[dontfollowtheherd]

There will be some benefit for those few who didn’t have neg/ams or interest-only loans in not paying property taxes to additional savings from insurance, HOA’s and other “owner” costs. On the other hand they don’t get the mortgage write-off. There is too much inventory driving prices down faster than many “experts” thought and more rentals are appearing as well. With the cost of living so high in Ca. at some point there will be competition among landlords to sign qualified renters that can last six months to a year. We’re just warming up. We’ll be seeing a few thousand more homes from brand-new developments on the market this year and next.

People who try to time it and get in early (like now) on foreclosure “deals” will be experiencing the “catch a falling knife” syndrome as prices continue declining 25-30% from current levels. Some renters may end up paying more for less but there will also be a number of these unsold homes being rented (by banks, lenders etc.) when they finally decide to get some form of cash-flow out of their portfolios. How many other agressive/inexperienced flippers like the Temecula area guy with 15 NOD’s ready to wreak comp sales havoc on neighborhoods and communities are out there? Its going to be an interesting Summer and Fall. Unless there is a fire sale by this October I”m on the fence until next Spring at the soonest before I even think about buying more property.

[dontfollowtheherd]

There will be some benefit for those few who didn’t have neg/ams or interest-only loans in not paying property taxes to additional savings from insurance, HOA’s and other “owner” costs. On the other hand they don’t get the mortgage write-off. There is too much inventory driving prices down faster than many “experts” thought and more rentals are appearing as well. With the cost of living so high in Ca. at some point there will be competition among landlords to sign qualified renters that can last six months to a year. We’re just warming up. We’ll be seeing a few thousand more homes from brand-new developments on the market this year and next.

People who try to time it and get in early (like now) on foreclosure “deals” will be experiencing the “catch a falling knife” syndrome as prices continue declining 25-30% from current levels. Some renters may end up paying more for less but there will also be a number of these unsold homes being rented (by banks, lenders etc.) when they finally decide to get some form of cash-flow out of their portfolios. How many other agressive/inexperienced flippers like the Temecula area guy with 15 NOD’s ready to wreak comp sales havoc on neighborhoods and communities are out there? Its going to be an interesting Summer and Fall. Unless there is a fire sale by this October I”m on the fence until next Spring at the soonest before I even think about buying more property.

[dontfollowtheherd]

I concur. Think I’ll pick up a car and another house by then.

[dontfollowtheherd]

THERE IS NO WAY THIS PIG IS GONNA FLY !

How many fiscally responsible TAXPAYERS and more importantly, CONSTITUENTS do you think are going to sit by while Congress asks them to pay for the bad decisions of others? There is no way, no how, they will get very far on this before it unleashes a firestorm of protests. These members of Congress have their livelihoods at stake. Besides all this, the government can’t afford it. Look at Bernanke’s latest speech about the deficit.

The US is so far in debt already that it would further compromise programs like social security which is in doubt already. Don’t think for one minute that John Q Public is going to sit back and let their hard-earned retirement be taken from them because of some stupid political decision. Let them take it from the overblown defense fund or some $200 billion dollar pork barrel project in Iowa.

[dontfollowtheherd]

Nice to have the expert validation of an “obvious” problem that has been brewing for the last 3-4 years. Jim Rogers is very highly regarded. We’ll see how this whole thing pans out over the next couple of years.

[dontfollowtheherd]

SDR,

Like you I have been fortunate enough to have excellent mentors. One of them came up with a business model that will reach 10 billion in sales in a couple of years. He predicted a LONG, LONG time ago that the next really MAJOR recession in the U.S. would be in real estate – for a number of reasons I won’t go into at this point.

I don’t depend on r.e. either but have benefitted from it over the years. I have never been one to follow others over a cliff and I’m not going to start now. I bought my first house when I was 22. I’ve bought a few more since then. I’m very comfortable in analyzing the market objectively. I don’t get married to my positions and that has served me well. Until every speck of land is built on there will never be a housing shortage in the U.S. – you can take that to the bank. Diversification is my business and investment credo.

Just remember at one point up to last year one in every four homes was being bought by a speculator or professional of some sort. They controlled 25 % of the market and to a large degree the prices people were paying in having to compete against them in the market. That is a huge part of the equation removed from today’s buyer. They know there is no one ready to trump them within hours or minutes and can make rational decisions rather than rash ones thinking they will never have a chance to buy a home again. Hogwash.

The cost of gas,insurance,inflation etc. will continue to drive up the cost of your Italian meal over time. At some point it will be $19.95 and by then it may not be the value you thought it was. At least there is a rational explanation for the price increases (ingredients, labor etc.)and not speculation, flipping, interest derivatives, subprime loans or any other manipulative practices. Pretty soon you begin to look at other options. When sales slow or stop at your restaurant their prices may reverse or the business may eventually close. Until then bon appetit.

[dontfollowtheherd]

And now Bush has Treasury Secretary Paulson traveling the world trying to reassure everyone that the world’s economy is on solid footing. Real estate speculation has come home to roost in many countries over the years, notably Britain, Australia and Japan. The powers that be are still trying to figure out last week’s “hiccup”. Be very careful about thinking it won’t happen again. With all the other global market challenges across various platforms we’re seeing more and more anomalies. Kurt Richebacher thinks we’re in for a long spiral down in real estate as well as other markets. He has a pretty accurate record so it will be an interesting couple of years ahead.

[dontfollowtheherd]

Or when they think about how much they are going to be paying in taxes over the next 5 years because they aren’t going to sell at a profit anytime soon. Yikes!

[dontfollowtheherd]

SDrealtor,

We can agree to disagree. If as your name implies you are in the biz then I’d guess you also have a vested interest in hoping I’m not correct. Sorry if I’m being blunt or assuming anything here. More importantly I think we’ll be seeing a few dead cat bounces as we trend down further. If these people who are buying lately haven’t had buyer’s remorse after today they never will. They are stuck in these homes for a decade. I’m sticking by what I said before; “who would buy a home right now that they can get 25-50% cheaper in a year or two? Imagine how much that home has to go back up for them to gain a decent amount of equity. If the market drops 25% you’re talking about a 75% rise in prices for them to build up 50% in equity. People couldn’t get into these homes without some shenanigans so you think they will later?

I don’t see that valuation happening at today’s prices. It will happen again in 15-20 years when all the 15-18 year olds out there have forgotten about this correction. Who do you think (aside from flippers and speculators) has been the largest segment of buyers with low FICO scores? It’s not the 50-60 yr. old with 100-150k in the bank and 50-75 k left on his/her mortgage or paid off for that matter. There is plenty more carnage to come – especially after Black Monday.

There will be A LOT of people out of work soon if they aren’t already. Think I’m exagerrating? Check out this link and see where New Century and Fremont have abruptly closed without warning in many locations and both could be closed for good by Friday:

http://forum.brokeroutpost.com/loans/forum/1/2.htm

Or this one from the same board titled “Who Wants It?”:

http://forum.brokeroutpost.com/loans/forum/2/100024.htm

Loan scenario

Rate and term Refi
Looking for a fixed 5,7,10,30 (would like 30) IO or PI
Stated
SFR-San Diego, Ca OO
Loan amount- $741,640
CLTV-100% (any combo 80/20, 90/10, no MI if possible)
FICO-mid 680
Dti-40%
5 months reserves
Good trades
No BK, FC, lates

SD, this just the second leg down. It is going to cut across a wide employment swath in all sectors who are affiliated with housing/real estate. The “R” word has been floated by Greenspan and Bernanke has no choice for now but to paint a rosier picture in the position he’s in. Dubya would go ballistic if he heard him agree with big Al. The PSYCHOLOGICAL shift is on my friend whether we like it or not.

[dontfollowtheherd]

latesummer2008/earlywinter2009

When would you like it to be? Why don’t we just get out the ouija board and consult it? Unless you’ve lived through a few of these (which it sounds like you haven’t) your perspective tends to be a bit short-sighted. You want to know NOW. LOL. Cut to the chase so to speak. Can’t say I blame you.

If it were that easy there’d be no point in this blog now would there? Putting a timeframe/date/% is speculative at best. Trying to call the top and bottom of any market has burned many people very badly. There have been many excellent examples posted in this and other threads re: employment, inflation,deflation, outsourcing etc. This past 5+ years has been a real-estate driven boom. That has ended. It’s over – stick a fork in it. I’ve hired a number of people who were in that biz and most of their friends are looking for new careers as well. Historically you’re looking at seven to nine-year cycles based on data over the last 100 years.

We’ve had the seven-year up cycle and now it’s headed down. We can post whatever we desire to support our positions but an often overlooked MAJOR factor imo is the general PSYCHOLOGY of John Q Public. It was a SELLER’s market and many people (herders) rushed in to buy thinking they were never going to “see prices like this again”. They were right – they were going to see lower prices! I’ve been through three of these cycles. It’s never “different this time” despite what you hear or read. Now people are convinced it’s a BUYER’S market and they are going to wait it out for some time. Yes, even years if need be.

We Americans tend to overdo everything to the point where we end up with undesired results. The dot-com era produced many instant million/billionaires and even more who lost their a$$es. Many who made money decided to get into the glamorous wine business and more acreage was planted from the Central Coast up into Napa/Sonoma in 2-3 years than in the previous 25-50 years. Beautiful rolling hills as well as barren scrub were converted into Cabernet, Chardonnay, Merlot or whatever. All these people thought they were going to make more money.

And what was the major result of this? Two Buck Chuck aka Charles Shaw at Trader Joe’s! At one point they were selling 20-25% of all domestic wine. One out of every 4-5 bottles sold was Charles Shaw. For many wealth-seeking wineries this only proved the old adage of “know how to make a small fortune in the wine biz? start with a large one”! What happened after all this over planting? You guessed it. They started pulling out vineyards and housing developments sprung up everywhere. Look at Templeton and Paso Robles for example. It has become so overbuilt that prices there are dropping as quickly as they are in most markets.

There are thousands of houses on the market in most areas right now and there are literally thousands more in new developments (Portola, El Toro, Tustin) coming to market in the OC alone. Not to mention all the people who pulled their homes last Fall/Winter thinking this Spring might be better. Well guess what? They would have been better off pricing them correctly and getting out with a small(er) profit than a potential loss. It’s getting worse by the week/month. The headlines are going to get bleaker as we get into summer and fall.

But I digress…. what was it you wanted? Oh yeah.

Submitted by latesummer2008 on February 25, 2007 – 11:44am.

The magic question is Where’s the Bottom ? I am in Santa Monica and the latest numbers look pretty dismal in higher end markets (LA County) for the month of January as reported by the LA TIMES Sunday Feb 25.

I am interested in when to buy and how much of a drop from the peak for the Westside of LA in particular, but feel other high end markets in So. Cal are in the same boat. SD seems to be leading all down the river. Please post your opinions on local markets here based on SQ FT numbers and NOT MEDIAN prices.

FWIW here are my guesstimates:

How long? 2015

Time frame? Buy from June 2009-2012 (it will have sunk in pretty well in most psyches by then that it’s a buyer’s market and will be for years)

Percentage of drop? I’m looking for an across-the-board MINIMUM decline of 25 to 35% from current prices.

My first offer is my best offer.

[dontfollowtheherd]

Amen brother. The larger their followers it seems the more their obligations/priorities shift from their original business models and schools of thought to preservation of reputation. And sometimes people end up paying a pretty high price in their portfolios. No thanks. I’ll keep doing my own DD as it has served me well to date.

[dontfollowtheherd]

Check out the number of homes on the market out in the desert area alone. Use any service you want and you’ll find a huge inventory. Plus they are still building in a few areas that were already committed to and couldn’t pull out of. It’s the same in the mountain resorts and elsewhere. So many people who bought “second” homes are coming to the realization that they are going to be sunk if they don’t dump something soon. I’ve seen a number of “make an offer I’m getting desperate” ads already that it makes me wonder what things will look like in the fall.

[dontfollowtheherd]

Praying for a bust? Hardly. Watching one is more like it. I get more solicitations for Fisher’s list than any others. Not too many billionaires I know try to solicit business as often.

[dontfollowtheherd]

kev,

Caveat emptor.

A simple Googling of some of these homebuilders Fisher is touting brings mixed results with the majority of it negative. Saying there is no problem won’t make it go away. He’s either too far married into to his positions or is one heck of a palm reader imo. Toll Bros. took it on the chin the other day and their trends are headed lower. There are so many financial lenders setting aside more money to cover upcoming losses in a market they thought was invincible a year ago.

http://news.google.com/news?ie=UTF-8&oe=UTF-8&hl=en&tab=wn&q=toll+brothers+kb+homes+housing+&btnG=Search

[dontfollowtheherd]

And now we have another sex scandal with dubya who has been in bed with big oil. Only he hasn’t been getting screwed – we have. lol

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