Housing won’t hit bottom ’til 2012

[Anonymous]

[quote=bearishgurl][quote=deadzone] . . . There are so many people out there who still have good jobs but are living on the edge due to their interest only and neg-am loans. I know and work with several people in this category . . . [/quote]

deadzone, I sympathize with the plight of some of your co-workers, but did you ever think that THEY might be to blame for their troubles? Have you ever ASKED any of them if they had OPTION ARMS and if so, why they CHOSE to pay Option 1 or 2 each and every month since origination, KNOWING FULL WELL it would render them upside down and in hot water at “reset” time? Your co-workers were smart enough to read their loan docs at the time of origination, weren’t they??

If your co-workers DIDN’T take out OPTION ARMS, then WHY did they sign up for a 5/1, 7/1 or other type of I/O mortgage program? Could it be that they applied for a mortgage that was too high for them in attempt to obtain a property that was “out of their league?”

You appear to be blaming the Fed and the economy for all of their ills but where does borrower individual responsibility come into play? Just think about this for a minute.[/quote]

I’m not blaming anybody. I’m merely pointing out that there is a large population out there who have good jobs and are “living on the edge”, my co-workers are just part of that group. Basically EVERYBODY who bought a house in San Diego between 2004 and 2007 F-d up big time, regardless of their job status they are almost guaranteed to be under major water and job or not, many of these folks are at their limits in terms of paying the mortgage.

Most people that I know who are in this situation and still have a good job have chosen NOT to walk away due to feelings of morality, pride, not wanting to lose their credit (or security clearance for DoD workers), etc.

We’ll see how long they can last if interest rates rise significantly. I’m sure it will be disastrous. The Fed knows this, that is why it continues it’s reckless QE programs.

[Anonymous]

[quote=flu]Sorry to say this, but until we see an implosion in the equity markets, I’d say home prices are going to trickle down ever so slowly for awhile….

Locally, QC, brcm, Intuit are all near 52 weeks high right now…and also with open head count..Heck, even former 6 bucks motorola is at it’s 52 week top end…So I think we’re ways away from any type of “implosion” imho. (Don’t shoot the messenger)[/quote]

FLU, you may be right about equity markets holding up for a while longer, but what does that have to do with real estate prices? You are assuming that most home buyers have large equity positions and I doubt that in general. If anything 401Ks but you cant use that for a downpayment on a house. I don’t see that there is any strong correlation. Furthermore, just because everything is now at 52 week highs (and in many cases fully recovered to 2007 prices) why do you think that means the implosion is far off? If anything, that tells me we are getting closer.

[Anonymous]

[quote=flu]Sorry to say this, but until we see an implosion in the equity markets, I’d say home prices are going to trickle down ever so slowly for awhile….

Locally, QC, brcm, Intuit are all near 52 weeks high right now…and also with open head count..Heck, even former 6 bucks motorola is at it’s 52 week top end…So I think we’re ways away from any type of “implosion” imho. (Don’t shoot the messenger)[/quote]

FLU, you may be right about equity markets holding up for a while longer, but what does that have to do with real estate prices? You are assuming that most home buyers have large equity positions and I doubt that in general. If anything 401Ks but you cant use that for a downpayment on a house. I don’t see that there is any strong correlation. Furthermore, just because everything is now at 52 week highs (and in many cases fully recovered to 2007 prices) why do you think that means the implosion is far off? If anything, that tells me we are getting closer.

[Anonymous]

[quote=flu]Sorry to say this, but until we see an implosion in the equity markets, I’d say home prices are going to trickle down ever so slowly for awhile….

Locally, QC, brcm, Intuit are all near 52 weeks high right now…and also with open head count..Heck, even former 6 bucks motorola is at it’s 52 week top end…So I think we’re ways away from any type of “implosion” imho. (Don’t shoot the messenger)[/quote]

FLU, you may be right about equity markets holding up for a while longer, but what does that have to do with real estate prices? You are assuming that most home buyers have large equity positions and I doubt that in general. If anything 401Ks but you cant use that for a downpayment on a house. I don’t see that there is any strong correlation. Furthermore, just because everything is now at 52 week highs (and in many cases fully recovered to 2007 prices) why do you think that means the implosion is far off? If anything, that tells me we are getting closer.

[Anonymous]

[quote=flu]Sorry to say this, but until we see an implosion in the equity markets, I’d say home prices are going to trickle down ever so slowly for awhile….

Locally, QC, brcm, Intuit are all near 52 weeks high right now…and also with open head count..Heck, even former 6 bucks motorola is at it’s 52 week top end…So I think we’re ways away from any type of “implosion” imho. (Don’t shoot the messenger)[/quote]

FLU, you may be right about equity markets holding up for a while longer, but what does that have to do with real estate prices? You are assuming that most home buyers have large equity positions and I doubt that in general. If anything 401Ks but you cant use that for a downpayment on a house. I don’t see that there is any strong correlation. Furthermore, just because everything is now at 52 week highs (and in many cases fully recovered to 2007 prices) why do you think that means the implosion is far off? If anything, that tells me we are getting closer.

[Anonymous]

[quote=flu]Sorry to say this, but until we see an implosion in the equity markets, I’d say home prices are going to trickle down ever so slowly for awhile….

Locally, QC, brcm, Intuit are all near 52 weeks high right now…and also with open head count..Heck, even former 6 bucks motorola is at it’s 52 week top end…So I think we’re ways away from any type of “implosion” imho. (Don’t shoot the messenger)[/quote]

FLU, you may be right about equity markets holding up for a while longer, but what does that have to do with real estate prices? You are assuming that most home buyers have large equity positions and I doubt that in general. If anything 401Ks but you cant use that for a downpayment on a house. I don’t see that there is any strong correlation. Furthermore, just because everything is now at 52 week highs (and in many cases fully recovered to 2007 prices) why do you think that means the implosion is far off? If anything, that tells me we are getting closer.

[bearishgurl]

[quote=deadzone] . . . Basically EVERYBODY who bought a house in San Diego between 2004 and 2007 F-d up big time, regardless of their job status they are almost guaranteed to be under major water and job or not, many of these folks are at their limits in terms of paying the mortgage . . . [/quote]

I understand prices were high in those years and I know a few people that have been in the RE biz awhile that overextended themselves (buying too many investment properties at inflated prices which proved to be money drains). But fixed rate programs DID exist in those years. The fixed rate in 03/04 was VERY low. The OPTION to pay the fully amortized rate (Option 3) on an OPTION ARM DID exist in those years because I had one and I paid it!

Even if your co-workers paid up to, say, 20% too much in the “bubble years,” they might still be able to hang on with (lower payments after reset) and keep their good credit/security clearances IF they made wise financing and payment choices in the origination of their mortgage or early years of their “evil” Neg Am ARMS.

Your co-workers obviously screwed up so they could have more discretionary income in the first years of their mortgages, which is the time they should have paid the most in interest. Those choices got them where they are today (and certainly falling values didn’t help, either).

[bearishgurl]

[quote=deadzone] . . . Basically EVERYBODY who bought a house in San Diego between 2004 and 2007 F-d up big time, regardless of their job status they are almost guaranteed to be under major water and job or not, many of these folks are at their limits in terms of paying the mortgage . . . [/quote]

I understand prices were high in those years and I know a few people that have been in the RE biz awhile that overextended themselves (buying too many investment properties at inflated prices which proved to be money drains). But fixed rate programs DID exist in those years. The fixed rate in 03/04 was VERY low. The OPTION to pay the fully amortized rate (Option 3) on an OPTION ARM DID exist in those years because I had one and I paid it!

Even if your co-workers paid up to, say, 20% too much in the “bubble years,” they might still be able to hang on with (lower payments after reset) and keep their good credit/security clearances IF they made wise financing and payment choices in the origination of their mortgage or early years of their “evil” Neg Am ARMS.

Your co-workers obviously screwed up so they could have more discretionary income in the first years of their mortgages, which is the time they should have paid the most in interest. Those choices got them where they are today (and certainly falling values didn’t help, either).

[bearishgurl]

[quote=deadzone] . . . Basically EVERYBODY who bought a house in San Diego between 2004 and 2007 F-d up big time, regardless of their job status they are almost guaranteed to be under major water and job or not, many of these folks are at their limits in terms of paying the mortgage . . . [/quote]

I understand prices were high in those years and I know a few people that have been in the RE biz awhile that overextended themselves (buying too many investment properties at inflated prices which proved to be money drains). But fixed rate programs DID exist in those years. The fixed rate in 03/04 was VERY low. The OPTION to pay the fully amortized rate (Option 3) on an OPTION ARM DID exist in those years because I had one and I paid it!

Even if your co-workers paid up to, say, 20% too much in the “bubble years,” they might still be able to hang on with (lower payments after reset) and keep their good credit/security clearances IF they made wise financing and payment choices in the origination of their mortgage or early years of their “evil” Neg Am ARMS.

Your co-workers obviously screwed up so they could have more discretionary income in the first years of their mortgages, which is the time they should have paid the most in interest. Those choices got them where they are today (and certainly falling values didn’t help, either).

[bearishgurl]

[quote=deadzone] . . . Basically EVERYBODY who bought a house in San Diego between 2004 and 2007 F-d up big time, regardless of their job status they are almost guaranteed to be under major water and job or not, many of these folks are at their limits in terms of paying the mortgage . . . [/quote]

I understand prices were high in those years and I know a few people that have been in the RE biz awhile that overextended themselves (buying too many investment properties at inflated prices which proved to be money drains). But fixed rate programs DID exist in those years. The fixed rate in 03/04 was VERY low. The OPTION to pay the fully amortized rate (Option 3) on an OPTION ARM DID exist in those years because I had one and I paid it!

Even if your co-workers paid up to, say, 20% too much in the “bubble years,” they might still be able to hang on with (lower payments after reset) and keep their good credit/security clearances IF they made wise financing and payment choices in the origination of their mortgage or early years of their “evil” Neg Am ARMS.

Your co-workers obviously screwed up so they could have more discretionary income in the first years of their mortgages, which is the time they should have paid the most in interest. Those choices got them where they are today (and certainly falling values didn’t help, either).

[bearishgurl]

[quote=deadzone] . . . Basically EVERYBODY who bought a house in San Diego between 2004 and 2007 F-d up big time, regardless of their job status they are almost guaranteed to be under major water and job or not, many of these folks are at their limits in terms of paying the mortgage . . . [/quote]

I understand prices were high in those years and I know a few people that have been in the RE biz awhile that overextended themselves (buying too many investment properties at inflated prices which proved to be money drains). But fixed rate programs DID exist in those years. The fixed rate in 03/04 was VERY low. The OPTION to pay the fully amortized rate (Option 3) on an OPTION ARM DID exist in those years because I had one and I paid it!

Even if your co-workers paid up to, say, 20% too much in the “bubble years,” they might still be able to hang on with (lower payments after reset) and keep their good credit/security clearances IF they made wise financing and payment choices in the origination of their mortgage or early years of their “evil” Neg Am ARMS.

Your co-workers obviously screwed up so they could have more discretionary income in the first years of their mortgages, which is the time they should have paid the most in interest. Those choices got them where they are today (and certainly falling values didn’t help, either).

[Coronita]

[quote=deadzone][quote=flu]Sorry to say this, but until we see an implosion in the equity markets, I’d say home prices are going to trickle down ever so slowly for awhile….

Locally, QC, brcm, Intuit are all near 52 weeks high right now…and also with open head count..Heck, even former 6 bucks motorola is at it’s 52 week top end…So I think we’re ways away from any type of “implosion” imho. (Don’t shoot the messenger)[/quote]

FLU, you may be right about equity markets holding up for a while longer, but what does that have to do with real estate prices? You are assuming that most home buyers have large equity positions and I doubt that in general. If anything 401Ks but you cant use that for a downpayment on a house. I don’t see that there is any strong correlation. Furthermore, just because everything is now at 52 week highs (and in many cases fully recovered to 2007 prices) why do you think that means the implosion is far off? If anything, that tells me we are getting closer.[/quote]

I think you’re underestimating folks who’s discretionary spending count significantly on how well (or not well) RSU’s and/or stock options are doing. Mind you that some of these companies never paid top salary dollars. They touted we’ll pay you so-so present day, and through (then worthless) equity at you that vests in 3-4 years.

Typical household with such an arrangement goes like this. proceeds from equity sales goes to discretionary spending items… downpayment for a home, bling, etc…. while as salary goes to paying the bills and 401k toward retirement…Hence, a lot of the discretionary spending (in such households) is completely tied to how the equity markets are doing..Not to mention, that there’s a psychological factor at play here too. If one is see their equity, 401k going up, people “feel” they have more discretionary spending capacity, even if the value of the dollar itself has been cut significantly…
I’d say given the two choices, folks in this category would rather see the equity markets rise 20+% versus wanting interest rates to fall .5%, simply because so much is riding on the equity markets…I wouldn’t be surprised for some of these folks that 80+% of their financial situation depends on the equity markets.

Again, don’t shoot the messenger.

[Coronita]

[quote=deadzone][quote=flu]Sorry to say this, but until we see an implosion in the equity markets, I’d say home prices are going to trickle down ever so slowly for awhile….

Locally, QC, brcm, Intuit are all near 52 weeks high right now…and also with open head count..Heck, even former 6 bucks motorola is at it’s 52 week top end…So I think we’re ways away from any type of “implosion” imho. (Don’t shoot the messenger)[/quote]

FLU, you may be right about equity markets holding up for a while longer, but what does that have to do with real estate prices? You are assuming that most home buyers have large equity positions and I doubt that in general. If anything 401Ks but you cant use that for a downpayment on a house. I don’t see that there is any strong correlation. Furthermore, just because everything is now at 52 week highs (and in many cases fully recovered to 2007 prices) why do you think that means the implosion is far off? If anything, that tells me we are getting closer.[/quote]

I think you’re underestimating folks who’s discretionary spending count significantly on how well (or not well) RSU’s and/or stock options are doing. Mind you that some of these companies never paid top salary dollars. They touted we’ll pay you so-so present day, and through (then worthless) equity at you that vests in 3-4 years.

Typical household with such an arrangement goes like this. proceeds from equity sales goes to discretionary spending items… downpayment for a home, bling, etc…. while as salary goes to paying the bills and 401k toward retirement…Hence, a lot of the discretionary spending (in such households) is completely tied to how the equity markets are doing..Not to mention, that there’s a psychological factor at play here too. If one is see their equity, 401k going up, people “feel” they have more discretionary spending capacity, even if the value of the dollar itself has been cut significantly…
I’d say given the two choices, folks in this category would rather see the equity markets rise 20+% versus wanting interest rates to fall .5%, simply because so much is riding on the equity markets…I wouldn’t be surprised for some of these folks that 80+% of their financial situation depends on the equity markets.

Again, don’t shoot the messenger.

[Coronita]

[quote=deadzone][quote=flu]Sorry to say this, but until we see an implosion in the equity markets, I’d say home prices are going to trickle down ever so slowly for awhile….

Locally, QC, brcm, Intuit are all near 52 weeks high right now…and also with open head count..Heck, even former 6 bucks motorola is at it’s 52 week top end…So I think we’re ways away from any type of “implosion” imho. (Don’t shoot the messenger)[/quote]

FLU, you may be right about equity markets holding up for a while longer, but what does that have to do with real estate prices? You are assuming that most home buyers have large equity positions and I doubt that in general. If anything 401Ks but you cant use that for a downpayment on a house. I don’t see that there is any strong correlation. Furthermore, just because everything is now at 52 week highs (and in many cases fully recovered to 2007 prices) why do you think that means the implosion is far off? If anything, that tells me we are getting closer.[/quote]

I think you’re underestimating folks who’s discretionary spending count significantly on how well (or not well) RSU’s and/or stock options are doing. Mind you that some of these companies never paid top salary dollars. They touted we’ll pay you so-so present day, and through (then worthless) equity at you that vests in 3-4 years.

Typical household with such an arrangement goes like this. proceeds from equity sales goes to discretionary spending items… downpayment for a home, bling, etc…. while as salary goes to paying the bills and 401k toward retirement…Hence, a lot of the discretionary spending (in such households) is completely tied to how the equity markets are doing..Not to mention, that there’s a psychological factor at play here too. If one is see their equity, 401k going up, people “feel” they have more discretionary spending capacity, even if the value of the dollar itself has been cut significantly…
I’d say given the two choices, folks in this category would rather see the equity markets rise 20+% versus wanting interest rates to fall .5%, simply because so much is riding on the equity markets…I wouldn’t be surprised for some of these folks that 80+% of their financial situation depends on the equity markets.

Again, don’t shoot the messenger.

[Coronita]

[quote=deadzone][quote=flu]Sorry to say this, but until we see an implosion in the equity markets, I’d say home prices are going to trickle down ever so slowly for awhile….

Locally, QC, brcm, Intuit are all near 52 weeks high right now…and also with open head count..Heck, even former 6 bucks motorola is at it’s 52 week top end…So I think we’re ways away from any type of “implosion” imho. (Don’t shoot the messenger)[/quote]

FLU, you may be right about equity markets holding up for a while longer, but what does that have to do with real estate prices? You are assuming that most home buyers have large equity positions and I doubt that in general. If anything 401Ks but you cant use that for a downpayment on a house. I don’t see that there is any strong correlation. Furthermore, just because everything is now at 52 week highs (and in many cases fully recovered to 2007 prices) why do you think that means the implosion is far off? If anything, that tells me we are getting closer.[/quote]

I think you’re underestimating folks who’s discretionary spending count significantly on how well (or not well) RSU’s and/or stock options are doing. Mind you that some of these companies never paid top salary dollars. They touted we’ll pay you so-so present day, and through (then worthless) equity at you that vests in 3-4 years.

Typical household with such an arrangement goes like this. proceeds from equity sales goes to discretionary spending items… downpayment for a home, bling, etc…. while as salary goes to paying the bills and 401k toward retirement…Hence, a lot of the discretionary spending (in such households) is completely tied to how the equity markets are doing..Not to mention, that there’s a psychological factor at play here too. If one is see their equity, 401k going up, people “feel” they have more discretionary spending capacity, even if the value of the dollar itself has been cut significantly…
I’d say given the two choices, folks in this category would rather see the equity markets rise 20+% versus wanting interest rates to fall .5%, simply because so much is riding on the equity markets…I wouldn’t be surprised for some of these folks that 80+% of their financial situation depends on the equity markets.

Again, don’t shoot the messenger.

[Author]

Posts