San Diego Housing Market News and Analysis

Yea, everybody was patting themselves on the back not to long ago with their refi rates. Flu must be calling his broker.

this just re-validates my opinion that points are a rip-off. Dont buy 'em.

tb

I think the bond market is telling a bigger story about the dollar. Of course, we don't know what kind of manipulations are going on behind closed doors, but absent any manipulation, I'd say the falling rates are a sign that something is going to happen with the dollar trade. IMHO, we're about to see asset price deflation and other currencies lose strength against the dollar. Everyone is short the dollar by going into other currencies, commodities, stocks, real estate, etc. They are expecting someone else to pay them more, in dollars, than they paid for these things, IMHO. If everyone who is convinced that the dollar is toast is already in on the trade, who is left to buy things at a higher price? The unemployed/underemployed workers? The poor from the developing nations, whose jobs depend on those (underemployed and unemployed) people in developed nations buying more junk?

FWIW, this feels like the slowest "spring selling season" I've seen in the RE market for at least a decade -- even slower than what was going on during the "financial crisis." Again, sales are happening, but they are selling for less than what they would have fetched even in the 2007-2009 period, in many cases.

You just described a classic speculative bubble which is grounded in ponzi-dynamics. The bubble burst when it ran out of new entrants.

On top of that I get to raise my rental price $100. Cool beans.

I'll just follow the slow wagon train on down for $0 ... like I always do :=]

Why? My 15 year rate is is lower than what it is now...Now if it falls to 3.25 or below, then that's a different story... The rates are so ridiculously low around this time and the dollar is going to devalue further...

CAR
Not sure what you are looking at but the market around here has been on fire the last few weeks. It was a late start but these lower rates could provide another boost also.

Except there's one big problem.... Precious metals and commodities got slaughtered today (and this week frankly).....Silver kicked the bucket with more than 20% fall in just a few days... Ouch!

I was girding my loins for a steady upward march towards 1970/1980's era interest rates. The market can remain irrational longer than we can remain logical....

Nice job bg! You are fighting the good fight!

Rates aren't low enough yet to suggest a refi for our home. But, if they went to 3.75 for a 30 year fixed, then we'd have pretty phenomenal motivation. I wonder just how low they'll go?

Someone talk some sense into me.

I'm actually giving some serious consideration to changing my strategy and instead of trying to pay off my primary earlier with a 15, refinance back into a 30 year and take as much cash out as possible..then take the money and do something with it. Like use it to buy cheaper/paid off rental property.

Afterall, if we think the dollar is getting weaker, is there any good reason why I should try to pay this off in today's dollar sooner, versus using less-worth dollars in the future??? I mean at least if I have some rentals, I can jack up rent (to a point) to keep up with inflation.. Also, since the refinance is on my primary, my interest is deductible up to the phase out limit... On the other hand, if I tie up too much equity now, that's money that's lost opportunity which will devalue because I can't do anything with it....Seems like a big opportunity cost... (other than I just wasted the past 6 years paying down a loan )

Thoughts? Someone talk some sense into me, please...

I think it's a good strategy.

If you can buy rental properties in a cheap area and the management is not too much trouble, or you enjoying doing it, go ahead and do it.

Exactly. I've been thinking of the run-up in asset prices as a bubble that was fueled by the Fed's actions, and the govt's unwillingness to let things sort themselves out, especially in the RE market.

Even with the pick-up in sales activity, it still feels like the slowest spring I've witnessed in many years. I'm also seeing and hearing of more distressed homeowners.

The low rates will provide a floor of sorts, and maybe even cause a bounce, but if the reason for the low rates is the strengthening dollar, housing prices will eventually fall, too, IMHO.

That's the bubble bursting. It could be done, or it could be the beginning of something much bigger.

Exactly, I think it has further to go before it gets pumped back up. How much I am not sure?

In a way, oil kind of acts as the anti-bubble when it gets to high.

All central banks are attempting to manipulate and debase fiat currencies but all the money they are printing is staying high up the food chain and going into long commodity contracts.

This is why devaluing the dollar will not work for the Fed, in the long run, as it just kept adding a premium on oil and hence all commodities, thus a checkmate.

We see things in very much the same way, Arraya.

We shall see, CA renter.

More liquidity sloshing around means higher asset prices.

Compared to the rest of the world, American house prices are pretty low right now.

I think there will be stagnation of house prices for a couple years.... but I'm not sure how much lower they could go. Talking about house prices in general here. Certain higher end markets still have deflation in their near future.

Money Jan/Feb isue has some interesting stuff for the lay investor. It explains that the government isn't really printing money but giving banks credit on their credit sheets for reserves. Now as long as the banks don't loan out on this "cash reserve" then we don't seem to see the inflation. Once the banks feel confident we are on track towards recovery then they will loan and we will have inflation. Until then BAU.

11th District COFI, Baby ... I've been playing this same poker game since the mid-eighties and haven't been overly shocked or disappointed yet!

There is no demand for the money because the public is saturated with debt. This does free up extra cash for banks to speculate on, though. Hence, the commodity bubble.

So basically, the people are broke and debt encumbered while the banks are running up necessities in gambling schemes. lol

Here's a link http://money.cnn.com/magazines/moneymag/...

The money does get printed, sorta. Not literally printed, but the money is created and credited to the banks' accounts.

Paul Krugman has been writing about his. Money stays sequestered at the top of the financial pyramid and not making down to the people.

I don't think the market is irrational but this site hosts so many crazy inflationists. With the burst of the biggest asset bubble in history, I remain a deflationist. I don't think the recent run-up of inflation is the result of FED's cheap money. Rather it is supply issue in the commodity and agriculture segment.

I have seen people saying that 3 metals are barometers for the market:
gold for deflation
silver for inflation
copper for economic bull

Gold outperforms the other two signals deflation pressure, silver outperforms the other two signals inflation pressure, copper outperforms the other two signals bull market.
With gold leading the way, copper has been terrible since Feb, and recent smack down of silver, deflation and a major market downturn are written on the wall.

But obviously, you guys are too obsessed with your anger for the FED to notice that. I think FED is the only rational central bank at the moment to keep its focus on fighting the deflation.

Grrrrr Locked at 4.75.

Actually I predict that our house will not appraise, which throws the whole thing back into a negotiation phase. Especially since I have no intention of covering a low appraisal with cash. I think we'll know Mon.-Tues of next week.

Good luck, Cardiff!

well, depends. when we refi'd nearly a year ago, we purchased 0.5 point, which amounted to about $2000. that's the difference of 3.5 months between the old payment and the new payment.

now that the jr jumbo rate is at 4.5% at 0 point, I'm glad I paid that 0.5 point nearly a year ago to bring my rate down to 4.5%.

that actually make a lot of sense. why pay down at accelerated scale with money that is worth more when you know if you pay at a slower scale you'll be able to pay with money that's worth less.

ask anyone with professional school loans (med, law, mba, etc). these guys get low interest loans for their education, loans with interest rate even lower than CD rates. none of them ever pay down the loans early.

get an investment property, near an UC campus.

Of course we are all angry with the FED. They've been destroying the US economy since 1913!

Since 1913. Really ?

In 1900 the US economy was about 16% of world GDP.
Currently the US economy is about 22% of world GDP [1].

I wish they could destroy more things as effectively.

[1]
http://visualizingeconomics.com/2008/01/...