Will we see a selling panic in housing?

[gn]

I think from now on, the behaviour will be "bimodal". Below $500K range, a somewhat disorderly drop, lower $/sqft being covered up by fairly unchanging transaction prices as people get better and more homes for their precious and fewer $. Above $500K is where the fun will be to watch. As the market practically empties out to everyone but cash buyers, there will be quite a scramble for anyone unfortunate enough to sell.

bsrsharma brought up a good point about the "bimodal behavior"

I wonder which will pack more punch:

1. The downward pull on prices from the inability of buyers to move up b/c they cann't sell their old house.

2. The downward push on prices b/c the difficulties of getting non-conforming loans.

Any thought ?

[(former)FormerSanDiegan]

temeculaguy –
I think you are wise to wait in your neck of the woods.

betting on the fall –
Nationally homeownership is at record highs, but what about San Diego. Roughly 45% of the population rents. In LA it’s more like 50%.

Where did the buyers come from after the last downturn ?
After 2-3 years of anemic sales there was pent-up demand. Also, the economy was improving. I believe there need to be triggers, such as an improving economy, good jobs, and an influx of population, etc. to make a bottom. Rent prices typically reflect these things.

[(former)FormerSanDiegan]

temeculaguy –
I think you are wise to wait in your neck of the woods.

betting on the fall –
Nationally homeownership is at record highs, but what about San Diego. Roughly 45% of the population rents. In LA it’s more like 50%.

Where did the buyers come from after the last downturn ?
After 2-3 years of anemic sales there was pent-up demand. Also, the economy was improving. I believe there need to be triggers, such as an improving economy, good jobs, and an influx of population, etc. to make a bottom. Rent prices typically reflect these things.

[(former)FormerSanDiegan]

temeculaguy –
One more thing …
RE: “I think you may find that when other areas find themselves more inline with fundamentals there will still be apprehension on the part of the buyer, or it could just be me.”

There are few buyers at the bottom. When the general public is apprehensive, (or better yet repulsed) by real estate, that’s when you want to buy.

[(former)FormerSanDiegan]

temeculaguy –
One more thing …
RE: “I think you may find that when other areas find themselves more inline with fundamentals there will still be apprehension on the part of the buyer, or it could just be me.”

There are few buyers at the bottom. When the general public is apprehensive, (or better yet repulsed) by real estate, that’s when you want to buy.

[temeculaguy]

Former, all that you say is true, for me it is a matter of timing. Like alot of us on the sidelines I would be happier buying back in but even happier buying back in at the lowest price possible. I see many reasons to wait but I am also not blind to the fundamentals. I need to avoid being greedy and missing it. 18 months ago I told myself that I will buy back in when I can get a sfr over 2000 sq ft between 300 and 400k. My reasons were all about math. With 20% down I would be paying between 20 and 30% of my gross monthly income for PITI, income tax benefits just make it even better and things would be inline with rents. Well, it’s happening, so now what? I am about to re-adjust my goal prices again and I use this site like an alcoholic uses AA meetings. You forced me to run my numbers today using the houses I am looking at and I can honestly say they are inline with rent and it would be a wash for me to buy, I feel like that alcoholic who just got offered a free drink, I need to go to another meeting.

[temeculaguy]

Former, all that you say is true, for me it is a matter of timing. Like alot of us on the sidelines I would be happier buying back in but even happier buying back in at the lowest price possible. I see many reasons to wait but I am also not blind to the fundamentals. I need to avoid being greedy and missing it. 18 months ago I told myself that I will buy back in when I can get a sfr over 2000 sq ft between 300 and 400k. My reasons were all about math. With 20% down I would be paying between 20 and 30% of my gross monthly income for PITI, income tax benefits just make it even better and things would be inline with rents. Well, it’s happening, so now what? I am about to re-adjust my goal prices again and I use this site like an alcoholic uses AA meetings. You forced me to run my numbers today using the houses I am looking at and I can honestly say they are inline with rent and it would be a wash for me to buy, I feel like that alcoholic who just got offered a free drink, I need to go to another meeting.

[NotCranky]

Temecula guy,
With RE you can afford to show up to the dance six months to a year or more after the bottom. I wouldn’t get the jitters over that. I would say,having read your take on things for months, that you might want to force yourself to buy six months after you think it is time. If stability is in the air buy ,if the waiting revealed more declines wait another six months. This is not bossy advice, it’s a friendly suggestion for a possible alternative plan that could put you in a better equity situation.
Best wishes

[NotCranky]

Temecula guy,
With RE you can afford to show up to the dance six months to a year or more after the bottom. I wouldn’t get the jitters over that. I would say,having read your take on things for months, that you might want to force yourself to buy six months after you think it is time. If stability is in the air buy ,if the waiting revealed more declines wait another six months. This is not bossy advice, it’s a friendly suggestion for a possible alternative plan that could put you in a better equity situation.
Best wishes

[no_such_reality]

If serious measures are enacted it might be to fix ills as serious or worse than hyper- inflation and stabilize/stimulate or in other words rescue the economy.

IF we need the New Deal II, we’ll need the New Deal II, however, since nobody has put that plan together yet and everybody is basically talking about meddling via throwing piles of money at defaulting home borrowers, I’ll stand by my gut instinct the result for housing and economy for a Governmental solution to the foreclosure problem will be the same result as for the I-35 bridge for government solution to a “spontaneous” collapse of another bridge in Cleveland in 1983.

As for 7 million people losing their homes, I say baloney. 7 million homes will be lost, but again, looking at the investment schemes, I see a million Casey Serin’s and Murrieta Investors and not seven million families.

Yes a lot of families will be upside down, but, they’ll have to move on. Any solution attempting to maintain their home price actually is worse for them.

The sound-bite solution be grand-standed by the Pols will do nothing but prop housing prices at their current level. They will do nothing to maintain the economy since the economy is driving by the jobs and spending and debt of a housing market appreciating at 20%/yr. Without it, the mortgage volume will stay at or below it’s current half rate, home sales remain at the 50% down from peak rate and equity spending on restuarants, cars, electronics all dries up even if housing prices are propped up.

[no_such_reality]

If serious measures are enacted it might be to fix ills as serious or worse than hyper- inflation and stabilize/stimulate or in other words rescue the economy.

IF we need the New Deal II, we’ll need the New Deal II, however, since nobody has put that plan together yet and everybody is basically talking about meddling via throwing piles of money at defaulting home borrowers, I’ll stand by my gut instinct the result for housing and economy for a Governmental solution to the foreclosure problem will be the same result as for the I-35 bridge for government solution to a “spontaneous” collapse of another bridge in Cleveland in 1983.

As for 7 million people losing their homes, I say baloney. 7 million homes will be lost, but again, looking at the investment schemes, I see a million Casey Serin’s and Murrieta Investors and not seven million families.

Yes a lot of families will be upside down, but, they’ll have to move on. Any solution attempting to maintain their home price actually is worse for them.

The sound-bite solution be grand-standed by the Pols will do nothing but prop housing prices at their current level. They will do nothing to maintain the economy since the economy is driving by the jobs and spending and debt of a housing market appreciating at 20%/yr. Without it, the mortgage volume will stay at or below it’s current half rate, home sales remain at the 50% down from peak rate and equity spending on restuarants, cars, electronics all dries up even if housing prices are propped up.

[gn]

you might want to force yourself to buy six months after you think it is time. If stability is in the air buy ,if the waiting revealed more declines wait another six months.

Rustico, excellent advice.

When prices were going up, it's driven by greed. When prices go down, it'll be driven by fear. They always overshoot.

This means prices are likely to down below levels justified by the fundmentals.

 

[gn]

you might want to force yourself to buy six months after you think it is time. If stability is in the air buy ,if the waiting revealed more declines wait another six months.

Rustico, excellent advice.

When prices were going up, it's driven by greed. When prices go down, it'll be driven by fear. They always overshoot.

This means prices are likely to down below levels justified by the fundmentals.

 

[NotCranky]

Thanks gn,
If I understand Temecula Guy correctly he is not really trying to time bottom. He would rather buy when his parameters are met which is fine too. Lately though, he has shared second thoughts on that strategy so I thought I would pitch in my two cents.

[NotCranky]

Thanks gn,
If I understand Temecula Guy correctly he is not really trying to time bottom. He would rather buy when his parameters are met which is fine too. Lately though, he has shared second thoughts on that strategy so I thought I would pitch in my two cents.

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