patrick.net
An Antidote to Corporate Media
1,365,005 comments by 15,734 users - HANrongli, mell, Patrick online now
Comments 1 - 3 of 145 Next » Last » Search these comments
thenuttyneutron
@
2006 Oct 20, 10:20pm
As the RE crumbles, we will move our speculation to Tulip Bulbs. They will appreciate YOY at 10000% for 10 years and become worthless overnight. At that moment, all of those FBs who started Tulip farms on the properties that they paid too much for will be ruined. I can then buy a good home, Tulips and all, with a McDonalds Happy Meal containing a Beenie Baby toy.
When enough people can't afford basic rent and the tent cities spring up like during the Hoover administration the goverment won't be able to ignore the problem. We have to many rich elitist and politicians who like ostriches have thier heads in the sand. If they don't see it firsthand it must not exist... In fact alot of the country has that kind of thinking.
I'm in the "Or another example" crowd.
Post Election? All bets are off.
Care for an accident? No thanks, just had one. I was talking to a SoCal mortgage broker last week and he puts 07's foreclosure rate at 10-14%. Uh, that's not for sub-prime loans, that's across the board!
Toasty.
If anyone (bull or bear) can devise an exit script, please feel free to share. Outside of "re-negotiating" purchase price (then "refinancin") show me how we're going to contend w/gushing negative equity? Uh...... let's see, I bought in August 2005 w/zilcho down at 475K, I'd be lucky to get 375k, I'm two months behind and my teaser period is set to expire next month! Other than that I'm in good shape. Here at Patrick.net we love to toss ideas around and I'm fine w/that but could someone please explain to me how "lenders" are going to deal w/this and still have some semblance of dignity? Some semblance of "standards"?
I got no where to go and all day to get there.
Comments 1 - 3 of 145 Next » Last » Search these comments
Start with any generally observable and credible premise. Example: "Rents are up 10%." Or "Inventory is up 135%."
Assuming the premise is true, what impact will this have on the Bay Area housing market?
For instance:
KCBS reported rents are up 10%. Most anecdotal evidence suggests anywhere between 7% to 15% increases. If this is true, it could have the following consequences:
1. Rents go up -> Wages go up -> Wage inflation slows job growth -> Puts brakes on population-driven rent increases -> Rent vs. Buy adjusts a little, not a lot.
2. Higher rents -> People move out of area -> Rents stabilize, maybe fall -> Rent vs. Buy doesn't change a lot, and demand for both rental and for-sale housing softens -> Prices continue to slide.
3. Higher rents + refis -> help to bail out a few homeowners, reducing the overhang of potential FB's -> Could cushion the landing a little.
4. Rents keep going up 10% per year -> Creative renting strategies (home sharing, warm-bedding, etc.) become common, but overall renting becomes an expensive proposition -> People continue to do whatever they can to buy, keeping nominal prices high -> Rent vs. Buy is mainly adjusted by higher rents.
Or another example.
Premise: Punch bowl gets thrown away after Nov. 8 elections.
FB's rush to the exits -> No buyer confidence -> Inventory spikes up -> Prices fall FB's put unsaleable houses for rent, driving rents down.
The above are just examples. You can start with any other credible economic premise and expand it to assess impact on the HB. And even those outside the Bay Area can contribute their own crystal ball visions. And if this turns out to be too arcane, feel free to start a new thread.
SP
#housing