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  • August 22, 2008 at 2:17 PM #260427
    peterb
    Participant

    Most markets tend to over-correct there normalization or equilibrium models before they stabilize. Given the illiquid nature of real estate and its dependence on financial markets, these over-corrections can go on for a while. Throw rising unemployment and constricting credit into the mix and it will probably put added pressure on the over-correction of prices and duration. Growing negative sentiment will most likely play a large roll as well.
    Therefore, I would consider “normal ratio’s” as one indicator towards a slowing decline, but by no means an end of the decline. IMO, there are just too many other large negative forces working on the housing market at this time.
    If you study the nature of deflating markets, it’s an amazing economic event and not easily stopped.

    August 22, 2008 at 4:08 PM #260216
    CA renter
    Participant

    It’s possible this is the unwinding of a credit bubble that began in the early 80s — we’ve just seen the “blow-off top” in the 2000-2007 period.

    It may stop mid-stream, but what if it goes all they way (and then some)? Of course, this would be an extreme scenario, but it’s interesting to think of the possibilities.

    Personally, I think housing will not be the great “wealth-builder” it’s been in the past.

    August 22, 2008 at 4:08 PM #260414
    CA renter
    Participant

    It’s possible this is the unwinding of a credit bubble that began in the early 80s — we’ve just seen the “blow-off top” in the 2000-2007 period.

    It may stop mid-stream, but what if it goes all they way (and then some)? Of course, this would be an extreme scenario, but it’s interesting to think of the possibilities.

    Personally, I think housing will not be the great “wealth-builder” it’s been in the past.

    August 22, 2008 at 4:08 PM #260425
    CA renter
    Participant

    It’s possible this is the unwinding of a credit bubble that began in the early 80s — we’ve just seen the “blow-off top” in the 2000-2007 period.

    It may stop mid-stream, but what if it goes all they way (and then some)? Of course, this would be an extreme scenario, but it’s interesting to think of the possibilities.

    Personally, I think housing will not be the great “wealth-builder” it’s been in the past.

    August 22, 2008 at 4:08 PM #260472
    CA renter
    Participant

    It’s possible this is the unwinding of a credit bubble that began in the early 80s — we’ve just seen the “blow-off top” in the 2000-2007 period.

    It may stop mid-stream, but what if it goes all they way (and then some)? Of course, this would be an extreme scenario, but it’s interesting to think of the possibilities.

    Personally, I think housing will not be the great “wealth-builder” it’s been in the past.

    August 22, 2008 at 4:08 PM #260513
    CA renter
    Participant

    It’s possible this is the unwinding of a credit bubble that began in the early 80s — we’ve just seen the “blow-off top” in the 2000-2007 period.

    It may stop mid-stream, but what if it goes all they way (and then some)? Of course, this would be an extreme scenario, but it’s interesting to think of the possibilities.

    Personally, I think housing will not be the great “wealth-builder” it’s been in the past.

    August 22, 2008 at 4:49 PM #260246
    peterb
    Participant

    I would be careful to not be overly negative. And it’s easy to be this way once the ball is rolling downhill like it is. It will stop somewhere.
    But one good thing about RE is that it moves pretty slowly compared to many other things.

    So a trend is not hard to identify. Volume of homes for sale has to come way down and REO’s have to get off the market as well. Then unemployment needs to get below 6% and RE has to show some verifiable YOY increase in price. Even after all this, it may languish for a while before it really rises again.But at least the trend will be in your favor at that point. When and if it comes.

    China and India may put such huge downward pressure on wages and US employment that this may be a long time in coming.

    August 22, 2008 at 4:49 PM #260444
    peterb
    Participant

    I would be careful to not be overly negative. And it’s easy to be this way once the ball is rolling downhill like it is. It will stop somewhere.
    But one good thing about RE is that it moves pretty slowly compared to many other things.

    So a trend is not hard to identify. Volume of homes for sale has to come way down and REO’s have to get off the market as well. Then unemployment needs to get below 6% and RE has to show some verifiable YOY increase in price. Even after all this, it may languish for a while before it really rises again.But at least the trend will be in your favor at that point. When and if it comes.

    China and India may put such huge downward pressure on wages and US employment that this may be a long time in coming.

    August 22, 2008 at 4:49 PM #260455
    peterb
    Participant

    I would be careful to not be overly negative. And it’s easy to be this way once the ball is rolling downhill like it is. It will stop somewhere.
    But one good thing about RE is that it moves pretty slowly compared to many other things.

    So a trend is not hard to identify. Volume of homes for sale has to come way down and REO’s have to get off the market as well. Then unemployment needs to get below 6% and RE has to show some verifiable YOY increase in price. Even after all this, it may languish for a while before it really rises again.But at least the trend will be in your favor at that point. When and if it comes.

    China and India may put such huge downward pressure on wages and US employment that this may be a long time in coming.

    August 22, 2008 at 4:49 PM #260502
    peterb
    Participant

    I would be careful to not be overly negative. And it’s easy to be this way once the ball is rolling downhill like it is. It will stop somewhere.
    But one good thing about RE is that it moves pretty slowly compared to many other things.

    So a trend is not hard to identify. Volume of homes for sale has to come way down and REO’s have to get off the market as well. Then unemployment needs to get below 6% and RE has to show some verifiable YOY increase in price. Even after all this, it may languish for a while before it really rises again.But at least the trend will be in your favor at that point. When and if it comes.

    China and India may put such huge downward pressure on wages and US employment that this may be a long time in coming.

    August 22, 2008 at 4:49 PM #260543
    peterb
    Participant

    I would be careful to not be overly negative. And it’s easy to be this way once the ball is rolling downhill like it is. It will stop somewhere.
    But one good thing about RE is that it moves pretty slowly compared to many other things.

    So a trend is not hard to identify. Volume of homes for sale has to come way down and REO’s have to get off the market as well. Then unemployment needs to get below 6% and RE has to show some verifiable YOY increase in price. Even after all this, it may languish for a while before it really rises again.But at least the trend will be in your favor at that point. When and if it comes.

    China and India may put such huge downward pressure on wages and US employment that this may be a long time in coming.

    August 22, 2008 at 6:08 PM #260296
    Rich Toscano
    Keymaster

    If buyers can achieve a good rental surplus (properly calculated) at the current level on purchase

    This bit seems like a big “if” to me… if this is happening, I imagine it’s just in a few pockets and not widespread enough to form a regionally generalizable floor.

    It still seems to me like the market, even the REO part of it, is pricing in a quick price rebound. People sometimes talk about getting positive cash flow without accounting for the opportunity cost of their down payment, or they talk about good deals where cash flow (often based on optimistic assumptions) is only slightly negative.

    From a non-investor standpoint, there’s no doubt that despite all that has happened, there is still a sense of urgency for many people to get into a house. It wasn’t like this before the boom.

    It still seems like the sentiment hasn’t been ground down to a point where there would be enough of a floor to offset all the REOs.

    That’s my semi-coherent Friday afternoon 2 cents anyway…

    Rich

    August 22, 2008 at 6:08 PM #260494
    Rich Toscano
    Keymaster

    If buyers can achieve a good rental surplus (properly calculated) at the current level on purchase

    This bit seems like a big “if” to me… if this is happening, I imagine it’s just in a few pockets and not widespread enough to form a regionally generalizable floor.

    It still seems to me like the market, even the REO part of it, is pricing in a quick price rebound. People sometimes talk about getting positive cash flow without accounting for the opportunity cost of their down payment, or they talk about good deals where cash flow (often based on optimistic assumptions) is only slightly negative.

    From a non-investor standpoint, there’s no doubt that despite all that has happened, there is still a sense of urgency for many people to get into a house. It wasn’t like this before the boom.

    It still seems like the sentiment hasn’t been ground down to a point where there would be enough of a floor to offset all the REOs.

    That’s my semi-coherent Friday afternoon 2 cents anyway…

    Rich

    August 22, 2008 at 6:08 PM #260505
    Rich Toscano
    Keymaster

    If buyers can achieve a good rental surplus (properly calculated) at the current level on purchase

    This bit seems like a big “if” to me… if this is happening, I imagine it’s just in a few pockets and not widespread enough to form a regionally generalizable floor.

    It still seems to me like the market, even the REO part of it, is pricing in a quick price rebound. People sometimes talk about getting positive cash flow without accounting for the opportunity cost of their down payment, or they talk about good deals where cash flow (often based on optimistic assumptions) is only slightly negative.

    From a non-investor standpoint, there’s no doubt that despite all that has happened, there is still a sense of urgency for many people to get into a house. It wasn’t like this before the boom.

    It still seems like the sentiment hasn’t been ground down to a point where there would be enough of a floor to offset all the REOs.

    That’s my semi-coherent Friday afternoon 2 cents anyway…

    Rich

    August 22, 2008 at 6:08 PM #260552
    Rich Toscano
    Keymaster

    If buyers can achieve a good rental surplus (properly calculated) at the current level on purchase

    This bit seems like a big “if” to me… if this is happening, I imagine it’s just in a few pockets and not widespread enough to form a regionally generalizable floor.

    It still seems to me like the market, even the REO part of it, is pricing in a quick price rebound. People sometimes talk about getting positive cash flow without accounting for the opportunity cost of their down payment, or they talk about good deals where cash flow (often based on optimistic assumptions) is only slightly negative.

    From a non-investor standpoint, there’s no doubt that despite all that has happened, there is still a sense of urgency for many people to get into a house. It wasn’t like this before the boom.

    It still seems like the sentiment hasn’t been ground down to a point where there would be enough of a floor to offset all the REOs.

    That’s my semi-coherent Friday afternoon 2 cents anyway…

    Rich

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