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I can’t say I’m surprised.

A lot of the apologetics claim the last downturn followed the massive aerospace layoffs. I don’t discount that, but when they say things are different this time around I agree. Different because this time the housing downturn is causing the job layoffs.

Think about it: realtors, brokers, appraisers, notaries, contractors, plumbers, builders, carpenters, electricians, roofers, just in the immediate path. Then you’ve got supply houses, materials warehouses, the companies that supply them, all the way to the retail chains of Lowes, Depot, Sears even Wal-mart. On the financial side you have the mortgage specialists, MBS traders, investors, PMI companies, and banks galore.

Foreclosures are just now hitting the scene. What’s going to happen when they make it all the way up the food chain?

The economy will survive, but I think prices are going to be hit harder than most people expect. The jobs that helped people barely afford an overpriced house are getting hit as a result of the bust.

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I’m a novice at ths stuff but from what I hear in talking to people there are at least 2 reasons people go IO, both with a big potential to backfire:

1. You expect a significant riase before or right at the time rates reset. The problem here is obvious: what if you don’t get a raise, or worse you get laid off? And this really doesn’t consider the Fed rate increases.

2. I will just sell my house once the rates go up. This implies the buyer expects not to be able to afford it, and can just sell. The problem is the mindset at the time was prices would double every few years. We know that passed so now people may be forced to sell at a loss, because everyone else w/ an IO had the same idea and wants to sell too.

Throw in the tightened loan standards, leading to less buyers, declining prices, and rising defaults, IO loans from the last 3-4 years are a recipe for disaster, unless you find a sucker for a buyer or doubled your salary in the last 3 years.

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I’m a novice at ths stuff but from what I hear in talking to people there are at least 2 reasons people go IO, both with a big potential to backfire:

1. You expect a significant riase before or right at the time rates reset. The problem here is obvious: what if you don’t get a raise, or worse you get laid off? And this really doesn’t consider the Fed rate increases.

2. I will just sell my house once the rates go up. This implies the buyer expects not to be able to afford it, and can just sell. The problem is the mindset at the time was prices would double every few years. We know that passed so now people may be forced to sell at a loss, because everyone else w/ an IO had the same idea and wants to sell too.

Throw in the tightened loan standards, leading to less buyers, declining prices, and rising defaults, IO loans from the last 3-4 years are a recipe for disaster, unless you find a sucker for a buyer or doubled your salary in the last 3 years.

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Here is a short clip on reactions to his comments. I like the “Well, you’re probably right…” line.

It sounds like BB’s logic is since sub-primes are so bad, the standard loans must have cleansed themselves of all bad loans and have 0% defaults. Therefore we are past the worst of it. Again. No seriously, for real this time.

I also love the “no spillover” effects BS, and the convenient “blame it on the rain” line. Retail sales are down at Home Depot, Sears, and Wal-mart, and car sales are down. If that’s not spillover I don’t know what is.

Lie to the public so they think everything is okay and keep spending money they don’t have. I guess that’s the only way to fight deflation and inflation at the same time.

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Here is a short clip on reactions to his comments. I like the “Well, you’re probably right…” line.

It sounds like BB’s logic is since sub-primes are so bad, the standard loans must have cleansed themselves of all bad loans and have 0% defaults. Therefore we are past the worst of it. Again. No seriously, for real this time.

I also love the “no spillover” effects BS, and the convenient “blame it on the rain” line. Retail sales are down at Home Depot, Sears, and Wal-mart, and car sales are down. If that’s not spillover I don’t know what is.

Lie to the public so they think everything is okay and keep spending money they don’t have. I guess that’s the only way to fight deflation and inflation at the same time.

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“Don’t mean to be an A-hole, but it’s $20k.

Put it in an index fund and STFU.

Give me a break.”

Kind of hard to believe that first line when it’s followed buy STFU.

Not everyone here makes $7 million/hour, has 852 income properties, 6 yellow hummers, and a yacht in Monaco. So please excuse those of us who request advice on handling pocket change.

I wish I had $20,000 that I didn’t know what to do with, but I do have $5.36 in change in my car, any advice?

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“Don’t mean to be an A-hole, but it’s $20k.

Put it in an index fund and STFU.

Give me a break.”

Kind of hard to believe that first line when it’s followed buy STFU.

Not everyone here makes $7 million/hour, has 852 income properties, 6 yellow hummers, and a yacht in Monaco. So please excuse those of us who request advice on handling pocket change.

I wish I had $20,000 that I didn’t know what to do with, but I do have $5.36 in change in my car, any advice?

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*yawn* More rhetoric from these people who are starting to make lawyers look honest, and base their opinions on nothing more than desired outcome:

“…gradual recovery, which should start in the second half of this year.”

Based on what data? The fact that prices are falling, foreclosures are up, or lending standards have tightened?

“It appears that the worst of the price correction is behind us,” says Pat V. Combs, president of the trade association.

Again, based on what, your gut?

Median prices have fallen three quarters in a row, and they fall faster each quarter, like a bullet dropped from the top of the Empire State Building.

This is my favorite line in the article, because it is an observation, not BS. The bullet hasn’t landed yet, so there is pretty much zero weight to their points of view.

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I saw that same article on MSN, although it now shows Wal-Mart profits are up, despite lower sales reported.

The other thing it says is more wonderful poopaganda from the National Association of Liars:
“The median price of a single-family home fell to $212,300 in the first quarter of 2007, down 1.8% from the price of a home in the first quarter of last year.”

The report said this was the third quarterly drop in a row, the first-quarter decline followed declines in the third and fourth quarters of 2006.

But NAR President Pat Combs said she found the number encouraging.

“It appears the worst of the price correction is behind us,” Combs said in a the press release. And more states are stabilizing, she said, noting Wyoming, the District of Columbia and Arkansas as the top three states with sales increases.”

This BULL$#!^ market doesn’t take any news serisouly. Low Sales at Home Depot means people are doing less work on their houses, whether before a sale or after, indicating the potential for future sales is lessening. If prices dropped before this news, logically they will only fall more because of it. Yet the bulls see this as the end.

I think they should replace the term “bull” with “ostrich.”

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So many opportunities to rip this argument to shreds, and so little time.

In that case I will just say…

No more disgruntled than those scared that we might be right, and certainly less disgruntled than those same people when we ARE right.

It’s a matter of time buddy…

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It means now is a great time to buy a home with no money down, a 125% financed, negative amortization, variable-rate, interest only, stated income loan, where you inflate your income by 50%, but then blame your broker for allowing you to do it, and file a lawsuit against them so you can absolve yourself of any responsibility or consequences of your reckless actions.

Ahhh…. The American Dream.

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I think it’s also the beginning of the spillover effects the powers that be continue to maintain have not been seen.

The “fake” money circulating over the last 5+ years (in the form of debt) is drying up as people can no longer tap into their Housing ATM.

LIGHT-TRUCK SALES HIT BY CONSTRUCTION AND HOUSING SLUMP?
Sears, Kmart same-store sales down in 1st-quarter

These are related to housing, but weak sales at Wal-Mart is definately bad news for an economy that relies on people spending money.

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I think just the fact that people now actually accept the idea that a downturn is possible indicates the shift in the market. This is despite all the BS we are fed by those who close their eyes and plug their ears when someone mentions foreclosure, decline, bubble or correction.

For the last 5-6 years or so people laughed at the idea that home prices would would do anything but go up.

We’re still in the early stages of the downturn. Picture a roller coaster with lead car facing down, but the rear cars still looking at the sky.

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“I’ve seen my fair share of people who like to focus on so much negativity, that their view is the entire world is crumbling and they just don’t motivate to do anything. They’d rather wallow in misery.. It’s no different than those idiots that believe the party will never end..

I don’t think that is the message we are sending here at all. (Watch an hour of the nightly news and you’ll feel like it though) One of the primary goals of this site is to provide un-biased housing data. Having read the data, many of us develop opinions that are perceived as doomsdayers, but often by those who have and would continue to benefit from a continued run-up in pricing.

We argue the run-up is over, and prices are coming down. The data certainly doesn’t indicate anything less, though other interpretations of it do. That is not wallowing in misery or claiming the world is crumbling. It’s just perceived as negative to the homeowner sitting on negative equity, when we say prices will fall.

Not everyone here is sitting on millions in other assets, so many will benefit from a decline because we have not made poor choices.

Hoping for a significant correction in prices is no different than hoping the penny stock you bought will increase ten-fold overnight. The difference are the side effects, i.e. people losing their homes. That’s unfortunate yes, but so is making responsible citizens bail out those who made poor choices.

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“But, but, but, now is a good time to buy OR sell…(sob/cry/whine)”

The irony is that comes from Yahoo Real Estate. What’s more, is estimated data like this is more than likely skewed towards those in favor of mild correction. I’d like to see an estimate by those who are in favor of a drop.

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