[Bugs]

There is a full-scale counterassault going on right now. RE boosters are fighting back agressively against the media depictions of a distressed RE market. The boosters are breaking out all their big guns:

– San Diego has great weather

– Everyone wants to live in SD

– Counting the 200% spike in the 2000s, RE prices have increased an average of 5%/yr since 1980 (this one is my personal favorite)

– There are plenty of great jobs here to support these prices

– Interest rates are going to go back down and stay down

– The government (or God) is going to intervene and bail the RE markets out

– Etc, etc, etc

There are people who believe the boosters, some out of fear that maybe their 2005 purchase wasn’t such a good move after all and others because they literally don’t know any better.

[Bugs]

It’s true that people want to benefit, but I think most people would prefer not to benefit at someone else’s expense. Just remember, the people who are overextended now are not being screwed by the people who now want the market to correct; they were screwed by the people who sold them their albatross. If you want to blame someone for the suffering of the FBs, Piggs are absolutely the last group of the someones who you should be looking at.

Your comment about how people were able to get themselves into this mess is practically a gimme. You imply the region was economically capable of supporting all those prices without artificial assistance. The problem with that suggestion is that current events are proving it to be completely unfounded.

Based on the number of ARMs that were used and the subsequent trends for default it has become obvious that a significant percentage of buyers who bought in 2004 and 2005 do NOT have such great jobs or earn the incomes necessary to sustain their purchases.

I don’t know when this trend will end and I’ve made no predictions beyond saying it isn’t going to happen in the next 2 years. The only reason I even go that far is because I have already seen a RE recession up close once before and I’ve seen what happens when there are a significant number of foreclosures in the market.

Price is a function of supply and demand. Use any measure you want – right now we have a lot more supply than the effective demand can absorb. Remember, “effective demand” goes beyond the number of people who simply want, and includes only those buyers who have both the desire and the financial means to achieve those desires. The normalization of the credit markets only serves to further reduce the number of would-be buyers who comprise that effective demand.

Before pricing can stablize the market has to achieve some level of equilibrium between the number of typically motivated listings vs. the rate of sales. That can’t happen when there are a lot of foreclosures available in the market, and all indications are that the stream of resale listings resulting from foreclosures will not recede below their current level until at least 2011.

The market has to absorb both the must-sell inventory and clear out all the excess wanna-sells before the number of available properties approaches the rate of sales. Once that happens and there are enough buyers to go around we’ll see price stabilization. It basically can’t happen before then.

That’s why I think that 2011 is the EARLIEST this trend can stabilize and we can go back into growth mode. The aggregate losses will be largely a function of the length of time multiplied by the current rate of decline that we’ve already seen. If the rate of decline speeds up the losses will be greater, if it slows down they’ll end up being less.

I was too optimistic in the early 1990s and called the end of that downtrend a couple years prior to when it actually occurred. I am a reasonably optimistic person by nature (I’m just not irrational about it), so it’s very possible that my opinion about 2011 being the earliest the market can turn may also turn out to be optimistic.

About the only way I can envision this decline being cut shorter than 2011 is if by artificial means. The most commonly touted artificial life preserver being bandied about right now if the taxpayers are compelled to bail out these investors and subsidize these foolish FBs. Aliens from outer space might come to Earth to give us the secret to clean power for free. The Rapture or it’s equivalent might happen and man may learn to live in peace without war or conflict.

But barring some unforseeable event changing the history of man, I’m just not seeing any shortcuts.

[Bugs]

It’s true that people want to benefit, but I think most people would prefer not to benefit at someone else’s expense. Just remember, the people who are overextended now are not being screwed by the people who now want the market to correct; they were screwed by the people who sold them their albatross. If you want to blame someone for the suffering of the FBs, Piggs are absolutely the last group of the someones who you should be looking at.

Your comment about how people were able to get themselves into this mess is practically a gimme. You imply the region was economically capable of supporting all those prices without artificial assistance. The problem with that suggestion is that current events are proving it to be completely unfounded.

Based on the number of ARMs that were used and the subsequent trends for default it has become obvious that a significant percentage of buyers who bought in 2004 and 2005 do NOT have such great jobs or earn the incomes necessary to sustain their purchases.

I don’t know when this trend will end and I’ve made no predictions beyond saying it isn’t going to happen in the next 2 years. The only reason I even go that far is because I have already seen a RE recession up close once before and I’ve seen what happens when there are a significant number of foreclosures in the market.

Price is a function of supply and demand. Use any measure you want – right now we have a lot more supply than the effective demand can absorb. Remember, “effective demand” goes beyond the number of people who simply want, and includes only those buyers who have both the desire and the financial means to achieve those desires. The normalization of the credit markets only serves to further reduce the number of would-be buyers who comprise that effective demand.

Before pricing can stablize the market has to achieve some level of equilibrium between the number of typically motivated listings vs. the rate of sales. That can’t happen when there are a lot of foreclosures available in the market, and all indications are that the stream of resale listings resulting from foreclosures will not recede below their current level until at least 2011.

The market has to absorb both the must-sell inventory and clear out all the excess wanna-sells before the number of available properties approaches the rate of sales. Once that happens and there are enough buyers to go around we’ll see price stabilization. It basically can’t happen before then.

That’s why I think that 2011 is the EARLIEST this trend can stabilize and we can go back into growth mode. The aggregate losses will be largely a function of the length of time multiplied by the current rate of decline that we’ve already seen. If the rate of decline speeds up the losses will be greater, if it slows down they’ll end up being less.

I was too optimistic in the early 1990s and called the end of that downtrend a couple years prior to when it actually occurred. I am a reasonably optimistic person by nature (I’m just not irrational about it), so it’s very possible that my opinion about 2011 being the earliest the market can turn may also turn out to be optimistic.

About the only way I can envision this decline being cut shorter than 2011 is if by artificial means. The most commonly touted artificial life preserver being bandied about right now if the taxpayers are compelled to bail out these investors and subsidize these foolish FBs. Aliens from outer space might come to Earth to give us the secret to clean power for free. The Rapture or it’s equivalent might happen and man may learn to live in peace without war or conflict.

But barring some unforseeable event changing the history of man, I’m just not seeing any shortcuts.

[Bugs]

It’s true that people want to benefit, but I think most people would prefer not to benefit at someone else’s expense. Just remember, the people who are overextended now are not being screwed by the people who now want the market to correct; they were screwed by the people who sold them their albatross. If you want to blame someone for the suffering of the FBs, Piggs are absolutely the last group of the someones who you should be looking at.

Your comment about how people were able to get themselves into this mess is practically a gimme. You imply the region was economically capable of supporting all those prices without artificial assistance. The problem with that suggestion is that current events are proving it to be completely unfounded.

Based on the number of ARMs that were used and the subsequent trends for default it has become obvious that a significant percentage of buyers who bought in 2004 and 2005 do NOT have such great jobs or earn the incomes necessary to sustain their purchases.

I don’t know when this trend will end and I’ve made no predictions beyond saying it isn’t going to happen in the next 2 years. The only reason I even go that far is because I have already seen a RE recession up close once before and I’ve seen what happens when there are a significant number of foreclosures in the market.

Price is a function of supply and demand. Use any measure you want – right now we have a lot more supply than the effective demand can absorb. Remember, “effective demand” goes beyond the number of people who simply want, and includes only those buyers who have both the desire and the financial means to achieve those desires. The normalization of the credit markets only serves to further reduce the number of would-be buyers who comprise that effective demand.

Before pricing can stablize the market has to achieve some level of equilibrium between the number of typically motivated listings vs. the rate of sales. That can’t happen when there are a lot of foreclosures available in the market, and all indications are that the stream of resale listings resulting from foreclosures will not recede below their current level until at least 2011.

The market has to absorb both the must-sell inventory and clear out all the excess wanna-sells before the number of available properties approaches the rate of sales. Once that happens and there are enough buyers to go around we’ll see price stabilization. It basically can’t happen before then.

That’s why I think that 2011 is the EARLIEST this trend can stabilize and we can go back into growth mode. The aggregate losses will be largely a function of the length of time multiplied by the current rate of decline that we’ve already seen. If the rate of decline speeds up the losses will be greater, if it slows down they’ll end up being less.

I was too optimistic in the early 1990s and called the end of that downtrend a couple years prior to when it actually occurred. I am a reasonably optimistic person by nature (I’m just not irrational about it), so it’s very possible that my opinion about 2011 being the earliest the market can turn may also turn out to be optimistic.

About the only way I can envision this decline being cut shorter than 2011 is if by artificial means. The most commonly touted artificial life preserver being bandied about right now if the taxpayers are compelled to bail out these investors and subsidize these foolish FBs. Aliens from outer space might come to Earth to give us the secret to clean power for free. The Rapture or it’s equivalent might happen and man may learn to live in peace without war or conflict.

But barring some unforseeable event changing the history of man, I’m just not seeing any shortcuts.

[Bugs]

Hype,

I can appreciate the “bring data” comments because it does serve to keep us honest. I know the reason I didn’t initially respond was twofold: it does take time, and I wasn’t operating off of what someone else here said to begin with; I had seen references in other news accounts.

I’m assuming that several other posters also had outside references that they trusted, which may explain why they didn’t jump in themselves.

[Bugs]

Hype,

I can appreciate the “bring data” comments because it does serve to keep us honest. I know the reason I didn’t initially respond was twofold: it does take time, and I wasn’t operating off of what someone else here said to begin with; I had seen references in other news accounts.

I’m assuming that several other posters also had outside references that they trusted, which may explain why they didn’t jump in themselves.

[Bugs]

Hype,

I can appreciate the “bring data” comments because it does serve to keep us honest. I know the reason I didn’t initially respond was twofold: it does take time, and I wasn’t operating off of what someone else here said to begin with; I had seen references in other news accounts.

I’m assuming that several other posters also had outside references that they trusted, which may explain why they didn’t jump in themselves.

[Bugs]

I searched online for mortgage rates (30yr jumbo fixed) and ran across a listing with 28 lenders, including BofA and Union Bank.

Of the 28, 7 were advertising rates in the high 6% – 7% ranges; 13 advertised between 7.0% – 7.5%; 5 advertised between 7.5% – 8.0%; and 3 advertised rates above 8.0%.

So, there are direct lenders ADVERTISING their best rates as being above 8.0% and well as lenders advertising their best rates above 7.5%.

Bank of America is quoting 8.375%
Union Bank is quoting 7.65%
GE Money is quoting 7.560%
Countrywide is quoting 7.5%
San Diego National Bank is quoting 7.25%

I don’t see a 6.5% program anywhere among those lenders.

As I’ve said before, it isn’t even the actual number that counts, but the trend that should be catching your attention.

It has been mentioned before from a couple of our loan originator posters that advertised rates are not always the same as what a specific borrower and property can qualify for. Based on that, it’s reasonable to assume that a few of the sub 7.5% programs are not that widely available to actual buyers in this market.

Again, it isn’t what the best qualified buyers can do in this market that will determine what happens, but what is typical. If you think a 1% increase in long term interest rates doesn’t significantly affect the affordability index, especially in light of the reduced availability of alternatives, then I’d like to see your explanation.

And as long as we’re throwing down challenges, I’d still like to see your comments addressing the reduced sales volume that is in fact ocurring as we speak. All the proof we need that financing options are cutting into sales is staring us in the face.

We ARE on track for the worst year in sales volumes since 1996. That is a fact that I would like to see you address.

[Bugs]

I searched online for mortgage rates (30yr jumbo fixed) and ran across a listing with 28 lenders, including BofA and Union Bank.

Of the 28, 7 were advertising rates in the high 6% – 7% ranges; 13 advertised between 7.0% – 7.5%; 5 advertised between 7.5% – 8.0%; and 3 advertised rates above 8.0%.

So, there are direct lenders ADVERTISING their best rates as being above 8.0% and well as lenders advertising their best rates above 7.5%.

Bank of America is quoting 8.375%
Union Bank is quoting 7.65%
GE Money is quoting 7.560%
Countrywide is quoting 7.5%
San Diego National Bank is quoting 7.25%

I don’t see a 6.5% program anywhere among those lenders.

As I’ve said before, it isn’t even the actual number that counts, but the trend that should be catching your attention.

It has been mentioned before from a couple of our loan originator posters that advertised rates are not always the same as what a specific borrower and property can qualify for. Based on that, it’s reasonable to assume that a few of the sub 7.5% programs are not that widely available to actual buyers in this market.

Again, it isn’t what the best qualified buyers can do in this market that will determine what happens, but what is typical. If you think a 1% increase in long term interest rates doesn’t significantly affect the affordability index, especially in light of the reduced availability of alternatives, then I’d like to see your explanation.

And as long as we’re throwing down challenges, I’d still like to see your comments addressing the reduced sales volume that is in fact ocurring as we speak. All the proof we need that financing options are cutting into sales is staring us in the face.

We ARE on track for the worst year in sales volumes since 1996. That is a fact that I would like to see you address.

[Bugs]

I searched online for mortgage rates (30yr jumbo fixed) and ran across a listing with 28 lenders, including BofA and Union Bank.

Of the 28, 7 were advertising rates in the high 6% – 7% ranges; 13 advertised between 7.0% – 7.5%; 5 advertised between 7.5% – 8.0%; and 3 advertised rates above 8.0%.

So, there are direct lenders ADVERTISING their best rates as being above 8.0% and well as lenders advertising their best rates above 7.5%.

Bank of America is quoting 8.375%
Union Bank is quoting 7.65%
GE Money is quoting 7.560%
Countrywide is quoting 7.5%
San Diego National Bank is quoting 7.25%

I don’t see a 6.5% program anywhere among those lenders.

As I’ve said before, it isn’t even the actual number that counts, but the trend that should be catching your attention.

It has been mentioned before from a couple of our loan originator posters that advertised rates are not always the same as what a specific borrower and property can qualify for. Based on that, it’s reasonable to assume that a few of the sub 7.5% programs are not that widely available to actual buyers in this market.

Again, it isn’t what the best qualified buyers can do in this market that will determine what happens, but what is typical. If you think a 1% increase in long term interest rates doesn’t significantly affect the affordability index, especially in light of the reduced availability of alternatives, then I’d like to see your explanation.

And as long as we’re throwing down challenges, I’d still like to see your comments addressing the reduced sales volume that is in fact ocurring as we speak. All the proof we need that financing options are cutting into sales is staring us in the face.

We ARE on track for the worst year in sales volumes since 1996. That is a fact that I would like to see you address.

[Bugs]

There’s a big difference between being dumb and being dishonest. I don’t think this is a case of “dumb”.

[Bugs]

There’s a big difference between being dumb and being dishonest. I don’t think this is a case of “dumb”.

[Bugs]

There’s a big difference between being dumb and being dishonest. I don’t think this is a case of “dumb”.

[Bugs]

Not only silly, but dangerous for society as a whole. It’s to everyone’s benefit to limit the losses only to those people who cannot pay their mortgages. Encouraging otherwise viable borrowers to walk away just so they can keep their toys and SUVs is sending the wrong message. That is the opposite of accepting responsibility for your personal decisions.

The prices will correct on their own just based on the unqualified borrowers. There’s no good reason to encourage everyone who’s even moderately distressed to walk away.

There is such a thing as right vs. wrong.

[Bugs]

Not only silly, but dangerous for society as a whole. It’s to everyone’s benefit to limit the losses only to those people who cannot pay their mortgages. Encouraging otherwise viable borrowers to walk away just so they can keep their toys and SUVs is sending the wrong message. That is the opposite of accepting responsibility for your personal decisions.

The prices will correct on their own just based on the unqualified borrowers. There’s no good reason to encourage everyone who’s even moderately distressed to walk away.

There is such a thing as right vs. wrong.

[Author]

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