OT: Shadow inventory research

[briansd1]

flu, I personally misread the recession. I did not anticipate the government, with cheap money, being able to so well help corporate profits.

Large corporations are flush with cash and sustaining the economy.

Tech is definitely a bright sector of the economy.

[an]

[quote=briansd1]Intervention is designed to stop prices from collapsing further than they already have, encouraging people to stay put.

Remember, because of loss aversion, homeowners will willingly sell only after prices return being above mortgage balances (above water) + cash sunk (downpayment, remodel).

Theoretically, as prices firm up and become organically sustainable, government intervention will be withdrawn, thereby creating a drag on the market, but not enough of a drag to reverse previous gains.

We may question Federal intervention being withdrawn; but Federal Reserve intervention will eventually be reversed.

There are different forces at play. There is pent-up demand, but there is also pent-up supply.

I believe that interests also affect affordability.[/quote]
And yet, prices collapsed anyways. How much more would it collapse w/out government intervention, no one really knows. But you’re giving government too much credit for knowing exactly when to pull out, so only to stop the prices from collapsing instead of aiding the price increase as well. I say, the intervention will cause price to increase. Which will encourage people to move.

[an]

[quote=flu]As long as people’s stock options/RSU’s are in the money, they don’t care… You have one very large employer on an 52 week high rampage almost weekly… So yes, even all those 1-2 year new employees have 50% vesting and ESPP shares totally in the money probably could come up with a decent downpayment on a decent condo…Yeah, it’s going to be interesting in the next few months… Welcome to multiple counter offer world….[/quote]
Not only is that large employer hitting 52 week high almost weekly, they’re also hiring constantly as well. With that said, I think that large employer RSU is on a 3 year vesting period with 33% each year. So, it might not be a big of an influx of cash as if it was 2 years vesting at 50% each year. You nailed it on ESSP though. Now, if only gas price can go to $10 gallon so people will want to live with 5 miles of work :-D.

[briansd1]

[quote=AN]
And yet, prices collapsed anyways. How much more would it collapse w/out government intervention, no one really knows.
[/quote]

[quote=AN]
I say, the intervention will cause price to increase. Which will encourage people to move.[/quote]

The two quotes above seem to be self contradictory.

Your remark “and yet, prices collapse anyways” implies that you don’t give much credence to government intervention. Then you go on to say: “I say, the intervention will cause price to increase”.

[quote=AN]
But you’re giving government too much credit for knowing exactly when to pull out, so only to stop the prices from collapsing instead of aiding the price increase as well.
[/quote]

I never said the government will know when to pull out (Unlike some nutty people, nobody rational actually believes that that pull-out timing method works).

But I know that government support with be eventually be withdrawn. I don’t known about the Federal government, but the Federal Reserve will eventually undo its programs.

My observations are regarding prices today. I say that government support has stabilized prices; but underwater homeowners will not start to “willingly” move until they are “made whole.” We are not yet at a point where mobility is encouraged by increasing prices.

[an]

[quote=briansd1]The two quotes above seem to be self contradictory.

Your remark “and yet, prices collapse anyways” implies that you don’t give much credence to government intervention. Then you go on to say: “I say, the intervention will cause price to increase”.[/quote]
It’s not that I don’t think the government intervention work. It works, at what cost is a whole different debate. I just don’t think they can time the market. I.E. they dump the money at the problem, but it didn’t stop the crash. On the other side, by the time they decide to take away the intervention, it’s already too late and another bubble will form. I’m questioning their ability to time things, not the ability of inflating bubbles.
[quote=briansd1]My observations are regarding prices today. I say that government support has stabilized prices; but underwater homeowners will not start to “willingly” move until they are “made whole.” We are not yet at a point where mobility is encouraged by increasing prices.[/quote]

[quote=briansd1]As I said before, we will not see it reflected in nominal prices (because of inflation and government intervention) but after 10 years, real, inflation adjusted, prices will reflect reversion to the mean. [/quote]

Aren’t you contradicting yourself here? If I read it correctly, you say we’ll see an increase in nominal prices due to inflation and government intervention. Then wouldn’t the home owners will be “made whole” nominally, which mean the government intervention was intended to get people to move, not to say? BTW, I was specifically debating your last quote I just pasted. Home owner don’t care about real prices. They care about nominal prices.

[bearishgurl]

[quote=Jazzman][quote=bearishgurl on March 25, 2012 – 12:14pm]Username, if you think you will be able to purchase “equity” from a “distressed” home-debtor (whether in foreclosure or not), think again. Even if the home-debtor DOES have equity, there are many pitfalls to this type of transaction, namely a few pesky “legalities,” including the ability of the home-debtor to claim YOU took advantage of him/her and legally recover title to their property.

You would do well to study these types of transactions carefully before “knocking on doors” and attempting to “jump in with both feet.”

Since you are asking these questions here in the manner you are asking them in, it is apparent that you have a lot of “studying” to do. Instead of listening to fast-talkers on infomercials selling books and CDs, I would suggest you begin your “studies” by taking RE Principles and then RE Law at your local community college.[/quote]

This is a huge assumption! What happened to innocent until proven guilty? A guy comes along and asks a perfectly legitimate question and is jumped upon. Maybe he’s doing some research for a paper, or is just curious. And so what if he’s looking for opportunities. Good for him/her. Why is the free market great when it serves it’s masters and evil when it doesn’t. To use your own expression, you can’t have it both ways. Anyway, it looks like he’s been chased out of town. Pity so many threads end up this way. :([/quote]

Actually, Jazzman, I wasn’t the first Pigg on this thread who (negatively?) commented on the “advice” the OP is seeking here.

[quote=sdrealtor on March 25, 2012 – 10:55am]
Guys like this typically think they are smarter than everyone else. The beleive they can just walk onto a very competitive landscape and take what they want. He/she has quite a bit to learn about the way things really operate out there.[/quote]

From the text of the OP, it appears he/she is seeking to find owners with “equity” in distress to make them an offer before any agents get involved or their properties are foreclosed upon (and hopefully take title to their property).

This “minefield” falls straight into the abyss of CA Civil Code section 1695 et seq., where the “wheel was invented” long ago:

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=01001-02000&file=1695-1695.17

I simply told him/her to tread very, very carefully – don’t trip over yourself and dot all your i’s and cross all your t’s, so to speak.

There is a lot of buried ordinance in that landscape that could blow up on him/her when he/she least expects it.

Here’s a good example:

http://piggington.com/question_on_an_apparent_foreclosure

Do any Piggs know if the above property actually went to trustee’s sale? If so, WHO was actually foreclosed upon??

/End of lesson learned.

***********************

As (brian?) suggested, why not just keep making offers on SS’s which are priced at ’98-’02 prices (for the sole purpose of causing their surrounding area to be grossly “undervalued”)? Rinse and repeat until you get an “lender-approved” offer! This is probably easier (and safer) than attempting an “equity purchase,” ESP in the current litigious climate of homedebtor “victim mentality” :=[

I never tried to run Username off. All those “infomercials” made “equity purchasing” (in states OTHER than CA, of course) look like a no-brainer . . . lol! I say, GO FOR IT, watch your step and PLEASE report back here in a few months as to how you’re doing on your “wealth-building activities.” I’m all ears :=]

[bearishgurl]

[quote=AN]. . . Home owner don’t care about real prices. They care about nominal prices.[/quote]

Correct, AN. Longtime owners with equity care about getting back their initial investment (downpayment) and as much of their own money as possible that they sunk into permits and labor/materials in their property over the years (depending on how long ago those improvements were made and what they were).

It has nothing to do with wanting a “millenium-boom bubble price.”

[briansd1]

[quote=AN]If I read it correctly, you say we’ll see an increase in nominal prices due to inflation and government intervention. Then wouldn’t the home owners will be “made whole” nominally, which mean the government intervention was intended to get people to move, not to say?
[/quote]

Homeowners will be “made whole” eventually. But not yet.

I was addressing the market conditions today, why inventories are low, and why homeowners are unwilling to sell.

[quote=AN]
Home owner don’t care about real prices. They care about nominal prices.[/quote]

Generally true.

I’m just saying the government prevented a deeper price collapse, opting instead to ease the pain over many years. The reckoning will be in inflation adjusted real prices.

I believe that most Americans would prefer this scenario.

[bearishgurl]

In other words, if a longtime owner in their sixties wants to sell their suburban homestead now, they are not as interested in recovering their investment of a pool they installed in ’86 that their five kids (all grown now) had weekly pool parties in. It’s old and used now and sellers realize that many buyers with young children don’t want pools.

OTOH, if these same owners installed $14K of “Low E” vinyl windows just three years ago, they will want to recoup that investment on sale.

[briansd1]

BG, I agree on the point of seller psychology.

Wanting to recoup the $14k window investment contributes to the lock-in effect, or the negative utility of selling.

The paper I linked to earlier has an econometric model of mobility.

The low inventories are due in good part to loss aversion. Even homeowners who have plenty of equity will experience loss aversion because they know that their properties were once worth a lot more.

But as any gambler knows, loss avoidance can only be sustained so long. Either you recover, or you give up. It all depends on timing and wherewithal. A 75yo has different options than a 55yo homeowner.

Government intervention gave banks and households more tools to avoid losses.

[quote=walterwhite]I think chess can teach us much about the housing market.[/quote]

Gaming theory is very useful in economics.

Chess is too rational. Poker is more like real life.

[an]

[quote=briansd1]I’m just saying the government prevented a deeper price collapse, opting instead to ease the pain over many years. The reckoning will be in inflation adjusted real prices.

I believe that most Americans would prefer this scenario.[/quote]I agree, most Americans would prefer this. Most Americans also spend every penny they make and save little to none. Most American would prefer price to start shooting past bubble price sooner rather than later.

[sdduuuude]

[quote=briansd1][quote=walterwhite]I think chess can teach us much about the housing market.[/quote]

Gaming theory is very useful in economics.

Chess is too rational. Poker is more like real life.[/quote]

+1 on the bold part.

[scaredyclassic]

Not sure which one is true as I am just learning. But chess has been played w the same rules in Europe since the 15th c which if u think about it is actually very cool. My son told me there are mathematically more possible combinations of chess games than there are molecules in the universe which I’m guessing is a big number.

[Coronita]

Off topic…but since it was mentioned. And yes, I’m insane.. So apologize for the nutjob question..

Just curious…
Do any of you actually run a monte carlo type simulation on your 9 or so stock market categories and slightly rebalance the percentages accordingly, as some fund managers say one they do and swear by?

More importantly, if you do, I’m curious where did you get the the hell did you get your simulator from?

I’m sorry, by I did pretty shitty in probability and stochastic processes class in school

[sdduuuude]

[quote=flu]Off topic…but since it was mentioned. And yes, I’m insane.. So apologize for the nutjob question..

Just curious…
Do any of you actually run a monte carlo type simulation on your 9 or so stock market categories and slightly rebalance the percentages accordingly, as some fund managers say one they do and swear by?

More importantly, if you do, I’m curious where did you get the the hell did you get your simulator from?

I’m sorry, by I did pretty shitty in probability and stochastic processes class in school[/quote]

Most important thing to know about simulation: There are lots of ways to do it wrong that seem right. Very tricky stuff. Was a focus of mine in under-grad school.

If it ever came to me running Monte-Carlo simulations for the purposes of trading my own money, someone come to my house and just kill me. I could, but I don’t. Would rather have someone else invest my money than take that much of my time using a very employable part of my brain that could be used earning a decent income, or better – playing Wii with the kids.

[Author]

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