[no_such_reality]

SB – they’ll be debt collectors, repo men, property managers since so many will be trying to rent their places without the desire or skills of managing tenants.

Jes – I hope not. Zero job growth and exodus is actually better, IMHO, than substantial immigration where there aren’t new jobs for 11 of 12.

[no_such_reality]

No.

No. No. No. No. No.

That is the exact same mistake people make when they go buy a car. It is also the thinking that got us in this mess. They look at what their monthly payment is and not what they are paying.

Your friend needs to think about how big the hook she is on is.

She can be on the hook for $540,000 with a payment of $3500 month today. Or wait and only be on the hook for $440,000 (20% drop) and still have a payment of $3500 IF interest rates shoot up to 9.5%.

The difference is how easily she can walk away.

IMHO, the rate game is much less risky than the capital loss game of buying today.

[no_such_reality]

1 Job for every 12 newbies.

6) Southern CA is adding 200-300,000 new residents per year.
7) SoCal will create 30-50,000 jobs in the next 2 years.

So, 30-50K new jobs in two years, but 400-600K new residents.

That’s 1 job for every 12 new residents. Hopefully it isn’t true.

[no_such_reality]

Looks like overall average is just holding inflation since 2004.

[no_such_reality]

TP, what’s the last actual comp sale in the neighborhood? What did the homes in May go for? Are they roughly the same size, beds, baths?

[no_such_reality]

I think there is backlogged demand out there too. I also think it’ll vaporize as the numbers quickly head to their mental numbers. More importantly, it’ll vaporize as they realize, they don’t just have one good deal at their price, they have a dozen in the neighborhood they’re looking at.

[no_such_reality]

Interesting.

Can’t sell, cut price, cut it again, then try an auction and dispair.

Can’t sell, rent it, at a loss.

Can’t sell, cut the price and think of finding a renter.

That’s actually why I see the rental market softening. People are renting their places out as a last resort since they can’t get it sold.

[no_such_reality]

In the 2000-2001 recession, the S&P 500 lost the following in each of quarter of 2001: -23.2%, -39.4%, -35.4%, -24.2%.

Bunk. The S&P 500 index closed on the first day of each quarter at the following:
Jan 2000 = 1455
Apr 2000 = 1505
Jul 2000 = 1469
Oct 2000 = 1436
Jan 2001 = 1283
Apr 2001 = 1145
Jul 2001 = 1236
Oct 2001 = 1038
Jan 2002 = 1154

The first quarter of 2001 lost 10%. The 2nd gained 8% and the 3rd due to September 11th got slaughtered for 16%, but the fourth pulled back for a 11% gain. The entire year saw a 10% loss.

2002 was a different story, Q2 & Q3 got walloped, combined losing 27%.

[no_such_reality]

Hey, came across this little ditty on the US Census site ranking Owner Occupied monthly expenditures on home owning costs in 2004 spending 30% of more on housing… too much

looks like in 2004, SD was at 44%. Santa Ana was worse, which may have improved with influx of incomes.

I’d be curious to see 2005 and 2006, but we probably have to wait two years.

Trying to see why nationally, housing fluctuates between 2.5 and 3.5 median income while California typical is well above at approximately 5X household income in places like SD, OC.

[no_such_reality]

It shows housing is 100% overvalued. Nationally. Local market will be above or below accordingly.

Viewed in context of history, the graph shows a lot. What it clearly shows is that the current median home price nationally should be ~$110K versus the $200K it is. It also shows that anything above or below $110K is cyclic noise.

Prior to modern credit and central banking policy, the equivalent was $100K, now the reset point is $110K corresponds to the suburbanization shift that occured post WWII.

You local market will show the same, in fact, Rich has already posted it for SD, OC and LA. It’s the median price to income chart. Which is 8.5-9.0X median income.

[no_such_reality]

-62.45% Real Money (-55.2% nominal)

Okay, That’s my new prediction. Here’s the math.

Median 2005 Home value was $591,000.
Median family income in 2005 was $62,900.

Correcting to base financing and sustainable cash flow. Meaning requires 20% down, current 7.5% rate and max 30% of gross income for PITI.

Future median home value $221,916. PITI = $1572.

Allowing for 3% annual inflation and 6 years of correction, our 2012 targeted home price is $265K. A 55.2% nominal drop in prices.

There, it’s on the table…

Does anybody find it surprising that the PITI number corresponds to what the payment is with exotic loans?

[no_such_reality]

I like the San Deigo year over year historical appreciation chart. It’s all nominal pricing, but what it shows is that from 1991 to 1997, prices decreased approximately 5% or less annually with a couple dead cat bounces.

Buyer and investor psychology will be dramatically different if we have substantial quick nominal falls hitting double digits. A 3, 4 or even 5% “pull-back” is a “buying opportunity” when it gets above and hits the psychological 10%, it’s a problem that can’t easily be soft-sold.

[no_such_reality]

Join one of the major parties you want to change and work hard to influence its policies.

That’s wasting your time. Both parties are beholding to their donors and radical voters. In the republican’s case, that’s big money people and the fundamentalist religious groups because of the demonstrated single issue impact in swing states.

Similarly the democrats are subject to the Union’s and their money. They also have their radical left members with similar impact.

You will not be changing either party.

[no_such_reality]

L_thek,

7% is an unrealistic high average gain for housing. I’d guess that the extraordinary gains of 2000-2005 have distorted your average.

Second item, a 3% monthly loss would be absolutely devastating, that’s a 30% annual loss. Which is abolutely unprecedented. In previous downtowns, the revision to mean typically as zero to 4% loss during which inflation over-run the price driving the “real” price down.

We’re in uncharted territory. Real estate has not seen nominal losses in double digits, that are obvious to everybody. When the median starts to buckle and the median starts reporting 5% below last year, people will worry. When it goes month after month reporting 5% or more annual loss, people will really worry. If, and that’s a big if, annual median lost starts to show the kinds of dramatic price cutting that is showing up in CV, and the median shows 10% or more annual losses, buyers and investors will flee.

Simple question for all of use on the board, we may say will buy, but what will be our trigger? If the market enters freefall, what will you buy with? Is your money parked in cash? Will the local encomony belly up on the loss of RE jobs?

[no_such_reality]

Yes, but they miss something too…

Because of the soft rental market from 1990 to 1997 and then the subsequent home run, very little rental housing was built.

Occupancy in large scale rental developments are unsustainably high.

The question will be who gets busted out first: home owners or renters?

Keep in mind that from 1990 to 1996 bottom that the bulk of the decrease was inflation. The nominal prices only fell 10% or so.

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