[brian_in_la]

Well, our jumbo-sized cali loans just got a bit pricier…interesting to see another lender raising rates…between the subprime shutdown and jumbo’s rate increase it is getting ugly….thanks for info you guys…

[brian_in_la]

Well, our jumbo-sized cali loans just got a bit pricier…interesting to see another lender raising rates…between the subprime shutdown and jumbo’s rate increase it is getting ugly….thanks for info you guys…

[brian_in_la]

Hey Davelj – is this via their website? I checked it out and couldn’t get it to generate rates….maybe I’m just a clumsy user…..

Can you dish some more on where you got the info and if you know what the change is to?

[brian_in_la]

Hey Davelj – is this via their website? I checked it out and couldn’t get it to generate rates….maybe I’m just a clumsy user…..

Can you dish some more on where you got the info and if you know what the change is to?

[brian_in_la]

Hey Davelj – is this via their website? I checked it out and couldn’t get it to generate rates….maybe I’m just a clumsy user…..

Can you dish some more on where you got the info and if you know what the change is to?

[brian_in_la]

check out

http://www.la.curbed.com
http://www.blogdowntown.com/

[brian_in_la]

The 6.25% loss might not be terrible…but the weird thing is how much of this debt has been turned into derivative products created by some hedge fund math phd turned finance wizard. Alot of very smart people have created a lot of very weird financial products used by completely unregulated entities with god knows what sorts of exposure. Remember Long Term Capital Management? I think there is hedge fund exposure (based on complicated bets on the dollar, oil, mortgage debt, god knows what else) that completely dwarfs their exposure. Who knows what will happen to these hidden derivative markets in your scenario. That’s what is scary.

I don’t expect a depression (hey brother can you spare a dime sort of depression). But alot of people are going to losing their homes to foreclosure – the growth curve on the notice of default data for California is a sight to behold. It looks like housing PRICES in 2003,4,5.

[brian_in_la]

Hey Powawayseller – can you post the link on that article…

My rent has gone up a total of 12% since 2000, which I have been very happy with. If rents flat-lined, I’d be pleased. A decrease would be heavenly.

SF was insane in 2000 – my friends at start-ups/consulting firms, etc. said it was like ghosttown for a while after the dot.com thing blew up. People doing graphic design, etc. for the web companies were literally moving back in with their parents. My friend was a month away from moving back in with his parents in Bufalo. Luckily, he picked up a free-lance gig and hung on. He negotiated lower rent and his landlord was delighted to comply!

[brian_in_la]

I almost feel like I am piling on here…but for heavens sake…you don't even need an argument against this…just GOOGLE.  

I personally am not counting on a rent decrease, and I am also not claiming that we are certain to have a 50% nominal decline in housing prices.   But to say that rents never decline is the most easily refuted statement, it was almost not worth the effort.   

I make no predictions about what will happen with rents.  But, in general slow/negative growth seems to be linked to flat/declining rents.  Real Estate Bubble deflation seems to be linked to flat/declining rents.   Add it up. 

A brief historical tour, via 10 minutes of GOOGLE.

New York – 1993Apartment Rentals Tightening By NICK RAVO

Published: February 7, 1993

NYT

“Indeed, the market continues to be very soft, and rents last year dropped in many parts of the city, particularly in areas where gentrification never fully took hold and for such apartments as studios, small one-bedrooms, fourth-floor walk-ups and units in buildings without doormen.

But the rent declines were not, for the most part, as steep as they were in previous years. Overall, rents in New York have dropped about 15 percent since the real estate recession began in 1988, about half as much as the sale prices of co-ops and condominiums. …Rents, according to the National Cooperative Bank, showed the greatest decrease — 14.8 percent — in Lower Manhattan. On the Upper West Side the drop was 4.2 percent and on the Upper East Side, 2.7 percent.”

 San Francisco – 2003 

http://www.edab.org/newsletter/Quarterly/4thQuarter2003Files/RealEstate.html

 

“…rental rates for apartments have fallen by nearly 30% for most of the Bay Area. Here the East Bay has been hit as hard as its two neighbors, hardly a surprise given the commuting patterns of the region.”

 West Coast, Midwestern Cites – 2004 

FURTHER OCCUPANCY DECLINES SIGNAL CONTINUING SOFTNESS.   http://www.realfacts.com/news7.html

 

“Over the last four quarters the greatest year-over-year rent declines were in San Jose, 5.4%; Tulsa, 2.8%; Oakland, 2.4%; Austin 2.4%; Portland, 2.0%; and San Francisco, 1.6%. For both the quarter and year-over-year, three of five of the biggest rent declines were in northern California markets„San Jose, Oakland and San Francisco” April 23, 2004 

Boston, etc. – 2005“Rental markets have soured as well. Rents in most cities have been either flat or down in 2005. In Boston, a net loss of about 180,000 jobs in the past few years drove rents down about 10 percent in 2005, according to the U.S. Department of Housing and Development (HUD).”http://money.cnn.com/2005/12/07/real_estate/buying_selling/small_landlord_guide/index.htm

[brian_in_la]

Inland Empire – – Ouch

“With one new foreclosure filing for every 250 households, Riverside/San Bernardino, Calif., documented the nation’s third highest MSA foreclosure rate in November. The two-county metro area reported 4,747 properties entering some stage of foreclosure during the month, an increase of more than 57 percent from the previous month and 3.8 times the national average.”

[brian_in_la]

Hmmm, I wonder if this is linked to the zillow data disapearinig from the zip realty website. Any info on that?

[brian_in_la]

Hi SD…5-10% decline in 2007 seems in the realm of sensible to me…so I wouldn’t complain about that as a guess. I’d be less surprised by 2% than 20% though.

I also agree that you buy a particular house – in fact a conclusion to be drawn from my post was that even in a flat market, you could buy low and sell high and thus make money. That’s why people need a good realtor!

I guess we’ll see what that those “trillion $$ in resetting ARM’s” do…lots of folks seem to think that this thing is going to go nuclear in 2Q 2007…we’ll see…I sure am glad I’m watching from the sidelines!!!

[brian_in_la]

I agree with Daniel. If you look at the C-S index, it shows the huge run-up in prices. Shiller certainly thinks there is a housing bubble. I don’t think anything is nefarious about the C-S data. As I mentioned when posted the latest C-S data a few days ago (the data are released on the last tuesday of every month, if you are interested just go to the S & P website and hunt for it), there are some reasons why the index may not have completely tracked the top of the boom and also reasons why it may lag somewhat on the decline. But in my opinion people are getting too bent out of shape about month to month declines. Expecting a 20% drop in six months is just another form of speculative mania. If this is a bust (and I think it is), the decline is likely to be a slow, long grind. Check back in four years, not four months.

I love the “look at the flipper in trouble” listings. Schadenfreude is a delicious pleasure in very small doses. But, these listings are anecdotes, not data. In a market that is completely flat forever (but with some variability in pricing around a flat mean) it will of course be possible to find properties that lose (and make) money YOY. In a market that is declining 2-5% a year nominal, you will find even more losers. If you are looking for the losers, you’ll find them.

Anyway, I hope I am wrong. I am tracking some zip codes in LA because I want to buy. I would love a swift 40% decline…I just don’t think it is going to happen.

[brian_in_la]

“If all other countries go to gold to back their economic activity (i.e., use denominator of 5B * 28%), price could reach ~$5,000 per ounce.”

Huh?

Well, at least that (ex) wedding ring I never got around to hurling with rage into the sea will have some value…I can use it to buy a wheel-barrow to take my greenbacks to the 7-11.

[brian_in_la]

My guess is that they don’t raise rates. The chinese need to loosen their currency and let it rise against the dollar. Hopefully they will (continue) to do so slowly and we will have a nice gentle fall over the next decade. I agree currency shocks are bad. But, weaker dollar=good. We buy fewer imports and sell more exports. Wail about M3 (M9, whatever) and housing prices all you want, but until the CPI shows real action or there is a dam-busting currency crash, the probability for raising rates is about zero for 2007. The european central bank (alert: “rumors via bloomberg”)has indicated it is not worried about a weakending dollar till it hits 1.45 (!) versus euro. So, don’t expect any help in coordinating walking the dollar back up. Given the doom and gloom expectations about the housing market on this site – I would expect less worry about inflation….real-estate busts are nice inflation killers (see: Japan, the last decade or two). Sometimes too nice. I too long for an end to the free-money decade, but I worry about deflation as much as inflation in the years ahead.

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