patrick.net

"I think we're bumping along the bottom right now," said Realtor Douglas MacDonald of Coldwell Banker Solano Pacific in Vallejo.

If I had a nickel....

My point is, "Home values fell in the Bay Area and around the nation in the fourth quarter..." The bottom was not 2009.

Looks like a 2B condo sold for $380,000 in the complex I like to watch.

I think we're bouncing along the bottom here and chances are in fact non-zero that prices will move up.

They certainly want to, given that the 30 year cost of owership on that condo is just $1300/mo, well under rents (actual cash outgo is $2300/mo, which is pretty affordable around here).

joshuatrio says

“I think we’re bumping along the bottom right now,” said Realtor Douglas MacDonald of Coldwell Banker Solano Pacific in Vallejo.

If I had a nickel….

Last time the REA were saying we are "bumping along the bottom,
and prices would go flat for awile" was when prices peaked in 2006-07.

pkowen says

My point is, “Home values fell in the Bay Area and around the nation in the fourth quarter…” The bottom was not 2009.

OH! SHOCKING NEWS !

RE is local ...... repeat as needed

Sales transactions, asking prices, and selling prices *do* traditionally fall during the 4th quarter of any year, but the article does note that the decline is also year-over-year:

For the nine-county Bay Area, Zillow shows a median home value in the fourth quarter of $463,246, down 3.6 percent compared with a year earlier

But, this is also Zillow talking, and their home "value" formula is based on shaking a Magic 8 Ball.

If your going to get your real estate education via the internet... nuff said! A 9 pound monkey with a network connection can appear to be the mighty oracle, just look at one of the biggest idiots - Stan Humphries, of Zillow. The fact that that moron gets interviewed is beyond comprehension. The site is just plagued with errors, yet it is cited as an authority for establishing what is going on with values nationally. Another is Yun. They get notoriety by placing 'Economist' at the end of their name, and the public accepts them as a GURU; very sad.

Real Estate will bottom when these conditions begin to turn. Employment; this number is so cooked, actually closer to 20%. The Treasury stops printing money, and returns money creation to the public, where it constitutionally belongs. Huge cuts in spending are put in place, but this is the proverbial 'double edge sword'; for the trillions that need to be cut, there are hundreds of thousands of jobs associated with those cuts.

At some point all the daily POMO's (permanent open market operations) will end. When that happens, the financial markets will fall dramatically, along with the final down leg in real estate, all monetary based markets will begin normalization, and a healthy recovery will occur. The odds of this scenario occurring are virtually improbable. The government, mainly republicans, have not learned a thing from history, and this administration is no different economic policy wise, as was the Hoover Administration. The big difference is the 14.2 Trillion in annual spending... 98% of GDP! The death spiral is in motion, the Dollar is being decimated; down over 30% in the last 3 years. Your mission; figure a way out! The real estate bottom.... Many years away.

nelsonbentz says

nelsonbentz

Take a look at this post by nelsonbentz - MORON EXTRAORDINAIRE! Joins thread to post a blatant lie, just like the septic hole he lives in; MBA - Mortgage Bankers Association. Take a look at the garbage stats that criminal organization puts up! They have run out of warm bodies with pulses to pump this garbage to, and refinance numbers are so pathetic, they can't even spin them anymore! This is their new marketing campaign. But they are barking up the wrong tree here! Right guys / gals! Patrick Net has you covered, with the daily post to educate, enlighten, and inform!

repo4sale says

FACTS 4 ALL 2 ANALYZE:

1-California Real Estate Cycles are 8-10 years to top & to bottom, same cycle since WW2

2-Bottom is about 200% of past bottoms & tops are about 200% of past tops!

3-California is about 15% of the US GNP or GDP, or 7th or 8th biggest “economy” in the world.

4-Most “real estate deals” get derailed due to BAD TIMING, LITIGATION, EMOTIONS OR DEBT.

5-California is a good Property Tax State due to Prop.13 minimizing BUY Assessments.

6-Timing is 100% of your DEAL aka investing at the bottom & selling at the top, avoid DRAMA!

7-Internal Rate of Return, aka the MBA Hedge Funds way to calculate Investments is REQUIRED!

8-Me? I bought 300 properties in the 1990s (bottom) & sold 198 of them at or near the top.

9-My GROSS monthly return before expenses was 49.22% per month, all deals included.

10-THE BUY WINDOW IS 2010 TO 2015 & SELL WINDOW IS 2018-2020(subject2changes).

11-My IRR aka Net return after expenses is 27%/month from 1999-2008.

12-I bought 32 properties in 2010 at 1-7cents vs. 2007 value.

13-I expect to close escrow on 100-200 properties by 2015.

14-My “Exit” window is 2016-20 yielding 35% IRR via graphs, charts, HP12B2, Android & Excel!

15-By 2020 my goal is to be a Billionaire.

You got a connection to that high octane weed their growin' out there don't you! Could you forward me the link!

Bap33 says

RE is local …… repeat as needed

Thats basically it. In some places RE dropped to reality, in some places it is holding on due to lavish subsidies and other items such as denial or market manipulation.

The one interesting tidbit was the point that accelerating declines are likely to help bring the market to a bottom later this year. This dovetails with the argument that stakeholders (banks, govt) should allow the market to drop quickly so that a bottom can be found more quickly --- the problem is that the stakeholders are NOT allowing the market to find a natural floor, so I think this tidbit is likely to be incorrect (without taking into account other factors such as momentum).

The fact is that none of us know when RE will hit bottom, and it is kind of silly for the guy from Zillow to make such a prediction. There are too many influencing factors which are unknowable.

junk says

repo4sale says

FACTS 4 ALL 2 ANALYZE:
1-California Real Estate Cycles are 8-10 years to top & to bottom, same cycle since WW2
2-Bottom is about 200% of past bottoms & tops are about 200% of past tops!
3-California is about 15% of the US GNP or GDP, or 7th or 8th biggest “economy” in the world.
4-Most “real estate deals” get derailed due to BAD TIMING, LITIGATION, EMOTIONS OR DEBT.
5-California is a good Property Tax State due to Prop.13 minimizing BUY Assessments.
6-Timing is 100% of your DEAL aka investing at the bottom & selling at the top, avoid DRAMA!
7-Internal Rate of Return, aka the MBA Hedge Funds way to calculate Investments is REQUIRED!
8-Me? I bought 300 properties in the 1990s (bottom) & sold 198 of them at or near the top.
9-My GROSS monthly return before expenses was 49.22% per month, all deals included.
10-THE BUY WINDOW IS 2010 TO 2015 & SELL WINDOW IS 2018-2020(subject2changes).
11-My IRR aka Net return after expenses is 27%/month from 1999-2008.
12-I bought 32 properties in 2010 at 1-7cents vs. 2007 value.
13-I expect to close escrow on 100-200 properties by 2015.
14-My “Exit” window is 2016-20 yielding 35% IRR via graphs, charts, HP12B2, Android & Excel!
15-By 2020 my goal is to be a Billionaire.

You got a connection to that high octane weed their growin’ out there don’t you! Could you forward me the link!

**puff, puff...... pass**

I have to admit the Clear Capital report did surprise me a bit (I would have given even odds on a seasonal turn, but an early turn would be shocking) so I dug around a little. As they say, all real estate is local:
Only Detroit, MI; Fresno, CA; Las Vegas, NV; Raleigh, NC; San Francisco, CA; and Tampa, FL experienced larger quarterly price declines over last month.
Quite an august group to be part of...

Just bought my first post bubble rental. That being said, I hope the market continues to go down. My balance sheet will take a hit, but I hope to buy more rentals a bargain prices.

EBGuy says

I have to admit the Clear Capital report did surprise me a bit

It might not even be reflected in Case Shiller since CC isn't doing a rolling average (hence, more volatile data).

Troy says

Looks like a 2B condo sold for $380,000 in the complex I like to watch.

I think we’re bouncing along the bottom here and chances are in fact non-zero that prices will move up.

They certainly want to, given that the 30 year cost of owership on that condo is just $1300/mo, well under rents (actual cash outgo is $2300/mo, which is pretty affordable around here).

What are the homeowners fees in said condo... What's to keep those fees from skyrocketing? Buying a condo with HOAs may be similar to buying an adjustable rate mortgage with interest rates at all time lows....

In 30 years your HOA fees might be $1300 a month! have fun with that!

You'll know home prices have hit bottom when everyone says they will never buy real estate ever again. Too many people still are talking about what a great deal houses are.

common_sense says

Too many people still are talking about what a great deal houses are.

You have got to be kidding........Patrick.net is chocked full of doomsday, 1/2 glass empty, chicken little types. Watch out the sky is falling in ALL parts of the USA at pat.net

Safe mortgage= 3X Yearly Salary.

How many people in the bay area make $463,246 / 3 ???

We are still in a bubble.
Don't kid yourselves.

3 X Monthly Salary.
End of story.

I rent a house in Newark that sold for 165,000 in 1997.
They tried to sell it for $599,999 in Dec. of last year before going back to renting it.
They cannot get it through their heads that NOBODY can get a loan for .6 Million anymore on a signature.

It will take time, but we have a lot of adjusting to do in the bay area.
I and my wife WILL wait. Many hundreds of thousand, if not millions of rational Californios like us will undoubtedly follow suit.

divingengineer says

How many people in the bay area make $463,246 / 3 ???

Tons, actually. Plenty to soak up any new supply really. Which is why only houses in the po' areas are under $500,000 right now.

It will take time, but we have a lot of adjusting to do in the bay area.

but I agree that there is a great possibility for "adjustment" here. Depends on whether or not the state can get its fsical act together, how local spending holds up, and the tech job market.

It's a mixed bag, more bad than good, but it's not all bleak. Prop 13 protection on rentals is a beautiful thing WRT limiting supply here.

Troy says

divingengineer says

How many people in the bay area make $463,246 / 3 ???

Tons, actually. Plenty to soak up any new supply really. Which is why only houses in the po’ areas are under $500,000 right now.

in 1999 17.3% of all california households (11.5M) made $100k or more.
6.9% of california households made $150k or more.

note: stats are for 1999 not 2010, and for california not bay area. 2010 census numbers for california will be out before april 1 of this year.

http://factfinder.census.gov/servlet/QTTable?_bm=n&_lang=en&qr_name=DEC_2000_SF3_U_DP3&ds_name=DEC_2000_SF3_U&geo_id=04000US06

robertoaribas

Be civil and avoid calling other posters names. Case Schiller is a lagging index. The truth will be be revealed in time.

Confidence comes from not always being right but from not fearing to be wrong - P Mcintyre

marcus says

RE prices go up when interest rates go down, and RE prices go up when interest rates go up. So what I hear you saying is basically that RE prices always go up.

Historically -- yes. Right? Due to the supply/demand nature, as long as after-tax incomes keep rising so will home values.

But I think comparison of this decade with past decades is totally wishful thinking.

We've never been at the zero-bound before, and we've been basically running scared economically since 2002.

Volcker was actually using higher interest rates to KILL housing appreciation in the late 70s, and so did Greenspan in the late 80s, and mid and late 1990s.

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

Bernanke, too -- rates were mildly raised in the 2005-2006 back to "neutral" -- and THAT partially caused the Great Recession.

That's why things are Different Now. Raising rates back to 5% shouldn't result in the mother of all recessions.

The problems run deep with this economy and all we're doing now is throwing borrowed and printed money at the problem. This is probably not going to end particularly well.

Raising rates will be a significant liability to the banks who own property and people who want to sell their homes.

inflection point says

robertoaribas
Be civil and avoid calling other posters names. Case Schiller is a lagging index. The truth will be be revealed in time.
Confidence comes from not always being right but from not fearing to be wrong - P Mcintyre

Don't be too hard on Robert, he rarely has anything good to say to anyone. He just can't help himself. Just look how sad him and his dog look.

I realllllly like robertoaribas' dog.

There are some good points on here furthering my education. I see rising inflation which could increase housing prices but crush your spending power (I don't think the average citizen would fully understand that). Rising interest rates which could keep some people from buying, or go the other way to force peoples decisions who want to lock in a lower rate. Then their is the inventory of foreclosed homes on the market that seems to keep rising.

Inflation raises prices up.
Interest rates for this year could spark some people buying or keep people out. (neutral)
Excess inventory on the market drives prices down.

Of these three factors, I see a fairly stagnent scenario. I am no expert however.

Truthplease says

Inflation raises prices up.
Interest rates for this year could spark some people buying or keep people out. (neutral)
Excess inventory on the market drives prices down.

This has been the debate for the past several years on this board.

The biggest problem housing has, is if credit dries up - and they make 20% + down mandatory. You'll see home prices TANK as very few people even have 20%.

joshuatrio says

Truthplease says

Inflation raises prices up.

Interest rates for this year could spark some people buying or keep people out. (neutral)

Excess inventory on the market drives prices down.

This has been the debate for the past several years on this board.
The biggest problem housing has, is if credit dries up - and they make 20% + down mandatory. You’ll see home prices TANK as very few people even have 20%.

Your "if" is not reality. We just went through the biggest credit contraction in history, and we are right back to lending with 3.5% down. The chances of making 20%+ down is pretty much 0%. The gov't is hellbent on inflating away our problems, they are not all of a sudden going to restrict housing so that only the rich can buy.

ch_tah says

Your “if” is not reality.

That's why it's an "if."

ch_tah says

joshuatrio says

Truthplease says

Inflation raises prices up.
Interest rates for this year could spark some people buying or keep people out. (neutral)
Excess inventory on the market drives prices down.

This has been the debate for the past several years on this board.

The biggest problem housing has, is if credit dries up - and they make 20% + down mandatory. You’ll see home prices TANK as very few people even have 20%.

Your “if” is not reality. We just went through the biggest credit contraction in history, and we are right back to lending with 3.5% down. The chances of making 20%+ down is pretty much 0%. The gov’t is hellbent on inflating away our problems, they are not all of a sudden going to restrict housing so that only the rich can buy.

Government is actively restricting everyone from buying by artificially keeping the prices above what people can afford. However, they've done it for so long that an average person is ticked off at how government officials have handled this and don't want to be on the market.

With internet being free government can't keep people from finding out, communicating, and universally coming to a consensus that some officials are screwing us all for personal gain.

joshuatrio says

ch_tah says

Your “if” is not reality.

That’s why it’s an “if.”

But an "if" that has 0% chance of happening is not worth mentioning.

If the gov't hands everyone $1M tomorrow, then almost no one will be underwater on their mortgage. Is that really a concern of yours as a potential future purchaser? No, because the chances of it happening are pretty much 0.

Troy says

divingengineer says

How many people in the bay area make $463,246 / 3 ???

Troy says:
Tons, actually. Plenty to soak up any new supply really. Which is why only houses in the po’ areas are under $500,000 right now.

Average household income in the greater bay area is $65,052.
Average house in the greater bay area is $463,246

463,246 / 65,052 = 7.121 times annual income.

Am I missing some glaringly obvious point here?

divingengineer says

Am I missing some glaringly obvious point here?

yeah, inflation & Prop 13 basically. Not all homes are sold every year, so the median income is irrelevant.

Historically, 5% of the stock comes on the market every year, and the buying public has had to stretch themselves to get onto the "housing ladder".

Those who stay out of the market remain renters and have had inflation continue to kick their ass as rents rose to match inflation.

Buying power is also increased thanks to move up buyers transferring equity from old place to new.

It's the inflation element that makes the 3X annual income thing non-operative. People who stretched to buy 15 years ago are perfectly fine now.

So this can't end well.

ChrisLA says

Government is actively restricting everyone from buying by artificially keeping the prices above what people can afford.

I disagree with this. Affordability is orthogonal to what the government does and does not do.

At the end of the day what it comes down to is "how-much-a-month", plus the impetus of inflation creating a speculative premium that people are willing to pay. When Government intervenes to reduce the monthly expense for a given pricepoint, pricepoints just rise to compensate.

Houses will always be on the edge of affordable, since they are sold on the bid.

ch_tah says

But an “if” that has 0% chance of happening is not worth mentioning.

That's your opinion. And you know what they say about opinions...

You make is sound like a return to conservative lending standards is a bad thing.

Unless you're underwater, or have recently made a house purchase - a return to "sane" banking would be a good thing (long term) for our economy.

Edit: http://blog.useforeclosurelaw.com/2011/02/07/housing-debt-financing-is-disappearing/?source=patrick.net#post-233 this article today was a pretty good read. If financing becomes difficult in the future - and lending standard do tighten - I don't see any reason why they won't start requiring 20% down again - or at least a higher percentage.... Heck, if they are requiring 3.5% now - that's a huge leap from nothing during the boom. Even worse, if banks refuse to lend, it'll just make things cheaper. Granted, all we can do is guess at this stage in the game, but saying that the chance of lending standards changing is 0% is pure hogwash.

joshuatrio says

a return to “sane” banking would be a good thing (long term) for our economy.

I'm a happy renter and I'm not entirely sure about this.

There's this $6T mortgage bubble we've got to pay off . . .

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

joshuatrio says

ch_tah says

But an “if” that has 0% chance of happening is not worth mentioning.

That’s your opinion. And you know what they say about opinions…
You make is sound like a return to conservative lending standards is a bad thing.
Unless you’re underwater, or have recently made a house purchase - a return to “sane” banking would be a good thing (long term) for our economy.
Edit: http://blog.useforeclosurelaw.com/2011/02/07/housing-debt-financing-is-disappearing/?source=patrick.net#post-233 this article today was a pretty good read. If financing becomes difficult in the future - and lending standard do tighten - I don’t see any reason why they won’t start requiring 20% down again - or at least a higher percentage…. Heck, if they are requiring 3.5% now - that’s a huge leap from nothing during the boom. Even worse, if banks refuse to lend, it’ll just make things cheaper. Granted, all we can do is guess at this stage in the game, but saying that the chance of lending standards changing is 0% is pure hogwash.

Ok, I guess that's your opinion.

Be sure to let me know when 20% down is required again.

ch_tah says

Ok, I guess that’s your opinion.

Be sure to let me know when 20% down is required again.

That's all opinions are - opinions.

But completely dismissing an idea, just because you don't agree with it doesn't make it not worth mentioning. We may never see 20% down again, but we may never see 0%... Who knows? What if banks require 40% ? **gasp** People would actually have to save money again if they wanted the luxury of buying a home (when was that ever such a bad thing) !

You're on a forum - guess what you typically read on forums - you got it - "opinions."