The Great Turn Around of 2010

[Bugs]

I would caution everyone to not get too hung up on a date at this point. It’s okay for entertainment purposes, but timing an RE market requires actively watching factors other than the prices themselves. Prices are an effect, not a cause; and we should be watching for changes to those causes.

For all we know the trend could reverse before 2010; or, it might drag out way beyond. During the last bust I made the mistake of getting into the dating game and I was wrong by virtue of being too optimistic. (if you can believe that!!). In 1991 I thought we’d be done by late 1993; that’s how wrong I was.

The last bust lingered a lot longer and did a lot more damage than I thought it would – the same could happen this time. Just as guessing exactly when the market would peak was futile when it was going up, so too is trying to guess exactly when the bottom will arive while it’s going down. There are all manner of factors, some of which we can’t see at this point, that will contribute to exactly when/where the bottom does arrive.

[lendingbubblecontinues]

LostCat said “I just don’t see how this sag can last longer than 2 more years. It already had 2 years in the bank.”

An analogy for you….the last 2 years have been like getting a fully loaded aircraft carrier into reverse after it was steaming at “all ahead full”.

We haven’t seen anything yet.

Prices are still somewhat “sticky” right? Capitulation needs to set in before we get anywhere near close to a “bottom”.

[SHILOH]

There are places in Europe where you pay 75% income tax. There are places in Europe where the “people” support an archaic monarchy.
Please….I hope we are not going in the direction of Europe, I don’t hold Europe up as a standard to aspire to.

100 year mortgages…that is indentured servitude. You are renting – plus you “own” pay property tax and upkeep on a crappy 100 year old outdated home?
What created this bubble market is hysteria and ridiculous financing, wasting investors money, a lot of it foreign.
I don’t picture foreign gov’ts trusting the US with their hard earned money for investment in sham mortgages in the future.

If Americans are stupid enough to buy into the 100 year mortgage – then we are truly finished. I think at that point we would be ready for revolution.

[drunkle]

i just got notice of a $20/month rent hike… due to: water, lawn care, insurance and taxes (?!!). about a 2% hike.

arm resets, subprime, housing in general is so significant in business news these days, you gotta figure some portion of people who will be reset on are paying attention and making plans… meaning, that second wave of resets may have it’s effects sooner and more spread out in fashion. people bailing out sooner, defaulting sooner, whatever.

more than anything, i think the reo’s already in bank possession will control the picture. when the banks start aggressively unloading, they’ll under cut everyone else and drive the market down. especially since they’re not likely to play cash back, comp manipulation games. i think they’re holding back for now in order to not have to reassess their asset holding values and thereby not report how bad a position they actually are…

[sdduuuude]

After Japan’s housing market crash, housing prices remained flat for 13 years, and counting. I’m sure there are differences in the economic situations, but a 2010 recovery is far from certain.

[JWM in SD]

Just some friendly advice Lost Cat. You NEED to spend sometime at the following sites before wasting time with posts like this:
Calculated Risk
Mish Shedlock: Global Economic Analysis Blog

Also spend some time studying the economic theories on Inflation. Specifically causes and symptoms.

Luckliy, other posters here (specifically Bugs) poked enough holes in your assertions to give you things to ponder.

It is posts like these that drive me to harp so much about connecting the micro to macro economic picture. SD RE is not an economic island unto itself.

[lonestar2000]

I fully agree with the main sentiment, that you should not try to time the market. Nobody foresaw the bubble, almost nobody foresaw the downturn, and quite certainly nobody knows then it will bottom out. If this could be known we’d all be multi millionaires by now and buy our own islands.

What you SHOULD concentrate on is finding equilibrium…and by that I mean buy when it makes sense to you. If you find the house you want, at a price you can afford, and are looking to LIVE there and not as an investment, then by all means go for it and enjoy it! Don’t worry about when is the right time or wrong time to buy, after all, nobody here will be making your mortgage payments but you.

There’s nothing wrong with delaying a purchase when prices are in a freefall like they are now, but don’t let the thought of another $10,000 savings hold off if you’re ready to buy.

[SHILOH]

[img_assist|nid=4655|title=Japan Graph -Housing|desc=Here is a Japan house price graph. Taken from this: http://efinancedirectory.com/articles/Why_Bush%27s_Mortgage_Bailout_Plan_is_a_Bad_Idea.html|link=node|align=left|width=466|height=302]

try it here:
http://efinancedirectory.com/articles/Why_Bush%27s_Mortgage_Bailout_Plan_is_a_Bad_Idea.html

Excerpt:
“In the 1990s, Japan experienced a similar housing boom/price bubble. Home prices doubled, and in the largest cities, they tripled. And then everything began to unravel. The market began to crash. That’s when the Japan government made the terrible decision to intervene.

The result?

The market correction in Japan is still dragging on to this day. Because Japan’s Ministry of Finance was so eager to keep the banks that made bad loans from going bankrupt, they virtually assured that the country would be languished in a multi-decade recession.

[an]

Bugs, I totally agree with you. Trying to time any market is a fool’s game. For all we know, this could deteriorates very quickly and hit bottom in 2008 or very slowly and hit bottom in 2020. There are infinite variables, so we’ll never know until we’re well past the bottom.

[lendingbubblecontinues]

“If you find the house you want, at a price you can afford, and are looking to LIVE there and not as an investment, then by all means go for it and enjoy it! Don’t worry about when is the right time or wrong time to buy, after all, nobody here will be making your mortgage payments but you.”

David Lereah…is that you??

[JWM in SD]

“Nobody foresaw the bubble, almost nobody foresaw the downturn…”

Uhh, yeah actually we did….

[bsrsharma]

Real quote from a leading national magazine:

The demand for mortgage brokers in Las Vegas was so strong that "every stripper, waiter and bartender on the Strip had a broker's license," says Boyd Nyborg, a former mortgage broker who now tends bar at the Tao Las Vegas.

http://www.msnbc.msn.com/id/20546324/site/newsweek/page/0/

 

[an]

If you’re here, you foresaw the bubble and the downturn. But I don’t think anyone called the 2005 peak, at least not with any certainty at the time. Which is why I don’t think anyone can call the bottom with any certainty until it’s 1-2 years too late. Even then, top for NCC is very different than East County.

[LostCat]

JWM,

What is the site for if you’re not going to talk about housing and possible future scenarios? We could sit around and talk about the jock strap that you wear too tight, but I’ll keep it focused on the what ifs of the housing market. Right or wrong. You can look at as much data as you want and make as many assumptions or educated guesses as you want based on the data you decide to review (good or bad). However, like anything in life, it’s unpredictable in many ways and your argument will be just as good as anyone’s until after the fact and history has been written.

Poking holes in my assertions was and is the exact point of this blog subject. It’s to perpetuate good dialog between different views. It’s an opportunity for individuals with different research skills to present their findings and debate this ongoing decline in Home Values. It’s an opportunity to try and formulate and make some sense about how this all started and when it will or how it will all end up. It’s to educate ourselves on the mater of fact of the subject. And unlike you, not everyone that is logged in and on today, was logged in and on last week, last month, last year or the three years leading up to this housing collapse. With new individuals adding to this site, it leave the door open for new discussions on old topics with the possibility of improved expertise, especially given the fact that there are more people without jobs today then a month ago and therefore more have more time to write about subjects like this. There might even be a possibility for authors of the other blogs with a high level of economic expertise to chime in.

San Diego is obviously not an economic island, nor is California nor the USA. But it’s all relative and the perpetuation of this subject matter. What happens locally does have impacts on things regionally, nationally and internationally. If you end discussion because of you think you know it all and have all the answers by reading a couple of periodicals, economic journals, or other blog sites, then sign off and stop reading into blogs on this site.

Thanks,

Lostcat

[LostCat]

Nice find SHILOH. So Japan is still struggling!

What about European housing markets. How have the been relative to other global markets? How does China deal with land value, etc.. Are they susceptible to the same problems we have? Up and downs even though they are a communist/imperialist country?

[Author]

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