patrick.net

I don't think we will hit bottom until the incentives are gone. Too much government involvement in the way of tax credits and FHA BS loans for us to find a true bottom. They want you to think this is bottom and buy, but I refuse to until the monkey business with housing stops.

Agree with Tude. It's impossible to call it a bottom because there is so much in play right now to prop up prices. Pull the plugs on those, see what happens, then we can talk of a market bottom if that is the case.

Def. not in 11229, 11230, 11235; with 2/3 "luxury*" Bedroom condos selling for 500K-1.4 million and old crusty single-family homes starting at 500K, it's far from the bottom here. I think the developers, agents and owners are still running on bubble vapor.

* Featured "luxuriates" include: in-door plumbing and sears/kenmore appliances.

klarek says

Agree with Tude. It’s impossible to call it a bottom because there is so much in play right now to prop up prices. Pull the plugs on those, see what happens, then we can talk of a market bottom if that is the case.

How can one even think of buying a house while the government is so actively propping up housing prices?

Can the government do this forever? If the government backs away prices must fall.

Nationwide, which is pretty non-specific, we may be at or near a bottom, but many (me included) expect a long, extended 'L' shape so-called "recovery". I.e. no serious increases for some time. I predict people expecting a big re-inflation (and there are many in SF bay area saying this) will be sorely disappointed.

In CA and SF bay area in particular, this tells you a lot, from today's Patrick news:
http://www.washingtonpost.com/wp-dyn/content/article/2009/09/08/AR2009090803507.html?ref=patrick.net

"The most severe problems have surfaced in states with the steepest price drops. About 75 percent of option ARMs financed homes in California, Florida, Nevada and Arizona, where prices have plunged on average 48 percent from the second quarter of 2006 to the first quarter of this year, according to Fitch."

There are a ton of over-paid houses in my area, often bought with option ARMs and prices have not fallen much ... YET!

Even with the tax credit home sales in Southern California fell by 11 percent in August.
The average "price increase" is less than the 8,000 dollar tax credit so it is really a price decrease and means nothing.
It should be interesting to see what happens after the tax credit goes away and the
"prime sales season" is over. Hopefully they won't create another tax credit for a while so we can see what
prices ought to be like.
I am seeing more "bank repo" open house signs on the weekends so I get the feeling that banks are worried about the tax credit ending. They apparently are taking back about 80 percent of foreclosed properties even though "investors" are supposed to be buying up everything. Sooner or later they will have to unload it all.

pinnacle says

Even with the tax credit home sales in Southern California fell by 11 percent in August.
The average “price increase” is less than the 8,000 dollar tax credit so it is really a price decrease and means nothing.
It should be interesting to see what happens after the tax credit goes away and the
“prime sales season” is over. Hopefully they won’t create another tax credit for a while so we can see what
prices ought to be like.
I am seeing more “bank repo” open house signs on the weekends so I get the feeling that banks are worried about the tax credit ending. They apparently are taking back about 80 percent of foreclosed properties even though “investors” are supposed to be buying up everything. Sooner or later they will have to unload it all.

Tax credit program will not be allowed to expire. When housing sales figure decline in the coming months - NAR will lobby Congress for program extension/expansion. I think that Congress will increase the amount from $8000 to at least $10,000.

It is interesting that they came up with 8,000 in the first place. If they wanted to stimulate sales, the five figure tax credit sounds much more lucrative.

The tax credit is not the big government intervention. Private banks are practically not backing mortgages. The government is backing something like 80% of all mortgages, and there still is the 3.5% downpayment nonsense.

The government is the only one with any skin in the housing game.

I agree with Tude. The government needs to get their grubby hands out of the market and the chips just need to fall where they may. We are prolonging the decrease in house prices. Lets just get it over and done with. When China stops lending the US money, then all h*ll will break lose. Then the government can't do anything!! We need to go back to reality. We are living in a fake economy.

I doubt we have hit bottom due to a few things.

1) we still have 19 or so million EMPTY houses in the USA. That's quite a number. Yes it isn't exactly a natural market but still. On my daily commute first I noticed an abandoned house...then I noticed one in foreclosure. Now I see one living in combination truck and tent!

2) Where will the baby boomers retire to? This has serious ramifications. How can everyone downsize? When people get older they buy fewer things not more. If they can't climb stairs how much sense does it make to have a bathroom or shower on the 2nd floor? etc

Tell me what could possibly cause prices to rise? Wages are still dropping, unemployment is still rising. People have lost a lot of their savings in the stock market. Banks are being more conservative in their lending. And even if the govt is still lending liberally, it's downright stingy compared to what the Countrywide's were doing during the boom. Credit is contracting. So someone please tell me what possible justification they have for house prices going up anytime soon. Stabilizing, maybe. But I think unemployment will keep going up and housing will keep going down. If interest rates jump for whatever reason house prices will crash even harder as people won't be able to qualify for as large of a loan.

If you think we've hit bottom, go buy a house?

Kevin says

If you think we’ve hit bottom, go buy a house?

Do you go out and buy everything that is a good price? If I put a good price on a pump will you go out and buy it?

I'm looking for value for my money. I probably could go out a buy a house tomorrow, but most of the stuff in my area is still, IMO, overpriced. That said, I am cognizant of my bias towards lower prices, and am trying to stay as objective as possible.

Prices in the county I live in have returned to 2004 levels. In the school district I had hoped to buy into, I have seen some home seelin for close to what they sold to in 2002 in some instances, but these typically are neglected (foreclosures) and need some work.

What it comes down to is, as much as I think that prices still need to come down more, given the income of the area, I don't think that they will come down as much as logic dictates they should, given the amount of government intervention going on.

Is this as good as it gets? or is this a false bottom. I can make the argument for the latter, but I fear it is the former. As much as I tell myself that most of the sales in the past six to twelve months have been to first time home-buyers, that many of these have been financed using FHA + the tax credit, and that it stands to reason that as much as 10% of these transactions may default in the next year (winter is setting in, and I doubt that all of the first time buyers had the foresight to consider heating costs when they were house hunting this spring)...

It could just be that spending 38 to 40% of one's gross income on housing is the new normal, and I can either keep up (and be house poor) or shut-up. (and keep renting where I am at).

Given that I need to make a decision on renewing my lease in the next few weeks, the decision (To by or not to buy, that is the question) has been weighing heavily on my mind.

At the very least I don't expect prices to go up sharply in the near future, but that urge to simply "get this overwith" and take the plunge into ownership is real, and it is hard to ignore.

EastCoastBubbleBoy says

I’m looking for value for my money. I probably could go out a buy a house tomorrow, but most of the stuff in my area is still, IMO, overpriced. That said, I am cognizant of my bias towards lower prices, and am trying to stay as objective as possible.
Prices in the county I live in have returned to 2004 levels. In the school district I had hoped to buy into, I have seen some home seelin for close to what they sold to in 2002 in some instances, but these typically are neglected (foreclosures) and need some work.
What it comes down to is, as much as I think that prices still need to come down more, given the income of the area, I don’t think that they will come down as much as logic dictates they should, given the amount of government intervention going on.
Is this as good as it gets? or is this a false bottom. I can make the argument for the latter, but I fear it is the former. As much as I tell myself that most of the sales in the past six to twelve months have been to first time home-buyers, that many of these have been financed using FHA + the tax credit, and that it stands to reason that as much as 10% of these transactions may default in the next year (winter is setting in, and I doubt that all of the first time buyers had the foresight to consider heating costs when they were house hunting this spring)…
It could just be that spending 38 to 40% of one’s gross income on housing is the new normal, and I can either keep up (and be house poor) or shut-up. (and keep renting where I am at).
Given that I need to make a decision on renewing my lease in the next few weeks, the decision (To by or not to buy, that is the question) has been weighing heavily on my mind.
At the very least I don’t expect prices to go up sharply in the near future, but that urge to simply “get this overwith” and take the plunge into ownership is real, and it is hard to ignore.

It is still regional my friend. IMO some parts of the country have already bottomed out(mostly low end houses where cash is enough) but correction is far from over from areas like in Bay area and Socal(High end is still few years to go due to no move up and very low jumbo loan availibility)

True, very true. I do my best not to disclose my location for privacy's sake, but needless to say, it's on the East Coast... and in an area that is still (somewhat) overpriced.

We are no where near bottom, at least in the Baltimore - Washington DC area.

I think it's premature to call a bottom because we don't know the direction of the economy--our retail economy?
No doubt realtors and Wall St. cheerleaders would lead you to believe the worst is passed--so buy, buy, buy! Damn.
I don't buy it for a second. We haven't quantified the downside on the biggest bubble of all: the credit bubble.
Has the credit contraction backwashed over corporate salaries and relevant to SFBA--venture capital? Not yet?
I'll buy we're at bottom when the BS fog clears and we finally see the total sum of damages--not before then.
But that's just me.

What Tude said. The incentives the goverment is giving are completely distorting the market. Barney Frank just sayed it was *policy* to write bad FHA loans to keep prices from falling too fast. And just like cash-for-clunkers the policies are pulling forward demand. Once that pull is gone, the market will be weak again.

Still, I think some markets are indeed close to the scraping bottom phase, and won't fall much more. That's assuming we don't go into a double dip recession, which is a big if.

High end markets like the city of San Francisco? We're just getting started. My friend who's been in the market for 2 years told me a few days ago that 10% down has evaporated (Used to be 80% first, 10% second, 10% down for many first time buyers on standard loans), and now the only deals getting done are 80/20. The bottom just dropped out of the market, and the foreclosures on options ARM borrowers isn't even underway yet.

Gosh, I better rush out and buy right now! If the bottom is in it will only be a matter of weeks before the market is back to it's bubble valuations!

With all the unemployed suddenly employed again there's sure to be a mad scramble for all this oversold housing.

Can someone recommend a good realtor to help me?

lmao ....... welcome to the club BrotherBrian

HISTORY HAS SHOWN A LONG CYCLE GOING FROM INFLATION TO DEFLATION CLEAR BACK TO THE REVOLUTIONARY WAR. IN TERMS OF ECONOMIC THEORY, JAPAN ADOPTED MONETARISM FIRST, & WAS CITED IN FRIEDMANS BOOK ABOUT HOW TO CURE INFLATION: "FREE TO CHOOSE", WRITTEN BACK IN THE 1980'S. WHAT FRIEDMAN'S THEORIES OF MONETARISM NEVER FORSAW WERE THE LONGER TERM CONSEQUENCES OF MONETARISM: DEFLATION IN JAPAN. AT THE FED, WE USE THE SAME BASIC MONETARISTIC MODEL AS JAPAN. THUS, ITS HARD TO SEE HOW WE ARE GOING TO GET DIFFERENT RESULTS USING THE SAME APPROACH. MAYBE HISTORY, JAPAN, & HUMAN NATURE HAVE ALL CHANGED--SO "THIS TIME ITS DIFFERENT", BUT AGAIN, THAT IS HARD TO SEE OR BELIEVE....GIVEN THE CONTINUING CONSEQUENCES WE SEE ON A DAILY BASIS TO OUR ECONOMY SINCE THE BUBBLE HAS POPPED................ERIC WALTON

BrotherBrian says

Gosh, I better rush out and buy right now! If the bottom is in it will only be a matter of weeks before the market is back to it’s bubble valuations!
With all the unemployed suddenly employed again there’s sure to be a mad scramble for all this oversold housing.
Can someone recommend a good realtor to help me?

I know a RE guy, but I think he is buried in mortgage troubles and is busy trying to rent out his garage to someone.

To look at it another way, what are the pros and cons of buying now vs later.

If you buy now and prices go up, they will likely go up at a more normal rate, probably in the 4-7% range that we have seen over the 20 years or so (minus the bubble times) If you buy now and prices go down, the bottom is unknown, and losses could be fairly large.

Your losses likely out weigh buying now, vs locking in a years worth of gains. Don't try and catch the bottom, catch on the way up, when you are sure things are stable and going to return to a stable uptick. You'll lose the absolute bottom, but hopefully won't take a large loss. On the flip side you add a year to your mortgage and you retire it one year later in life.

The complaint about housing prices jumping in the bay area, different people moving in and people moving here en mass is just a city growing up. Instead of a single neighbourhood changing, it's an entire city. If people don't like what the majority have "done' to the bay area they can obviously leave and go somewhere else and find a city with demographics that they enjoy. But it's the masses who decide the values on homes and what they're willing to pay or give up.

So far only about 3 percent of mortgage modifications have been made permanent so it it does not look like
the flood of foreclosures is going to stop any time soon.
This does not even include the Alt-A and Option Arm loan problems coming in the next year.
Also 20 percent of California workers will be unable to get loans due to unemployment and
wage cuts that will make them "bad credit risks" for several years.