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Someone wake me when the bubble bursts in the Bay Area…..
4% interest rates are a real doozy. Anybody with bucks and a need to buy, getting a 15yr 4% loan is a no-brainer, at least if one approaches the housing market from its historical performance of prices doubling every 15 years.
After taxes, the cost of money is 3% or less. Shouldn't be tough earning that later this decade.
The question is, of course, whether wage inflation is coming or going.
Troy,
Decent starter houses are still in the 600k range... crap houses are in the 400k range. And you can buy a shack in the woods with port-a-potties for 300k.
No new jobs exist. No wage inflation coming. In fact, the country is on the verge of realizing the actual depression we are in. Interest rates or not, the price of housing is way too expensive here.
*pulling up the covers and going back to sleep until the madness ends*
-Rip
I think housing prices were being supported by a lot of knife catchers thinking the 1970s are coming back, that this downturn is just like the 1990-94 downturn and the next wave is coming soon enough.
All I want here in the bay area is a nice, safe, quiet 2/2 condo. These were going for $320K back in 2000 when I was FOB here, and now they are $600K or so. I think this is partially because to get one west of Lawrence Expy you have to bid against an Apple/Goog person, and mostly due to interest rates.
The Los Gatos -> Cupertino -> Menlo Park corridor is distorted by all the high-end hiring and market success Apple and Google have enjoyed over the past few years. They've expanded by 10,000 or 20,000 well-paid heads, and thanks to Prop 13 keeping old people from getting priced out of the area, and the lack of buildable land, it's hard for the existing housing market to accommodate all of them.
But the interest thing is also important. When I was looking in 2000, rates were pushing 8% still and that $320K condo would cost $2200/mo.
With the 4% money available now, that same $2200/mo payment can service a $550K mortgage's "carrying cost" (PITA less the P). While the market price is $600,000, $50K more, AFAICT the extra $50K is simply short supply vs a lot of area demand (and high end wages are about 20% higher now than 2000, too).
But the interest thing is also important. When I was looking in 2000, rates were pushing 8% still and that $320K condo would cost $2200/mo.
With the 4% money available now, that same $2200/mo payment can service a $550K mortgage’s “carrying cost†(PITA less the P). While the market price is $600,000, $50K more, AFAICT the extra $50K is simply short supply vs a lot of area demand (and high end wages are about 20% higher now than 2000, too).
If you are going to live in this condo do 30 years, it doesn't really matter the price and interest rate. Waht really matters is the montly payment.
Wait Rayray... Aren't you spelling his name "Owebama" now? I'm confused. Please explain. Please shine the light of your vast towering intelligence and colossal genius into our lives and explain why you've changed the spelling yet again. I'm sure it's for an important reason.
All I want here in the bay area is a nice, safe, quiet 2/2 condo. These were going for $320K back in 2000 when I was FOB here, and now they are $600K or so. I think this is partially because to get one west of Lawrence Expy you have to bid against an Apple/Goog person, and mostly due to interest rates
They were going for half that much a few years earlier than 2000. Troy, I hope you find that Condo or TH your looking for at a very reasonable price. We certainly need lots of sensibility in the market place.
“Owebamaâ€
I’ll go with your spelling from now on: O W E B A M A. I like it.
Actually, almighty genius, the spelling came from you originally. (Is there a misfire in your circuits or something?)
“Owebamaâ€
I’ll go with your spelling from now on: O W E B A M A. I like it.
Well, we knowe it's not Simcha's spelling, cuz he ain't as smart as rayray. nowe one is.
Troy,
Decent starter houses are still in the 600k range… crap houses are in the 400k range. And you can buy a shack in the woods with port-a-potties for 300k.
No new jobs exist. No wage inflation coming. In fact, the country is on the verge of realizing the actual depression we are in. Interest rates or not, the price of housing is way too expensive here.
*pulling up the covers and going back to sleep until the madness ends*
Yes, its called starter homes now, before the bubble it was median priced homes. It wasnt until CAR changed their meaning of affordibilty that the term "starter homes" was introduced. What the heck is a starter home anyway ? Condo, TH, Mobile Home ? Really need to push that idea back and not accept such propaganda.
Obama Money� ??
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=MZM&s[1][range]=5yrs
What about that graph don’t you understand?
i don;t think you have the slightest clue what money supply is or how its created, at least you posting that chart would suggest so, as it doesn't pertain to anything at all posted by the OP.. lol
i don;t think you have the slightest clue what money supply is or how its created, at least you posting that chart would suggest so, as it doesn’t pertain to anything at all posted by the OP.. lol
Awesome. I love it when people say you don't know what you're talking about, but offer no further explanation. Great post surfer.
Well, we knowe it’s not Simcha’s spelling, cuz he ain’t as smart as rayray. nowe one is.
Finally, a fair and objective comment. Thank you.
i don;t think you have the slightest clue what money supply is or how its created, at least you posting that chart would suggest so, as it doesn’t pertain to anything at all posted by the OP.. lol
From the graph, MZM was $3T in 1995, crossing $5T at the start of the 2001 recession, and crossing $8T at the start of the 2008 recession. There has been a lot of money creation in past adminstrations!
But MZM is now about where it was in when the Obama administration started, while in the equivalent period in GWB's first term money supply (as measured by MZM) had risen from $4.8T to $5.8T (up 20%).
I objected to Ray's imbecilic use of the term "Obama Money" since the Fed has allowed money supply to expand tremendously since 1995, and especially since 2001, with two separate liquidity expansion events.
While as a renter I don't want government to throw more money at housing, if I were running things I would in fact throw money at housing, to reestablish the 2006 peak and then change tax policy to hold the line there with removal of price supports and imposition of direct taxes on land value as the general economy reinflated.
Back to the original thread. The expiration of the tax credits for homebuyers and the subsequent decrease in housing sales is further proof that Keynesian economics is a failure. Once the artificial economic boost expires (such as the tax credit), the market responds by doing what is natural economically. The same can be applied to the Job Stimulus Bill, along with the artificially low interest rates, etc. Obama & the Fed have used up all their economic bullets and it has not worked. Now we're in a depression that will be vastly extended because of these artificial Keynesian policies that have only prolonged the inevitable. America is entering into the "Lost Decade," and these ideologues refuse to admit that their policies have failed.
I objected to Ray’s imbecilic use of the term “Obama Money†since the Fed has allowed money supply to expand tremendously since 1995, and especially since 2001, with two separate liquidity expansion events.
The "Obama Money" I was referring to was the Homebuyer's Tax Credit, which as you will recall, paid people out of the GOVERNMENT'S funds (borrowed from China, etc.) to buy a home.
You mean that it wasn't out of the president's personal checking account?
Back to the original thread. The expiration of the tax credits for homebuyers and the subsequent decrease in housing sales is further proof that Keynesian economics is a failure. Once the artificial economic boost expires (such as the tax credit), the market responds by doing what is natural economically. The same can be applied to the Job Stimulus Bill, along with the artificially low interest rates, etc. Obama & the Fed have used up all their economic bullets and it has not worked. Now we’re in a depression that will be vastly extended because of these artificial Keynesian policies that have only prolonged the inevitable. America is entering into the “Lost Decade,†and these ideologues refuse to admit that their policies have failed.
That is complete and utter nonsense. You have no idea how successful the government programs were because you have nothing to compare it to. What would the economy look like today if the government hadn't intervened??
Of course there is going to be a lull after the housing credit expires because people are going to move their purchase up to take advantage of the program if possible. That doesn't prove anything. By almost all accounts the economy has improved from where it was when Obama took office. Most sane people would call that proof that his policies, in fact, worked.
ian policies that have only prolonged the inevitable. America is entering into the “Lost Decade,†and these ideologues refuse to admit that their policies have failed.
Oddly enough our favorite Congressman Franks came on CNBC and denied promoting "his" failed policies on housing. This is one is from Thursday. Friday they did a comparision with his fomer comments back in 2005, where he denied any bubble existed and further promotion of housing.
But what do you expect from a screaming queen anyway...
Oddly enough our favorite Congressman Franks came on CNBC and denied promoting “his†failed policies on housing. This is one is from Thursday. Friday they did a comparision with his fomer comments back in 2005, where he denied any bubble existed and further promotion of housing.
Being a member of Congress, especially if you happen to be a Democrat, affords you the luxury of having selective memory. Shame on you for posting factual information in here. I'll be the first (of no doubt many) that will accuse you of being an insensitive, right wing, anti-Obama, Nazi, racist, homophobe hatemonger.
Why is this a news? When there is a bailout culture there is always an attitude of asking more. Economy starts reversing when banks, businesses and people start working to generate money(when bailout stops). Simple economics!
You mean that it wasn’t out of the president’s personal checking account?
Really? Because I thought he meant that "Owebama" is printing new money with his picture on each bill and that we were going to start using this "Owebama Money" instead of US Dollars. Gosh that Rayray is just so clever that I just never understand what he intends with his magnificent pronouncements.
Oddly enough our favorite Congressman Franks came on CNBC and denied promoting “his†failed policies on housing. This is one is from Thursday. Friday they did a comparision with his fomer comments back in 2005, where he denied any bubble existed and further promotion of housing.
But what do you expect from a screaming queen anyway…
http://www.cnbc.com/id/15840232/?video=1500265401&play=1
Kind of funny there isn't any response from the left on this. I wonder why?
rayray:
You haven't responded as to where you were while Glen Beck may or may not have been raping & killing young girls. He surely couldn't have acted alone, and yet you've remained strangely silent on this issue. Please produce witnesses that can prove that you weren't there while this incident might, or might not, have occurred. You also haven't provided proof as to your not being a child molester. We would hope that by now you would have stepped up and proven that you aren't attracted to little kids but your lack of response to this issue is quite telling. Your attempts to derail every thread back to an attack on people who believe differently than do you, and your misperception of what a liberal is; well, it makes me wonder what other secrets you're hiding.
Kind of funny there isn't any response from rayray on this issue. I wonder why.
rayray:
You haven’t responded as to where you were while Glen Beck may or may not have been raping & killing young girls. He surely couldn’t have acted alone, and yet you’ve remained strangely silent on this issue. Please produce witnesses that can prove that you weren’t there while this incident might, or might not, have occurred. You also haven’t provided proof as to your not being a child molester. We would hope that by now you would have stepped up and proven that you aren’t attracted to little kids but your lack of response to this issue is quite telling. Your attempts to derail every thread back to an attack on people who believe differently than do you, and your misperception of what a liberal is; well, it makes me wonder what other secrets you’re hiding.
Kind of funny there isn’t any response from rayray on this issue. I wonder why.
Michael Savage said it best: "Liberalism is a mental disorder." After reading the above, how can you argue with that?
Nomo ... Apparently you have a problem with Michael Savage (Wiener, whatever) being Jewish. As for him being a "liberal" that is too funny. Nice try at labeling him and at the same time successfully exposing yourself as an anti-Semite.
First and foremost I couldn't care less what Savage is. Second, he may be "liberal" as you claim on some issues, but for the most part, he is a conservative. I have the ability to discern for myself as to what "leads" me and Savage is not my "leader" in any way, shape or form. Apparently, you are unable to make that distinction and erroneously think that because I quoted Savage, that makes me his disciple. Another example of the simple, close mindedness of the left.
Nomo … Apparently you have a problem with Michael Savage (Wiener, whatever) being Jewish. As for him being a “liberal†that is too funny. Nice try at labeling him and at the same time successfully exposing yourself as an anti-Semite.
And now you attack Nomo. People usually do that when they want to detract the topic from themselves.
You haven’t responded as to where you were while Glen Beck may or may not have been raping & killing young girls. He surely couldn’t have acted alone, and yet you’ve remained strangely silent on this issue. Please produce witnesses that can prove that you weren’t there while this incident might, or might not, have occurred. You also haven’t provided proof as to your not being a child molester. We would hope that by now you would have stepped up and proven that you aren’t attracted to little kids but your lack of response to this issue is quite telling. Your attempts to derail every thread back to an attack on people who believe differently than do you, and your misperception of what a liberal is; well, it makes me wonder what other secrets you’re hiding.
With each refusal to address these very serious charges, rayray, whomever is listening in here jacks you higher up on the suspect list...
How does it feel to be led around by the nose by a bunch of Jewish entertainers, Ray?
Spoken like a true Jewish Doctor, re-posted by a Jewess Social Worker. You want he should lay down & die, Nomo?
How does it feel to be led around by the nose by a bunch of Jewish entertainers, Ray?
Spoken like a true Jewish Doctor, re-posted by a Jewess Social Worker. You want he should lay down & die, Nomo?
And now it's spoken like a true Jewish Doctor, re-posted by a Jewess Social Worker, and posted again by a Jewish Psychotherapist. Now all we need is a Jewish lawyer and a Jewish Hollywood Establishment Entertainment Media Mogul and the stereotypes would be complete. ROFLMAO
And if we add a Kosher Butcher, Jewish Actor, a Rabbi, a Rebbetzen, and a Jewish Banker, we'd have a Minyan.
And if we add a Kosher Butcher, Jewish Actor, a Rabbi, a Rebbetzen, and a Jewish Banker, we’d have a Minyan.
Jewish actor with a gentile name: Helen Slater, Anson Williams, William Shatner...
Here we go again:
http://www.bloomberg.com/apps/news?pid=20601109&sid=an_hcY9YaJas&pos=10
As 180,000 suckers are sweating out getting that 8K tax break.
Poor bastards, needs to be praying their deal falls through. The house is collapsing.
The news can't keep asking.... "IS THE WORLD BROKE?"
While shitholes are selling for anything near 100K let alone most of Burbdale America.
Surprise! Surprise! This is precisely what CONSERVATIVES on this site (humbly, I was one of them) said would happen.
http://www.dailyfinance.com/story/real-estate/housing-starts-may/19518477/
The Housing Lobby has had it's sticky fingers in "tax freebies" since forever. When did the tax deduction for mortgages start? This is not news, except to Rushbots who have suddenly discovered my God US housing is subsidized, like it was when they were still in diapers.
When did the tax deduction for mortgages start?
You are confusing the Mortgage Tax Deduction with the Federal Tax Credits for Homebuyers. Indigently, the mortgage tax deduction only applies if one itemizes, which for most people does not pay. The tax credits for homebuyers did exactly what we said it would; pull into the market FUTURE buyers which would result in a slower housing market in the FUTURE, which has now been proven to be the case. This program did nothing to stabilize the housing market. It did expand the Federal deficit (and National Debt), a problem that the Obamatards have no problem with passing that bill onto their kids and grandkids.
simchaland says: "Really? Because I thought he meant that “Owebama†is printing new money with his picture on each bill and that we were going to start using this “Owebama Money†instead of US Dollars."
Ala the film "Idiocracy"? :-) Loved that film, as depressingly accurate as it seems some days.
When did the tax deduction for mortgages start?
You are confusing the Mortgage Tax Deduction with the Federal Tax Credits for Homebuyers. Indigently
My point was broad not specific. US housing has been subsidized at many levels for a long time. This credit thing is a pimple on the elephant in the room. At best it's a bandaid atop a sucking chest wound.
The fair thing to do, is remove subsidies at all levels. No deductions, no credits, no special assistance to big homebuilders, no city incentives to subdivision developers, no easy writeoffs for your flubs. Require vacant houses be sold at public auction. However this runs counter to decades of entrenched American belief that single-family housing is an "investment" and should be assisted without looking at costs, and it well predates Obama. It goes much further back than Bush Junior inane push for the "Ownership Society".
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Mortgage Applications Plummet To 13-Year Low As Tax Cuts Expire
“Purchase applications plummeted 27 percent last week and have declined almost 20 percent over the past month, despite relatively low interest rates. The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season. In fact, this drop occurred even as rates on 30-year fixed-rate mortgages continued to fall, and at 4.83 percent are at their lowest level since November 2009,†said Michael Fratantoni, MBA’s Vice President of Research and Economics. “However, refinance borrowers did react to these lower rates, with refi applications up almost 15 percent, hitting their highest level in nine weeks.
... The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.83 percent from 4.96 percent, with points increasing to 1.08 from 0.91 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
Call your Congressman, Congresswoman, Congressit NOW! Without more air this bubble is really going to burst. We need more free Obama Money now!
#politics