Forum Replies Created
-
AuthorPosts
-
patientrenter
ParticipantDaC,
Were you around for the 1988-1996 cycle? If so, do the banks/investors and regulatory bodies seem much better prepared and more effectively acting in concert this time?
Patient renter in OC
ParticipantThanks DaC,
I just read your papers after I returned from dinner… with someone from one of the key agencies, as it happens. I think there’s really substantive relief being readied as needed. Aggregate loan losses will probably be effectively limited. This will keep mortgage investors from cutting off new funds too severely. Looks like the great housing put lives on, and I’m beginning to think prices will rise after a pretty modest dip (of 20-30%?).
This is depressing. Why does anyone save and actually pay with their own money for things like houses? Oh, I forgot, the Chinese and Japanese do save enough to eventually actually pay for things with their own money. If they ever learn this game…
At this point, I think the only hope for a decrease of 50% or so (still way above real prices just 10 years ago) is an external global shock or a total screw-up by the regulators, and realistically those are long shots.
Patient renter in OC
ParticipantThanks DaC,
I just read your papers after I returned from dinner… with someone from one of the key agencies, as it happens. I think there’s really substantive relief being readied as needed. Aggregate loan losses will probably be effectively limited. This will keep mortgage investors from cutting off new funds too severely. Looks like the great housing put lives on, and I’m beginning to think prices will rise after a pretty modest dip (of 20-30%?).
This is depressing. Why does anyone save and actually pay with their own money for things like houses? Oh, I forgot, the Chinese and Japanese do save enough to eventually actually pay for things with their own money. If they ever learn this game…
At this point, I think the only hope for a decrease of 50% or so (still way above real prices just 10 years ago) is an external global shock or a total screw-up by the regulators, and realistically those are long shots.
Patient renter in OC
ParticipantWho’sAfraidofBigBadHousingPut..
It’s fun putting catchy lipstick on the pig of housing finance.
“There has been a lot of input so far above and beyond Barney Frank & Co., including the ASF and MBA.”
DaC, can you shed a little light on what the other players driving mortgage practices, especially loand mods and guarantees, are doing? Until I looked them up just now, I didn’t know who the ASF or MBA were, and there are just hints on their websites of upcoming guidelines. Being involved in other regulatory processes, I know that if they say they are preparing guidelines, they are far along and a lot of people know what’s likely, or at least possible.
Patient renter in OC
ParticipantWho’sAfraidofBigBadHousingPut..
It’s fun putting catchy lipstick on the pig of housing finance.
“There has been a lot of input so far above and beyond Barney Frank & Co., including the ASF and MBA.”
DaC, can you shed a little light on what the other players driving mortgage practices, especially loand mods and guarantees, are doing? Until I looked them up just now, I didn’t know who the ASF or MBA were, and there are just hints on their websites of upcoming guidelines. Being involved in other regulatory processes, I know that if they say they are preparing guidelines, they are far along and a lot of people know what’s likely, or at least possible.
Patient renter in OC
ParticipantNot much to oppose… ZB, your general views about housing are largely shared by most other piggingtonians. There might be a little controversy around the edges, but not in the center. As SD Realtor has just said in another thread, we’re mostly now just watching for specific data to better judge when to strike… er, buy our specific little piece of paradise.
Patient renter in OC
ParticipantNot much to oppose… ZB, your general views about housing are largely shared by most other piggingtonians. There might be a little controversy around the edges, but not in the center. As SD Realtor has just said in another thread, we’re mostly now just watching for specific data to better judge when to strike… er, buy our specific little piece of paradise.
Patient renter in OC
ParticipantSD Realtor,
You’re spot on. I just saw this site fairly recently, and had lots of general questions. I’ve now seen that everything I had questions about was raised months ago, and discussed in depth.
At this point, we’re all just waiting for the right time and price (and sometimes area, for the more footloose opportunists) to buy in. And what we need is mostly just early warning data on prices and pressures.
You didn’t say it, but I think you implied that the strong and increasing tendency to go off-topic onto traditional non-RE topics of passionate disagreement was driven by a lack of really meaty RE news that even the fully up-to-date blogger here can get excited about. I agree. Bored teenagers start shouting and fighting with each other. So let’s give ’em something chewy to keep busy on.
I’d add that temeculaguy’s updates on price drops are helpful and uplifting, and PD and others have given useful updates on Coronado. There is a whole section of this blog that was supposed to be set aside for news about specific areas. Maybe some threads could be set up there so that it’s easy for us all to know where to post specific info and look it up?
Patient renter in OC
ParticipantSD Realtor,
You’re spot on. I just saw this site fairly recently, and had lots of general questions. I’ve now seen that everything I had questions about was raised months ago, and discussed in depth.
At this point, we’re all just waiting for the right time and price (and sometimes area, for the more footloose opportunists) to buy in. And what we need is mostly just early warning data on prices and pressures.
You didn’t say it, but I think you implied that the strong and increasing tendency to go off-topic onto traditional non-RE topics of passionate disagreement was driven by a lack of really meaty RE news that even the fully up-to-date blogger here can get excited about. I agree. Bored teenagers start shouting and fighting with each other. So let’s give ’em something chewy to keep busy on.
I’d add that temeculaguy’s updates on price drops are helpful and uplifting, and PD and others have given useful updates on Coronado. There is a whole section of this blog that was supposed to be set aside for news about specific areas. Maybe some threads could be set up there so that it’s easy for us all to know where to post specific info and look it up?
Patient renter in OC
ParticipantOFHEO opens the spigots..
http://www.ofheo.gov/media/pdf/PMConf61107.pdf
Yal on Calculated Risk posted a link to this OFHEO presentation by James Lockhart. Note the 2 new programs on page 23. There is no $ limit on the “Home Stay” program to ease terms for homeowners who don’t pay their originally agreed loan obligations.
Between this and FAS 140 ‘clarifications’ and lots of other actions in process or under consideration, the full force of federal and other regulatory and private intervention is being readied. I’d be (pleasantly) surprised if prices fell by more than 20-30% in So Calif before these measures put a floor under the prices. There’s a Greenspan put for stocks. Housing goes beyond the Fed. To whom should we give credit for the nationwide housing put?
Patient renter in OC
ParticipantOFHEO opens the spigots..
http://www.ofheo.gov/media/pdf/PMConf61107.pdf
Yal on Calculated Risk posted a link to this OFHEO presentation by James Lockhart. Note the 2 new programs on page 23. There is no $ limit on the “Home Stay” program to ease terms for homeowners who don’t pay their originally agreed loan obligations.
Between this and FAS 140 ‘clarifications’ and lots of other actions in process or under consideration, the full force of federal and other regulatory and private intervention is being readied. I’d be (pleasantly) surprised if prices fell by more than 20-30% in So Calif before these measures put a floor under the prices. There’s a Greenspan put for stocks. Housing goes beyond the Fed. To whom should we give credit for the nationwide housing put?
Patient renter in OC
Participantnsr and PD,
Thanks for the comments. When I buy, it’ll be all cash, so I have no mortgage calculation. I may just leave out the opportunity cost too, because that applies only if I assume the home won’t appreciate at inflation or the rate of other assets. I simply won’t be able to bring myself to buy if house prices are still moving down at a clip. So my assumption at purchase will be that the condo/house asset I’m purchasing could appreciate or depreciate just like stocks or anything else I could buy. I could be wrong, but then I could be wrong if I buy stocks too. Simple calcs, but it makes it easy to decide.
I went through the boom of 1987-1990, and the drop of 1991-1996. I moved from LA to OC in 1996 and didn’t buy because I was very familiar with what houses here cost in the 1970’s. (I was a RE nut even when I was a teenager in the 1970’s, so I knew prices in So Calif even though I lived 5000 miles away.) That experience taught me to not be greedy and not to use absolute historical price measures, and instead to just buy when I can lock in my current living situation at around my current cash cost….. unless prices are dropping so fast that I am convinced the market is still going down. I never again want to read in my rental about prices that are too high for me and going even higher.
Patient renter in OC
Participantnsr and PD,
Thanks for the comments. When I buy, it’ll be all cash, so I have no mortgage calculation. I may just leave out the opportunity cost too, because that applies only if I assume the home won’t appreciate at inflation or the rate of other assets. I simply won’t be able to bring myself to buy if house prices are still moving down at a clip. So my assumption at purchase will be that the condo/house asset I’m purchasing could appreciate or depreciate just like stocks or anything else I could buy. I could be wrong, but then I could be wrong if I buy stocks too. Simple calcs, but it makes it easy to decide.
I went through the boom of 1987-1990, and the drop of 1991-1996. I moved from LA to OC in 1996 and didn’t buy because I was very familiar with what houses here cost in the 1970’s. (I was a RE nut even when I was a teenager in the 1970’s, so I knew prices in So Calif even though I lived 5000 miles away.) That experience taught me to not be greedy and not to use absolute historical price measures, and instead to just buy when I can lock in my current living situation at around my current cash cost….. unless prices are dropping so fast that I am convinced the market is still going down. I never again want to read in my rental about prices that are too high for me and going even higher.
Patient renter in OC
Participantnsr, here’s my buy or rent calc.
I’m a price sensitive tenant. I pay $1425/mo for an old 2+1+garage apartment condo here in Eastside Costa Mesa. On Craiglist, I don’t see much for less than that in Lake Forest or Mission Viejo or Laguna Niguel. So I assume it would cost me at least $1300 for about the same old 2+1+garage in one of those areas.
If my total expenses when buying are $3K / yr for HOA and 1.5% for maintenance and 1% for taxes and 2% for occasional upgrades and miscellaneous, then I am paying about 5 – 5.5% on $300K after tax, or about $1300 / mo. So if I can get an old 2+1 with a garage for $300K, my outlay is about equal to renting.
My hope is to wait, as long as prices are decreasing, so I can get something better for $300K, but if price decreases slow and I can buy something similar to what I live in now for less than $300K, I probably will pull that trigger. I have to hold myself back from making a premature move by also requiring that I can pay for it out of money market savings, which are less than $200K now and growing slowly.
Patient renter in OC
-
AuthorPosts
