Incredible NAR Survey

[equalizer]

PS
You really have to cool the rhetoric. Even if know 50-80% drop were going to happen, NO ONE would believe you! So stop the wild exaggerations because they will just turn off most people because it is too extreme.

The NAR Survey is a not too subtle threat to Fed that Congress will be bullied to lean on Fed to CUT rates, thats right cut rates, not just leave them alone. As PS as stated the PCE is lower than CPI because it has a lower weight on housing. Most of the economists on WSJ panel excuse the CPI figures by flippantly exclaiming that rents are causing most of the increase and that rents don’t matter since housing prices are coming down!! Look for these SLIMEBALLS to lobby replacing the rent with NAR home prices in the CPI. That way, CPI will be go down and we can get a rate cut. Feds will be happy since it means less money on COLA for SS,etc., NAR will be happy that housing stops dropping hard and ANALysts will be happy that stocks will stop their nosedive. As a homeowner and stockholder, I would be HAPPY to see ZERO percent rate like in Japan!! Then we could see Dow 32K,etc. [we can dream]

[rankandfile]

I am glad that you, as a homeowner and stockholder, would love to see our economic system artificially buoyed so that you can continue to enjoy hefty profits. Who do you think will have to pay for our excess consumption? If you want to dance, you have to pay the band…eventually.

To tell PS to cool the rhetoric just shows how much you have become de-sensitized to the outlandish increases in home prices over the past decade. To recap, a 50% reduction in current prices would bring us back in line with the historical mean. I repeat, historical mean…not a rock-bottom, price-you-only-get-in-a-depression price. Are you telling realtors to cool their rhetoric when they say that a home is worth 300% more than it was just a few years ago! No, because you, along with the realtors and others, have a financial interest in home prices being so high. But you know what, middle class people like me aren’t buying it anymore…literally.

Compare a 300% markup to a 50% drop and then tell me who needs to cool their rhetoric.

[sdrealtor]

A 300% mark up is rhetoric. My house in a very desireable area, neighborhood, location and lot is about 8 years old. After throwing in what it took to put the landscaping, pool, paint, window treatments etc it was never up much more than double. I’d say that was pretty much the way its been across the board around here. Last time I checked, that was a 100% markup not even close to 300%.

BTW, if my house fell 50% it would be back where I got it in 1998 when things (construction costs, restaurants, movie tickets, gas, health insurance, daycare etc.) were a helluva lot less expensive around here. I just have a real hard time seeing that. If it happens, it would be fine by me as it would allow more nice young families to move into the type of neighborhoods they should be living in.

[equalizer]

rankandfile
You havent read enough of my posts to get my sarcasm [zero rate,etc]. You are correct that there is no reason for a house to double in last 4 years with wages up only a few % a year, actually below inflation. Its all because of the ARMs. Dont get me started on health insurance going up 10-15% annually for 5 F’in years.

No inflation here, as we watch Mr T wring the necks of NAR and Congress and Fed for LYING. [damn russians must be hacking my computer again]

SD wages are ridiculously low, about the same as most other cities that have a much lower cost of living. The UT has had articles in the last few years about bus drivers and other lower income people moving to vegas. Why are lower income people still living here and renting at ridiculously high prices? Everyone wants to live here?!? OK, no one wants to get kicked out of towm, esp if they grow up here, even if it would be better for their family. If we didnt purchase our first condo (later to a house) in 99, I know I would have been extremely sad (understatement of the year) and would have seriously thought about leaving myself. If one had the misfortune of graduating from college in last 5 years even with a good job one is totally hosed and cant afford jack. All because one is 5-7 years too young!! It would take 20 years of wages to save up the 250K the median went up in last 5+ years.

There, I think that neatly summarizes your frustration. Shouting is not going to help you get your point across. Your posts are generally great. But us bubbleheads have been so wrong for 4 years, that we have to stick to actual facts instead of rhetoric. That’s why I keep asking PS to tone it down. She takes good data and then extraplates it to the point that she is like the NAR in reverse.

[powayseller]

Prove to me that it *won’t* go down 55%.

Read the Bubble Primer, and see what we need to get back to a median of wages/prices ratio of 7. We are at over 14 today.

Why would wages suddenly rise? No, I doubt it. Competition from China and illegals have kept downward pressure on wages and those forces are not going away soon. Healthcare costs keep rising so any extra pay that employers can offer, is passed on to the benefits portion of compensation, not to the wages.

That leaves prices. Prices will come down to revert to a ratio of 7.

[JJGittes]

I have to agree with sdrealtor on this. 300% is rhetoric. Maybe this happened an Santa Monica, but not here. I also bought in mid 1998 in n. county, and at the tip top peak (which I think was spring 2005), it was maybe a 140% gain, not accounting for improvements. Now, its less. Overstating things either way cheapens the debate.

[powayseller]

zillow shows San Diego homes are up 275% (Poway homes only 200%, Chula Vista 275%, National City 340%, Solana Beach 400%, Del Mar 240%) in the last 10 years. We might disagree on their accuracy, but unless you think they are always biased in the same direction, that is a good guide.

The homes I looked at in spring 2000 were in the mid 300’s, and had been in the high 200’s the year before. By 2004, they were in the high 700s to low 800s. That is a tripling, is it not?

I am sure some houses did not gain as much as others, but I don’t really know enough about real estate to explain why one person’s home went up 140%, while the other went up 300%.

[North County Jim]

The homes I looked at in spring 2000 were in the mid 300’s, and had been in the high 200’s the year before. By 2004, they were in the high 700s to low 800s. That is a tripling, is it not?

PS, your math is off. Let’s assume $280k for your high 200’s and $820k for your low 800’s.

820-280=540

540/280=193%

A tripling in price is a 200% gain.

You need a quadrupling for a 300% gain.

[powayseller]

280 x 3 = 840. Tripling.

The new number is 840, an increase of 300%.

The difference, or the equity gained, is 560 or 200%.

zillow uses the former, since they show the market value of the home over time. In this case, a home that moved from 400K to $1.16m went up not 190%, but rather 269%.

Thanks for checking my math. Sometimes I make mistakes.

[North County Jim]

The new number is 840, an increase of 300%.

No!

Increase = New Price – Old Price

Percent Increase = Increase/Old Price

Increase is the same as equity gained.

So a tripling in value is an increase of 200%

[powayseller]

I used the wrong word, Jim, but just go back and look at my math. I did it correctly.

The new number is 300% of the old number, but the difference is 200%.

What I wanted to show you is that today’s prices are 3x the price of 1999, or 300% of that number. Sorry if the words were inaccurate.

[Author]

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