Effect of the Mega Bailout on home prices

[underdose]

Let’s make one clarification of the question. When you say “what will happen to prices”, do you mean in real terms or nominal terms? That’s a vital distinction.

In real terms, houses are still overvalued, no question. Prices must fall in real terms, that is, adjusted for inflation.

But nominal terms, that’s anyone’s guess. Paulson and Bernanke are causing so much monetary inflation through all this that across the board price inflation is not unlikely. So maybe home prices will recover in nominal terms. We may see a 5% increase in home prices nominally, and the govt. will declare victory. Of course, if this comes at the price of gas and milk both hitting $10 a gallon, that 5% nominal gain will still represent a significant decline in real terms.

Or, of course there is always the massive flight from dollar, hyper-inflation scenario, in which case homes skyrocket to trillions of dollars and milk and gas jump to hudreds of millions of dollars. That’s quite a gain in nominal terms, but still a devastating loss in real terms…

[34f3f3f]

I understand the bail out as surgery to remove the cancerous loans, and free up inter bank lending. This is supposed to lubricate the way for future loans, but as it has been pointed out on this blog numerous times, the momentum for declining prices is gathering pace, and is unlikely to slow down until the fundamentals of pricing have been satisfied. Having said that, Arcadia in LA saw increases recently in its median price. This does seem odd, and out of character with neighboring areas. It is a bastion of Asian dwellers, many of whom seem oblivious to the credit crisis. I will qualify that by saying my in-laws are Chinese, and within their own sub-economy things (any manner) may be different. Either pent up demand, or cash looking for somewhere to go that’s more secure than banks, could be a plausible cause.

[34f3f3f]

I understand the bail out as surgery to remove the cancerous loans, and free up inter bank lending. This is supposed to lubricate the way for future loans, but as it has been pointed out on this blog numerous times, the momentum for declining prices is gathering pace, and is unlikely to slow down until the fundamentals of pricing have been satisfied. Having said that, Arcadia in LA saw increases recently in its median price. This does seem odd, and out of character with neighboring areas. It is a bastion of Asian dwellers, many of whom seem oblivious to the credit crisis. I will qualify that by saying my in-laws are Chinese, and within their own sub-economy things (any manner) may be different. Either pent up demand, or cash looking for somewhere to go that’s more secure than banks, could be a plausible cause.

[34f3f3f]

I understand the bail out as surgery to remove the cancerous loans, and free up inter bank lending. This is supposed to lubricate the way for future loans, but as it has been pointed out on this blog numerous times, the momentum for declining prices is gathering pace, and is unlikely to slow down until the fundamentals of pricing have been satisfied. Having said that, Arcadia in LA saw increases recently in its median price. This does seem odd, and out of character with neighboring areas. It is a bastion of Asian dwellers, many of whom seem oblivious to the credit crisis. I will qualify that by saying my in-laws are Chinese, and within their own sub-economy things (any manner) may be different. Either pent up demand, or cash looking for somewhere to go that’s more secure than banks, could be a plausible cause.

[34f3f3f]

I understand the bail out as surgery to remove the cancerous loans, and free up inter bank lending. This is supposed to lubricate the way for future loans, but as it has been pointed out on this blog numerous times, the momentum for declining prices is gathering pace, and is unlikely to slow down until the fundamentals of pricing have been satisfied. Having said that, Arcadia in LA saw increases recently in its median price. This does seem odd, and out of character with neighboring areas. It is a bastion of Asian dwellers, many of whom seem oblivious to the credit crisis. I will qualify that by saying my in-laws are Chinese, and within their own sub-economy things (any manner) may be different. Either pent up demand, or cash looking for somewhere to go that’s more secure than banks, could be a plausible cause.

[34f3f3f]

I understand the bail out as surgery to remove the cancerous loans, and free up inter bank lending. This is supposed to lubricate the way for future loans, but as it has been pointed out on this blog numerous times, the momentum for declining prices is gathering pace, and is unlikely to slow down until the fundamentals of pricing have been satisfied. Having said that, Arcadia in LA saw increases recently in its median price. This does seem odd, and out of character with neighboring areas. It is a bastion of Asian dwellers, many of whom seem oblivious to the credit crisis. I will qualify that by saying my in-laws are Chinese, and within their own sub-economy things (any manner) may be different. Either pent up demand, or cash looking for somewhere to go that’s more secure than banks, could be a plausible cause.

[Huckleberry]

So, now that we have heard another couple of days of Congressional hearings with Bernanke and Paulson. What is everyone’s opinion/read on what the new bailout will look like?

Are we going to bail out individuals mortgages through foreclosure forbearance, (through “bankruptcy cramdown” by judges), student and car loans, and all the other debt as I have been hearing about?

Are housing prices destined to be supported by our own tax dollars, disallowing those of us waiting to buy from affording a home?

[Huckleberry]

So, now that we have heard another couple of days of Congressional hearings with Bernanke and Paulson. What is everyone’s opinion/read on what the new bailout will look like?

Are we going to bail out individuals mortgages through foreclosure forbearance, (through “bankruptcy cramdown” by judges), student and car loans, and all the other debt as I have been hearing about?

Are housing prices destined to be supported by our own tax dollars, disallowing those of us waiting to buy from affording a home?

[Huckleberry]

So, now that we have heard another couple of days of Congressional hearings with Bernanke and Paulson. What is everyone’s opinion/read on what the new bailout will look like?

Are we going to bail out individuals mortgages through foreclosure forbearance, (through “bankruptcy cramdown” by judges), student and car loans, and all the other debt as I have been hearing about?

Are housing prices destined to be supported by our own tax dollars, disallowing those of us waiting to buy from affording a home?

[Huckleberry]

So, now that we have heard another couple of days of Congressional hearings with Bernanke and Paulson. What is everyone’s opinion/read on what the new bailout will look like?

Are we going to bail out individuals mortgages through foreclosure forbearance, (through “bankruptcy cramdown” by judges), student and car loans, and all the other debt as I have been hearing about?

Are housing prices destined to be supported by our own tax dollars, disallowing those of us waiting to buy from affording a home?

[Huckleberry]

So, now that we have heard another couple of days of Congressional hearings with Bernanke and Paulson. What is everyone’s opinion/read on what the new bailout will look like?

Are we going to bail out individuals mortgages through foreclosure forbearance, (through “bankruptcy cramdown” by judges), student and car loans, and all the other debt as I have been hearing about?

Are housing prices destined to be supported by our own tax dollars, disallowing those of us waiting to buy from affording a home?

[sdnerd]

A long time ago on this board, I predicted that the lower end areas would be creamed but the higher end would hold out long enough for a bailout. After all, it’s not really a problem until the pain trickles up the financial ladder it seems. As soon as it does, suddenly the world is going to end unless we act yesterday.

As much as I hate that viewpoint, that’s still the direction I tend towards.

While it may be too late for Oceanside, Chula Vista, etc – I personally don’t care to live there.

The areas that I, and it seems many others on these forums are anxiously waiting for to fall drastically in price… there’s still quite a bit of time to find a way to keep these people in their homes.

Loan modifications, foreclosure freezes, low interest refinances, who knows what trickery will be used. I just have this unsettling feeling that an artificial floor will be put in place with a long period of no gain and a lot of people living in homes they can’t really afford. Sure a small number of foreclosures will slip through the gates in the interim, and they’ll be met with multiple bids.

That’s my pessimistic viewpoint. 🙂

/Still sitting on the sidelines on a hoard of cash, watching it’s value slip away. Wife pressures building, crazy financial market, and not wanting to catch a falling knife.

[sdnerd]

A long time ago on this board, I predicted that the lower end areas would be creamed but the higher end would hold out long enough for a bailout. After all, it’s not really a problem until the pain trickles up the financial ladder it seems. As soon as it does, suddenly the world is going to end unless we act yesterday.

As much as I hate that viewpoint, that’s still the direction I tend towards.

While it may be too late for Oceanside, Chula Vista, etc – I personally don’t care to live there.

The areas that I, and it seems many others on these forums are anxiously waiting for to fall drastically in price… there’s still quite a bit of time to find a way to keep these people in their homes.

Loan modifications, foreclosure freezes, low interest refinances, who knows what trickery will be used. I just have this unsettling feeling that an artificial floor will be put in place with a long period of no gain and a lot of people living in homes they can’t really afford. Sure a small number of foreclosures will slip through the gates in the interim, and they’ll be met with multiple bids.

That’s my pessimistic viewpoint. 🙂

/Still sitting on the sidelines on a hoard of cash, watching it’s value slip away. Wife pressures building, crazy financial market, and not wanting to catch a falling knife.

[sdnerd]

A long time ago on this board, I predicted that the lower end areas would be creamed but the higher end would hold out long enough for a bailout. After all, it’s not really a problem until the pain trickles up the financial ladder it seems. As soon as it does, suddenly the world is going to end unless we act yesterday.

As much as I hate that viewpoint, that’s still the direction I tend towards.

While it may be too late for Oceanside, Chula Vista, etc – I personally don’t care to live there.

The areas that I, and it seems many others on these forums are anxiously waiting for to fall drastically in price… there’s still quite a bit of time to find a way to keep these people in their homes.

Loan modifications, foreclosure freezes, low interest refinances, who knows what trickery will be used. I just have this unsettling feeling that an artificial floor will be put in place with a long period of no gain and a lot of people living in homes they can’t really afford. Sure a small number of foreclosures will slip through the gates in the interim, and they’ll be met with multiple bids.

That’s my pessimistic viewpoint. 🙂

/Still sitting on the sidelines on a hoard of cash, watching it’s value slip away. Wife pressures building, crazy financial market, and not wanting to catch a falling knife.

[sdnerd]

A long time ago on this board, I predicted that the lower end areas would be creamed but the higher end would hold out long enough for a bailout. After all, it’s not really a problem until the pain trickles up the financial ladder it seems. As soon as it does, suddenly the world is going to end unless we act yesterday.

As much as I hate that viewpoint, that’s still the direction I tend towards.

While it may be too late for Oceanside, Chula Vista, etc – I personally don’t care to live there.

The areas that I, and it seems many others on these forums are anxiously waiting for to fall drastically in price… there’s still quite a bit of time to find a way to keep these people in their homes.

Loan modifications, foreclosure freezes, low interest refinances, who knows what trickery will be used. I just have this unsettling feeling that an artificial floor will be put in place with a long period of no gain and a lot of people living in homes they can’t really afford. Sure a small number of foreclosures will slip through the gates in the interim, and they’ll be met with multiple bids.

That’s my pessimistic viewpoint. 🙂

/Still sitting on the sidelines on a hoard of cash, watching it’s value slip away. Wife pressures building, crazy financial market, and not wanting to catch a falling knife.

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