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ParticipantIt’s too late for that. It didn’t work in Japan and it won’t work here.
ParticipantI recall a time, not so long ago, when $500k could readily buy a reasonable house in La Jolla. Now it’s barely enough for a 50-year old house in El Cajon.
ParticipantI recall a time, not so long ago, when $500k could readily buy a reasonable house in La Jolla. Now it’s barely enough for a 50-year old house in El Cajon.
ParticipantI remember not so long ago making a comment about interest rates increasing above 8% and getting a couple comments saying I was being way too pessimistic.
Apparently I wasn’t being THAT pessimistic.
At this point I’d say the difference between what it takes to go from 6.5% to 8.5% on a jumbo is a lot larger than what it would take to go from 8.5% to 10%.
A $500,000 loan at 6.5% = $3143/month
A $500,000 loan at 8.5% = $3817/month
A $500,000 loan at 10.% = $4315/month.It almost makes one wonder where the ceiling is? Could we be looking at an early 1980s credit scenario?
A $3,143/month loan payment services a $308,000 mortgage at 12%. Not counting taxes and insurance. Offset that some by the tax writeoff for the higher interest rate, but we’d still looking at a 35% haircut just because of interest rates, not counting whatever other damage to the economy would result from that type of credit contraction.
ParticipantI remember not so long ago making a comment about interest rates increasing above 8% and getting a couple comments saying I was being way too pessimistic.
Apparently I wasn’t being THAT pessimistic.
At this point I’d say the difference between what it takes to go from 6.5% to 8.5% on a jumbo is a lot larger than what it would take to go from 8.5% to 10%.
A $500,000 loan at 6.5% = $3143/month
A $500,000 loan at 8.5% = $3817/month
A $500,000 loan at 10.% = $4315/month.It almost makes one wonder where the ceiling is? Could we be looking at an early 1980s credit scenario?
A $3,143/month loan payment services a $308,000 mortgage at 12%. Not counting taxes and insurance. Offset that some by the tax writeoff for the higher interest rate, but we’d still looking at a 35% haircut just because of interest rates, not counting whatever other damage to the economy would result from that type of credit contraction.
ParticipantI think you greatly overestimate the number of PRs out there and you greatly underestimate how smart the average PR is. Most of the PRs are bearish because that’s what makes sense in the current market given the current relationships between rents and prices, not because they’re afraid or stupid. They recognize that, unlike sales prices, rents are directly related and to and dependent upon wages and population trends and therefore have a definite ceiling regardless of sales prices. Unless the wages go up, the rents basically can’t increase that much. This is evidenced by the fact that they basically haven’t increased that much in relation to everything else.
PRs are watching the sales volumes and the inventories, because they know that those are the relevant numbers to watch, not the sales prices themselves or the medians. Trees and forests. A lot of the tree-inspection that goes on here is done primarily in the name of entertainment value. The health of the forest is already well-establihsed and therefore not worthy of debate, let alone discussion.
What this means is that many of the current bears are probably going to go shopping while the bulls are still trying to figure out how to create a new credit identity to escape the poor decisions they made during the last few years. You could say the bear of 2007 will be the bull of the future and vice-versa.
ParticipantI think you greatly overestimate the number of PRs out there and you greatly underestimate how smart the average PR is. Most of the PRs are bearish because that’s what makes sense in the current market given the current relationships between rents and prices, not because they’re afraid or stupid. They recognize that, unlike sales prices, rents are directly related and to and dependent upon wages and population trends and therefore have a definite ceiling regardless of sales prices. Unless the wages go up, the rents basically can’t increase that much. This is evidenced by the fact that they basically haven’t increased that much in relation to everything else.
PRs are watching the sales volumes and the inventories, because they know that those are the relevant numbers to watch, not the sales prices themselves or the medians. Trees and forests. A lot of the tree-inspection that goes on here is done primarily in the name of entertainment value. The health of the forest is already well-establihsed and therefore not worthy of debate, let alone discussion.
What this means is that many of the current bears are probably going to go shopping while the bulls are still trying to figure out how to create a new credit identity to escape the poor decisions they made during the last few years. You could say the bear of 2007 will be the bull of the future and vice-versa.
ParticipantBTW, the 2110 number for July is where I’m projecting it will shake out after the late reporters check in. The 1936 is where we are this morning; 2110 represents a 9% increase for the late reporters.
ParticipantBTW, the 2110 number for July is where I’m projecting it will shake out after the late reporters check in. The 1936 is where we are this morning; 2110 represents a 9% increase for the late reporters.
ParticipantThe “grapevine” has some pretty knowedgeable participants, but it’s always interesting to see how little some of those people understand about their own business.
ParticipantThe “grapevine” has some pretty knowedgeable participants, but it’s always interesting to see how little some of those people understand about their own business.
ParticipantIt’s all coming together. ARM resets, foreclosures, dropping sale volumes, the loss of RE-dependent jobs, and the negative publicity that influences the market psychology – it’s all combining to create that vicious cycle that feeds on itself.
The engine that ran our local economy is having the equivalent of a massive coronary – it’s arteries clogged by the junk food and the toxins we’ve been shoveling into it. The bulls are hoping the government will find some magical heart defibrillator to shock the patient back to life. What they apparently don’t realize – or don’t want to realize – is that there isn’t enough current in the paddles to cut through the blubber, let alone excite that heart to beat strong enough to force any circulation through those arteries.
Some of these FBs are already corpses – others are dead men walking and they don’t even know it. Intervention? They’d be better off making their peace and resolving to go quietly.
ParticipantIt’s all coming together. ARM resets, foreclosures, dropping sale volumes, the loss of RE-dependent jobs, and the negative publicity that influences the market psychology – it’s all combining to create that vicious cycle that feeds on itself.
The engine that ran our local economy is having the equivalent of a massive coronary – it’s arteries clogged by the junk food and the toxins we’ve been shoveling into it. The bulls are hoping the government will find some magical heart defibrillator to shock the patient back to life. What they apparently don’t realize – or don’t want to realize – is that there isn’t enough current in the paddles to cut through the blubber, let alone excite that heart to beat strong enough to force any circulation through those arteries.
Some of these FBs are already corpses – others are dead men walking and they don’t even know it. Intervention? They’d be better off making their peace and resolving to go quietly.
ParticipantEvery day brings another indication that the lenders are changing their priorities. It’s like tightening the screws.
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