I need your opinions…..

[temeculaguy]

Okay I’ll play along, if nobody lowers their prices where are the qualified buyers with down payments going to come from? My answer, Nowhere! They exist, I am one of them along with dozens of us piggies, but we are not only a minority, we have taken our marbles home and we’re not playing.

The elimination of subprime zero down toxic mortgages is bringing down the house of cards. They are not buying the entry level homes they cannot afford and nobody is loaning them money. This is eliminating the move up and we are starting to see it in the mid range now. Ulitmately it freezes the market. One of two things has to happen to start up the motor again. Money has to flow freely (this one won’t happen for years until selective amnesia sets in) or the prices have to come down to where people qualify again and their 5% in the bank becomes 10% because the price is halved.

So to answer your question, if prices remain the same, the market seizes. However this motor won’t seize, the builders and the repos “have to sell” so it will grind without any motor oil, there will be smoke, smell, noise and damage, IMHO.

[temeculaguy]

Okay I’ll play along, if nobody lowers their prices where are the qualified buyers with down payments going to come from? My answer, Nowhere! They exist, I am one of them along with dozens of us piggies, but we are not only a minority, we have taken our marbles home and we’re not playing.

The elimination of subprime zero down toxic mortgages is bringing down the house of cards. They are not buying the entry level homes they cannot afford and nobody is loaning them money. This is eliminating the move up and we are starting to see it in the mid range now. Ulitmately it freezes the market. One of two things has to happen to start up the motor again. Money has to flow freely (this one won’t happen for years until selective amnesia sets in) or the prices have to come down to where people qualify again and their 5% in the bank becomes 10% because the price is halved.

So to answer your question, if prices remain the same, the market seizes. However this motor won’t seize, the builders and the repos “have to sell” so it will grind without any motor oil, there will be smoke, smell, noise and damage, IMHO.

[HLS]

STAN, perfect point that it cannot go on for long.

There are many people today who are refusing to lower their asking prices. Some because of emotion and some because of what they owe.
Many people today say that they cannot sell their house.
The reality is that they cannot sell their house at anywhere near what they are asking. If you had an unreserved auction, it would sell.

It isn’t possible that anybody knows exactly how many homes will go to foreclosure. There are estimates, but until a sale is scheduled, we don’t have an exact idea. (NOD’s are a start)

Temec, after you buy your home, will you be looking for a 2nd one with a similar down payment ??

The question is who is going to buy the REO’s ??
I don’t believe that there are an equal number of Temecs with liquid reserves and solid situations equal to the avalanche of foreclosures coming.

Take 500 foreclosed current “owners” who are losing homes because they cannot afford their new payment. Forget the fact that they now have a foreclosure on their credit history. Without crazy financing again, most still probably have no down payment and cannot qualify for a new purchase even at 50%-60% of what they previously owed.
That’s 500 homes added to inventory.

Add in the psychological trauma that goes along with a foreclosure. Many won’t want to buy again ever for a long time.

At current market rents, there is still a long way to go for wise investors to step in.

Another big question is will there be enough UN-wise investors who step in and overpay before it gets to a level that the wise ones are interested ??

The motor is slowing down, the RPM’s are dropping.

The county stands to have a HUGE drop in property tax revenue as prices fall.

What’s next ???

[HLS]

STAN, perfect point that it cannot go on for long.

There are many people today who are refusing to lower their asking prices. Some because of emotion and some because of what they owe.
Many people today say that they cannot sell their house.
The reality is that they cannot sell their house at anywhere near what they are asking. If you had an unreserved auction, it would sell.

It isn’t possible that anybody knows exactly how many homes will go to foreclosure. There are estimates, but until a sale is scheduled, we don’t have an exact idea. (NOD’s are a start)

Temec, after you buy your home, will you be looking for a 2nd one with a similar down payment ??

The question is who is going to buy the REO’s ??
I don’t believe that there are an equal number of Temecs with liquid reserves and solid situations equal to the avalanche of foreclosures coming.

Take 500 foreclosed current “owners” who are losing homes because they cannot afford their new payment. Forget the fact that they now have a foreclosure on their credit history. Without crazy financing again, most still probably have no down payment and cannot qualify for a new purchase even at 50%-60% of what they previously owed.
That’s 500 homes added to inventory.

Add in the psychological trauma that goes along with a foreclosure. Many won’t want to buy again ever for a long time.

At current market rents, there is still a long way to go for wise investors to step in.

Another big question is will there be enough UN-wise investors who step in and overpay before it gets to a level that the wise ones are interested ??

The motor is slowing down, the RPM’s are dropping.

The county stands to have a HUGE drop in property tax revenue as prices fall.

What’s next ???

[stansd]

Agree…though I feel like I’m finally seeing chinks in the armor of the inert.

I’ve got a strong feeling that the San Diego market will move down around 10% in the next 4 months. My sample size is small, but I’m watching absolutely everything in my middle class Rancho Bernardo neighborhood absolutely sit. Price reductions are big as well. Prices are dropping, but places only sell after they’ve sat for 4-5 months and the prices come down 50-80K on 5-600K houses.

In my immediate neighborhood, I think things are already down 10% in the last 6 months.

There are several houses that are really nice, but 30-40K overpriced (today’s market, not intrinsic value) and not budging.

Stan

[stansd]

Agree…though I feel like I’m finally seeing chinks in the armor of the inert.

I’ve got a strong feeling that the San Diego market will move down around 10% in the next 4 months. My sample size is small, but I’m watching absolutely everything in my middle class Rancho Bernardo neighborhood absolutely sit. Price reductions are big as well. Prices are dropping, but places only sell after they’ve sat for 4-5 months and the prices come down 50-80K on 5-600K houses.

In my immediate neighborhood, I think things are already down 10% in the last 6 months.

There are several houses that are really nice, but 30-40K overpriced (today’s market, not intrinsic value) and not budging.

Stan

[temeculaguy]

I think Stan is right but there is a possibility the pace will increase. HLS, I’ve read your stuff for a while and there is an unusual air of desperation in your words in this thread, are you feeling the crash is emminant. I know the traditional school of thought is a slow and measured decline but interpreting from industry insiders, yourself included, I feel we are at the abyss and I’m without fear. The local market made extraordinary gains during the up cycle, there is a fair chance there will be equally earth shattering declines, it broke rules on the way up so it should break some on the way down. I don’t have a bad feeling, the world won’t end, but I also feel this will not be a measured decline. I know you are looking at this from a humanistic perspective because you talk to many of the affected people every day and you have come to a “stop the insanity” realization. These people will survive with all of their limbs intact and it will be a while before they are ready to dive into the game again. The goal here is to capatalize on the trend, soon R/E will be completely out of fashion if it isn’t already and the opposite of catastrophe will have occurred, then and only then (when a teacher can afford a house) will all be right with the world again. Don’t fear it, embrace it, it isn’t just a good thing for reverse flippers, it’s good for society.

[temeculaguy]

I think Stan is right but there is a possibility the pace will increase. HLS, I’ve read your stuff for a while and there is an unusual air of desperation in your words in this thread, are you feeling the crash is emminant. I know the traditional school of thought is a slow and measured decline but interpreting from industry insiders, yourself included, I feel we are at the abyss and I’m without fear. The local market made extraordinary gains during the up cycle, there is a fair chance there will be equally earth shattering declines, it broke rules on the way up so it should break some on the way down. I don’t have a bad feeling, the world won’t end, but I also feel this will not be a measured decline. I know you are looking at this from a humanistic perspective because you talk to many of the affected people every day and you have come to a “stop the insanity” realization. These people will survive with all of their limbs intact and it will be a while before they are ready to dive into the game again. The goal here is to capatalize on the trend, soon R/E will be completely out of fashion if it isn’t already and the opposite of catastrophe will have occurred, then and only then (when a teacher can afford a house) will all be right with the world again. Don’t fear it, embrace it, it isn’t just a good thing for reverse flippers, it’s good for society.

[HLS]

We are on the same page. I don’t fear it however. I agree that it will be good for society (eventually)
The country recovered after the 1930’s too.

An abyss is either bottomless or very far down, so I’m not sure where you think we are….

Baby boomers have had a pretty good life, the last 65 years have been prosperous, with a few hiccups and many people are now living way beyond their means. Many with ONLY a home as their retirement nest egg.

I have a crazy vision in my head and I really want to be wrong about it. It’s hard to see so many people wading in debt and denial.

RE is far from being out of fashion….that’s why those that are buying, are still buying, and others are hoping and praying.
It’s still fun to watch FLIP THIS HOUSE too.

I don’t think a “crash” is imminent,, It’s going to drag on for awhile and be on a house by house, neighborhood by neighborhood basis, but I think that certain areas will be hit VERY hard.

One thing that I wonder though is even someone with an 800 credit score, at some point will they walk ?
What is their credit score worth if their home is worth 50%-60% of what they owe, and they owe $1M ?

Think San Diego, LA & OC not just IE.
Cribs in the Hood were $400K++ c’mon !!

My goal a year ago was to find the first house that had been foreclosed on or short sold twice in this cycle. I figured it would be mid 2008 for that to happen.

I saw this mess coming long before the subprime loan market disappeared and the fall from grace of jumbos.
These two unexpected factors have added to my concerns..

It’s almost impossible for a homeowner to protect themselves from the continued loss of net worth, AND the false sense of what their house is “worth” without taking huge risks, not prudent for most people.

1928 was a good year, things changed for the worse in ’29 and few saw it coming.

At this point, my only thought is wanting to know what kind of toilet paper is used in govt so I can buy stock in the company that makes it. I firmly believe that they have no idea what to do to fix this mess and are crapping in their pants daily. The need for TP in DC has got to be huge.

[HLS]

We are on the same page. I don’t fear it however. I agree that it will be good for society (eventually)
The country recovered after the 1930’s too.

An abyss is either bottomless or very far down, so I’m not sure where you think we are….

Baby boomers have had a pretty good life, the last 65 years have been prosperous, with a few hiccups and many people are now living way beyond their means. Many with ONLY a home as their retirement nest egg.

I have a crazy vision in my head and I really want to be wrong about it. It’s hard to see so many people wading in debt and denial.

RE is far from being out of fashion….that’s why those that are buying, are still buying, and others are hoping and praying.
It’s still fun to watch FLIP THIS HOUSE too.

I don’t think a “crash” is imminent,, It’s going to drag on for awhile and be on a house by house, neighborhood by neighborhood basis, but I think that certain areas will be hit VERY hard.

One thing that I wonder though is even someone with an 800 credit score, at some point will they walk ?
What is their credit score worth if their home is worth 50%-60% of what they owe, and they owe $1M ?

Think San Diego, LA & OC not just IE.
Cribs in the Hood were $400K++ c’mon !!

My goal a year ago was to find the first house that had been foreclosed on or short sold twice in this cycle. I figured it would be mid 2008 for that to happen.

I saw this mess coming long before the subprime loan market disappeared and the fall from grace of jumbos.
These two unexpected factors have added to my concerns..

It’s almost impossible for a homeowner to protect themselves from the continued loss of net worth, AND the false sense of what their house is “worth” without taking huge risks, not prudent for most people.

1928 was a good year, things changed for the worse in ’29 and few saw it coming.

At this point, my only thought is wanting to know what kind of toilet paper is used in govt so I can buy stock in the company that makes it. I firmly believe that they have no idea what to do to fix this mess and are crapping in their pants daily. The need for TP in DC has got to be huge.

[JWM in SD]

HLS,

What the hell are you asking such a ridiculous question for? I’m a little surprised at this.

[JWM in SD]

HLS,

What the hell are you asking such a ridiculous question for? I’m a little surprised at this.

[HLS]

I think that I went down the wrong path with the OP, I was chasing a thought and looking for input, but I see now that it looks stupid. SORRY!~

Did you get past the original question ???

Again, I didn’t say it WILL happen, cuz it won’t.

[HLS]

I think that I went down the wrong path with the OP, I was chasing a thought and looking for input, but I see now that it looks stupid. SORRY!~

Did you get past the original question ???

Again, I didn’t say it WILL happen, cuz it won’t.

[Author]

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