patrick.net

http://finance.yahoo.com/echarts?s=SRS+Interactive#symbol=srs;range=1m;compare=iyr;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

I expect that RE downtrend to continue. IMO RE can only hold some if outperformed by another broad-based bull run which would lift all boats and that doesn't seem likely. Plant yams now!!

tatupu70 says

Fair valuation is a very subjective term. Each person has a different answer. A 5BR house probably has only slightly more value than a 3BR house to a family of 3, but to a family of 5 or 6, it has a great deal more value.

Or a stock--someone who believes that AAPL will double earnings next year will value the stock much more than someone who thinks earnings will stay flat.

There is no "right" answer for intrinsic value.

How wrong you are!

There is only one answer, one figure, you can come up with when pricing a share of stock, bond or option. Its basic finance question any finance/accounting major know. Its not subjective and to think it is pure stupidity.

APOCALYPSEFUCKisShostikovitch says

Who comes up with these show concepts? This is obscenely bad. Let's get people to guess on the price of crap that no sane person would want near them. Duh.

How else does the public view 'the right price" when buying a home.

It's a possibility - the numbers look ugly.

the landlord of the house we used to rent had bought in and around 1988-89' and told me about how much value the house lost afterwards. Bubbles are a part of the Bay Area's DNA. Usually expect to see bubbles inflate and deflate in 5-7 year cycles. That's how its been forever here.

thomaswong.1986 says

There is only one answer, one figure, you can come up with when pricing a share of stock, bond or option. Its basic finance question any finance/accounting major know. Its not subjective and to think it is pure stupidity.

You've got to be kidding me. You've obviously never done a valuation of a stock, bond, or option. It is basic finance--I can't believe you are so ill informed.

In order to do a proper valuation you must ESTIMATE future cash flows. And discount rate. Five people that do a valuation will almost certainly come up with five different answers.

Is it coming back now Thomas?

tatupu70 says

Homeboy says

Not a strawman. It's the logical conclusion of your line of reasoning. You believe that GM had to be bailed out because of the risk that its employees would lose their jobs, and therefore decrease demand for cars, right? That IS what you said, isn't it?

No--don't think so. Can you link where I said that? Because in this very thread I believe I've said the exact opposite. So it is most definitely a strawman.

Can I link to where you said that? Sure - right here:

tatupu70 says

Perhaps it would have been better stated--keeps demand from falling. When you're laid off, your demand for a new car is probably reduced. Wouldn't you agree?

So you are claiming that your statement that GM laying off employees reduces demand, is the "opposite" of saying that GM laying off employees would reduce demand? Um, yeah - that makes sense. LOL. Did you get confused as to what the word "opposite" means?

NR said: So what about Stockton and Sacramento?
Inventory is up by 25% in Sacramento (according to Redfin, year to year for Nov) with a slight decline in homes sold. PPSF is holding steady.

OK--let me get this straight. Stating the obvious fact that:

People losing their jobs decreases demand

is the same as saying:

GM had to be bailed out because of the risk that employees would lose their jobs??

Where in the hell do you get that???

Homeboy says

So you are claiming that your statement that GM laying off employees reduces demand, is the "opposite" of saying that GM laying off employees would reduce demand? Um, yeah - that makes sense. LOL. Did you get confused as to what the word "opposite" means?

No, I'm saying--stating an obvious fact that people wihtout jobs are less likely to buy new cars than people with jobs, is not the same as my opinion as to whether GM should have been bailed out or not.

The effect that GM ceasing to operate would have on unemployment is one factor in the bailout decision (or my opinion of the decision at least), but it's not the only one. As I said earlier, most likely other factors are more important.

Do you see now?

tatupu70 says

In any event--all time periods aren't equal. A company going bankrupt when unemployment is low is not nearly the same as if the country is on the verge of a depression.

It also depends why the company has to declare bankruptcy. Every case is different.

Exactly. It would have been different if market forces had necessitated their bankruptcy, but it was the spiral of the financial system at the heart of it.

In any case, the Obama administration did gently guide them into bankruptcy, as opposed to allowing the entire system to go into a death spiral.

If the economy had been healthier, I wouldn't doubt they would have been allowed to fail. We could have absorbed that, and more importantly, there would have been willing buyers. I don't recall anyone being eager to buy an automotive megacorp in '09, as many investors wouldn't even buy shares at $1...even the famed Ford stock was worthless.

CL says

Exactly. It would have been different if market forces had necessitated their bankruptcy, but it was the spiral of the financial system at the heart of it.

Those were market forces necessitating the leveraged into bankruptcy. In fact tightening credit is a poster boy of a market force example.

CL says

In any case, the Obama administration did gently guide them into bankruptcy, as opposed to allowing the entire system to go into a death spiral.

Lots of other companies went belly up, GM was not in special in any case. Usually bailouts and crony subsidies like this happen in backdoor negotiations out of fear of stirring up a political scandal, and they are illegal. What this did is setting a precedent for the president to come in openly like a fascist/corporatist dictator and pick winners and losers, blatantly disregarding the rule of law and fucking over people who thought they had a contract while turning the whole affair into a PR stunt. This alone was grounds for impeachment (and yes, Bush gave plenty of reasons for impeachment as well).

edvard2 says

Medians mean everything, sorry. After actually buying a house and working
with an experienced realtor I can tell you that medians are used not only
locally, but even on a neighborhood by neighborhood basis: recent home sales are
combined to come up with current market values for a particular home for sale in
that era. When combining recent home sales, that means their median prices are
used as a benchmark. With that system this is how values rise in lockstep.

I don't think the medians were that relevant for the past few years when investors, speculation, and the proliferation of being priced out of the market were running rampant.

Analyzer says

I don't think the medians were that relevant for the past few years when investors, speculation, and the proliferation of being priced out of the market were running rampant.

They were because knowing the medians ( average house price) is what contributed mightily to the psychological elements of the bubble. Basically knowing what these averages were what caused people to either get greedy, or panic by the fear of being priced out forever. They heard reports on the radio- that "prices had risen xxx% last month" and so on.

edvard2 says

And yes- we are very much in a bubble.

I think the cost of living regarding shelter is high in bay area whether it's renting or owning. Back during "official" bubble days of mid 2000s however, the annual rents ratio was higher. Nowadays, the ratios are more reasonable but it's only because the rents are so much higher compared to back then.

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

Say hey! This was in the Wall Street Journal on March 30, 1999. Note "... how much it will buy."

Holy cow/interesting/compelling ...!

And where is it up to date??? Right here ... see the first chart shown in this thread.
Recent Dow day is Monday, December 16, 2013 __ Level is 101.6

WOW! It is hideous that this is hidden! Is there any such "Homes, Inflation Adjusted"? Yes! This was in the New York Times on August 27, 2006:

And up to date (by me) is here:
http://patrick.net/?p=1219038&c=999083#comment-999083

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

And http://patrick.net/?p=1230886

Looking at how strong the real estate market came back, it seems we didn't have a bubble.

Memories are apparently short. People seem to be forgetting that from 2003-2007, the bubble was ALL anyone talked about at dinner parties. I'm starting to hear some of that same talk now. We might be towards the earlier side of a new bubble, but its here for sure and it like all the others will run its course.

edvard2 says

Memories are apparently short.

LOL! and that is the most remarkable part about bubbles... any bubble !

The amount of denial is so blatant..

tatupu70 says

You've got to be kidding me. You've obviously never done a valuation of a stock, bond, or option. It is basic finance--I can't believe you are so ill informed.

In order to do a proper valuation you must ESTIMATE future cash flows. And discount rate. Five people that do a valuation will almost certainly come up with five different answers.

Is it coming back now Thomas?

I just have to laugh when I read this.. to even flunk a simple bond valuation is unthinkable... there are no 5 different answers!

Its remarkable to really see the people here, neck deep in RE, they banked

everything on it..

It goes down... it goes down really bad for these folks... why they are deep in denial !

thomaswong.1986 says

I just have to laugh when I read this.. to even flunk a simple bond valuation is unthinkable... there are no 5 different answers!

Again-there is absolutely no way you are a controller. None. You lack the most basic accounting and finance skills.

Rew says

I'll play!

You add all the total home sale prices up and divide by the total number of sales. This gives you a median home price.

Why they are meaningless: because if you sell a few very expensive houses, or many many more affordable houses, the median will be about the same. So, the median itself doesn't tell us what the market is doing or made up of at all.

You're simplifying this to make a point. Yes- there are indeed overall medians for overall housing markets on a national, state, regional, metro, city,and neighborhood. Likewise there are also median statistics for upper, lower and medium levels of housing: for example, what the average 3 bedroom, 2 bath home sells for in a given neighborhood.

It is the statistical collection of these medians that determine current value of any given area. If that wasn't true then someone could say: " Well, my neighbor's house sold for $250,000... so I'm going to put mine on sale for a Million!" Of course you wouldn't do that: You would price based on studying your local market-aka- what is the MEDIAN that the homes in your area are selling at.

Again- this is super, super basic fundamental economics.

Its important to understand how mathematics and economics go hand in hand.

tatupu70 says

I just have to laugh when I read this.. to even flunk a simple bond valuation is unthinkable... there are no 5 different answers!

Again-there is absolutely no way you are a controller. None. You lack the most basic accounting and finance skills.

Thats OK...I will have a good laugh and continue with my prosperous career...

But I will know YOU couldnt pass the CPA or CFA exam because you cant do a simple Bond valuation problem and you come up with 5 different answers.

thomaswong.1986 says

But I will know YOU couldnt pass the CPA or CFA exam because you cant do a simple Bond valuation problem and you come up with 5 different answers.

I explained how the bond valuation is done and also why different people will get different answers (in the real world). On an exam, there is one answer because all the variables are provided for you. In the real world, when you have to estimate, different people will get different answers.

If you think I'm wrong, please explain why. Otherwise, I'll assume you don't know...

tatupu70 says

I explained how the bond valuation is done and also why different people will get different answers (in the real world). On an exam, there is one answer because all the variables are provided for you. In the real world, when you have to estimate, different people will get different answers.

If you think I'm wrong, please explain why. Otherwise, I'll assume you don't know...

Im not going to explain jack fucking shit cause you dont know how to do a simple valuation of Future cash flow...... your neck deep in RE and like many in denial...

You made your own noose, now hang from it.

tatupu70 says

OK--let me get this straight. Stating the obvious fact that:

People losing their jobs decreases demand

is the same as saying:

GM had to be bailed out because of the risk that employees would lose their jobs??

Where in the hell do you get that???

Um, because that's the subject of this thread. If CL argues that the bailout was necessary to preserve demand, and you chime in and ALSO say that saving jobs preserves demand, then yeah, it sounds a bit like you're arguing in favor of the bailout.

But I guess you aren't; you're just being a disingenuous troll arguing only for the sake of argument.

CL says

In any case, the Obama administration did gently guide them into bankruptcy, as opposed to allowing the entire system to go into a death spiral.

Tell that to the Bondholders about "Gently"... whats that supposed to mean anyway
vs a "Reorganization Bankruptcy"..... how is that a death spiral ?

What death spiral did PG&E go through.. why are they still around ?

http://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization

Homeboy says

Um, because that's the subject of this thread. If CL argues that the bailout was necessary to preserve demand, and you chime in and ALSO say that saving jobs preserves demand, then yeah, it sounds a bit like you're arguing in favor of the bailout.

Seems like it might be a terrible idea if the Government is trying to stave off collapse and to contain the damage, that they would just allow an even more costly disaster to simply "take its course."

Further, wasn't allowing Lehman to collapse the previous administration's biggest economic regret? Didn't that cause a whole lot of panic? The free-marketeers suddenly weren't into that creative destruction mantra they spout to get the votes of the rightwing electorate. They're all Keynesians at heart.

thomaswong.1986 says

"Gently"... whats that supposed to mean anyway

Even in the link you provided, Lehman and Wamu were two of the top 4 largest bks in history. If GM were to suddenly collapse, I think it's reasonable to believe that we would have had much longer and painful turmoil. But who cares, as long as we have ideological purity, embraced by a minority!

thomaswong.1986 says

If home prices didnt fall,, how do you explain the large % of homes that sold for a loss?

I never said they didn't fall. They most assuredly did.

edvard2 says

It is the statistical collection of these medians that determine current value of any given area. If that wasn't true then someone could say: " Well, my neighbor's house sold for $250,000... so I'm going to put mine on sale for a Million!" Of course you wouldn't do that: You would price based on studying your local market-aka- what is the MEDIAN that the homes in your area are selling at.

This is a comparative price, NOT a median. Comps ARE important for price determination ... Medians are not.

Both do not tell you anything predictive about market health, bubbles, future etc.

thomaswong.1986 says

Im not going to explain jack fucking shit cause you dont know how to do a simple valuation of Future cash flow...... your neck deep in RE and like many in denial...

You made your own noose, now hang from it.

That's what I expected. You don't know.

Homeboy says

Um, because that's the subject of this thread. If CL argues that the bailout was necessary to preserve demand, and you chime in and ALSO say that saving jobs preserves demand, then yeah, it sounds a bit like you're arguing in favor of the bailout.

Try reading my comment next time and you won't make that mistake.

The subject of the thread is how much the bailout cost the taxpayers. And lost tax revenue is most definitely an appropriate subject for discussion. So you're pretty much 0-2.

If you'd calm down, you might not make that mistake next time...

CL says

Further, wasn't allowing Lehman to collapse the previous administration's biggest economic regret? Didn't that cause a whole lot of panic? The free-marketeers suddenly weren't into that creative destruction mantra they spout to get the votes of the rightwing electorate. They're all Keynesians at heart.

The wealthy are Keynesians at heart, yes, to their own benefit and at the detriment of the middle class.

CL says

Even in the link you provided, Lehman and Wamu were two of the top 4 largest bks in history. If GM were to suddenly collapse, I think it's reasonable to believe that we would have had much longer and painful turmoil. But who cares, as long as we have ideological purity, embraced by a minority!

The rule of law and the free market are not ideological impurities. They protect countries from sliding into poverty and fascism.

I wonder if Ellison has what it takes to be a Thought Leader in an anarcho-cannibalistic economic system.

Rew says
The exact middle between the highest and lowest sold house (Median) isn't very relevant in market prediction or health either. With a median it only takes 1 very low or high priced house to skew the middle. (That actually seems worse!)

Yeah, it has limited use especially when your data is limited.

The graph shows we recently hit an all time high in median prices of new homes sold. I would have thought we have ways to go before we hit that number.

I'll add a few ideas to the mix:

Pirates! There would be no end of desperately poor people lining up to take their shot at the assholes who not only destroyed any shot they had at a better life but convinced them it was their fault. A few knives and AKs is all it takes.

Mines! Nuff said.

Sharks! - Gives me goose pimples just thinking about it - someone call the Discovery Channel!

Now THAT'S reality TV worth watching!

This is insane. While I think some of the intelligence is cooked, to accuse it of being a Zionist plot without any proof is ridonkulous. If anyone staged it, it was likely a Saudi plot since they are supplying the rebels with arms (and I don't even think it is them either).

The Israelis have nothing to gain and everything to lose if Assad is removed from power at the expense of Sunni extremists. Alawite refugees would cause a massive exodus, destabilizing the region even further. Their best scenario is what is happening now, or Assad regaining power, for stability. The devil you know is better than the one you don't.

You give the Israelis too little credit for doing what is in their best interest. (and I think you are really infatuated with this whole Yinon Zionist cabal theory)

New Renter says

There would be no end of desperately poor people lining up to take their shot at the assholes who not only destroyed any shot they had at a better life but convinced them it was their fault.

I dunno: killing the job craters with 50-cal. sniper rifles would increase their security costs, which they would just pass on to us in the form of higher prices for goods and services.

Plus: if there are no job craters, nobody will ever have jobs again!

Not insane. Russia flys a tattered false flag dipped in the insecticide of post communistic populatory excess.
Time for us to wake up and smell the Borscht.

Waitingtobuy says

This is insane. While I think some of the intelligence is cooked, to accuse it of being a Zionist plot without any proof is ridonkulous. If anyone staged it, it was likely a Saudi plot since they are supplying the rebels with arms (and I don't even think it is them either).