by HARM follow (0)
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I have a Betty Crocker sized stove in a kitchen that I can barely turn around in. My kitchen window is rotted and won’t stay closed and the cabinents are so painted over they don’t shut. I have to go out to do the laundry and I have no A/C.
sounds like the quality of stock in sydney for a similar price, esp near bondi beach...
is it too late for a French Revolution, Part II? guillotine the landlords, etc...
HARM,
Peter P and Randy H bring a balance to the equation. Yes, sometimes their lack of faith (in the face of mounting evidence) can be a little frustrating but they reside in the last "citadel". The last seller's market hold out. Market of last resort if you will. It's got to seem like every perma bull, specuvestor and investulator had this pre-determined plan to "fall back" to the BA if this thing falls apart. While I do share their temptation to just "throw your hands in the air" in disgust I'd have to admit that from inception of the bubble that the BA (and possibly NYC) would be hold-outs.
Over the last several years as the bubble built a full head of steam my "ultimate fantasy" was to see these two markets humbled first (meaning the other markets didn't stand a chance) creating a negative feedback cycle building momentum on a daily basis. Now we're finding Randy H's native Ohio leading the nation in foreclosures and coming in only second in bankruptcies? Results like these are quickly seized upon by industry cheerleaders declaring "there is no national RE market" and of course "location". Well, the NAR probably doesn't lose much sleep about Ohio or it's members there. RE is about the "new hot area" and I'm doubting that many of their "top producers" are from Ohio. They'll gladly serve them up without a second thought if it means the can keep things red hot and rollin' in places like FL, CA, AZ and LV. These are their growth markets (and where the dollars and influence those dollars represent come from!) The "growth markets" are their "power base". Will they take a cut of your commission if you're in Iowa? Sure! But it's getting in front of the boomer demographic and positioning themselves to profit in a big way where they can focus their resources in their "growth engines" assuring the "cartel's" health that really matters.
My guess is that the NAR was breaking out the champange in 2004. And why not? We were reaching that new "permanently high plateau"! But somewhere in 2005 when the air spoiler flew off in turn 3 there had to be concerns. Who better to know the truth about DOM manipulation? There had to be a growing sense of alarm in their "think tank" and how best to spin this to their members, builders, lenders and finally the public. We may never get to the bottom of things b/c these types of discussions are seldom made public but it seemed that there was almost a sense of relief after Katrina? Homes wiped out means more need to be built and more homes built means more homes need to be sold? Can this event be spun into a positive as pressure on building materials to keep prices escalating? If we can get a loan for illegal immigrants why not the displaced? How many of the Top 25 markets are prone to a correction? Can the remaining "hot" markets (given today's mobility) create enough revenue to "off-set" the commission dollars we won't be getting from the markets we've "written off"? What percentage of markets need to remain "hot" for builders to feel incentivized to continue to build and for buyers to buy? What's our "point of no return"? Will "gifting" of down payments be enough to bring "fresh meat" to the table? How do we square short sales where there were bidding wars just months ago?
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Seriously, guys, just when public psychology and the market is finally starting to turn to such an extent that --even the brain-dead, NAR-bought MSM has to acknowledge it-- NOW you guys have decided to puss out and capitulate??
Yes, the recent uptick in asking rents since March is significant (and as Surfer-X continues to point out, that's ASKING rents, not ACCEPTED rents, boys). Even so, didn't Mr. H himself predict this very phenomenon several threads ago, when he (accurately) applied the "escalation of commitment" theory to increasingly desperate FBs? Aren't the many testimonials by renters in the previous thread (while not statisticially significant) evidence enough that landlords have not repealed the law of Supply and Demand and can dictate rents at will? Not only that, but we've only just begun to see the barest start of apartment-to-condo conversions that are slowly reverting back to apartments. This alone will help flood the rental market with new inventory, right as Joe Homedebtor begins to give up on the concept of house = sure-fire investment.
As John Haverty FRIFY, To BA Or Not To BA and countless others have pointed out, there is just not going to be much in the way of real rent inflation UNLESS WAGES ALSO GO UP. This is for a very good reason: you cannot pay your rent with an NAAVLP. And what's more, rent-to-income ratios for most major metro areas of California are already hugely above the median/mean for practically every other state. It's already not unusual for CA working class households (or what's left of the middle class) to pay over 50% of take-home pay on rent. Exactly how much more can people possibly devote to rent --are they going to pay 90%? How about 100%? If this is true, I think I'm going to invest in the companies that make Ramen Noodles and peanut butter, becuase that's all people are going to be able to afford to eat after paying the rent. Or better yet, I'm going to heavily invest in housing OUTSIDE California --because that's where people will be headed in droves if this really comes to pass.
Peter P, tsk, tsk, tsk... Aren't you the guy who Face Reality used to call "Darth Bubblehead"? For shame.
Look, I'll be the first to admit that in my early phases of Bubble investigation, I was far from certain, and that I've experienced occasional bouts of self doubt. We all do, and it's really quite natural for sane people (only megalomaniacs, zealots and idiots lack the capacity for self doubt). Even so, I would recommend taking a moment to set aside all your complicated NPV/cash-flow discount models for a minute and reconsider the current situation in terms of old-fashioned COMMON SENSE. There is such a thing as being "too smart by half" and missing the forest for the trees, my overeducated gentlemen!
Now, suppose the perma-bulls' ultimate wet-dream "soft landing" scenario actually happens: price/rent correction ENTIRELY through wage & non-housing inflation. So what?? We all just got a 100-200% pay raise, boys --woo-hoo! And now we can all afford to buy a decent home for our families without taking out an insanely toxic loan. Is this an outcome I'm supposed to be afraid of? Hardly.
Personally, I don't care whether prices correct entirely through wage inflation (while nominal RE prices stay flat) or through big, nominal price drops --or some combination of the two. Either way, I win. I get the opportunity to purchase a depreciated asset tomorrow at a much lower real cost.
Have a little faith, gentlemen. The housing market moves excruciatingly, glacially slowly --but move it will.
#housing