Future of US Housing Market?

[PerryChase]

I’m a North County Coastal homeowner. And I don’t care if my house drops 50%. I bought it a long time ago and I made a conscious lifestyle decision to live there.

A 50% drop would give me the opportunity to buy something I would rather live in central San Diego city.

A 50% drop sounds like a catastrophe. But if you think in terms of dollars, it’s not. It wasn’t too long ago that we had median prices about $300k. And at that time, housing was alredy too expensive. Prices can revert back to the mean and we’ll be fine. People in real estate related businesses will be hurt, but everyone else will be fine. Just roll back the clock 5 years.

I think that all housing will be affected by the same percentage at different times. I don’t know of any downturn before where “superior” products declined a lower percentage. Actually, the supply of “luxury” housing is propertionately greater so it could well be that “luxury” housing will turn into average housing.

Another psychological point that affects feelings about real estate is that homeowners who stretched to buy feel that they worked really hard to afford their homes. Thus they feel entitled to be rewarded with housing appreciation. People stretch to buy all sorts of things. What’s different with a house? Should buying a house be “rewarded” anymore than working hard for a Ferrari or a big diamond ring or a luxury vacation to Europe?

[woodrow]

I enjoy PS’s analysis and predicitions – it makes the forum a better read.

That being said, her analysis isn’t any different from David Lereah’s (she’s simply a cheerleader on the opposite end of the spectrum) when she doesn’t base her analysis on hard data. If there is a flaw in her “witty” style, it’s that she sometimes makes wild guesses at data that is relatively easily researched, and her guesses are usually in error in favor of the argument she’s making, showing her inherent bias.

Keep up the good work PS – you’re a valuable member of this community. You should expect to be held to a higher standard than Lereah; after all he’s being paid large sums of money for his biased opinion. And no one that I know of takes him seriously – you don’t want to suffer the same fate.

[Tracy]

I always enjoy PS’s posts. I think she’s amusing and I hope her predictions are correct.

[rocketman]

25% 35% 50% 75% ????

As soon as things turn around and Big Ass Mae gets around to strenghthing requirements for qualifying, lets say… verifiable income and debt to income ratio = < 30%. Then I will buy. Because at that time, I will qualify for a $250 - $350k 3 bedroom house in a nice neighborhood with excellent schools with 20% down and a 6-7% int 25 loan and pay what I can afford... around $2,500 (incl tax,insurance) per month (with an income over $100k). So I don't place a percentage on how far the market will fall, only what I see is realistic for working class families to afford. If that doesn't happen then I'll be renting the rest of my life. I believe that's how far the market will fall. Graph that!

[an]

rocketman, I’m with you on this one. I don’t like to place a % on the decline, it can be as little as 10% and as much as 80% depend on the economic condition. If we have hyper inflation, we all will be making $200-$300k/yr and price will not fall at all. If we go into a great depression and wage drop even more, as well as rent, then 80% is not unrealistic. It can also be somewhere in between. We’ll never know how much it will fall until it’s over and done with.

[rocketman]

Thanks Asianautica,

I remember my Mother, who was raised during the depression, saying to me before I bought my first house “never pay more than 25% of your gross income for personal housing expenses, add a little extra to each payment and… never ever re-finance (unless you can drop your rate 2 points and shorten the lenght)”. I used this formula when I purchased my last three residences.

I believe we will be getting back to this formula before the next rise in housing begins either by Federal regulation or, hopefully, people more conscious of their financial future.

Remember: As much as it hurts, listen to your Mother.

[carlislematthew]

They say it is my style that offends, not my message. But hey, I am just a nice girl next door, that has coffee with the neighbors and carpools to church. I believe the threat is not my style, but the message itself.

Wow.

I happen to have also sold, am waiting for prices to drop, and generally agree with your predictions.

However, I often find your tone, your arrogance, and your lack of general diplomacy quite remarkable. You’re an incredibly frustrating individual to debate with because you instantly dismiss others if they don’t 100% agree with you. If someone disagrees with you, you believe it’s because they’re so kind of evil realtor/home-owner loser that’s totally delusional. It’s fascinating.

[carlislematthew]

Are you mad at David Lereah for saying “real estate never goes down, never has, never will” ? Are you upset with Greenspan for saying “there is no tech stock bubble, and there certainly is no housing bubble; we can identify bubbles only after the fact”?

Yes.

[FutureSDguy]

Lereah Lereah Lereah. Why doesn’t the NAR just present graphs titled “Commission revenue”? That’s what matters to them. That would simply the same graph as the ones they show now adjusted down by a multiple of 0.06, the usual commission rate. The buyer is affected by a multiplier of -1.0. The seller gets 0.94.

Is it taboo for these guys to ever use the word “commission”, the actual source of income for the NAR (or do they also have bake sales)?

We listen too much: let’s talk as buyers and sellers, and let the realtors receive their pay for helping on the transactions. Let’s stop letting these guys act as if they’re running the show. I got boycotted because I had the nerve to do my own paperwork as a seller–that’s the seed of my resentment. They make their living trying to convince everyone that selling houses is too difficult. The lord over the MLS system. And now they’re meddling in the affairs of actual property owners by propagandizing the market.

Just a rant. Feel better now. 🙂

[powayseller]

carlislematthew, I like debates.

[NotCranky]

[quote=powayseller]A 63% drop. I am called extreme for suggesting it could happen here, because we are different. Hey, are we different? Perhaps their housing bubble dwarfed ours?[/quote]

Just looking for old threads where declines were predicted or predictions were refuted. For fun, of course.In this one, Powayseller strikes again!(The real poway seller).

[NotCranky]

[quote=powayseller]A 63% drop. I am called extreme for suggesting it could happen here, because we are different. Hey, are we different? Perhaps their housing bubble dwarfed ours?[/quote]

Just looking for old threads where declines were predicted or predictions were refuted. For fun, of course.In this one, Powayseller strikes again!(The real poway seller).

[NotCranky]

[quote=powayseller]A 63% drop. I am called extreme for suggesting it could happen here, because we are different. Hey, are we different? Perhaps their housing bubble dwarfed ours?[/quote]

Just looking for old threads where declines were predicted or predictions were refuted. For fun, of course.In this one, Powayseller strikes again!(The real poway seller).

[NotCranky]

[quote=powayseller]A 63% drop. I am called extreme for suggesting it could happen here, because we are different. Hey, are we different? Perhaps their housing bubble dwarfed ours?[/quote]

Just looking for old threads where declines were predicted or predictions were refuted. For fun, of course.In this one, Powayseller strikes again!(The real poway seller).

[NotCranky]

[quote=powayseller]A 63% drop. I am called extreme for suggesting it could happen here, because we are different. Hey, are we different? Perhaps their housing bubble dwarfed ours?[/quote]

Just looking for old threads where declines were predicted or predictions were refuted. For fun, of course.In this one, Powayseller strikes again!(The real poway seller).

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