Home › Forums › Financial Markets/Economics › Do you feel the economy getting better?
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paramount.
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March 1, 2012 at 1:44 AM #739005March 1, 2012 at 5:31 AM #739013
moneymaker
ParticipantI’m getting more tips @ work but I think my employer is losing more business / attracting lower clientel. Good for me, not good for future job security. If anybody here works for the IRS, no the tips are not significant and I do not depend on them.
March 1, 2012 at 1:26 PM #739027The-Shoveler
ParticipantAnother Point for Brian’s theory ,
Big sales for small cars in February,
http://finance.yahoo.com/news/big-sales-small-cars-february-162618510.html
The Markets almost always move in the direction everyone least expects (thereby creating the most pain to the most people in the process, just the way it works, I did not make the rules).
In this case the way to maximum pain may very well be to continue to show signs of improvement.
I know that’s an odd theory.Note: In addition, what would cause the max pain would be for retail investors to give-up based on fear they are being left behind and go all-in just as the market peaks, which kind of looks like what is starting to happen. (I am still on the side but feeling the pain of watching everything just seem to go up myself ). I guess time will tell.
March 1, 2012 at 1:48 PM #739041Aecetia
ParticipantI see a lot of folks shopping, but not that many buying. The market is up, but real estate still seems down. Not sure what is going on. I am not sure this is a recovery. The market can be manipulated.
Then there is this: “The National Association of Realtors reported that the median home price in January fell 2% from December to $154,700. That’s the lowest price reading since November 2001, before the run-up in home prices that became known as the housing bubble.”
http://money.cnn.com/2012/02/22/real_estate/home_sales/index.htm
March 1, 2012 at 2:43 PM #739046briansd1
Guest3% GDP growth. Pretty good for the economy as a whole.
http://www.marketwatch.com/story/fourth-quarter-us-gdp-growth-revised-up-to-3-2012-02-29?link=MW_latest_newsAsset values don’t have anything to do with GDP growth; but asset values do affect consumer confidence.
If you bought a house at the peak in 2006 and you’ve been getting pay cuts, then raises 0% to 3%, you’re probably not happy making your mortgage payments. But still 3% is better than 0%, or negative.
March 1, 2012 at 3:29 PM #739047poorgradstudent
Participant[quote=briansd1]3% GDP growth. Pretty good for the economy as a whole.
http://www.marketwatch.com/story/fourth-quarter-us-gdp-growth-revised-up-to-3-2012-02-29?link=MW_latest_newsAsset values don’t have anything to do with GDP growth; but asset values do affect consumer confidence.
If you bought a house at the peak in 2006 and you’ve been getting pay cuts, then raises 0% to 3%, you’re probably not happy making your mortgage payments. But still 3% is better than 0%, or negative.[/quote]
Upward revisions are always encouraging. It looks like first time jobless claims also is continuing it’s steady march in the good direction.On a tangential note, Marketwatch has some of the dumbest commenters I’ve seen.
March 1, 2012 at 8:33 PM #739066paramount
Participant[quote=briansd1]3% GDP growth. Pretty good for the economy as a whole.
[/quote]But still below WS expectations.
March 1, 2012 at 9:34 PM #739070sdrealtor
ParticipantI can only speak for SD real estate but if you look at the low and mid tier markets it is quiet hot right now. If you look at the high tier its a bit of ablood bath IMO.
One thing it does in discredit the old time Bugs Butterfly theory. The low end is recovering, the mid is stable to recovering and the high is getting smacked. They couldnt be more disconnected.
March 1, 2012 at 10:25 PM #739077paramount
Participant[quote=sdrealtor]I can only speak for SD real estate but if you look at the low and mid tier markets it is quiet hot right now. If you look at the high tier its a bit of ablood bath IMO.
One thing it does in discredit the old time Bugs Butterfly theory. The low end is recovering, the mid is stable to recovering and the high is getting smacked. They couldnt be more disconnected.[/quote]
The ‘last’ recession started in December of 2007, I wonder what housing sales were January/February 2008 (for San Diego)?
March 1, 2012 at 11:12 PM #739083sdrealtor
ParticipantSomeone can provide the actual numbers but my recollection is very low volume. In October 2007 there was very little lending going on. I called a bottom on the volume of sales around then, people called me crazy here but history has proven me correct. By early 08 lending had started again but I’d still be surprised in sales in early 08 weren’t lower than now
March 2, 2012 at 1:04 AM #739088temeculaguy
Participant[quote=sdrealtor]I can only speak for SD real estate but if you look at the low and mid tier markets it is quiet hot right now. If you look at the high tier its a bit of ablood bath IMO.
One thing it does in discredit the old time Bugs Butterfly theory. The low end is recovering, the mid is stable to recovering and the high is getting smacked. They couldnt be more disconnected.[/quote]
I hate to disagree but that is exactly the bugs butterfly theory only in a different part of the arc. You see, when the lower fell and the middle mostly held and the upper held up entirely, the theory was in the beginning phase. The middle would soon fall because the lower wouldn’t move up and the price to benefit ratio would eventually hit the upper market, it would just take time. Now that the egg has moved through the snake, the appearance will be different. The low end is hot, eventually it will spill into the middle, then the upper end. Patience grasshopper, even good action movies have a few kissing scenes. The lower areas will slow when the price closes the gap and the buyers decide to go up a neighborhood for a small price gap, eventually that hits the high end. The pain train had scheduled stops on the way in, but it also has scheduled stops on the way out. If I may quote the greatest television show of all time (The Wire), “everything is connected.”
March 2, 2012 at 1:45 AM #739090CA renter
Participant[quote=temeculaguy][quote=sdrealtor]I can only speak for SD real estate but if you look at the low and mid tier markets it is quiet hot right now. If you look at the high tier its a bit of ablood bath IMO.
One thing it does in discredit the old time Bugs Butterfly theory. The low end is recovering, the mid is stable to recovering and the high is getting smacked. They couldnt be more disconnected.[/quote]
I hate to disagree but that is exactly the bugs butterfly theory only in a different part of the arc. You see, when the lower fell and the middle mostly held and the upper held up entirely, the theory was in the beginning phase. The middle would soon fall because the lower wouldn’t move up and the price to benefit ratio would eventually hit the upper market, it would just take time. Now that the egg has moved through the snake, the appearance will be different. The low end is hot, eventually it will spill into the middle, then the upper end. Patience grasshopper, even good action movies have a few kissing scenes. The lower areas will slow when the price closes the gap and the buyers decide to go up a neighborhood for a small price gap, eventually that hits the high end. The pain train had scheduled stops on the way in, but it also has scheduled stops on the way out. If I may quote the greatest television show of all time (The Wire), “everything is connected.”[/quote]
Agree 100%, TG.
March 2, 2012 at 11:22 AM #739152sdrealtor
ParticipantAnd I have to disagree back. It is easy to sit back in cyberspace and throw out theories like that which make sense but do not represent reality.
The low is completely dettached from the high end. The low end crashed because the buyers never could really afford paying their mortgages even if the interest rate was zero. Today’s buyers on the low end are heavily dominated by investors picking up properties that cash flow. The low interest rates are bringing 1st timers also but they are having a tough time against the investors.
Buyers in each tier stick to their tier and dont move as freely as the Butterfly theory suggests. A perfect example is the CAR family. They could have gotten a much bigger nicer and cheaper home long ago had they been willing to migrate like butterflies to Oceanside, Vista, San Marcos, Escondido but that was never a real option for them because of location of work and lifestyle. Sure they romantisized the idea of a big house on a 1/2 acre or more lot in areas like SW Esco around Lake Hodges but if they were up for that they would have gotten it long ago.
The high is getting smacked now for two reason that I can see. Sellers finally capitulating that no recovery is coming soon combined with the drop in the superconforming loan limit (the main culprit IMO) by $150K this Fall. Prior to then you could buy up to 850K with an easy qualify gov’t backed loan and put 20% down. That now only gets you up to about $700K. The jumbos are harder to qualify for and many want 25% down. What is going on in the Upper Tier has nothing to do with the mid or lower tier. They are completely different buyers.
March 3, 2012 at 4:01 AM #739203CA renter
Participant[quote=sdrealtor]And I have to disagree back. It is easy to sit back in cyberspace and throw out theories like that which make sense but do not represent reality.
The low is completely dettached from the high end. The low end crashed because the buyers never could really afford paying their mortgages even if the interest rate was zero. Today’s buyers on the low end are heavily dominated by investors picking up properties that cash flow. The low interest rates are bringing 1st timers also but they are having a tough time against the investors.
Buyers in each tier stick to their tier and dont move as freely as the Butterfly theory suggests. A perfect example is the CAR family. They could have gotten a much bigger nicer and cheaper home long ago had they been willing to migrate like butterflies to Oceanside, Vista, San Marcos, Escondido but that was never a real option for them because of location of work and lifestyle. Sure they romantisized the idea of a big house on a 1/2 acre or more lot in areas like SW Esco around Lake Hodges but if they were up for that they would have gotten it long ago.
The high is getting smacked now for two reason that I can see. Sellers finally capitulating that no recovery is coming soon combined with the drop in the superconforming loan limit (the main culprit IMO) by $150K this Fall. Prior to then you could buy up to 850K with an easy qualify gov’t backed loan and put 20% down. That now only gets you up to about $700K. The jumbos are harder to qualify for and many want 25% down. What is going on in the Upper Tier has nothing to do with the mid or lower tier. They are completely different buyers.[/quote]
Buyers in “upper-tier” neighborhoods are usually move-up buyers. Easy to find move-up buyers when they are taking $200K+++ from their starter homes to use as down payments. Now, all that bubble money on the bottom end is gone; the move-up market is dead.
The only reason the higher-mid and higher-end areas have held up so well is because there was less distress, largely due to the fact that all the foreclosure moratoriums, govt-backed mortgage market, etc. kicked in AFTER then lower end had already collapsed but right as the declines were heading into the better areas. Additionally, the large down-payments brought into the higher-end areas (from sales of starter homes) provided a buffer that the zero-down crowd at the lower end did not have. Those with this “buffer” were able to sell at a profit, or at least break-even, while the lower-end bubble buyers were upside down on day one, especially with 100%+ financing and the selling costs involved. If they needed/wanted to move, they HAD to short sale or foreclose.
In our case, the SW Escondido area really wasn’t that much cheaper than what we could find here, all things considered (maintenance, commute, etc.). To buy our house/lot in a comparable neighborhood in Esco, we probably would have paid about the same, maybe more. We also would have had to deal with an HOA or architectural committee in many Esco neighborhoods, which we don’t have to deal with here. So, it was a no-brainer. IF we could have gotten a comparable house/lot/neighborhood in Esco for 40-50% less than here, we would have jumped on it. We DID make multiple offers in Esco at prices we were willing to pay, but they were never accepted.
March 3, 2012 at 7:10 AM #739208svelte
ParticipantAgree CAR but wonder if there is one more factor you overlooked – that high end homeowners often have funds stashed in various places that they can use to feed their home loan during the down economy (a luxury that low end homebuyers didn’t have as they were barely making it to begin with, so any hiccup in their income stream forced them to miss payments).
One theory is that those stashed funds are now becoming very depleted or the high end homeowners have grown tired of watching their life savings go up in smoke so they have decided to start bailing.
I think it is very plausible, especially on the high end homes originally bought with exotic loans.
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