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sdcellar
ParticipantI like to think that Piggington is all about reality. I am most interested in quality posts related to the present and future state of the real estate market.
The bubble is reality. It’s just a question of what’s going to happen next and staying a step or two ahead of it.
I like Rich’s tag line about everyone else bringing data. I don’t think he’s asking us to be bearish for the sake of being bearish.
I’m making no comments about powayseller here, rather that balanced is good if that’s the “truth”. If perma-bearing is what I was looking for, I’d hang out at Housing Panic (no thank you very much).
October 2, 2006 at 10:29 AM in reply to: Is “highly desirable” property immune from the downturn? #37009ParticipantDidn’t some guy publish some theory about relativity or something? Nothing is immune (which you obviously understand).
A week or so ago somebody posted something about Davidson homes possibly being less susceptible to price pressure due to their emphasis on higher quality and distinctive design. While I certainly agree that they do build a better product, you can see that they are no different than anyone else.
Sure, you can say it’s Del Sur or whatever, but you actually have to give Davidson credit as they’ve at least gotten aggressive on pricing. They undertand that the market is going down and they’re trying not to chase it (even though they still may be from the looks of things…)
Contrast that to the idiots from Lyon Homes and Standard Pacific. Check out these $763,900 paired condos from Standard Pacific as well! These are all inferior properties and proof that it’s not just homeowners who don’t get it.
September 29, 2006 at 11:41 PM in reply to: New Lending Guidelines Will Lower Sales and Refis #36876ParticipantGuidance?!
a, b, and c) Little. None?
ParticipantAnybody have any idea what percentage of stated income loans required the borrower to submit Form 4506-T? If the percentage is high, you have to wonder why they didn’t use them effectively. If the percentage was low, then why would this change anything?
I suspect the latter and if so, then why would brokers and lenders who have been complicit in seemingly fraudulent practices change their ways?
Participantsdrebear, The stretch here might be the notion that people with a lot of money “bid up” prices. Typically, folks with more money expect more for it.
To counter my own point though (and support yours), it does seem that if the money comes through non-traditional sources (stock options, big investment returns), there might be a tendency to be a bit looser with it. e.g. hey, I just made an extra $100K because I worked at the right place at the right time, so what if I’m spending a little more than I’d like.
I believe bubbles feed other bubbles, and I think that’s what’s got a lot of people worried. We’re running out of bubbles…
ParticipantPS, yes sorry, I should have said vacancy rate. I was suggesting that if low vacancy rates were a significant factor, then rental prices should have experienced similar gains to housing prices. Of course, if that had happened, we would be less likely to consider this a bubble in the first place.
ParticipantPS, I’m supporting the point even though I don’t agree? I guess you’re connecting the dots for me? Well, I don’t agree with the dots. Could you at least respond to the inventory side of my post?
I think somebody else tried to make the point that there weren’t enough $110K earners in general, let alone tech related, to be singled out as the driver of this bubble.
Why are we singling out tech workers? Always tough to generalize, but engineers tend to be pretty conservative with their money. We established that even at those income levels, it gets tough to afford properties much over $500,000. Do we think that tech folks want to spend more than they need to and/or overextend themselves?
ParticipantIf the increase in rents correlated to the increase in home prices, there might be something to that. Plenty of people without money bought overpriced homes. Tell gym guy to keep trying…
Participantsdrealtor was on to something when he said that high paying tech jobs were easier to come by from ’99-’01. The early stages of the boom might be supported by that somewhat.
That said, following the dot-com bust, the trend reversed, but the bubble continued to grow at an even faster pace.
I’m still sticking mostly with buyer psychology. The American consumer is easily manipulated.
Must… go… buy… new iPod nano
ParticipantNor_LA-Temcu-SD-Guy
I was going to say exactly the same thing (right down to the 500K). I, too, would go fixed rate.
Sure, you could go higher with some of the creative (?) loan products out there, but then the driver is the loan products, not the income levels.
That said, my feeling is it was mostly speculators and the boom itself that fed the boom. Booms in high tech have happened before (even though they don’t seem to be happening now). Adjustable and negative amortization loans have been around a long time. Stated income seems new, but other than that, speculators and psychology (and manipulation of same, witness the spin with the August new home sales numbers) seem to be the drivers to me.
ParticipantNow we’re getting somewhere. I would agree that it doesn’t seem like it will take huge increases in foreclosures to impact resale values.
Why did you choose to “quote” Cagan, especially since you don’t put much creedence in what he has to say? It certainly seemed to cost you and others a bit of grief today.
For me, I’m hoping foreclosures don’t get too bad because I don’t want to see neighborhoods go to hell in a handbasket. Nope, just enough to bring things back to normalcy. I’ve heard of neighborhoods north of San Diego experiencing multiple foreclosures on a single street (could be hearsay, I don’t live there). That can’t be good.
Participantsdrealtor
Do I owe you or someone else and apology? You, me? I’m confused!
ParticipantAccording to Cagan (at least on February 14, 2006), it doesn’t matter what the numbers are as it won’t have much of an effect anyway. Excerpt:
Entitled “Mortgage Payment Reset: The Rumor and the Reality,” by Christopher Cagan, Ph.D., director of research and analytics at First American Real Estate Solutions, the study utilizes the extensive database and analytical resources of First American RES and its subsidiary LoanPerformance to classify market segments as relatively safe or vulnerable under the pressure of mortgage payment resets. The most vulnerable will be those who do not have substantial equity in their homes, but hold adjustable rate mortgages (ARMs) with low initial rates, often with interest-only and negative-amortization features.The study concludes, however, that while individual families and firms that are involved with the riskiest loans may suffer, on a national basis the impact of mortgage payment reset and subsequent default will not significantly impact the economy, as it will result in approximately $110 billion in losses, or less than 1 percent of total U.S. mortgage lending annually.
I disagree. Discuss!
September 27, 2006 at 5:30 PM in reply to: Critique the analysis, not the person: professional behavior #36649ParticipantWell, in the latest topic it’s become “WILL”, so what do you think of the interpretation now?
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