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May 3, 2007 at 6:38 AM in reply to: “Those who say the prices are going to go down 50 percent are just yahoos who are not looking at the whole picture,” #51669
latesummer2008
ParticipantDENIAL !!! UCLA forecasters are laughable now that Thornberg left. Read between the lines and you get a lot of “I think”, “So Far” and “Murky” ,basically leaving themselves an out. If your so sure about this article, why aren’t you jumping in and buying right now, before prices go up? I am sure their are plenty of people would love to unload their ball and chain.
ParticipantSpeculation is Over! That is what was driving the Real Estate Boom. Easy Credit allowed ANYONE to play. Now all we are stuck with is HIGH PRICES. Nowhere to go, but DOWN. It is obvious to me and will become clearer as we get into the Summer Buying Season. Smart buyers are waiting until at least Next Summer. Get ready for the Crash of 07′
ParticipantKeep Smokin Duuude…. look at the FACTS instead of numbers your hoping will pan out. Nothing like “REALTOR KOOL-AID” to turn this crappy market around. I’d say you have the wrong audience here.
ParticipantPerfect Storm is Brewing here in Southern California. Housing Collapse, Inflation, and Job Losses. This could make the early 90s look like peanuts. Just wait until the money starts leaving and were left with a thoroughly depleted infrastructure. Then who could, and would make payments of $4000 a month for a marginal piece of property, knowing it’s dropping in value???????
The gig is up….
ParticipantApril Drop in Home Sales could rock the housing market any day now. Last months figure was -8.4% The biggest drop since 1989, just before the last housing bust. Any guesses on what the number might be?
ParticipantYes, TsunARMi is coming with all the resets just beginning in April. I wonder how many will be felt here in Southern California? And, how many people don’t even realize what their adjustments will be? Can you say “REAL ESTATE FRAUD” I’m hearing more and more stories about how supposedly, even the mortgage broker didn’t understand all the terms because of them buried so deep in the “DOCs”. Especially here in California, which is the most lenient state in the country, when it comes to selling home mortgages.
Sheeeeeeittt…..
ParticipantHow Many Problem Loans are out there? That is the key question. Is it just entry level buyers who were stretched in 2005-2006 or will it reached all the way up the housing food chain? That is my guess. I believe entry level buyers are the first and hardest hit, while more affluent homeowners (homedebtors) have longer staying power. But how long and how much do they stand to lose? Will they be quicker to exit?
We shall see….
ParticipantARMs Reset & Credit Crunch will have a serious affect on April Home Sales that report in May. Then, the dominoes really begin to fall. I expect inventory ballooning by the time summer officially arrives. Sellers will begin slashing prices, MSM stokes the flames and FORECLOSURE becomes the hot topic of summer parties.
Unfortunately, many sellers refuse to accept reality because of speculation or their retirement hopes evaporating. Those days are OVER. Our economy has been artificially inflated due to asset bubbles since 1996. Housing, Stocks, Housing, Stocks. We now have Housing Credit Cards (MEWs & HELOCS) and you can RENT a house from a Used House Salesmen for NO MONEY DOWN, NO ASSETS and NO JOB. Please….
I suppose every 9 years or so, they’re more suckers to be had. Unfortunately, guess who eventually picks up the tab? That’s right. This time around, people may not forget as easily, because it will be MEMORABLE.Time to pull your head out the sand folks……..
ParticipantBingo JWM! Global Issues are driving the MACRO picture right now. And guess what, EVERYONE is now looking at the U.S. Housing Sector. More specifically, areas that INFLATED the most are at greatest risk. Can you say SOUTHERN CALIFORNIA? Better yet, Can you say SAN DIEGO? WESTSIDE of LA? etc.. JWM makes some very interesting observations incorporatingthe BIG PICTURE. We are in a Global Economy now, and the U.S. is showing weakness. The housing numbers for APRIL will be AWFUL. But, R.E. Shills will try to find a way to spin them . The ONLY numbers which matter are measured YOY……….(Year over Year). MONTHLY numbers don’t mean SQUAT. Median numbers don’t mean SQUAT. The best numbers really, are PRICE/SQ FT, measured YEAR OVER YEAR. But they won’t show you that. Even those can be questionable. Houses actually depreciate each year, ITS THE LAND which GOES UP or DOWN.
Sorry guys, #@&%$?# hits the fan this summer….Even worse the following summer
ParticipantA 2%-3% drop per month in prices will take care of stickiness. Wouldn’t you think seriously about selling, no matter what year, you purchased ? I think MANY would. 12-18 months of declines like that would toss enormous amounts of inventory into the pool. I believe, that is the scenario we will be looking at. Not a popular view, but very possible. Remember, prices normally correct faster and deeper on the downside, than the upside, of any asset bubble. We are in UNPRECEDENTED TERRITORY now.
The MSM is already getting a hold of the foreclosure story. Tonight, CNN was chronicling an old lady losing her home after 30 years on “Debtor Nation”. Just wait until the April numbers for housing come in.Hold on for the ride, it’s going get real interesting, real fast.
ParticipantNow NAHB is warning its members to hold on tight. How much bad news do people need to hear? Seems like everyday another part of the Real Estate Industry has no choice, but to deal with terrible numbers coming in. The reason May might be especially bad is, the first of the 2/28 ARMs that were given in 2005 are beginning to reset. Sticker Shock Horror stories will find there way into the MSM, therby scaring the hell out of others, who could also be @#$%&*! Also, nobody seems to detect a bottom in housing anymore and the reality of a decline is sinking in. HOMES ARE LOSING VALUE. Why would anyone buy now?
I believe this,will accelerate the downside of the current real estate cycle, likely at a much quicker rate, than the upside. People didn’t HAVE to buy on the upside, but they may HAVE to sell on the downside.
I can just imagine how much the MSM is licking its chops, right about now. T the earliest, buyers should wait until “Late Summer of 2008”, before jumping back in.ParticipantPrice vs. Value. Price is what is paid at a certain time. Value is how much something is worth to a certain person. Value can differ to different people, whereas price is indeed a fact, and captures a certain moment in the history of a property. That is why HPM (House Price Multiplier) analyzes Sales Price for a given SFR. Evaluating SFRs by $/sq ft of living space is inaccurate. Most of the value HERE, is in the LAND. Otherwise, we would have prices like Kansas. The HOUSES in Kansas, are generally better constructed, than here.
I’ll take a big lot and small house any day, over a big house on a small lot in the same area. Often times, bigger houses are one persons’ dream and the next owners’ nightmare, as resale is not usually considered, when doing an addition.Participantsdrealtor, correct, but, demand is LOW and SUPPLY is high. As a buyer, wouldn’t you want to know the going price of the LAND and the HOUSE ? Here in S.Calif most of the value is in the land, not a crappy 50-60 year old house. And most figures thrown around the real estate industry are $/sq ft of the HOUSE. If you can figure out HOW MUCH per sq/ft HOUSES are selling for AND HOW MUCH per sq/ft LAND is selling for, then you can add them together to get a GOOD idea of how a property is (PRICED) at a given time. NOT, how much a person may pay (Value). In a declining market such as this, it is best to know HOW WELL property is PRICED. OF course supply and demand is what drives the market, but it doesn’t inform a buyer to how much a house is worth in an arms-length transaction. I applied this formula to two houses on Pier Avenue in Santa Monica, same block, lot, living space and realized one sale that closed within 3 weeks of another was OVERPRICED by just under $100,000. They’re more than screwed now.
Perhaps you should actually try the formula, before you judge it.
ParticipantHPM formula is as follows:
1) Divide Living Space/Lot to get HF(House Factor)
2) Subtract HF from 100% to get LF(Lot Factor)
3) Divide Sales Price/Living Space to get $/sq ft (House)
4) Divide sales Price/Lot size to get $/sq ft (Lot)
5) Multiply $/sq ft(House) x HF(House Factor) = HV(House Value)
6) Multiply $/sq ft(Lot) x LF(LotFactor) = LV(Lot Value)
7) Add HV(House Value) + LV(Lot Value) = HPM(House Price Multiplier)Also, this will give you an idea how much the House and Lot is worth individually. The HPM (House Price Multiplier) is to be used as a baseline or index for original houses on standardized lots. Sales Price will take care of the Location Factor, but you may have to adjust slightly for building materials, view, traffic, uneven lot, etc.
Since most of the value is in the land here, what do you think?
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