Its official folks . . . SD RE YOY inventory is now shrinking.

[nostradamus]

I think if you’re on this blog you pretty much need/want a home.

Such as it is, we tend to generalize: “If I need/want a home then pretty much everyone else needs/wants a home and whoa, look at this here blog, a bunch of people on here need/want a home which adds further evidence that everyone needs/wants a home”.

You’re on a blog about real estate. Either you want it or you want to sell it otherwise you wouldn’t be here. We all here need/want something, but besides meself and one or two others I know, very few of my friends and acquaintances need/want a home. Maybe 1 in 10.

[tomato]

“Back in the day” I rented for $195/mo in downtown Syracuse, which was outrageous at the time. I did it because I could not afford a home at the time – the homes were also outrageous at about $35,000. I was POed. But I drove my Plymouth Roadrunner with the 426 hemi and filled up the tank for less than $5.
We started having kids and bit the bullet, bought a house and was house poor for a decade or two.
In 30 years, I’ll be dead and you will tell your grandkids about the days when you could buy gasoline for $3/gallon. They laugh and say “no way, grandpa”. They wont believe you. They also will have to wait and save for a starter home that costs $4 million or more.
You are now stuck firmly between both zones.

[tomato]

“Back in the day” I rented for $195/mo in downtown Syracuse, which was outrageous at the time. I did it because I could not afford a home at the time – the homes were also outrageous at about $35,000. I was POed. But I drove my Plymouth Roadrunner with the 426 hemi and filled up the tank for less than $5.
We started having kids and bit the bullet, bought a house and was house poor for a decade or two.
In 30 years, I’ll be dead and you will tell your grandkids about the days when you could buy gasoline for $3/gallon. They laugh and say “no way, grandpa”. They wont believe you. They also will have to wait and save for a starter home that costs $4 million or more.
You are now stuck firmly between both zones.

[tomato]

“Back in the day” I rented for $195/mo in downtown Syracuse, which was outrageous at the time. I did it because I could not afford a home at the time – the homes were also outrageous at about $35,000. I was POed. But I drove my Plymouth Roadrunner with the 426 hemi and filled up the tank for less than $5.
We started having kids and bit the bullet, bought a house and was house poor for a decade or two.
In 30 years, I’ll be dead and you will tell your grandkids about the days when you could buy gasoline for $3/gallon. They laugh and say “no way, grandpa”. They wont believe you. They also will have to wait and save for a starter home that costs $4 million or more.
You are now stuck firmly between both zones.

[tomato]

“Back in the day” I rented for $195/mo in downtown Syracuse, which was outrageous at the time. I did it because I could not afford a home at the time – the homes were also outrageous at about $35,000. I was POed. But I drove my Plymouth Roadrunner with the 426 hemi and filled up the tank for less than $5.
We started having kids and bit the bullet, bought a house and was house poor for a decade or two.
In 30 years, I’ll be dead and you will tell your grandkids about the days when you could buy gasoline for $3/gallon. They laugh and say “no way, grandpa”. They wont believe you. They also will have to wait and save for a starter home that costs $4 million or more.
You are now stuck firmly between both zones.

[tomato]

“Back in the day” I rented for $195/mo in downtown Syracuse, which was outrageous at the time. I did it because I could not afford a home at the time – the homes were also outrageous at about $35,000. I was POed. But I drove my Plymouth Roadrunner with the 426 hemi and filled up the tank for less than $5.
We started having kids and bit the bullet, bought a house and was house poor for a decade or two.
In 30 years, I’ll be dead and you will tell your grandkids about the days when you could buy gasoline for $3/gallon. They laugh and say “no way, grandpa”. They wont believe you. They also will have to wait and save for a starter home that costs $4 million or more.
You are now stuck firmly between both zones.

[ucodegen]

@asianautica
I understand the 2nd hump. But I’m pretty sure the people in the first and 2nd hump buy in different area. That is how I explain move up areas lagging way behind entry level areas.

I disagree. There is a time lag between the two ‘humps’ on resets. The difference is when it was originated. If you look at Fed rates during the period, the Option-ARMs were done when the Fed rates were higher. I think the lagging on ‘move-up’ areas is due to buyers having a bit more equity when they bought in (not that they have it now) and a stronger belief that the area never goes down. I need to dig through my computer files.. I think I have a more recent graph than that one. It showed the first ‘hump’ shrinking, but the second ‘hump’ getting bigger. I suspect people ref’ing out of more ‘standard’ loan products into Option-ARMs.

@tomato — read the bubble primer!! Pure economics is important because it addresses the ability to afford(as opposed to financial gambling) the house. Option-ARMs are last ditch trying to get in.. and if need be get out before things go south. When they become widely used, get the heck out of dodge because the drop will be rapid. BTW: in addition to sd_bear’s comments: Emotions also have an effect on the way down (I don’t want to buy into a house when I can get it cheaper next year!!). It displays itself as ‘momentum’ in the prices and causes ‘overshoot’ and temporary market inequities. (ref efficient market theory)

You are now stuck firmly between both zones.
Humm.. If you bought a house for $35k in 1970, it would be worth about $600k (market peak) on the high end.. for an average appreciation of 7.7% per year compounded. If I bought BRKA on Nov 11, 1976 after doing nothing with the money for 7 years, I would have $64,410,447.. makes you go humm.. So what do you think I am doing with my money right now?? If you just took the 20% down of $7,000 in 1970.. did nothing for almost 7 years and then bought BRKA.. you would have $12,882,089.

[ucodegen]

@asianautica
I understand the 2nd hump. But I’m pretty sure the people in the first and 2nd hump buy in different area. That is how I explain move up areas lagging way behind entry level areas.

I disagree. There is a time lag between the two ‘humps’ on resets. The difference is when it was originated. If you look at Fed rates during the period, the Option-ARMs were done when the Fed rates were higher. I think the lagging on ‘move-up’ areas is due to buyers having a bit more equity when they bought in (not that they have it now) and a stronger belief that the area never goes down. I need to dig through my computer files.. I think I have a more recent graph than that one. It showed the first ‘hump’ shrinking, but the second ‘hump’ getting bigger. I suspect people ref’ing out of more ‘standard’ loan products into Option-ARMs.

@tomato — read the bubble primer!! Pure economics is important because it addresses the ability to afford(as opposed to financial gambling) the house. Option-ARMs are last ditch trying to get in.. and if need be get out before things go south. When they become widely used, get the heck out of dodge because the drop will be rapid. BTW: in addition to sd_bear’s comments: Emotions also have an effect on the way down (I don’t want to buy into a house when I can get it cheaper next year!!). It displays itself as ‘momentum’ in the prices and causes ‘overshoot’ and temporary market inequities. (ref efficient market theory)

You are now stuck firmly between both zones.
Humm.. If you bought a house for $35k in 1970, it would be worth about $600k (market peak) on the high end.. for an average appreciation of 7.7% per year compounded. If I bought BRKA on Nov 11, 1976 after doing nothing with the money for 7 years, I would have $64,410,447.. makes you go humm.. So what do you think I am doing with my money right now?? If you just took the 20% down of $7,000 in 1970.. did nothing for almost 7 years and then bought BRKA.. you would have $12,882,089.

[ucodegen]

@asianautica
I understand the 2nd hump. But I’m pretty sure the people in the first and 2nd hump buy in different area. That is how I explain move up areas lagging way behind entry level areas.

I disagree. There is a time lag between the two ‘humps’ on resets. The difference is when it was originated. If you look at Fed rates during the period, the Option-ARMs were done when the Fed rates were higher. I think the lagging on ‘move-up’ areas is due to buyers having a bit more equity when they bought in (not that they have it now) and a stronger belief that the area never goes down. I need to dig through my computer files.. I think I have a more recent graph than that one. It showed the first ‘hump’ shrinking, but the second ‘hump’ getting bigger. I suspect people ref’ing out of more ‘standard’ loan products into Option-ARMs.

@tomato — read the bubble primer!! Pure economics is important because it addresses the ability to afford(as opposed to financial gambling) the house. Option-ARMs are last ditch trying to get in.. and if need be get out before things go south. When they become widely used, get the heck out of dodge because the drop will be rapid. BTW: in addition to sd_bear’s comments: Emotions also have an effect on the way down (I don’t want to buy into a house when I can get it cheaper next year!!). It displays itself as ‘momentum’ in the prices and causes ‘overshoot’ and temporary market inequities. (ref efficient market theory)

You are now stuck firmly between both zones.
Humm.. If you bought a house for $35k in 1970, it would be worth about $600k (market peak) on the high end.. for an average appreciation of 7.7% per year compounded. If I bought BRKA on Nov 11, 1976 after doing nothing with the money for 7 years, I would have $64,410,447.. makes you go humm.. So what do you think I am doing with my money right now?? If you just took the 20% down of $7,000 in 1970.. did nothing for almost 7 years and then bought BRKA.. you would have $12,882,089.

[ucodegen]

@asianautica
I understand the 2nd hump. But I’m pretty sure the people in the first and 2nd hump buy in different area. That is how I explain move up areas lagging way behind entry level areas.

I disagree. There is a time lag between the two ‘humps’ on resets. The difference is when it was originated. If you look at Fed rates during the period, the Option-ARMs were done when the Fed rates were higher. I think the lagging on ‘move-up’ areas is due to buyers having a bit more equity when they bought in (not that they have it now) and a stronger belief that the area never goes down. I need to dig through my computer files.. I think I have a more recent graph than that one. It showed the first ‘hump’ shrinking, but the second ‘hump’ getting bigger. I suspect people ref’ing out of more ‘standard’ loan products into Option-ARMs.

@tomato — read the bubble primer!! Pure economics is important because it addresses the ability to afford(as opposed to financial gambling) the house. Option-ARMs are last ditch trying to get in.. and if need be get out before things go south. When they become widely used, get the heck out of dodge because the drop will be rapid. BTW: in addition to sd_bear’s comments: Emotions also have an effect on the way down (I don’t want to buy into a house when I can get it cheaper next year!!). It displays itself as ‘momentum’ in the prices and causes ‘overshoot’ and temporary market inequities. (ref efficient market theory)

You are now stuck firmly between both zones.
Humm.. If you bought a house for $35k in 1970, it would be worth about $600k (market peak) on the high end.. for an average appreciation of 7.7% per year compounded. If I bought BRKA on Nov 11, 1976 after doing nothing with the money for 7 years, I would have $64,410,447.. makes you go humm.. So what do you think I am doing with my money right now?? If you just took the 20% down of $7,000 in 1970.. did nothing for almost 7 years and then bought BRKA.. you would have $12,882,089.

[ucodegen]

@asianautica
I understand the 2nd hump. But I’m pretty sure the people in the first and 2nd hump buy in different area. That is how I explain move up areas lagging way behind entry level areas.

I disagree. There is a time lag between the two ‘humps’ on resets. The difference is when it was originated. If you look at Fed rates during the period, the Option-ARMs were done when the Fed rates were higher. I think the lagging on ‘move-up’ areas is due to buyers having a bit more equity when they bought in (not that they have it now) and a stronger belief that the area never goes down. I need to dig through my computer files.. I think I have a more recent graph than that one. It showed the first ‘hump’ shrinking, but the second ‘hump’ getting bigger. I suspect people ref’ing out of more ‘standard’ loan products into Option-ARMs.

@tomato — read the bubble primer!! Pure economics is important because it addresses the ability to afford(as opposed to financial gambling) the house. Option-ARMs are last ditch trying to get in.. and if need be get out before things go south. When they become widely used, get the heck out of dodge because the drop will be rapid. BTW: in addition to sd_bear’s comments: Emotions also have an effect on the way down (I don’t want to buy into a house when I can get it cheaper next year!!). It displays itself as ‘momentum’ in the prices and causes ‘overshoot’ and temporary market inequities. (ref efficient market theory)

You are now stuck firmly between both zones.
Humm.. If you bought a house for $35k in 1970, it would be worth about $600k (market peak) on the high end.. for an average appreciation of 7.7% per year compounded. If I bought BRKA on Nov 11, 1976 after doing nothing with the money for 7 years, I would have $64,410,447.. makes you go humm.. So what do you think I am doing with my money right now?? If you just took the 20% down of $7,000 in 1970.. did nothing for almost 7 years and then bought BRKA.. you would have $12,882,089.

[barnaby33]

tomato, its too bad Rich isn’t an deflationista. Home prices didn’t rise all that fast before inflation became such a large factor in our monetary thought. We may indeed end up paying 4 million for a home, but only if the Fed manages to keep the inflation going. So far they haven’t had much luck.

I just realized I was thread-jacking. To answer shizo’s question, decreasing inventory really doesn’t mean much of anything. Tis a big ship our real estate market, she turns slowly aye, but when she does she moves long distances before turning again, arggghhh. We’ve along we togo a’fore we reach shore, lets not be jumpin up n down in the f’ocsle ever time we think we spot land.

Josh

[barnaby33]

tomato, its too bad Rich isn’t an deflationista. Home prices didn’t rise all that fast before inflation became such a large factor in our monetary thought. We may indeed end up paying 4 million for a home, but only if the Fed manages to keep the inflation going. So far they haven’t had much luck.

I just realized I was thread-jacking. To answer shizo’s question, decreasing inventory really doesn’t mean much of anything. Tis a big ship our real estate market, she turns slowly aye, but when she does she moves long distances before turning again, arggghhh. We’ve along we togo a’fore we reach shore, lets not be jumpin up n down in the f’ocsle ever time we think we spot land.

Josh

[barnaby33]

tomato, its too bad Rich isn’t an deflationista. Home prices didn’t rise all that fast before inflation became such a large factor in our monetary thought. We may indeed end up paying 4 million for a home, but only if the Fed manages to keep the inflation going. So far they haven’t had much luck.

I just realized I was thread-jacking. To answer shizo’s question, decreasing inventory really doesn’t mean much of anything. Tis a big ship our real estate market, she turns slowly aye, but when she does she moves long distances before turning again, arggghhh. We’ve along we togo a’fore we reach shore, lets not be jumpin up n down in the f’ocsle ever time we think we spot land.

Josh

[barnaby33]

tomato, its too bad Rich isn’t an deflationista. Home prices didn’t rise all that fast before inflation became such a large factor in our monetary thought. We may indeed end up paying 4 million for a home, but only if the Fed manages to keep the inflation going. So far they haven’t had much luck.

I just realized I was thread-jacking. To answer shizo’s question, decreasing inventory really doesn’t mean much of anything. Tis a big ship our real estate market, she turns slowly aye, but when she does she moves long distances before turning again, arggghhh. We’ve along we togo a’fore we reach shore, lets not be jumpin up n down in the f’ocsle ever time we think we spot land.

Josh

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