Housing won’t hit bottom ’til 2012

[jstoesz]

AN I tend to agree.

I think the link is not so much causative as correlative.

Lower stock prices harm the economy, and when the economy is harmed home prices drop.

So stock prices do have a causative effect on the economy, there link is not DIRECTLY causative to home values. Sometimes, some other asset class is waiting in the wings (a la 2001).

One other note regarding rent vs. buy. Even in markets outside of california, a favorable rent vs. buy is not enough to buoy the market.

In MN (probably in NV too, but I have no anecdotal evidence there) homes can easily cash flow. My friends who have bought in the last 2 years are still underwater even though they can cash flow their home. Psychologically it helps them stay current, but it is still interesting to note.

[sdrealtor]

BTW, I just put what actually happened into your calculator. Not assumptions but rather what I paid, what rent would have been, what it is worth now, what rent would be now etc. If my house did not appreciate one penny in the 1st 6 years I still would have been better off buying than renting with your calculator at that point. It is now 11 years I have been here and not only is it cheaper for me to own than it would be to rent my house by a large margin (as it has been for quite some time) but it has appreciated nearly 100%.

[sdrealtor]

BTW, I just put what actually happened into your calculator. Not assumptions but rather what I paid, what rent would have been, what it is worth now, what rent would be now etc. If my house did not appreciate one penny in the 1st 6 years I still would have been better off buying than renting with your calculator at that point. It is now 11 years I have been here and not only is it cheaper for me to own than it would be to rent my house by a large margin (as it has been for quite some time) but it has appreciated nearly 100%.

[sdrealtor]

BTW, I just put what actually happened into your calculator. Not assumptions but rather what I paid, what rent would have been, what it is worth now, what rent would be now etc. If my house did not appreciate one penny in the 1st 6 years I still would have been better off buying than renting with your calculator at that point. It is now 11 years I have been here and not only is it cheaper for me to own than it would be to rent my house by a large margin (as it has been for quite some time) but it has appreciated nearly 100%.

[sdrealtor]

BTW, I just put what actually happened into your calculator. Not assumptions but rather what I paid, what rent would have been, what it is worth now, what rent would be now etc. If my house did not appreciate one penny in the 1st 6 years I still would have been better off buying than renting with your calculator at that point. It is now 11 years I have been here and not only is it cheaper for me to own than it would be to rent my house by a large margin (as it has been for quite some time) but it has appreciated nearly 100%.

[sdrealtor]

BTW, I just put what actually happened into your calculator. Not assumptions but rather what I paid, what rent would have been, what it is worth now, what rent would be now etc. If my house did not appreciate one penny in the 1st 6 years I still would have been better off buying than renting with your calculator at that point. It is now 11 years I have been here and not only is it cheaper for me to own than it would be to rent my house by a large margin (as it has been for quite some time) but it has appreciated nearly 100%.

[jstoesz]

Speaking in absolutes is always going to yield obviously contrary data. So your beef with dz is valid, but I think he makes a strong point. RE loans were largely driven by speculative loans (option ARMs and the like). Now, did everyone do it in some choice neighborhood, certainly not. But they are not so far insulated as they would like from the hoards of people inland who did.

[quote=sdrealtor]js
I cant disagree that for higher priced RE the rent vs buy looks better. However for many people (not all) renting is a substandard lifestyle. It typically means moving every couple years and sometimes more often than that. It means not having control over the place you live. For many people their home is the core of their existence. I hate moving, I hate answering to anyone other than my children and I love the sense of security our home provides us. There are alot of people like me. This means you can take your calculator and toss wherever you want because all things considered a home is and will remain a good store of value (throwing out the crazy the few year we went through which we all agree was an extreme outlier period) because there will always be someone who wants what we homeowners have around here.

So if you want to live your life under the auspices of calculators you should do so. I on the other hand enjoy the rewards of my hard work be it a nice bottle of wine, a ticket to see Roger Waters play The Wall live in concert that I missed 30 years ago or on my home that makes no sense to own when you compare buy vs rent. I can live with that.[/quote]

sdr, I completely and totally agree! Buying a home has some sort of ethereal awesomeness that I too long for (note: I used the word home not stick framed shelter). Thankfully, I am not in the place in life yet where it really has its teeth in me. I dream of buying a fixer in some sweet neighborhood and making it my own through the sweat of my brow. I grew up in this kind of neighborhood, and I can not fathom making a home in some irvine development. You can not put a price on this (or maybe everyone has a different price for that feeling’s value). I can not argue with you on this front. But my point was simply that from a PURELY numbers basis, in most SD neighborhoods (at least the ones I like) there is much financial risk and little financial reward possibilities, even if you get a smoking deal! Now in regards to the ethereal…I can’t play the numbers with that. I just know it sucks to lose you shirt and the rent vs buy in my preferred hoods point to losing your shirt.

Side note: I do wonder how many landlords would be more than pleased to sign a 10 year lease with a tenant…given some elaborate buy out and remodel provisions of course.

[jstoesz]

Speaking in absolutes is always going to yield obviously contrary data. So your beef with dz is valid, but I think he makes a strong point. RE loans were largely driven by speculative loans (option ARMs and the like). Now, did everyone do it in some choice neighborhood, certainly not. But they are not so far insulated as they would like from the hoards of people inland who did.

[quote=sdrealtor]js
I cant disagree that for higher priced RE the rent vs buy looks better. However for many people (not all) renting is a substandard lifestyle. It typically means moving every couple years and sometimes more often than that. It means not having control over the place you live. For many people their home is the core of their existence. I hate moving, I hate answering to anyone other than my children and I love the sense of security our home provides us. There are alot of people like me. This means you can take your calculator and toss wherever you want because all things considered a home is and will remain a good store of value (throwing out the crazy the few year we went through which we all agree was an extreme outlier period) because there will always be someone who wants what we homeowners have around here.

So if you want to live your life under the auspices of calculators you should do so. I on the other hand enjoy the rewards of my hard work be it a nice bottle of wine, a ticket to see Roger Waters play The Wall live in concert that I missed 30 years ago or on my home that makes no sense to own when you compare buy vs rent. I can live with that.[/quote]

sdr, I completely and totally agree! Buying a home has some sort of ethereal awesomeness that I too long for (note: I used the word home not stick framed shelter). Thankfully, I am not in the place in life yet where it really has its teeth in me. I dream of buying a fixer in some sweet neighborhood and making it my own through the sweat of my brow. I grew up in this kind of neighborhood, and I can not fathom making a home in some irvine development. You can not put a price on this (or maybe everyone has a different price for that feeling’s value). I can not argue with you on this front. But my point was simply that from a PURELY numbers basis, in most SD neighborhoods (at least the ones I like) there is much financial risk and little financial reward possibilities, even if you get a smoking deal! Now in regards to the ethereal…I can’t play the numbers with that. I just know it sucks to lose you shirt and the rent vs buy in my preferred hoods point to losing your shirt.

Side note: I do wonder how many landlords would be more than pleased to sign a 10 year lease with a tenant…given some elaborate buy out and remodel provisions of course.

[jstoesz]

Speaking in absolutes is always going to yield obviously contrary data. So your beef with dz is valid, but I think he makes a strong point. RE loans were largely driven by speculative loans (option ARMs and the like). Now, did everyone do it in some choice neighborhood, certainly not. But they are not so far insulated as they would like from the hoards of people inland who did.

[quote=sdrealtor]js
I cant disagree that for higher priced RE the rent vs buy looks better. However for many people (not all) renting is a substandard lifestyle. It typically means moving every couple years and sometimes more often than that. It means not having control over the place you live. For many people their home is the core of their existence. I hate moving, I hate answering to anyone other than my children and I love the sense of security our home provides us. There are alot of people like me. This means you can take your calculator and toss wherever you want because all things considered a home is and will remain a good store of value (throwing out the crazy the few year we went through which we all agree was an extreme outlier period) because there will always be someone who wants what we homeowners have around here.

So if you want to live your life under the auspices of calculators you should do so. I on the other hand enjoy the rewards of my hard work be it a nice bottle of wine, a ticket to see Roger Waters play The Wall live in concert that I missed 30 years ago or on my home that makes no sense to own when you compare buy vs rent. I can live with that.[/quote]

sdr, I completely and totally agree! Buying a home has some sort of ethereal awesomeness that I too long for (note: I used the word home not stick framed shelter). Thankfully, I am not in the place in life yet where it really has its teeth in me. I dream of buying a fixer in some sweet neighborhood and making it my own through the sweat of my brow. I grew up in this kind of neighborhood, and I can not fathom making a home in some irvine development. You can not put a price on this (or maybe everyone has a different price for that feeling’s value). I can not argue with you on this front. But my point was simply that from a PURELY numbers basis, in most SD neighborhoods (at least the ones I like) there is much financial risk and little financial reward possibilities, even if you get a smoking deal! Now in regards to the ethereal…I can’t play the numbers with that. I just know it sucks to lose you shirt and the rent vs buy in my preferred hoods point to losing your shirt.

Side note: I do wonder how many landlords would be more than pleased to sign a 10 year lease with a tenant…given some elaborate buy out and remodel provisions of course.

[jstoesz]

Speaking in absolutes is always going to yield obviously contrary data. So your beef with dz is valid, but I think he makes a strong point. RE loans were largely driven by speculative loans (option ARMs and the like). Now, did everyone do it in some choice neighborhood, certainly not. But they are not so far insulated as they would like from the hoards of people inland who did.

[quote=sdrealtor]js
I cant disagree that for higher priced RE the rent vs buy looks better. However for many people (not all) renting is a substandard lifestyle. It typically means moving every couple years and sometimes more often than that. It means not having control over the place you live. For many people their home is the core of their existence. I hate moving, I hate answering to anyone other than my children and I love the sense of security our home provides us. There are alot of people like me. This means you can take your calculator and toss wherever you want because all things considered a home is and will remain a good store of value (throwing out the crazy the few year we went through which we all agree was an extreme outlier period) because there will always be someone who wants what we homeowners have around here.

So if you want to live your life under the auspices of calculators you should do so. I on the other hand enjoy the rewards of my hard work be it a nice bottle of wine, a ticket to see Roger Waters play The Wall live in concert that I missed 30 years ago or on my home that makes no sense to own when you compare buy vs rent. I can live with that.[/quote]

sdr, I completely and totally agree! Buying a home has some sort of ethereal awesomeness that I too long for (note: I used the word home not stick framed shelter). Thankfully, I am not in the place in life yet where it really has its teeth in me. I dream of buying a fixer in some sweet neighborhood and making it my own through the sweat of my brow. I grew up in this kind of neighborhood, and I can not fathom making a home in some irvine development. You can not put a price on this (or maybe everyone has a different price for that feeling’s value). I can not argue with you on this front. But my point was simply that from a PURELY numbers basis, in most SD neighborhoods (at least the ones I like) there is much financial risk and little financial reward possibilities, even if you get a smoking deal! Now in regards to the ethereal…I can’t play the numbers with that. I just know it sucks to lose you shirt and the rent vs buy in my preferred hoods point to losing your shirt.

Side note: I do wonder how many landlords would be more than pleased to sign a 10 year lease with a tenant…given some elaborate buy out and remodel provisions of course.

[jstoesz]

Speaking in absolutes is always going to yield obviously contrary data. So your beef with dz is valid, but I think he makes a strong point. RE loans were largely driven by speculative loans (option ARMs and the like). Now, did everyone do it in some choice neighborhood, certainly not. But they are not so far insulated as they would like from the hoards of people inland who did.

[quote=sdrealtor]js
I cant disagree that for higher priced RE the rent vs buy looks better. However for many people (not all) renting is a substandard lifestyle. It typically means moving every couple years and sometimes more often than that. It means not having control over the place you live. For many people their home is the core of their existence. I hate moving, I hate answering to anyone other than my children and I love the sense of security our home provides us. There are alot of people like me. This means you can take your calculator and toss wherever you want because all things considered a home is and will remain a good store of value (throwing out the crazy the few year we went through which we all agree was an extreme outlier period) because there will always be someone who wants what we homeowners have around here.

So if you want to live your life under the auspices of calculators you should do so. I on the other hand enjoy the rewards of my hard work be it a nice bottle of wine, a ticket to see Roger Waters play The Wall live in concert that I missed 30 years ago or on my home that makes no sense to own when you compare buy vs rent. I can live with that.[/quote]

sdr, I completely and totally agree! Buying a home has some sort of ethereal awesomeness that I too long for (note: I used the word home not stick framed shelter). Thankfully, I am not in the place in life yet where it really has its teeth in me. I dream of buying a fixer in some sweet neighborhood and making it my own through the sweat of my brow. I grew up in this kind of neighborhood, and I can not fathom making a home in some irvine development. You can not put a price on this (or maybe everyone has a different price for that feeling’s value). I can not argue with you on this front. But my point was simply that from a PURELY numbers basis, in most SD neighborhoods (at least the ones I like) there is much financial risk and little financial reward possibilities, even if you get a smoking deal! Now in regards to the ethereal…I can’t play the numbers with that. I just know it sucks to lose you shirt and the rent vs buy in my preferred hoods point to losing your shirt.

Side note: I do wonder how many landlords would be more than pleased to sign a 10 year lease with a tenant…given some elaborate buy out and remodel provisions of course.

[CA renter]

[quote=deadzone]Looking at the last 10 years a macro level RE price to Stock correlation does exist to some degree, but it is not for the reason you guys are saying. It has nothing to do with individuals feeling more wealthy from their stock portfolios. It has everything to do with the Fed’s interest rate policy.

As we saw in the early 2000s and again in 2009, the easy money from the Fed acts to juice the equity markets. In the case of the 2001 interest rate cuts it also helped launch the housing bubble.[/quote]

deadzone,

You likely know that I am a long-time bear (still renting, and have been doing so since spring 2004, and have been sitting in cash for a long time…waiting for deflation), but even I have to admit that for as long as the stock market is up, housing will not crash as spectacularly as it would if the stock market were to implode.

You have to realize that aside from the very real wealth that is created when stocks rise — and I personally know quite a few who cashed-out options/stocks and purchased real estate — there is the psychological aspect. Many, many people look to the stock market to tell them if the economy is “healthy” or not. Yes, it’s stupid and lends itself to the Fed/govt being able to easily control people’s behavior, but it is what it is.

Yes, the price movement is mostly due to the Fed/govt’s actions (note the last paragraph in my post above about “cheap vs. dear” money), but asset prices tend to move together.

The reason we had the insane rise in housing prices is because the credit bubble (which started in the early 80s) was beginning to wobble during/after the stock market bubble, so the Fed tried to juice the market by dropping rates through the floor. It would seem obvious that there would be a tragic end to this reckless credit expansion, but apparently they don’t care, are sociopathic criminals, or are so painfully stupid that they have no right to control our monetary policy.

Still…the correlation does exist, whether we like it or not (I don’t).

[CA renter]

[quote=deadzone]Looking at the last 10 years a macro level RE price to Stock correlation does exist to some degree, but it is not for the reason you guys are saying. It has nothing to do with individuals feeling more wealthy from their stock portfolios. It has everything to do with the Fed’s interest rate policy.

As we saw in the early 2000s and again in 2009, the easy money from the Fed acts to juice the equity markets. In the case of the 2001 interest rate cuts it also helped launch the housing bubble.[/quote]

deadzone,

You likely know that I am a long-time bear (still renting, and have been doing so since spring 2004, and have been sitting in cash for a long time…waiting for deflation), but even I have to admit that for as long as the stock market is up, housing will not crash as spectacularly as it would if the stock market were to implode.

You have to realize that aside from the very real wealth that is created when stocks rise — and I personally know quite a few who cashed-out options/stocks and purchased real estate — there is the psychological aspect. Many, many people look to the stock market to tell them if the economy is “healthy” or not. Yes, it’s stupid and lends itself to the Fed/govt being able to easily control people’s behavior, but it is what it is.

Yes, the price movement is mostly due to the Fed/govt’s actions (note the last paragraph in my post above about “cheap vs. dear” money), but asset prices tend to move together.

The reason we had the insane rise in housing prices is because the credit bubble (which started in the early 80s) was beginning to wobble during/after the stock market bubble, so the Fed tried to juice the market by dropping rates through the floor. It would seem obvious that there would be a tragic end to this reckless credit expansion, but apparently they don’t care, are sociopathic criminals, or are so painfully stupid that they have no right to control our monetary policy.

Still…the correlation does exist, whether we like it or not (I don’t).

[CA renter]

[quote=deadzone]Looking at the last 10 years a macro level RE price to Stock correlation does exist to some degree, but it is not for the reason you guys are saying. It has nothing to do with individuals feeling more wealthy from their stock portfolios. It has everything to do with the Fed’s interest rate policy.

As we saw in the early 2000s and again in 2009, the easy money from the Fed acts to juice the equity markets. In the case of the 2001 interest rate cuts it also helped launch the housing bubble.[/quote]

deadzone,

You likely know that I am a long-time bear (still renting, and have been doing so since spring 2004, and have been sitting in cash for a long time…waiting for deflation), but even I have to admit that for as long as the stock market is up, housing will not crash as spectacularly as it would if the stock market were to implode.

You have to realize that aside from the very real wealth that is created when stocks rise — and I personally know quite a few who cashed-out options/stocks and purchased real estate — there is the psychological aspect. Many, many people look to the stock market to tell them if the economy is “healthy” or not. Yes, it’s stupid and lends itself to the Fed/govt being able to easily control people’s behavior, but it is what it is.

Yes, the price movement is mostly due to the Fed/govt’s actions (note the last paragraph in my post above about “cheap vs. dear” money), but asset prices tend to move together.

The reason we had the insane rise in housing prices is because the credit bubble (which started in the early 80s) was beginning to wobble during/after the stock market bubble, so the Fed tried to juice the market by dropping rates through the floor. It would seem obvious that there would be a tragic end to this reckless credit expansion, but apparently they don’t care, are sociopathic criminals, or are so painfully stupid that they have no right to control our monetary policy.

Still…the correlation does exist, whether we like it or not (I don’t).

[CA renter]

[quote=deadzone]Looking at the last 10 years a macro level RE price to Stock correlation does exist to some degree, but it is not for the reason you guys are saying. It has nothing to do with individuals feeling more wealthy from their stock portfolios. It has everything to do with the Fed’s interest rate policy.

As we saw in the early 2000s and again in 2009, the easy money from the Fed acts to juice the equity markets. In the case of the 2001 interest rate cuts it also helped launch the housing bubble.[/quote]

deadzone,

You likely know that I am a long-time bear (still renting, and have been doing so since spring 2004, and have been sitting in cash for a long time…waiting for deflation), but even I have to admit that for as long as the stock market is up, housing will not crash as spectacularly as it would if the stock market were to implode.

You have to realize that aside from the very real wealth that is created when stocks rise — and I personally know quite a few who cashed-out options/stocks and purchased real estate — there is the psychological aspect. Many, many people look to the stock market to tell them if the economy is “healthy” or not. Yes, it’s stupid and lends itself to the Fed/govt being able to easily control people’s behavior, but it is what it is.

Yes, the price movement is mostly due to the Fed/govt’s actions (note the last paragraph in my post above about “cheap vs. dear” money), but asset prices tend to move together.

The reason we had the insane rise in housing prices is because the credit bubble (which started in the early 80s) was beginning to wobble during/after the stock market bubble, so the Fed tried to juice the market by dropping rates through the floor. It would seem obvious that there would be a tragic end to this reckless credit expansion, but apparently they don’t care, are sociopathic criminals, or are so painfully stupid that they have no right to control our monetary policy.

Still…the correlation does exist, whether we like it or not (I don’t).

[Author]

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