patrick.net

India has had the most ABSURD real estate bubble in the world for many years, but some "expert" folks are finally on to the next most absurd bubble in the world, China....Hopefully, these experts will get to India soon, and then they will realize how unbelievably cheap the United States is....

http://www.marketoracle.co.uk/Article21735.html

http://www.scoop.co.nz/stories/BU1007/S00500.htm

clayfire23 says

You are comparing my usage of “self-destructor” to your usage of “moron”…..riiiiight…those are the same….

A moron is someone that is ignorant. Someone that is ignorant claims that housing prices haven't done better than 3% per year over the last 30 years. My term was correct.

You called us self-destructors, but what have we destroyed? You think the nation as a whole would be better if we all bought as much as we could in 2006 and destroyed our financial lives? You are clinging to a false reality, a world that has been disproven.

You're right though, those two instances of name-calling are not really in the same boat. The one I used for you was correct, the one you used for the rest of us was not.

clayfire23 says

As for my comments not being true, Tatupu already understood and re-stated what I said, and you acknowledged the same somewhere within those conflicting points that you make.

Your remark about home prices was flatly false. Your remark about housing being the backbone of our economy was a half-truth, but half-stupid. You inferred that over-inflated housing prices are the key to economic prosperity in this country, which is NOT what he was saying.

klarek,

My original statement, if you go back and look was "In the majority of our country, home prices have actually UNDERPERFORMED that rate of 3% per year over the past 30 years. While Shiller and Shilling can call out the few places where it went well over the rate of inflation, they should also call out the vast middle of the country where it is actually undervalued".

If you can read well and understand that, you will notice that I did not say that every place in America underperformed inflation. I specifically included the reference to the vast "middle" of the country. I also said that Shiller can call out the places where it appreciated faster than it should have.

Nowhere in my comments have I stated that I expect home prices to grow at a rapid pace or double every 2-3 years like they do in India and China. I do not expect our homeowners to be greedy and expect to make a huge profit. I would be perfectly happy if home prices appreciate at a steady/stable healthy low rate of 2-4% per year, and if homeowners are not deeply underwater like they are now. I have just repeatedly lamented only the LOSS of wealth for current homeowners, not the fact that we are not making a profit. Of course, all of your inconsistent and incoherent replies have implied that I expected massive profits from real estate. It is actually your statements that are totally baseless.

Now that it is obvious that you cannot read or understand things well, I have to lower your annual earnings capacity to 25 cents.

clayfire23 says

If you can read well and understand that, you will notice that I did not say that every place in America underperformed inflation.

You said overall (most places) we have underperformed inflation, which isn't true. I can distinguish between the aggregate and all instances within. I know what you meant, and there is nothing to back that up. Either way, if you are inferring that housing prices are too cheap in flyover states therefore prices should not fall further in San Francisco (otherwise us self-destructors will win), you're wrong. One has nothing to do with the other. If your argument is that indexes like Case Shiller aren't adequate because they misrepresent the flyover areas of the country and you somehow have access to a data source that better captures those figures, why won't you show it?

clayfire23 says

I have just repeatedly lamented only the LOSS of wealth for current homeowners, not the fact that we are not making a profit.

The wealth, that equity, it wasn't meant to be in the first place. If you purchased pre-bubble, you're regret is misplaced unless you thought that 10% or 20% gains were sustainable or deserved.

clayfire23 says

Of course, all of your inconsistent and incoherent replies have implied that I expected massive profits from real estate.

My statements might not be polite or politically correct, but they are coherent and consistent. And yes, all the whining you did in your first comment above implied that you feel inherited to bubble money, which in 2010 you are not.

robertoaribas says

Rhetorical technique aside, klarek makes points. Points you may not agree with, but hardly troll like. Meanwhile Taputookie feels free to ignore my points and call me names on threads…

I don't recall calling you a name. If I did I apologize--it was a hot summer.

What points am I ignoring? Disagreeing is different than ignoring.

klarek is way too inconsistent and incoherent and makes no clear points. Sure, every place in America is a bubble except where he lives...that alone proves his worth or the lack of it. The only thing consistent about his posts is that he attacks everyone and self-proclaims the title of being the genius on the blog.

clayfire23 says

klarek is way too inconsistent and incoherent and makes no clear points. Sure, every place in America is a bubble except where he lives…that alone proves his worth or the lack of it. The only thing consistent about his posts is that he attacks everyone and self-proclaims the title of being the genius on the blog.

Dude.... jesus I already explained that the "not here" phenomenon is something I am very used to here and dismiss. The difference is that it's not all or nothing. That is, there are market fundamentals that can change the economy of one region versus another. Detroit's economy is ravaged by a depleted auto industry, it will suffer certain long term economic growth. George Bush's war on terror etc. creates a climate of job growth in the DC area. Gee, which one will sustain housing price increases more than the other.

That aside, it's not enough to keep housing bubble prices intact. In fact, your original complaint about "boo-hoo we need housing prices UP" is something that around my neck of the woods is really laughable, something I hear all the time when I argue that housing prices are way too high. People think that because of higher than average income growth, a bubble market should be sustainable, which it is not.

But that is an aside. I was expressing the difference and granularity of one particular market versus the aggregate. It obviously went completely over your head (aka "incoherent").

It wasn't inconsistency, you are just lashing out against something you don't get.

So you have now turned from "fundamentally supported" prices in the D.C. area to "not enough to keep prices intact" there. You cannot keep a consistent thought on even your own area, so use that 25 cents that you earn per year to get yourself some grade level education.

clayfire23 says

So you have now turned from “fundamentally supported” prices in the D.C. area to “not enough to keep prices intact” there.

Did I say that? No. In fact, prices as they are right now in my region are unsupported by the fundamentals. Work on your reading comprehension. Income is a core fundamental. Some markets have different changes in income compared to others.
I see that by adding any level of fidelity or granularity about different regions or economic phenomena, it merely confuses you and makes you think it's inconsistent.

You were bitching about people here wishing ill upon others, schadenfreude. Sorry, it's called "I don't want to be ripped off, fall into the same trap as others have and screw myself". You clearly have no grasp at all about economics or the bubble and its deflation. To attack people on their views about something you're clueless about is unfair.

This is really basic economics, such that only a fucking retard shouldn't be able to understand.

Nomograph says

clayfire23 says

klarek is way too inconsistent and incoherent and makes no clear points. Sure, every place in America is a bubble except where he lives…

100% agree. The guy is all over the place, presents ZERO facts, and appears to be running on pure emotion.

I've referenced CS and CC indexes a number of times. I've mentioned GDP growth rates, inflation, interest rates, and tax credits. Just because any or all of that is over your head doesn't mean they aren't data or that the facts are insufficient. They just are for you.

klarek says

Income is a core fundamental. Some markets have different changes in income compared to others.

Just curious. What fundamental do you use for median income/price ratio? Does this ratio change as income increases? How about as interest rates change?

tatupu70 says

Just curious. What fundamental do you use for median income/price ratio?

It changes with interest rates, FHA rules, etc. I don't believe in any general rule of thumb. When people shift slowly from 15 year loans to 30, or to 40, it changes. You just have to look at the indexes and the stats on mortgages issued to get a sense if the fundamentals and prices line up. Traditionally, they have. But right now we're in the 15th inning of pretend and extend.

tatupu70 says

Does this ratio change as income increases?

In a sense, yes. People making a lot of money can afford a mortgage as a higher percentage of their income than someone making $50k a year. Does it change as incomes across the board increase? I don't think so.

tatupu70 says

How about as interest rates change?

Definitely. A guy with an 8% interest rate can afford 25% less than a guy with a 5% interest rate. All other arguments aside, the leveraged purchasing power depends greatly upon that.

clayfire23 says

What I do not understand about many of you folks on this board is your obvious “joy” in seeing home prices falling and more average Americans losing a lot of our wealth and jobs. You are rejoicing the tremendous suffering that most Americans are facing because of our own self-destruction of this great nation. Shame on you for doing this.
It is not just the ultra-wealthy that have suffered in this country. Most of the middle class which purchased homes in the last 10-20 years has seen their equity disappear.

That is their own fault for believing their homes would make them rich. That "equity" was a delusion. The bubble was not sustainable. It's disingenuous to cite the "equity" of extremely overvalued real estate, because being overvalued is only a temporary condition.

Nobody is paying a single dime more for their mortgage than they AGREED to pay. Equity has nothing to do with it. If they agreed to pay too much, that is their own fault. They obviously thought it was a good deal at the time; why isn't it now? Because they know they could get something cheaper now?

I'm sorry that people got locked into deals that they don't like now, and I wish it hadn't happened, but why should I have to suffer for other people's mistakes? You seem to expect that we should all have to pay higher prices so that homeowners have to "suffer" less. How is that fair? Will you help me pay my rent? Will you help me buy a house? No, you won't do that. So why should I help you?

I lost my job too. What is the government doing to help me? Why do you only qualify for help if you own a house?

This is unfair. Shame on YOU for defending it.

The loss in US housing wealth suffered by homeowners, which is still the majority of our population, is over 10 trillion in just the past few years, far surpassing other wasteful government spending measures. America’s homes are already the cheapest in the world when comparing size, features, quality and surrounding infrastructure, median income and yet, you guys expect a 3000 sqft palace of gold to cost just a few pennies just in America, while you are completely ok with a small 500 sqft 1BR apartment selling for a million dollars in other parts of the world.

Comparing U.S. home prices to other countries is pointless. There are too many variables, like population density. What makes sense is to compare prices now to historical norms in THIS country.

I have said this before, and I repeat. Housing is the backbone of every economy, and the rest of the world knows it well. China’s government sponsors heavy appreciation in its own housing values to keep its economy strong. India has the most ABSURD housing bubble in the world. We in America are self-destructing our already cheap housing. Unlike many “experts” who believe that strong jobs create a strong housing market, I believe it is the other way around. A strong housing market gives homeowners a strong sense of wealth and encourage them to spend on a lot of things, resulting in a vibrant economy which then leads to stable jobs.

Oh, I ABSOLUTELY disagree. You haven't learned anything from this disaster. The problem was, we tried to expand the economy by inflating the housing market, and that is precisely why it crashed. There were no fundamentals to support the prices. A solid economy has to be based on producing tangible things of value, not trading houses back and forth and counting numbers on computers. This housing bust is the best proof you could find.

klarek says

You just have to look at the indexes and the stats on mortgages issued to get a sense if the fundamentals and prices line up. Traditionally, they have. But right now we’re in the 15th inning of pretend and extend

Help me out-so what are you looking at right now that makes you think the fundamentals and prices aren't lining up?

tatupu70 says

Help me out-so what are you looking at right now that makes you think the fundamentals and prices aren’t lining up?

I am eating a bean burrito and not looking at anything right now. I've played with it all on spreadsheets: the income levels, the housing levels, the affordability based on different interest rates, the shifting of the populace to 30 year loans from 15 year loans, etc. I haven't built a model with certain fidelity, but my own opinion is that national prices are not supported by the fundamentals. Just look at GDP levels now versus ten years ago and compare that to the housing prices now versus then. It really doesn't take a lot of digging around to get the gist of it.

CS housing composite index is at 148.91. Ten years ago, it was at 107.77. I'm not going to spend an hour crawling through GDP data for you folks, but suffice to say that income levels are more or less what they were ten years ago, adjusted for inflation.

tatupu70 says

You provide nothing and when asked you call the poster a lazy fuck.

Because if he weren't an asshole and actually had cared, he would have read up on it himself. There's a difference between absorbing the information versus having it all bookmarked and ready for every asshole that wants to challenge it It's like asking someone to dig up data to prove the sun always rises in the morning and sets in the evening. They're either trolling or they are a lazy fuck that hasn't bothered figuring it out for themselves. If he had something contrary to the point, I might care enough to dig through economic reports and charts for a half an hour. Why the fuck would I do that for an ignorant prick that rips on me for eating a burrito? Let him remain uninformed.

robertoaribas says

Strange, how that “pendulum stopped” at the EXACT second buyers started getting tax credits, and appears to have restarted that swing since it ended…

Obviously a coincidence. A one-in-a-hundred coincidence.

Klarek...your own quote was "In my area, DC, income has risen faster than inflation over the last decade and therefore housing prices are actually fundamentally supported at a level above the inflation curve.". Every time you post, it is clear that you are just raving mad and have no idea of what you yourself said just minutes ago. Just go back and read your own inconsistent comments while you are stuffing on another burrito and letting the gas come outta your mouth too...

And you whine and call others terrible names because they asked YOU for data. How ironic is that you were asking me for data yourself in this quote of yours from just this afternoon? "If your argument is that indexes like Case Shiller aren’t adequate because they misrepresent the flyover areas of the country and you somehow have access to a data source that better captures those figures, why won’t you show it?"

I guess it is just everyone else that is lazy while you are too busy to dig for some data on the vast number of metros in the middle part of our own country.

clayfire23 says

There will be a lot more mad jobless burrito eaters soon.

please note: I did not say it, clayfire did.

robertoaribas says

I guess my ‘limited knowledge’ comes from studying mathematics applied to economics at UC Berkeley…

No kidding !

An understatement if ever I heard one.

clayfire23 says

Klarek…your own quote was “In my area, DC, income has risen faster than inflation over the last decade and therefore housing prices are actually fundamentally supported at a level above the inflation curve.”. Every time you post, it is clear that you are just raving mad and have no idea of what you yourself said just minutes ago. Just go back and read your own inconsistent comments while you are stuffing on another burrito and letting the gas come outta your mouth too…

Okay, let me explain this very slowly for you so you don't get confused. There is nothing inconsistent at all with what I am saying. Contrast two markets:
-Detriot, where GDP and household income have declined due to a market that has eroded over the last ten years
-DC, where since 9/11 there has been a swelling of govt spending and a GDP increase above the national level

Which do you think will have an increase in housing values during the past decade? That does NOT mean that DC prices belong at their bubbled peak. What it means is that it's unrealistic for me as a potential buyer to expect them to fall around here below the inflation-trended line going back into the 90's. The FUNDAMENTALS support an amount SLIGHTLY higher than that (and, in the academic sense, this is bare bones 101-level material that could be taught to a child).

There is not a single inconsistent thing I have said. You just haven't the faintest economic background to process any of it.

clayfire23 says

And you whine and call others terrible names because they asked YOU for data. How ironic is that you were asking me for data yourself in this quote of yours from just this afternoon? “If your argument is that indexes like Case Shiller aren’t adequate because they misrepresent the flyover areas of the country and you somehow have access to a data source that better captures those figures, why won’t you show it?”

Because you made a claim that housing prices in general and within those areas had fallen below the inflation trend over thirty years. I have read up on housing enough over the years and have NEVER heard that before. So all I asked was where that information came from. I'm still waiting.

clayfire23 says

In any case, my first post today was not about klarek or gameisrigged or anyone specific. I strongly believe that we are self-destructing our own country by deflating our already cheap housing using extremely flawed metrics.

Yes, more expensive housing is what our country needs. Everything was so much better when people could take out loans at twenty times their income, refi six months later and swim in a pool of cash. Oh the humanity, we have to live with a housing market that's supported by actual fundamentals rather than a never-ending ponzi scheme of housing prices that go sky-high every year forever.

That's what builds a strong economy, right? Homes that pump out cash? You sound like an economic scholar, really have a firm grasp on what increases the aggregate standard of living and productivity: housing ATMs.

gameisrigged,

I will assume that you are in the middle class. I also remember you stating that you lost your job. You are the exactly the type of person that I see being affected by our own self-destruction. Too bad it has already happened to you.

I have already stated many times my position which is different from most of the "experts". Jobs do NOT drive housing. A strong housing market drives jobs. Not directly, like as in construction jobs. But by producing a stable wealth effect, which leads all consumers, including the middle class which is still the majority in the country, to spend some, which supports all other sectors of the economy. The recession since 2006 is NOT related to jobs disappearing first, but to housing collapsing, which then led to drastically less consumer spending, which then led to job losses. Some folks on this board believe that we should collapse housing even more. Are not the effects of that obvious to everyone?

I have never prescribed bubblicious price rises for homes. I am fine with you guys calling out parts of California and Florida for their excessive growth. I call out India and China as the most absurd bubbles on the planet. I live in the MidWest, where there was never a boom, but there has sure been a bust, leaving home values below inflation. I see plenty of middle class families who have never been greedy losing their equity and then losing their jobs.

A healthy housing market to me is one that appreciates 2-4% in value every year. Too much appreciation leads to speculation and shifting of wealth to just the rich. Too little appreciation destroys the middle class the most.

I have to leave for work, but let me just say this. I find it absurd that we talk about "median home prices" without first defining what a median home itself is. Is that a 8x8 ft tent? A 200 sqft trailer home? I guess it is a 4 BR 2 storey with a huge lot, attached garage, central air and heating, nice roads and neighborhood, good schools, etc. The problem is that we want 5-star luxury housing for everyone, but we want it at a 1-star price. If all that you care about is a home available for everyone at less that 1 time median income, why not just build a whole bunch of 600-sqft condos in every city and sell them for about $25,000.00 each? Surely that will satisfy the folks that want "median house price" to be less than 2 times the median income. A typical person should need only 150 sqft of space, so a 600 sqft condo will easily accommodate a typical family of four. Outside America, that is what people do. And they pay far far more for that small condo than Americans pay for their ultr-luxury housing.

clayfire23 says

The recession since 2006 is NOT related to jobs disappearing first, but to housing collapsing, which then led to drastically less consumer spending, which then led to job losses. Some folks on this board believe that we should collapse housing even more. Are not the effects of that obvious to everyone?

What you are talking about was the end of an embarrassing era of people were cashing out their homes' fake equity in amounts and at a rate that was purely unsustainable. Yes, they spent it on the economy and for a little while, everybody was really pleased. Some saw it for what it was and chose to not partake. It disgusted many people. Everybody else at least realized when the party was over how stupid they all were. This lesson appears to have eluded you.

You know, most people look back on that period with a feeling of sadness, regret, and anger that we as a society could become so stupid. You seem to be the only person that's been asleep for the past four years and is now nostalgic for it. Amazing.

clayfire23 says

Housing is the backbone of every economy

Poppycock. Industry and manufacturing - as in value adding work are the backbone of an economy. Yes, this includes manufacturing or building houses, but that alone is not sufficient.

Borrowing a shit-ton of money to 'buy' a house, and waiting for a greater fool to borrow a bigger shit-ton of money to 'buy' the house from you -- that is nothing more than a speculative ponzi scheme that is doomed to failure. The only ones who make a profit from a ponzi are the ones who get out before it blows up - not the idiots who pile on at the end and make bigger fools of themselves by trying to convince everyone that it isn't over.

The hyperactivity that comes with a speculative bubble creates the illusion that the economy is booming - but eventually the math catches up. Fucking around with 'housing' isn't much of an economy.

idiotwordsofgod also compared walnut creek to beverly hills.

yes, I consider Lafayette a fortress, It is out of reach to 90%-95% of outsiders, the very thing that makes the area attractive. Since it is known for its great school, families with small children(s) covet the area.

My definition of fortress is an area that is out of reach to normal people. Keeping people out based on economic factor is very important to where the well-off purchase and live.

Median family income is around 160K, a tad below the more well known Palo Alto, it's definitely not reachable to the middle class unless the properties are purchased decades ago. No new homes are built there for decades (population was 20K plus in 1970 vs 24K today) so all the features that make it a fortress is there.

clayfire23 says

gameisrigged,
I will assume that you are in the middle class. I also remember you stating that you lost your job. You are the exactly the type of person that I see being affected by our own self-destruction. Too bad it has already happened to you.
I have already stated many times my position which is different from most of the “experts”. Jobs do NOT drive housing. A strong housing market drives jobs. Not directly, like as in construction jobs. But by producing a stable wealth effect, which leads all consumers, including the middle class which is still the majority in the country, to spend some, which supports all other sectors of the economy. The recession since 2006 is NOT related to jobs disappearing first, but to housing collapsing, which then led to drastically less consumer spending, which then led to job losses. Some folks on this board believe that we should collapse housing even more. Are not the effects of that obvious to everyone?

I'm not even going to bother trying to refute this again, since Klarek already did a great job of that, except to say that you didn't address ANY of my points. You simply re-stated your original flawed premise.

I did not lose my job because the housing market collapsed. My losing my job AND the housing market collapsing were BOTH the result of Wall Street influencing government to allow them to engage in a massive ponzi scheme, and abscond with trillions of dollars of wealth that formerly was possessed by the middle class.

The point I made before, and which you did not address, is that the scheme was unsustainable. The proof of its unsustainability is the collapse of the housing market. If, as you seem to think, an economy can be built from the top down, by inflating housing prices, and that jobs and prosperity will follow, then why did it collapse?

And please address my other point, which is what you mean when you say we are "collapsing" or "deflating" housing. You use the words as active verbs, implying that someone (although you haven't stated who, other than to say "we") is engaging in some sort of deliberate process to bring this about. What are you talking about?

SF ace says

yes, I consider Lafayette a fortress, It is out of reach to 90%-95% of outsiders, the very thing that makes the area attractive. Since it is known for its great school, families with small children(s) covet the area

I gotta hand it Marketing people in the Real Estate industry. They come up with the most interesting 'hooks' to overprice homes. We did not have this decades before. So where did this come from?

When you have "fortress" house proped up as a million dollar home, it will net future earnings to RE agents at $60K a pop! Can you think of any other 3rd parties to a transaction in another industry which manipulates prices like this ?

I moved to Los Gatos (so called fortress town today) back in 1982, and bought 10 years later. The price was no different than many other Santa Clara towns and cities. Only in the past 10 years, have we heard this term "Fortress" being thrown around. It did not exist for many decades before that. I have a neighbor from New York, who paid $1.2M in 2003 for a home which otherwise was worth around mid 300K when he bought it. He still thinks he lives in a dream home, but frankly he is dreaming like most. They just dont get they overpaid! He oddly thinks prices in decades past was undervalued. Talk about "bubble denial".

So lets look at "Fortress" Lafayette.. before and today. Clearly people lost their minds.

Property History for 3286 GLORIA Ter
Date Event Price Appreciation Source
Oct 20, 2010 Price Changed $919,000 -- EBRD #40478292
Oct 20, 2010 Relisted -- -- EBRD #40478292
Sep 10, 2010 Pending -- -- EBRD #40478292
Aug 16, 2010 Price Changed $995,900 -- EBRD #40478292
Aug 16, 2010 Price Changed $950,900 -- EBRD #40478292
Jul 22, 2010 Listed $1,150,000 -- EBRD #40478292
Nov 28, 2005 Sold (Public Records) $1,425,000 7.5%/yr Public Records
Dec 27, 2000 Sold (Public Records) $997,500 77.2%/yr Public Records
Jun 23, 1999 Sold (Public Records) $419,000 60.8%/yr Public Records
Apr 24, 1997 Sold (Public Records) $150,000 -- Public Records

here is another one,

Property History for 3399 WOODVIEW Dr
Date Event Price Appreciation Source
Oct 18, 2010 Relisted -- -- EBRD #40477912 $554,900
Aug 05, 2010 Pending -- -- EBRD #40477912
Jul 30, 2010 Delisted -- -- EBRD #40477912
Jul 20, 2010 Listed $554,900 -- EBRD #40477912
Jun 18, 2008 Sold (Public Records) $875,000 -- Public Records Foreclosed
Jun 29, 2006 Sold (Public Records) $1,098,000 -- Public Records

and another

Property History for 898 DEWING Ave
Date Event Price Appreciation Source
Oct 08, 2010 Price Changed $635,900 -- EBRD #40480275
Sep 07, 2010 Price Changed $649,900 -- EBRD #40480275
Aug 14, 2010 Price Changed $699,900 -- EBRD #40480275
Aug 03, 2010 Listed $729,900 -- EBRD #40480275
Oct 02, 1996 Sold (Public Records) $199,000 -15.1%/yr Public Records
Jul 21, 1995 Sold (Public Records) foreclosed $357,503 -- Public Records
Mar 06, 1992 Sold (Public Records) $420,000 -- Public Records

another

Property History for 1117 HILLCREST Dr
Date Event Price Appreciation Source
Oct 22, 2010 Price Changed $899,000 -- EBRD #40488324
Oct 01, 2010 Price Changed $970,000 -- EBRD #40488324
Sep 17, 2010 Listed $1,050,000 -- EBRD #40488324
Jul 17, 1996 Sold (Public Records) $380,000 -- Public Records

Prices around the bay area before the bubble unified at around $125/sq ft, there was no way to market homes in so called "fortress towns". But what changed?

Nothings changed, except Lafayette is even more unreachable than ever. That is my only point and your data is not what I was after. 90 - 95 percent of the local population will never be able to buy there, in 20 years, perhaps it is 95-97 percent. That is the nature of prime property.

gameisrigged,

Please read all my previous comments, including the ones that I posted on Oct 12th.

Most of us repeat the same beliefs that we have stated already. So me re-stating what I said already is just consistency.

I have also repeatedly stated what I consider a healthy home price appreciation, and why I consider American homes vastly undervalued while compared to the rest of the world. The main difference between you and me is that you have very narrow perspective and consider anything happening outside America irrelevant. I have lived in many countries, and see the global economy for what it is.

The way America is being self-destructed is that people such as you with narrow perspective have propagated the "perception" that a 5-star home should be available for everyone to purchase at a 1-star price, and if not, it is a "bubble" and "unjustified". In my previous post, I asked why a 600-sqft condo was not enough for a family of 4 at the 1-star price that you desire, as that is what most people in the world typically get to live in. There are many trailers and manufactured homes that sell in the 10,000-20,000 dollar range.

Let us first define what the median "home" should be. Then we can estimate its median value and then count its multiple against the local median income. The reason for the collapse is NOT that median home values rose a lot (which they DID NOT), but that quite a few folks bought a lot more house than they could ever afford. Never confuse "affordability" with "biting off more than you can chew". In my previous posts, I have given the example of someone with ZERO income and no earning potential ever. This person cannot and should not buy even a hundred dollar tent. That does not mean that the hundred dollar tent is overvalued or there is some "ponzi" scheme at play.

"Perception" is reality in everything. In many parts of the world, real estate is considered/perceived as the BEST investment, and real estate values have shot up many many times, and as many as one thousand times in the past 30 years in the metros of India and China. Compare that to the metros in America. Sure, there are factors like inflation, population density and so on. But for each of those factors, there are counter factors, and proper analysis will consider ALL the factors, not just some.

I have been posting on many blog sites for a long time, but came to patrick.net only recently. I have seen many many posters like you and klarek. Frankly, folks like you are in the majority on every blog. Are you doing this self-destruction intentionally? I hope not, and think it is just your limited perspective. I do not see you guys stopping any time soon, which is why I also believe that America is in a self-destructive death spiral, and that there will be many more jobless bean burrito eaters pretty soon.

tts says

Historical trends and such are great and all, but you can’t ignore the fundamentals of a)wages and b)jobs as well as c)cost of living. You know it costs almost $22,000 a year on average for a family of 4 to have health care? That means you need to have at least one person working a decent full time job just to pay for insurance/health care, and most dual income earner families make less than $55,000 a year.

If you're going to talk about health care costs, then you need to talk about earnings including benefits. A good portion of the $22K is paid by the employer and isn't included in the $55K/year figure you quote.

tts says

Whats worse is that the long term trend for jobs is higher unemployment, short of New Deal 2.0 programs, and the long term trend for wages is down too while costs of goods/services that you need (ie. food, gas, clothes, healthcare) are starting to rise.

Huh? You think the long term trend is higher unemployment than now?

clayfire23 says

I have also repeatedly stated what I consider a healthy home price appreciation, and why I consider American homes vastly undervalued while compared to the rest of the world.

A decent size chunk of the rest of the world (China and Austrailia) are still in the middle of their own housing bubbles, also home prices/rents always depend on local average wages and jobs. Repeating yourself won't make you anymore right.

clayfire23 says

The main difference between you and me is that you have very narrow perspective and consider anything happening outside America irrelevant.

How do home prices in Spain effect home prices in Alabama or vice versa? There is no connnection at all. The laws regarding property are different, the wages are different, the cost of living and taxes are different, etc. You cannot compare prices across the world like that, it is an apples to oranges comparison.

clayfire23 says

The way America is being self-destructed is that people such as you with narrow perspective have propagated the “perception” that a 5-star home should be available for everyone to purchase at a 1-star price, and if not, it is a “bubble” and “unjustified”.

The US is being trashed by its own government, the super rich, and the banks. The middle class, poor, and upper middle class have effectively almost no representation anymore or respect by the institutions which run the state. They are the victims in all of this mess. That you would hold them responsible for the current condition of the country shows that you are either out of touch with reality or trolling.

clayfire23 says

There are many trailers and manufactured homes that sell in the 10,000-20,000 dollar range.

Sure, they're decrepit hovels in the worse areas with poor schools and high crime rates. You have all the morals of a crook if you think that is the acceptable standard for the poor much less the middle class in general who make up most of the population of the US. You're essentially arguing the US should turn into a 3rd world country.

clayfire23 says

Let us first define what the median “home” should be.

No. You don't get to do that, the market does. And the market depends on 2 main things to determine that; wages and jobs. Other things like cost of living and local property laws/government support can have their effect too, but long term it always comes down to wages and jobs.

clayfire23 says

“Perception” is reality in everything.

Liars and theives say such things. Sure, perception can influence markets briefly in the short term, but it doesn't make the market. If it did the bubble never would've popped since the perception was that housing would go up forever.

tatupu70 says

If you’re going to talk about health care costs, then you need to talk about earnings including benefits. A good portion of the $22K is paid by the employer and isn’t included in the $55K/year figure you quote.

That used to be true, but no longer. More and more employers don't pay benefits or pay very little. The new trend is to higher people as "contractors" so they don't have to pay benefits at all and/or can fire them easily.

tatupu70 says

Huh? You think the long term trend is higher unemployment than now?

Yup. The economy, both national and global, is falling apart faster than the markets can adapt while nations wage currency wars on eachother. We're looking at a global version of Japan's Lost Decade, and that is in the best case. If we're lucky it won't last that long and we might come out of it in decent (it. a 2nd world country) shape. If we're unlucky then it might just turn into a full blown modern Great Depression 2.0. I'm not optimistic because our federal/state governments are both incompetent and corrupt, as are our financial system (banks+Wall St.).

Basically we've got assholes running the show, and you can't go expecting the best from some of the worst now can you?

EDIT: going to sleep will check/back reply later tap

tts says

clayfire23 says
“Perception” is reality in everything.
Liars and theives say such things. Sure, perception can influence markets briefly in the short term, but it doesn’t make the market. If it did the bubble never would’ve popped since the perception was that housing would go up forever.

shucks ! tts you beat me to it!

tts says

That used to be true, but no longer. More and more employers don’t pay benefits or pay very little. The new trend is to higher people as “contractors” so they don’t have to pay benefits at all and/or can fire them easily.

It is still true. The vast majority of employers pay benefits on full time positions.

tts says

Yup. The economy, both national and global, is falling apart faster than the markets can adapt while nations wage currency wars on eachother

All evidence to the contrary. There are discussions about proper exchange rates, but not sure how you can claim that the global economy is falling apart faster than the markets can adapt. You sound like a drama queen...

clayfire23 says

I have also repeatedly stated what I consider a healthy home price appreciation, and why I consider American homes vastly undervalued while compared to the rest of the world.

You said it's because of all these houses that haven't tracked with inflation over the years. This is the third time I am asking: where did you get this information? I follow all kinds of news and data related to housing and I have never heard this. I think you are Chicken Little, manufacturing fake reasons for housing to be artificially inflated.

clayfire23 says

I have been posting on many blog sites for a long time, but came to patrick.net only recently. I have seen many many posters like you and klarek. Frankly, folks like you are in the majority on every blog. Are you doing this self-destruction intentionally? I hope not, and think it is just your limited perspective. I do not see you guys stopping any time soon, which is why I also believe that America is in a self-destructive death spiral, and that there will be many more jobless bean burrito eaters pretty soon.

You want to return to a time when housing prices are completely out of control and money comes pouring out of the walls. You think that drives production or has any sort of long term beneficial impact on our quality of life. You have no understanding of the housing bubble or economics in general. You're pissed that we can't live in a completely bogus economy (though we are close), and you want to blame it on us "self-destructors". Pathetic.

tatupu70 says

It is still true. The vast majority of employers pay benefits on full time positions.

And that trend is changing. And the current benefits payed don't pay for enough of it. Healthcare costs are effectively unaffordable and aren't going to get any cheaper. You're out of touch with reality if you don't know this.

tatupu70 says

All evidence to the contrary.

What evidence to the contrary? You saying something doesn't make it so. I didn't chart spam but I least I pointed out the currency wars we've got going on ATM.

tatupu70 says

There are discussions about proper exchange rates, but not sure how you can claim that the global economy is falling apart faster than the markets can adapt.

The currency wars are playing games with the prices of commodities, generally raising them, while also causing the global credit markets to go haywire. Businesses are having to raise prices to stay in business (http://www.dailyfinance.com/story/walmart-raises-prices/19587730/) in a severe recessionary environment. Businesses who don't do this are failing, but the ones who do jack up prices end up having lower sales due to higher prices, and reduce inventory, which cuts back on manufacturing, etc. All of this is reactionary and uncontrolled.

tatupu70 says

You sound like a drama queen…

Yay insults. Again.

tts says

And that trend is changing. And the current benefits payed don’t pay for enough of it. Healthcare costs are effectively unaffordable and aren’t going to get any cheaper. You’re out of touch with reality if you don’t know this.

I pretty much agree with this. You should have said this from the start...

tts says

What evidence to the contrary? You saying something doesn’t make it so. I didn’t chart spam but I least I pointed out the currency wars we’ve got going on ATM.

Do I really need to post evidence that the world economy isn't falling apart? Come on.

tts says

The currency wars are playing games with the prices of commodities, generally raising them, while also causing the global credit markets to go haywire. Businesses are having to raise prices to stay in business (http://www.dailyfinance.com/story/walmart-raises-prices/19587730/) in a severe recessionary environment. Businesses who don’t do this are failing, but the ones who do jack up prices end up having lower sales due to higher prices, and reduce inventory, which cuts back on manufacturing, etc. All of this is reactionary and uncontrolled.

Times are tough--no doubt about it. Weak businesses fail during recessions-nothing new about that. Walmart raised prices back to previous levels because their strategy of lowering prices didn't generate as much new sales as expected. But the point is that there is nothing reactionary or uncontrolled about this. Maybe 2 years ago I might agree, but certainly not now.

tts says

You sound like a drama queen…
Yay insults. Again.

Wow-you've got a bit of a thin skin. I just said you SOUND like a drama queen--didn't even really insult you at all...

klarek,

Your questions have already been answered many times. Tatupu explicitly specified Detroit as vastly below inflation. I have stated time and time again that much of the MidWest has underperformed inflation, has never had a boom, but definitely a bust. I also told you to dig up the data yourself (taste of your own medicine) than ask me for data. One of my early posts on this thread asked for Shiller to point out the markets where home prices were lagging inflation. Shiller sticks just to comparison against inflation in his charts, but once you realized that there are indeed many places in the USA where homes were lagging inflation, you changed your story for it now be about local GDP and local conditions. You cannot have it many different ways.