patrick.net

That's right. Extend and pretend is not going to work indefinitely. There will be another dip.

The market will stabilize now, if not now soon, all these things the goverment is doing will create inflation, everything will go up, if houses don't go up at least they will not fall as deep as without inflation

@jordi_jorda,

There is currently no inflation and there won't be inflation for quite some time. In order to have inflation take hold, you need velocity of money. Right now, velocity is negative and you can see proof of this just by going out to the Fed's website and looking at their graphs! Credit all across the economy is collapsing. Without people and businesses taking on credit, there is no velocity and hence no inflation.

An 8K credit on an 800K house isn't going to cause a massive dip in markets over here in the bay area. On a 300K house, it's a little larger. On a 100K house, it could be quite a bit.

In the end a dip like that won't be massive. Now that at least some of the homes have been flipped to new owners, it won't be a mad rush down. People will likely drop their prices over a few months to match that 8K credit, but it will still take a bit of time before a real double dip happens.

It's likely, but I'm not sure if the government programs will cause it. More likely arms resetting will cause a larger dip.

inflation will only work if your wage got inflated too....

Yeah, my wages haven't "inflated" since 2000.

Whitney has not been that accurate as of late, so lets not get fixiated on any one "expert" and treat them like a modern day prophet.

http://investingcaffeine.com/2009/11/23/meredith-whitney’s-cloudy-crystal-ball/

The expiration of the $8k credit should not have any impact on higher end houses since, if you can afford that kind of house, you most likely don't qualify for the credit since your income is too high.

Yes many properties are being bought out with cash. But I think many of these all cash purchases are made by house flippers. They will be more aware that a cash offer may not be an option for the future buyer of the home they intend to flip. That may be taken into consideration when they make these cash-offers no?

Vain says

Yes many properties are being bought out with cash. But I think many of these all cash purchases are made by house flippers.

And that is what is left, flippers buying between themself without any real end users, horse trading!

warblah says

inflation will only work if your wage got inflated too….

add no job recovery to this and there is no inflation in sight.

Let me correct that HousingWatcher posted:

Meredith Whitney's Cloudy Crystal Ball

Although I'd say in her defense, as an investment advisor that spends a lot of time talking to the media, you WILL find contradictory statements at different points in time. Who doesn't change their mind, or make mistakes?

thomas.wong1986 says

Vain says

Yes many properties are being bought out with cash. But I think many of these all cash purchases are made by house flippers.

And that is what is left, flippers buying between themself without any real end users, horse trading!

Exactly. Slowly these buyer market for all cash flippers will wane and another tipping point in RE market will be the saturation of these properties ready to be flipped. Throw in the ARM resetting(especially in CA for next 2-3 years), regular mortgage going sour and strategic defaults. Happy days are ahead of California housing market. Cheers!

thomas.wong1986 says

Vain says

Yes many properties are being bought out with cash. But I think many of these all cash purchases are made by house flippers.

And that is what is left, flippers buying between themself without any real end users, horse trading!

I am seeing quite a few of these types. Cash offer, splash a new paint, bought for 350K and listed for 520K, waiting for a sucker. You gotta love the realtwhore description on those listings: "NOT A SHORT SALE OR REO, New carpet, New paint..blah..blah..as is sale"

Oh..yeah..if its as-is sale, why the hell would I buy from you, I would rather buy from bank..Happy days are ahead indeed.

HousingWatcher says

The expiration of the $8k credit should not have any impact on higher end houses since, if you can afford that kind of house, you most likely don’t qualify for the credit since your income is too high.

This likely explains why the only houses that are selling in Portland are those at the low end, less than $250K. Sure some folks with big $$ are getting great deals at the high end but very few can pull off the financing. Early on the local realtors were blaming 'folks sitting on the fence' but it seems clear to me that given our unemployment numbers and the fact that prices are still way out of whack with incomes, it's more than just folks sitting on the fence waiting for prices to drop....folks just can't afford those $300K+ homes.

HousingWatcher says

The expiration of the $8k credit should not have any impact on higher end houses since, if you can afford that kind of house, you most likely don’t qualify for the credit since your income is too high.

Another thing to mention about Portland's market though I don't think we are unique in this regard... the $8K credit would assist the 'move-up' buyer though the feeling around Portland is that those that sold aren't moving up but renting or leaving town, did I mention our crappy unemployment numbers?!