[cyphire]

The more important question (I think), is what happens to the people who aren’t selling because they didn’t sell at the top, but still would like to get out their equity?

I especially refer to a lot of baby boomers, who might have counted on their home as their retirement egg – especially as they didn’t really save any other money!

While I think that the vast majority of folks who would like to sell sometime in the next 5 years or so are waiting for prices to level off and go higher, what will their sentiment be if things keep getting worse? I think that there is still way, way, WAY, too much belief that the market will level off and will start appreciating at about 4% per year by next year or the year after.

I ask why?

The CASE Shiller index has us at around 300ish with a top of 320’ish? Most of the other crazilly priced communities maxed at 250ish and never got to the 300’s… Look at whats going to play out in the mortgage market… Higher mortgage rates in opposition to interest rates (as the lenders price in some of the future risk – they didn’t make enough money to cover the problems.), and further sinking home prices. Do you think this will be over next year???? The resets will go on for years. The 5 and 10 year ARM’s will be resetting as well and for those people who didn’t expect to stay in their homes, they will need to dump at some point.

If the market keeps going down for the next 5+ years… At what point to people say ‘STOP THE TRAIN AND LET ME OFF!’…?

There is no panic out there yet. What happens 2 years from now when prices have gone down another 20-30%? (Or even 10-20%)…. If you have a solid citizen, with good credit, with 70% equity in their home, and the prices go down 30%, they have lost almost half, not a third of their equity. And do you think that most of the people who own 1M homes only owe 300K on them? Including paying for college, cars, vacations, investments, etc? I don’t think so!

I think that there will be an ever increasing group of people who need to cash out, and they will keep dropping the prices until they do. It doesn’t take a large number of these people to push the comps down…. Just my opinion.

[cyphire]

Could be… I think you can probably find interesting people and cultured people everywhere… I just think that the pickings are somewhat slimmer here…!

On the pretentiousness aspect, you might be right or not. I am not pretentious and when I see it (or don’t see it) I just ignore it. It’s very hard to snub someone when they don’t either don’t recognize it or just don’t care!

Often in NY I got dropped quickly when I wouldn’t buy into someones bullsh_t!

Whoops a Ferrari just went by my office really quickly… All the girls in sunglasses just swooned!

[cyphire]

Could be… I think you can probably find interesting people and cultured people everywhere… I just think that the pickings are somewhat slimmer here…!

On the pretentiousness aspect, you might be right or not. I am not pretentious and when I see it (or don’t see it) I just ignore it. It’s very hard to snub someone when they don’t either don’t recognize it or just don’t care!

Often in NY I got dropped quickly when I wouldn’t buy into someones bullsh_t!

Whoops a Ferrari just went by my office really quickly… All the girls in sunglasses just swooned!

[cyphire]

Could be… I think you can probably find interesting people and cultured people everywhere… I just think that the pickings are somewhat slimmer here…!

On the pretentiousness aspect, you might be right or not. I am not pretentious and when I see it (or don’t see it) I just ignore it. It’s very hard to snub someone when they don’t either don’t recognize it or just don’t care!

Often in NY I got dropped quickly when I wouldn’t buy into someones bullsh_t!

Whoops a Ferrari just went by my office really quickly… All the girls in sunglasses just swooned!

[cyphire]

“where people don’t take the time to be responsible for themselves and their family concerning mortgages and home ownership”

Do you think that the vast, vast majority of these people didn’t obsess over every single part of their buying experience? That they didn’t lose sleep every second before they pulled the trigger? This scared the crap out of them, and they were fleeced. You expect a lot out of people who would have no idea what you are talking about.

People get their news and info from whoever is selling to them …. Thats the way it works. It takes a lot for people to pull themselves up by their bootstraps.

Anyway – I don’t disagree on what people should do, I just disagree that it’s that easy to expect a large number of them to do it.

[cyphire]

“where people don’t take the time to be responsible for themselves and their family concerning mortgages and home ownership”

Do you think that the vast, vast majority of these people didn’t obsess over every single part of their buying experience? That they didn’t lose sleep every second before they pulled the trigger? This scared the crap out of them, and they were fleeced. You expect a lot out of people who would have no idea what you are talking about.

People get their news and info from whoever is selling to them …. Thats the way it works. It takes a lot for people to pull themselves up by their bootstraps.

Anyway – I don’t disagree on what people should do, I just disagree that it’s that easy to expect a large number of them to do it.

[cyphire]

“where people don’t take the time to be responsible for themselves and their family concerning mortgages and home ownership”

Do you think that the vast, vast majority of these people didn’t obsess over every single part of their buying experience? That they didn’t lose sleep every second before they pulled the trigger? This scared the crap out of them, and they were fleeced. You expect a lot out of people who would have no idea what you are talking about.

People get their news and info from whoever is selling to them …. Thats the way it works. It takes a lot for people to pull themselves up by their bootstraps.

Anyway – I don’t disagree on what people should do, I just disagree that it’s that easy to expect a large number of them to do it.

[cyphire]

Ditto Ex-SD… I think that if anything you are too optimistic. The same psychology which caused the problem will accelerate it in reverse. Don’t think that in 2011-2012 the prices will have fallen enough to make the market go up again. There will have been too many people hurt, too many people afraid…. 2011-2012 will be the big pain years… I think for years after the market will be flat or still fall because the economy will have been crushed.

The years of equity lines, new kitchens, new boats, cars, toys, second homes, investment properties and increased interest rates (a larger spread between Fed rates and actual mortgage rates) will cause long term pain, for at least a decade.

This might be the start of a general long term decline for the US and its need to pay for all the years of spending and no savings.

[cyphire]

Ditto Ex-SD… I think that if anything you are too optimistic. The same psychology which caused the problem will accelerate it in reverse. Don’t think that in 2011-2012 the prices will have fallen enough to make the market go up again. There will have been too many people hurt, too many people afraid…. 2011-2012 will be the big pain years… I think for years after the market will be flat or still fall because the economy will have been crushed.

The years of equity lines, new kitchens, new boats, cars, toys, second homes, investment properties and increased interest rates (a larger spread between Fed rates and actual mortgage rates) will cause long term pain, for at least a decade.

This might be the start of a general long term decline for the US and its need to pay for all the years of spending and no savings.

[cyphire]

Ditto Ex-SD… I think that if anything you are too optimistic. The same psychology which caused the problem will accelerate it in reverse. Don’t think that in 2011-2012 the prices will have fallen enough to make the market go up again. There will have been too many people hurt, too many people afraid…. 2011-2012 will be the big pain years… I think for years after the market will be flat or still fall because the economy will have been crushed.

The years of equity lines, new kitchens, new boats, cars, toys, second homes, investment properties and increased interest rates (a larger spread between Fed rates and actual mortgage rates) will cause long term pain, for at least a decade.

This might be the start of a general long term decline for the US and its need to pay for all the years of spending and no savings.

[cyphire]

Maybe in OZ Contraman….

Look – I agree with you – those are very altruistic goals… But unfortunately you aren’t dealing with people who have had those values, goals, or level of self control. You are dealing with people who have lived their lives on the edge, from the guy making 25K to the guy making 250K.

The American consumer has been turned into a spending machine which has created this playboy mentality. It’s what made our economy what it is. Look at conservative countries… Their unemployment is high, taxes are larger, and have bad economies. They don’t spend. So when the spending machines get conned, don’t expect them to stop watching American Idol and get a library card.

You play the hand you are dealt.

I read about Serpico (the cop from NY)… He grew up in a family which if you couldn’t pay cash for it, you don’t buy it. I think that’s admirable. But it also wouldn’t have created the economy which paid his salary.

I would love it if the US Consumer was educated and we started saving. Of course in the current economy that would effectively destroy our economy. (The consumer spends 70% of the money in this society, if they even spent 10% less it would drive us into a depression).

Anyway – smart people will make smart decisions, the vast number of smart but non-thinking people and not smart, not educated people will do what the marketers tell them to…. Sorry… Thats reality.

[cyphire]

Maybe in OZ Contraman….

Look – I agree with you – those are very altruistic goals… But unfortunately you aren’t dealing with people who have had those values, goals, or level of self control. You are dealing with people who have lived their lives on the edge, from the guy making 25K to the guy making 250K.

The American consumer has been turned into a spending machine which has created this playboy mentality. It’s what made our economy what it is. Look at conservative countries… Their unemployment is high, taxes are larger, and have bad economies. They don’t spend. So when the spending machines get conned, don’t expect them to stop watching American Idol and get a library card.

You play the hand you are dealt.

I read about Serpico (the cop from NY)… He grew up in a family which if you couldn’t pay cash for it, you don’t buy it. I think that’s admirable. But it also wouldn’t have created the economy which paid his salary.

I would love it if the US Consumer was educated and we started saving. Of course in the current economy that would effectively destroy our economy. (The consumer spends 70% of the money in this society, if they even spent 10% less it would drive us into a depression).

Anyway – smart people will make smart decisions, the vast number of smart but non-thinking people and not smart, not educated people will do what the marketers tell them to…. Sorry… Thats reality.

[cyphire]

Maybe in OZ Contraman….

Look – I agree with you – those are very altruistic goals… But unfortunately you aren’t dealing with people who have had those values, goals, or level of self control. You are dealing with people who have lived their lives on the edge, from the guy making 25K to the guy making 250K.

The American consumer has been turned into a spending machine which has created this playboy mentality. It’s what made our economy what it is. Look at conservative countries… Their unemployment is high, taxes are larger, and have bad economies. They don’t spend. So when the spending machines get conned, don’t expect them to stop watching American Idol and get a library card.

You play the hand you are dealt.

I read about Serpico (the cop from NY)… He grew up in a family which if you couldn’t pay cash for it, you don’t buy it. I think that’s admirable. But it also wouldn’t have created the economy which paid his salary.

I would love it if the US Consumer was educated and we started saving. Of course in the current economy that would effectively destroy our economy. (The consumer spends 70% of the money in this society, if they even spent 10% less it would drive us into a depression).

Anyway – smart people will make smart decisions, the vast number of smart but non-thinking people and not smart, not educated people will do what the marketers tell them to…. Sorry… Thats reality.

[cyphire]

Time will tell my Realtor friend!

Who has been buying those boats, motorcycles, cars, etc? I’m just saying that the chill of equity loss is on the horizon for many. The US consumer will stop spending when their equity goes in jeopardy. Do you see a ever steepening curve and long term trend downward in Real Estate here in SD?

p.s. It takes buyers to step in. What is the current cost of a super jumbo? Will that even put more pressure on home prices? At what point does the entire market move when equity is being erased?

[cyphire]

Time will tell my Realtor friend!

Who has been buying those boats, motorcycles, cars, etc? I’m just saying that the chill of equity loss is on the horizon for many. The US consumer will stop spending when their equity goes in jeopardy. Do you see a ever steepening curve and long term trend downward in Real Estate here in SD?

p.s. It takes buyers to step in. What is the current cost of a super jumbo? Will that even put more pressure on home prices? At what point does the entire market move when equity is being erased?

[Author]

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