think we are stuck at these low rates for a long time.

lostand confused says

The only thing that can happen, is if the dam breaks and the flood is large enough to bury even the FED. While unlikely, it may happen-but chances are slim. I think we are stuck at these low rates for a long time.

The Fed is the king of creating bubbles. The dam will break sooner or later.

tatupu70 says

JodyChunder says

There will be no middle class income growth in America in the next decade.

(Why would there be?)

lol. US productivity continues to rise. The only reason there is no median income growth is because it's all going to the 1%. If Obama continues to make taxes more progressive, median income growth will return.

I think this will be one vital solution to the problem--more money definitely needs to trickle down. That is crucial.

underwaterman says

And, more dumb ass anecdotal evidence ignoring the effect a 7.5% interest rate would have on leverage mortgage payments. Just more of the same BS miss roberta

Everyone understands the effect that higher interest rates has on mortgage payments. Believe me, we get it.

But we also understand the historical relationship between interest rates and wage inflation. Like I said earlier, interest rates don't rise and fall randomly--they move in response to macroeconomic factors. And those factors historically have also had an effect on wage inflation.

So, for you to completely ignore the historical relationship shows your ignorance.

It's another high jacked real estate thread by underwaterman. underwaterman says

Another ad hominem personal attack via my profitable investment.

I've yet to hear about your profitable investments, yet you want us all to tell you ours in great detail. So far all I've ever read you say is Real Estate bad, gold good, because Glenn Beck tells me all these other people have made fortunes from gold.

That's it, and yet you keep mucking up Real Estate threads with your psycho babble.

underwaterman says

Yeah, silly me. Wages causes interest rates to go up and down is what your stating. Seems to me the FED is having some kind of causal effect thru their ZIRP policies. Yes, wage inflation accounts for housing interest rates going from 6.5% in 2008 to 3.5% today. Yeah, right.

In a sense, it does. You are the one who keeps saying that wages are flat or falling for the last decade. Interest rates and wages move together, so it's not surprising that interest rates are falling.