housing a sucker’s bet now?

[highpacific]

More Evidence

“There is no change in the previously reported negative outlook for the local economy through the first half of 2009. What is needed to turn the economy around both locally and nationally is stability in the housing market. Falling prices and a jump in foreclosures have hurt both the labor market and the financial markets and institutions. The recent increase in home resales is a positive sign, but a bottom in the housing market in not likely to be reached until the latter part of 2009, and home prices are not expected to increase until 2010 at the earliest.”
-Professor Alan Gin

Source:
San Diego Index of Leading Economic Indicators

[peterb]

Last night I attended an RE investment meeting. A couple of observations about the meeting and what was said:

1) There was easily 250 people at the meeting looking to invest. So this tells me sentiment for RE is still quite high despite recent huge declines.

2)The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.

My take: There’s still some money to squeeze out of the market in the near term on the low-end. How long this will last? As unemployment rises in CA, this could be a very short lived opportunity.

[peterb]

Last night I attended an RE investment meeting. A couple of observations about the meeting and what was said:

1) There was easily 250 people at the meeting looking to invest. So this tells me sentiment for RE is still quite high despite recent huge declines.

2)The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.

My take: There’s still some money to squeeze out of the market in the near term on the low-end. How long this will last? As unemployment rises in CA, this could be a very short lived opportunity.

[peterb]

Last night I attended an RE investment meeting. A couple of observations about the meeting and what was said:

1) There was easily 250 people at the meeting looking to invest. So this tells me sentiment for RE is still quite high despite recent huge declines.

2)The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.

My take: There’s still some money to squeeze out of the market in the near term on the low-end. How long this will last? As unemployment rises in CA, this could be a very short lived opportunity.

[peterb]

Last night I attended an RE investment meeting. A couple of observations about the meeting and what was said:

1) There was easily 250 people at the meeting looking to invest. So this tells me sentiment for RE is still quite high despite recent huge declines.

2)The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.

My take: There’s still some money to squeeze out of the market in the near term on the low-end. How long this will last? As unemployment rises in CA, this could be a very short lived opportunity.

[peterb]

Last night I attended an RE investment meeting. A couple of observations about the meeting and what was said:

1) There was easily 250 people at the meeting looking to invest. So this tells me sentiment for RE is still quite high despite recent huge declines.

2)The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.

My take: There’s still some money to squeeze out of the market in the near term on the low-end. How long this will last? As unemployment rises in CA, this could be a very short lived opportunity.

[Fearful]

[quote=SD Realtor]
My hope is that I am wrong. I am not saying foreclosures or distressed properties will halt. However there will indeed be a reduction, more then people care to admit. Rather then a huge second wave I think it will be more like a long drawn out rising tide, slowing and inexhaustibly washing in. Again, some markets have already hit a point where alot of risk has been washed out. What will be particularly interesting to me will be the dilema of the distressed homes in the 600k-2M range. My hope is that nothing will happen to these homes.

[/quote]
Perhaps this topic is worthy of its own thread. It looked to me like Schwarzenegger’s foreclosure moratorium talk was more an attempt to muscle the banks into doing workouts on loans – the moratorium would not apply to banks that have workout programs in place. I believe – I hope – that the Administration understands that a true moratorium would further impair bank asset prices and would make the situation with the financial and economic systems worse.

For a moratorium to be popular, it would also have to exempt the higher end houses, as I think your final two sentences suggest.

[Fearful]

[quote=SD Realtor]
My hope is that I am wrong. I am not saying foreclosures or distressed properties will halt. However there will indeed be a reduction, more then people care to admit. Rather then a huge second wave I think it will be more like a long drawn out rising tide, slowing and inexhaustibly washing in. Again, some markets have already hit a point where alot of risk has been washed out. What will be particularly interesting to me will be the dilema of the distressed homes in the 600k-2M range. My hope is that nothing will happen to these homes.

[/quote]
Perhaps this topic is worthy of its own thread. It looked to me like Schwarzenegger’s foreclosure moratorium talk was more an attempt to muscle the banks into doing workouts on loans – the moratorium would not apply to banks that have workout programs in place. I believe – I hope – that the Administration understands that a true moratorium would further impair bank asset prices and would make the situation with the financial and economic systems worse.

For a moratorium to be popular, it would also have to exempt the higher end houses, as I think your final two sentences suggest.

[Fearful]

[quote=SD Realtor]
My hope is that I am wrong. I am not saying foreclosures or distressed properties will halt. However there will indeed be a reduction, more then people care to admit. Rather then a huge second wave I think it will be more like a long drawn out rising tide, slowing and inexhaustibly washing in. Again, some markets have already hit a point where alot of risk has been washed out. What will be particularly interesting to me will be the dilema of the distressed homes in the 600k-2M range. My hope is that nothing will happen to these homes.

[/quote]
Perhaps this topic is worthy of its own thread. It looked to me like Schwarzenegger’s foreclosure moratorium talk was more an attempt to muscle the banks into doing workouts on loans – the moratorium would not apply to banks that have workout programs in place. I believe – I hope – that the Administration understands that a true moratorium would further impair bank asset prices and would make the situation with the financial and economic systems worse.

For a moratorium to be popular, it would also have to exempt the higher end houses, as I think your final two sentences suggest.

[Fearful]

[quote=SD Realtor]
My hope is that I am wrong. I am not saying foreclosures or distressed properties will halt. However there will indeed be a reduction, more then people care to admit. Rather then a huge second wave I think it will be more like a long drawn out rising tide, slowing and inexhaustibly washing in. Again, some markets have already hit a point where alot of risk has been washed out. What will be particularly interesting to me will be the dilema of the distressed homes in the 600k-2M range. My hope is that nothing will happen to these homes.

[/quote]
Perhaps this topic is worthy of its own thread. It looked to me like Schwarzenegger’s foreclosure moratorium talk was more an attempt to muscle the banks into doing workouts on loans – the moratorium would not apply to banks that have workout programs in place. I believe – I hope – that the Administration understands that a true moratorium would further impair bank asset prices and would make the situation with the financial and economic systems worse.

For a moratorium to be popular, it would also have to exempt the higher end houses, as I think your final two sentences suggest.

[Fearful]

[quote=SD Realtor]
My hope is that I am wrong. I am not saying foreclosures or distressed properties will halt. However there will indeed be a reduction, more then people care to admit. Rather then a huge second wave I think it will be more like a long drawn out rising tide, slowing and inexhaustibly washing in. Again, some markets have already hit a point where alot of risk has been washed out. What will be particularly interesting to me will be the dilema of the distressed homes in the 600k-2M range. My hope is that nothing will happen to these homes.

[/quote]
Perhaps this topic is worthy of its own thread. It looked to me like Schwarzenegger’s foreclosure moratorium talk was more an attempt to muscle the banks into doing workouts on loans – the moratorium would not apply to banks that have workout programs in place. I believe – I hope – that the Administration understands that a true moratorium would further impair bank asset prices and would make the situation with the financial and economic systems worse.

For a moratorium to be popular, it would also have to exempt the higher end houses, as I think your final two sentences suggest.

[SD Realtor]

“The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.”

Peter I do not agree with this statement. There are many more sales then you implied in housing in the 600k range on up. Are the sales “robust”? No not at all. Also I will compare some sales in those higher ranges. Without looking at the data, they are more likely lower then last year but to say that the only sales happening right now are lower end starter home purchases is something I disagree with. My thoughts are more that this type of housing is following the same trend as lower end housing did when it was starting to crack, just staggered by a few years. Let’s see what the data shows later tonite. All I know is, there are still people buying out there in the higher ranges and as a potential buyer it is FRUSTRATING the heck out of me.

Fearful as always I think that the efforts by the powers that be are simply intended to slow things down. There is no true solution to the problem outside of letting it correct properly but to many dominoes fall by letting it do that. Similarly with a nasty recession and unemployment coming on strong I can VERY easily see some sort of “relief act” passed by the legislature at the federal level that would strictly prohibit any unemployed citized from being foreclosed on.

Does anyone think this is a stretch?

Similarly it would not surprise me if any sort of blanket moratorium was passed. Maybe a 90 or 180 day duration.

Let’s talk more about the higher end. This really worries me. What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? If it kept him in his home it seems more then probable that he gets reworked because he is no different then the guy living in a 300k home who can only afford a 200k payment. Similarly this 600k comp is never a comp. That pretty much royally sucks.

Now right now the banks may be dragging thier feet on these sorts of reworks and there may be restrictions on these however to think that there will not be more programs in front of us to push stronger action into place is in just as much denial as the seller who prices his home wrong. This future is not happening cuz of Obama, it would have happened no matter who is in the white house.

Now what I do see helping us potential buyers is that there is NO WAY that this will halt the depreciation trend. What we WILL start seeing now is more distress due to economic conditions rather then what we have seen in the past 2 years. Our previous distress was due to people overconsuming and prices peaking and dropping leaving homeowners in a lurch. Now we have true distress caused by unemployment and that is gonna be a grinder.

So… we will see how it plays out. I do think we are well overdue for a chunk down move in the 800k on up housing.

[SD Realtor]

“The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.”

Peter I do not agree with this statement. There are many more sales then you implied in housing in the 600k range on up. Are the sales “robust”? No not at all. Also I will compare some sales in those higher ranges. Without looking at the data, they are more likely lower then last year but to say that the only sales happening right now are lower end starter home purchases is something I disagree with. My thoughts are more that this type of housing is following the same trend as lower end housing did when it was starting to crack, just staggered by a few years. Let’s see what the data shows later tonite. All I know is, there are still people buying out there in the higher ranges and as a potential buyer it is FRUSTRATING the heck out of me.

Fearful as always I think that the efforts by the powers that be are simply intended to slow things down. There is no true solution to the problem outside of letting it correct properly but to many dominoes fall by letting it do that. Similarly with a nasty recession and unemployment coming on strong I can VERY easily see some sort of “relief act” passed by the legislature at the federal level that would strictly prohibit any unemployed citized from being foreclosed on.

Does anyone think this is a stretch?

Similarly it would not surprise me if any sort of blanket moratorium was passed. Maybe a 90 or 180 day duration.

Let’s talk more about the higher end. This really worries me. What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? If it kept him in his home it seems more then probable that he gets reworked because he is no different then the guy living in a 300k home who can only afford a 200k payment. Similarly this 600k comp is never a comp. That pretty much royally sucks.

Now right now the banks may be dragging thier feet on these sorts of reworks and there may be restrictions on these however to think that there will not be more programs in front of us to push stronger action into place is in just as much denial as the seller who prices his home wrong. This future is not happening cuz of Obama, it would have happened no matter who is in the white house.

Now what I do see helping us potential buyers is that there is NO WAY that this will halt the depreciation trend. What we WILL start seeing now is more distress due to economic conditions rather then what we have seen in the past 2 years. Our previous distress was due to people overconsuming and prices peaking and dropping leaving homeowners in a lurch. Now we have true distress caused by unemployment and that is gonna be a grinder.

So… we will see how it plays out. I do think we are well overdue for a chunk down move in the 800k on up housing.

[SD Realtor]

“The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.”

Peter I do not agree with this statement. There are many more sales then you implied in housing in the 600k range on up. Are the sales “robust”? No not at all. Also I will compare some sales in those higher ranges. Without looking at the data, they are more likely lower then last year but to say that the only sales happening right now are lower end starter home purchases is something I disagree with. My thoughts are more that this type of housing is following the same trend as lower end housing did when it was starting to crack, just staggered by a few years. Let’s see what the data shows later tonite. All I know is, there are still people buying out there in the higher ranges and as a potential buyer it is FRUSTRATING the heck out of me.

Fearful as always I think that the efforts by the powers that be are simply intended to slow things down. There is no true solution to the problem outside of letting it correct properly but to many dominoes fall by letting it do that. Similarly with a nasty recession and unemployment coming on strong I can VERY easily see some sort of “relief act” passed by the legislature at the federal level that would strictly prohibit any unemployed citized from being foreclosed on.

Does anyone think this is a stretch?

Similarly it would not surprise me if any sort of blanket moratorium was passed. Maybe a 90 or 180 day duration.

Let’s talk more about the higher end. This really worries me. What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? If it kept him in his home it seems more then probable that he gets reworked because he is no different then the guy living in a 300k home who can only afford a 200k payment. Similarly this 600k comp is never a comp. That pretty much royally sucks.

Now right now the banks may be dragging thier feet on these sorts of reworks and there may be restrictions on these however to think that there will not be more programs in front of us to push stronger action into place is in just as much denial as the seller who prices his home wrong. This future is not happening cuz of Obama, it would have happened no matter who is in the white house.

Now what I do see helping us potential buyers is that there is NO WAY that this will halt the depreciation trend. What we WILL start seeing now is more distress due to economic conditions rather then what we have seen in the past 2 years. Our previous distress was due to people overconsuming and prices peaking and dropping leaving homeowners in a lurch. Now we have true distress caused by unemployment and that is gonna be a grinder.

So… we will see how it plays out. I do think we are well overdue for a chunk down move in the 800k on up housing.

[SD Realtor]

“The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.”

Peter I do not agree with this statement. There are many more sales then you implied in housing in the 600k range on up. Are the sales “robust”? No not at all. Also I will compare some sales in those higher ranges. Without looking at the data, they are more likely lower then last year but to say that the only sales happening right now are lower end starter home purchases is something I disagree with. My thoughts are more that this type of housing is following the same trend as lower end housing did when it was starting to crack, just staggered by a few years. Let’s see what the data shows later tonite. All I know is, there are still people buying out there in the higher ranges and as a potential buyer it is FRUSTRATING the heck out of me.

Fearful as always I think that the efforts by the powers that be are simply intended to slow things down. There is no true solution to the problem outside of letting it correct properly but to many dominoes fall by letting it do that. Similarly with a nasty recession and unemployment coming on strong I can VERY easily see some sort of “relief act” passed by the legislature at the federal level that would strictly prohibit any unemployed citized from being foreclosed on.

Does anyone think this is a stretch?

Similarly it would not surprise me if any sort of blanket moratorium was passed. Maybe a 90 or 180 day duration.

Let’s talk more about the higher end. This really worries me. What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? If it kept him in his home it seems more then probable that he gets reworked because he is no different then the guy living in a 300k home who can only afford a 200k payment. Similarly this 600k comp is never a comp. That pretty much royally sucks.

Now right now the banks may be dragging thier feet on these sorts of reworks and there may be restrictions on these however to think that there will not be more programs in front of us to push stronger action into place is in just as much denial as the seller who prices his home wrong. This future is not happening cuz of Obama, it would have happened no matter who is in the white house.

Now what I do see helping us potential buyers is that there is NO WAY that this will halt the depreciation trend. What we WILL start seeing now is more distress due to economic conditions rather then what we have seen in the past 2 years. Our previous distress was due to people overconsuming and prices peaking and dropping leaving homeowners in a lurch. Now we have true distress caused by unemployment and that is gonna be a grinder.

So… we will see how it plays out. I do think we are well overdue for a chunk down move in the 800k on up housing.

[Author]

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