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(former)FormerSanDiegan
ParticipantI fully expect that some desireable areas (e.g. Solana Beach) will not correct as far as other areas, by the simple fact that they did not become nearly as bubbly to the upside.
Some might call this immunity, but since there are symptoms in these areas it is more like a resistance than an immunity.Participant[quote=kev374]my guess is that it will not have any effect on home prices since the amount any buyer can offer is still driven by 2 things:
1) Income
2) Availability of credit (which now is driven strictly by income)as long as income does not inflate, home prices will continue to fall until it matches historical affordability. However, with all this massive amounts of money being injected into the market by the government I am not sure when the current wave of deflation is going to turn into inflation, this part is not clear.[/quote]
Actually, availability of credit is NOT driven strictly by income. It is also driven by the ability and willingness of the lender to lend. This depends heavily on the lenders’ balance sheets, which is what the plan intends to address.
Participant[quote=kev374]my guess is that it will not have any effect on home prices since the amount any buyer can offer is still driven by 2 things:
1) Income
2) Availability of credit (which now is driven strictly by income)as long as income does not inflate, home prices will continue to fall until it matches historical affordability. However, with all this massive amounts of money being injected into the market by the government I am not sure when the current wave of deflation is going to turn into inflation, this part is not clear.[/quote]
Actually, availability of credit is NOT driven strictly by income. It is also driven by the ability and willingness of the lender to lend. This depends heavily on the lenders’ balance sheets, which is what the plan intends to address.
Participant[quote=kev374]my guess is that it will not have any effect on home prices since the amount any buyer can offer is still driven by 2 things:
1) Income
2) Availability of credit (which now is driven strictly by income)as long as income does not inflate, home prices will continue to fall until it matches historical affordability. However, with all this massive amounts of money being injected into the market by the government I am not sure when the current wave of deflation is going to turn into inflation, this part is not clear.[/quote]
Actually, availability of credit is NOT driven strictly by income. It is also driven by the ability and willingness of the lender to lend. This depends heavily on the lenders’ balance sheets, which is what the plan intends to address.
Participant[quote=kev374]my guess is that it will not have any effect on home prices since the amount any buyer can offer is still driven by 2 things:
1) Income
2) Availability of credit (which now is driven strictly by income)as long as income does not inflate, home prices will continue to fall until it matches historical affordability. However, with all this massive amounts of money being injected into the market by the government I am not sure when the current wave of deflation is going to turn into inflation, this part is not clear.[/quote]
Actually, availability of credit is NOT driven strictly by income. It is also driven by the ability and willingness of the lender to lend. This depends heavily on the lenders’ balance sheets, which is what the plan intends to address.
Participant[quote=kev374]my guess is that it will not have any effect on home prices since the amount any buyer can offer is still driven by 2 things:
1) Income
2) Availability of credit (which now is driven strictly by income)as long as income does not inflate, home prices will continue to fall until it matches historical affordability. However, with all this massive amounts of money being injected into the market by the government I am not sure when the current wave of deflation is going to turn into inflation, this part is not clear.[/quote]
Actually, availability of credit is NOT driven strictly by income. It is also driven by the ability and willingness of the lender to lend. This depends heavily on the lenders’ balance sheets, which is what the plan intends to address.
March 18, 2009 at 8:16 AM in reply to: I believe Home Prices (Most Places in San Diego) reached bottom or almost bottom #369028Participant[quote=Huckleberry]This is NOT an accurate account of what is happening.
1. Hedge funds are already saddled with HUGE losses related to CDO’s, why would they go out and start purchasing hard assets related to RE? They wouldn’t!
2. Hedge funds typically have an ROI around 20% annually. Unless they have run their risk modeling and it shows So. Cal. RE is going to go through a “V” shaped bottom and return to it’s bubblicious state in the next year, there is no way they would invest in houses.
3. Hedge funds do not invest in hard and illiquid assets. They have to be SUPER nimble in the markets. Hedge funds are day traders, not long term buy and hold investors.
4. These same principals hold true for money management companies, mutual funds, asset management company’s, holding corporations, etc…
This is hog wash![/quote]
The only statement I agree with is the last exclamation (assuming it refers to the 4 points preceding it.
Re: 1. Disagree: ALL hedge funds did/do not hold underwater CDOs. I would even venture to guess that some even profited off declines in real estate and stocks.
Re: 2. But they CAN make 20% annually.
If someone can buy property at 60 % current FMV in bulk one can make 20% (Ask Bruce Norris about this).Re: 3. Hedge funds are not necessarily day traders and quite often operate in illiquid assets.
Re: 4. Same with fund managers. Consider REIT funds, for example. Many hold commercial properties which are not exactly the most liquid day-tradable item.
March 18, 2009 at 8:16 AM in reply to: I believe Home Prices (Most Places in San Diego) reached bottom or almost bottom #369313Participant[quote=Huckleberry]This is NOT an accurate account of what is happening.
1. Hedge funds are already saddled with HUGE losses related to CDO’s, why would they go out and start purchasing hard assets related to RE? They wouldn’t!
2. Hedge funds typically have an ROI around 20% annually. Unless they have run their risk modeling and it shows So. Cal. RE is going to go through a “V” shaped bottom and return to it’s bubblicious state in the next year, there is no way they would invest in houses.
3. Hedge funds do not invest in hard and illiquid assets. They have to be SUPER nimble in the markets. Hedge funds are day traders, not long term buy and hold investors.
4. These same principals hold true for money management companies, mutual funds, asset management company’s, holding corporations, etc…
This is hog wash![/quote]
The only statement I agree with is the last exclamation (assuming it refers to the 4 points preceding it.
Re: 1. Disagree: ALL hedge funds did/do not hold underwater CDOs. I would even venture to guess that some even profited off declines in real estate and stocks.
Re: 2. But they CAN make 20% annually.
If someone can buy property at 60 % current FMV in bulk one can make 20% (Ask Bruce Norris about this).Re: 3. Hedge funds are not necessarily day traders and quite often operate in illiquid assets.
Re: 4. Same with fund managers. Consider REIT funds, for example. Many hold commercial properties which are not exactly the most liquid day-tradable item.
March 18, 2009 at 8:16 AM in reply to: I believe Home Prices (Most Places in San Diego) reached bottom or almost bottom #369479Participant[quote=Huckleberry]This is NOT an accurate account of what is happening.
1. Hedge funds are already saddled with HUGE losses related to CDO’s, why would they go out and start purchasing hard assets related to RE? They wouldn’t!
2. Hedge funds typically have an ROI around 20% annually. Unless they have run their risk modeling and it shows So. Cal. RE is going to go through a “V” shaped bottom and return to it’s bubblicious state in the next year, there is no way they would invest in houses.
3. Hedge funds do not invest in hard and illiquid assets. They have to be SUPER nimble in the markets. Hedge funds are day traders, not long term buy and hold investors.
4. These same principals hold true for money management companies, mutual funds, asset management company’s, holding corporations, etc…
This is hog wash![/quote]
The only statement I agree with is the last exclamation (assuming it refers to the 4 points preceding it.
Re: 1. Disagree: ALL hedge funds did/do not hold underwater CDOs. I would even venture to guess that some even profited off declines in real estate and stocks.
Re: 2. But they CAN make 20% annually.
If someone can buy property at 60 % current FMV in bulk one can make 20% (Ask Bruce Norris about this).Re: 3. Hedge funds are not necessarily day traders and quite often operate in illiquid assets.
Re: 4. Same with fund managers. Consider REIT funds, for example. Many hold commercial properties which are not exactly the most liquid day-tradable item.
March 18, 2009 at 8:16 AM in reply to: I believe Home Prices (Most Places in San Diego) reached bottom or almost bottom #369520Participant[quote=Huckleberry]This is NOT an accurate account of what is happening.
1. Hedge funds are already saddled with HUGE losses related to CDO’s, why would they go out and start purchasing hard assets related to RE? They wouldn’t!
2. Hedge funds typically have an ROI around 20% annually. Unless they have run their risk modeling and it shows So. Cal. RE is going to go through a “V” shaped bottom and return to it’s bubblicious state in the next year, there is no way they would invest in houses.
3. Hedge funds do not invest in hard and illiquid assets. They have to be SUPER nimble in the markets. Hedge funds are day traders, not long term buy and hold investors.
4. These same principals hold true for money management companies, mutual funds, asset management company’s, holding corporations, etc…
This is hog wash![/quote]
The only statement I agree with is the last exclamation (assuming it refers to the 4 points preceding it.
Re: 1. Disagree: ALL hedge funds did/do not hold underwater CDOs. I would even venture to guess that some even profited off declines in real estate and stocks.
Re: 2. But they CAN make 20% annually.
If someone can buy property at 60 % current FMV in bulk one can make 20% (Ask Bruce Norris about this).Re: 3. Hedge funds are not necessarily day traders and quite often operate in illiquid assets.
Re: 4. Same with fund managers. Consider REIT funds, for example. Many hold commercial properties which are not exactly the most liquid day-tradable item.
March 18, 2009 at 8:16 AM in reply to: I believe Home Prices (Most Places in San Diego) reached bottom or almost bottom #369637Participant[quote=Huckleberry]This is NOT an accurate account of what is happening.
1. Hedge funds are already saddled with HUGE losses related to CDO’s, why would they go out and start purchasing hard assets related to RE? They wouldn’t!
2. Hedge funds typically have an ROI around 20% annually. Unless they have run their risk modeling and it shows So. Cal. RE is going to go through a “V” shaped bottom and return to it’s bubblicious state in the next year, there is no way they would invest in houses.
3. Hedge funds do not invest in hard and illiquid assets. They have to be SUPER nimble in the markets. Hedge funds are day traders, not long term buy and hold investors.
4. These same principals hold true for money management companies, mutual funds, asset management company’s, holding corporations, etc…
This is hog wash![/quote]
The only statement I agree with is the last exclamation (assuming it refers to the 4 points preceding it.
Re: 1. Disagree: ALL hedge funds did/do not hold underwater CDOs. I would even venture to guess that some even profited off declines in real estate and stocks.
Re: 2. But they CAN make 20% annually.
If someone can buy property at 60 % current FMV in bulk one can make 20% (Ask Bruce Norris about this).Re: 3. Hedge funds are not necessarily day traders and quite often operate in illiquid assets.
Re: 4. Same with fund managers. Consider REIT funds, for example. Many hold commercial properties which are not exactly the most liquid day-tradable item.
ParticipantThat rate sounds like JUMBO-conforming (e.g. less than 697K).
Who is the lender
1/2 point at the max is still only a few grand. In the scheme of building a house that very tolerable (Its the same amount you would pay for a couple months extra rent during construction)
If you think the contractor will finish in time, and that it will easily appraise at 60-70% LTV. Lock it, No Brainer.
Biggest worries:
1. Are we done yet ?
If you are still 180 days from completion, it is not possible to predict a completion date with any degree of accuracy. (Well, at least that’s my experience from a grand total of one major 4-month remodel that became 8 months).2. Appraisals. Banks are very conservative on appraisals. If you are in the 50% LTV range you have no worries. If, in your opinion the LTV is in the 70-80% range, a conservative appraisal 6 months from now could put you above 80% LTV.
ParticipantThat rate sounds like JUMBO-conforming (e.g. less than 697K).
Who is the lender
1/2 point at the max is still only a few grand. In the scheme of building a house that very tolerable (Its the same amount you would pay for a couple months extra rent during construction)
If you think the contractor will finish in time, and that it will easily appraise at 60-70% LTV. Lock it, No Brainer.
Biggest worries:
1. Are we done yet ?
If you are still 180 days from completion, it is not possible to predict a completion date with any degree of accuracy. (Well, at least that’s my experience from a grand total of one major 4-month remodel that became 8 months).2. Appraisals. Banks are very conservative on appraisals. If you are in the 50% LTV range you have no worries. If, in your opinion the LTV is in the 70-80% range, a conservative appraisal 6 months from now could put you above 80% LTV.
ParticipantThat rate sounds like JUMBO-conforming (e.g. less than 697K).
Who is the lender
1/2 point at the max is still only a few grand. In the scheme of building a house that very tolerable (Its the same amount you would pay for a couple months extra rent during construction)
If you think the contractor will finish in time, and that it will easily appraise at 60-70% LTV. Lock it, No Brainer.
Biggest worries:
1. Are we done yet ?
If you are still 180 days from completion, it is not possible to predict a completion date with any degree of accuracy. (Well, at least that’s my experience from a grand total of one major 4-month remodel that became 8 months).2. Appraisals. Banks are very conservative on appraisals. If you are in the 50% LTV range you have no worries. If, in your opinion the LTV is in the 70-80% range, a conservative appraisal 6 months from now could put you above 80% LTV.
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