Wow. 47% Decline for San Diego

[(former)FormerSanDiegan]

ibjames –
The rent*12*20 was an assumption that 5% gross rent on a property would yield break even. E.g. Annual rent should be 5% of the property value. The 12 is 12 months. The 20 is 1/0.05

However, this is not really the break even point. It depends on amount down, maintenance and a host of other factors.

A similar rule-of-thumb approach, (assuming interest rates in the 6 to 7% range), is that single-family home property value is 15x the annual rent or less (about 6.7% gross rate). This is the point where, from a primary residence point of view owning versus renting approaches break even with 20% down.

For SFH investment property, I am more conservative and would want more like 12 or 14x annual rent. Because unlike the maintenance of your own home maintenance of rental property is simply an expense. In you own home, maintenance becomes a hobby (especially your first house).

[Huckleberry]

Here is a more descriptive excerpt regarding the Fitch report.

Fitch is a VERY reputable company when it comes to ratings, so I believe their perspective more than 95% of the opinions out there. They are compiling the data from the “Wall Street” perspective, not just the general housing industry perspective.

http://mrmortgage.ml-implode.com/2008/07/25/fitch-massive-house-price-losses-in-non-conforming-areas-to-come/

[Huckleberry]

Here is a more descriptive excerpt regarding the Fitch report.

Fitch is a VERY reputable company when it comes to ratings, so I believe their perspective more than 95% of the opinions out there. They are compiling the data from the “Wall Street” perspective, not just the general housing industry perspective.

http://mrmortgage.ml-implode.com/2008/07/25/fitch-massive-house-price-losses-in-non-conforming-areas-to-come/

[Huckleberry]

Here is a more descriptive excerpt regarding the Fitch report.

Fitch is a VERY reputable company when it comes to ratings, so I believe their perspective more than 95% of the opinions out there. They are compiling the data from the “Wall Street” perspective, not just the general housing industry perspective.

http://mrmortgage.ml-implode.com/2008/07/25/fitch-massive-house-price-losses-in-non-conforming-areas-to-come/

[Huckleberry]

Here is a more descriptive excerpt regarding the Fitch report.

Fitch is a VERY reputable company when it comes to ratings, so I believe their perspective more than 95% of the opinions out there. They are compiling the data from the “Wall Street” perspective, not just the general housing industry perspective.

http://mrmortgage.ml-implode.com/2008/07/25/fitch-massive-house-price-losses-in-non-conforming-areas-to-come/

[Huckleberry]

Here is a more descriptive excerpt regarding the Fitch report.

Fitch is a VERY reputable company when it comes to ratings, so I believe their perspective more than 95% of the opinions out there. They are compiling the data from the “Wall Street” perspective, not just the general housing industry perspective.

http://mrmortgage.ml-implode.com/2008/07/25/fitch-massive-house-price-losses-in-non-conforming-areas-to-come/

[DWCAP]

It was not san diego, it was Davis CA. It was between 2001-2005 roughly (I was there longer than that). It is a much smaller town than San Diego, and that makes for a much wider spread than we will ever see here. I am not trying to compare the two, just trying to show that rents can do crazy stupid things too.

[DWCAP]

It was not san diego, it was Davis CA. It was between 2001-2005 roughly (I was there longer than that). It is a much smaller town than San Diego, and that makes for a much wider spread than we will ever see here. I am not trying to compare the two, just trying to show that rents can do crazy stupid things too.

[DWCAP]

It was not san diego, it was Davis CA. It was between 2001-2005 roughly (I was there longer than that). It is a much smaller town than San Diego, and that makes for a much wider spread than we will ever see here. I am not trying to compare the two, just trying to show that rents can do crazy stupid things too.

[DWCAP]

It was not san diego, it was Davis CA. It was between 2001-2005 roughly (I was there longer than that). It is a much smaller town than San Diego, and that makes for a much wider spread than we will ever see here. I am not trying to compare the two, just trying to show that rents can do crazy stupid things too.

[DWCAP]

It was not san diego, it was Davis CA. It was between 2001-2005 roughly (I was there longer than that). It is a much smaller town than San Diego, and that makes for a much wider spread than we will ever see here. I am not trying to compare the two, just trying to show that rents can do crazy stupid things too.

[equalizer]

commentary on Fitch model change:

“But I’ve heard from more than a few market participants, the kinds of in-the-trenches people that would never get permission from their employer to see their name in print, that the opaque ratings models used by the big three — a “competitive advantage” that all three firms work hard to protect, hence the opacity — also allow the agencies to cover up for models that have some very rudimentary failings in modeling techniques.

The risk factors discussed above would appear to be one example of this, and while it’s good to see Fitch now making an attempt to correct for this, the move to include the variables into the model now is really no different than closing the barn door after the animals have long since run out of their stalls.

And it’s only one example of how ratings models missed clear risk factors that might have forced greater credit enhancement, but might have also protected investors to a larger degree: Fitch said its Resilogic 2.0 model will up penalties for loans written in no-doc or low-doc scenarios, as well as for loans with a piggyback second lien at origination.”

So, competitive factors, aka free market, complete failure for common investor, but not for insiders at every related firm. But once again, its others people’s money, why the bleep does anyone in industry care, its not their money and they cant get fired for being average.

Well, maybe GimmeCredit has some credibility since it is indepedent. It issued warning on WaMu today and it went down another 4%.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2ZCdg_BBYlk&refer=home

http://www.housingwire.com/2008/07/24/ratings-models-missed-essential-collateral-risk-factors/

[equalizer]

commentary on Fitch model change:

“But I’ve heard from more than a few market participants, the kinds of in-the-trenches people that would never get permission from their employer to see their name in print, that the opaque ratings models used by the big three — a “competitive advantage” that all three firms work hard to protect, hence the opacity — also allow the agencies to cover up for models that have some very rudimentary failings in modeling techniques.

The risk factors discussed above would appear to be one example of this, and while it’s good to see Fitch now making an attempt to correct for this, the move to include the variables into the model now is really no different than closing the barn door after the animals have long since run out of their stalls.

And it’s only one example of how ratings models missed clear risk factors that might have forced greater credit enhancement, but might have also protected investors to a larger degree: Fitch said its Resilogic 2.0 model will up penalties for loans written in no-doc or low-doc scenarios, as well as for loans with a piggyback second lien at origination.”

So, competitive factors, aka free market, complete failure for common investor, but not for insiders at every related firm. But once again, its others people’s money, why the bleep does anyone in industry care, its not their money and they cant get fired for being average.

Well, maybe GimmeCredit has some credibility since it is indepedent. It issued warning on WaMu today and it went down another 4%.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2ZCdg_BBYlk&refer=home

http://www.housingwire.com/2008/07/24/ratings-models-missed-essential-collateral-risk-factors/

[equalizer]

commentary on Fitch model change:

“But I’ve heard from more than a few market participants, the kinds of in-the-trenches people that would never get permission from their employer to see their name in print, that the opaque ratings models used by the big three — a “competitive advantage” that all three firms work hard to protect, hence the opacity — also allow the agencies to cover up for models that have some very rudimentary failings in modeling techniques.

The risk factors discussed above would appear to be one example of this, and while it’s good to see Fitch now making an attempt to correct for this, the move to include the variables into the model now is really no different than closing the barn door after the animals have long since run out of their stalls.

And it’s only one example of how ratings models missed clear risk factors that might have forced greater credit enhancement, but might have also protected investors to a larger degree: Fitch said its Resilogic 2.0 model will up penalties for loans written in no-doc or low-doc scenarios, as well as for loans with a piggyback second lien at origination.”

So, competitive factors, aka free market, complete failure for common investor, but not for insiders at every related firm. But once again, its others people’s money, why the bleep does anyone in industry care, its not their money and they cant get fired for being average.

Well, maybe GimmeCredit has some credibility since it is indepedent. It issued warning on WaMu today and it went down another 4%.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2ZCdg_BBYlk&refer=home

http://www.housingwire.com/2008/07/24/ratings-models-missed-essential-collateral-risk-factors/

[equalizer]

commentary on Fitch model change:

“But I’ve heard from more than a few market participants, the kinds of in-the-trenches people that would never get permission from their employer to see their name in print, that the opaque ratings models used by the big three — a “competitive advantage” that all three firms work hard to protect, hence the opacity — also allow the agencies to cover up for models that have some very rudimentary failings in modeling techniques.

The risk factors discussed above would appear to be one example of this, and while it’s good to see Fitch now making an attempt to correct for this, the move to include the variables into the model now is really no different than closing the barn door after the animals have long since run out of their stalls.

And it’s only one example of how ratings models missed clear risk factors that might have forced greater credit enhancement, but might have also protected investors to a larger degree: Fitch said its Resilogic 2.0 model will up penalties for loans written in no-doc or low-doc scenarios, as well as for loans with a piggyback second lien at origination.”

So, competitive factors, aka free market, complete failure for common investor, but not for insiders at every related firm. But once again, its others people’s money, why the bleep does anyone in industry care, its not their money and they cant get fired for being average.

Well, maybe GimmeCredit has some credibility since it is indepedent. It issued warning on WaMu today and it went down another 4%.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2ZCdg_BBYlk&refer=home

http://www.housingwire.com/2008/07/24/ratings-models-missed-essential-collateral-risk-factors/

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