It's interesting that while the curves for the biggest bubble areas appear to continue accelerating downward, those for the less bubblicious regions (Cleveland and Denver) look as though they're beginning to flatten out somewhat. You have to look closely but there is just a little flip at the tail for both of those cities that's nowhere in evidence for the other four.
--
REAL ((inflation-adjusted) Case-Shiller Home Price Change since December 1995
Composite-10\t+72.0%
Los Angeles\t+99.8%!
We have a LONG ways to go on the down side. 1995 would be the best case scenario and the worst-case would be HALF, or worse!, of 1995 prices in real terms
OT on MarketWatch:
Justice Dept., realtors settle over online listings
SAN FRANCISCO (MarketWatch) -- The Justice Department said Tuesday it reached a proposed settlement with the National Association of Realtors that requires the association to abide by a 10-year antitrust agreement with respect to online listing practices. In September 2005, the Justice Department sued the association charging that its policies allowing local realtors to withhold listings prevented online realtors from offering better services and lower costs to consumers. The settlement, which is subject to court approval, requires the association to treat online brokers no differently that traditional brokers, and to repeal rules allowing traditional brokers from withholding listings from their Internet counterparts, according to the Justice Department.
CR, any sense of what the magnitude of the foreclosure/trashout sales are relative to normal traffic? I get the sense that we could see real desperation set in over the next six months, as homeowners who are not in trouble with their mortgages find that they cannot sell their houses at a reasonable price to make a move required by job or age/health. In other words, an overshoot from equilibrium home prices to deeply depressed levels... which could, in turn, inhibit sales of other properties in the area.
"A 20%-plus means anyone with one of those old fashioned 20%-down deals since Q3 2003 is underwater."
Actually, you are underwater no matter how much you put down. It is just a question of whether you prepaid your losses or have to pony up when you pay off the mortgage (assuming that you are in a must-sell position).
It'd be interesting to see the CS curve for Seattle, an area that sustained a substantial housing bubble that has proven rather puncture resistant. With air being let out of every other major market, this region is likely to represent the nation's largest remaining bubble.
those for the less bubblicious regions (Cleveland and Denver) look as though they're beginning to flatten out somewhat.
I don't think the CS numbers are seasonally adjusted. Maybe we're seeing the normal spring bounce in price superimposed onto an overall drop in the market?
What a great phwacking idea: Bring together a small bunch of people to bitch and rant about micro topics that hit home for about 20 minutes and then, as these attention deficit zombies phase out and become deluded by other self-obsessed phreaks -- they, as a group all run off topic until the next topic is posted, by the self-professed gurus that bait the fools! What a waste of time, and to think, this is the wave of the future!
Re: "Idiot" was originally created to refer to "layman, person lacking professional skill", "person so mentally deficient as to be incapable of ordinary reasoning"
Here is something from the NAR that y'all will love.
Getting Case-Shillered: Can you spell conflict of interest?
'If the unemployment rate is historically low yet your customers are waiting for home prices to drop 30 percent before they buy, youve just been Case-Shillered.'
If I take out my super-duper extrapolation ruler, it appears that somewhere around 2018 all houses will be worth 0. Everyone will then be free to live wherever they want, something that many dreamed of in 1968. And it will only have taken 50 years.
Meet Tracy Warren. NPR says she's not surprised by the mortgage meltdown because she was supposed to be in charge of preventing it. Tracy worked for a quality control contractor that reviewed subprime loans for investment banks before they were sold on Wall Street, and her company's biggest client was none other than Bear Stearns. Tracy says she found plenty of loans to reject. The trouble is, according to Tracy, after she rejected them... her bosses unrejected them.
"FFDIC writes:
In Housing Market, Even the Strong Are Weakening - NY Times? hp"
From the article:
"Seeing the number of homes on the market rise and prices fall, buyers are becoming more picky and negotiating harder, he and other agents said. Basic economics would suggest that lower prices should increase demand, but if buyers expect that prices will be lower still they will wait."
I meant to add some commentary to that; they'll wait until prices hit bottom, and then they'll wait some more until they're sure. Leading to a price-decline overshoot.
deflationary jane posted: "If the unemployment rate is historically low yet your customers are waiting for home prices to drop 30 percent before they buy, youve just been Case-Shillered."
Tell me about it. Here in Raleigh inventory dropped recently, and median prices just hit a new marginal high.
Market-based inflation expectations have risen recently but have not become unmoored, and the Federal Reserve intends to keep it that way, San Francisco Fed President Janet
1.2% price gain! Those prices are really running away from you. Also inventories are up 24% yoy if you look at your own link. I see the month over month drop though of 2.3%. In CA I hear about speculators trying to pick the NC market because the lack or participation in the housing price "boom". Speculator driven and nothing more IMO.
All of this is good for the stock market right? I mean wall of worry and all that.
Oh yeah, stocks are up.
As an aside, I was just watching CNBC at lunch today -- I went to a different bar than normal and they had the Power Lunch on. They were talking about if the American energy crisis was over. OMG, gas prices are, like, so Q2! I see why people get so wound up about this crap.
Did you use the real CPI (shadowstats) or that work of fiction the government publishes?
I am beginning to think that housing bubble isn't so big in real terms. It's just that inflation is terribly underestimated foe the last 15 years. The current unaffordability of housing represents another decline in lifestyle for the middle class. Similar to the gas pump and grocery store.
"In real terms, the Case-Shiller National Home price index is off 21% from the peak."
Not exactly CR. Prices WERE off 21% in for sales closing in March, the period just being reported by CS. From Mid March to today is about 2.4 months. If you look at housingtracker, you get an average of about 5% additional drop in list prices from March to today (26% instead of 21%). If you assume that the homes closing in March were for deals agreed to in February, the difference is about 7% (28% instead of 21%).
Sebastian, re the median prices just hitting a new marginal high there in Raleigh.
You folks down that way are always the last to know. Not to worry though, your housing market will eventually catch up with the rest of the country.
BTW, I live in Ala and see the same thing. Everything is great here except for some misc things like 3-4 major condo complexes folding in the past few weeks and the house supply doubling. The RE industry here is in a total state of denial, every week they (nervously) publish new articles about how great things are and how different we are than Fla (an hour or so drive yet somehow we differ???)
Tell me about it. Here in Raleigh inventory dropped recently, and median prices just hit a new marginal high.
Don't confuse asking price on housingtracker with actual sales price. Median price in Wake County was down nearly 7% versus last year as of the latest MLS stats (April '08). Sales were down about 24% YoY and inventory up about 32%.
Do Women Itch to Buy Homes as Men Itch to Buy Toys?
From numerous reports and few anecdotes it seem to me that women have been the driver of the latest housing bubble. Even among speculators women might out-number men in all likelihood. Could it be that just as certain cars are extension of the male organ are houses an expansion of female treasure?
And this little chitchat on Faux Busybodies News:
Women are better investors because they like to buy homes More women were buying homes The guys say lets wait, lets wait, but women would say let us buy the home or beach condo and enjoy Guys like to hit the bottom [in prices] but women would say dont worry about hitting the bottom [just buy right now]
Is now the time to buy? Who would you use as a lender? Is a condo a good buy.
I've saved for so long to buy a home in the Inland Empire and now it seems like a good time to buy. Can anyone refer me to a good article to read or guidelines to use in the present day market for purchasing a home.
I do have any older book that gives a checklist...but it doesn't take into account the repo's, and present lending practices.
RP,
I think that if you can get financing and you have down payment money, you ARE the market in your area. Name a price you can afford, really afford for the home you want, and see what happens.
If you get no takers, try again next spring. You'll probably be able to get a better house for less money then.
Unless inflation has eaten all of our lunches by then.
That NPR story Ministry of Truth linked to had an interesting tidbit. From the Examiner's Final Report on New Century:
"New Century was able...to negotiate understandings with certain loan purchasers to limit kickouts to a maximum rate, such as 2.5%."
I was reading the New Century filings pretty carefully, I thought, and I was blissfully unaware that their securitization agreements had any such provision. It's probably not surprising that I didn't know, either, since "the Examiner was unable to establish corroboration for this statement," which was made explicitly by New Century during the examination.
Kickout rates on whole loan sales were running around twice that (this was in spring of '05).
One of these days I need to go through that whole examiner's report--bearish as I was, I had no idea MBS agreements included limits on the number of EPDs that could be put back to the lender.
Jumbo loans in CA are cheap right now, though in all likelihood 9/10 mortgage brokers will try to put you in a conforming and a second instead. So many mortgage packages have disappeared into the ether. I did a little fishing for rates in AZ and they're beating my door down, but they're all offering the same product(and not what I asked or was looking for.)
The biggest problem is with prices dropping like they are you'll have to have a hefty down payment(20-25%) unless it's an REO. This is where the credit crunch is really starting to hammer the housing market because now only GSAs are doing up to conforming limit and commercial banks are barely going above $300k.
I am beginning to think that housing bubble isn't so big in real terms. It's just that inflation is terribly underestimated foe the last 15 years. The current unaffordability of housing represents another decline in lifestyle for the middle class. Similar to the gas pump and grocery store.
Not quite. Investors from Italy and Argentina don't exactly rush in to support prices if the locals lose buying power, nor do many rich people prefer the hassles of property management to the ease and liquidity of stocks and bonds. Housing prices are, by definition, what the middle class can afford, even if it means being house-poor with a long amortization and a low interest rate.
We have a LONG ways to go on the down side. 1995 would be the best case scenario and the worst-case would be HALF, or worse!, of 1995 prices in real terms
chya right. I was renting a nice garden 1B near the VA in WLA in 1991-1992 for $770/mo. These days rents are more than TWICE that.
Prices should go down to near equivalent rents, but not 1985 prices.
That was a link to some crap from the NAR where they develope talking points to counter the Case-Shiller. I was hoping someone had the time to tear the analysis apart.
It's funny that you mention the triangle as I've been looking at homes there for the last 2 months. Seems everything I was intersted in is still on the market and most have dropped their prices in the last week.
Now if Duke doesn't come through, it looks like we get to choose between St. Louis MO or South Bend, IN. Either way, bye bye UC and hello private univ salaries >; )
I'm a bit puzzled by the YtoY 20% drop in the C-S index for SF region.
The index covers the following counties:
Alameda
Contra Costa
Marin
San Mateo
San Francisco
One needs to dig deep into pockets of weakness to find properties that fell 20% from their peaks.
I'm a renter with an intent to buy eventually, so I'll be happy with a 20% decline in the area housing prices. But, I'm simply not seeing any change or trend of those magnitudes anywhere around me.
But, I confess that I rarely get around Alameda/Contra Costa counties. Is that one reason?
I guess that it's a part of CR's RE mosaic story.
I'm not fully versed in the C-S methodology, but would it be possible that their indeces samples heavily from those pockets of weaknesses where a lot of actions happen? I suspect those professors probably used some weights to correct for such issues, no?
But, I confess that I rarely get around Alameda/Contra Costa counties. Is that one reason?
Yes. Contra Costa includes the Brentwood area, which has already gotten KILLED - way more than 20%. San Ramon suffering too, and even some of the nicer areas like LaMorinda and Danville are suffering with 20% declines from the peak.
Python,
You're experiencing the difference between the headlines and the reality. For some reason, Case-Shiller likes to think that these outlying counties are part of the Bay Area. When in reality as we know, being actual residents of this area, that prices in SF and the Peninsula are not dropping across the board. In fact, in some areas they are flat or increasing. Now that's not something that the conspiracy theorists here like hear, but it's true. I have a lot of very prime friends trying to buy in "the Bay Area" that are getting outbid. Today.
Unfortunately, that information doesn't resonate in the CR echo chamber however...
Python: Your concern is a valid one that I have also wondered about. C-S (and OFHEO as well) consider homes with MULTIPLE sales. Any home that didn't change hands won't be in the index. Thus, it overweights neighbourhoods where there is a lot of turnover-these will have both risen and fallen more rapidly than stable low-turnover neighbourhoods. As far as I know neither index controls for this.
If I have mis-stated this, I will be happy to be corrected.
Giacutter, I think that if you can get financing and you have down payment money, you ARE the market in your area.
That about sums up my lame effort to sell my investment property, the market is so, so very thin.
prices are sticky. As a whole not back to 2003 price yet. In the marginal areas, most sellers are still going for 2005. In the good areas, they are trying to sell for 30% above 2003 prices.
I have two friends who recently sold homes in Piedmont Ca,which is probably the most stable,and among the most desirable locations in Alameda County.Both got very good prices ($830k for a 3/1 needing $100k in work!).Piedmont is desirable for a number of reasons,among them that it has about the only good school district in the county,as well as separate fire and police.This home would rent for $3k a month,roughly.However,in any but the best areas prices have nosedived,and I include SF.This iss partially masked by the fact that homes in the marginal areas are not selling except as REO's.good neighborhoods do not take as big a hit,and they get hit later,something to do with Location,I suspect
This coupled with news that more investors are challenging lenders to take back their defaulted loans due to mistakes and fraud. What's the number-- 25% of all homes purchased in 2006 were by investors? Even if they are not in trouble, most are underwater by this point.
i have issues concerning inferences made regarding the flow of causality here...were there tests of granger causality done? at the very least there is going to be an endogeneity issue
if we're just saying theres a correlation, thats fine, but using that to be predictive i think is really going to be tenuous
Shonji writes:
It'd be interesting to see the CS curve for Seattle, an area that sustained a substantial housing bubble that has proven rather puncture resistant. With air being let out of every other major market, this region is likely to represent the nation's largest remaining bubble.
Not the nations largest remaining bubble by a LOOOONG shot. Take a look at Manhattan. Seattle's bubble was about 25% of Manhattan's and Manhattan (although Q reports tend to show it still going up) is just now (hopefully) slowing and/or leveling off.
I am beginning to think that housing bubble isn't so big in real terms. It's just that inflation is terribly underestimated foe the last 15 years. The current unaffordability of housing represents another decline in lifestyle for the middle class. Similar to the gas pump and grocery store.
Where's the flaw in my logic?
The flaw is that housing is in fact not any less affordable than it used to be - rents have not been growing faster than incomes. Rather there is an asset bubble in housing stock because financing costs exceed the net rental yield. In other words, the cost of owning exceeds renting, when it should be the other way around.
The ratio of two nominals - price and rent - gives you a real result that is independent of any estimate of price inflation or monetary inflation.
first?
Would it be wise to shortsell at this time as an exit strategy?
It's interesting that while the curves for the biggest bubble areas appear to continue accelerating downward, those for the less bubblicious regions (Cleveland and Denver) look as though they're beginning to flatten out somewhat. You have to look closely but there is just a little flip at the tail for both of those cities that's nowhere in evidence for the other four.
--
REAL ((inflation-adjusted) Case-Shiller Home Price Change since December 1995
Composite-10\t+72.0%
Los Angeles\t+99.8%!
We have a LONG ways to go on the down side. 1995 would be the best case scenario and the worst-case would be HALF, or worse!, of 1995 prices in real terms
Jas
A 20%-plus means anyone with one of those old fashioned 20%-down deals since Q3 2003 is underwater.
Smart of the Post Office to raise postage rates right before the next wave of jingle mail.
Short US home industry, Buy USPS.
Recent FDIC Enforcement Decisions and Orders
FDIC: Enforcement Decisions and Orders - Recent Orders and Decisions
Jas Jain writes: "We have a LONG ways to go on the down side."
I agree.
S&P: Dallas home prices drop 3.3% as U.S. values tumble
S&P: Dallas home prices drop 3.3% as U.S. values tumble |
News for Dallas, Texas | Dallas Morning News
| Latest News
Dallas-Fort Worth homebuilders feel sting of housing slump
Dallas-Fort Worth homebuilders feel sting of housing slump |
News for Dallas, Texas | Dallas Morning News
| Dallas Business News
OT on MarketWatch:
Justice Dept., realtors settle over online listings
SAN FRANCISCO (MarketWatch) -- The Justice Department said Tuesday it reached a proposed settlement with the National Association of Realtors that requires the association to abide by a 10-year antitrust agreement with respect to online listing practices. In September 2005, the Justice Department sued the association charging that its policies allowing local realtors to withhold listings prevented online realtors from offering better services and lower costs to consumers. The settlement, which is subject to court approval, requires the association to treat online brokers no differently that traditional brokers, and to repeal rules allowing traditional brokers from withholding listings from their Internet counterparts, according to the Justice Department.
Whether we're halfway down the price decline or just starting:
These assumptions still rest on U.S. interest rates staying at lower-than-historic levels, with cooperation from our friends overseas.
Any bets on how long that cooperation continues?
Clock is Ticking for Banks With Asset Quality Issues
Clock is Ticking for Banks With Asset Quality Issues -- Seeking Alpha
CR, any sense of what the magnitude of the foreclosure/trashout sales are relative to normal traffic? I get the sense that we could see real desperation set in over the next six months, as homeowners who are not in trouble with their mortgages find that they cannot sell their houses at a reasonable price to make a move required by job or age/health. In other words, an overshoot from equilibrium home prices to deeply depressed levels... which could, in turn, inhibit sales of other properties in the area.
How Deceitful Are the Big Banks?
How Deceitful Are the Big Banks? -- Seeking Alpha
Wait until that nice man Mr. Bernankie hears about this. He'll push these home price off the cliff don't you worry.
"A 20%-plus means anyone with one of those old fashioned 20%-down deals since Q3 2003 is underwater."
Actually, you are underwater no matter how much you put down. It is just a question of whether you prepaid your losses or have to pony up when you pay off the mortgage (assuming that you are in a must-sell position).
It'd be interesting to see the CS curve for Seattle, an area that sustained a substantial housing bubble that has proven rather puncture resistant. With air being let out of every other major market, this region is likely to represent the nation's largest remaining bubble.
Merlin- "Would it be wise to shortsell at this time as an exit strategy?"
You name is 'Merlin' and you don't know?
Redwood writes:
those for the less bubblicious regions (Cleveland and Denver) look as though they're beginning to flatten out somewhat.
I don't think the CS numbers are seasonally adjusted. Maybe we're seeing the normal spring bounce in price superimposed onto an overall drop in the market?
**
What a great phwacking idea: Bring together a small bunch of people to bitch and rant about micro topics that hit home for about 20 minutes and then, as these attention deficit zombies phase out and become deluded by other self-obsessed phreaks -- they, as a group all run off topic until the next topic is posted, by the self-professed gurus that bait the fools! What a waste of time, and to think, this is the wave of the future!
Re: "Idiot" was originally created to refer to "layman, person lacking professional skill", "person so mentally deficient as to be incapable of ordinary reasoning"
Here is something from the NAR that y'all will love.
Getting Case-Shillered: Can you spell conflict of interest?
'If the unemployment rate is historically low yet your customers are waiting for home prices to drop 30 percent before they buy, youve just been Case-Shillered.'
Real Estate Publications: News & Commentary: Realtor Magazine: Commentary: Housing
Conjure is drooling all over this analysis. We're going to be crunching numbers into the night.
OT:
What's up with the constant zeroing out of bid/ask on quite a few stocks today??
I've seen it before on a much smaller scale and paid no attention to it...however today it's hard not to notice it. Platform??
Any idea's??
Ciao
MS
Dopes still calling a bottom. Never ends. When they stop then wait a few months then it will bottom.
Long ways down until incomes can afford a house on real loans.
If I take out my super-duper extrapolation ruler, it appears that somewhere around 2018 all houses will be worth 0. Everyone will then be free to live wherever they want, something that many dreamed of in 1968. And it will only have taken 50 years.
Meet Tracy Warren. NPR says she's not surprised by the mortgage meltdown because she was supposed to be in charge of preventing it. Tracy worked for a quality control contractor that reviewed subprime loans for investment banks before they were sold on Wall Street, and her company's biggest client was none other than Bear Stearns. Tracy says she found plenty of loans to reject. The trouble is, according to Tracy, after she rejected them... her bosses unrejected them.
The Consumerist: Search Results
Realtors Agree to Stop Blocking Web Listings
Settlement In Lawsuit Vs. Realtors - NY Times
In Housing Market, Even the Strong Are Weakening
- NY Times
IT's over...the prices will now go up 50%.
Of course there's a relationship... but is it a cause-effect relationship? NO.
Poor lending practices ultimately caused both.
Ice cream and crime rise and fall together also, which should we ban?
"FFDIC writes:
In Housing Market, Even the Strong Are Weakening
- NY Times? hp"
From the article:
"Seeing the number of homes on the market rise and prices fall, buyers are becoming more picky and negotiating harder, he and other agents said. Basic economics would suggest that lower prices should increase demand, but if buyers expect that prices will be lower still they will wait."
I meant to add some commentary to that; they'll wait until prices hit bottom, and then they'll wait some more until they're sure. Leading to a price-decline overshoot.
deflationary jane posted: "If the unemployment rate is historically low yet your customers are waiting for home prices to drop 30 percent before they buy, youve just been Case-Shillered."
Tell me about it.
Here in Raleigh inventory dropped recently, and median prices just hit a new marginal high.
HousingTracker.net | Median Home Asking Price & Inventory Data for Raleigh, North Carolina
Sebastia
"Aheadofthecurve writes:
If I take out my super-duper extrapolation ruler, it appears that somewhere around 2018 all houses will be worth 0."
I was just trying to calculate how long til zero. Well, at least we don't have to worry about resale value and keeping the decor neutral.
Market-based inflation expectations have risen recently but have not become unmoored, and the Federal Reserve intends to keep it that way, San Francisco Fed President Janet
Yellen says inflation expectations not unmoored
| Reuters
Janet be one stupid bitch.
Libor Cracks Widen as Bankers Struggle With Reforms
Libor Cracks Widen as Bankers Struggle With Reforms (Update2) - Bloomberg.com
All of this is good for the stock market right? I mean wall of worry and all that.
When housing prices are presented in real terms, are they indexed to the CPI or to wages?
Shonji @ 2:14pm -- Check out seattlebubble.com.
jmay, cpi less shelter.
Best to all.
Sebastian
1.2% price gain! Those prices are really running away from you. Also inventories are up 24% yoy if you look at your own link. I see the month over month drop though of 2.3%. In CA I hear about speculators trying to pick the NC market because the lack or participation in the housing price "boom". Speculator driven and nothing more IMO.
Bizzaro:
All of this is good for the stock market right? I mean wall of worry and all that.
Oh yeah, stocks are up.
As an aside, I was just watching CNBC at lunch today -- I went to a different bar than normal and they had the Power Lunch on. They were talking about if the American energy crisis was over. OMG, gas prices are, like, so Q2! I see why people get so wound up about this crap.
Maybe something like this: at 6 months MOI, the camel's legs start to buckle, and at 12 MOI he is on his knees? and at 18 MOI he is on his back?
Do not underrate a MAJOR CREDIT CONTRACTION?
Jas,
Did you use the real CPI (shadowstats) or that work of fiction the government publishes?
I am beginning to think that housing bubble isn't so big in real terms. It's just that inflation is terribly underestimated foe the last 15 years. The current unaffordability of housing represents another decline in lifestyle for the middle class. Similar to the gas pump and grocery store.
Where's the flaw in my logic?
"In real terms, the Case-Shiller National Home price index is off 21% from the peak."
Not exactly CR. Prices WERE off 21% in for sales closing in March, the period just being reported by CS. From Mid March to today is about 2.4 months. If you look at housingtracker, you get an average of about 5% additional drop in list prices from March to today (26% instead of 21%). If you assume that the homes closing in March were for deals agreed to in February, the difference is about 7% (28% instead of 21%).
Sebastian, re the median prices just hitting a new marginal high there in Raleigh.
You folks down that way are always the last to know. Not to worry though, your housing market will eventually catch up with the rest of the country.
BTW, I live in Ala and see the same thing. Everything is great here except for some misc things like 3-4 major condo complexes folding in the past few weeks and the house supply doubling. The RE industry here is in a total state of denial, every week they (nervously) publish new articles about how great things are and how different we are than Fla (an hour or so drive yet somehow we differ???)
Sebastian writes:
Tell me about it.
Here in Raleigh inventory dropped recently, and median prices just hit a new marginal high.
Don't confuse asking price on housingtracker with actual sales price. Median price in Wake County was down nearly 7% versus last year as of the latest MLS stats (April '08). Sales were down about 24% YoY and inventory up about 32%.
PDF warning - http://www.trianglemls.com/tmls-april2008stats.htm?&label_stage=TMLS%20Statistical%20Resources~Monthly%20Stats~2008~Tmls-april2008stats.htm
--
"Janet be one stupid bitch."
Anon,
You wish. The Fed and the USG are full of the likes. And "the American People" keeps getting bit, or screwed.
Jas
--
Let us get to the important stuff...
Do Women Itch to Buy Homes as Men Itch to Buy Toys?
From numerous reports and few anecdotes it seem to me that women have been the driver of the latest housing bubble. Even among speculators women might out-number men in all likelihood. Could it be that just as certain cars are extension of the male organ are houses an expansion of female treasure?
And this little chitchat on Faux Busybodies News:
Women are better investors because they like to buy homes More women were buying homes The guys say lets wait, lets wait, but women would say let us buy the home or beach condo and enjoy Guys like to hit the bottom [in prices] but women would say dont worry about hitting the bottom [just buy right now]
Jas
Is now the time to buy? Who would you use as a lender? Is a condo a good buy.
I've saved for so long to buy a home in the Inland Empire and now it seems like a good time to buy. Can anyone refer me to a good article to read or guidelines to use in the present day market for purchasing a home.
I do have any older book that gives a checklist...but it doesn't take into account the repo's, and present lending practices.
Any referral would be greatly appreciated.
Thanks.
"Is now the time to buy?"
LOL!
RP,
I think that if you can get financing and you have down payment money, you ARE the market in your area. Name a price you can afford, really afford for the home you want, and see what happens.
If you get no takers, try again next spring. You'll probably be able to get a better house for less money then.
Unless inflation has eaten all of our lunches by then.
That NPR story Ministry of Truth linked to had an interesting tidbit. From the Examiner's Final Report on New Century:
"New Century was able...to negotiate understandings with certain loan purchasers to limit kickouts to a maximum rate, such as 2.5%."
I was reading the New Century filings pretty carefully, I thought, and I was blissfully unaware that their securitization agreements had any such provision. It's probably not surprising that I didn't know, either, since "the Examiner was unable to establish corroboration for this statement," which was made explicitly by New Century during the examination.
Kickout rates on whole loan sales were running around twice that (this was in spring of '05).
One of these days I need to go through that whole examiner's report--bearish as I was, I had no idea MBS agreements included limits on the number of EPDs that could be put back to the lender.
Jumbo loans in CA are cheap right now, though in all likelihood 9/10 mortgage brokers will try to put you in a conforming and a second instead. So many mortgage packages have disappeared into the ether. I did a little fishing for rates in AZ and they're beating my door down, but they're all offering the same product(and not what I asked or was looking for.)
The biggest problem is with prices dropping like they are you'll have to have a hefty down payment(20-25%) unless it's an REO. This is where the credit crunch is really starting to hammer the housing market because now only GSAs are doing up to conforming limit and commercial banks are barely going above $300k.
I am beginning to think that housing bubble isn't so big in real terms. It's just that inflation is terribly underestimated foe the last 15 years. The current unaffordability of housing represents another decline in lifestyle for the middle class. Similar to the gas pump and grocery store.
Not quite. Investors from Italy and Argentina don't exactly rush in to support prices if the locals lose buying power, nor do many rich people prefer the hassles of property management to the ease and liquidity of stocks and bonds. Housing prices are, by definition, what the middle class can afford, even if it means being house-poor with a long amortization and a low interest rate.
We have a LONG ways to go on the down side. 1995 would be the best case scenario and the worst-case would be HALF, or worse!, of 1995 prices in real terms
chya right. I was renting a nice garden 1B near the VA in WLA in 1991-1992 for $770/mo. These days rents are more than TWICE that.
Prices should go down to near equivalent rents, but not 1985 prices.
Seb,
That was a link to some crap from the NAR where they develope talking points to counter the Case-Shiller. I was hoping someone had the time to tear the analysis apart.
It's funny that you mention the triangle as I've been looking at homes there for the last 2 months. Seems everything I was intersted in is still on the market and most have dropped their prices in the last week.
Now if Duke doesn't come through, it looks like we get to choose between St. Louis MO or South Bend, IN. Either way, bye bye UC and hello private univ salaries >; )
I'm a bit puzzled by the YtoY 20% drop in the C-S index for SF region.
The index covers the following counties:
Alameda
Contra Costa
Marin
San Mateo
San Francisco
One needs to dig deep into pockets of weakness to find properties that fell 20% from their peaks.
I'm a renter with an intent to buy eventually, so I'll be happy with a 20% decline in the area housing prices. But, I'm simply not seeing any change or trend of those magnitudes anywhere around me.
But, I confess that I rarely get around Alameda/Contra Costa counties. Is that one reason?
I guess that it's a part of CR's RE mosaic story.
I'm not fully versed in the C-S methodology, but would it be possible that their indeces samples heavily from those pockets of weaknesses where a lot of actions happen? I suspect those professors probably used some weights to correct for such issues, no?
But, I confess that I rarely get around Alameda/Contra Costa counties. Is that one reason?
Yes. Contra Costa includes the Brentwood area, which has already gotten KILLED - way more than 20%. San Ramon suffering too, and even some of the nicer areas like LaMorinda and Danville are suffering with 20% declines from the peak.
--
No Spring, No Summer, only Fall and Winter. When it comes to housing we are having a global cooling of gargantuan proportions. New Ice Age?
Jas
Python,
You're experiencing the difference between the headlines and the reality. For some reason, Case-Shiller likes to think that these outlying counties are part of the Bay Area. When in reality as we know, being actual residents of this area, that prices in SF and the Peninsula are not dropping across the board. In fact, in some areas they are flat or increasing. Now that's not something that the conspiracy theorists here like hear, but it's true. I have a lot of very prime friends trying to buy in "the Bay Area" that are getting outbid. Today.
Unfortunately, that information doesn't resonate in the CR echo chamber however...
Python: Your concern is a valid one that I have also wondered about. C-S (and OFHEO as well) consider homes with MULTIPLE sales. Any home that didn't change hands won't be in the index. Thus, it overweights neighbourhoods where there is a lot of turnover-these will have both risen and fallen more rapidly than stable low-turnover neighbourhoods. As far as I know neither index controls for this.
If I have mis-stated this, I will be happy to be corrected.
Giacutter,
I think that if you can get financing and you have down payment money, you ARE the market in your area.
That about sums up my lame effort to sell my investment property, the market is so, so very thin.
prices are sticky. As a whole not back to 2003 price yet. In the marginal areas, most sellers are still going for 2005. In the good areas, they are trying to sell for 30% above 2003 prices.
I have two friends who recently sold homes in Piedmont Ca,which is probably the most stable,and among the most desirable locations in Alameda County.Both got very good prices ($830k for a 3/1 needing $100k in work!).Piedmont is desirable for a number of reasons,among them that it has about the only good school district in the county,as well as separate fire and police.This home would rent for $3k a month,roughly.However,in any but the best areas prices have nosedived,and I include SF.This iss partially masked by the fact that homes in the marginal areas are not selling except as REO's.good neighborhoods do not take as big a hit,and they get hit later,something to do with Location,I suspect
This coupled with news that more investors are challenging lenders to take back their defaulted loans due to mistakes and fraud. What's the number-- 25% of all homes purchased in 2006 were by investors? Even if they are not in trouble, most are underwater by this point.
Here's the story:
Blogger: Blog not found
i have issues concerning inferences made regarding the flow of causality here...were there tests of granger causality done? at the very least there is going to be an endogeneity issue
if we're just saying theres a correlation, thats fine, but using that to be predictive i think is really going to be tenuous
HUH?
And your a gorilla?
I cannot understand what you just grunted.
Shonji writes:
It'd be interesting to see the CS curve for Seattle, an area that sustained a substantial housing bubble that has proven rather puncture resistant. With air being let out of every other major market, this region is likely to represent the nation's largest remaining bubble.
Not the nations largest remaining bubble by a LOOOONG shot. Take a look at Manhattan. Seattle's bubble was about 25% of Manhattan's and Manhattan (although Q reports tend to show it still going up) is just now (hopefully) slowing and/or leveling off.
I am beginning to think that housing bubble isn't so big in real terms. It's just that inflation is terribly underestimated foe the last 15 years. The current unaffordability of housing represents another decline in lifestyle for the middle class. Similar to the gas pump and grocery store.
Where's the flaw in my logic?
The flaw is that housing is in fact not any less affordable than it used to be - rents have not been growing faster than incomes. Rather there is an asset bubble in housing stock because financing costs exceed the net rental yield. In other words, the cost of owning exceeds renting, when it should be the other way around.
The ratio of two nominals - price and rent - gives you a real result that is independent of any estimate of price inflation or monetary inflation.