patrick.net

Is this as good as it gets? I think if you are the holder of real estate I would guess this will be as good as it gets.

ECCB, so recession actually happend and correction is going on in your area?
Good for you. Just think hard.

Ony If I can see something like that in my area...
Nope, the same old 2007 price. Just few happenings.

Home owners (for the record I am one, long paid off) are going to poop themselves when they see how far prices will go down over the next 5 years.

10-20%?

You're being overly optimistic.

That being said, if the rent to own ratio is close and it's the low-end for your area, I would buy. Basic math prevails.

We're nowhere near a bottom in prime areas, and anyone who takes the rent to buy ratio lightly is a fool.

robertoaribas says

NAR released new speaking notes the other day, which included the whole “buy now before rates go up” scare tactic.

Funny thing is, they've been saying that for 3 years, and rates are now lower than ever.

eastcoast, I believe it cannot get any worst, consider the following: I am addressing my finding about San Francisco but generally applies.

Over the last 40 years, the start of a strong buying cycle is when the affordability index reaches record or near record highs. In San Francisco, the housing affordability index dropped from 20 percent in 1988 to 11 percent in 1989. It rose to a high of 33 percent in 1996 and mid 20's in 1998 before bottoming at around 6 percent in 2006-2007.

Guess where the affordability index is now? High 20's. Everytime the index reaches 30, the market will cycle back to the 10's. The trip between 30 percent and 10 percent is going to take a few years, and it's going to take prices up. This is 2010 not 2006. Prices tripled in the 70's doubled in the 80's and doubled in the 90's. Buy high, sell low, we are at or near historical high. http://www.nahb.org/reference_list.aspx?sectionID=135

Population growth is till in tact. California is projected to gain about 10 million new residents in about 15 years. (Projected CA growth)

Record high foreclosures are starting to recede and will go down gradually over the next several years. New delinquencies are trending down (PMI, Radian Group)

The debt-troubled households will get "replugged" into the housing market three to eight years after they emerge from foreclosure or bankruptcy.

Increasing income is already taking hold, unemployment rate will be trending lower the next several years. (US census, labor and wages)

There is already evidence that rents bottomed and have increased this spring and firming even further in the summer. (2Q-2010 REIT reports)

I'm not saying the housing market is going to be hot or even warm, but yes this is as good as it gets.

Home owners are going to kick themselves in the rear end when they see how far prices will go down over the next 5 years.
30 -35%
We’re nowhere near a bottom in prime areas,

To answer the question you've got to run the numbers.

Housing is different from all other economic areas in that it is something that EVERYONE -- well everyone who desires a post hunter-gatherer human existence -- requires, is completely fixed in supply (at any given time & place), and is the target of immense and unrestrained rentierism which further limits the supply and "affordability" of same.

All this results in housing being the source and sink of all wealth. When times are good, money flows into housing. When times are really bad, the sector gets the stuffing beat out of it.

ie. Housing is pure consumption and takes from renters (and new buyers) their producer surplus. Should this surplus disappear, housing prices adjust down. Should this surplus increase, housing prices adjust up.

What's going to happen to the producer surplus going forward? Do we even have one anymore? The Federal deficit is $1.5T on ~$3T of spending. The CA state deficit is $20B on $84B in spending.

IMO, We the People can borrow money at cheap rates still because the PTB would rather lend us this money at ~3% than get taxed for it (taxes have a -100% ROI).

But this borrowed money is introducing even more drag into the system as the debts pile up.

Closing the $20B state deficit is 400,000 $50k/yr jobs on the line in the state.

http://research.stlouisfed.org/fred2/series/CALF
http://research.stlouisfed.org/fred2/series/CAGOVT
http://research.stlouisfed.org/fred2/series/CAINFON
http://research.stlouisfed.org/fred2/series/CACONS
http://research.stlouisfed.org/fred2/series/CAMFG
http://research.stlouisfed.org/fred2/series/CAPCPI

I don't have any idea what the future holds. My bearish outlook has been informed by by experience living in West LA 1985-1992 (big boom-bust!) and then Tokyo 1992-2000.

Without middle-class wage inflation or game-changing gov't intervention (housing credits, 2% mortgage rates) there can be no housing recovery. Demographics are curious here too. The baby boom is now entering their mid-50s. The baby boom has produced all the kids they're going to, indeed, the baby boom echo is turning 25 now.

SF ace says

Guess where the affordability index is now? High 20’s. Everytime the index reaches 30, the market will cycle back to the 10’s. The trip between 30 percent and 10 percent is going to take a few years, and it’s going to take prices up. This is 2010 not 2006. Prices tripled in the 70’s doubled in the 80’s and doubled in the 90’s. Buy high, sell low, we are at or near historical high.

actually it took 15 years from early 80s to mid 90s ( 15 years ) for prices to double. But you have to factor in we had a much better economy back then across all incomes ranges with solid wage growth and we supported a huge manufacturing base, with little economic competitors globally early on. That being said prices didnt get out of hand as much as today nore did we have such hype regarding the bay area as we see/hear today.

affordabilty based on median incomes to median prices using fixed rate 30 year loan and 20% down was around 60-65%. in the mid 90s. That figure dropped down to under 10% around 2001-03 and close to 5-6% for SF and SCC. It got so bad the CAR (California's Ass's of Realtors) changed the method to "entry level" home using ARM loan and 3-5% down. They have jet to define what "entry level home" means. PRESTO the affordability went to 30% overnight. Further the CAR back in 2003 stated ARM loans and 5% down will be norm going forward. To this day they havent changed that methology regardless how faulty and devastating it has become.

SF ace says

Population growth is till in tact. California is projected to gain about 10 million new residents in about 15 years. (Projected CA growth)

Polulation growth has been flat for the past 10 years. Equal amount leaving and entering the state. The reality is we dont have the job base to absorb new inflow. Many other states court SV companies with lower of cost employment and lower over-all business costs. We have more folks working for CA companies outside than inside the state.

Even Charles Schwab has more facilities outside the state than SF. 900K sq ft vs 1800K outside of the state (See page 11) For someone like CS, they will be looking elsewhere as interest rates fall further.

http://www.aboutschwab.com/media/pdf/2009%20Form%2010K.pdf

Here is some more data regarding SF SC..

Page 23 (See chart)
Salaries down 9% Incentives down 12% Benefits up 6%.

Compensation and benefits expense decreased by $123 million, or 7%, in 2009 from 2008 primarily due to decreases in salaries and
wages expense and incentive compensation. Compensation and benefits expense decreased by $114 million, or 6%, in 2008 from
2007 due to decreases in incentive compensation and employee benefits and other expense, offset by an increase in salaries and wages
expense. The following table shows a comparison of certain compensation and benefits components and employee data

Like Troy stated... wage inflation isnt there .. and i dont think it will be growing anytime soon.

thomas.wong1986 says

it took 15 years from early 80s to mid 90s ( 15 years ) for prices to double

http://research.stlouisfed.org/fred2/series/MORTG/

with the favorable wind of interest rates falling from well over 10% to well under 10%. We don't know how the state in our now-globalized market will respond to a rising rate regime.

People looking to the 70s as a model need their head examined. Pre-NAFTA, pre-Internet, pre-Deng Reforms, the federal deficit was well under $100B/yr and the national debt was under $1T. With the baby boom hitting their 20s in the 1970s there was immense capacity to issue and exercise credit, 1980-1990. The national debt tripled in the 80s in nominal terms (doubled in real terms), riding this demographic and economic wave.

thomas.wong1986 says

Like Troy stated… wage inflation isnt there .. and i dont think it will be growing anytime soon.

Synthesizing the two:

Kinda sobering. What if incomes fall back to pre-bubble levels? I don't see why this can't happen this decade. Then there's the income we need to divert to support the baby boom hitting their 70s -- the front wave of the postwar peak is turning 55-60 this year. What will $10 gallon gas do to us?

2.3M Californians on unemployment now. State UI fund will soon be $15B in the red, ~$20B by end of 2011 -- Employer UI contributions are $4B/yr, current payouts are $11B/yr. 99 week UE ends November. We need to double the UI payroll contribution to stop the outflow and maybe begin repaying the Federal loans that are funding this.

Party on, Garth!

"But expecting further precipitous price drops is unrealistic, as such as scenario would mean there are far more pressing problems (on both the micro and marco levels) than home prices."

Take a step back and read the sentence you wrote above. You may have decided to purchase already and nothing will stop you.

However, buying on the above logic is totally wrong. If you want to buy because you want to live in the house or rent then fine. Don't buy it thinking prices are at the bottom because they are not.

We do have very pressing problems both micro and macro. The much vaunted "service" economy has been shown for the fraud it was and it will still take very big changes to our economy to get the majority of the unemployed back to work, choices no one wants to make at the moment. One of those choices will be to get the government out of the mortgage market and at some point for interest rates to rise. Hold on to your socks when this happen as values will plummet, in my area prices have slowly begun to drop.

We are nowhere near the bottom.

Armando148 says

“But expecting further precipitous price drops is unrealistic, as such a scenario would mean there are far more pressing problems (on both the micro and macro levels) than home prices.”

buying on the above logic is totally wrong

Yes, home prices are not "a problem to be solved". They are an output dependent on several inputs -- housing stock supply/demand, area after-tax incomes, interest rates, ability to borrow, ability to lend, private investment alternatives, and inflation expectations -- both short-term ("flipping") and intermediate (demographic/"secular").

This stuff starts to fall apart more and home prices will take care of themselves. The homes that have already been built have a present cost of production of whatever it costs to inspect, certify for habitation, and pay the transfer fee at the County. Its sunk cost is completely irrelevant now.

It's my thesis that the housing bubble was entirely responsible for the significant rise in incomes and wealth in California and most places, 2002-2007. The cart was pulling the horse, and that's simply unsustainable!

Rising home prices -- fueled by falling interest rates, tax cuts, rising government employment, cash-out refis, and of course suicide lending -- saw the nation push its total household debt from $8T ending FY01 to $14.4T in 1H07. The System lost its mind 2001-2007, creating a bubble economy that is gone now.

3 years ago today the national debt held by the public was $3.8T less than it is now, $4.4T if you count the total public debt.

That is over $30,000 PER HOUSEHOLD of deficit spending alone, $10,000 per year. Before that, 2003-2006, households were taking on debt at an average rate of . . . that same $10,000 per year per household.

Can the System keep these wheels turning? If it can't, look out below.

Nomograph says

However, one thing I’ve noticed on this board is that folks who rent in prime, high-priced areas seem convinced that their area will fall dramatically

I just think prices 1998 ~ 2008 adjusted to a reality that is no longer obtaining.

In fact, the very boom factors -- NAFTA, Chinese imports, the Internet, cheap oil, Peak Debt, gov't deficit spending -- are beginning to flip over and show their ugly sides, economically speaking.

FWIW, I think the Fortress areas will do fine. Any area with a large percentage of doctors, accountants, GOOG & AAPL workerbees, corporate farmers, private equity fund directors, and oilmen will still exhibit buying power.

Middle class america . . . Not So Much, unless the System can turn the machines back on.

Why does everyone aim to quantify this in terms of % decreases or % increases? As if housing is supposed to always be moving in chunks of 5% or 10% within short intervals. Alleged bottoms, next leg down, etc etc. We still give this particular market so much weight like housing is a commodity or a precious metal. Heck I'd barely consider it a "real estate" market right now...

There are as many forces working for the market as against it so what if housing just stays flat for the next 5 to 10 years? isn't that every bit as likely a scenario? will it break this country's expectation that housing should be a rapidly appreciating asset (that everyone can build immediate wealth on)? or break us of the expectiation that housing is crashing and we can take quick advantage? will we start thinking of a house as a home once again?

You know what, a few days ago I would have said we have to be close to the bottom and would have agreed with BubbleBoy that there would be little to gain in trying to time it exactly.

Then I decided to go take a look at a few rental properties for sale at the low end of the market.

We have a serious problem in REOs. Every place I looked at was an REO and every one was a scraper. I had seen a few of these places before and I know for a fact they had all once been in good condition. And the places I looked at were each dragging down the entire neighborhood in which they were located.

If you buy now, you could end up next to one of these places and even if you buy at the bottom, the real question is this: Would you want to live next to a wasting property?

If you buy, be very, very careful. I do not know if or, even, how you can guarantee that the place next to you won't go under. Vagrants, gang-bangers, drug addicts, and vandals prefer the more upscale communities for the very same reasons that home-owners do.

And I do not see how this situation will turn around, the dynamic is taking us all in the wrong direction as far as property values are concerned (and our wealth as a nation and the property tax base of local communities). In other words, we are all getting poorer. OK...now I've scared myself!

I think it should be fair that anyone that makes any opinion on whether prices are going to rise or fall needs to indicate if they are even able to buy at these prices. Because if they are not, then they have been priced out and it's obviously emotions that are speaking. They are not on the sidelines.

This thread has lots of good data from Troy and others, but so far there has been no discussion of the shadow inventory.

Here is an article from Blomberg today that addresses the shadow inventory, via The Big Picture blog

http://www.ritholtz.com/blog/2010/09/for-recovery-housing-market-must-clear-out-excess-inventory/

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aWoxk0NV0Ahg

Quote from the article:

“The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.

Shadow inventory — the supply of homes in default or foreclosure that may be offered for sale — is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the market by owners.”

****

Now, the above is the big picture of the national market, but given the trends exhibited in the California data linked by Troy, it is hard to see how California as a whole will do well, nor the more specialized micro-markets within California. No doubt we will hear fierce argumentation that this or that location is "special", but I think the combined effect of local and macro forces will drive prices further down.

By the way, did y'all see that DataQuick is reporting falling sales in Southern Cal for August 2010?

Here is the link s about the DataQuick Southern Cal Aug 2010 sales numbers:

http://www.calculatedriskblog.com/2010/09/dataquick-socal-home-sales-decline-in.html

Quote:

Southland home sales fell last month to the lowest level for an August in three years and the second-lowest in 18, the result of a worrisome job market and a lost sense of urgency among home shoppers. ... [sales were] down 2.1 percent from 18,946 sales in July, and down 13.8 percent from 21,502 sales in August 2009.

Last month’s sales were the lowest for the month of August since 2007, when 17,755 homes sold, and the second-lowest since August 1992, when 16,379 sold. Last month’s sales were 31.5 percent lower than the August average of 27,070 sales since 1988, when DataQuick’s statistics begin. The average change in sales between July and August is a gain of 3.9 percent ...

“The loss of home buyer tax credits explains much of the sales weakness over the past two months. But other factors are suppressing sales, too, such as the lack of meaningful job growth and potential buyers’ concerns about job security. Also, for many out home shopping now, there’s little beyond ultra-low mortgage rates to pressure them to buy sooner rather than later, especially in areas where the number of homes for sale is climbing,” said John Walsh, MDA DataQuick president.

Wage inflation would not surprise me. Continued government intervention would not surprise me. Then again nothing would surprise me. Heck, the Mayans may yet be right, in which case after 2012 it won't much matter.

For any of you who have read my prior posts, I am not trying to time the market per se. I'm just trying to weigh (and reweigh) all of the factors to make sure I haven't missed anything. It's a big leap to go from renting to the responsibility of owning. I have seen friends get in over their heads and end up short selling or foreclosing because of it. I have even seen regulars on this board jump in, thinking they were ready for the responsibility, only to lament it later.

I have come to the realization that no matter how far prices fall, they will still seem expensive to me. Still, "Life is what happens while you are busy making other plans" (or something like that). At some point, waiting to be "in a better position" becomes counter productive.

FWIW - the median income data in my target area is skewed. I used to say to myself "how many people bring in enough money to afford the asking prices" Now prices are lower, rates are lower, and the more my friends and I discussed money more openly, the more I realize that may bring in far more than their W-2 lets on. Under the table income streams may be less reliable, but almost everyone in this area has something "on the side". In short HH income data needs to be taken with a grain of salt, just like any other data set. Perhaps the asking prices in today's market are not as unrealistic as we would like to think.

Heck, the Mayans may yet be right
May be? Archeological evidence has shown a glyph for 10/99 in close proximity to the 2012 date inscription. Previously, the 10/99 glyph has been interpreted as a date, but the recent discovery of the brother glyph proceeding the 10/99 glyph leads some scholars to believe the the great reset (winter solstice 2012) of the long count calendar may be referring to the Mortgage Forgiveness Debt Relief Act (aka Don't 1099 Me, Bro). The Mortgage Forgiveness Debt Relief Act was extended by subsequent legislation and is set to expire at the end of 2012. Coincidence? I think not. Ivy Zellman's ARM reset chart only confirms this hypothesis.

Maybe it just got better in February 2011.

Hmmm...

But if I buy a $250k house at 4.75% today, or a $200k house a 5.5% two years from now, how much difference does it make?

About a $50,000 difference.

EastCoastBubbleBoy says

Wage inflation would not surprise me.

Wage inflation would suprize me, since I don't see how it could happen until they get full employment in China, India, Vietnam, etc.

Cvoc13 says

Home owners are going to kick themselves in the rear end when they see how far prices will go down over the next 5 years.
30 -35%
We’re nowhere near a bottom in prime areas,

I would expect to see very minor reduction in prices. While banks continue to dispose of foreclosures, it will have an impact to the low end of the market. Most of the houses they are selling at rock bottom prices are not desirable areas or houses to begin with. Houses that are desirable, the bank is selling will have multiple offers, there by keeping prices of those houses higher. Houses that your looking for. A decent looking house on a larger piece of property will be in higher demand than development tract homes on small lots.

If you were to look at the figures of what percentage home prices have fallen, you'll see that slums and development tract homes have lot the most value percentage wise. Decent houses in better areas have lost a smaller percentage in value / price in comparison. I believe your going to see the same thing in a housing market recovery. The most desirable houses will increase in value first and faster than less desirable houses. There may be those that are quick to point out prices continue to slide, but you need to ask yourself, do you want to live there? Probably not and most other people are saying the same thing and that's why prices are still sliding for those areas.

Real estate is a local thing, why else would a tiny apartment on Park avenue in New York City be more valuable than Big farm house and barn on 100 acres of land in Montana?

zzyzzx says

Cvoc13 says

Home owners are going to kick themselves in the rear end when they see how far prices will go down over the next 5 years.

30 -35%

We’re nowhere near a bottom in prime areas,

East Coast Bubble boy isn't in California, so your assessment that all real estate will continue to fall is a false assumption. If all real estate is doomed to lose the same percentage, then why has Las Vegas properties fallen 50% to 60% and Texas which only fell about 5% since 2007. In Texas prices have bottomed out and are starting to go back up. Las Vegas is probably a lost cause for another 10 years, don't know about the bay area in California and I think prices are near or at bottom in the northeastern United States. The prices of New Jersey houses are going up, sales are still weak, but the stuff that is selling is increasing in price. Since prices are increasing in New Jersey, I believe the most desirable houses / areas is what is driving the upward trend in prices.

My Opinion? I think prices have fallen as far as they are going to, Time to Bite the Bullet EastCoastBubbleBoy and buy something. You were very wise to wait, but I do not think it's wise to continue to wait.

Realistically markets will be adjusting for next 5 years or so. It's not a market, it's still a balloon deflating where random people run around still hoping to get ballooned price for their wooden box.

This morning:
http://blogs.wsj.com/economics/2011/02/09/live-blog-ben-bernanke-talks-budget-on-the-hill/

Ben Bernanke:
"...it would take us another four years or so to get down to 5% to 6% unemployment. "

And that was a very liberal statement because it considered 4.5% growth in GDP, which isn't there. But to sum it up in present context... no jobs = lower prices.

TechG, I have no idea about the market situation in where ECCB lives. Obviously, I can't comment on what he should do though, your last post above made me curious.

- What made you believe the housing price is as low as it can get in where ECCB lives?

- Which one is that? It's time to jump in because the area already got the kind of correction it needs, or you think he should not wait any longer because there're full of BS, and full denial that won't go away in thousand years?

I frankly have no idea how fast or far home prices will fall in the bay area. I thought a couple of years ago it would be much faster and sooner. I was wrong.

I will say that I get to rent a nice house for much less than I can buy in a nice neighborhood. I have really learned to enjoy no home repairs and yard work. That is plenty incentive for me to keep renting.

infection point. I have no idea either in northern virginia area. I thought the same way, and I was wrong too.

House rent is very rare, almost non-exisitance in where I live. Rent = Apartment is the norm here. Now I am seeing all sort of rent available though, it never was common. Apartment living had been ok for me for years, but it turned into a ghetto after few new commers came in. Old timers are leaving this place and I will be the next.

Will I rent better place or will I buy? It all depends on the market situation in next 6 monthes.

Seaside,

That is a tough situation. We have lots of single family home rentals in the bay area. I have been lucky to find a good rental at a very reasonable price and my landlord is excellent. I will re-sign my lease for another year.

I think you can easily rent for another 6 to 12 month and wait it out. After all, lets say we hit the bottom this year. I dont think home prices are going to start rising any time soon. If we have reached the bottom it is going to bounce side ways for some time to come.

Best of luck to you.

EastcoastBubbleBoy, you are absolutely right! We realized the exact same thing and bought a place. There is no rush to buy if you don't have any serious reasons to get out of your rental (like rent increase or nasty landlord)...but if your just waiting to buy because its gonna be cheaper, I think that's not the right reason. If you have the money right now and find a decent place that works for you and that you are comfortable with, I think its a sound decision...IMHO.

We hated our rental and landlord so I could not wait to get the hell outta here. If interest rates rise, price will come down but like you said...it won't help you, because your payment will still be the same for the same place and you may waste another 2 years of rent money. The only time it would matter is if prices dropped 50% and you had enough cash to buy a house with cash then...but another 50% from here would mean EVERYBODY can buy a house...that's exactly why it won't happen. Everbody can not buy a house - as soon as prices get cheap, people come out of the woodwork rentals and buy = prices start to stabilize then climb...

Good luck on your search, if you decide now - be tough - its a buyers market now, which is nice...inspect the home to the tooth and hand out a list with all the things you want fixed. Of course, all within reason but its that kind of market.

seaside says

TechG, I have no idea about the market situation in where ECCB lives. Obviously, I can’t comment on what he should do though, your last post above made me curious.
- What made you believe the housing price is as low as it can get in where ECCB lives?
- Which one is that? It’s time to jump in because the area already got the kind of correction it needs, or you think he should not wait any longer because there’re full of BS, and full denial that won’t go away in thousand years?

Because i know where he lives, I don't have his exact address, telephone number or Social Security number, but I have a pretty good idea what area he lives in.

As I stated at the end of my posting, in EastCoastBubbleBoy's situation at least, it's time to buy. The northeast is showing signs of housing recovery. I do not fore see more than another 5% decline in prices at the very most in the NorthEast. It really doesn't pay to wait any longer, at least for the kinds of inventory he's looking at (House with land). As i stated before the lower end of the market (tract developments on no land) will continue to drag down overall sales and pricing, but the higher end of the market is beginning to recover.

TechG. I somehow knew you had an idea about where he lives, and talked accordingly. My question was the reason why you think it’s time for him to buy, and your answer was it is because there’re signs of recovery in his area. That exactly is what I was curious about. What signs of housing recovery there? Can you be bit more specific about them, and let me know what they are?

For me the elephant in the room is that anyone saying one should buy now or that the bottom is in assumes that the recovery in jobs and wages will continue. I think that is a very dangerous assumption. Employment is not improving (regardless of what the headline 9.x% number says). Likewise wages are not improving.

One silver lining to this whole housing bubble debacle is that now you need to have income to qualify for a loan (down payments are still too low due to govt intervention but that's another topic). So if the employment or wage pictures continue to deteriorate then house prices must fall regardless of what interest rates do.

inflection point says

I frankly have no idea how fast or far home prices will fall in the bay area. I thought a couple of years ago it would be much faster and sooner. I was wrong.

Well you were right, prices did fall much faster and continue to fall. Only half way there so far.

http://www.housingbubblebust.com/

TechGromit says

The northeast is showing signs of housing recovery. I do not fore see more than another 5% decline in prices at the very most in the NorthEast

http://www.housingbubblebust.com/OFHEO/Major/NewEngland.html

Recovery ? Yes back to the normal trends...

thomas.wong1986 says

TechGromit says

The northeast is showing signs of housing recovery. I do not fore see more than another 5% decline in prices at the very most in the NorthEast

Recovery ? Yes back to the normal trends…

You graphs show two or three of the areas it's tracking out of seven in New England have flattened out. And for the other North East, three areas that are going up in price and another 2 that have flattened out. Incidentally, I live in near Atlantic City, which is basing my assumptions on. None of the graphs specifically addresses East CoastBubbleBoy's exact area. Also you have to remember the graphs are an overall condition of the market. they do not separate the different housing market tiers (low, middle and upper), a more detailed graph may show a much different story.

grywlfbg says

For me the elephant in the room is that anyone saying one should buy now or that the bottom is in assumes that the recovery in jobs and wages will continue. I think that is a very dangerous assumption. Employment is not improving (regardless of what the headline 9.x% number says). Likewise wages are not improving.

Hmm, I'll have to agree with you, the job outlook isn't improving very much... But regardless how FU'd the economy is, someone always has money. And those that do are not looking for at cookie cutter houses on 60x100 lots. They are looking for nice houses on decent sized properties, weather in golfing communities or nice wooded areas. This it the type of inventory East Coast it looking at. If he was looking at tract development housing, my advice would be very different. So I will state my position yet once again.

The upper end of the market on the east coast is beginning to improve significantly. Even if the graph shows an area is in decline overall, you have to consider that perhaps the low end inventory is dragging the graph data downward.

TechGromit says

thomas.wong1986 says

TechGromit says

The northeast is showing signs of housing recovery. I do not fore see more than another 5% decline in prices at the very most in the NorthEast

Recovery ? Yes back to the normal trends…

You graphs show two or three of the areas it’s tracking out of seven in New England have flattened out. And for the other North East, three areas that are going up in price and another 2 that have flattened out. Incidentally, I live in near Atlantic City, which is basing my assumptions on. None of the graphs specifically addresses East CoastBubbleBoy’s exact area. Also you have to remember the graphs are an overall condition of the market. they do not separate the different housing market tiers (low, middle and upper), a more detailed graph may show a much different story.
grywlfbg says

For me the elephant in the room is that anyone saying one should buy now or that the bottom is in assumes that the recovery in jobs and wages will continue. I think that is a very dangerous assumption. Employment is not improving (regardless of what the headline 9.x% number says). Likewise wages are not improving.

Hmm, I’ll have to agree with you, the job outlook isn’t improving very much… But regardless how FU’d the economy is, someone always has money. And those that do are not looking for at cookie cutter houses on 60×100 lots. They are looking for nice houses on decent sized properties, weather in golfing communities or nice wooded areas. This it the type of inventory East Coast it looking at. If he was looking at tract development housing, my advice would be very different. So I will state my position yet once again.
The upper end of the market on the east coast is beginning to improve significantly. Even if the graph shows an area is in decline overall, you have to consider that perhaps the low end inventory is dragging the graph data downward.

The main reason people that may have purchased housing in a development instead of in nicer area is price. When the market was in a bubble, even those with money could only afford smaller properties in developments. Now that market has stabilized, and they can afford nicer houses, they were not going to run back to over crowded developments anytime soon. If could afford a nice house on a bigger piece of property, what are you going to buy, that, or some house on a busy highway cause it's cheaper? A house on a 60x100 lot where 1/4 of the houses in the development are vacate because they were foreclosed on? I think not. The most desirable housing is going to go first, as the demand increases for those properties, the price will follow. Once the price reaches a point where some can not afford them, they will be forced to select less desirable properties.

If you were to look at houses for sale today and compare them to what they were selling for in 2005. Development houses that all look the same with no property are off by as much as 40% to 50% in price. Compare that to houses that are more unique looking, that are on larger lots of land, they are only off 20% to 25% in price. The desirable houses will always fall less in value during a downturn when compared to "Dr. Bubble Housing's gem of the week" and recover first and faster.

Folks whats happening IMO is the banks can't lower there prices in many areas. remember comps right?
Nothing seems to be selling around my area at the moment. I'm backing up with tons of old REO properties that aren't moving. at least mine aren't. I have 50 properties and only one has sold in the last 30 days.
I can't even take any more properties to manage.
this baby is going to pop soon!

Banks are starting to let the "tenants" just stay a watch the houses in places likeHemet CA, I'm seeing more of this as of late.
2011 is going to be the year! 20 percent down from here!

TechG, thanks for your opinion, though I still have couple questions.

I want you to give me some idea about the general market (HH income, unemployment rate, and home price range) of where you think ECCB is looking at, since I can hardly imagine what the place is like as ECCB was talking about 200~250K home, and you're saying it's upper end property in nicer area. This does not make a good sense to me, and I am pretty sure that we're seeing different pictures as we are living in different locations.

High end area in northern VA and some part of MD where median home price is over 700K, HH income is 200K = going up. 14% or so up in last few months. Mid level area where median home price is 450~500K, HH income is 80~100K = fluctuating little bit, -5 to +5%. Low end or less desirable area mostly in east and south of DC = Slashed down 50% already and still going down... is what's happening in DC metro. Only one trend that is the same in all area is sales volume. It's quite lower than usual. Unemployeement rate never been a problem here in DC metro area.

So, what's the area you think ECCB is buying is like?

Katy Perry says

Folks whats happening IMO is the banks can’t lower there prices in many areas. remember comps right?

Nothing seems to be selling around my area at the moment. I’m backing up with tons of old REO properties that aren’t moving. at least mine aren’t. I have 50 properties and only one has sold in the last 30 days.

I can’t even take any more properties to manage.

this baby is going to pop soon!
Banks are starting to let the “tenants” just stay a watch the houses in places likeHemet CA, I’m seeing more of this as of late.

2011 is going to be the year! 20 percent down from here!

Same here. I am adding more and more of them on redfin favorites everyday but none of the old favorites are coming up as *SOLD*.

Classic example. I have so many on my watchlist.

http://www.redfin.com/CA/Cypress/9838-Ravari-Dr-90630/home/3994846