“Those who say the prices are going to go down 50 percent are just yahoos who are not looking at the whole picture,”

[Anonymous]

It doesn’t take a rocket scientist to know that housing prices are going to fall big time, just common sense. The only wildcards are how much and when. Regarding the S&P, I wouldn’t be at all surprised if it dropped to 600 down the road.

[Bugs]

I’ll say one thing about the people who are sitting this one out – they aren’t losing money right now and they aren’t sweating their positions.

F_L_Union – surely you can see that the current direction of both the price trend and the volume of sales is down and all indicators are that the pace of decline is picking up steam. There are no data to suggest a turn right now other than some wishful thinking from people who have, at this point, no remaining credibility.

Whether the whole thing bottoms out at -30% or -70% nobody can possibly know. But we do know there have been declines and we do know it’s going to decline more before it’s over. I direct your attention to just 18 months ago when the RE bulls were still reassuring everyone that the market was just going to level off, take a breather and then resume these increases. This in spite of a ton of data to the contrary. They were wrong then and they’re wrong now.

You have expressed the contrary view and there’s nothing wrong with that. Now lets see you come up with some data, some factor in the local economy, some factual reason to have that hope other than “it hasn’t happened yet” that supports your opinion. We have information and analysis that supports why we hold our opinions – do you? If so, we’d LOVE to see it. I direct your attention to Piggington’s motto below.

Eventually this downtrend will reverse course and from that point RE will be a great investment – that’s what a lot of people on this board are waiting for. Until then, time is on their side and they are the freaking geniuses.

Try to remember the most important rule of RE: You make your money when you buy, not when you sell.

It doesn’t matter what all those people have right now as a result of all their “hard work” and entrepreneurial spirit. It’s not what you make that counts, it’s what you can keep.

[cr]

Ah Poor “Fat_Lazy_Union_…” aka RATcliff?

I love to see high-road, classy, and professional responses from people scared about the coming demise in the housing industry.

I also love the cheap shots they give to people in jobs not directly involved with housing. Those who thumbed their noses at salaried/union/SBO’s in the past 5 years, are now complaining to them that they are wrong for not buying 5 years ago.

Truth is, misery loves company and many who bought at affordable prices, refinanced at higher levels and can’t afford anymore either.

“UNION boy” is no different and I hope he reads this.

The only difference between what you call our hope in a crash, (which is really just an expectation of a correction to make houses affordable again) and your hope that prices will continue to rise, is we base it on actual data, not politically charged propoganda and opinion.

As one of his cronies, why don’t you continue to follow in the footsteps of Mr. Lereah…

[ibjames]

I am not an econ wiz at all, but to me it seems easy to see that something has to change. Since it won’t be wages, (maybe I’m going to get a 20k raise? That probably still wont’ be enough) it has to be something else.

To act like this is normal is absurd. People were flocking all over the place to buy housing, like wood is a scarce commodity and house building will forever be stopped by the year 2006. Greed and stupidity ran rampant across the board. People not caring because they qualified for the loan and we’ll take care of it in the future. Well the future is almost here. Don’t act like people were making calculated decisions because it was far from calculated.

Look at the charts, not gradual price increases, obscene price increases. Even GM is feeling the pinch from the crazy real estate market. Sub prime lenders closing their doors, bailout programs starting to emerge. The wave is now on the horizon. I’m sitting in the lineup looking out.. turning my board to the shore getting ready to start paddling to catch the big wave.

I don’t know the percentage of change, but it’s impossible for people to think it’s going to change just a little bit. When dual income no children white collar families cannot buy a place without buying a gun to live there. Something has to change.

Sling mud all you want. Bitter, pessimistic, whatever. I know that a lot on this board looked at the loans, and stated that it is crazy to put yourself in that position. It’s called using your brain, too bad you are sitting on yours.

[Anonymous]

This discussion reminds me of the MSM debate where Republicans accuse the media of an elitist liberal bias and Democrats harp on the dangers of corporate consolidation. There is an element of self interest on both sides.

For example, Mr WestsideREmeltdown is SO clearly trying to instigate his apocalyptic prediction that he borders on ‘agitator’ status. And while I’m not necessarily proud of it, it WOULD be in MY self interest for him to be right. I live (and rent) on the Westside and am pretty much priced out of the market UNTIL a masive correction takes place. But the sheer amount of wealth and international diversity in the area just doesn’t make it seem that likely to me.

San Diego is a different animal and I’m not as familiar with it. But the point is that media spin DOES matter but it will only go so far.

Does anyone remember Gov. Arnold proclaiming California as a modern nation-state a few months back? I think the comment was related to statewide environmental policies compared to the relative lack of them at the national level – one of the bolder things I’ve heard him say.

His subtext was that California possesses an international ‘cachet’ that is very much in play in this overall debate. The multi-generational California native does not matter as much when newly wealthy “call center entrepreneurs” from Mumbai are currently shopping for homes in Santa Monica.

[kev374]

But the sheer amount of wealth and international diversity in the area just doesn’t make it seem that likely to me

Wealth? Excuse me? Have you personally verified their net worth? Most of these seemingly wealthy people are in debt upto their eyeballs my friend!

And why would call center entrepreneurs from India would not be shopping for property in Santa Monica of all places? If they had that much money they could easily buy in the French Riviera.

[Bugs]

Isn’t that a variation of “everyone wants to live here”? It’s simply not true. SD County has population outmigration situation going on right now, and a large percentage of the people who are leaving are people who would normally own or buy properties. They are not being replaced by people who made their money elsewhere.

There is some foreign money coming in, but the number of people involved is miniscule within the context of the RE market. There’s nowhere near enough foreign money coming to either town to support pricing across the board.

[masayako]

With my own research and observation, I don’t think the desired area (LJ, Del Mar, NC Coastal in general) will drop below 35%; 25%-25% is still possible but really depend on the homeowners’ financial situation.

RB, RQ, Escondido, CV, Oceanside, Central valley, east county etc..) could drop more (~35%-40% max) especially 92127 (4S) and camrmel valley (92129). Unless we have some ‘surprises’ like massive job lost, earthquake, wild fire, otherwise, 50% drop is really wishful thinking.

I don’t agree everything ‘Union’ boy said. But, there is some truth in what he said. 50% percent or more price drop is highly unlikely, if not possible at all.

Masayako

[Bugs]

I think that some bears try to approach the subject with a certain amount of circumspection. Bears are not greedy people by nature. I think a lot of bears subscribe to the idea that it’s not cool to get caught hoping for a correction that will cost a large percentage of our neghbors their shirts.

We still have the data and history to consider and we ignore either at our own peril. Any price correction less than 50% won’t even get us close to the long term trendline. If you believe that the past indicates to the future, then a complete correction (and indeed – overcorrection) is more probable than not.

At the same time is also important to remember that the residential markets are not rational. Just because the markets should correct doesn’t mean that they will correct at this time. Who knows, maybe we’ll get a divided cycle whereby we get halfway to the trend this time, followed by a short up-down cycle that gets the rest of the way by the time it’s over.

No matter what, the regional pricing will eventually have to reconcile with wage/population trends, one way or another.

[no_such_reality]

School teachers and firefighters being able to afford entry-level housing? And, god forbid, HAVE ENOUGH MONEY LEFT OVER TO RAISE A FAMILY?

Wow, you’re under estimating what teachers and firefighters make, they can afford homes NOW.

[PD]

I love how people think foreign money is going prop up the market. There are very few places on this earth where there really is a scarcity of land coupled with significant international demand. London is one of those places. Santa Monica? What? Folks, there are many, many miles of coastline between Santa Barbara and the border. Mr. Mumbai with his pockets full of cash has a lot to choose from.

I get pretty tired of hearing bears described as bitter folks left out of the money party. Sigh. There is nothing bitter about me. Sure, I’ve been very conservative in the stock market this year and missed some earnings. However, I still made money (shorting New Century last fall sure made me feel like a hero :)). Had I kept my house (sold 05), my net worth would be down 20%. Instead, my net worth is up over 20%. I sleep very well at night, thank you very much.

[lonestar2000]

The bottom line is, whether we’re optimistic or pessimistic, owning or renting, looking to move or looking to stay, the general housing prices are out of whack. As I said before, when the average Joe can’t afford the average house, we got a problem.

It is this situation that is currently correcting itself. One way or another the market must get back to fundamentals because the processes that were driving the insane price increases are no longer in place.

[IONEGARM]

“You willing to bank everything on one big decline…You’re brave. I wouldn’t want to gamble on just one hit wonders.”

Wouldn’t buying now be gambling on the opposite side of the coin?

[little lady]

This Guy is just trying to provoke an arguement, ignore it it will go away …but in the meanwhile….put this in your pipe and smoke it………… FROM BANKRATE!!!!!

 

 Formula for foreclosure: resets, no equity By Holden Lewis • Bankrate.com

 

More than 1.1 million homeowners will lose their homes to foreclosure by 2014 because they can't afford the rising payments on their adjustable-rate mortgages, according to a researcher. Whether you think that's a big deal depends on your perspective. "This is not going to break the economy. It's better understood as a part of the business cycle," says Chris Cagan, the mathematician who wrote the foreclosure forecast. That's the big-picture, or macroeconomic, view. The up-close, or microeconomic, perspective is more ominous: "The trouble is that it doesn't affect everybody equally," Cagan says. "Its impact will tend to fall on the subset of borrowers, lenders and investors who are most exposed." $100 billion in foreclosures? In other words, the biggest losers will be the homeowners who lose their houses and the lenders and investors who fronted them the money. Cagan, a researcher for First American CoreLogic, says the net losses from these foreclosures will total about $100 billion over the next six or seven years. Depending on whether house prices go up or down in the meantime, the financial impact could be lighter or heavier than that, he says. Cagan says the problem stems from "the double whammy of reset and no equity." There's a lot of meaning stuffed into that sentence. Let's unpack it: Reset refers to the rising rate on an adjustable-rate mortgage, or ARM. In most cases, the introductory rate on an ARM can rise a maximum of 6 percentage points. That means that someone who gets an ARM with a starting rate of 6 percent could end up with a rate of 12 percent someday. No equity refers to the squeeze that borrowers find themselves in when they owe more than the house is worth (being "upside-down" on the house). Cagan expects this to happen to millions of homeowners. When they owe more than the house is worth, but can no longer afford the payments after ARM reset, they won't be able to refinance. The most likely outcome is foreclosure. When Cagan makes his prediction of 1.1 million foreclosures over the next six or seven years, he's talking only about people caught in the vise between rising ARM rates and declining home equity. These reset-related foreclosures will be in addition to millions of foreclosures resulting from the usual reasons: job loss, divorce, death, illness and fraud. Home values dropping People become upside-down on their houses in two ways: The house loses value, or the loan balance rises, or both.

[Anonymous]

Like I said, San Diego is a different animal. I am commenting primarily on my experience in the Westside of LA.

But living here, you can’t help but get the impression that this is largely a “trust fund” part of town. And while I can’t really back that up with verifiable data, I don’t really think I’m mistaken.

My point is that I’m “with” most of the people on this board in having an interest in affordable housing in this state … mainly because I DON’T have a trust fund.

I respect the focus on data here on this board and feel that beating this drum is a good way of achieving results down the line … especially when elements within the housing industry have a vested interest in doing just the opposite … in maintaining the “rosy outlook” version of sticking their head in the sand.

Its not an argument we’re having here.

My point is that Santa Monica at this point and in many ways has every bit the attraction the French Riviera has. Also, the manner in which information gets filtered into the media is very much a part of this conversation. Perception can create reality. Maybe that’s just the marketing person in me talking. But not being attentive to that is ALSO a way of sticking your head in the sand.

[Author]

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