[patientrenter]

Sounds like there’s a lot of emotion on this issue, so I’ll just drop in on this thread and drop out.

The notion that 50% off peak prices is a baseline, not a nadir, isn’t so far-fetched. I always scratch my head when I see fellow Piggs say that they expect the market to bottom at the price level that prevailed some time between 2000 and 2003. Sure, that could happen, but real estate is very cyclical, and the bottom of the last cycle was not then – it was 1996 or so.

In my own attempts to ballpark what home prices in So Cal might do as they reach bottom in the next few years, I:

1. Start with prices as of the bottom of the last cycle – 1996

2. Add some inflation. You can argue over the amount, but it’s not worth refining too much, so I just add about 40-60%, depending on my mood.

3. Subtract some for the extra severity of this downturn. This is a pure guess. Your guess is as good as mine (unless it’s different!)

4. Add some for the massive government efforts to maintain high home prices in this latest downturn. Who knows?

Because the last 2 are pure guesses, I tend to not do any explicit calculation for them, and just assume that in some hard-hit areas, prices will get in the neighborhood of the 1996 inflation-adjusted level and maybe lower, and in some sheltered areas, prices could stay higher by a significant %.

How does all that relate to the discussion about 50% off peak? Given that home prices at their peak were perhaps 4-6 times what they were in 1996, I see 50% off peak as being near the high end of my expected price range at the bottom this time.

[patientrenter]

Sounds like there’s a lot of emotion on this issue, so I’ll just drop in on this thread and drop out.

The notion that 50% off peak prices is a baseline, not a nadir, isn’t so far-fetched. I always scratch my head when I see fellow Piggs say that they expect the market to bottom at the price level that prevailed some time between 2000 and 2003. Sure, that could happen, but real estate is very cyclical, and the bottom of the last cycle was not then – it was 1996 or so.

In my own attempts to ballpark what home prices in So Cal might do as they reach bottom in the next few years, I:

1. Start with prices as of the bottom of the last cycle – 1996

2. Add some inflation. You can argue over the amount, but it’s not worth refining too much, so I just add about 40-60%, depending on my mood.

3. Subtract some for the extra severity of this downturn. This is a pure guess. Your guess is as good as mine (unless it’s different!)

4. Add some for the massive government efforts to maintain high home prices in this latest downturn. Who knows?

Because the last 2 are pure guesses, I tend to not do any explicit calculation for them, and just assume that in some hard-hit areas, prices will get in the neighborhood of the 1996 inflation-adjusted level and maybe lower, and in some sheltered areas, prices could stay higher by a significant %.

How does all that relate to the discussion about 50% off peak? Given that home prices at their peak were perhaps 4-6 times what they were in 1996, I see 50% off peak as being near the high end of my expected price range at the bottom this time.

[patientrenter]

Sounds like there’s a lot of emotion on this issue, so I’ll just drop in on this thread and drop out.

The notion that 50% off peak prices is a baseline, not a nadir, isn’t so far-fetched. I always scratch my head when I see fellow Piggs say that they expect the market to bottom at the price level that prevailed some time between 2000 and 2003. Sure, that could happen, but real estate is very cyclical, and the bottom of the last cycle was not then – it was 1996 or so.

In my own attempts to ballpark what home prices in So Cal might do as they reach bottom in the next few years, I:

1. Start with prices as of the bottom of the last cycle – 1996

2. Add some inflation. You can argue over the amount, but it’s not worth refining too much, so I just add about 40-60%, depending on my mood.

3. Subtract some for the extra severity of this downturn. This is a pure guess. Your guess is as good as mine (unless it’s different!)

4. Add some for the massive government efforts to maintain high home prices in this latest downturn. Who knows?

Because the last 2 are pure guesses, I tend to not do any explicit calculation for them, and just assume that in some hard-hit areas, prices will get in the neighborhood of the 1996 inflation-adjusted level and maybe lower, and in some sheltered areas, prices could stay higher by a significant %.

How does all that relate to the discussion about 50% off peak? Given that home prices at their peak were perhaps 4-6 times what they were in 1996, I see 50% off peak as being near the high end of my expected price range at the bottom this time.

[patientrenter]

Sounds like there’s a lot of emotion on this issue, so I’ll just drop in on this thread and drop out.

The notion that 50% off peak prices is a baseline, not a nadir, isn’t so far-fetched. I always scratch my head when I see fellow Piggs say that they expect the market to bottom at the price level that prevailed some time between 2000 and 2003. Sure, that could happen, but real estate is very cyclical, and the bottom of the last cycle was not then – it was 1996 or so.

In my own attempts to ballpark what home prices in So Cal might do as they reach bottom in the next few years, I:

1. Start with prices as of the bottom of the last cycle – 1996

2. Add some inflation. You can argue over the amount, but it’s not worth refining too much, so I just add about 40-60%, depending on my mood.

3. Subtract some for the extra severity of this downturn. This is a pure guess. Your guess is as good as mine (unless it’s different!)

4. Add some for the massive government efforts to maintain high home prices in this latest downturn. Who knows?

Because the last 2 are pure guesses, I tend to not do any explicit calculation for them, and just assume that in some hard-hit areas, prices will get in the neighborhood of the 1996 inflation-adjusted level and maybe lower, and in some sheltered areas, prices could stay higher by a significant %.

How does all that relate to the discussion about 50% off peak? Given that home prices at their peak were perhaps 4-6 times what they were in 1996, I see 50% off peak as being near the high end of my expected price range at the bottom this time.

[patientrenter]

[quote=aldante] Patient:

Patient……I think that voice of 2 thousand bankers close and cozy to the treasury drowns out the drone of 45 million homeowners trying to make ends meet. Especially when you tell them things are gonna work out. That is the crux of if for me.Btw try and call and talk to Feinstein or Boxer….I have never had one response.[/quote]

I totally agree that the big boys get the real inside access to lawmakers. But I am saying that they can only go so far without public support. The elephant in the room in this whole housing/stock price bubble is the large majority of the general public who want those prices to go higher. We can pretend the elephant is not there, but that won’t help us understand what happened and what will happen.

[patientrenter]

[quote=aldante] Patient:

Patient……I think that voice of 2 thousand bankers close and cozy to the treasury drowns out the drone of 45 million homeowners trying to make ends meet. Especially when you tell them things are gonna work out. That is the crux of if for me.Btw try and call and talk to Feinstein or Boxer….I have never had one response.[/quote]

I totally agree that the big boys get the real inside access to lawmakers. But I am saying that they can only go so far without public support. The elephant in the room in this whole housing/stock price bubble is the large majority of the general public who want those prices to go higher. We can pretend the elephant is not there, but that won’t help us understand what happened and what will happen.

[patientrenter]

[quote=aldante] Patient:

Patient……I think that voice of 2 thousand bankers close and cozy to the treasury drowns out the drone of 45 million homeowners trying to make ends meet. Especially when you tell them things are gonna work out. That is the crux of if for me.Btw try and call and talk to Feinstein or Boxer….I have never had one response.[/quote]

I totally agree that the big boys get the real inside access to lawmakers. But I am saying that they can only go so far without public support. The elephant in the room in this whole housing/stock price bubble is the large majority of the general public who want those prices to go higher. We can pretend the elephant is not there, but that won’t help us understand what happened and what will happen.

[patientrenter]

[quote=aldante] Patient:

Patient……I think that voice of 2 thousand bankers close and cozy to the treasury drowns out the drone of 45 million homeowners trying to make ends meet. Especially when you tell them things are gonna work out. That is the crux of if for me.Btw try and call and talk to Feinstein or Boxer….I have never had one response.[/quote]

I totally agree that the big boys get the real inside access to lawmakers. But I am saying that they can only go so far without public support. The elephant in the room in this whole housing/stock price bubble is the large majority of the general public who want those prices to go higher. We can pretend the elephant is not there, but that won’t help us understand what happened and what will happen.

[patientrenter]

[quote=aldante] Patient:

Patient……I think that voice of 2 thousand bankers close and cozy to the treasury drowns out the drone of 45 million homeowners trying to make ends meet. Especially when you tell them things are gonna work out. That is the crux of if for me.Btw try and call and talk to Feinstein or Boxer….I have never had one response.[/quote]

I totally agree that the big boys get the real inside access to lawmakers. But I am saying that they can only go so far without public support. The elephant in the room in this whole housing/stock price bubble is the large majority of the general public who want those prices to go higher. We can pretend the elephant is not there, but that won’t help us understand what happened and what will happen.

[patientrenter]

[quote=flu]
Horray, the 105% rule still applies.

http://finance.yahoo.com/news/6-companies-to-get-99B-under-apf-14938907.html

Yup, this most likely won’t help too much in CA…unless the banks cheat on the appraisals…Now they wouldn’t do that would they?
🙂
[/quote]

Took the words out of my mouth. How reliable at preventing overvaluation were appraisals before now?

[patientrenter]

[quote=flu]
Horray, the 105% rule still applies.

http://finance.yahoo.com/news/6-companies-to-get-99B-under-apf-14938907.html

Yup, this most likely won’t help too much in CA…unless the banks cheat on the appraisals…Now they wouldn’t do that would they?
🙂
[/quote]

Took the words out of my mouth. How reliable at preventing overvaluation were appraisals before now?

[patientrenter]

[quote=flu]
Horray, the 105% rule still applies.

http://finance.yahoo.com/news/6-companies-to-get-99B-under-apf-14938907.html

Yup, this most likely won’t help too much in CA…unless the banks cheat on the appraisals…Now they wouldn’t do that would they?
🙂
[/quote]

Took the words out of my mouth. How reliable at preventing overvaluation were appraisals before now?

[patientrenter]

[quote=flu]
Horray, the 105% rule still applies.

http://finance.yahoo.com/news/6-companies-to-get-99B-under-apf-14938907.html

Yup, this most likely won’t help too much in CA…unless the banks cheat on the appraisals…Now they wouldn’t do that would they?
🙂
[/quote]

Took the words out of my mouth. How reliable at preventing overvaluation were appraisals before now?

[patientrenter]

[quote=flu]
Horray, the 105% rule still applies.

http://finance.yahoo.com/news/6-companies-to-get-99B-under-apf-14938907.html

Yup, this most likely won’t help too much in CA…unless the banks cheat on the appraisals…Now they wouldn’t do that would they?
🙂
[/quote]

Took the words out of my mouth. How reliable at preventing overvaluation were appraisals before now?

[patientrenter]

[quote=deadzone]That’s bullcrap patient, these bailouts have nothing to do with making people (i.e.voters) happy. 3/4 of Americans are not homeowners, not sure where you got that stat. The majority of American’s are against bailing out homeowners. Nearly 40% of Americans are renters, do you think the bailout is making them happy? What about homeowners who either own their homes outright or nearly outright? Are they happy?

Don’t kid yourself, Its all about saving the banks and financial industry. The U.S. economy has no real foundation outside of loaning money to each other to buy crap. If/when the financial industry implodes, the U.S. is done. [/quote]

deadzone:

1. Check my post. I didn’t claim that 3/4 of Americans are homeowners. [Hint, check for the word “voters” in my post.]

2. Yes, people may rail against bailouts. But let’s take a reality check here. Many of those people want their own home’s price to be higher, not lower. That is true whether they have a mortgage or not. If you want something for yourself, it can lead you into turning a blind eye to what it takes to get it.

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