[ltokuda]

Besides what BobS said, another possible reason is that the economy wasn’t really doing as well as we had thought. Here’s a chart from http://www.shadowstats.com which shows the U.S. GDP, using the historical calculation of CPI (as opposed to the tweeked versions used since the 1980’s).

[img_assist|nid=7776|title=
ShadowStats GDP|desc=|link=node|align=left|width=466|height=324]

By tweeking the definition of CPI, you can effectively manipulate the reported GDP. The chart illustrates the effects of all those tweeks.

So its possible that the economy was doing much worse than what was officially reported. Notice that GDP could have gone negative around 1995/1996.

What’s also interesting to me is that the ShadowStats GDP says that the 2001 recession actually lasts until 2003. I think its interesting because that’s exactly what it felt like to me. This experience gives me reason to believe that the ShadowStats GDP numbers are true.

[ltokuda]

Besides what BobS said, another possible reason is that the economy wasn’t really doing as well as we had thought. Here’s a chart from http://www.shadowstats.com which shows the U.S. GDP, using the historical calculation of CPI (as opposed to the tweeked versions used since the 1980’s).

[img_assist|nid=7776|title=
ShadowStats GDP|desc=|link=node|align=left|width=466|height=324]

By tweeking the definition of CPI, you can effectively manipulate the reported GDP. The chart illustrates the effects of all those tweeks.

So its possible that the economy was doing much worse than what was officially reported. Notice that GDP could have gone negative around 1995/1996.

What’s also interesting to me is that the ShadowStats GDP says that the 2001 recession actually lasts until 2003. I think its interesting because that’s exactly what it felt like to me. This experience gives me reason to believe that the ShadowStats GDP numbers are true.

[ltokuda]

I thought it made sense for you to buy until I read that you may not stay put long enough. Then this finally put the nail on the coffin:

"We want to keep our options open so when higher-end homes in the Bay area become reasonable we can make the jump."

Obviously you don't like Vacaville for the long term! You really want to live in the Bay Area.

I agree with Diego.  You had me convinced until I read that statement.  It seems like you're trying to convince yourself that you want to buy that house when, in fact, you really don't want to live there.  I have to take back my "go for it" recommendation.  Although I won't go as far as recommending against it.

Just for reference, I did the buy vs. rent calculation on your house.  The equivalent rent (on a $470,000 house) would have to be about $3100 for the "buy=rent" equation to hold true.  This assumes that you will live in the house.

If you purchase this home for $470,000 and rent it out, you would have to charge about $4100/month to break even.  This calculation assumes a 5% down payment and an 8% vacancy rate.  So if you buy another house in the Bay Area and want to rent this one out, you would need the rents to increase by 30% for you to break even on the initial cash flow.

If you were to rent this house out for $3100/month and you wanted to break even on the cash flow, then you would only want to pay about $350,000 for this house.  Again, I assume 5% down, 8% vacancy.  I would expect $350,000 to be very close to a hard bottom in today's dollars.  That's how low I think it could possible go … not that it will ever get there.

If the market drops more and you decide to purchase another home in the Bay Area, you will probably be upsidedown on your first house.  Its also likely that if you rent it out, you'll be losing money every month for years to come.  If you could stomach the idea of walking out of your first home, it would be a great option at that point.

[ltokuda]

I thought it made sense for you to buy until I read that you may not stay put long enough. Then this finally put the nail on the coffin:

"We want to keep our options open so when higher-end homes in the Bay area become reasonable we can make the jump."

Obviously you don't like Vacaville for the long term! You really want to live in the Bay Area.

I agree with Diego.  You had me convinced until I read that statement.  It seems like you're trying to convince yourself that you want to buy that house when, in fact, you really don't want to live there.  I have to take back my "go for it" recommendation.  Although I won't go as far as recommending against it.

Just for reference, I did the buy vs. rent calculation on your house.  The equivalent rent (on a $470,000 house) would have to be about $3100 for the "buy=rent" equation to hold true.  This assumes that you will live in the house.

If you purchase this home for $470,000 and rent it out, you would have to charge about $4100/month to break even.  This calculation assumes a 5% down payment and an 8% vacancy rate.  So if you buy another house in the Bay Area and want to rent this one out, you would need the rents to increase by 30% for you to break even on the initial cash flow.

If you were to rent this house out for $3100/month and you wanted to break even on the cash flow, then you would only want to pay about $350,000 for this house.  Again, I assume 5% down, 8% vacancy.  I would expect $350,000 to be very close to a hard bottom in today's dollars.  That's how low I think it could possible go … not that it will ever get there.

If the market drops more and you decide to purchase another home in the Bay Area, you will probably be upsidedown on your first house.  Its also likely that if you rent it out, you'll be losing money every month for years to come.  If you could stomach the idea of walking out of your first home, it would be a great option at that point.

[ltokuda]

I thought it made sense for you to buy until I read that you may not stay put long enough. Then this finally put the nail on the coffin:

"We want to keep our options open so when higher-end homes in the Bay area become reasonable we can make the jump."

Obviously you don't like Vacaville for the long term! You really want to live in the Bay Area.

I agree with Diego.  You had me convinced until I read that statement.  It seems like you're trying to convince yourself that you want to buy that house when, in fact, you really don't want to live there.  I have to take back my "go for it" recommendation.  Although I won't go as far as recommending against it.

Just for reference, I did the buy vs. rent calculation on your house.  The equivalent rent (on a $470,000 house) would have to be about $3100 for the "buy=rent" equation to hold true.  This assumes that you will live in the house.

If you purchase this home for $470,000 and rent it out, you would have to charge about $4100/month to break even.  This calculation assumes a 5% down payment and an 8% vacancy rate.  So if you buy another house in the Bay Area and want to rent this one out, you would need the rents to increase by 30% for you to break even on the initial cash flow.

If you were to rent this house out for $3100/month and you wanted to break even on the cash flow, then you would only want to pay about $350,000 for this house.  Again, I assume 5% down, 8% vacancy.  I would expect $350,000 to be very close to a hard bottom in today's dollars.  That's how low I think it could possible go … not that it will ever get there.

If the market drops more and you decide to purchase another home in the Bay Area, you will probably be upsidedown on your first house.  Its also likely that if you rent it out, you'll be losing money every month for years to come.  If you could stomach the idea of walking out of your first home, it would be a great option at that point.

[ltokuda]

I thought it made sense for you to buy until I read that you may not stay put long enough. Then this finally put the nail on the coffin:

"We want to keep our options open so when higher-end homes in the Bay area become reasonable we can make the jump."

Obviously you don't like Vacaville for the long term! You really want to live in the Bay Area.

I agree with Diego.  You had me convinced until I read that statement.  It seems like you're trying to convince yourself that you want to buy that house when, in fact, you really don't want to live there.  I have to take back my "go for it" recommendation.  Although I won't go as far as recommending against it.

Just for reference, I did the buy vs. rent calculation on your house.  The equivalent rent (on a $470,000 house) would have to be about $3100 for the "buy=rent" equation to hold true.  This assumes that you will live in the house.

If you purchase this home for $470,000 and rent it out, you would have to charge about $4100/month to break even.  This calculation assumes a 5% down payment and an 8% vacancy rate.  So if you buy another house in the Bay Area and want to rent this one out, you would need the rents to increase by 30% for you to break even on the initial cash flow.

If you were to rent this house out for $3100/month and you wanted to break even on the cash flow, then you would only want to pay about $350,000 for this house.  Again, I assume 5% down, 8% vacancy.  I would expect $350,000 to be very close to a hard bottom in today's dollars.  That's how low I think it could possible go … not that it will ever get there.

If the market drops more and you decide to purchase another home in the Bay Area, you will probably be upsidedown on your first house.  Its also likely that if you rent it out, you'll be losing money every month for years to come.  If you could stomach the idea of walking out of your first home, it would be a great option at that point.

[ltokuda]

I thought it made sense for you to buy until I read that you may not stay put long enough. Then this finally put the nail on the coffin:

"We want to keep our options open so when higher-end homes in the Bay area become reasonable we can make the jump."

Obviously you don't like Vacaville for the long term! You really want to live in the Bay Area.

I agree with Diego.  You had me convinced until I read that statement.  It seems like you're trying to convince yourself that you want to buy that house when, in fact, you really don't want to live there.  I have to take back my "go for it" recommendation.  Although I won't go as far as recommending against it.

Just for reference, I did the buy vs. rent calculation on your house.  The equivalent rent (on a $470,000 house) would have to be about $3100 for the "buy=rent" equation to hold true.  This assumes that you will live in the house.

If you purchase this home for $470,000 and rent it out, you would have to charge about $4100/month to break even.  This calculation assumes a 5% down payment and an 8% vacancy rate.  So if you buy another house in the Bay Area and want to rent this one out, you would need the rents to increase by 30% for you to break even on the initial cash flow.

If you were to rent this house out for $3100/month and you wanted to break even on the cash flow, then you would only want to pay about $350,000 for this house.  Again, I assume 5% down, 8% vacancy.  I would expect $350,000 to be very close to a hard bottom in today's dollars.  That's how low I think it could possible go … not that it will ever get there.

If the market drops more and you decide to purchase another home in the Bay Area, you will probably be upsidedown on your first house.  Its also likely that if you rent it out, you'll be losing money every month for years to come.  If you could stomach the idea of walking out of your first home, it would be a great option at that point.

[ltokuda]

Maybe a change in the title would be appropriate to CA Housing Crisis, the Real Story…Out-of-Control Supply.

I agree.  The data you presented does suggest that the future supply will be greatly affected by the large and growing number of REO's in the pipeline.

[ltokuda]

Maybe a change in the title would be appropriate to CA Housing Crisis, the Real Story…Out-of-Control Supply.

I agree.  The data you presented does suggest that the future supply will be greatly affected by the large and growing number of REO's in the pipeline.

[ltokuda]

Maybe a change in the title would be appropriate to CA Housing Crisis, the Real Story…Out-of-Control Supply.

I agree.  The data you presented does suggest that the future supply will be greatly affected by the large and growing number of REO's in the pipeline.

[ltokuda]

Maybe a change in the title would be appropriate to CA Housing Crisis, the Real Story…Out-of-Control Supply.

I agree.  The data you presented does suggest that the future supply will be greatly affected by the large and growing number of REO's in the pipeline.

[ltokuda]

Maybe a change in the title would be appropriate to CA Housing Crisis, the Real Story…Out-of-Control Supply.

I agree.  The data you presented does suggest that the future supply will be greatly affected by the large and growing number of REO's in the pipeline.

[ltokuda]

In all seriousness, the properties banks are holding are imminently going on the market. Most have already been on the market as short sales, go off, then back on very shortly after the bank takes possession. They need to be considered as inventory.

jpinpb, I think you're confusing "future inventory" with "inventory".  "Future inventory" is useful information when you're trying to forecast the market.  People should definitely be aware of it.  But you shouldn't use "future inventory" to calculate the "months of supply" because "months of supply" has a very specific definition.  Changing the definition of a well known term will confuse people rather than enlighten them.

[ltokuda]

In all seriousness, the properties banks are holding are imminently going on the market. Most have already been on the market as short sales, go off, then back on very shortly after the bank takes possession. They need to be considered as inventory.

jpinpb, I think you're confusing "future inventory" with "inventory".  "Future inventory" is useful information when you're trying to forecast the market.  People should definitely be aware of it.  But you shouldn't use "future inventory" to calculate the "months of supply" because "months of supply" has a very specific definition.  Changing the definition of a well known term will confuse people rather than enlighten them.

[ltokuda]

In all seriousness, the properties banks are holding are imminently going on the market. Most have already been on the market as short sales, go off, then back on very shortly after the bank takes possession. They need to be considered as inventory.

jpinpb, I think you're confusing "future inventory" with "inventory".  "Future inventory" is useful information when you're trying to forecast the market.  People should definitely be aware of it.  But you shouldn't use "future inventory" to calculate the "months of supply" because "months of supply" has a very specific definition.  Changing the definition of a well known term will confuse people rather than enlighten them.

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