I don’t really buy much of what Mr. Stein is saying. In another video clip I saw him as a panelist in turn of the year discussion of where housing prices would go in 2007. He recommended that people buy the house they love and can afford and don’t give it another thought. Maybe he should have qualified that a little better.

This is from the post you link HLS:
“That’s what’s been happening the past couple of weeks. But it’s not interesting to say that the speculators are whipping the market around to satisfy their money lust. So the speculators themselves make up reasons for why the market is fluctuating, flog those reasons to the media, and then profit if some other speculators believe the jive reasons and jump in the way the manipulators want them to.”

Some people call it volatility. I have tended to agree with Mr. Stein’s conclusion on the topic. I call it the “Shake and Take” episode of the market, named after the “shake and bake” after a phrase from basketball. The volume coupled with variety of stocks and the odd directions they are taking make me curious.I am loathe to align it as bullish or bearish. I am bearish in general in equities.

It sounds to me like Ben Stein is talking about the majority of the USA and leaving CA, parts of Florida, Las Vegas, Washington DC, Seattle and a couple of other places out of his thought processes. You can’t look objectively at southern CA with all of the facts that are now in place and not come to a conclusion that prices will drop substantially. Will it be 20% or will they fall 50%…….? Nobody knows at this point but to me, it looks like we’re going to see a slow slippery slide as time goes bye and finally see a bottoming out in late 2011 or mid 2012. People will have to accept that their house is worth a whole lot less before they will lower their prices to the range where they will actually find a buyer. This will take some time, depending on each individuals circumstances. I read a story yesterday in the San Francisco Chronicle about a man who had been trying to sell the his house in the Castro Valley (SF area) for six months for $550k with no offers. He actually had equity in the home because he owed around $350k. He bought the house in early 2006. He did the smart thing and held an absolute auction. The house sold for $450k, he freed himself from the mortgage that was going to re-set next year and he walked away with some cash. Time will tell but I think he did the smartest thing he could do.
As prices in SoCal drop further and more ARM’s reset to higher rates, a huge number of people who have no equity will simply walk away from the house. Then, when the foreclosed house sells at the true market value, the comps in the area are down the drain for anyone else who has to sell their home. There are many things that are all inter-related that will continue to drive the crazy prices in these bubble markets back to some sort of sanity. When you can buy really nice homes in most parts of the country for around $200k, CA and with liar loans down the drain, etc, my guess is that SFR’s will drop as much as 40% (or more)……………but who has a crystal ball? I just look at the facts and make logical assumptions.

It sounds to me like Ben Stein is talking about the majority of the USA and leaving CA, parts of Florida, Las Vegas, Washington DC, Seattle and a couple of other places out of his thought processes. You can’t look objectively at southern CA with all of the facts that are now in place and not come to a conclusion that prices will drop substantially. Will it be 20% or will they fall 50%…….? Nobody knows at this point but to me, it looks like we’re going to see a slow slippery slide as time goes bye and finally see a bottoming out in late 2011 or mid 2012. People will have to accept that their house is worth a whole lot less before they will lower their prices to the range where they will actually find a buyer. This will take some time, depending on each individuals circumstances. I read a story yesterday in the San Francisco Chronicle about a man who had been trying to sell the his house in the Castro Valley (SF area) for six months for $550k with no offers. He actually had equity in the home because he owed around $350k. He bought the house in early 2006. He did the smart thing and held an absolute auction. The house sold for $450k, he freed himself from the mortgage that was going to re-set next year and he walked away with some cash. Time will tell but I think he did the smartest thing he could do.
As prices in SoCal drop further and more ARM’s reset to higher rates, a huge number of people who have no equity will simply walk away from the house. Then, when the foreclosed house sells at the true market value, the comps in the area are down the drain for anyone else who has to sell their home. There are many things that are all inter-related that will continue to drive the crazy prices in these bubble markets back to some sort of sanity. When you can buy really nice homes in most parts of the country for around $200k, CA and with liar loans down the drain, etc, my guess is that SFR’s will drop as much as 40% (or more)……………but who has a crystal ball? I just look at the facts and make logical assumptions.

Ditto Ex-SD… I think that if anything you are too optimistic. The same psychology which caused the problem will accelerate it in reverse. Don’t think that in 2011-2012 the prices will have fallen enough to make the market go up again. There will have been too many people hurt, too many people afraid…. 2011-2012 will be the big pain years… I think for years after the market will be flat or still fall because the economy will have been crushed.

The years of equity lines, new kitchens, new boats, cars, toys, second homes, investment properties and increased interest rates (a larger spread between Fed rates and actual mortgage rates) will cause long term pain, for at least a decade.

This might be the start of a general long term decline for the US and its need to pay for all the years of spending and no savings.