patrick.net

shrekgrinch says

He can't possibly be as stupid as the things he's saying, like his bullshit talk about "restoring home prices."

Yes, he IS that stupid. Guess who was the numero dos guy that received the most in campaign contributions from Freddie and Fannie?

A junior senator from Illinois. Barack Hussein Obama

http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html

Christopher Dodd was numero uno because he did a lot with getting CRA and other crap out there while leaning on regulators to look the other way when some of them smelled a foul stench coming from CountryWide and other such institutions.

And the NAR (an actual pac) has donated mostly to Republicans (until it melted down).

This is typically a canard. Individuals within an organization do not represent an organization. You can have 1,000 employees donate $250 each to the Democrat and the CEOs donate 100,000 to the Republican--does that make the Dems or the GOP in the pocket of the business?

You'll see that the GSE totals include individuals.

Shawn says

You forgot to factor in that a married couple already receives a standard tax deduction of $11,600 per year.

In high-tax states like California, people buying $800,000 houses will have the full standard deduction covered by the state income tax deduction.

And it's more than that, really, because inflation will inevitably increase the standard deduction over time whereas the interest costs should remain fixed.

Neither here nor there as long as the household is bringing in an upper middle class salary.

That's actually lower than I thought it'd be

yup!

Plugging in 8% interest rates sees the average TCO rise to $2800/mo.

Refiing down to 2.5% would lower the TCO to $1460/mo.

I think we'll see 2.5% rates before 8%.

I deeply regret not buying that $350,000 condo in 2001. Rates were 8%+. That suppressed home values. My housing cost would be under $1000/mo now had I bought.

Bellingham Bob,

The standard deduction increasing is important, as it would decrease the total advantage of buying a house over just taking that deduction over time.

No matter how we do the math I don't imagine myself regretting not buying right now. When it all comes down to it I look at the houses we can afford where we want to live in San Diego and I vomit. In a way that really ends the debate for me. Maybe I'm just not a fan of the 70's style architecture. Maybe I just can't see how anyone would want to live in a 1200 sq ft box with no yard, let alone pay 500 grand for it. But I just can't hop onboard.
If the properties that we do like drop to half the cost, which could happen, we'll buy something. If not we just plan to move in a few years.

bubblesitter says

For those who have jobs,wages are stagnant or are falling due to pay cuts and furloughs

We can argue about what wages will do in the future, but for people having jobs, wages are NOT decreasing.

Shawn says

The standard deduction increasing is important, as it would decrease the total advantage of buying a house over just taking that deduction over time.

the standard deduction rises with incomes. As long as the household's state tax payment covers it, the MID is entirely free money.

No matter how we do the math I don't imagine myself regretting not buying right now.

Sure. As long as prices are falling $30,000 a year I'm happy renting.

Maybe I'm just not a fan of the 70's style architecture

LOL. I love old nabes with the big trees.

But I am in no way a buyer in the bay area. Nice place to visit but I wouldn't want to live there. Well, this place maybe:

http://www.redfin.com/CA/Kensington/88-Norwood-Ave-94707/home/1685368

Bellingham Bob says

the standard deduction rises with incomes. As long as the household's state tax payment covers it, the MID is entirely free money.

No matter how we do the math I don't imagine myself regretting not buying right now.

Sure. As long as prices are falling $30,000 a year I'm happy renting.

Ah, caught it this time.

The falling prices have helped us feel good about renting for now too. Friends and coworkers tried to point out how well the tax credit was working and how crazy we were. It was a little tougher staying out of it then, but nobody's telling us they told us so anymore.

tatupu70 says

but for people having jobs, wages are NOT decreasing.

There are still some other shoes that can start dropping here.

Simpson Bowles, the Ryan Plan, the state budget blowing up, interest rates spiking for some reason, $10 gas, the list is pretty long.

Bellingham Bob says

tatupu70 says

but for people having jobs, wages are NOT decreasing.

There are still some other shoes that can start dropping here.

Simpson Bowles, the Ryan Plan, the state budget blowing up, interest rates spiking for some reason, $10 gas, the list is pretty long.

“Nessuna soluzione . . . nessun problema!„

No doubt. That's why I hedged by saying the future is unknown. But I'm tired of bubble saying wages for people working are falling.

tatupu70 says

We can argue about what wages will do in the future, but for people having jobs, wages are NOT decreasing.

Not entirely true. A lot of my clients complain about being underpaid. What happened for a while is that people who lost jobs, took on lower paying jobs just to make ends meet.

Of course I don't know what they were doing before the bubble. Hard to compare.

I'm not really sure incomes are falling for those with jobs. An employer would be foolish to cut wages of existing workers because that would destroy morale and possibly invite sabatoge as a small minority will seek revenge. An employer would be better off laying off workers or allowing them to retire/ quit, and then re-hiring new workers at a lower wage.

This is how it is typically done. Company A dumps their high paid American workers and then immediately hires low paid H1-Bs. They are not going to tell the American workers that they will now only get the same salary as an H1-B. Even if they ware willing to work for less, they won't give them the option.

"Missing in this analysis is productivity per worker. Thanks to computers, cheap oil, automation, etc we're 50% more productive now than 30 years ago."

True and I agree but

"The baby boom echo is only 10% smaller than the bb, btw."

Not that sure on that though. There is no doubt that we do have smaller family units then in the past (productivity being a major cause but one could argue if one cannot afford a family they simply won't have it).

"Counting bodies is misleading. What needs to be counted is economic opportunity. That doesn't necessarily scale with just raw population, otherwise Bangladesh would not be nearly the poorest country on the planet."

But that is a bit misleading as well. People there were known for having large families but the family units dropped dramatically with higher education (William Easterly's White Man's burden illustrated this). China has more but with a one child policy.

Raw population alone is one thing but economic opportunity pretty much is extending to much of the planet. There are areas that were known for decades of war that have ended..coupled with a oil boom and wealth surged (Angola). Every country wants to be connected (although certainly north korea, iran and Somalia are going to have issues). Raw population and ability to work pretty much showed why china boomed and russia (post ussr) didn't. Historically in an economic downturn countries turn to export markets..of course the trouble with that is it can lead to massive intervention and price wars

shrekgrinch says

Ah yes...they pulled the old 'we didn't make the contributions, our employees did' fraud and you buy it hook, line and sinker?

You guys really have drunk the Obambi Kool-Aide, haven't you?

You're a moron.

Did you actually READ the article? I'll reiterate, since you obviously didn't: When you count directors, officers, and lobbyists, McCain got TEN TIMES AS MUCH in campaign contributions as Obama. TEN TIMES.

You're counting EVERYONE who ever got a paycheck, in any way, from Fannie or Freddie. I suppose you think it's relevant whether the fucking janitor at the Fannie Mae office gave 20 bucks to the Obama campaign. Only in your warped right-wing fantasy world would such a thing be considered as him getting money FROM Fannie and Freddie. They don't control what their low-level employees do in their spare time. Yeah, if the president and board of directors of the company are giving money to a candidate, then it's jive to hide behind the fact that they are "employees". Guess what? When you count the actual people who would guide policy at the company in some way, Obama wasn't even CLOSE to being the biggest recipient. But hey, don't let those pesky facts get in the way of your diatribe.

You really drank the Rush Limbaugh Kool-Aid, didn't you?

The Banksters are laughing their asses off at people like you who are so into your little partisan nonsense that you don't even notice they're robbing you blind, and it has nothing to do with whether the R's or the D's are in office.

I think Obama knows about renters being priced out. The problem is there is no easier way to get growth back up unless the current inventory dries up. I am a renter myself and have been frustrated by the high prices, yet sometimes i ask myself.. what is better? Lower home prices vs. More unemployed, including myself? We could have some other bubble, but the housing one beats them all in sheer size.

Java says

Lower home prices vs. More unemployed, including myself? We could have some other bubble, but the housing one beats them all in sheer size.

There's no real way to get that party started again. Interest rates are 4%. Lowering them to 2% would only induce a ~10% rise in prices.

The boom (2002-2003) was caused by rates falling from 8% to 5% and tax cuts giving families thousands of dollars more a year to bid up housing.

The bubble (2004-2006) was caused by the abandonment of lending standards (liar loans), the innovation of suicide lending (negative am), and 80/20 "affordability" products that removed any risk to the borrower.

We can't do that again.

House appreciation doesn't create sustainable jobs. Sustainability comes from exportable wealth creation. We can't export homes.

gameisrigged says

The Banksters are laughing their asses off at people like you who are so into your little partisan nonsense that you don't even notice they're robbing you blind, and it has nothing to do with whether the R's or the D's are in office.

Pwned quite nicely there, gameisrigged. This is exactly what I tell shrek sometimes, that there are many gullible people who focus on stupid things like this, but he insists on his nonsense.

>And the NAR (an actual pac) has donated mostly to Republicans (until it melted down).

Something else I learned on this site.

Java says

I think Obama knows about renters being priced out. The problem is there is no easier way to get growth back up unless the current inventory dries up. I am a renter myself and have been frustrated by the high prices, yet sometimes i ask myself.. what is better? Lower home prices vs. More unemployed, including myself? We could have some other bubble, but the housing one beats them all in sheer size.

I don't follow, Java. The "problem" is that inventory needs to "dry up"? How do you reduce inventory? By selling. How do you sell? By offering reasonable prices. High prices would have the exact OPPOSITE effect that you want them to have.

Every dollar of lost value causes, what, $10M of default losses?

That's the jam the system is in.

http://research.stlouisfed.org/fred2/graph/?g=240

$10T of borrowed money and not enough equity to cover it.

Bellingham Bob says

House appreciation doesn't create sustainable jobs. Sustainability comes from exportable wealth creation. We can't export homes.

You've got that straight.

And this entire issue of the Resident knowing about renters being priced out of the market? I hate to say that the one's truly ruined IN THE MARKET were the loan debtors on the properties. The renters with no mortgages turned out to be the winners (which was predicted I believe even on Patrick.net at the height of this lunacy about five years ago.)

Bellingham Bob says

House appreciation doesn't create sustainable jobs. Sustainability comes from exportable wealth creation. We can't export homes.

That is true...of course the NAR tries to say it does create jobs (thank God for HDTV as you can read actual text now) It says it takes two homes to create one job...sheeshh.

But it would be interesting if we could export homes. I'm surprised that Lennar or some other one wouldn't try to put money into exporting homes..I'm sure it could be done but it is simply a matter of scale.

If you ever want to see an odd assembly line there was this caddy from the late 80s/early 90s
http://en.wikipedia.org/wiki/Cadillac_Allant%C3%A9

CL says

And the NAR (an actual pac) has donated mostly to Republicans (until it melted down).

From what I've seen looking at the donation numbers, it's almost a 50/50 split. NAR owns both political parties and play favorites on a case-by-case basis.