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

[cr]

Perception may influence reality, but I don’t think it creates it.

The fact is on average home prices are well beyond the only true measure of affordability: incomes.

Yes there are nicer areas, and people who can afford them, but that has always been the case, and averages have been reasonable in the past, prices have come back to earth after previous bubbles and the same people labeling Bears as “Yahoo’s” said the same things in this article during the last bubble, because their ONLY hope is their words will convince people to go buy.

The notion that anything could happen is irrelevant. I prefer to look at what HAS happened. And after the last two bubbles, (both a fraction of the current one) came all the way back down. That’s not a point of view, it’s a fact.

Rich has done great work on dispelling the arguments that claim things are different this time.

[Bugs]

One more dimension to this affordability issue is that the borrower’s willingness to pay a certain amount of their paycheck towards housing is not the same as their maximum ability to pay that amount. We’ve recently seen examples of people being willing to pay (or at least, commit to paying) more than they can afford to pay; but we haven’t seen as much in the way of borrowers being unwilling to max out their paychecks on housing.

I think that unwillingness is not only possible but even probable at some point. We saw it back in the mid-90s – mortgage payments (PITI) as cheap as rents. Could it happen again? Maybe.

[nccoastalseller]

all you yahoos are just wrong

This San Diego market she is unsinkable

Free ice chips on the foredeck

[latesummer2008]

Shotdsherrif, get a grip..
Try bringing some data to this blog and proving a point, instead of just giving an opinion. I have worked as an appraiser and a real estate agent before, and it is obvious, that the real estate market is in trouble. You can’t see it yet, but you will. Try studying trends, observing recent sales and then formulate a hypothesis. Maybe then you can debate. Otherwise, your just stating an opinion, which as they say, is like _______, everyone has one.
I believe that most people here, are in agreement that, buying opportunities are in the future for real estate in Southern California. With the largest speculative RE bubble in history, and the myriad of industry problems, it doesn’t take a rocket scientist to figure that one out. As far as how much it declines, who knows for sure, but 25-50% makes housing look much better to me.

Sorry you feel so agitated…. Its only a blog.
Get over it.

http://westsideremeltdown.blogspot.com

[Coronita]

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…

 

 

Actually, you mistaken me drastically. I hate unions personally, and I was never in the "real estate" speculation, save selling a home that was purchased at a normal time, and few rentals that have been cash flow positive for years. In fact, I'm probably what you consider just a normal,average salaried worker that is bent on reaching my goal of $3million before I turn 35. The lesson that I learned very young is that pretty much salaries are just there to pay bills, your assets is what you keep afloat.

Nothing would give me more pleasure than having housing correct so that homes  are "investments" again. I'm merely pointing out that I've seen my fair share of people who like to focus on so much negativity, that their view is the entire world is crumbling and they just don't motivate to do anything. They'd rather wallow in misery.. It's no different than those idiots that believe the party will never end..

There a some of you here that are really intelligent and probably here to really talk about investments. But I would say a handful of you are here to just gripe about home prices being unaffordable for you. The same people that will be griping about how ridiculously expensive stocks have become 2-3 years from now because you didn't think it was "rationale" to put money back in the market.. I call this the sour grape mentality. 
As far as a huge downturn, don't think it's gonna happen, but if I'm wrong  bring it on. I would more than welcome this. But like i said, even if there is a huge downturn, several of you won't be in any better positions to take advantage of this, unless you have sufficient cash on hand to buy out and hold, and if inflation also doesn't kill your purchaing power. The people who stand to benefit from this are the extremely rich (and no, I'm not consider myself to be in that category either).

 

[Coronita]

"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?

 

…As an investment, gambling yes. Foolishly, probably….As a primary home, it depends on what's more important to you (and your family) and whether you can afford it or not. Some folks here seem to talk that they will only buy if things correct 50-70%.. I would say that sort of logic is like saying that you'll only sell a stock only when it hits at $100 when it's currently trading at $50… You can pony up as much data as you want, but highly unlikely anyone is going to be able to predict the bottom.

 The reason why I think things won't get "that" out of hand is banks won't let it. Banks know things are bad, they aren't telling you. I wouldn't be surprised if they start getting creative to bailout people while also screwing them in the process.  Expect to see 40 to 50 year mortgages coming on the horizon, along with lobbied legislation to make it more difficult to just walk away from a loan. I'm sure there are a good percentage of idiots that would do anything to keep their homes. I see the biggest areas of declines are probably in L.A. frankly, especially when the defense budget starts to shrink again. Happened when clinton took office, and it will happen again. San Diego will probably get hit too. But 50-70% decline across the board…uh,sure. 

[ibjames]

There was a thread here where the increase in loan terms was discussed. With housing prices being so high. A 10 -20 year increase in the loan will be a drop in the bucket. That means people will be paying equity, which interest only loans didn’t do at all. If people could barely afford interest only, how are they going to afford a loan that actually pays equity? Japan had 100 year loans, it still didn’t help. I’ll try and search for that thread.

The doom and gloom you often refer to is people trying to figure out where the economy is headed. If you look at what people often talk about, they talk about how to invest so if inflation does come in large amounts your money is protected. If it’s moving your cash into gold or in foreign currency etc. I think your perception is a bit skewed.

[blahblahblah]

I see the biggest areas of declines are probably in L.A. frankly, especially when the defense budget starts to shrink again. Happened when clinton took office, and it will happen again.

Aren’t there more defense contract workers in the SD area than in the LA area (per capita at least?)

[Anonymous]

The defense budget is not going to shrink considerably any time soon. In fact Defense is one of the most stable industries in San Diego (and the US) today, but it is not nearly as big it was in the cold war days. It shrunk considerable in the early 90s due to the end of the cold war and it was simply way oversized and everyone agreed on that. Don’t think Clinton taking office had anything to do with the shrinking defense budget, sounds like Rush Limbaugh propoganda.

[cr]

“I’ve seen my fair share of people who like to focus on so much negativity, that their view is the entire world is crumbling and they just don’t motivate to do anything. They’d rather wallow in misery.. It’s no different than those idiots that believe the party will never end..

I don’t think that is the message we are sending here at all. (Watch an hour of the nightly news and you’ll feel like it though) One of the primary goals of this site is to provide un-biased housing data. Having read the data, many of us develop opinions that are perceived as doomsdayers, but often by those who have and would continue to benefit from a continued run-up in pricing.

We argue the run-up is over, and prices are coming down. The data certainly doesn’t indicate anything less, though other interpretations of it do. That is not wallowing in misery or claiming the world is crumbling. It’s just perceived as negative to the homeowner sitting on negative equity, when we say prices will fall.

Not everyone here is sitting on millions in other assets, so many will benefit from a decline because we have not made poor choices.

Hoping for a significant correction in prices is no different than hoping the penny stock you bought will increase ten-fold overnight. The difference are the side effects, i.e. people losing their homes. That’s unfortunate yes, but so is making responsible citizens bail out those who made poor choices.

[Coronita]

The defense budget is not going to shrink considerably any time soon. In fact Defense is one of the most stable industries in San Diego (and the US) today, but it is not nearly as big it was in the cold war days. It shrunk considerable in the early 90s due to the end of the cold war and it was simply way oversized and everyone agreed on that. Don't think Clinton taking office had anything to do with the shrinking defense budget, sounds like Rush Limbaugh propoganda.

 

Wait and see. I think the biggest problem is how much we're spending on the Iraq War. It's not going to continue, and the Gov is going to switch to addressing the other(domestic) issues we now have . And I wasn't attacking Clinton. It's just my opinion that it was a shift in dollars from what was important to the Gov at that time. Gov is going to try to address this housing loan issue and going to try a bailout. It's not going to help everyone, but just a small percentage enough so that politicians can say "they did something for the average joe"…. It's not going be a big topic before elections because that would risk polarizing voters and politicians like debating over more "important" issues like abortion rights, gay marriages, creationism versus evolution. But it will be probably something the Gov attempts to fix first after the elections. 

 

[no_such_reality]

Gov is going to try to address this housing loan issue and going to try a bailout. It’s not going to help everyone, but just a small percentage enough so that politicians can say “they did something for the average joe”….

I’m opposed, but if they attempt to bail out it won’t really be that much skin off my back, ( just more of the skin I’ve lost on the corruption on Katrina aid, Halliburton funding for the war, and the S&L debacle). We can debate whether should or shouldn’t, how much they will, etc, but in the end, it’s all going to be lip-service and have no affect on the market.

The percentage that they can help is so small that’s it’s basically immaterial to the overall affect on the market. You can’t take the strawberry pickers in NorCal with $70/80K of combined income and keep them in a loan worth $720,000, plus property taxes, etc.

In the end, everybody they “help” will merely be saddled with a loan they can barely afford that is worth 30% more than they can sell their home for. They’ll be endentured servants servicing the loan.

In the end, what they’ll really scream for is to have foreclosure removed from the credit record sooner.

[Author]

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