Spring Housing Prediction

[fun4vnay2]

I think it does not matter if you have money to buy house.

I have money to buy but hell I won’t buy in this climate

[blahblahblah]

There are always a certain number of forced sell situations arising. Death of a family member, severe illness with the corresponding high medical bills, divorce, job relocations, etc… In good markets these sales will not affect the going prices much. However in bad markets they can have a big effect. Just think of the families that bought in Del Mar in the 1970s. What happens when one of them gets cancer and needs a great deal of care? Once the insurance quits paying (and it always does) then it’s time to tap the house. They only paid $200K for it and if they can get $900K they can pay off their bills and still have enough left over to get a little condo in a senior community. So what if they could get $1.3M if they kept it on the market for 6 months. The bill collectors are calling today so old Mrs. Greene says “sell sell sell!” and someone gets a deal. Meanwhile everyone else in the neighborhood groans as a new low watermark has just been established.

Also, consider those aging families who had a substantial amount of their retirement in stocks and just lost half of it! Where is there retirement money going to come from now? You guessed it, that house they bought in 1972. Sell it and move to a senior community in Arizona with a nice chunk of change. Dad was tired of keeping up the yard anyway. He doesn’t get around like he used to, you know? And that dry heat is good for Mom’s arthritis…

I know, I know, these are contrived and unusual scenarios. Such sales will be overwhelmed by the hordes of Chinese tourists stepping off the cruise ships with suitcases full of money to purchase CV homes in cash. And of course all of the high-flying $250K/yr sales professionals and attorneys who will never be affected by the current downturn.

I’m just sayin’…

[blahblahblah]

There are always a certain number of forced sell situations arising. Death of a family member, severe illness with the corresponding high medical bills, divorce, job relocations, etc… In good markets these sales will not affect the going prices much. However in bad markets they can have a big effect. Just think of the families that bought in Del Mar in the 1970s. What happens when one of them gets cancer and needs a great deal of care? Once the insurance quits paying (and it always does) then it’s time to tap the house. They only paid $200K for it and if they can get $900K they can pay off their bills and still have enough left over to get a little condo in a senior community. So what if they could get $1.3M if they kept it on the market for 6 months. The bill collectors are calling today so old Mrs. Greene says “sell sell sell!” and someone gets a deal. Meanwhile everyone else in the neighborhood groans as a new low watermark has just been established.

Also, consider those aging families who had a substantial amount of their retirement in stocks and just lost half of it! Where is there retirement money going to come from now? You guessed it, that house they bought in 1972. Sell it and move to a senior community in Arizona with a nice chunk of change. Dad was tired of keeping up the yard anyway. He doesn’t get around like he used to, you know? And that dry heat is good for Mom’s arthritis…

I know, I know, these are contrived and unusual scenarios. Such sales will be overwhelmed by the hordes of Chinese tourists stepping off the cruise ships with suitcases full of money to purchase CV homes in cash. And of course all of the high-flying $250K/yr sales professionals and attorneys who will never be affected by the current downturn.

I’m just sayin’…

[blahblahblah]

There are always a certain number of forced sell situations arising. Death of a family member, severe illness with the corresponding high medical bills, divorce, job relocations, etc… In good markets these sales will not affect the going prices much. However in bad markets they can have a big effect. Just think of the families that bought in Del Mar in the 1970s. What happens when one of them gets cancer and needs a great deal of care? Once the insurance quits paying (and it always does) then it’s time to tap the house. They only paid $200K for it and if they can get $900K they can pay off their bills and still have enough left over to get a little condo in a senior community. So what if they could get $1.3M if they kept it on the market for 6 months. The bill collectors are calling today so old Mrs. Greene says “sell sell sell!” and someone gets a deal. Meanwhile everyone else in the neighborhood groans as a new low watermark has just been established.

Also, consider those aging families who had a substantial amount of their retirement in stocks and just lost half of it! Where is there retirement money going to come from now? You guessed it, that house they bought in 1972. Sell it and move to a senior community in Arizona with a nice chunk of change. Dad was tired of keeping up the yard anyway. He doesn’t get around like he used to, you know? And that dry heat is good for Mom’s arthritis…

I know, I know, these are contrived and unusual scenarios. Such sales will be overwhelmed by the hordes of Chinese tourists stepping off the cruise ships with suitcases full of money to purchase CV homes in cash. And of course all of the high-flying $250K/yr sales professionals and attorneys who will never be affected by the current downturn.

I’m just sayin’…

[blahblahblah]

There are always a certain number of forced sell situations arising. Death of a family member, severe illness with the corresponding high medical bills, divorce, job relocations, etc… In good markets these sales will not affect the going prices much. However in bad markets they can have a big effect. Just think of the families that bought in Del Mar in the 1970s. What happens when one of them gets cancer and needs a great deal of care? Once the insurance quits paying (and it always does) then it’s time to tap the house. They only paid $200K for it and if they can get $900K they can pay off their bills and still have enough left over to get a little condo in a senior community. So what if they could get $1.3M if they kept it on the market for 6 months. The bill collectors are calling today so old Mrs. Greene says “sell sell sell!” and someone gets a deal. Meanwhile everyone else in the neighborhood groans as a new low watermark has just been established.

Also, consider those aging families who had a substantial amount of their retirement in stocks and just lost half of it! Where is there retirement money going to come from now? You guessed it, that house they bought in 1972. Sell it and move to a senior community in Arizona with a nice chunk of change. Dad was tired of keeping up the yard anyway. He doesn’t get around like he used to, you know? And that dry heat is good for Mom’s arthritis…

I know, I know, these are contrived and unusual scenarios. Such sales will be overwhelmed by the hordes of Chinese tourists stepping off the cruise ships with suitcases full of money to purchase CV homes in cash. And of course all of the high-flying $250K/yr sales professionals and attorneys who will never be affected by the current downturn.

I’m just sayin’…

[blahblahblah]

There are always a certain number of forced sell situations arising. Death of a family member, severe illness with the corresponding high medical bills, divorce, job relocations, etc… In good markets these sales will not affect the going prices much. However in bad markets they can have a big effect. Just think of the families that bought in Del Mar in the 1970s. What happens when one of them gets cancer and needs a great deal of care? Once the insurance quits paying (and it always does) then it’s time to tap the house. They only paid $200K for it and if they can get $900K they can pay off their bills and still have enough left over to get a little condo in a senior community. So what if they could get $1.3M if they kept it on the market for 6 months. The bill collectors are calling today so old Mrs. Greene says “sell sell sell!” and someone gets a deal. Meanwhile everyone else in the neighborhood groans as a new low watermark has just been established.

Also, consider those aging families who had a substantial amount of their retirement in stocks and just lost half of it! Where is there retirement money going to come from now? You guessed it, that house they bought in 1972. Sell it and move to a senior community in Arizona with a nice chunk of change. Dad was tired of keeping up the yard anyway. He doesn’t get around like he used to, you know? And that dry heat is good for Mom’s arthritis…

I know, I know, these are contrived and unusual scenarios. Such sales will be overwhelmed by the hordes of Chinese tourists stepping off the cruise ships with suitcases full of money to purchase CV homes in cash. And of course all of the high-flying $250K/yr sales professionals and attorneys who will never be affected by the current downturn.

I’m just sayin’…

[Mark Holmes]

[quote=EconProf]Good point about the psychological element in this economic cycle.
Since WWII, we’ve had over a dozen recessions. Growth goes negative for 2 or 3 quarters, rarely more. Unemployment goes from “full employment” or 4% or so to 6-7%, seldom hitting 8%. Our downturn is offset by other countries’ upturn and the world economy does OK. So our fiscal and monetary policies apply stimulus, the inventory cycle kicks in as stores and factories discover they’ve cut production too much and re-hire, consumers get back to buying long-postponed durable goods. In other words, the recession exhausts itself and we bounce back.
Now it’s different. The world economy is falling into recession, fiscal and monetary weapons have been fired and are out of ammunition, the inventory cycle isn’t working because we’ve become a service-dominant economy, and consumers are scared and only BEGUN to cut back expenses relative to what they are capable of.
Casting a pall over everything is a growing deflationary psychology that threatens to rewrite all the rules since the deflation of the 1930s. I’m not predicting it, am just saying the odds have ratcheted up of a downturn worse than anything seen since the 1930s. Mass psychology is mistakenly ignored by my fellow economists, some of whom like to masturbate looking at economic models. The genius behind the multi-billion LTCB that failed in the late 1990s? Nobel prize winner. Failed again early this year & lost his backers more. Relied on faulty assumptions again in his models. But his math was correct.
In short, the rules we used to depend on are no longer valid. Those in power in business and government–and their economists–have lost their credibility. I suggest we study history now instead of economics, and would especially recommend Charles P. Kindleberger: Manias, Panics, and Crashes.[/quote]

I used the quote feature because EconProf’s words bear repeating. I personally think we’ll all look back on these posts in 2 or 3 years and think “how quaint”. I don’t want that to be true, but anyone ignoring the macro-economic trends is just burying their head in the sand.

I mean, has anyone been watching the foreign markets? And the TED spread? And 3-month T-Bills approaching negative returns? This is not the beginning of a 4-quarter recession with a V-shaped recovery. Believing that is ludicrous at this point.

But I sincerely hope I’m wrong.

[Mark Holmes]

[quote=EconProf]Good point about the psychological element in this economic cycle.
Since WWII, we’ve had over a dozen recessions. Growth goes negative for 2 or 3 quarters, rarely more. Unemployment goes from “full employment” or 4% or so to 6-7%, seldom hitting 8%. Our downturn is offset by other countries’ upturn and the world economy does OK. So our fiscal and monetary policies apply stimulus, the inventory cycle kicks in as stores and factories discover they’ve cut production too much and re-hire, consumers get back to buying long-postponed durable goods. In other words, the recession exhausts itself and we bounce back.
Now it’s different. The world economy is falling into recession, fiscal and monetary weapons have been fired and are out of ammunition, the inventory cycle isn’t working because we’ve become a service-dominant economy, and consumers are scared and only BEGUN to cut back expenses relative to what they are capable of.
Casting a pall over everything is a growing deflationary psychology that threatens to rewrite all the rules since the deflation of the 1930s. I’m not predicting it, am just saying the odds have ratcheted up of a downturn worse than anything seen since the 1930s. Mass psychology is mistakenly ignored by my fellow economists, some of whom like to masturbate looking at economic models. The genius behind the multi-billion LTCB that failed in the late 1990s? Nobel prize winner. Failed again early this year & lost his backers more. Relied on faulty assumptions again in his models. But his math was correct.
In short, the rules we used to depend on are no longer valid. Those in power in business and government–and their economists–have lost their credibility. I suggest we study history now instead of economics, and would especially recommend Charles P. Kindleberger: Manias, Panics, and Crashes.[/quote]

I used the quote feature because EconProf’s words bear repeating. I personally think we’ll all look back on these posts in 2 or 3 years and think “how quaint”. I don’t want that to be true, but anyone ignoring the macro-economic trends is just burying their head in the sand.

I mean, has anyone been watching the foreign markets? And the TED spread? And 3-month T-Bills approaching negative returns? This is not the beginning of a 4-quarter recession with a V-shaped recovery. Believing that is ludicrous at this point.

But I sincerely hope I’m wrong.

[Mark Holmes]

[quote=EconProf]Good point about the psychological element in this economic cycle.
Since WWII, we’ve had over a dozen recessions. Growth goes negative for 2 or 3 quarters, rarely more. Unemployment goes from “full employment” or 4% or so to 6-7%, seldom hitting 8%. Our downturn is offset by other countries’ upturn and the world economy does OK. So our fiscal and monetary policies apply stimulus, the inventory cycle kicks in as stores and factories discover they’ve cut production too much and re-hire, consumers get back to buying long-postponed durable goods. In other words, the recession exhausts itself and we bounce back.
Now it’s different. The world economy is falling into recession, fiscal and monetary weapons have been fired and are out of ammunition, the inventory cycle isn’t working because we’ve become a service-dominant economy, and consumers are scared and only BEGUN to cut back expenses relative to what they are capable of.
Casting a pall over everything is a growing deflationary psychology that threatens to rewrite all the rules since the deflation of the 1930s. I’m not predicting it, am just saying the odds have ratcheted up of a downturn worse than anything seen since the 1930s. Mass psychology is mistakenly ignored by my fellow economists, some of whom like to masturbate looking at economic models. The genius behind the multi-billion LTCB that failed in the late 1990s? Nobel prize winner. Failed again early this year & lost his backers more. Relied on faulty assumptions again in his models. But his math was correct.
In short, the rules we used to depend on are no longer valid. Those in power in business and government–and their economists–have lost their credibility. I suggest we study history now instead of economics, and would especially recommend Charles P. Kindleberger: Manias, Panics, and Crashes.[/quote]

I used the quote feature because EconProf’s words bear repeating. I personally think we’ll all look back on these posts in 2 or 3 years and think “how quaint”. I don’t want that to be true, but anyone ignoring the macro-economic trends is just burying their head in the sand.

I mean, has anyone been watching the foreign markets? And the TED spread? And 3-month T-Bills approaching negative returns? This is not the beginning of a 4-quarter recession with a V-shaped recovery. Believing that is ludicrous at this point.

But I sincerely hope I’m wrong.

[Mark Holmes]

[quote=EconProf]Good point about the psychological element in this economic cycle.
Since WWII, we’ve had over a dozen recessions. Growth goes negative for 2 or 3 quarters, rarely more. Unemployment goes from “full employment” or 4% or so to 6-7%, seldom hitting 8%. Our downturn is offset by other countries’ upturn and the world economy does OK. So our fiscal and monetary policies apply stimulus, the inventory cycle kicks in as stores and factories discover they’ve cut production too much and re-hire, consumers get back to buying long-postponed durable goods. In other words, the recession exhausts itself and we bounce back.
Now it’s different. The world economy is falling into recession, fiscal and monetary weapons have been fired and are out of ammunition, the inventory cycle isn’t working because we’ve become a service-dominant economy, and consumers are scared and only BEGUN to cut back expenses relative to what they are capable of.
Casting a pall over everything is a growing deflationary psychology that threatens to rewrite all the rules since the deflation of the 1930s. I’m not predicting it, am just saying the odds have ratcheted up of a downturn worse than anything seen since the 1930s. Mass psychology is mistakenly ignored by my fellow economists, some of whom like to masturbate looking at economic models. The genius behind the multi-billion LTCB that failed in the late 1990s? Nobel prize winner. Failed again early this year & lost his backers more. Relied on faulty assumptions again in his models. But his math was correct.
In short, the rules we used to depend on are no longer valid. Those in power in business and government–and their economists–have lost their credibility. I suggest we study history now instead of economics, and would especially recommend Charles P. Kindleberger: Manias, Panics, and Crashes.[/quote]

I used the quote feature because EconProf’s words bear repeating. I personally think we’ll all look back on these posts in 2 or 3 years and think “how quaint”. I don’t want that to be true, but anyone ignoring the macro-economic trends is just burying their head in the sand.

I mean, has anyone been watching the foreign markets? And the TED spread? And 3-month T-Bills approaching negative returns? This is not the beginning of a 4-quarter recession with a V-shaped recovery. Believing that is ludicrous at this point.

But I sincerely hope I’m wrong.

[Mark Holmes]

[quote=EconProf]Good point about the psychological element in this economic cycle.
Since WWII, we’ve had over a dozen recessions. Growth goes negative for 2 or 3 quarters, rarely more. Unemployment goes from “full employment” or 4% or so to 6-7%, seldom hitting 8%. Our downturn is offset by other countries’ upturn and the world economy does OK. So our fiscal and monetary policies apply stimulus, the inventory cycle kicks in as stores and factories discover they’ve cut production too much and re-hire, consumers get back to buying long-postponed durable goods. In other words, the recession exhausts itself and we bounce back.
Now it’s different. The world economy is falling into recession, fiscal and monetary weapons have been fired and are out of ammunition, the inventory cycle isn’t working because we’ve become a service-dominant economy, and consumers are scared and only BEGUN to cut back expenses relative to what they are capable of.
Casting a pall over everything is a growing deflationary psychology that threatens to rewrite all the rules since the deflation of the 1930s. I’m not predicting it, am just saying the odds have ratcheted up of a downturn worse than anything seen since the 1930s. Mass psychology is mistakenly ignored by my fellow economists, some of whom like to masturbate looking at economic models. The genius behind the multi-billion LTCB that failed in the late 1990s? Nobel prize winner. Failed again early this year & lost his backers more. Relied on faulty assumptions again in his models. But his math was correct.
In short, the rules we used to depend on are no longer valid. Those in power in business and government–and their economists–have lost their credibility. I suggest we study history now instead of economics, and would especially recommend Charles P. Kindleberger: Manias, Panics, and Crashes.[/quote]

I used the quote feature because EconProf’s words bear repeating. I personally think we’ll all look back on these posts in 2 or 3 years and think “how quaint”. I don’t want that to be true, but anyone ignoring the macro-economic trends is just burying their head in the sand.

I mean, has anyone been watching the foreign markets? And the TED spread? And 3-month T-Bills approaching negative returns? This is not the beginning of a 4-quarter recession with a V-shaped recovery. Believing that is ludicrous at this point.

But I sincerely hope I’m wrong.

[peterb]

Actually CONCHO, this exact thing just happened to a close friend. He lives in an area that peaked in 2005 at about $1.2M per house. It has many people in it that are well over 65. The house directly accross the street just did almost exaclty what you said. The husband died last year, the wife no longer could stay in the property, so she sold. And guess what? She sold the house for $750K after 4 months on the market. She even put on a new roof to help sell it. They paid about $150K for the house in 1970, so she still did well, profit wise. But the point is, she had the equity to sell at the new low for the hood. My friends was bummed as he realized this scenario could happen many more times around his house and keep lowering the comps.

[peterb]

Actually CONCHO, this exact thing just happened to a close friend. He lives in an area that peaked in 2005 at about $1.2M per house. It has many people in it that are well over 65. The house directly accross the street just did almost exaclty what you said. The husband died last year, the wife no longer could stay in the property, so she sold. And guess what? She sold the house for $750K after 4 months on the market. She even put on a new roof to help sell it. They paid about $150K for the house in 1970, so she still did well, profit wise. But the point is, she had the equity to sell at the new low for the hood. My friends was bummed as he realized this scenario could happen many more times around his house and keep lowering the comps.

[peterb]

Actually CONCHO, this exact thing just happened to a close friend. He lives in an area that peaked in 2005 at about $1.2M per house. It has many people in it that are well over 65. The house directly accross the street just did almost exaclty what you said. The husband died last year, the wife no longer could stay in the property, so she sold. And guess what? She sold the house for $750K after 4 months on the market. She even put on a new roof to help sell it. They paid about $150K for the house in 1970, so she still did well, profit wise. But the point is, she had the equity to sell at the new low for the hood. My friends was bummed as he realized this scenario could happen many more times around his house and keep lowering the comps.

[peterb]

Actually CONCHO, this exact thing just happened to a close friend. He lives in an area that peaked in 2005 at about $1.2M per house. It has many people in it that are well over 65. The house directly accross the street just did almost exaclty what you said. The husband died last year, the wife no longer could stay in the property, so she sold. And guess what? She sold the house for $750K after 4 months on the market. She even put on a new roof to help sell it. They paid about $150K for the house in 1970, so she still did well, profit wise. But the point is, she had the equity to sell at the new low for the hood. My friends was bummed as he realized this scenario could happen many more times around his house and keep lowering the comps.

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