[one_muggle]

Duck,

You might try responding without stooping to juvenile veiled ad hominem insults. I really wonder whether you are just being annoying or if, possibly, English is not your first language.

Yes, I said:
there are plenty of reasons why people sell their homes when they do not need to sell

I suggest that you read it again, and maybe the context will help. The point I made is that people that are not under pressure to sell are currently choosing not to sell, stupid or not. This may be creating pent-up demand.

If you don’t understand the sentence, perhaps a few examples will help:
I’ve sold property because I made more on the sale than on the rent, but I didn’t need to sell.
I sold my primary residence because I wanted a better school district. I didn’t need to move, I could have used the current school, or paid for private school, but I chose to move.
I sold an old condo because it was more of a hassle to rent it than it was worth. I did not need to sell.
The idea that one would sell something when one did not need to sell is not that hard. Those with a choice, who are choosing not to sell are increasing in number.
If you need more help understanding this concept, you might hire a tutor.

-one muggle

[one_muggle]

Why else would you move?

Seriously!? Do you live in California?
People in CA move every three years, on average. Do you really think they all need to move? They move to bigger homes, closer to the beach, further from the traffic, whatever.

People that MUST sell are people that cannot, without serious financial repercussions, keep the property. Which, as I said are forced sales, job move, retirement, bought another home, etc. Many people that were thinking of moving up, can no longer afford the financing, so they choose not to sell, yet. People expecting to use their homes as retirement are now waiting to sell, according to AARP and Money.com. Flippers who cannot sell their places are becoming unintentional landlords, and are waiting to sell. If you can’t tell the difference between “Must Sell (or buy)” and “Want to Sell (or buy)”, I hope your livelihood does not depend on understanding markets.

There are plenty of reasons why people sell homes when they do not NEED to sell, and those people seem to be waiting, for now. Unlike Hovnanian,

http://www.cnbc.com/id/20772628

Hovnanian, struggling like other home builders, is offering six-figure discounts on some of its properties this weekend as it attempts to draw interest in a slumping market. The sales blitz involves dropping prices by more than 20% on some of its prime real estate.

Go buy one, you’ll have an instant couple hundred thousand in equity… because RE isn’t really dropping, it’s all a media conspiracy.

[one_muggle]

Econ 101 – future supply (low for N. County Coastal) vs future demand (seems to be holding strong.) Does this boost the simple argument?

What you seem to be missing, and is the gist of the many examples here is that the “simple” supply-demand curve relates to price. An analysis by Global Insights, which takes into account the historic desirability of an area, as well as population and salaries, puts SD about 30-40% over its intrinsic value. This belies the idea that population growth will keep RE up.
So does the fact that from 1990 to 2000, the number of >$100k (adjusted for inflation) households has dropped, as a percentage of total population. In 1990 it was around 28%, but in 2000 the percentage dropped to about 16%. This is due in part to a high number of younger, college aged population moving in.

A survey done by (I think) Forbes, showed that a healthy chunk of higher-income college grads all but killed themselves to get into RE in the major markets since around 2001, possibly “stealing” demand from future years. In addition, retiring boomers have begun putting off home sales in metro areas (to move to less expensive locales) in an effort to wait out this crunch. This is fueling pent-up supply. In most major markets, the bulk of For Sale’s are becoming need-to-sell inventory (forced sales, job move, retirement, bought another home, etc).

The fraction of people that can afford the median priced home is less than 10 percent, see:
[img_assist|nid=4186|title=SD and LA Affordability Index: Probability of no crash…small|desc= The chart above shows that less than 2% of LA and 6% of SD can afford a median priced home. |link=node|align=left|width=466|height=360]

With the fundamental firmly against a continued RE boom and the expected value of SoCal RE running negative, the burden of proof is on RE bulls. The sunshine tax did not save Florida and it will not save California.

[one_muggle]

I’ve the secret of alchemy.
Send me your brass, lead, or iron and I’ll turn it into the equivalent mass in gold. Right now it costs about $850/oz, but I’m convinced that I can make you money on the volume.

-one muggle

[one_muggle]

Actually, that’s not a bad idea. There are a lot of hot, formerly employed mortgage brokers out there. Like the drug sales profession, the mortgage broker profession tends to draw in a lot of hot women.

How about prostitution?
I can see the Ad now: Get SCREWED by your mortgage broker… Again! (except this time it’s cheaper)

-one muggle

[one_muggle]

Isn’t that David Lereah?

Maybe his book isn’t selling

-one muggle

[one_muggle]

I have to second what bob said about Wells Fargo, not sure about B of A

BofA is nearly twice the size (by market cap~$200B) of WF, and both are enormous companies–more than an order of magnitude bigger than is countrywide, and none of these companies is as small and overextended as are the hedge funds or brokerages.
I’ll go out on a limb and say that if either closes up shop, I’ll eat my keyboard. (of course, if things get that bad, I may just have to anyway)

-one muggle

[one_muggle]

Job losses, when they come, in the USG are almost entirely from hiring freezes and attrition, they do not layoff and it is very hard to get fired. Even if an entire department is closed, all employees are offered jobs elsewhere–which they can choose not to take, but it is a choice.
I am pretty sure it takes an act of congress to have the equivalent of a civil service layoff.
For better or worse, govie jobs are still very safe.

-one muggle

[one_muggle]

For me gold is still cheap right now.
It may be, but what concerns me is the “water-cooler” status of gold. As far back as ~2000, scores of friends have been extolling the virtues of gold, and it has had a good run over those years. Yet currently, not one single professional wall street type I know personally or read is bullish on gold. Put together, it strikes me as more hype than investment.

Bubble: I believe one of the best ways to invest in gold is thru an ETF such as Streetracks GLD or iShares IAU
If you’re going to buy gold, I agree.

many feel that demand for gold will decrease as we may go into recession. Industrial use of gold is still a big gold user, e.g. gold plated electronics connectors.
As a pure commodity, I would have to agree. It is gold’s status as the benchmark currency, and hedge against inflation that makes this hard to call.
As far as electronics, this is also true, but currently it is the labor cost that dominates my costs. We do specialized, low volume stuff, so the actual gold costs might be more significant for high volume production, like cell phones–I don’t know. IMHO, if gold were merely an industrial metal, it would trade for far less and be more at the mercy of recessions than it is currently.

-one muggle

[one_muggle]

where gold is useless

Never said it was useless, but thanks for explaining buy low, sell high, I’d missed that one. Never predicted it would keep dropping either–just don’t see it worth the risk versus likely continued gains/ Never said the world had changed.
Speaking of history, the price of gold has historically increased about 7-8%, do you think the world has changed? Its several year run-up has just about put it back to its price during the last stagflation craze in the late 70’s. As prices go up, they dig more out of the ground, price goes down. Last analysis I saw was about $350-400 to dig it out, that is some incentive to dig up more as prices top $600.

Wheat was cheap a few ago… great, what’s your point?
Gold is either a hedge against inflation or speculation based upon increasing hordes upon hordes of inexperienced investors thinking that they’ve outsmarted the market. The only people that I expect to see see beating market returns with gold over the last ~10yrs are gold salesmen.
If gold was rising (in dollars) mainly because of US inflation, I might buy into your idea. But check gold versus almost every major currency, it’s way up. The last time gold ran up in anticipation of worldwide inflation, it proceeded to drop back to its historic return, losing about half its price. This is likely to occur again, unless, as you are fond of saying, the world has changed.

-one muggle

[one_muggle]

Oh, and by the way, my friend had a personal conversation with Warren Buffett. Buffett asked him how his investments were doing, and my friend answered: “I have a lot of investments outside the dollar, mostly precious metals”. And Buffett said “That’s very good, I also like them, and especially …”. That was about two years ago.

Sure, but he bought mine stocks, not the gold.

Crises come and go, and in the last one gold went to $850 ($6000 in today’s dollars if the dollar loses half its value every decade).
Now you’ve convinced me. Since gold has had a massively negative return from your $850 ($6000 in today’s, as you say) down to the $600’s in today’s dollars, now it must be a good time to buy gold.
Tootsie roll has had almost 300% returns over the same period, and in really bad times you can actually eat a Tootsie roll. 8^)

Good luck with your gold ventures (really), but when they are pumping out commercials for buying gold on every medium known to man–you are probably getting to the party late. And unlike google, which might also be overavalued, gold cannot earn its way back to its purchase price. When you would have been better off putting your money in your mattress rather than buy gold at $850, doesn’t that make you a wee bit wary today?

-one muggle

[one_muggle]

LA_Renter, I agree that they likely cannot help. BUT, the certainly can do significant damage trying.

Unintended consequences are a bitch.

-one muggle

[one_muggle]

I feel like this puts the thumb on those who have worked hard, saved for a down, etc… It’s pretty much like we have to coddle and baby sit these idiot borrowers.

Yup. But it just might happen because it bails out the two most important political constituencies: The donors and the victims. Anyone else feel like you’re living in an Ayn Rand novel?

Reminds me of the Educational Equality initiative that was proposed on Long Island twenty years ago. I forget the exact numbers but the gist was that since the middle/upper-middle class neighborhood schools had more money than did the working class neighborhoods, it was proposed to pool the money and dole it out more fairly. Some friends of mine and I figured out that if we expanded the pool to include the most affluent neighborhood schools as well, then the middle-class schools would stay roughly even. The response was basically “Nice try kids, but don’t you know people PAY more money to live in those neighborhoods?”
Strange, and I thought the middle-class people paid more to be in those neighborhoods, as compared to the working class areas.
I guess the moral is that we should all pay for the victims, whomever they may be, but we can’t expect the ultra rich to take a hit, because they deserve their money.

-one muggle

[one_muggle]

I suggest a surge of skilled Realtors (c) be deployed into areas of high foreclosure. After 9 months or so, we can expect a report from the Realtor Brigade, which will be refuted by an army of desk jockey political appointees that have never bought or sold a home. Nah, that’s just crazy talk.

-one muggle

[one_muggle]

Or not.
Warren Buffet also said that gold was non-productive in 1998 at Harvard: “It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

I suggest that you might not want to quote the oracle the next time you try to sell educated people gold. Some of us read.

-one muggle

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