[Fearful]

The steepness and severity of the NOD graph, looking a bit like a rocket launch, gives one pause. My only guess is that it will affect the depth and length of the decline, less so the slope. Here’s why: The only sellers I see rapidly becoming aggressive on pricing are the builders. Banks are hard to predict; sometimes they will auction, sometimes they will market in the conventional way. Individual sellers will tend more to let the house sit on the market than to price aggressively. If an enormous supply of houses, priced conservatively, is suddenly dumped on the market, that has little effect on the house selling prices because those houses just sit there – the transactions are what determine the house prices. A large inventory will thus take a long time to make its effects on house prices felt.

If all houses were sold at auction, with immediate effect on house prices, the NOD chart would portend a precipitous drop indeed.

[Fearful]

Why does anyone expect prices that rose over several years to drop overnight? In general assets fall over about the same time period as they rose – the humps are roughly symmetrical.

One reason for this is people are loathe to realize gains. They hate to sell stocks, and houses, that have lost money. The smart money walks away from losing investments. In equity markets there is a lot more smart money than dumb, while in housing markets there is a lot more dumb money than smart.

So in the housing markets you have a minority that is put into a must-sell mode, while the majority sit tight until they are inclined to sell. Very few have the fortitude to sell because they expect future price declines. Rich is right to be monitoring NOD’s as a leading indicator of housing prices, because must-sell is the predominant driver of declines.

All depending on the mix of must-sell houses to come, but it would not surprise me if the decline will be longer and slower than the rise. I wish it were otherwise, because I too am itching to buy a house, but I will wait until no one ever expects to make money on a house again.

[Fearful]

Why does anyone expect prices that rose over several years to drop overnight? In general assets fall over about the same time period as they rose – the humps are roughly symmetrical.

One reason for this is people are loathe to realize gains. They hate to sell stocks, and houses, that have lost money. The smart money walks away from losing investments. In equity markets there is a lot more smart money than dumb, while in housing markets there is a lot more dumb money than smart.

So in the housing markets you have a minority that is put into a must-sell mode, while the majority sit tight until they are inclined to sell. Very few have the fortitude to sell because they expect future price declines. Rich is right to be monitoring NOD’s as a leading indicator of housing prices, because must-sell is the predominant driver of declines.

All depending on the mix of must-sell houses to come, but it would not surprise me if the decline will be longer and slower than the rise. I wish it were otherwise, because I too am itching to buy a house, but I will wait until no one ever expects to make money on a house again.

[Fearful]

I hope you are not counting on your Texas house retaining its value, through to 2009, for that $500K in cash.

[Fearful]

I hope you are not counting on your Texas house retaining its value, through to 2009, for that $500K in cash.

[Fearful]

Prices in SF Bay Area

I just moved here from San Jose. Sold my house there. Mira Mesa type area, maybe even a little older (1949), extensively and questionably remodeled, 1900 sf but on a 9k sf lot, quiet street but a block away from a major thoroughfare, awful school district … $917K. I would definitely say that bay area prices are 50% to 100% higher than here.

One value engine in the bay area, not really present here, is non salary earnings such as stock options. Yet that valley has gone through some pretty rough housing shocks.

[Fearful]

Prices in SF Bay Area

I just moved here from San Jose. Sold my house there. Mira Mesa type area, maybe even a little older (1949), extensively and questionably remodeled, 1900 sf but on a 9k sf lot, quiet street but a block away from a major thoroughfare, awful school district … $917K. I would definitely say that bay area prices are 50% to 100% higher than here.

One value engine in the bay area, not really present here, is non salary earnings such as stock options. Yet that valley has gone through some pretty rough housing shocks.

[Fearful]

WaitingToExhale, the range in his listing was 640K to something. Not quite sure why they turned down the offer.

The ranges don’t mean jack.

[Fearful]

WaitingToExhale, the range in his listing was 640K to something. Not quite sure why they turned down the offer.

The ranges don’t mean jack.

[Fearful]

Here is one data point: I live in Torrey Hills. Right across the street from Torrey Hills elementary, so this is quite a desirable little neighborhood. I rent in a development in which the houses are all quite similar, so one transaction is not too dissimilar to another. A fair number of recent transactions: Around 2005, sales around $800K. Late 2006, low 700’s. Now one guy has a house on the market for about one month, and has gotten one offer at the low of his range, $640K. Now, he declined the offer, but still, there is a fundamental decline in value going on.

The sad thing is many are good, earnest people, families with little kids. These ain’t no ghetto HELOC abusers.

[Fearful]

Here is one data point: I live in Torrey Hills. Right across the street from Torrey Hills elementary, so this is quite a desirable little neighborhood. I rent in a development in which the houses are all quite similar, so one transaction is not too dissimilar to another. A fair number of recent transactions: Around 2005, sales around $800K. Late 2006, low 700’s. Now one guy has a house on the market for about one month, and has gotten one offer at the low of his range, $640K. Now, he declined the offer, but still, there is a fundamental decline in value going on.

The sad thing is many are good, earnest people, families with little kids. These ain’t no ghetto HELOC abusers.

[Fearful]

It is a sense of superiority. When you know better, and sit on the sidelines during an asset bubble, it endlessly grates on your nerves to see people smugly profiting. Thus when the assets start to deflate, it is payback time, and you start bashing the newly chastened. It is not healthy but it is human nature.

I stand by my statement: These guys are dumbasses who have no business owning a couple of million dollars worth of real estate. They should own one house, such as a nice condo in Florida, and have the remaining $million in CDs, farting out 5% interest.

[Fearful]

It is a sense of superiority. When you know better, and sit on the sidelines during an asset bubble, it endlessly grates on your nerves to see people smugly profiting. Thus when the assets start to deflate, it is payback time, and you start bashing the newly chastened. It is not healthy but it is human nature.

I stand by my statement: These guys are dumbasses who have no business owning a couple of million dollars worth of real estate. They should own one house, such as a nice condo in Florida, and have the remaining $million in CDs, farting out 5% interest.

[Fearful]

Not sure who the bigger dumbasses are, the wife who vacantly expresses “attachment” to a $900K spare house, or the Money writers and editors.

They also do not need the life insurance.

[Fearful]

Not sure who the bigger dumbasses are, the wife who vacantly expresses “attachment” to a $900K spare house, or the Money writers and editors.

They also do not need the life insurance.

[Author]

Posts