Home sales continue plunge

[all]

[quote=briansd1]I wonder how many tax credit recipients will walk if we get the double dip.
[/quote]

JTR says 90% of those who bought in 92130 since 06/01 put 20% or more down. I don’t remember the credit era numbers, but it was not much different. The prices would need to drop a lot for those to walk.

[CA renter]

[quote=yojimbo][quote]I believe that the mentality of the buyers is still very much that when real estate picks up it will appreciate like it did before. That’s why people spend so much on housing. [/quote]

I haven’t seen much of a shift away from that yet and I’m still not certain that it is going to happen.

The “Your house is your best investment” mentality is pretty firmly ingrained even now amongst potential buyers. Besides, you get to mix emotion with alleged rationality when buying a home. It’s fun, exciting and satisfying searching for and buying your “dream” home and at the same time is (was) a great investment. You can’t say the same thing about a car or a stock or a bond. Paying too much for a car is just dumb. Overpaying for your dream home is shrewd given the locked in appreciation. Pay enough for it and you’ll get the satisfaction of explaining to your friends how you were able to adeptly out negotiate those other foolish buyers while at the same time covertly insinuating that your finances are so good that you can easily afford the overpriced, over-sized home.

Are those days long gone? I wish, but I don’t think they are gone yet. I still see it in the market though it’s essentially dominated by the “investor” crowd now. Maybe another 10-20% drop in prices or a very prolonged dead market will change attitudes. We’ll see. I’ll believe it when I see it.[/quote]

You’re right. The bubble mentality is still very much alive and well out there. It’s only when the declines grind on year after year after year that they will finally get it.

IMHO, we are on the downside of a multi-decade-long credit bubble that was made possible by a fairly wealthy contingent of Baby Boomers who were taught that wages always rise, and asset purchases will always make you rich over time. Who will take their place (and have the same resources and belief in never-ending inflation)? Lots of unwinding left to do.

[CA renter]

[quote=yojimbo][quote]I believe that the mentality of the buyers is still very much that when real estate picks up it will appreciate like it did before. That’s why people spend so much on housing. [/quote]

I haven’t seen much of a shift away from that yet and I’m still not certain that it is going to happen.

The “Your house is your best investment” mentality is pretty firmly ingrained even now amongst potential buyers. Besides, you get to mix emotion with alleged rationality when buying a home. It’s fun, exciting and satisfying searching for and buying your “dream” home and at the same time is (was) a great investment. You can’t say the same thing about a car or a stock or a bond. Paying too much for a car is just dumb. Overpaying for your dream home is shrewd given the locked in appreciation. Pay enough for it and you’ll get the satisfaction of explaining to your friends how you were able to adeptly out negotiate those other foolish buyers while at the same time covertly insinuating that your finances are so good that you can easily afford the overpriced, over-sized home.

Are those days long gone? I wish, but I don’t think they are gone yet. I still see it in the market though it’s essentially dominated by the “investor” crowd now. Maybe another 10-20% drop in prices or a very prolonged dead market will change attitudes. We’ll see. I’ll believe it when I see it.[/quote]

You’re right. The bubble mentality is still very much alive and well out there. It’s only when the declines grind on year after year after year that they will finally get it.

IMHO, we are on the downside of a multi-decade-long credit bubble that was made possible by a fairly wealthy contingent of Baby Boomers who were taught that wages always rise, and asset purchases will always make you rich over time. Who will take their place (and have the same resources and belief in never-ending inflation)? Lots of unwinding left to do.

[CA renter]

[quote=yojimbo][quote]I believe that the mentality of the buyers is still very much that when real estate picks up it will appreciate like it did before. That’s why people spend so much on housing. [/quote]

I haven’t seen much of a shift away from that yet and I’m still not certain that it is going to happen.

The “Your house is your best investment” mentality is pretty firmly ingrained even now amongst potential buyers. Besides, you get to mix emotion with alleged rationality when buying a home. It’s fun, exciting and satisfying searching for and buying your “dream” home and at the same time is (was) a great investment. You can’t say the same thing about a car or a stock or a bond. Paying too much for a car is just dumb. Overpaying for your dream home is shrewd given the locked in appreciation. Pay enough for it and you’ll get the satisfaction of explaining to your friends how you were able to adeptly out negotiate those other foolish buyers while at the same time covertly insinuating that your finances are so good that you can easily afford the overpriced, over-sized home.

Are those days long gone? I wish, but I don’t think they are gone yet. I still see it in the market though it’s essentially dominated by the “investor” crowd now. Maybe another 10-20% drop in prices or a very prolonged dead market will change attitudes. We’ll see. I’ll believe it when I see it.[/quote]

You’re right. The bubble mentality is still very much alive and well out there. It’s only when the declines grind on year after year after year that they will finally get it.

IMHO, we are on the downside of a multi-decade-long credit bubble that was made possible by a fairly wealthy contingent of Baby Boomers who were taught that wages always rise, and asset purchases will always make you rich over time. Who will take their place (and have the same resources and belief in never-ending inflation)? Lots of unwinding left to do.

[CA renter]

[quote=yojimbo][quote]I believe that the mentality of the buyers is still very much that when real estate picks up it will appreciate like it did before. That’s why people spend so much on housing. [/quote]

I haven’t seen much of a shift away from that yet and I’m still not certain that it is going to happen.

The “Your house is your best investment” mentality is pretty firmly ingrained even now amongst potential buyers. Besides, you get to mix emotion with alleged rationality when buying a home. It’s fun, exciting and satisfying searching for and buying your “dream” home and at the same time is (was) a great investment. You can’t say the same thing about a car or a stock or a bond. Paying too much for a car is just dumb. Overpaying for your dream home is shrewd given the locked in appreciation. Pay enough for it and you’ll get the satisfaction of explaining to your friends how you were able to adeptly out negotiate those other foolish buyers while at the same time covertly insinuating that your finances are so good that you can easily afford the overpriced, over-sized home.

Are those days long gone? I wish, but I don’t think they are gone yet. I still see it in the market though it’s essentially dominated by the “investor” crowd now. Maybe another 10-20% drop in prices or a very prolonged dead market will change attitudes. We’ll see. I’ll believe it when I see it.[/quote]

You’re right. The bubble mentality is still very much alive and well out there. It’s only when the declines grind on year after year after year that they will finally get it.

IMHO, we are on the downside of a multi-decade-long credit bubble that was made possible by a fairly wealthy contingent of Baby Boomers who were taught that wages always rise, and asset purchases will always make you rich over time. Who will take their place (and have the same resources and belief in never-ending inflation)? Lots of unwinding left to do.

[CA renter]

[quote=yojimbo][quote]I believe that the mentality of the buyers is still very much that when real estate picks up it will appreciate like it did before. That’s why people spend so much on housing. [/quote]

I haven’t seen much of a shift away from that yet and I’m still not certain that it is going to happen.

The “Your house is your best investment” mentality is pretty firmly ingrained even now amongst potential buyers. Besides, you get to mix emotion with alleged rationality when buying a home. It’s fun, exciting and satisfying searching for and buying your “dream” home and at the same time is (was) a great investment. You can’t say the same thing about a car or a stock or a bond. Paying too much for a car is just dumb. Overpaying for your dream home is shrewd given the locked in appreciation. Pay enough for it and you’ll get the satisfaction of explaining to your friends how you were able to adeptly out negotiate those other foolish buyers while at the same time covertly insinuating that your finances are so good that you can easily afford the overpriced, over-sized home.

Are those days long gone? I wish, but I don’t think they are gone yet. I still see it in the market though it’s essentially dominated by the “investor” crowd now. Maybe another 10-20% drop in prices or a very prolonged dead market will change attitudes. We’ll see. I’ll believe it when I see it.[/quote]

You’re right. The bubble mentality is still very much alive and well out there. It’s only when the declines grind on year after year after year that they will finally get it.

IMHO, we are on the downside of a multi-decade-long credit bubble that was made possible by a fairly wealthy contingent of Baby Boomers who were taught that wages always rise, and asset purchases will always make you rich over time. Who will take their place (and have the same resources and belief in never-ending inflation)? Lots of unwinding left to do.

[CA renter]

[quote=Arraya]Regarding expectations:

http://www.reuters.com/article/idUSTRE63R2IH20100428

Consumers remain unsure about the direction of the housing market, but are optimistic about real estate values, with 46 percent expecting prices in their area to increase over the next year. Just 12 percent expect prices to decline, the survey found.

Gee, do you think expectations have anything to do with their decision to purchase?

Another month or two of bad numbers coupled with a dow below 10K, will deter many potential able buyers, of the quickly depleting pool, and exacerbate the downward trend. Actually, when you think about it, the tax credit probably made the next downtrend more severe because it pulled demand forward and further depleted the pool. The Fed is squeezing blood from a turnip at this point.[/quote]

But “nobody” could have predicted this of course, right? 😉

[CA renter]

[quote=Arraya]Regarding expectations:

http://www.reuters.com/article/idUSTRE63R2IH20100428

Consumers remain unsure about the direction of the housing market, but are optimistic about real estate values, with 46 percent expecting prices in their area to increase over the next year. Just 12 percent expect prices to decline, the survey found.

Gee, do you think expectations have anything to do with their decision to purchase?

Another month or two of bad numbers coupled with a dow below 10K, will deter many potential able buyers, of the quickly depleting pool, and exacerbate the downward trend. Actually, when you think about it, the tax credit probably made the next downtrend more severe because it pulled demand forward and further depleted the pool. The Fed is squeezing blood from a turnip at this point.[/quote]

But “nobody” could have predicted this of course, right? 😉

[CA renter]

[quote=Arraya]Regarding expectations:

http://www.reuters.com/article/idUSTRE63R2IH20100428

Consumers remain unsure about the direction of the housing market, but are optimistic about real estate values, with 46 percent expecting prices in their area to increase over the next year. Just 12 percent expect prices to decline, the survey found.

Gee, do you think expectations have anything to do with their decision to purchase?

Another month or two of bad numbers coupled with a dow below 10K, will deter many potential able buyers, of the quickly depleting pool, and exacerbate the downward trend. Actually, when you think about it, the tax credit probably made the next downtrend more severe because it pulled demand forward and further depleted the pool. The Fed is squeezing blood from a turnip at this point.[/quote]

But “nobody” could have predicted this of course, right? 😉

[CA renter]

[quote=Arraya]Regarding expectations:

http://www.reuters.com/article/idUSTRE63R2IH20100428

Consumers remain unsure about the direction of the housing market, but are optimistic about real estate values, with 46 percent expecting prices in their area to increase over the next year. Just 12 percent expect prices to decline, the survey found.

Gee, do you think expectations have anything to do with their decision to purchase?

Another month or two of bad numbers coupled with a dow below 10K, will deter many potential able buyers, of the quickly depleting pool, and exacerbate the downward trend. Actually, when you think about it, the tax credit probably made the next downtrend more severe because it pulled demand forward and further depleted the pool. The Fed is squeezing blood from a turnip at this point.[/quote]

But “nobody” could have predicted this of course, right? 😉

[CA renter]

[quote=Arraya]Regarding expectations:

http://www.reuters.com/article/idUSTRE63R2IH20100428

Consumers remain unsure about the direction of the housing market, but are optimistic about real estate values, with 46 percent expecting prices in their area to increase over the next year. Just 12 percent expect prices to decline, the survey found.

Gee, do you think expectations have anything to do with their decision to purchase?

Another month or two of bad numbers coupled with a dow below 10K, will deter many potential able buyers, of the quickly depleting pool, and exacerbate the downward trend. Actually, when you think about it, the tax credit probably made the next downtrend more severe because it pulled demand forward and further depleted the pool. The Fed is squeezing blood from a turnip at this point.[/quote]

But “nobody” could have predicted this of course, right? 😉

[CA renter]

[quote=andymajumder]Not a homeowner…but I would I careful what I wish for. Las Vegas probably has reached or is close to 2000 nominal pricing. But, if that were to happen in SD or in most parts of CaliforniaUS, we would probably be in a depression. Eventually…it doesn’t matter much if you are renter or a owner if you don’t have a job and the country is in a sever depression, things will be very bad for all of us.[/quote]

I question this undying belief that lower housing prices would cause a depression.

Since housing prices are determined by the prices paid by new buyers, high housing prices are actually a drain on the economy. In order for any *sustainable* benefit to be derived from high housing prices, the sellers would have to sell and rent or scale down to a less expensive home — freeing up the “profits” to be spent somewhere else in the economy.

People mistakenly believe that the HELOCs and cash-out refis enabled by higher housing prices are somehow a net positive. They aren’t. The only thing someone is doing when the HELOC/cash-out refi their home is adding on to their debt burden *and using the house as collateral* which simply means that they are giving rights to the lender to foreclose on them if the debt is not paid as per their agreement. Debt, by its very nature, pulls economic activity forward *at the expense of future economic activity.* As a matter of fact, debt pulls more from the future than it brings to the present because of the interest payments that need to be made.

Lower housing prices are exactly what’s needed to allow us to rebuild a **sustainable** recovery that doesn’t harm future activity. Lower prices free up more money as wages — with no debt offset — can be spent on more productive/beneficial endeavours.

[CA renter]

[quote=andymajumder]Not a homeowner…but I would I careful what I wish for. Las Vegas probably has reached or is close to 2000 nominal pricing. But, if that were to happen in SD or in most parts of CaliforniaUS, we would probably be in a depression. Eventually…it doesn’t matter much if you are renter or a owner if you don’t have a job and the country is in a sever depression, things will be very bad for all of us.[/quote]

I question this undying belief that lower housing prices would cause a depression.

Since housing prices are determined by the prices paid by new buyers, high housing prices are actually a drain on the economy. In order for any *sustainable* benefit to be derived from high housing prices, the sellers would have to sell and rent or scale down to a less expensive home — freeing up the “profits” to be spent somewhere else in the economy.

People mistakenly believe that the HELOCs and cash-out refis enabled by higher housing prices are somehow a net positive. They aren’t. The only thing someone is doing when the HELOC/cash-out refi their home is adding on to their debt burden *and using the house as collateral* which simply means that they are giving rights to the lender to foreclose on them if the debt is not paid as per their agreement. Debt, by its very nature, pulls economic activity forward *at the expense of future economic activity.* As a matter of fact, debt pulls more from the future than it brings to the present because of the interest payments that need to be made.

Lower housing prices are exactly what’s needed to allow us to rebuild a **sustainable** recovery that doesn’t harm future activity. Lower prices free up more money as wages — with no debt offset — can be spent on more productive/beneficial endeavours.

[CA renter]

[quote=andymajumder]Not a homeowner…but I would I careful what I wish for. Las Vegas probably has reached or is close to 2000 nominal pricing. But, if that were to happen in SD or in most parts of CaliforniaUS, we would probably be in a depression. Eventually…it doesn’t matter much if you are renter or a owner if you don’t have a job and the country is in a sever depression, things will be very bad for all of us.[/quote]

I question this undying belief that lower housing prices would cause a depression.

Since housing prices are determined by the prices paid by new buyers, high housing prices are actually a drain on the economy. In order for any *sustainable* benefit to be derived from high housing prices, the sellers would have to sell and rent or scale down to a less expensive home — freeing up the “profits” to be spent somewhere else in the economy.

People mistakenly believe that the HELOCs and cash-out refis enabled by higher housing prices are somehow a net positive. They aren’t. The only thing someone is doing when the HELOC/cash-out refi their home is adding on to their debt burden *and using the house as collateral* which simply means that they are giving rights to the lender to foreclose on them if the debt is not paid as per their agreement. Debt, by its very nature, pulls economic activity forward *at the expense of future economic activity.* As a matter of fact, debt pulls more from the future than it brings to the present because of the interest payments that need to be made.

Lower housing prices are exactly what’s needed to allow us to rebuild a **sustainable** recovery that doesn’t harm future activity. Lower prices free up more money as wages — with no debt offset — can be spent on more productive/beneficial endeavours.

[CA renter]

[quote=andymajumder]Not a homeowner…but I would I careful what I wish for. Las Vegas probably has reached or is close to 2000 nominal pricing. But, if that were to happen in SD or in most parts of CaliforniaUS, we would probably be in a depression. Eventually…it doesn’t matter much if you are renter or a owner if you don’t have a job and the country is in a sever depression, things will be very bad for all of us.[/quote]

I question this undying belief that lower housing prices would cause a depression.

Since housing prices are determined by the prices paid by new buyers, high housing prices are actually a drain on the economy. In order for any *sustainable* benefit to be derived from high housing prices, the sellers would have to sell and rent or scale down to a less expensive home — freeing up the “profits” to be spent somewhere else in the economy.

People mistakenly believe that the HELOCs and cash-out refis enabled by higher housing prices are somehow a net positive. They aren’t. The only thing someone is doing when the HELOC/cash-out refi their home is adding on to their debt burden *and using the house as collateral* which simply means that they are giving rights to the lender to foreclose on them if the debt is not paid as per their agreement. Debt, by its very nature, pulls economic activity forward *at the expense of future economic activity.* As a matter of fact, debt pulls more from the future than it brings to the present because of the interest payments that need to be made.

Lower housing prices are exactly what’s needed to allow us to rebuild a **sustainable** recovery that doesn’t harm future activity. Lower prices free up more money as wages — with no debt offset — can be spent on more productive/beneficial endeavours.

[Author]

Posts