patrick.net

I like infowars and Alex Jones. He was some interesting content.

and interest rates will be jacked up by then, leaving only the mega-wealthy to buy out entire cities! oh joy!

Alex Jones is an FBI informant he goes around trying to stir up crazies to help the feds snatch a few people through entrapment

Back in 2007 I looked at the issue from the other way, the $ amount of home loans that went out during the bubble. Clearly 30-100% of ALL of that money is at risk (30% of first-lien and 100% of second, third etc).

According to the Federal Flow of Funds Report, net household mortgage borrowing was:

2001 $500B
2002 $670B
2003 $780B
2004 $1.03T
2005 $1.12T
2006 $1.06T
2007 $700B
2008 ($120B)
2009 ($214B)

resulting in annual household debt levels of :

2001 $5.2T
2002 $6.0T
2003 $6.8T
2004 $7.8T
2005 $8.9T
2006 $9.8T
2007 $10.5T
2008 $10.4T
2009 $10.2T

From the above table, pick a mortgage debt level that J6P can actually service going forward. $8T?

That's another $2T of debt that still has to come off the books. This was why BAC was trading at $3 not much more than a year ago.

We're going to need a bigger helicopter.

Currently, 80% of all house loans in vegas are underwater according to some article floating around (msn? yahoo?). What a trip.

In the end, 60 to 70% of all current mortgages will default!

I have met many you bought back during the 1988 peak, and there were many.
It wasnt until late 90s they "broke even", if you can call it that.

Its all about prices reverting back to the mean....

Not the "mean", so much as the edge between affordability and unaffordability.

The existing housing stock's done been built already and therefore has a present cost of production of pennies a day. Its actual cost is whatever we can collectively bid it up to (as we compete amongst each other to buy it up).

Prevailing interest rates, area household after-tax income, and demand/supply imbalances (that push the rent side up/down) determine the outcome of this auction process, not what the "mean" historically was.

This is not the 30s, the 50s, the 70s, or the 90s. Different forces at work produce different economic outcomes.

http://arizonabargainhomes.wordpress.com/2010/05/16/market-summary-for-april-2010-in-metro-phoenix-az/

interesting numbers for PHX.

^ goddamn, *if* we start getting some wage inflation or otherwise J6P recovers later this decade, all this bottom-fishing is going to be the biggest giveaway of wealth in history, especially in CA with its Prop-13 limitations on tax increases.

I lean about 60% toward the "Falling Knife" thesis (ie Japan's 13+ year decline from peak), but don't think the knife-catchers have necessarily made a mistake. I don't know what bull---- the PTB will pull to save the housing market, but i do think they will try literally anything.

Taking a random Chandler property:

http://www.zillow.com/homedetails/2331-W-Comstock-Dr-Chandler-AZ-85224/8201985_zpid/

Prices doubled from $160K to $320K 2003-2006, and have fallen back to $180K. This doesn't strike me as particularly unsustainable, given rents, the cost of money, etc. Certainly (if the past is any guide) wages will double over the next 20 years, making any investment buys now golden. The key question is whither J6P's after-tax, after-gas household income over this time period. Wages could be held down by too many workers and not enough work -- NAFTA and free trade with Chindia wasn't really thought through I think. $10 gas would also do a number on the housing market, outside the Gulf and Alaska producers at least.

Troy says

Taking a random Chandler property:

this is your problem, you're still in bubble mentality. Chandler properties aren't worth anything near what they were or are valued at. It's metro PHX that are the good buys. You have to think functionality, proximity, and economy and you certainly get that in metro PHX. Thing is that metro PHX properties depreciated along with places like Chandler, but they didn't appreciate nearly as much as those areas. These properties are undervalued.