EPD, I'm digging through the data right now - I don't see this as "managed". We are into the slow months right now, so there is a large seasonal adjustment. I post more after later.
EPD, NAR has been caught fudging the seasonal adjustment factor in the past. Whether this is an innocent bit of tweakery on their part or a more sinister attempt to make the numbers look better than they really are, I don't know.
Off Topic, but a sincere thanks to CR and Tanta for this blog. It is the best on the web bar none--no technical analysis crap or silly market blathering, just real information about difficult topics to understand.
Here in the San Fernando Valley sales are off about 40% since last year and over 65% (!) since the peak.
The median price is finally reflecting some of the discounting that's going on out there. The median price is down about 13% y/y, dropping under $500k in Oct & Nov for the first time since '04.
Lot's of foreclosures hitting the market now, usually listed for about 20-35% less than they sold for in '04-'06.
The San Fernando area had been one of the areas where pricing data had been holding up, while volume fell off a cliff. As one of the most overpriced areas in the country (along with the rest of LA), it looks like substantial price declines are finally here.
how much of an impact will the new GSE standards have on the market?
You mean the pricing adjustments that are just now hitting retail rate sheets?
That's hard to say. I am not sure how big that group of motivated buyers who can meet the tightened underwriting guidelines from earlier in the year (and cough up a down payment) but who are going to be priced out because of a 50 bps increase in the interest rate is.
I'm still inclined to think the biggest impact of that pricing change is going to be on refis. A lot of folks are just no longer in the money in the context of getting out from under their prime hybrid ARMs that will reset in the next year or two, so they'll hang in there a while longer.
Housing market is bottoming:
"Near term, existing-home sales should continue to hover in a narrow range,
just as they have since September, and that's good news because it'll be a
further sign that the housing market is stabilizing"
all real estate is local:
"Just like the weather, there are large local variations in home prices. A quarterly examination of price performance on a metropolitan basis
shows nearly two-thirds of metro areas are showing price increases"
It will be interesting to see how tax selling affects the next few days. 80% of the time, the last hour of the last trading day of the year sees a strong sell off. There are certainly plenty of losses to be sold, if they have not already been sold. On the other hand, The afternoon of the first trading day (Jan 2) usually sees big gains. There is a lot of new money waiting to go into the market. These patterns should be strong in the RE and financial sectors.
A lot of folks are just no longer in the money in the context of getting out from under their prime hybrid ARMs that will reset in the next year or two, so they'll hang in there a while longer.
oh man, i wish i could figure out how to draw a pig's tail in the comments. that tail would certainly yield some enjoyment!
Well, for anyone following the home builder stocks, we saw a minor pump-and-dump at the time of the NAR release. A stinging testament to the NAR's lack of credibility.
in my NYC suburb prices have stabilized a few % points below the last 12 months and about 10-15% from peak whereas only a few suckers actually bought at those levels. much ado about nothing around here.
I read the fortune article. funny thing they based it on what the guy from 3rd avenue who owns 20%... since 2006. can imagine how unbiased he is. they also said that current valuation implies smth like $3k per are, whereas firesale price is $5k. last transaction JOE did was at $1.5k per are. i assume quite a bit of their land is in the swamps
My sense is that there are many investors with RE that is negative cash flow and underwater. From what I understand, the lenders are hanging tough so far regarding loan renegotiation. Any thoughts on how this might play out would be appreciated. My conclusion is that there is a large pent up supply!
Speaking of Florida land values, here's an excerpt from a post I put up about a few land transactions by a couple of builders. No word on the haircuts invovled in the M/I transaction, but there is some detail on how much of a bath the private builder mentioned took ...
First, M/I Homes said it sold off approximately 3,700 lots for $82 million. Most of that land is in Florida, with more than 500 lots being dumped in the West Palm Beach market (which the company is exiting after doing business here since 1985). M/I Homes' local communities include a mixed townhome/detached home community called Paloma not too far from where I live and the Oaks at Hobe Sound.
Second, private builder Mercedes Homes just sold 130 vacant lots in Port St. Lucie for an average price of about $19,400, according to the Palm Beach Post. How big a discount is that from their previous value? Here's an excerpt from the story, with my emphasis added:
"The lots that we sold, we bought at the top of the market," said Rob Smithwick, Treasure Coast division president for privately held Mercedes Homes.
Instead of continuing to pay interest on lots that might be worth one-third of what it paid, the home builder decided to take what cash it could get and move the properties off its books. Smithwick said Mercedes' losses on a per-lot basis were as high as $70,000 in some cases.
"But $70,000 on paper doesn't buy me a hamburger," he said.
So what's the outlook like for this area? Smithwick had some comments there, too:
"I do believe '08 will be the worst of all the years," he said. "Our objective is to hunker down ... so when we come out in '09 we will be one of the few standing."
The Illinois Association of Realtors released its 3Q statistics in mid-November, but I didnt get around to looking at them until a day or so ago. In Cook County (Chicago and close in suburbs) the numbers are interesting. Number of sales down, but mean and median prices both up some considerably.
Here they are for Cook County (condos only) 3Q:
Number of sales: 06 vs. 05 11.4%, 07 vs. 06 16.2%
i.e. 07 vs. 05 25.8%
Median price: 07 vs. 06 +8.1%
Mean price: 07 vs. 06 +9.6%
Here they are for Cook County (SFH only) 3Q:
Number of sales: 06 vs. 05 20.5%, 07 vs. 06 23.5%
i.e. 07 vs. 05 39.2%
Median: 07 vs. 06 +5.4%
Mean: 07 vs. 06 +10.3%
For the 5 collar counties (far out suburbs and farmland, but a few cities such as Waukegan, Joliet, Aurora, and Elgin) the statistics are worse greater declines in numbers of sales, and flat to down (in a few case 20% down) in prices '07 vs '06.
Last Sunday the Chicago Tribune real estate section published number of sale and median price statistics for Chicago neighborhoods. I calculated percentages for about half and found number of sales up in 26% and median prices up in 44%. Numbers of sales ranged from +14% to 50% with most of the +s in the nicer neighborhoods (Near North, Gold Coast, Lincoln Park, etc.) probably because of conversion of SFH and row houses to high-rise condos in these areas -- i.e. increased density. Median prices ranged from +22% to 42%. The +22% was, frankly, an outlier in the Loop where many older office buildings are being converted to luxury condominiums and finally coming on line. The only other 2 digit up in price was 16% in West Ridge, a neighborhood which is unfamiliar to me, but which is just south of central Evanston.
Anecdotal but, between my town house and Chicagos Magnificent Mile (N. Michigan Ave. about 3/8 mile east of me) there are at least seven high rise condo towers either nearing completion, under construction, or ready to break ground this spring with models already open. My quick survey shows 2 bedroom condos around $7-800K, 3 bedrooms starting at $1.2M, and pent houses going up to a listed $12M. These prices are considerably above prices for existing condos of similar square footage.
Now to me these things show:
1) all real estate REALLY is local and particular;
2) the high end is selling better then the low end;
3) the suburban subdividing-developers (Ryland et al. around Chicago) are really hurting; and
4) prices of existing homes are sticky even in a substantial market slow down.
Saw some "we've hit housing bottom" spin on Bloomberg tv this am.
News flash spinmeisters: until median home price comes down or median incomes go up or until way-out-wacky financing comes back (it won't), HOUSES ARE STILL UNAFFORDABLE AT THEIR CURRENT PRICES.
Sorry for the shouting. Back to your regularly scheduled excellent posters.
We had a few investment properties in Southie (Boston) and I'm sure glad we got out in 2005! Friends of ours recently tried to sell, couldn't get their price and are keeping the rentals... Now we are in Richmond, VA where the weather's nice and rent is cheap!
While this may be a little OT, could someone please explain the implications of Buffett's latest move RE muni insurance?
JOE is a florida play. Is there a similar Ca play ?
Most of St Joe (Paper Company)'s holdings are in typically underdeveloped areas of north Florida (and possibly south Georgia). Many of those parcels have been held for many many years and were were purchased at prices so low you can barely believe them. As the land is in timber, the property taxes are nominal (under Greenbelt, Florida gives valid ag usages a property tax valuation of less than 25%). From what I've heard, the timber companies have little or no interest in selling any of that land. How long they can weather the current downturn (in the lumber biz) may dictate how long they maintain that policy.
Some companies (like GP) have spun off their timber/land holdings into other entities (originally GPT, then PCL, an REIT).
"What makes this all so painful is that up until a few months ago, many government officials felt certain they could weather the storm. They knew property values wouldn't soar forever. So they factored a downturn into budget calculations. [...]But the rainy day they prepared for turned out to be a monsoon.
The 10 most affected states, including California, Nevada and Arizona, will lose a combined $6.6 billion in tax revenue next year"
Maybe it's not a nice thing to say but if they had been reading Calculated Risk and other housing blogs they could have seen the monsoon coming. Really sad.
The muni insurers have a simple operation - they have a better credit rating than many municipalities. So it's more expensive for a podunk town in Texas, for example, to issue debt for building a sewer than it is if the insurer guarantees payment. So the town pays a fee to the insurer in exchange for lower interest payments. The problem - insuerers are now in a world of hurt because they guaranteed too much debt, too cheaply. Their credit ratings are under pressure, which means the insurers cannot profit from the spread between podunk Texan town and their own credit rating.
Some say this proves the whole idea of muni insurance is a scam. Buffett thinks the problem isn't in the business model, it's just that the existing companies made a classic mistake for insurers and wrote too many premiums when prices were too low.
Typical Buffett move - store cash up in good times, move in when competitors have liquidity problems. The competing insurers are basically screwed, unless they can somehow push existing claims into a "bad bank" and just write them down.
Regarding house price affordability if you take an area like California which like it or not is regarded as a desirable place to live then it is unreasonable that a first time buyer can buy a house there. The historical norm is that you get the cash from mum and dad or you save or you have moved from outside the area and so forth.
So when people talk about house price affordability what are they meaning?
The fact is right now a canadian who last year had a US dollar rate around 1.17 has today a dollar rate around 0.98 and can look at california and see the bargains of a lifetime
It could well be bottom forming/testing time soon. Or a bounce and then a retest. Thats how the bottom gets placed. Eventually everbody realises it is the bottom and it goes up.
Much has been said about historical run ups in prices but how does affordability stack up when measured against the large decline in the dollar?
Like the stock market a declining dollar is good for increases in valuations. The stock market is likely to go up from here rather than down if the dollar declines further
Anyway rather than doom and gloom i am seeing bottoms:-)
FYI - Here are the NY State numbers.
Sales of existing single-family homes in New York State slowed in November, which is typical for the seasonal market, to a level characteristic of the pre-boom market, according to preliminary single-family sales data accumulated by the New York State Association of REALTORS. The statewide median selling price, while holding steady from the previous month, fell compared to the same period in 2006.
The November 2007 sales total of 6,770 represents a 15.6-percent decrease compared to the November 2006 sales total of 8,021. The November 2007 sales total decreased 15.2 percent compared to the October 2007 sales total of 7,980.
The November 2007 statewide median sales price of $215,000 is unchanged from October 2007, and represents an 11.2-percent decrease compared to the November 2006 statewide median sales price of $242,100.
Sales gains were reported in 26 counties compared to October 2007, while 32 reported growth compared to November 2006. Eleven counties reported gains in median selling price compared to October 2007, while 12 posted gains compared to November 2006.
" how does affordability stack up when measured against the large decline in the dollar? "
Against? They aren't counterbalancing forces. The only way the dollar decline would have an impact is if your income rose proportionally to keep the purchasing power constant. Unfortunately, since both you and I get paid in dollars, and our incomes aren't tied to inflation, that doesn't matter.
If everyone in the country "got the money from mom and dad," that would imply mom and dad have savings. Right now, both the options you noted require savings. As has been posted by CR quite consistently in the history of this blog, the savings in the US is actually decreasing.
I'm worried as well, Worried -- that you're a NAR shill or troll.
Yup, the National Average and the good ol geometric substitution game, with bogus results!
OT: One problem we all share today is the crisis of youth and inexperience and the correlated tragedy of nepotism, i.e, within this Bush Era, we have seen the rapid decay of common sense and a massive upswing of a new generation that is unable to think.
The vast amount of people that have jobs, like @ WSJ, have those jobs because they were connected to the nepotism chain, which is obviously connected to the subprime bones which are connected to the lender bones, the banking bones, the government regulation bones, etc...
Although these people probably are not stupid, they do fail to understand the nature of things in general and as a unit, they are doing a heck of a job in destroying America!
Christmas dinner conversation with the relatives. Sister-in-law former banker, brother-in-law money manager (> billion $ whom I find out later has big bets on financials Citi, Goldman, Bear).
Me: the Fed needs to stop acting like a hedge fund and let these bankers who made mistakes get punished.
He: What mistakes?
Me: I describe a co-worker getting a million dollar loan from Countrywide. The bank gave him filled out paperwork (which he signed) that stated he made $20K a month.
He: Well the borrower committed fraud.
Me: Well yes and he will be sorry for it. But the Bank has made this a policy. They have responsibility in this.
He: Strong denial that banks are at fault.
After awhile.
She: Well, there would be a run on banks.
So thats the narrative. Plan A banks are not at fault. Plan B: there would be a run on banks.
Well, it's not "whole hog" until somebody figures out how to do the tail.Well, it's not "whole hog" until somebody figures out how to do the tail.
I tried but kept getting ["Long Tail"/Div(0)] errors.
A house is an assett like gold or oil. The parts are priced in dollars and those parts are traded around the globe. To at least some extent. An assett is worth what somebody is prepared to pay for it.
I said "The historical norm is that you get the cash from mum and dad or you save or you have moved from outside the area and so forth."
Bottoms therefore are not only dependant on what a first time borrower can afford
Finally if you assume that each person who says something you do not agree with is a shill then you are likely to only create a reality that you already see. A myopic reality dont you think?
p.s.: Worried, you should be more focused on shorts than bottoms.
tj & the bear | 12.31.07 - 12:30 pm | #
I am pretty sure there is a consol some place that has the relative pain level of all the shorts based on algorithms using relative worth and experience levels to ensure that at any point in time most shorts can be forced to cover simply because they cannot take the pain anymore. Shorting can be a dangerous game
Ethan-West Ridge is also called West Rogers Park. The western part of the neighborhood (near Lincolnwood) seems almost like a suburban extension. It's a nice, safe area. The eastern part of it is kind of an extension of Rogers Park, which has been improving a lot in the last few years, especially on the fringes that touch West Ridge, Evanston and Andersonville (home sweet rental home for me.)
Barely-Thanks for the map! I've been looking for something like that.
worried, one little thing. there are 33m people in canada, while there are 34m people in california. to think that canadians will come in hordes to buy milions of depreciating houses in california and other parts of us only to pay exorbitant re taxes and health insurance is something i would not be counting on. especially not if they have their own bubble in canada where chinesse are buying a lot.
I can "afford" to buy a house if I can find one at no more than three times my annual income. If not, I look for something to rent. Rental payment, including utilities, has to be something less than half of my monthly income. Lately, that means living is something like what we did when going to college, a converted chicken coop. The McMansions on the market are too pricey either to buy or to rent.
Why a Canadian would want to buy a house in CA is a mystery unless they were looking at investment properties. Even in that case, they would need to be sure the rent they could receive would cover mortgage payments. Since local landlords are having trouble making payments on properties purchased during the bubble, distant landlords probably would as well.
If you are flush with cash and don't need a mortgage to buy CA real estate, good luck. What you buy today is still going to worth less next year.
My prediction based on no scientific data analysis, is that property prices will bottom out only when they become affordable again. Considering the huge run-up in prices, the slow increase in nominal incomes, and price stickiness of real estate, that will be several years from now.
Late September/Early October contracts rising would make sense as long as the median price decreases: After the start of school the folks who didn't pull their houses off the market
Late September/Early October contracts rising would make sense as long as the median price decreases: After the start of school the folks who didn't pull their houses off the market
Late September/Early October contracts rising would make sense as long as the median price decreases: After the start of school the folks who didn't pull their houses off the market had to sell vs those who wanted to sell.
I guess the odd thing is how little the inventory dropped, possibly related to a theory I had that the want to sells who pull listings are replaced by those who have to sell.
If that's the case, then price drops should accelerate over the next few months and those who re-list(especially those who went from Want to HAVE) will find a most different landscape come spring.
Which furthermore relates that the cure rate (number of cures relative to number of defaults) was only 60.8%, with a 12-month moving average now 68.6%, and that the industry has never before recorded an annual rate below 79%.
Many of those people trying to pooh-pooh the seriousness of this situation have used the historically high cure rates on defaults as the cornerstone of their arguments.
Christmas dinner conversation with the relatives. Sister-in-law former banker, brother-in-law money manager (> billion $ whom I find out later has big bets on financials Citi, Goldman, Bear).
Be careful with that. About a year ago I told some guy in construction that I had some "big bets" against the industry and it almost turned into a fist fight.
Sometimes you gotta be careful about not rubbing it in, unless you're on the Internets.
An option arm makes alot of sense for somebody with a good but irratic income. And no sense for a person who cant budget and live within their means overtime or who is unable to downsize if finances require it.
Are you looking at the top left corner of the page under "finance and economics"?
If you mean the 'Finance and Economics', which is under 'Calculated Risk', then there is no pig showing up. There is the advertising at the top of the page, then the teal search bar with 'Calculated Risk' in the left side of it, the silver bar (which says 'Finance and Economics' in it on the left and the links/privacy policy on the right) below the teal bar, then the Sponsored Links on the left with an ad at the top of it, the main (center) page in the middle and the right column which contains CR4RE ad and the links below that to Housing Wire, Mortgage Insider and so on.
Thanks for the direct link to the image Worried. I click on it and it opens to a blank screen, with that URL in the address line and 'Done' at the bottom border of the page, indicating a successful load. I reloaded it several times and got the same result.
So that is the problem, the image is not loading. Odd. It is the latest version of SeaMonkey, and I have no problems with images (that I know of!) at any other pages. I still have a copy of Mozilla on another system that I will run later and check to see if the result is the same.
Re: Canadians flocking to CA to buy up all the million-dollar 1600 sq ft homes soon.
When I was in AZ looking at jobs last year, I was told that hordes of rich people from CA were coming to buy up all their desert real estate soon. Same thing in NV. Interestingly, the people in Sacramento that I talked with had faith that the fine people of 'the Valley' and 'the Bay' would be swooping in to buy their homes as well.
Someone didn't get the memo. The people of AZ still await their angel investors.
It is just timing out now (Address Not Found) when I try both links you provided. I thought I would give it another shot before I logged off here, and now it is not finding anything.
The URL shows up as: 'http://cr4re.com/images/mortgagepig.gif'
I did a ping and trace route to cr4re.com and got nothing in response. I even tried (sans quotes) 'www.cr4re.com', same thing. No response.
Odd. FYI, I live near the south border of Oregon, on the coast, and my line goes south in to California (Smith River, Crescent City).
Okay, where is sk? There has to be a British pub named "The Pig and Swan" We need to do a trademark/copyright search ASAP to ensure they don't sue.
BTW- How come when you ask for "Money, Guns, and Lawyers" all that shows up is the lawyers?
give in. just use microsoft explorer. yeah it sucks but you can see the pig! besides, what did Bill Gates ever do to you? he's gotta feed his kids too!
even I can see the pig, and I'm on an ancient computer at work!
you're really missing out... it's a beautiful pink pig with a little bit of lipstick... but no tail... a pity really.
St. Joe is easy to value IMO. It is worth what it was in 2000 (or even less), roughly $15 per share.
Perhaps (I don't even follow their current prices). Keep this in mind tho... if the timber market goes south (which it appears to be doing as a result of housing going south), they can always "just let the trees grow". Unlike other asset types, these assets tend to become more valuable as time passes (i.e. the diameter increases and become more mature). The market price per bd/ft might decline, but the equity in bd/ft (or whatever measure you wish to use) is increasing over time. All they have to do is pay the taxes and keep the office lights turned on.
I will pass on using Internet Exploder, the online welcome mat for trojans, viruses and worms. If I have to use it to be able to see the mortgage pig, then it is obviously another conspiracy by Mr. Gates to control all of the online pigs.
Maybe Billy Boy has trademarked the pig for Internet Exploder?
For the heck of it I went and checked the page using Internet Exploder, and the result is the same. No pig. The URL is not accessible from my end, so either my ISP is blocking it or there is some other problem downstream.
I have Office Pro, so I am well aware of how pretty the Mortgage Pig is via Excel.
Not much to do during the monsoon season on the Oregon coast. I have great riding gear, but it really is not much fun cruising Highway 101 in the cold, rain and fog. Same with beach combing, high surf, wind and rain take the fun out of that real fast.
We basically hibernate in the monsoon season and live outdoors the rest of the year. I guess it all balances out in the end!
Still, my motorcycle sure looks lonely in the garage. Oh well.
re: foreign buyers of California RE due to dollar decline
It wouldn't make sense for anyone, domestic or foreign, to buy homes as rental investments at current prices, since the investments don't work on a cash flow basis. Downwards adjustments of 35% or more need to be made to prices, in many areas.
Now, if those foreigners want to relocate here, or just bleed Canadian loonies until rents rise, that is their business.
All this oversupply means that rents will stay flat or even start to drop, relative to inflation. This will put further pressure on the cash-flow problem of investors.
========
re: new buyers needing more cash from parents or from another home sale cashout
Lateral transfers are always possible, using the 'overpriced home equity sale chit' - whether it comes from parents or onesself. But the reversion to prior, more stringent, lending policies still means there is a smaller pool of potential buyers. We have YEARS of oversupply here. Methinks the banks don't want the properties they will get kicked back to them to sit vacant or bleed red ink for years. Sans sufficient numbers of buyers, prices will fall, most likely to the investor 'all-in, cash-flow with profit better than risk-free CDs' level.
So... let me get this straight, Worried: it is perfectly acceptable for vast areas of the nation to be completely unaffordable to the people who live there as well as outsiders, and everyone should be stuck renting until they get a huge lump sum from their parents to buy a grossly overpriced house? And that, to you, is "affordable" housing? Unreal... Good thing all those Canadians will buy up overpriced CA real estate - oh, wait, they aren't!
Is this data "managed" in any way by NAR?
EPD, I'm digging through the data right now - I don't see this as "managed". We are into the slow months right now, so there is a large seasonal adjustment. I post more after later.
Best Wishes.
I guess it's worth mentioning that the existing home sales lag the new home series, but are generally more reliable?
Last week's new home sales data does not bode well for existing home sales going forward, so don't cover your existing homebuilder shorts just yet.
EPD, NAR has been caught fudging the seasonal adjustment factor in the past. Whether this is an innocent bit of tweakery on their part or a more sinister attempt to make the numbers look better than they really are, I don't know.
We are into the slow months right now, so there is a large seasonal adjustment. I post more after later.
I was about to mention the huge spike last year at this time. I think we saw a similar phenomenon this year, except in some of the jobs data.
I've had to run the AC several times in the past week. It used to snow here.
Off Topic, but a sincere thanks to CR and Tanta for this blog. It is the best on the web bar none--no technical analysis crap or silly market blathering, just real information about difficult topics to understand.
regards to all
CR, Excellent work tearing off the pretty wrapping paper and exposing the fish. You're the BEST!
how much of an impact will the new GSE standards have on the market?
will we see more wall st layoffs?
yet headlines abound of market stabilizing. Spin spin spin..
If you listen to Yun and the former cheerleader Lereah, it is like they can not even understand the downside potential - not an option.
Just curious if they get to make any assumptions in their number and how big if any their revisions have been.
Since their forecasts are not even close to reality, maybe their reporting data is influenced.
Previous Thread Topic PayOptionARMs - Stumbled across a neat map with concentrations. Apologies if this has been posted...
Map of Misery
Here in the San Fernando Valley sales are off about 40% since last year and over 65% (!) since the peak.
The median price is finally reflecting some of the discounting that's going on out there. The median price is down about 13% y/y, dropping under $500k in Oct & Nov for the first time since '04.
Lot's of foreclosures hitting the market now, usually listed for about 20-35% less than they sold for in '04-'06.
The San Fernando area had been one of the areas where pricing data had been holding up, while volume fell off a cliff. As one of the most overpriced areas in the country (along with the rest of LA), it looks like substantial price declines are finally here.
how much of an impact will the new GSE standards have on the market?
You mean the pricing adjustments that are just now hitting retail rate sheets?
That's hard to say. I am not sure how big that group of motivated buyers who can meet the tightened underwriting guidelines from earlier in the year (and cough up a down payment) but who are going to be priced out because of a 50 bps increase in the interest rate is.
I'm still inclined to think the biggest impact of that pricing change is going to be on refis. A lot of folks are just no longer in the money in the context of getting out from under their prime hybrid ARMs that will reset in the next year or two, so they'll hang in there a while longer.
I would expect that any future troll-pieces ( or lawsuit-trolls? lawsuit-pieces? ) should sue the NAR before Calculated Risk.
right? RIGHT?
Housing market is bottoming:
"Near term, existing-home sales should continue to hover in a narrow range,
just as they have since September, and that's good news because it'll be a
further sign that the housing market is stabilizing"
all real estate is local:
"Just like the weather, there are large local variations in home prices. A quarterly examination of price performance on a metropolitan basis
shows nearly two-thirds of metro areas are showing price increases"
Yun for president, everybody!
"yet headlines abound of market stabilizing. Spin spin spin..
Stuart"
Just got done doing my daily news sweep. I agree with Stuart...
You'd think the U.S. housing market had bounced back.
Happy New Year everyone!
PMI payments are bouncing too!!! wait... is this good news?
Defaults on Insured Mortgages Rise 35% to Record (Update4) - Bloomberg.com
It will be interesting to see how tax selling affects the next few days. 80% of the time, the last hour of the last trading day of the year sees a strong sell off. There are certainly plenty of losses to be sold, if they have not already been sold. On the other hand, The afternoon of the first trading day (Jan 2) usually sees big gains. There is a lot of new money waiting to go into the market. These patterns should be strong in the RE and financial sectors.
I am shorting St. Joe (JOE) based on positive fortune article that said:
"The way to value St. Joe isn't on its current earnings (which are awful) but on its land holdings"
JOE is a florida play. Is there a similar Ca play ?
Spring In Ventory
A lot of folks are just no longer in the money in the context of getting out from under their prime hybrid ARMs that will reset in the next year or two, so they'll hang in there a while longer.
oh man, i wish i could figure out how to draw a pig's tail in the comments. that tail would certainly yield some enjoyment!
Well, for anyone following the home builder stocks, we saw a minor pump-and-dump at the time of the NAR release. A stinging testament to the NAR's lack of credibility.
in my NYC suburb prices have stabilized a few % points below the last 12 months and about 10-15% from peak whereas only a few suckers actually bought at those levels. much ado about nothing around here.
oh man, i wish i could figure out how to draw a pig's tail in the comments. that tail would certainly yield some enjoyment!
Don't ask me. I'm still trying to figure out how to draw a black swan with Excel.
Don't ask me. I'm still trying to figure out how to draw a black swan with Excel.
that's easy. you start with a white swan, then just use "fill color".
Yal,
I read the fortune article. funny thing they based it on what the guy from 3rd avenue who owns 20%... since 2006. can imagine how unbiased he is. they also said that current valuation implies smth like $3k per are, whereas firesale price is $5k. last transaction JOE did was at $1.5k per are. i assume quite a bit of their land is in the swamps
LA Times - How a bank fell victim to loan fraud
How a bank fell victim to loan fraud - Los Angeles Times
My sense is that there are many investors with RE that is negative cash flow and underwater. From what I understand, the lenders are hanging tough so far regarding loan renegotiation. Any thoughts on how this might play out would be appreciated. My conclusion is that there is a large pent up supply!
that's easy. you start with a white swan, then just use "fill color".
You could work on Wall Street, you know that?
You could work on Wall Street, you know that?
really? cool. the Dairy Queen doesn't pay very well.
Hahahah! Is this New Years Eve....?...or Aprils fools day...?...I vote the latter.
Speaking of Florida land values, here's an excerpt from a post I put up about a few land transactions by a couple of builders. No word on the haircuts invovled in the M/I transaction, but there is some detail on how much of a bath the private builder mentioned took ...
First, M/I Homes said it sold off approximately 3,700 lots for $82 million. Most of that land is in Florida, with more than 500 lots being dumped in the West Palm Beach market (which the company is exiting after doing business here since 1985). M/I Homes' local communities include a mixed townhome/detached home community called Paloma not too far from where I live and the Oaks at Hobe Sound.
Second, private builder Mercedes Homes just sold 130 vacant lots in Port St. Lucie for an average price of about $19,400, according to the Palm Beach Post. How big a discount is that from their previous value? Here's an excerpt from the story, with my emphasis added:
"The lots that we sold, we bought at the top of the market," said Rob Smithwick, Treasure Coast division president for privately held Mercedes Homes.
Instead of continuing to pay interest on lots that might be worth one-third of what it paid, the home builder decided to take what cash it could get and move the properties off its books. Smithwick said Mercedes' losses on a per-lot basis were as high as $70,000 in some cases.
"But $70,000 on paper doesn't buy me a hamburger," he said.
So what's the outlook like for this area? Smithwick had some comments there, too:
"I do believe '08 will be the worst of all the years," he said. "Our objective is to hunker down ... so when we come out in '09 we will be one of the few standing."
The Illinois Association of Realtors released its 3Q statistics in mid-November, but I didnt get around to looking at them until a day or so ago. In Cook County (Chicago and close in suburbs) the numbers are interesting. Number of sales down, but mean and median prices both up some considerably.
Here they are for Cook County (condos only) 3Q:
Number of sales: 06 vs. 05 11.4%, 07 vs. 06 16.2%
i.e. 07 vs. 05 25.8%
Median price: 07 vs. 06 +8.1%
Mean price: 07 vs. 06 +9.6%
Here they are for Cook County (SFH only) 3Q:
Number of sales: 06 vs. 05 20.5%, 07 vs. 06 23.5%
i.e. 07 vs. 05 39.2%
Median: 07 vs. 06 +5.4%
Mean: 07 vs. 06 +10.3%
For the 5 collar counties (far out suburbs and farmland, but a few cities such as Waukegan, Joliet, Aurora, and Elgin) the statistics are worse greater declines in numbers of sales, and flat to down (in a few case 20% down) in prices '07 vs '06.
Last Sunday the Chicago Tribune real estate section published number of sale and median price statistics for Chicago neighborhoods. I calculated percentages for about half and found number of sales up in 26% and median prices up in 44%. Numbers of sales ranged from +14% to 50% with most of the +s in the nicer neighborhoods (Near North, Gold Coast, Lincoln Park, etc.) probably because of conversion of SFH and row houses to high-rise condos in these areas -- i.e. increased density. Median prices ranged from +22% to 42%. The +22% was, frankly, an outlier in the Loop where many older office buildings are being converted to luxury condominiums and finally coming on line. The only other 2 digit up in price was 16% in West Ridge, a neighborhood which is unfamiliar to me, but which is just south of central Evanston.
Anecdotal but, between my town house and Chicagos Magnificent Mile (N. Michigan Ave. about 3/8 mile east of me) there are at least seven high rise condo towers either nearing completion, under construction, or ready to break ground this spring with models already open. My quick survey shows 2 bedroom condos around $7-800K, 3 bedrooms starting at $1.2M, and pent houses going up to a listed $12M. These prices are considerably above prices for existing condos of similar square footage.
Now to me these things show:
1) all real estate REALLY is local and particular;
2) the high end is selling better then the low end;
3) the suburban subdividing-developers (Ryland et al. around Chicago) are really hurting; and
4) prices of existing homes are sticky even in a substantial market slow down.
Anybody have other/contrary ideas?
Saw some "we've hit housing bottom" spin on Bloomberg tv this am.
News flash spinmeisters: until median home price comes down or median incomes go up or until way-out-wacky financing comes back (it won't), HOUSES ARE STILL UNAFFORDABLE AT THEIR CURRENT PRICES.
Sorry for the shouting. Back to your regularly scheduled excellent posters.
We had a few investment properties in Southie (Boston) and I'm sure glad we got out in 2005! Friends of ours recently tried to sell, couldn't get their price and are keeping the rentals... Now we are in Richmond, VA where the weather's nice and rent is cheap!
While this may be a little OT, could someone please explain the implications of Buffett's latest move RE muni insurance?
Love the peekaboo pig.
Media alert: Larry Yun is going to be on Bloomberg radio (XM129) during the next segment.
Ascii Art Generator
ASCII Art - Image to Ascii - Text to Ascii FIGLet
Good luck, Haloscan no likey big pastes.
Glad to see you went whole hog on the main page.
Happy 2008 to all!
OT,
JOE is a florida play. Is there a similar Ca play ?
Most of St Joe (Paper Company)'s holdings are in typically underdeveloped areas of north Florida (and possibly south Georgia). Many of those parcels have been held for many many years and were were purchased at prices so low you can barely believe them. As the land is in timber, the property taxes are nominal (under Greenbelt, Florida gives valid ag usages a property tax valuation of less than 25%). From what I've heard, the timber companies have little or no interest in selling any of that land. How long they can weather the current downturn (in the lumber biz) may dictate how long they maintain that policy.
Some companies (like GP) have spun off their timber/land holdings into other entities (originally GPT, then PCL, an REIT).
Ray
Glad to see you went whole hog on the main page.
Well, it's not "whole hog" until somebody figures out how to do the tail.
But Excelent New Year to you, too.
LA times headline article on the devastating effects that this mess is having on state, county and city budgets
Housing crisis takes bite out of states, cities - Los Angeles Times
"What makes this all so painful is that up until a few months ago, many government officials felt certain they could weather the storm. They knew property values wouldn't soar forever. So they factored a downturn into budget calculations. [...]But the rainy day they prepared for turned out to be a monsoon.
The 10 most affected states, including California, Nevada and Arizona, will lose a combined $6.6 billion in tax revenue next year"
Maybe it's not a nice thing to say but if they had been reading Calculated Risk and other housing blogs they could have seen the monsoon coming. Really sad.
Thanks to CR and Tanta for a great blog.
Re buffett and munis insurance.
The muni insurers have a simple operation - they have a better credit rating than many municipalities. So it's more expensive for a podunk town in Texas, for example, to issue debt for building a sewer than it is if the insurer guarantees payment. So the town pays a fee to the insurer in exchange for lower interest payments. The problem - insuerers are now in a world of hurt because they guaranteed too much debt, too cheaply. Their credit ratings are under pressure, which means the insurers cannot profit from the spread between podunk Texan town and their own credit rating.
Some say this proves the whole idea of muni insurance is a scam. Buffett thinks the problem isn't in the business model, it's just that the existing companies made a classic mistake for insurers and wrote too many premiums when prices were too low.
Typical Buffett move - store cash up in good times, move in when competitors have liquidity problems. The competing insurers are basically screwed, unless they can somehow push existing claims into a "bad bank" and just write them down.
Regarding house price affordability if you take an area like California which like it or not is regarded as a desirable place to live then it is unreasonable that a first time buyer can buy a house there. The historical norm is that you get the cash from mum and dad or you save or you have moved from outside the area and so forth.
So when people talk about house price affordability what are they meaning?
The fact is right now a canadian who last year had a US dollar rate around 1.17 has today a dollar rate around 0.98 and can look at california and see the bargains of a lifetime
It could well be bottom forming/testing time soon. Or a bounce and then a retest. Thats how the bottom gets placed. Eventually everbody realises it is the bottom and it goes up.
Much has been said about historical run ups in prices but how does affordability stack up when measured against the large decline in the dollar?
Like the stock market a declining dollar is good for increases in valuations. The stock market is likely to go up from here rather than down if the dollar declines further
Anyway rather than doom and gloom i am seeing bottoms:-)
Larry:
"[The data is] implying that we are seeing early signs of a bottom forming."
"It's difficult to determine when the pent-up demand will enter the marketplace."
Roughly: By 2009 we will see price appreciation again.
It was a short segment (3-4 minutes) so no time for any real howlers.
Thanks for the Yun heads up. I'll make sure the radio is off for a while.
But Excelent New Year to you, too.
an Excel pun. life doesn't get much better than this.
"an Excel pun. life doesn't get much better than this."
That's a powerpoint you make.
FYI - Here are the NY State numbers.
Sales of existing single-family homes in New York State slowed in November, which is typical for the seasonal market, to a level characteristic of the pre-boom market, according to preliminary single-family sales data accumulated by the New York State Association of REALTORS. The statewide median selling price, while holding steady from the previous month, fell compared to the same period in 2006.
The November 2007 sales total of 6,770 represents a 15.6-percent decrease compared to the November 2006 sales total of 8,021. The November 2007 sales total decreased 15.2 percent compared to the October 2007 sales total of 7,980.
The November 2007 statewide median sales price of $215,000 is unchanged from October 2007, and represents an 11.2-percent decrease compared to the November 2006 statewide median sales price of $242,100.
Sales gains were reported in 26 counties compared to October 2007, while 32 reported growth compared to November 2006. Eleven counties reported gains in median selling price compared to October 2007, while 12 posted gains compared to November 2006.
Happy New Year! to CR, Tanta and all!
Thanks for all the good reading.
" how does affordability stack up when measured against the large decline in the dollar? "
Against? They aren't counterbalancing forces. The only way the dollar decline would have an impact is if your income rose proportionally to keep the purchasing power constant. Unfortunately, since both you and I get paid in dollars, and our incomes aren't tied to inflation, that doesn't matter.
If everyone in the country "got the money from mom and dad," that would imply mom and dad have savings. Right now, both the options you noted require savings. As has been posted by CR quite consistently in the history of this blog, the savings in the US is actually decreasing.
I'm worried as well, Worried -- that you're a NAR shill or troll.
Yup, the National Average and the good ol geometric substitution game, with bogus results!
OT: One problem we all share today is the crisis of youth and inexperience and the correlated tragedy of nepotism, i.e, within this Bush Era, we have seen the rapid decay of common sense and a massive upswing of a new generation that is unable to think.
The vast amount of people that have jobs, like @ WSJ, have those jobs because they were connected to the nepotism chain, which is obviously connected to the subprime bones which are connected to the lender bones, the banking bones, the government regulation bones, etc...
Although these people probably are not stupid, they do fail to understand the nature of things in general and as a unit, they are doing a heck of a job in destroying America!
Doc
Vlookup and smell the roses
Christmas dinner conversation with the relatives. Sister-in-law former banker, brother-in-law money manager (> billion $ whom I find out later has big bets on financials Citi, Goldman, Bear).
Me: the Fed needs to stop acting like a hedge fund and let these bankers who made mistakes get punished.
He: What mistakes?
Me: I describe a co-worker getting a million dollar loan from Countrywide. The bank gave him filled out paperwork (which he signed) that stated he made $20K a month.
He: Well the borrower committed fraud.
Me: Well yes and he will be sorry for it. But the Bank has made this a policy. They have responsibility in this.
He: Strong denial that banks are at fault.
After awhile.
She: Well, there would be a run on banks.
So thats the narrative. Plan A banks are not at fault. Plan B: there would be a run on banks.
Well, it's not "whole hog" until somebody figures out how to do the tail.Well, it's not "whole hog" until somebody figures out how to do the tail.
I tried but kept getting ["Long Tail"/Div(0)] errors.
That's a powerpoint you make.
WORD!
Happy New Year!!!
p.s.: Worried, you should be more focused on shorts than bottoms.
Unsympathetic
A house is an assett like gold or oil. The parts are priced in dollars and those parts are traded around the globe. To at least some extent. An assett is worth what somebody is prepared to pay for it.
I said "The historical norm is that you get the cash from mum and dad or you save or you have moved from outside the area and so forth."
Bottoms therefore are not only dependant on what a first time borrower can afford
Finally if you assume that each person who says something you do not agree with is a shill then you are likely to only create a reality that you already see. A myopic reality dont you think?
p.s.: Worried, you should be more focused on shorts than bottoms.
tj & the bear | 12.31.07 - 12:30 pm | #
I am pretty sure there is a consol some place that has the relative pain level of all the shorts based on algorithms using relative worth and experience levels to ensure that at any point in time most shorts can be forced to cover simply because they cannot take the pain anymore. Shorting can be a dangerous game
Ethan-West Ridge is also called West Rogers Park. The western part of the neighborhood (near Lincolnwood) seems almost like a suburban extension. It's a nice, safe area. The eastern part of it is kind of an extension of Rogers Park, which has been improving a lot in the last few years, especially on the fringes that touch West Ridge, Evanston and Andersonville (home sweet rental home for me.)
Barely-Thanks for the map! I've been looking for something like that.
worried, one little thing. there are 33m people in canada, while there are 34m people in california. to think that canadians will come in hordes to buy milions of depreciating houses in california and other parts of us only to pay exorbitant re taxes and health insurance is something i would not be counting on. especially not if they have their own bubble in canada where chinesse are buying a lot.
Worried
I can "afford" to buy a house if I can find one at no more than three times my annual income. If not, I look for something to rent. Rental payment, including utilities, has to be something less than half of my monthly income. Lately, that means living is something like what we did when going to college, a converted chicken coop. The McMansions on the market are too pricey either to buy or to rent.
Why a Canadian would want to buy a house in CA is a mystery unless they were looking at investment properties. Even in that case, they would need to be sure the rent they could receive would cover mortgage payments. Since local landlords are having trouble making payments on properties purchased during the bubble, distant landlords probably would as well.
If you are flush with cash and don't need a mortgage to buy CA real estate, good luck. What you buy today is still going to worth less next year.
My prediction based on no scientific data analysis, is that property prices will bottom out only when they become affordable again. Considering the huge run-up in prices, the slow increase in nominal incomes, and price stickiness of real estate, that will be several years from now.
Late September/Early October contracts rising would make sense as long as the median price decreases: After the start of school the folks who didn't pull their houses off the market
Bl**dy HS,
Late September/Early October contracts rising would make sense as long as the median price decreases: After the start of school the folks who didn't pull their houses off the market
Bloody HTML screwing my HS:
Late September/Early October contracts rising would make sense as long as the median price decreases: After the start of school the folks who didn't pull their houses off the market had to sell vs those who wanted to sell.
I guess the odd thing is how little the inventory dropped, possibly related to a theory I had that the want to sells who pull listings are replaced by those who have to sell.
If that's the case, then price drops should accelerate over the next few months and those who re-list(especially those who went from Want to HAVE) will find a most different landscape come spring.
Over at Housing Wire I find this interesting tidbit ...
Defaults on Insured Mortgages Reach Record
Which furthermore relates that the cure rate (number of cures relative to number of defaults) was only 60.8%, with a 12-month moving average now 68.6%, and that the industry has never before recorded an annual rate below 79%.
Many of those people trying to pooh-pooh the seriousness of this situation have used the historically high cure rates on defaults as the cornerstone of their arguments.
Christmas dinner conversation with the relatives. Sister-in-law former banker, brother-in-law money manager (> billion $ whom I find out later has big bets on financials Citi, Goldman, Bear).
Be careful with that. About a year ago I told some guy in construction that I had some "big bets" against the industry and it almost turned into a fist fight.
Sometimes you gotta be careful about not rubbing it in, unless you're on the Internets.
More than once at a party, I've driven toward the stupidity of Option ARMs, only to find out - "Oh, I have one of those..."
Faux pas ou non?
.
The Mortgage Lender Implode-O-Meter News Pick-ups: Imploded: National City Corp.
Speed,
Look on the bright side. At least they knew what type of mortgage they had!
An option arm makes alot of sense for somebody with a good but irratic income. And no sense for a person who cant budget and live within their means overtime or who is unable to downsize if finances require it.
The loan itself is not the problem.
But Excelent New Year to you, too.
an Excel pun. life doesn't get much better than this.
That's a powerpoint you make.
WORD!
If there is a pig on the main page, I can't Access it, so I will have to take your Word for it. I use SeaMonkey for my browser though.
Happy New Year to you all too!
St. Joe is easy to value IMO. It is worth what it was in 2000 (or even less), roughly $15 per share.
What the NAR need to do is apply a seasonal adjustment factor to the net sales for the entire year of 2007. Then the data will come out a bit better.
If there is a pig on the main page, I can't Access it
Are you looking at the top left corner of the page under "finance and economics"?
Hooray for Mortgage Pig on the front page!
I like the idea of an Excel black swan too -- it could be Pig's faithful sidekick. Instead of Moose and Squirrel -- is Pig and Swan!
Thank you and Happy New Year!
You might miss the pig if you have .gif animation set to once, or off.
If there is a pig on the main page, I can't Access it
Are you looking at the top left corner of the page under "finance and economics"?
Your Outlook can be affected by browser settings.
Are you looking at the top left corner of the page under "finance and economics"?
If you mean the 'Finance and Economics', which is under 'Calculated Risk', then there is no pig showing up. There is the advertising at the top of the page, then the teal search bar with 'Calculated Risk' in the left side of it, the silver bar (which says 'Finance and Economics' in it on the left and the links/privacy policy on the right) below the teal bar, then the Sponsored Links on the left with an ad at the top of it, the main (center) page in the middle and the right column which contains CR4RE ad and the links below that to Housing Wire, Mortgage Insider and so on.
Lots of stuff, but no oinker!
Pig: "Swan, watch me pull a mortgage out of my hat!"
Swan: "Again?!"
Your Outlook can be affected by browser settings.
Lol! Nope, mine is set to accept all images. I flushed the DNS and browser caches too, no luck.
Here is a link to a screenshot of my browser and the main page:
Where is the pig?!
Where is the pig?
Strange.
Try clicking my home page below
or this:
http://cr4re.com/images/mortgagepig.gif
Thanks for the direct link to the image Worried. I click on it and it opens to a blank screen, with that URL in the address line and 'Done' at the bottom border of the page, indicating a successful load. I reloaded it several times and got the same result.
So that is the problem, the image is not loading. Odd. It is the latest version of SeaMonkey, and I have no problems with images (that I know of!) at any other pages. I still have a copy of Mozilla on another system that I will run later and check to see if the result is the same.
Thanks!
Re: Canadians flocking to CA to buy up all the million-dollar 1600 sq ft homes soon.
When I was in AZ looking at jobs last year, I was told that hordes of rich people from CA were coming to buy up all their desert real estate soon. Same thing in NV. Interestingly, the people in Sacramento that I talked with had faith that the fine people of 'the Valley' and 'the Bay' would be swooping in to buy their homes as well.
Someone didn't get the memo. The people of AZ still await their angel investors.
"CR, Excellent work tearing off the pretty wrapping paper and exposing the fish."
"What the hell is this?"
. . .
"It means Lawrence Yun sleeps with the fishes".
It is just timing out now (Address Not Found) when I try both links you provided. I thought I would give it another shot before I logged off here, and now it is not finding anything.
The URL shows up as: 'http://cr4re.com/images/mortgagepig.gif'
I did a ping and trace route to cr4re.com and got nothing in response. I even tried (sans quotes) 'www.cr4re.com', same thing. No response.
Odd. FYI, I live near the south border of Oregon, on the coast, and my line goes south in to California (Smith River, Crescent City).
Oh, and sans quotes on the Mortgage Pig URL above! Sorry about that. I did not want it to show as a link.
Okay, where is sk? There has to be a British pub named "The Pig and Swan" We need to do a trademark/copyright search ASAP to ensure they don't sue.
BTW- How come when you ask for "Money, Guns, and Lawyers" all that shows up is the lawyers?
alan greenspin:
give in. just use microsoft explorer. yeah it sucks but you can see the pig! besides, what did Bill Gates ever do to you? he's gotta feed his kids too!
even I can see the pig, and I'm on an ancient computer at work!
you're really missing out... it's a beautiful pink pig with a little bit of lipstick... but no tail... a pity really.
St. Joe is easy to value IMO. It is worth what it was in 2000 (or even less), roughly $15 per share.
Perhaps (I don't even follow their current prices). Keep this in mind tho... if the timber market goes south (which it appears to be doing as a result of housing going south), they can always "just let the trees grow". Unlike other asset types, these assets tend to become more valuable as time passes (i.e. the diameter increases and become more mature). The market price per bd/ft might decline, but the equity in bd/ft (or whatever measure you wish to use) is increasing over time. All they have to do is pay the taxes and keep the office lights turned on.
I will pass on using Internet Exploder, the online welcome mat for trojans, viruses and worms. If I have to use it to be able to see the mortgage pig, then it is obviously another conspiracy by Mr. Gates to control all of the online pigs.
Maybe Billy Boy has trademarked the pig for Internet Exploder?
For the heck of it I went and checked the page using Internet Exploder, and the result is the same. No pig. The URL is not accessible from my end, so either my ISP is blocking it or there is some other problem downstream.
I have Office Pro, so I am well aware of how pretty the Mortgage Pig is via Excel.
Alan Greenspin
You live on the south coast of Oregon and you are wasting time indoors on the computer? That is one beautiful stretch of country.
Not much to do during the monsoon season on the Oregon coast. I have great riding gear, but it really is not much fun cruising Highway 101 in the cold, rain and fog. Same with beach combing, high surf, wind and rain take the fun out of that real fast.
We basically hibernate in the monsoon season and live outdoors the rest of the year. I guess it all balances out in the end!
Still, my motorcycle sure looks lonely in the garage. Oh well.
Happy New Year to all!
re: foreign buyers of California RE due to dollar decline
It wouldn't make sense for anyone, domestic or foreign, to buy homes as rental investments at current prices, since the investments don't work on a cash flow basis. Downwards adjustments of 35% or more need to be made to prices, in many areas.
Now, if those foreigners want to relocate here, or just bleed Canadian loonies until rents rise, that is their business.
All this oversupply means that rents will stay flat or even start to drop, relative to inflation. This will put further pressure on the cash-flow problem of investors.
========
re: new buyers needing more cash from parents or from another home sale cashout
Lateral transfers are always possible, using the 'overpriced home equity sale chit' - whether it comes from parents or onesself. But the reversion to prior, more stringent, lending policies still means there is a smaller pool of potential buyers. We have YEARS of oversupply here. Methinks the banks don't want the properties they will get kicked back to them to sit vacant or bleed red ink for years. Sans sufficient numbers of buyers, prices will fall, most likely to the investor 'all-in, cash-flow with profit better than risk-free CDs' level.
JMHO
So... let me get this straight, Worried: it is perfectly acceptable for vast areas of the nation to be completely unaffordable to the people who live there as well as outsiders, and everyone should be stuck renting until they get a huge lump sum from their parents to buy a grossly overpriced house? And that, to you, is "affordable" housing? Unreal... Good thing all those Canadians will buy up overpriced CA real estate - oh, wait, they aren't!
thanks, rcyra