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May 3, 2007 at 1:38 PM in reply to: “Those who say the prices are going to go down 50 percent are just yahoos who are not looking at the whole picture,” #51745
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ParticipantPerception may influence reality, but I don’t think it creates it.
The fact is on average home prices are well beyond the only true measure of affordability: incomes.
Yes there are nicer areas, and people who can afford them, but that has always been the case, and averages have been reasonable in the past, prices have come back to earth after previous bubbles and the same people labeling Bears as “Yahoo’s” said the same things in this article during the last bubble, because their ONLY hope is their words will convince people to go buy.
The notion that anything could happen is irrelevant. I prefer to look at what HAS happened. And after the last two bubbles, (both a fraction of the current one) came all the way back down. That’s not a point of view, it’s a fact.
Rich has done great work on dispelling the arguments that claim things are different this time.
May 3, 2007 at 10:55 AM in reply to: “Those who say the prices are going to go down 50 percent are just yahoos who are not looking at the whole picture,” #51718ParticipantAh Poor “Fat_Lazy_Union_…” aka RATcliff?
I love to see high-road, classy, and professional responses from people scared about the coming demise in the housing industry.
I also love the cheap shots they give to people in jobs not directly involved with housing. Those who thumbed their noses at salaried/union/SBO’s in the past 5 years, are now complaining to them that they are wrong for not buying 5 years ago.
Truth is, misery loves company and many who bought at affordable prices, refinanced at higher levels and can’t afford anymore either.
“UNION boy” is no different and I hope he reads this.
The only difference between what you call our hope in a crash, (which is really just an expectation of a correction to make houses affordable again) and your hope that prices will continue to rise, is we base it on actual data, not politically charged propoganda and opinion.
As one of his cronies, why don’t you continue to follow in the footsteps of Mr. Lereah…
ParticipantI think you can pretty much blame all of it on the interst rate cuts Greenspan used to bail out the stock market crash in 2001.
Low interest rates reduced foreign investment and weakened the dollar internationally. Since the stock market tanked, speculators moved to housing, which loosened lending standards, and drove house prices artifically higher. Many here argue Greenspan bailed out one bubble with another.
And his free money policy created more money and further weakened the dollar’s purchasing power, here and abroad. Consumer goods stayed affordable because there is virtually no shortage of them, but houses rose on speculation.
Oil in 2002 was about $30/barrel. The war and international demand give us the $70/barrel price today, but the war didn’t increase home prices. Consumers weren’t investing in tanks of gas, they bought homes because money was easy to get, and (at the time) you couldn’t lose. I’d say the over 100% increase in oil is roughly the same we have seen in housing in the last 5 years. But filling up at $4/gallon, albeit expenisve, is different than buying a house you can’t afford.
ParticipantThat’s funny. “$600!!!” That’s because the over-priced homes aren’t selling at all.
Guys like that are the poster child for the wide-sperad ignorance of this market. National averages are only going to deepen the wound of reality, and this guy is just laughing his fear away. For now at least.
ParticipantThe problem has been the utopian hysteria mindset that home prices are on an infinite year over year increase at the ridiculous rates we saw from 2002-2005. We all know that. Both parties are to blame buying into this propaganda; the lender for lending money to people who are in collections with Domino’s pizza, and the buyer for thinking they could afford a McMansion on a McDonald’s salary.
You can thank the Democrats for bailout talks in an effort to secure the White House in 2008, but as the reality of this mess sets in, I really think there simply won’t be enough money to cover it. The war in Iraq has cost what, 400 billion? Resetting Loans are 5 times that just for 2006-2007.
LA Times had 2 articles today: one on bad loans outside Subprime and one on cr
ParticipantMaybe they did the upgrades themselves and charged $500 an hour for their labor.
ParticipantNice Chart NSR.
Temecula has roughly 38% of it’s population making $35-75K, and roughly 35% making $75K-150K.
Ontario has about about the same making $35-75K, and about 26% making $75K-150K.
The difference is more than I would ahve expected, because Ontario has it’s fair share of industry too. But regardless of how accurate these numbers are, my question is how much of these incomes are from industries directly related to housing?
Realtors, Brokers, but also people on the construction side all raked in the money in the glory days, and are probably starting to struggle. The LA times had couple articles this week on former loan officers looking for new jobs.
I’d expect these to all go down.
ParticipantWell I haven’t read every post on here, so I’ll address the original post, which means I am probably just repeating what has already been said.
I think most of agree that not all, but a majority of the brand new BMW’s, Merceds, Yellow H2’s, and so on and so on, were bought with what I call fake money; money from a re-fi, or HELOC.
I honestly believe income levels are nowhere near what they appear to be. Even if you look at the NAR statistics, I think CA was mid $60K average income. LA, SF, and SD, yes, but the rest of the state? No way. We’re talking average here, and I’d bet the average is higher because we have so many celebrities and athletes in our state. Think about how many actors there are; tons of them live here in LA.
The (fake) money came form the real estate bubble. It made instant faux millionaires out of common homeowners. We know incomes didn’t triple like house prices did.
The scary thing is how much came from the real estate bubble. Everything from brokers and realtors, to plumbers, carpenters, and even companies that supply refrigerators, copper pipe, grantie counter tops, and so on.
We hear bits and pieces of these, but I think it’s going to get a lot worse as people shy more and more away from housing.
Watch out for those spillover effects, and others like increasing used luxury cars and SUV’s for sale.
ParticipantMy intitial thoughts on a bail out are quite colorful, but if you think about it…
– How many people can lenders really afford to bail out? It’s certainly limited.
– Then, how many people in foreclosure can actually qualify for a refi under the new restrictions? AKA traditional standards.
– Since mortgages are so heavily traded, how much bailing out are the investors going to allow? The article mentioned forgiving the principal. That won’t last long.As the article says:
“It’s really up to servicers in this climate, he said. “If the servicers aren’t flexible, then we’re going to see credit losses like we’ve never seen before.”The other thing, is this is by no means limited to sub-prime lenders. People won’t want to touch the housing market with a ten foot pole once the reality of the situation sets in.
April 4, 2007 at 10:21 AM in reply to: Some housing market newspaper clippings from the last Iraq war #49165ParticipantEven if Bush left office today it would have no effect on oil prices. Oil Companies would just pay millions more to lobby the next president to maintain their control on our economy, eradication of the electric car, and forcing manufacturers to make ugly hybrids.
The devaluation of the dollar has nothing to do with Bush either. As CONCHO said, you can thank the FED for whoring the dollar. If you look at WWII the War actually pulled the US out of the Great Depression. So really, we’ve had a stock market boom, 2nd war in iraq, a real estate boom, all to delay the next recession.
I like the part in the article that says housing permits fell to the lowest since WWII. Can we top that this time around? The runup certainly did.
ParticipantIt reminds me of that guy who predicts earthquakes all the time. Enough predictions eventually he’ll be right, but the issue is credibility. Obviously Schiff wants to establish or further his.
Either way, it’s obvious no one listened to him 5 years ago. If they did, maybe the run up (and fallout) would not be as bad.
As far as a bail out, I agree Kewp, once this thing hits full scale there will not be enough money anywhere to cover it. However, I think the FED is more likely to raise rates due to inflation, to keep the dollar out of the toilet, and bring back some foreign investment. I agree too that much of the market is still dependent on what I call artificial money from the bubble.
Since the bust is only beginning, it seems we are still in a bull market. Today stocks jump more than 1% on a 2.3% drop in oil, and 0.7% rise in pending-home-sales index, despite bad news from the Big 3.
No one really knows the timing, but no doubt things will get worse. We’ve bailed out two recessions with two bubbles. What’s the next one going to be, BS?
March 30, 2007 at 11:58 PM in reply to: Free gas for a year with the purchase of this house in Murrieta #48822ParticipantNoone you read my mind. My gosh, use Microsoft Word first, of have someone proof it. Nothing spells quality Real Estate Agent like a first grade reading level.
According to Zillow it “SOLD 09/25/2006: $579,000”
Someone trying a quick flip?
The think looks like crap and it not the greatest area of Murrieta from what I can tell.
I call foreclosure by summer 2008.
ParticipantWon’t the FED eventually have to raise rates to allow foreign investors (i.e. China) some way to make money and continue funding our trade deficit?
Otherwise, the dollar becomes more and more worthless compared to the rising RMB, which makes goods in China less affordable, right?
ParticipantThe best way to make a fortune is to write a book telling people how to make a fortune. If you really want to make it credible, pontificate the myriad ways society will change and present “your” ingenius ideas on how to profit from it.
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