House Price Puzzle: Mid-to-High End
Submitted by
CalculatedRisk on Fri, 05/15/2009 - 8:54am (126 comments)
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I am disappointed, CR. You forgot the pieces labeled "they aren't making any more land", "buy now or get priced out forever", and "we can do this; Suzanne researched it"
.
Just give me a financial jigsaw and i'll make the pieces fit somehow.
No way. Foreclosing / declining property values is a 'poor' syndrome... LOL!
Prices are going to fall, but not in my hood. My area is different.
Impossible. Obama won't allow it.
'Surging prime delinquencies'
The Surge is working...
AS,
I am in the DC MSA we are always exempt from bubbles..snark
increase the refundable tax credit to $50K and the FHA limit to 1M
Is it still a status symbol to park a $60K Mercedes in the driveway if your hood is flooded with foreclosures?
dum luk mentioned earlier that the CPI has turned negative. We have 0.74% deflation right now. If you take a look at the Consumer Price Index, you will see that it is extremely likely that we will see deflation through July or August of this year. What drove the CPI down in the second half of last year for the fall in oil prices.
The first column is for 2008, the second, incomplete column is for 2009.
Jan: 211.080 vs. 211.143
Feb: 211.693 vs. 212.193
Mar: 213.528 vs. 212.709
Apr: 214.823 vs. 213.240
May: 216.632
Jun: 218.815
Jul: 219.964
Aug: 219.086
Sep: 218.783
Oct: 216.573
Nov: 212.425
Dec: 210.228
Data from Inflationdata.com
One example: In Boulder, inventory is now > 1 year. The relittors are inventing segmentation and statistics in order to obfuscate the fact that inventory is thru the roof.
The first guy who figures out how to shoot straight there is going to clean up like jim the realtor.
Seeing as I live in CA... I saw prices in my neighborhood take off since 2000. They really peaked around 850K, for 2600 sq.ft !!!
Reality has set in and just this morning I received a flier from one of the desperate local cockroaches with the prices all around $560 - 600, with just one property asking $750k.
In one street alone there are 3 properties at least $200k underwater (!)
When I was a kid, my parents bought me a rubics cube. Fiddled with it for a few minutes until I realized I could take the stickers off and reapply them in the proper color coordination...possibly missed my calling in Finance and Banking.
--bh
B2 please knock it off... important people might read this site and we dont want them to get any ideas!
I wouldn't trust the financial powers that be, to be able to assemble a 1-piece jigsaw puzzle.
I am in the DC MSA we are always exempt from bubbles..snark
Condos in outer alexandria is down 25% by zillow, a lagging indicator.
It is been awhile since anyone tried to sell me on yurts as an affordable alternative to a house.
In a well-to-do neighborhood a few miles away the locals are up-in-arms because the county wants to zone a parcel (right on the freeway, by the way) for low-income housing. The arguments: It'll hurt property values. It'll clog traffic. "Those" people haven't earned the right to live here. And the ever-popular "It will damage our lifestyle."
I hope they're ready for no-income housing. Nothing's sold out that way for a year. Just a matter of time. It'd be prime bandoland, too, lots of secluded homes on big lots set back off the road.
UBS Said to Raise Bankers’ Base Pay by 50% After Bonus Cuts
UBS Said to Raise Bankers’ Base Pay by 50% After Bonus Cuts - Bloomberg.com
By Jacqueline Simmons and Elena Logutenkova
May 15 (Bloomberg) -- UBS AG, the European bank with the biggest losses from the financial crisis, plans to boost salaries for senior bankers by an average of 50 percent to stem defections, three people with knowledge of the matter said.
The salary increase would apply to managing directors in investment banking, fixed income and equities worldwide, said the people, who declined to be identified because the matter is confidential. Less senior bankers, including associate directors and executive directors, may also get raises, they said.
UBS cut its bonus pool by 78 percent in January after amassing the biggest loss in Swiss corporate history in 2008. The bank came under pressure from government officials to slash variable pay after the Swiss state provided capital to UBS and helped shift hard-to-trade assets off its books. Bank of America Corp., which bought Merrill Lynch & Co., said in March it might raise salaries as a proportion of compensation.
Mish says treasuries are a buy.
I continue to hold my ground in GNMAs.
OT-
14.7% of GDP is imputations.
Most(6.25% of GDP) comes from owner occupied housing imputations.
GDP has many areas that are redirected to make it look like private spending when it's actually government spending...
"In addition to imputations for nonmarket transactions, the GDP accounts redirect certain transactions so that the consumption is attributed to the ultimate recipient of the good or service rather than to the payer." ... "An important example is health care, which is generally paid for by private health insurance (often provided by the employer), by government insurance plans such as Medicare and Medicaid, or by consumer out-of-pocket payments for deductibles, copayments, and uninsured expenses. In the GDP, these health-care transactions are redirected so that they are included in personal consumption expenditures, reflecting the role of households as the final consumers of those health goods and services."
Hmm, so federal government expenditures on medicare and medicaid are counted as non-government part of GDP.
More of this in other areas...just a small sample.
"Food furnished to employees,
including military and domestic service"
" Standard clothing issued to
military personnel 5"
GDP has become a sham and the true ratio of government spending : GDP is much higher than is being reported, as is dept to GDP.
This is critically important.
Thousands flee Pakistan fighting
Thousands of people are streaming into camps seeking refuge from the conflict between Pakistan's army and Taleban rebels in the country's north-west.
Most of the civilians come from Mingora, the main city in the Swat valley, where a curfew was temporarily lifted to allow residents to leave.
The road out of Mingora was filled with buses and trucks on Friday, each one overcrowded, with people on the roofs.
The UN says nearly one million people have fled in the past two weeks.
The total number of people internally displaced within Pakistan over the past 12 months has risen to around 1.4 million.
[snip]
Pakistan's Prime Minister, Yousuf Raza Gilani, has described the situation as the country's worst refugee crisis since the bloody partition of India and Pakistan in 1947 at the end of colonial rule.
Speaking at the opening of a briefing session for key Pakistani political figures, Mr Gilani said Pakistan was "at the crossroads of its history", but conceded that the army operation in Swat could not be a "permanent solution".
The military commander in North West Frontier Province, Gen Tariq Khan, said the current military operations would probably be finished in about a month, but the process would continue elsewhere, turning into police operations by the end of the year.
BBC NEWS | South Asia | Thousands flee Pakistan fighting
They even had a yurt living expo.
Get me a yurt, a couple alpacas, a acoustic guitar, and a patch of weed and I would be living like its 1973.
7 chemtrails outside my window.
nova,
Yurts are fine as long as you own a yak--there's yak milk and you burn the yak dung in the yurt for heat. Very green as I understand it.
--bh
Remember the innocent days of not so long ago when terror came color-coded?
Let's bring back the good times, by hoisting the bankers colors (the Jolly Roger, but of course) and the black has to stay, as it's the only thing in their portfolio that's in the black, but we can switch out the traditional white for most festive flavors...
Today is condition: Yellow
Bob Dobbs,
I am sorry to say this but, the hubris of middle class whites who think they deserve their lifestyle never ceases to amaze me. They just got lucky - birth, era, country, region.. they are no more deserving of their lifestyle than anybody else.
"It is been awhile since anyone tried to sell me on yurts as an affordable alternative to a house. "
They use them for seasonal grape harvester housing in Napa County. The local lifestyle druids were in a quandry: they didn't want more icky permanent buildings for low-income workers in their beautiful valley, but grape-pickers need to stay somewhere in hyper-expensive Napa and without the grape Napa Valley is nothing. So they bought a bunch of yurts and erect them every year on wooden platforms; and in the winter, they tear them down again.
we all know the economic side of this bubble come crisis, but there is also a social side
Consider Ireland and Britain
energyecon,
What were you expecting?
My son was in the military and has a slight survivalist bent.
Never the less, the this is just a slight setback meme co exists with the end of the world meme in his brain.
He's 28.
He knows how to defend himself at least.
am sorry to say this but, the hubris of middle class whites who think they deserve their lifestyle never ceases to amaze me. They just got lucky - birth, era, country, region.. they are no more deserving of their lifestyle than anybody else.
So Lucifer - they didn't invite you to the neighborhood pool party again?
lawyerliz,
against?
//He knows how to defend himself at least.//
Looking back at all the time, water, energy and food wasted making Ethanol, could we just call it...
The Great Cornholio?
"The media is trying to paint this CPI report as a sign that deflation is off the table and the economy is heating up but that is total BS. Buried in the WSJ’s account of the CPI is the fact that Owner’s Equivalent Rent rose 0.1%, which doesn’t seem like a big deal but it makes up 29% of the core CPI so 1/3 of the "good number" is due to the fact that housing prices went down while the costs of owning the home (mortgage, taxes, repairs) stayed the same so the OER calculation pushes that through as an economic positive as it’s meant to measure willingness of people to buy or rent homes but is now measuring the pain of people trapped in homes they can no longer afford - a total joke!"
Options Trader Friday Outlook: EU GDP Disappoints -- Seeking Alpha
RECOMMENDED READING.
Bob, they should of done them in rainbow colors. That would be special.
The pieces don't seem to fit...
nova,
Nope.. it is the whole idea that- if you are a middle class white you deserve it because you are racially superior, more intelligent, more hardworking etc that I find laughable..
Do not justify your luck.. accept that it is luck- not ability.
Arbitrage_Macht_Frei (profile) wrote on Fri, 5/15/2009 - 1:17 pm reply Ignore user Looking back at all the time, water, energy and food wasted making Ethanol, could we just call it...
The Great Cornholio?
Need Kernels for your Ferm-hole?
--bh
Tim waiting for 2012,
You lack of faith in the new religion has been duly noted by the inquisition.
nova (profile) wrote on Fri, 5/15/2009 - 10:11 am reply Ignore user
They even had a yurt living expo.
Get me a yurt, a couple alpacas, a acoustic guitar, and a patch of weed and I would be living like its 1973.
Pink milk? Ewwww. Folk songs? Even more Ewwww.
Give me a geodesic (aka bankerdome), solar panel farm, iTunes & DVD library, and hydroponics lab and I'll party like its 2013.
It's a one-size fails all dilemma...
Speaking of Ireland, they are in a shedload of trouble. The external debt to GDP ratio is > 800%! And they don't even have the luxury of trying to inflate as their currency is the Euro. Looks like the luck of the Irish ran out.
A friend just booked a four day trip for two to Ireland - famous four star hotel and airfare for ~ $1700.
Pubs and golf anyone?
splat,
Sounds like beachfront property to me, hence the premium ....
against?
//He knows how to defend himself at least.//
Any fucker that crosses the threshold.
Nuff said.
Rob Dawg,
Have you considered that once a country sets up a nuclear program, nuclear weapons offer more bang for buck than any other weapons.. just a thought.
lucifer,
better lucky than good?
Arbitrage_Macht_Frei (profile) wrote on Fri, 5/15/2009 - 1:20 pm reply Ignore user It's a one-size fails all dilemma...
Or,
In the US the Round Hole Squares You...
--bh
FCs traveling up the chain.
Remember "The Jeffersons"
"Movin' on UP"
TARP Diemockracy
shill,
I think he has more to fear from the machinations and unintended consequences of the actions of timmy, ben and the banksters, than his unemployed neighbors.
riot- the unbeatable high,
That is fine with me.. but do not attribute to ability what is given to you by luck!
Lucifer (profile) wrote on Fri, 5/15/2009 - 10:22 am reply Ignore user
Rob Dawg,
Have you considered that once a country sets up a nuclear program, nuclear weapons offer more bang for buck than any other weapons.. just a thought.
Shock and awe? That's fighting the last war. You don't want all those injuries, all the unproductive infrastructure. Hollow out the command structure and fill the vacuum. Chem/Bio and stealth. Look... is that a contrail?
I am in the DC MSA we are always exempt from bubbles..snark
I know you're being sarcastic, but there is truth in what you're saying. We're not immune, but we tend to do much better than just about anywhere else. The Federal Government is the most stable employer in the country.
I hope CR is right about mid to upper level prices dropping as I'm hoping to be a move up homeowner in Montgomery County. It looks like prices have dropped about 25%, but they're still too high for me. The thing that really kills me are the property taxes. I don't mind helping out by buying a house, but I don't want to pay $8,000/yr in property taxes. I'm currently paying about $3,500/yr thanks to the homestead exception.
Who wants to make a prediction where we go into the close today? My guess is down -- I expect volumes to be high, and that has usually correlated with a sinking market. Program trades may not be a match for the rush to the exits. But what do I know? Place your bets!
lucifer,
true that : )
Most every CONtrail I see leads back to Wall*Street...
'High Prices Always' is their slogan
Gavshire Hathaway,
i say slightly down....
To me, this suggests prices will fall much further in many mid-to-high end areas. - CR
CR - has job loss hit the high-to-mid end owners as much as say it has hit sub-prime owners? I ask because that is going to be a very large piece of the puzzle too. I have expected this recession to be especially brutal on mid to upper level mgmt [they are where the money is at a lot of companies now because grunt operations have been either outsourced or automated].
Is there any evidence the upper half is getting hit as hard?
Arbitrage_Macht_Frei,
I have long suggested that we put all of the current generation of banksters and other financial leaders in some of our deeper mineshafts.
We cannot allow a mindshaft gap.
We're not immune
Every day, i ride by dozens of mostly empty luxury condos. the SFH in NW will fair much better, until the banks start foreclosing on the Edmund Andrewes in the area.
Couple this with lack of mobility in job market:
From economist:
Premium content | Economist.com
Is this cause for optimism about America? Possibly not. Compared with the 1930s, America’s workers are more specialised, which makes it harder to shift occupation; they are also more cushioned with social protection, which reduces the urgency to adapt. Workers are less flexible because the housing bust will prevent many from selling their houses to move to where the jobs are. JPMorgan estimates that America’s natural rate of joblessness may have risen from 4.75% to closer to 6%.
Another part of the article there is lip-service to bond yields exploding.
Bonds are the next fission bomb...
--bh
Rob Dawg,
Nothing beats the destruction, predictibility and awe of a Nuke. Bioweapons can come back to kill the user.. or mutate and do some other nasty things.
Lucifer
So true my friend so true.
Adjacent variables to the puzzle.
Most new construction is middle to high end, and competes for the same dollars!
New home inventory is not depleting that fast!
GH,
I'll also vote slightly down (say 1%).
--bh
For every housing victim, are not there equal number of folks that sold at the peak of the housing bubble that should/could be supporting the economy with their non-taxed huge gains and therefor providing an equal and opposite force to all that ails us and the economy?? Maybe CR can throw some light on this puzzle.
Enquiring minds wants to know!!
We all thought we were keeping up with the joneses, but was it really the smithereens?
Arbitrage_Macht_Frei,
It is ironic but strangelove's speech (putting leaders and their followers in mineshafts) works much better without the doomsday device. Getting rid of the most sociopathic parts of humanity cannot be a bad thing.
"Get me a yurt, a couple alpacas, a acoustic guitar, and a patch of weed and I would be living like its 1973."
That would go well with the impending unemployment, inflation and interest rates.
Rob Dawg (homepage, profile) wrote on Fri, 5/15/2009 - 1:26 pm
"Hollow out the command structure and fill the vacuum. Chem/Bio and stealth. Look... is that a contrail? "
<
p>
In a thinly-veiled nod to metals, Rob Dawg dons his tinfoil hat ...
No REALLY, my town IS special. University towns never have bad housing markets because employment is so stable.... Wait, massive budget cuts and layoffs?!
debtfree,
sold in 2005--gain went to student loans--almost all of it.
-bh
I know a couple in Manhattan who listed their co-op at $1.35 mio last fall, which was the appraised value at the time. They lowered their asking price to $1 mio last month and still no takers. High end real estate is getting just crushed right now.
Diablo,
You may have noticed i like my humor blackened and well done, and nobody did it better than Peter Sellers...
"Bonds are the next fission bomb..."
Merely tremors, nothing to worry about. China, Japan and ME have our backs...
debtfree,
and no. Most was move-up buying. CR has kind of illustrated this over the past 4 years (??)
--bh
I heard bonds has been under suspicion of using anabolic loanoids for some time now.
Care to guess when the fall of mid-high-end home price will happen? Sometime this year?
Blackhalo,
Right...and given unemployment, protectionism, weak-governmance, we might just be injecting a little tritium into that critical imploding mass...
--bh
oooh imploding tritium...that's bullish, right?
The Rise and Fall of the mid-high-end Homing Empire
Talk about cliff-diving: Here's the Chart of the Day showing S&P earnings.
This is nothing. Ben and Timmay said banks are doing fine; plus consumer confidence numbers are up.
Buy the dips.
This is a good one!
Guest post: A populist interpretation of the latest Boom-Bust cycle
Submitted by Edward Harrison of the site Credit Writedowns.
As with my most recent post here on Naked Capitalism about Larry Summers, I want to write a thought piece here, as much for discussion’s sake as for its analysis. Now, the core of what you are about to read is something I put together and posted on Credit Writedowns in March of ‘08. At the time, I was struggling with the dichotomy between the perceived increase in wealth in the United States and the obviously poor macro statistics on debt, leverage and earnings for the middle class. This piece was the product of that struggle.
Guest post: A populist interpretation of the latest Boom-Bust cycle « naked capitalism
..Kleptocracy in America?
The obvious corollary of this theory is that most successful modern societies are, in fact, kleptocracies. The key is to use the four methods to gain popular support in order to re-distribute as much wealth to the ruling class as the populace will support. If the ruling class takes too much, it will be overthrown and replaced by a new ruling class (which in turn will re-distribute wealth to itself using the same four methods)..While this angle seems cynical, it is a a line of argument that has great internal consistency
So, is the United States a kleptocracy? Of course it is! Is that bad? Well, it obviously depends on who you are in society. But, it also depends on whether the kleptocracy is efficient and fair over the long term. Let me explain this last statement a bit more...
........The question you should ask yourself is this: Why has it taken the citizens of the U.S. so long to figure all this out? Answer: Even though the gulf between rich and poor was widening and the rich were getting richer, we thought we too were getting richer as well. We thought that we too were profiting from all of this "productivity." In the 1980s, we came out of a steep double dip recession and stagflation and we won the cold war. This inflated our sense of well-being. In the 1990s, there was the tech bubble to inflate our assets. In this decade, there was the housing bubble. So, we thought we were getting rich too. We didn't mind that the ruling class was benefiting disproportionately as long as we too appeared to be benefiting.......
So when do we start TARPing the Un-employed?
@ Comrade Coinz
"Mish says treasuries are a buy.
I continue to hold my ground in GNMAs."
"Ten-year notes are still headed for the first weekly gain in two months, aided by two-week hiatus in Treasury debt sales and three purchases of government debt by the Federal Reserve."
I do not get it. What happens when debt sales resume? Is the expectation that the Fed will buy them all with printed money? I do not think the dollar makes out very well in that instance, which if it actually takes a hit will push up yields.
Senators Provided Quatloos Relentlessly
My sense of things is that most of the >$60K/yr folks in the PNW are like toy tops that are still spinning as a stable top, but that loss of energy momentum is wearing down the rotation and the tops are about to go unstable for the few turns it takes before the top falls over motionless. No one thinks that the tops won't spin forever, as they avert their eyes from the unstable movements beginning to occur. "It can't happen here" is the chorus of song they sing in unison. Their lying eyes about the empty condos, closed businesses, and increasing idle people in public places is the perfect definition of denial.
I mentioned last year that vanilla primes would be the thing to watch, like watching an opposing football player's "beltbuckle" to avoid a head fake.
CR, you forgot to mention that hospitality CRE is more shadow housing inventory that competes with rent and thus affects house price.
EHP:
left a comment for you about Burma in the last thread, also a note about Mr Andrews of the Times, the economist and his tale of financial woe...
besides the book deal my guess is that he'll get north of 1 million at auction for movie rights ... when I add up the elements I can see so many different
ways I could play the story... (Catherine Zeta for wife?)
but what he really needs is a grand finale... if Smith and Hickcock weren't hanged Capote didn't have his masterpiece ...
SPQR - hah!
But nobody's going to take away the overcast, chins up PNW'ers!
Groundhogday (profile) wrote on Fri, 5/15/2009 - 1:35 pm reply
"No REALLY, my town IS special. University towns never have bad housing markets because employment is so stable.... Wait, massive budget cuts and layoffs?!"
<
p>
Plus there are quite a few job-hoppers in academia -- I had three different "major advisors" while working on my doctorate. Lots of people looking to pad their vita with the appearance of being hot property.
Nothing like mass, indiscriminate layoffs to push up real productivity.
Miami's vise: Florida banks face possible seizure
Miami's vise: Florida banks face possible seizure - MarketWatch
CuriousGeorge,
as neil observed yesterday, everything is taking 3x longer to happen, so i'm guessing next summer for the mid/high end to really begin to throw in the towel (at least in la, all re is local, of course)...
Lucifer:
Yes and no. There are lots of middle class folk that got to their position due to hard work and diligence. I grew up in an immigrant community and saw it first hand. You are right, though, in that there are MANY upper middle class types that are living off the fumes of their grandparents accomplishments.
energyecon (homepage, profile) wrote on Fri, 5/15/2009 - 10:41 am reply Ignore user
oooh imploding tritium...that's bullish, right?
Go long transuranics and short lived isotopes.
Since it is Bank Failure Friday:
Miami's vise: Florida banks face possible seizure
I'm taking imaginary over-under action on today's Bank Putsch total, post time for the first raze being sometime in the twilight hours.
The over-under line is 3, and all wagers must be in Quatloos
"Who wants to make a prediction where we go into the close today?"
Well, we're flirting with the SPX 20-day EMA that has been the floor since mid-March. And we're also right atop last Monday's unfilled gap up. If support fails here, we could get an quick 8-10 point drop to the mid 870s. Toss in an obligatory rumor about a big-bank takedown this weekend, and maybe we make the upper 860s.
More likely scenario seems to be that we go basically flat-line for the last two hours of OPEX day and close down less than 1%.
Right.
If that guy pulls off a happy ending, his book et al are as good as dead in the water.
He'll have to end with how he's making ends meet cooking meth in tent down by the tracks.
Nuke,
Are you telling me that a black man born in poverty with your abilities had the same chances of success as you? No individual stories.. just percentages.
//There are lots of middle class folk that got to their position due to hard work and diligence.//
What the? Dollar is taking off today. What happened?
Diablo, are you really just a red herring?
Arbitrage_Macht_Frei
How?
//Diablo, are you really just a red herring?//
I do not see any significant non-durable consumer-price declines yet.
Headline oil-barrel and gasoline prices are volatile and political.
However, not too many years ago I got a quart of 10w40 for $0.79 and recently I have seen $3.
Wake me up when a quart is $0.79 again.
I think it might have to do with the eurozone hitting economic reality.
Arbitrage_Macht_Frei,
my pic was 3 before you asked (making up for lost time b/c my thinking is last friday the fdic tried as hard as possible to make the # 0, but had to do 1 anyway). but if the over/under is also 3, i'll throw down with 4. bet is only 1 loonie.... will loonies be worth more than dollars in the new world order?
"There are lots of middle class folk that got to their position due to hard work and diligence"
That position being underwater on their house, holding a shrinking 401K plan as they pop aspirins to erase headaches from job loss fears?
broward
The middle class did quite ok from the 1940s to the 1970s.. and in many cases right until 2008
//That position being in underwater on their house, holding a shrinking 401K plan?//
riot, can't accept any current currency as a wager, but i've got you down for one Quatloo.
Good luck and as they come down the stretch, I know you'll be cheering for your pony to win the raze.
Diablo,
I have seen your tale with it's forked endings, often.
Not One Cent,
I'm with you on this one. I think everyone is squeezing margins dry. You see great deals here and there but not a trend IMO.
Fire Bernanke now!
This is No Country for Old Ben
There is no justification for preserving faux capital. Bernanke is diluting the real capital of our Nation by proping up fraud. Bernanke is trying to legitimize the fraud perpetuated by banksters over the past 25 years. He can only succeed by stealing from those with real capital or from those that will produce real capital in the future.
What a sham(e)!
equal number of folks that sold at the peak of the housing bubble
They upgraded from a $400k house to a $700k house and now live in a $350k house with a $500k mortgage.
Great Post CR!
And here's another piece of the Big Puzzle:
Another significant reason families can't make the payments:
Finding the Dream
Post on what your Senators just voted for your own interest payments.
Prices will fall as long as lenders cannot find investors for their loans. No cash = no market.
Had a million + buyer last year, fooled around with CW for 45 days until they said his 30% down didn't leave enough reserve, so he wrote a 100% check and said F.U.
This year there is a trickle of lenders with money. Some funding = some more buyers = some stabilazation.
Don't get me wrong, I don't think anybody has hit bottom yet. But in areas where there has been a huge buildup in supply, I think that the least desirable housing will fall the farthest At the end of the day, there has to be some sort of correlation between how much the various deciles earn and how much they spend on housing. And people tend to fill housing from best to worst. Of course the fact that the bubble burst in the subprime market first means that low priced houses are closer to their eventual nadir in price than high priced houses. Their fall has been quicker because those borrower have fewer reserves, are more vulnerable to job loss, and proportionately paid the lowest downpayments.
I think that it's important to distinguish between expensive markets and expensive houses. We can look to Detroit. There are plenty of neighborhoods where houses are worth so little they're simply surrendered to the city for back taxes. They're basicly worthless. But there are certainly expensive suburbs. Maybe not expensive by CA standards, but those houses retained a much larger percentage of their value. Bubble markets in CA where even the cheapest house were half a million or more are likely to fall the hardest. They suffer from the worst combination of declining credit availability and least capable borrowers.
Yes, except 6.25 is not "most" of 14.7.
But apart from the fees made by the middle agencies, huge amounts of money went out of the lending institutions for all those transactions. All that money have to be sitting in somebody's pocket! It was not a zero sum game, banks lent out a heck lot of money, where did it all go? I am missing something here, I am sure!
For every housing victim, are not there equal number of folks that sold at the peak of the housing bubble that should/could be supporting the economy with their non-taxed huge gains and therefor providing an equal and opposite force to all that ails us and the economy?? Maybe CR can throw some light on this puzzle.
Enquiring minds wants to know!!
NO, most of those people played the "moving up" game rather than taking their winnings off of the table
Translation, now is a great time to buy or sell a house.
-Lawrence Yun
"NO, most of those people played the "moving up" game rather than taking their winnings off of the table."
Exactly. Often they double-downed on "investment properties", too, instead of finding themselves a nice yurt.