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May 31, 2011 at 6:55 PM in reply to: Excellent summation why housing market will be terrible for a long time #700329May 31, 2011 at 6:55 PM in reply to: Excellent summation why housing market will be terrible for a long time #700917
davelj
Participant[quote=StaunchLibertarian]
The dollar may collapse, but if the plebeian hordes can only find work at Chotchke’s…[/quote]I would appreciate it, Sir, if you would not denigrate a fine eating establishment and a fine place to work!
May 31, 2011 at 6:55 PM in reply to: Excellent summation why housing market will be terrible for a long time #701065Participant[quote=StaunchLibertarian]
The dollar may collapse, but if the plebeian hordes can only find work at Chotchke’s…[/quote]I would appreciate it, Sir, if you would not denigrate a fine eating establishment and a fine place to work!
May 31, 2011 at 6:55 PM in reply to: Excellent summation why housing market will be terrible for a long time #701424Participant[quote=StaunchLibertarian]
The dollar may collapse, but if the plebeian hordes can only find work at Chotchke’s…[/quote]I would appreciate it, Sir, if you would not denigrate a fine eating establishment and a fine place to work!
May 31, 2011 at 1:59 PM in reply to: Excellent summation why housing market will be terrible for a long time #700196ParticipantI’m not optimistic about housing prices in the intermediate term but I’m not as pessimistic as Mr. Hanson. I generally defer to Calculated Risk on this topic. He (Bill) looks at the big three drivers of supply and demand for housing: new residential construction (SFR and apartments), household formation, and the excess number of housing units based on population. Cutting to the chase, he sees equilibrium within 3 years, with up to 10% downside in prices from current levels. That’s not great, but it’s not the apocalypse either. While there are certainly plenty of foreclosures to come, some folks seem to forget that with the dearth of homes being built, the net number of housing units (at the macro level) is shrinking considerably every year… which is exactly what we need.
Where strategic defaulters are concerned, I’ve actually come across a couple of pseudo-strategic defaulters recently. I’m renting out a condo right now and got two emails from folks letting properties go (11 properties between the two). I spoke with both of them and both knew several others that had let multiple properties go (being in the business, that’s not surprising) and both felt that they had held on far too long. They both felt they were on the tail end of their peers in the specuvester (my term) camp. I also have a friend who’s letting a house go in Chicago, which wipes out a 2nd, but the 1st will probably be made whole. But, importantly, while these may look like strategic defaults on the surface – they aren’t. None of these folks could afford to hang onto these properties. They just appear as if they could on paper.
So, despite the big negative equity figures we see, I think only a relatively small fraction at this point are going to default on these properties going forward for the following reasons:
(1) The endowment effect guarantees that most folks underestimate the degree to which they are underwater. And they will continue to do so. So, if you’re 25% underwater, you probably only believe you’re 10% underwater because you overvalue your house in your mind. A lot of folks won’t default based on this faulty logic alone.
(2) There is a certain percentage of folks who just don’t care to what degree they’re underwater as long as they can comfortably pay their mortgage.
(3) There is a certain percentage of folks who are too tied into their home, social circles, schools, etc. to default unless their economic situation changes.
(4) There are a lot of folks in non-judicial foreclosure states that won’t default because they realize that they face recourse beyond the mortgage.
(5) There are a lot of folks who simply will not default because they feel it’s their moral obligation to pay. I know – that may sound crazy to lots of folks here – but plenty of folks feel this way.I could go on…
My point is that while there are a LOT of folks underwater, most of these folks won’t default for the reasons above. But that doesn’t change the fact that we’ve still got a lot of bank-owned action coming down the pike.
Interestingly, rents appear to be increasing. Anecdotally, I had no problem whatsoever renting my unit out. And that’s positive for the market as a whole.
May 31, 2011 at 1:59 PM in reply to: Excellent summation why housing market will be terrible for a long time #700294ParticipantI’m not optimistic about housing prices in the intermediate term but I’m not as pessimistic as Mr. Hanson. I generally defer to Calculated Risk on this topic. He (Bill) looks at the big three drivers of supply and demand for housing: new residential construction (SFR and apartments), household formation, and the excess number of housing units based on population. Cutting to the chase, he sees equilibrium within 3 years, with up to 10% downside in prices from current levels. That’s not great, but it’s not the apocalypse either. While there are certainly plenty of foreclosures to come, some folks seem to forget that with the dearth of homes being built, the net number of housing units (at the macro level) is shrinking considerably every year… which is exactly what we need.
Where strategic defaulters are concerned, I’ve actually come across a couple of pseudo-strategic defaulters recently. I’m renting out a condo right now and got two emails from folks letting properties go (11 properties between the two). I spoke with both of them and both knew several others that had let multiple properties go (being in the business, that’s not surprising) and both felt that they had held on far too long. They both felt they were on the tail end of their peers in the specuvester (my term) camp. I also have a friend who’s letting a house go in Chicago, which wipes out a 2nd, but the 1st will probably be made whole. But, importantly, while these may look like strategic defaults on the surface – they aren’t. None of these folks could afford to hang onto these properties. They just appear as if they could on paper.
So, despite the big negative equity figures we see, I think only a relatively small fraction at this point are going to default on these properties going forward for the following reasons:
(1) The endowment effect guarantees that most folks underestimate the degree to which they are underwater. And they will continue to do so. So, if you’re 25% underwater, you probably only believe you’re 10% underwater because you overvalue your house in your mind. A lot of folks won’t default based on this faulty logic alone.
(2) There is a certain percentage of folks who just don’t care to what degree they’re underwater as long as they can comfortably pay their mortgage.
(3) There is a certain percentage of folks who are too tied into their home, social circles, schools, etc. to default unless their economic situation changes.
(4) There are a lot of folks in non-judicial foreclosure states that won’t default because they realize that they face recourse beyond the mortgage.
(5) There are a lot of folks who simply will not default because they feel it’s their moral obligation to pay. I know – that may sound crazy to lots of folks here – but plenty of folks feel this way.I could go on…
My point is that while there are a LOT of folks underwater, most of these folks won’t default for the reasons above. But that doesn’t change the fact that we’ve still got a lot of bank-owned action coming down the pike.
Interestingly, rents appear to be increasing. Anecdotally, I had no problem whatsoever renting my unit out. And that’s positive for the market as a whole.
May 31, 2011 at 1:59 PM in reply to: Excellent summation why housing market will be terrible for a long time #700882ParticipantI’m not optimistic about housing prices in the intermediate term but I’m not as pessimistic as Mr. Hanson. I generally defer to Calculated Risk on this topic. He (Bill) looks at the big three drivers of supply and demand for housing: new residential construction (SFR and apartments), household formation, and the excess number of housing units based on population. Cutting to the chase, he sees equilibrium within 3 years, with up to 10% downside in prices from current levels. That’s not great, but it’s not the apocalypse either. While there are certainly plenty of foreclosures to come, some folks seem to forget that with the dearth of homes being built, the net number of housing units (at the macro level) is shrinking considerably every year… which is exactly what we need.
Where strategic defaulters are concerned, I’ve actually come across a couple of pseudo-strategic defaulters recently. I’m renting out a condo right now and got two emails from folks letting properties go (11 properties between the two). I spoke with both of them and both knew several others that had let multiple properties go (being in the business, that’s not surprising) and both felt that they had held on far too long. They both felt they were on the tail end of their peers in the specuvester (my term) camp. I also have a friend who’s letting a house go in Chicago, which wipes out a 2nd, but the 1st will probably be made whole. But, importantly, while these may look like strategic defaults on the surface – they aren’t. None of these folks could afford to hang onto these properties. They just appear as if they could on paper.
So, despite the big negative equity figures we see, I think only a relatively small fraction at this point are going to default on these properties going forward for the following reasons:
(1) The endowment effect guarantees that most folks underestimate the degree to which they are underwater. And they will continue to do so. So, if you’re 25% underwater, you probably only believe you’re 10% underwater because you overvalue your house in your mind. A lot of folks won’t default based on this faulty logic alone.
(2) There is a certain percentage of folks who just don’t care to what degree they’re underwater as long as they can comfortably pay their mortgage.
(3) There is a certain percentage of folks who are too tied into their home, social circles, schools, etc. to default unless their economic situation changes.
(4) There are a lot of folks in non-judicial foreclosure states that won’t default because they realize that they face recourse beyond the mortgage.
(5) There are a lot of folks who simply will not default because they feel it’s their moral obligation to pay. I know – that may sound crazy to lots of folks here – but plenty of folks feel this way.I could go on…
My point is that while there are a LOT of folks underwater, most of these folks won’t default for the reasons above. But that doesn’t change the fact that we’ve still got a lot of bank-owned action coming down the pike.
Interestingly, rents appear to be increasing. Anecdotally, I had no problem whatsoever renting my unit out. And that’s positive for the market as a whole.
May 31, 2011 at 1:59 PM in reply to: Excellent summation why housing market will be terrible for a long time #701030ParticipantI’m not optimistic about housing prices in the intermediate term but I’m not as pessimistic as Mr. Hanson. I generally defer to Calculated Risk on this topic. He (Bill) looks at the big three drivers of supply and demand for housing: new residential construction (SFR and apartments), household formation, and the excess number of housing units based on population. Cutting to the chase, he sees equilibrium within 3 years, with up to 10% downside in prices from current levels. That’s not great, but it’s not the apocalypse either. While there are certainly plenty of foreclosures to come, some folks seem to forget that with the dearth of homes being built, the net number of housing units (at the macro level) is shrinking considerably every year… which is exactly what we need.
Where strategic defaulters are concerned, I’ve actually come across a couple of pseudo-strategic defaulters recently. I’m renting out a condo right now and got two emails from folks letting properties go (11 properties between the two). I spoke with both of them and both knew several others that had let multiple properties go (being in the business, that’s not surprising) and both felt that they had held on far too long. They both felt they were on the tail end of their peers in the specuvester (my term) camp. I also have a friend who’s letting a house go in Chicago, which wipes out a 2nd, but the 1st will probably be made whole. But, importantly, while these may look like strategic defaults on the surface – they aren’t. None of these folks could afford to hang onto these properties. They just appear as if they could on paper.
So, despite the big negative equity figures we see, I think only a relatively small fraction at this point are going to default on these properties going forward for the following reasons:
(1) The endowment effect guarantees that most folks underestimate the degree to which they are underwater. And they will continue to do so. So, if you’re 25% underwater, you probably only believe you’re 10% underwater because you overvalue your house in your mind. A lot of folks won’t default based on this faulty logic alone.
(2) There is a certain percentage of folks who just don’t care to what degree they’re underwater as long as they can comfortably pay their mortgage.
(3) There is a certain percentage of folks who are too tied into their home, social circles, schools, etc. to default unless their economic situation changes.
(4) There are a lot of folks in non-judicial foreclosure states that won’t default because they realize that they face recourse beyond the mortgage.
(5) There are a lot of folks who simply will not default because they feel it’s their moral obligation to pay. I know – that may sound crazy to lots of folks here – but plenty of folks feel this way.I could go on…
My point is that while there are a LOT of folks underwater, most of these folks won’t default for the reasons above. But that doesn’t change the fact that we’ve still got a lot of bank-owned action coming down the pike.
Interestingly, rents appear to be increasing. Anecdotally, I had no problem whatsoever renting my unit out. And that’s positive for the market as a whole.
May 31, 2011 at 1:59 PM in reply to: Excellent summation why housing market will be terrible for a long time #701389ParticipantI’m not optimistic about housing prices in the intermediate term but I’m not as pessimistic as Mr. Hanson. I generally defer to Calculated Risk on this topic. He (Bill) looks at the big three drivers of supply and demand for housing: new residential construction (SFR and apartments), household formation, and the excess number of housing units based on population. Cutting to the chase, he sees equilibrium within 3 years, with up to 10% downside in prices from current levels. That’s not great, but it’s not the apocalypse either. While there are certainly plenty of foreclosures to come, some folks seem to forget that with the dearth of homes being built, the net number of housing units (at the macro level) is shrinking considerably every year… which is exactly what we need.
Where strategic defaulters are concerned, I’ve actually come across a couple of pseudo-strategic defaulters recently. I’m renting out a condo right now and got two emails from folks letting properties go (11 properties between the two). I spoke with both of them and both knew several others that had let multiple properties go (being in the business, that’s not surprising) and both felt that they had held on far too long. They both felt they were on the tail end of their peers in the specuvester (my term) camp. I also have a friend who’s letting a house go in Chicago, which wipes out a 2nd, but the 1st will probably be made whole. But, importantly, while these may look like strategic defaults on the surface – they aren’t. None of these folks could afford to hang onto these properties. They just appear as if they could on paper.
So, despite the big negative equity figures we see, I think only a relatively small fraction at this point are going to default on these properties going forward for the following reasons:
(1) The endowment effect guarantees that most folks underestimate the degree to which they are underwater. And they will continue to do so. So, if you’re 25% underwater, you probably only believe you’re 10% underwater because you overvalue your house in your mind. A lot of folks won’t default based on this faulty logic alone.
(2) There is a certain percentage of folks who just don’t care to what degree they’re underwater as long as they can comfortably pay their mortgage.
(3) There is a certain percentage of folks who are too tied into their home, social circles, schools, etc. to default unless their economic situation changes.
(4) There are a lot of folks in non-judicial foreclosure states that won’t default because they realize that they face recourse beyond the mortgage.
(5) There are a lot of folks who simply will not default because they feel it’s their moral obligation to pay. I know – that may sound crazy to lots of folks here – but plenty of folks feel this way.I could go on…
My point is that while there are a LOT of folks underwater, most of these folks won’t default for the reasons above. But that doesn’t change the fact that we’ve still got a lot of bank-owned action coming down the pike.
Interestingly, rents appear to be increasing. Anecdotally, I had no problem whatsoever renting my unit out. And that’s positive for the market as a whole.
Participant[quote=jstoesz]
What is worse, failing at makings one’s mark, or making your mark so easy that you do not need to aim?[/quote]I have no idea. I simply don’t think about life in those terms.
In my view, the purpose of one’s life is to enjoy it as much as possible while not impeding others’ enjoyment of their own lives (and hopefully even helping some folks to enjoy their lives more than they would have otherwise… if one gets satisfaction from that sort of thing, that is).
Making one’s mark… failing to make one’s mark… I don’t even bother myself with such notions.
Participant[quote=jstoesz]
What is worse, failing at makings one’s mark, or making your mark so easy that you do not need to aim?[/quote]I have no idea. I simply don’t think about life in those terms.
In my view, the purpose of one’s life is to enjoy it as much as possible while not impeding others’ enjoyment of their own lives (and hopefully even helping some folks to enjoy their lives more than they would have otherwise… if one gets satisfaction from that sort of thing, that is).
Making one’s mark… failing to make one’s mark… I don’t even bother myself with such notions.
Participant[quote=jstoesz]
What is worse, failing at makings one’s mark, or making your mark so easy that you do not need to aim?[/quote]I have no idea. I simply don’t think about life in those terms.
In my view, the purpose of one’s life is to enjoy it as much as possible while not impeding others’ enjoyment of their own lives (and hopefully even helping some folks to enjoy their lives more than they would have otherwise… if one gets satisfaction from that sort of thing, that is).
Making one’s mark… failing to make one’s mark… I don’t even bother myself with such notions.
Participant[quote=jstoesz]
What is worse, failing at makings one’s mark, or making your mark so easy that you do not need to aim?[/quote]I have no idea. I simply don’t think about life in those terms.
In my view, the purpose of one’s life is to enjoy it as much as possible while not impeding others’ enjoyment of their own lives (and hopefully even helping some folks to enjoy their lives more than they would have otherwise… if one gets satisfaction from that sort of thing, that is).
Making one’s mark… failing to make one’s mark… I don’t even bother myself with such notions.
Participant[quote=jstoesz]
What is worse, failing at makings one’s mark, or making your mark so easy that you do not need to aim?[/quote]I have no idea. I simply don’t think about life in those terms.
In my view, the purpose of one’s life is to enjoy it as much as possible while not impeding others’ enjoyment of their own lives (and hopefully even helping some folks to enjoy their lives more than they would have otherwise… if one gets satisfaction from that sort of thing, that is).
Making one’s mark… failing to make one’s mark… I don’t even bother myself with such notions.
Participant[quote=jstoesz]
The point, the reason, the intention of marriage is not for self fulfillment of ones “needs” or appetites. It is to create something that is greater than oneself. It is to provide man some semblance of a purpose in life. To create a unit geared toward making the world a better place. Primarily through the betterment of one’s children, but more immediately the betterment of one’s self and spouse’s self. It is the most obvious and natural way in which man can accomplish this. Nothing in life that is worthwhile is easy, nothing! I would contend that successful marriages are so difficult, because they are one of the most worthwhile things a man can do. But in turn then, they must be difficult.
[/quote]I disagree with most of this. The intention of most marriages, if folks are being honest with themselves, is to “lock down” the other person; to take them off the market, so to speak, so that they’re not running around with other people. Now, more often than not, both people want to have kids and they want the other person as a partner in this venture. But the whole thing can viewed as fairly selfish, frankly – “You’re mine now.” “Creating something greater than one’s self”, “to provide man some semblance of purpose in life”? I suppose there are folks out there that feel this way, but… I find this notion completely bizarre. You need to have a spouse (and/or kids) to have purpose in life? Beyond bizarre. Now if you said that helping other people in some profound manner – which has nothing to do with marriage and kids – might engender some sense of purpose in one’s life, then o.k., I’ll buy that. But I wouldn’t put marriage into that category.
Do you honestly believe that your marriage is creating “a unit geared toward making the world a better place”? You cannot be serious. Look, I hope you have a happy union, self fulfillment, and nice kids, etc. But, for christ’s sake… making the world a better place through your marriage?… please. That’s one of the more pretentious things I’ve ever read here at the Pigg. And that’s saying something.
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