patrick.net

Jesus Christ man, you cannot be saved. Forget it. In your imaginary world, you win. In the real world, everybody loses, including you.

agree with TOB aka thunderlips11

thunderlips11,

>>Why was only the Gov’t willing to buy them?

Well, according to SG, the problem was that the banks were unwilling to SELL. And you say nobody were willing to BUY except Gov. The truth must be somewhere in between.

Why does SG (correction: RFESJ) say that TL11 is TOB? Is there some secret text web-alyzer one can run?

Some people just cannot be bothered with facts, and will deny them until their last gasp. There's not much I can do about that.

Yes, the Fed has been buying over a trillion in mortgage backed securities from the banks. Here is info on the program on the NY Fed's site: http://www.newyorkfed.org/markets/mbs_FAQ.HTML

The Fed's stated goal for this program is to "The goal of the program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally."

The program began in January, arguably well after the "credit crunch" had eased a bit. Given that other Fed and government policies have been aimed at propping up the value of these toxic assets (PPIP, removing the mark to market requirement, etc), we can only assume that the Fed paid at or near top dollar for these assets. At discount prices, there would have likely been ample private buyers.

No matter how you cut it...this is what the FED has being doing : providing capital for an entity which otherwise will go broke. You and me will never get a loan form govt if we screw up but the banks have been getting free capital even though they have been screwing up big time. But banks always had access to capital from govt.the only difference is that they get it now based on thier toxic assets...but does it really matter ? free access to govt money is not new for banks.

PS, if you haven't seen this interview with William K. Black, the senior regulator who cracked the the S&L scandal, it's worth the watch: http://www.pbs.org/moyers/journal/04032009/watch.html. It's a pretty scathing critique of the banking system and of Paulson/Geithner's handling of the bailouts.

also , can someone tell me how much we (GOVT) actually lost ( dollars) during the bank bailout ?
I am not talking about the loans...etc. just give me the actual cash equivalent that we will never get back.

renter for ever_san jose - what matters is that this time, banks and bank bond and shareholders are being funneled huge profits directly from government coffers. In the past (S&L crisis, etc), bailouts merely went to depositors, and the banks/bondholders/shareholders were left with nothing.

The question wasn't whether the government would be stuck paying for the bank screwups, it was how much they would pay and whether that payment would include handouts to the very same people that caused the problem in the first place through their incompetence and malfeasance.

renter for ever_san jose - it's hard to pin down since the bailout is still in progress. And it depends on what the Fed and others can eventually get for all the mortgage backed securities they purchased. If you assume 50 cents on the dollar (they currently would be lucky to get 30 cents on the dollar), then they would "lose" 600 or 700 billion from the MBS purchases alone. Estimates for PPIP run the gamut from an actual modest profit to 1-2 trillion losses.

So who knows. That's why it's all so scary.

Hey Wanker...anyone point out to you that the clip that you posted was about national prices? As for the Westside of LA? Prices are falling and will continue to fall. Up until a short time ago the requirements to get a loan for a $4M house was $200K down with $400K in income. Now it is $1.2M down with $700K in income. That's going to affect prices.

Just because people have delusions about the value of their property doesn't make it true.

http://www.redfin.com/CA/Los-Angeles/120-S-Anita-Ave-90049/home/6838669

The people who own the house above seem to believe that it has increased in value by $499K since they bought it in 2005. The fact that it has been on the market for 218 days shows that they are delusional.

Oh, and the house right next door, same McMansion style, slightly smaller, is has been on the market for 24 days and is listed at $2.985K.

At the height of the boom, houses on Anita sold the day they went on the market (including the first one I listed). If you want to belive that the bust is over on the westside of LA, go right ahead. But you are also...delusional.

No way, the Westside is immune. Prices never drop here. We're sprinkled in magical pixie dust. We have lots of "entertainment" types, and you KNOW they're all rolling in money. Things are different here. It's always sunny and warm! (Except at the beach in the summer... and spring... and winter.) Did I mention the pixie dust already?

guys...what is the expectation on this board.
What would make you guys happy ??

1) prices 50% less than long term trend of case shiller index
2) prices 20% less than long term trend of case shiller index
3) prices in line with long term trend of case shiller index

I am getting sick of the pessimism here..you guys are sounding like the same bunch of irrational people who use to believe that housing will go up for ever during housing bubble.

Please do me and others a favor and look at the graphs :http://www.recharts.com/cme.html (scroll to the bottom)

rational1 says

Hey Wanker…anyone point out to you that the clip that you posted was about national prices? As for the Westside of LA? Prices are falling and will continue to fall. Up until a short time ago the requirements to get a loan for a $4M house was $200K down with $400K in income. Now it is $1.2M down with $700K in income. That’s going to affect prices.
Just because people have delusions about the value of their property doesn’t make it true.
http://www.redfin.com/CA/Los-Angeles/120-S-Anita-Ave-90049/home/6838669
The people who own the house above seem to believe that it has increased in value by $499K since they bought it in 2005. The fact that it has been on the market for 218 days shows that they are delusional.
Oh, and the house right next door, same McMansion style, slightly smaller, is has been on the market for 24 days and is listed at $2.985K.
At the height of the boom, houses on Anita sold the day they went on the market (including the first one I listed). If you want to belive that the bust is over on the westside of LA, go right ahead. But you are also…delusional.

irrational1, I realize the article was written regarding national prices. Thanks for pointing out the obvious. Secondly, let me know when the houses in Brentwood are available for $400K. I'll pick up a baker's dozen.

renter for ever_san jose says

guys…what is the expectation on this board.

What would make you guys happy ??
1) prices 50% less than long term trend of case shiller index

2) prices 20% less than long term trend of case shiller index

3) prices in line with long term trend of case shiller index
I am getting sick of the pessimism here..you guys are sounding like the same bunch of irrational people who use to believe that housing will go up for ever during housing bubble.
Please do me and others a favor and look at the graphs :http://www.recharts.com/cme.html (scroll to the bottom)

My sentiments, exactly.

I don't believe it's that difficult to guess where prices might bottom. Check out the price in a given area in 1999, then adjust for inflation. Since prices tracked inflation for the prior 100 years, there's good reason to assume they will revert to that trend. In fact, I would say, any argument that prices will NOT revert to the 100 year trend should include substantial data to back up such a claim, as it would represent a complete break from established market history.

We know why prices bubbled, and most of the forces that led to the bubble are now absent. Given that it took a rather unique confluence of events to cause such an extreme diversion from trend levels in the first place, what do you believe could potentially cause prices to keep from reverting?

srla says

Since prices tracked inflation for the prior 100 years, there’s good reason to assume they will revert to that trend.

And as some have pointed out, it may overshoot "the trend" on the way down before any appreciation starts.

Yeah, I would assume it would overshoot too, based mainly on the extreme nature of the bubble itself. In general, the more extreme the bubble on the upside, the more extreme the downside.

Dr. Housing Bubble has accumulated a ton of data that indicates the other shoe is about to drop in So Cal, mainly in the middle and upper end. I have yet to see any real data that would counter his argument. In fact, he and others predicted an upward trend in the median many months ago, as more houses begin to sell in the higher priced areas.

If I had to guess, I would say a bottom might be in in the I.E. (I sure hope it is in, for family that live out there!) But I can't see us being anywhere near a bottom here in L.A.

There are 3 foreclosures within a block of my house that have been empty from 6 to 10 months. All are listed for around 35-45% off their last sale price, and yet they have found no buyers, despite signs being up and one of the banks even springing to mow the lawn! (talk about staging.) Other non REO properties have sold for around 40% below peak, but a few more are just sitting there and have been for months.

It sure doesn't feel like a bottom in these parts, especially since many listing prices are still about 2-3 times the 2001 values.

I think the main variable is: Is it cheaper to buy or rent the same house.

Where I live (Lone Rock, WI) I bought a house because my interest, taxes, maint, insur., etc. add up to $654 per month. This is for a nice 3 bd/2 bath house.

I would have to pay $850 per month to rent the same type of property. So for me, it's a non brainer to buy vs rent.

Now from where I came (Long Beach, CA) I would most likely rent vs buy as it would be cheaper monthly to rent.

This way of dealing with the housing bubble takes the appreciation-depreciation out of it for me.

peace out,

don
thelittleguylobby.org

Yeah, I would assume it would overshoot too, based mainly on the extreme nature of the bubble itself. In general, the more extreme the bubble on the upside, the more extreme the downside

now thats called irrational thought process...once it undershoots, i'll buy and then sell when it over shoots ( since the previous event was undershoot) again and do this multiple times and be multi millionaire...common guys its not a damped sinusoidal wave! if the world was so simple, everybody would be millionaires.
My suggestion : If you need a home and like it and the shiller index in your area is in line with long term trend...buy it.

renter for ever_san jose - it's not an irrational thought process, it's simply an empirical observation made by a number of economists. And we're not talking a perpetual motion machine here. If you have evidence to the contrary, then by all means, present it.

And we're not talking a perpetual motion machine or a pendulum here. In fact, it's more like a roller coaster. This bubble was inflated by a series of unique events and policies and a by rather unique mindset. Now that these things are largely absent, the bubble is deflating and returning to mean. Bubbles are driven by emotion and fear both on the upside and on the down. One reason larger bubbles tend to overshoot is that people panic on the downside once they realize how fast prices are falling or how far they have already fallen.

This has been documented in many past bubbles.

Of course, market timing is a whole other story as you never know just where a bottom will be. But there seems to be a very good chance there will be a prolonged flat period after this bubble, so while you might not be able to time the bottom, there is no reason to rush to by "before prices rebound" either.

renter for ever_san jose says

guys…what is the expectation on this board.
What would make you guys happy ??
1) prices 50% less than long term trend of case shiller index
2) prices 20% less than long term trend of case shiller index
3) prices in line with long term trend of case shiller index
I am getting sick of the pessimism here..you guys are sounding like the same bunch of irrational people who use to believe that housing will go up for ever during housing bubble.
Please do me and others a favor and look at the graphs :http://www.recharts.com/cme.html (scroll to the bottom)

I'm just curious, but why do you come to a board that clearly states Housing Crash Continues and then get "sick of the pessimism" when people post things about prices continuing to decline? I don't go to a Red Sox board expecting them to say positive things about the Yankees.

As for your question, I just want prices to be in line with rents or at least close. Right now I'd have to pay $4-5k for a mortgage when I could rent the same place for $2-3k. I don't think I'm being unreasonable for waiting.

renter for ever_san jose says

I am getting sick of the pessimism here..you guys are sounding like the same bunch of irrational people who use to believe that housing will go up for ever during housing bubble.

Guys, let's cheer up for renter for ever_san_jose, and give him this news:
Silicon Valley real estate market: The bidding war is back

The news article says:

He said the county has only 22 days worth of unsold inventory under $450,000 — measured by dividing the number of homes on the market by their current sales pace. That's not enough lower-priced homes to meet the current demand.

To Calhoun, that looks like a market "on fire."

Bidding war is back! Offer over asking is back! We are back to 2004 again! Only 22 days worth of inventory! Cheer!!!

But, Ooops!

I've said it before, and I will have to repeat: you can't have a civilized dialouge with anyone calling themselves Wanker. And why, Wanker, do you look like an African American woman? What are you really trying to tell everyone?

Tell us about your mother.

P2D2 - Hahah. Of course, I'm not really sure how assuming housing will revert to trend or to rental parity is pessimistic. For anyone who doesn't own a house yet or who wants to move from a lower priced market, it's great news. It's also great news for the next generation of homebuyers, who will only have to pay close to what there parents paid for houses, adjusted for inflation, rather than some insane proportion of their salary.

Of course, the government is hell bent on re-inflating prices, but just because they want to ignore attendant harm caused to the above mentioned groups doesn't mean that damage isn't being inflected. So yay to the falling prices. It's great that actual supply and demand will once again determine housing prices rather than speculative frenzy.

Bubbles are driven by emotion and fear both on the upside and on the down. One reason larger bubbles tend to overshoot is that people panic on the downside once they realize how fast prices are falling or how far they have already fallen

I agree that there is some truth to the above statement but are you going to count on that and wait for the undershoot just like after the dot com bust in real estate, people waited for housing to overshoot.
How would you know that housing has bottomed ? what % of upward trend would convince you ? 10% 20% 30% ?

renter for ever_san jose says

How would you know that housing has bottomed ? what % of upward trend would convince you ? 10% 20% 30% ?

I don't think anybody here, whom you refer "pessimist", claimed bottom. There are plenty of signs of farther fall - unemployment, foreclosures, Alt-A. Bottom call is coming from only those who were denial even a few months back. First they kept on denying - "Market is great and healthy. I don't see any crash here.". Then suddenly they changed their gears and started shouting "it's bottom, it's bottom". Well, if market did not crash (and so healthy), where is the bottom coming from?

srla says

I don’t believe it’s that difficult to guess where prices might bottom. Check out the price in a given area in 1999, then adjust for inflation.

You are missing some critical factors
1. Interest rates (affordability depends on both prices and interest rate). The interest rates in 1999 where around 8%.
2. Migration factors (ie jobs)
3. Economic factors
4. Human factor

Although from a 1 million mile few things look simple, they are not. I beleive that the government is often over simplifies economic problems which is why almost every time they change interest rates in attempts to fix a problem a new and bigger problem is often created.

I went to the fourth open house at a very nice condo in Pasadena that has been on the market for more than a year.
The price keeps dropping so I don't think there are "multiple offers" yet.
In another year it might be down to a reasonable price.

I thought Buffett thought Obama walked on water. Whats up with this?

http://finance.yahoo.com/tech-ticker/article/306287/Buffett-We%27re-Going-to-Be-Crushed-Under-Mountain-of-Debt?tickers=tbt,tlt,udn,uup,brk-a,brk-b,spy&sec=topStories&pos=9&asset=&ccode=

2 weeks left of the summer selling season. By Labor Day, we will see an entirely different market on the Westside of Los Angeles. Sales will drop dramatically, with foreclosures being the talk of the town. Alt-A and Prime Loan Tsunami is headed this way.

www.westsideremeltdown.blogspot.com

http://finance.yahoo.com/news/US-July-existing-home-sale-rb-1135231752.html?x=0&sec=topStories&pos=main&asset=&ccode=

"WASHINGTON (Reuters) - Sales of previously owned U.S. homes notched their fastest pace in nearly two years in July, an industry survey showed on Friday, the strongest sign yet that housing was pulling out of a three-year slump.

The National Association of Realtors said that sales jumped 7.2 percent to an annual rate of 5.24 million units, the highest since August 2007, beating market expectations for a 5 million unit pace. Sales were at a 4.89 million pace in June.

July's percentage increase was the largest monthly gain since the series started in 1999 and marked the fourth straight monthly advance. The last time sales rose for four consecutive months was in June 2004, the NAR said."

~~~snip~~~

""Existing home sales data show that we are moving in the right direction," said Kevin Flanagan, fixed income strategist for Global Wealth Management at Morgan Stanley in Purchase, New York.

Compared to July last year, sales rose 5.0 percent. The improvement in sales in July was broad based with single-family home sales rising 6.5 percent to annual rate of 4.61 million units and multifamily dwellings surging 12.5 percent to a 630,000 unit rate."

I know, I know~~~~I want to be able to buy a house in The Palisades for $400K, too. But we aren't there yet. Perhaps if we wait a year or two, prices in The Palisades, Brentwood and Bel Air will drop low enough where a box~boy at Home Depot will be able to buy his dream home. (tongue planted firmly in cheek)

The wanker is on his pump-and-dump mission again. Need I say he is wrong?

Look at the NAS (non-seasonally-adjusted) graph under the following link.

http://www.calculatedriskblog.com/2009/08/existing-home-sales-increase-in-july.html

You will see that 2009 home sales volume were up by some piddly amount relative to 2008 in
JUNE-JULY only. Compare volumes in 2009 with volumes in 2006 and 2007. Note that a large percentage
of sales were low-end houses in badly ravaged states and locations. Keep in mind that some people are getting
all hot and bothered about a $8k tax credit that expires SOON.

Now sit back and wait for the new wave of foreclosures to hit the market. And watch prices
fall, along with volume. Watch the Case-Schiller index drop again.

Wanker -- are you a realtor or otherwise derive your income from housing transactions?

@justmoi, No, I'm not a realtor. No need to be a realtor to read the news that the economy is picking up and the real estate market may have hit bottom in certain markets.

WillyWanker says

No need to be a realtor to read the news that the economy is picking up and the real estate market may have hit bottom in certain markets.

LOL! Is this the new metric for gauging economy - some numbers from NARRRRRRRRRRR?

Regarding hitting bottom, the operative word is "certain market". Certain lower end areas may have hit bottom, but "Palisades, Brentwood and Bel Air" are definitely not one of them.

Expensive homes miss the recovery
Why Home Prices Will Continue To Fall
High-End Homes Frozen Out of Budding Housing Rebound

WillyWanker says

I know, I know~~~~I want to be able to buy a house in The Palisades for $400K, too.

Tell me about Palisades. How is it doing there? Lots of overbidding? Home value is appreciating in 10%?

Wanker sez (my emphasis):

>>the real estate market MAY have hit bottom in CERTAIN markets

That's like me saying "There exists a stock which MAY (already) have hit bottom for the next 5 years". In fact, I would not be too surprised if such a stock exists. But does that mean that people should start "getting into stocks". No, it doesn't.

There is an abyss of difference between "there exists an area where prices have already hit bottom" and "for all areas, prices have hit bottom".

You don't need to be a logician to understand there is a fundamental difference between "for all" and "there exists".

My problem with Wanker is the sheer dishonesty of pumping the real estate market, while at the same time hiding by weasel phrases such as "may have" and "certain markets".

It is clear that Wanker does not really want the reader to understand the fine print. The fine print is only there to give the Wanker cover when prices drop again. The overall message he is trying to send is "it is a good time to buy".

Wanker, you say you are not a Realtor? You did not answer the full question: Do you derive income, dorectly or indirectly, from RE transactions taking place?

I am sorry but someone who calls himself 'wanker' is not exactly asking for respect. WW I am not posting this to insult you, just to point out that as someone from UK I cannot get passed it:

* Main Entry: wank·er
* Pronunciation: \ˈwaŋ-kər\
* Function: noun
* Date: circa 1961

1 chiefly British usually vulgar : a person who masturbates
2 chiefly British usually vulgar : jerk, dolt

OK, having pointed this out, I totally agree with what justme said. A general housing rebound is not here yet and I do think anybody can say when it will arrive.

RentorBuy says

2 chiefly British usually vulgar : jerk, dolt

Interesting. I thought that term was merely the second part of a compound word that refers to an East Ender. After all, when has anyone heard the term "Cockney" without the term "Wanker" immediately following?

California removed from bond-rating watch list

http://www.latimes.com/news/local/la-me-california-iou22-2009aug22,0,4684215.story?track=rss

Slowly but surely........