Coworkers argument that house prices won’t fall…

[temeculaguy]

He’s right it won’t be like the 90’s, it will be so much worse he will wish for the 90’s. The 90’s and today are different because there was no widespread use of toxic mortgages, the norm was 20% down and 33% income to housing expense ratio. That norm will be returning shortly and the effect of allowing a market to swing that far off course and then be brought back, well, we don’t know because it has never happened. I can bet it won’t soften the blow, how much harder is anyone’s guess. Had this market peaked in 2003 we would be in for a 1995, probably pulling out of it right now, too late for that now.

[bsrsharma]

“heated debate”

No need. Follow the facts.

1. 80% or so of homes sold after about 2002 have explosive ARMs. When they reset, the owners have no alternative but sell if they can. Of course, most can’t for money they owe causing foreclosure. REO properties eventually go down in price.

2. Credit crunch means no mortgages of funny kind. Definitely very few Jumbos. Without qualified buyers where is the market? We don’t even have to introduce affordability logic here.

3. If your friends like to just take a walk around they can see “For Sale” signs everywhere. And they are not going away after 3,6,9,…months. Questions?

4. Let them take a look at $/sqft statistics from Sandicor/DataQuick/RealtyTrac etc., It is coming down fast!

5. Population movement. Are people moving in or out of SD? I think it is out. (leaving aside illegals, who can’t buy, at least not right away) What does that do to demand and supply? And prices…

6. Are they not reading about mortgage companies going out of business like dot-coms of 2000? Show them implode-o-meter website. What do they think will happen when most are out of business. Yep, the rates will skyrocket. Just like credit cards.

7. They should read sites like piggington, patrick.net, calculatedRisk etc.,

[bsrsharma]

“heated debate”

No need. Follow the facts.

1. 80% or so of homes sold after about 2002 have explosive ARMs. When they reset, the owners have no alternative but sell if they can. Of course, most can’t for money they owe causing foreclosure. REO properties eventually go down in price.

2. Credit crunch means no mortgages of funny kind. Definitely very few Jumbos. Without qualified buyers where is the market? We don’t even have to introduce affordability logic here.

3. If your friends like to just take a walk around they can see “For Sale” signs everywhere. And they are not going away after 3,6,9,…months. Questions?

4. Let them take a look at $/sqft statistics from Sandicor/DataQuick/RealtyTrac etc., It is coming down fast!

5. Population movement. Are people moving in or out of SD? I think it is out. (leaving aside illegals, who can’t buy, at least not right away) What does that do to demand and supply? And prices…

6. Are they not reading about mortgage companies going out of business like dot-coms of 2000? Show them implode-o-meter website. What do they think will happen when most are out of business. Yep, the rates will skyrocket. Just like credit cards.

7. They should read sites like piggington, patrick.net, calculatedRisk etc.,

[bsrsharma]

“heated debate”

No need. Follow the facts.

1. 80% or so of homes sold after about 2002 have explosive ARMs. When they reset, the owners have no alternative but sell if they can. Of course, most can’t for money they owe causing foreclosure. REO properties eventually go down in price.

2. Credit crunch means no mortgages of funny kind. Definitely very few Jumbos. Without qualified buyers where is the market? We don’t even have to introduce affordability logic here.

3. If your friends like to just take a walk around they can see “For Sale” signs everywhere. And they are not going away after 3,6,9,…months. Questions?

4. Let them take a look at $/sqft statistics from Sandicor/DataQuick/RealtyTrac etc., It is coming down fast!

5. Population movement. Are people moving in or out of SD? I think it is out. (leaving aside illegals, who can’t buy, at least not right away) What does that do to demand and supply? And prices…

6. Are they not reading about mortgage companies going out of business like dot-coms of 2000? Show them implode-o-meter website. What do they think will happen when most are out of business. Yep, the rates will skyrocket. Just like credit cards.

7. They should read sites like piggington, patrick.net, calculatedRisk etc.,

[Arraya]

Apparantly he or she is a homeowner.

It won’t take long for him to realize. I’ve watched a few get upset then finally accept it.

“I know I’m talking about El Cajon/ Spring Valley condos and not S.D. SFRs, but this will have an eventual effect I bet.”

I follow prices of SFRs and condos in hillcrest/mission hills/bankers hill. I could give many many examples of 10-40% hits across property values of 300K to 1.5 mill. It’s almost everywhere with the exception of a few select areas…

I found one today selling at a loss in the most expensive condo development of the area. Purchased in 05 for 2.1 mill, on the market now for 1.9 mill. ouch!

[Arraya]

Apparantly he or she is a homeowner.

It won’t take long for him to realize. I’ve watched a few get upset then finally accept it.

“I know I’m talking about El Cajon/ Spring Valley condos and not S.D. SFRs, but this will have an eventual effect I bet.”

I follow prices of SFRs and condos in hillcrest/mission hills/bankers hill. I could give many many examples of 10-40% hits across property values of 300K to 1.5 mill. It’s almost everywhere with the exception of a few select areas…

I found one today selling at a loss in the most expensive condo development of the area. Purchased in 05 for 2.1 mill, on the market now for 1.9 mill. ouch!

[Arraya]

Apparantly he or she is a homeowner.

It won’t take long for him to realize. I’ve watched a few get upset then finally accept it.

“I know I’m talking about El Cajon/ Spring Valley condos and not S.D. SFRs, but this will have an eventual effect I bet.”

I follow prices of SFRs and condos in hillcrest/mission hills/bankers hill. I could give many many examples of 10-40% hits across property values of 300K to 1.5 mill. It’s almost everywhere with the exception of a few select areas…

I found one today selling at a loss in the most expensive condo development of the area. Purchased in 05 for 2.1 mill, on the market now for 1.9 mill. ouch!

[garysears]

Good news! Forbes.com is predicting a recovery (does that mean prices have to decline?) in Q2’08 for San Diego. We can then expect 5%+ appreciation!

http://realestate.msn.com/Buying/Article_Forbes.aspx?cp-documentid=5008065

I love the indepth reporting. Seems strange that there is absolutely no justification for the prediction other than the big “Forbes” name. I’m sure they built a “model”, but nice choice of data. Lets see…randomly call a “bottom” with no supporting data or estimate of total price decline, decline %, or nominal bottom price. Then create the expectation for the continuation of the madness. Don’t give a cost basis for the appreciation so you don’t have to bother with any downturn prediction. Don’t specifically say WHEN that increase will begin or how long it will last. Unreal. So basically this guy is predicting an overcorrection of unknown extent and guessing it will come back because it has in the past. I guess all an expert for Forbes has to be able to do is explain what would make a chart look like a “V”, “U”, or “L” and then randomly pick a good positive number. I’m so underpaid. I’m one of the most undereducated posters (financially speaking) on the board and I think I could fake a similar article. I would include lucky lotto numbers for each city in another column.

[garysears]

Good news! Forbes.com is predicting a recovery (does that mean prices have to decline?) in Q2’08 for San Diego. We can then expect 5%+ appreciation!

http://realestate.msn.com/Buying/Article_Forbes.aspx?cp-documentid=5008065

I love the indepth reporting. Seems strange that there is absolutely no justification for the prediction other than the big “Forbes” name. I’m sure they built a “model”, but nice choice of data. Lets see…randomly call a “bottom” with no supporting data or estimate of total price decline, decline %, or nominal bottom price. Then create the expectation for the continuation of the madness. Don’t give a cost basis for the appreciation so you don’t have to bother with any downturn prediction. Don’t specifically say WHEN that increase will begin or how long it will last. Unreal. So basically this guy is predicting an overcorrection of unknown extent and guessing it will come back because it has in the past. I guess all an expert for Forbes has to be able to do is explain what would make a chart look like a “V”, “U”, or “L” and then randomly pick a good positive number. I’m so underpaid. I’m one of the most undereducated posters (financially speaking) on the board and I think I could fake a similar article. I would include lucky lotto numbers for each city in another column.

[garysears]

Good news! Forbes.com is predicting a recovery (does that mean prices have to decline?) in Q2’08 for San Diego. We can then expect 5%+ appreciation!

http://realestate.msn.com/Buying/Article_Forbes.aspx?cp-documentid=5008065

I love the indepth reporting. Seems strange that there is absolutely no justification for the prediction other than the big “Forbes” name. I’m sure they built a “model”, but nice choice of data. Lets see…randomly call a “bottom” with no supporting data or estimate of total price decline, decline %, or nominal bottom price. Then create the expectation for the continuation of the madness. Don’t give a cost basis for the appreciation so you don’t have to bother with any downturn prediction. Don’t specifically say WHEN that increase will begin or how long it will last. Unreal. So basically this guy is predicting an overcorrection of unknown extent and guessing it will come back because it has in the past. I guess all an expert for Forbes has to be able to do is explain what would make a chart look like a “V”, “U”, or “L” and then randomly pick a good positive number. I’m so underpaid. I’m one of the most undereducated posters (financially speaking) on the board and I think I could fake a similar article. I would include lucky lotto numbers for each city in another column.

[Raybyrnes]

For many homeowners who are not pulling out equity to buy hum v’s or putting in a new pool the housing market is meaningless. They can afford the monthly payments, they plan on staying for a loing time and are making additional payment each month to pay the house off early.

Here is an idea. There are really 2 components to any home. The first component is the land, the second component is the home. Commodity prices are up dramatically ie. copper, oil, lumber, cement, etc. There is a push to reform immigration which would increase the cost of labor used to build homes. The bottom line here is that while land values are coming down the cost of building is going up sharply. What is the par value of a new home. 80, 100, 150??? Or even more meaningful what can be used as the rate of increase. 3,5,7, 12???

[Raybyrnes]

For many homeowners who are not pulling out equity to buy hum v’s or putting in a new pool the housing market is meaningless. They can afford the monthly payments, they plan on staying for a loing time and are making additional payment each month to pay the house off early.

Here is an idea. There are really 2 components to any home. The first component is the land, the second component is the home. Commodity prices are up dramatically ie. copper, oil, lumber, cement, etc. There is a push to reform immigration which would increase the cost of labor used to build homes. The bottom line here is that while land values are coming down the cost of building is going up sharply. What is the par value of a new home. 80, 100, 150??? Or even more meaningful what can be used as the rate of increase. 3,5,7, 12???

[Raybyrnes]

For many homeowners who are not pulling out equity to buy hum v’s or putting in a new pool the housing market is meaningless. They can afford the monthly payments, they plan on staying for a loing time and are making additional payment each month to pay the house off early.

Here is an idea. There are really 2 components to any home. The first component is the land, the second component is the home. Commodity prices are up dramatically ie. copper, oil, lumber, cement, etc. There is a push to reform immigration which would increase the cost of labor used to build homes. The bottom line here is that while land values are coming down the cost of building is going up sharply. What is the par value of a new home. 80, 100, 150??? Or even more meaningful what can be used as the rate of increase. 3,5,7, 12???

[citydweller]

bsrsharma, regarding your comment,

“1. 80% or so of homes sold after about 2002 have explosive ARMs.”

does anyone know the total number of homes that have been sold since 2002? In other words, if 100,000 sales were made in the past 5 years, then that would mean there are 80,000 with explosive ARMs.

I’m just trying to get a feel for how many homes in S.D. are in trouble. I realize we would need to add to that number the homeowners who have HELOC’d themselves into trouble.

BTW, I live in a gated complex in Mission Valley and when I got home today there was a Notice of Trustees sale taped to the entrance gate. I wish I had a digital camera, I would’ve posted a picture of it.

[citydweller]

bsrsharma, regarding your comment,

“1. 80% or so of homes sold after about 2002 have explosive ARMs.”

does anyone know the total number of homes that have been sold since 2002? In other words, if 100,000 sales were made in the past 5 years, then that would mean there are 80,000 with explosive ARMs.

I’m just trying to get a feel for how many homes in S.D. are in trouble. I realize we would need to add to that number the homeowners who have HELOC’d themselves into trouble.

BTW, I live in a gated complex in Mission Valley and when I got home today there was a Notice of Trustees sale taped to the entrance gate. I wish I had a digital camera, I would’ve posted a picture of it.

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