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This article was eviscerated last week on numerous blogs linked to on Piggington.

Suffice it to say, Plummer’s a tool, and he completely ignores items that agree with the massive overall price drop, and disagree with his thesis, like the Case-Shiller national housing index (which has been around a LOT longer than the 7 years the Composite-20 index has been). Way too many flaws to bother regurgitating here, I suggest you look through the blog links for relevent links that took him apart.

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Some of my thoughts – the market in 2007 was not nearly as bad as it is this year (the foreclosure wave hadn’t even really started to build back then), which I think has had a couple of effects relative to inventory.

Firstly, the market today is made up in large part of “must-sell” inventory (foreclosures + short sales is approaching, if not exceeding the 50% mark in San Diego as a whole – add to that job transfers and other must-sell properties, and it is almost certainly the large majority of the market). “Must-sell” inventory, by it’s very nature is not seasonal – no bank, short-saler, or job-transferee is going to pull a listing off the MLS in November and put it back on the market in March.

Secondly, all this “must-sell” inventory I would think would have the effect of keeping a lot of houses which don’t have to be sold off the market – I suspect a LOT of potential sellers who aren’t in a “must-sell” position are keeping their properties off the market because they don’t want to compete with the “must-sell” inventory. This inventory I would think would normally make up the large part of the seasonal variation – people who don’t have to sell their house have the luxury of listing it during the spring buying season, and being able to pull it down if it doesn’t sell at the price they’d like to see. This is “phantom inventory” as it is inventory that would likely be on the market if not for the severe economic conditions in the current market.

And, of course, banks and courts still haven’t been able to keep up with the incredible foreclosure rate, meaning there’s still a ton of stuff in the wings just waiting to be processed.

[SDEngineer]

Some of my thoughts – the market in 2007 was not nearly as bad as it is this year (the foreclosure wave hadn’t even really started to build back then), which I think has had a couple of effects relative to inventory.

Firstly, the market today is made up in large part of “must-sell” inventory (foreclosures + short sales is approaching, if not exceeding the 50% mark in San Diego as a whole – add to that job transfers and other must-sell properties, and it is almost certainly the large majority of the market). “Must-sell” inventory, by it’s very nature is not seasonal – no bank, short-saler, or job-transferee is going to pull a listing off the MLS in November and put it back on the market in March.

Secondly, all this “must-sell” inventory I would think would have the effect of keeping a lot of houses which don’t have to be sold off the market – I suspect a LOT of potential sellers who aren’t in a “must-sell” position are keeping their properties off the market because they don’t want to compete with the “must-sell” inventory. This inventory I would think would normally make up the large part of the seasonal variation – people who don’t have to sell their house have the luxury of listing it during the spring buying season, and being able to pull it down if it doesn’t sell at the price they’d like to see. This is “phantom inventory” as it is inventory that would likely be on the market if not for the severe economic conditions in the current market.

And, of course, banks and courts still haven’t been able to keep up with the incredible foreclosure rate, meaning there’s still a ton of stuff in the wings just waiting to be processed.

[SDEngineer]

Some of my thoughts – the market in 2007 was not nearly as bad as it is this year (the foreclosure wave hadn’t even really started to build back then), which I think has had a couple of effects relative to inventory.

Firstly, the market today is made up in large part of “must-sell” inventory (foreclosures + short sales is approaching, if not exceeding the 50% mark in San Diego as a whole – add to that job transfers and other must-sell properties, and it is almost certainly the large majority of the market). “Must-sell” inventory, by it’s very nature is not seasonal – no bank, short-saler, or job-transferee is going to pull a listing off the MLS in November and put it back on the market in March.

Secondly, all this “must-sell” inventory I would think would have the effect of keeping a lot of houses which don’t have to be sold off the market – I suspect a LOT of potential sellers who aren’t in a “must-sell” position are keeping their properties off the market because they don’t want to compete with the “must-sell” inventory. This inventory I would think would normally make up the large part of the seasonal variation – people who don’t have to sell their house have the luxury of listing it during the spring buying season, and being able to pull it down if it doesn’t sell at the price they’d like to see. This is “phantom inventory” as it is inventory that would likely be on the market if not for the severe economic conditions in the current market.

And, of course, banks and courts still haven’t been able to keep up with the incredible foreclosure rate, meaning there’s still a ton of stuff in the wings just waiting to be processed.

[SDEngineer]

Some of my thoughts – the market in 2007 was not nearly as bad as it is this year (the foreclosure wave hadn’t even really started to build back then), which I think has had a couple of effects relative to inventory.

Firstly, the market today is made up in large part of “must-sell” inventory (foreclosures + short sales is approaching, if not exceeding the 50% mark in San Diego as a whole – add to that job transfers and other must-sell properties, and it is almost certainly the large majority of the market). “Must-sell” inventory, by it’s very nature is not seasonal – no bank, short-saler, or job-transferee is going to pull a listing off the MLS in November and put it back on the market in March.

Secondly, all this “must-sell” inventory I would think would have the effect of keeping a lot of houses which don’t have to be sold off the market – I suspect a LOT of potential sellers who aren’t in a “must-sell” position are keeping their properties off the market because they don’t want to compete with the “must-sell” inventory. This inventory I would think would normally make up the large part of the seasonal variation – people who don’t have to sell their house have the luxury of listing it during the spring buying season, and being able to pull it down if it doesn’t sell at the price they’d like to see. This is “phantom inventory” as it is inventory that would likely be on the market if not for the severe economic conditions in the current market.

And, of course, banks and courts still haven’t been able to keep up with the incredible foreclosure rate, meaning there’s still a ton of stuff in the wings just waiting to be processed.

[SDEngineer]

Some of my thoughts – the market in 2007 was not nearly as bad as it is this year (the foreclosure wave hadn’t even really started to build back then), which I think has had a couple of effects relative to inventory.

Firstly, the market today is made up in large part of “must-sell” inventory (foreclosures + short sales is approaching, if not exceeding the 50% mark in San Diego as a whole – add to that job transfers and other must-sell properties, and it is almost certainly the large majority of the market). “Must-sell” inventory, by it’s very nature is not seasonal – no bank, short-saler, or job-transferee is going to pull a listing off the MLS in November and put it back on the market in March.

Secondly, all this “must-sell” inventory I would think would have the effect of keeping a lot of houses which don’t have to be sold off the market – I suspect a LOT of potential sellers who aren’t in a “must-sell” position are keeping their properties off the market because they don’t want to compete with the “must-sell” inventory. This inventory I would think would normally make up the large part of the seasonal variation – people who don’t have to sell their house have the luxury of listing it during the spring buying season, and being able to pull it down if it doesn’t sell at the price they’d like to see. This is “phantom inventory” as it is inventory that would likely be on the market if not for the severe economic conditions in the current market.

And, of course, banks and courts still haven’t been able to keep up with the incredible foreclosure rate, meaning there’s still a ton of stuff in the wings just waiting to be processed.

[SDEngineer]

Amortization is simply the fact that you are paying down the loan principal, not the type of interest calculation used (as opposed to, for instance, an interest only loan where you only pay interest, without reducing the principal for a number of years).

The type of interest used in mortgages is typically called “simple interest” (and is also the most common form of auto loan) – you pay the interest due as it comes due, and the remaining portion of your payment goes towards reducing the principal, so that the next year, you pay less towards the interest (as theres less principal to charge interest on) and more towards the principal.

Yes, you do pay the majority of the interest during the early period of the loan, but it is really 6% whether you keep it for 5 years or 25 – it’s just that at 25 years, you’ve paid down much of the principal, so theres much less interest to charge.

For example, on a 400K loan at 6%, your monthly payments are ~2400. During the first year, because you are paying interest on nearly the full 400K, your monthly interest comes to about 2000, and you’re only paying $400 of your payment to reduce the principal (at the end of a year, you’ve only paid down about $5K in principal). But, as the principal goes down, each year less and less goes towards interest, and more goes towards the principal. By year 25, you are down to $125K in principal, and each month of your $2400 payment only about $700 is going towards interest, and $1700 towards the principal.

This math though is why it saves a LOT of interest in the long run by making extra principal payments early in the loan. If you make the principal payments early in the loan, each $1 you put towards the loan saves you around $3 over the life of the loan. Conversely, if you wait til later in the loan, your $1 towards paying down the loan doesn’t save you much more than that dollar.

[SDEngineer]

Amortization is simply the fact that you are paying down the loan principal, not the type of interest calculation used (as opposed to, for instance, an interest only loan where you only pay interest, without reducing the principal for a number of years).

The type of interest used in mortgages is typically called “simple interest” (and is also the most common form of auto loan) – you pay the interest due as it comes due, and the remaining portion of your payment goes towards reducing the principal, so that the next year, you pay less towards the interest (as theres less principal to charge interest on) and more towards the principal.

Yes, you do pay the majority of the interest during the early period of the loan, but it is really 6% whether you keep it for 5 years or 25 – it’s just that at 25 years, you’ve paid down much of the principal, so theres much less interest to charge.

For example, on a 400K loan at 6%, your monthly payments are ~2400. During the first year, because you are paying interest on nearly the full 400K, your monthly interest comes to about 2000, and you’re only paying $400 of your payment to reduce the principal (at the end of a year, you’ve only paid down about $5K in principal). But, as the principal goes down, each year less and less goes towards interest, and more goes towards the principal. By year 25, you are down to $125K in principal, and each month of your $2400 payment only about $700 is going towards interest, and $1700 towards the principal.

This math though is why it saves a LOT of interest in the long run by making extra principal payments early in the loan. If you make the principal payments early in the loan, each $1 you put towards the loan saves you around $3 over the life of the loan. Conversely, if you wait til later in the loan, your $1 towards paying down the loan doesn’t save you much more than that dollar.

[SDEngineer]

Amortization is simply the fact that you are paying down the loan principal, not the type of interest calculation used (as opposed to, for instance, an interest only loan where you only pay interest, without reducing the principal for a number of years).

The type of interest used in mortgages is typically called “simple interest” (and is also the most common form of auto loan) – you pay the interest due as it comes due, and the remaining portion of your payment goes towards reducing the principal, so that the next year, you pay less towards the interest (as theres less principal to charge interest on) and more towards the principal.

Yes, you do pay the majority of the interest during the early period of the loan, but it is really 6% whether you keep it for 5 years or 25 – it’s just that at 25 years, you’ve paid down much of the principal, so theres much less interest to charge.

For example, on a 400K loan at 6%, your monthly payments are ~2400. During the first year, because you are paying interest on nearly the full 400K, your monthly interest comes to about 2000, and you’re only paying $400 of your payment to reduce the principal (at the end of a year, you’ve only paid down about $5K in principal). But, as the principal goes down, each year less and less goes towards interest, and more goes towards the principal. By year 25, you are down to $125K in principal, and each month of your $2400 payment only about $700 is going towards interest, and $1700 towards the principal.

This math though is why it saves a LOT of interest in the long run by making extra principal payments early in the loan. If you make the principal payments early in the loan, each $1 you put towards the loan saves you around $3 over the life of the loan. Conversely, if you wait til later in the loan, your $1 towards paying down the loan doesn’t save you much more than that dollar.

[SDEngineer]

Amortization is simply the fact that you are paying down the loan principal, not the type of interest calculation used (as opposed to, for instance, an interest only loan where you only pay interest, without reducing the principal for a number of years).

The type of interest used in mortgages is typically called “simple interest” (and is also the most common form of auto loan) – you pay the interest due as it comes due, and the remaining portion of your payment goes towards reducing the principal, so that the next year, you pay less towards the interest (as theres less principal to charge interest on) and more towards the principal.

Yes, you do pay the majority of the interest during the early period of the loan, but it is really 6% whether you keep it for 5 years or 25 – it’s just that at 25 years, you’ve paid down much of the principal, so theres much less interest to charge.

For example, on a 400K loan at 6%, your monthly payments are ~2400. During the first year, because you are paying interest on nearly the full 400K, your monthly interest comes to about 2000, and you’re only paying $400 of your payment to reduce the principal (at the end of a year, you’ve only paid down about $5K in principal). But, as the principal goes down, each year less and less goes towards interest, and more goes towards the principal. By year 25, you are down to $125K in principal, and each month of your $2400 payment only about $700 is going towards interest, and $1700 towards the principal.

This math though is why it saves a LOT of interest in the long run by making extra principal payments early in the loan. If you make the principal payments early in the loan, each $1 you put towards the loan saves you around $3 over the life of the loan. Conversely, if you wait til later in the loan, your $1 towards paying down the loan doesn’t save you much more than that dollar.

[SDEngineer]

Amortization is simply the fact that you are paying down the loan principal, not the type of interest calculation used (as opposed to, for instance, an interest only loan where you only pay interest, without reducing the principal for a number of years).

The type of interest used in mortgages is typically called “simple interest” (and is also the most common form of auto loan) – you pay the interest due as it comes due, and the remaining portion of your payment goes towards reducing the principal, so that the next year, you pay less towards the interest (as theres less principal to charge interest on) and more towards the principal.

Yes, you do pay the majority of the interest during the early period of the loan, but it is really 6% whether you keep it for 5 years or 25 – it’s just that at 25 years, you’ve paid down much of the principal, so theres much less interest to charge.

For example, on a 400K loan at 6%, your monthly payments are ~2400. During the first year, because you are paying interest on nearly the full 400K, your monthly interest comes to about 2000, and you’re only paying $400 of your payment to reduce the principal (at the end of a year, you’ve only paid down about $5K in principal). But, as the principal goes down, each year less and less goes towards interest, and more goes towards the principal. By year 25, you are down to $125K in principal, and each month of your $2400 payment only about $700 is going towards interest, and $1700 towards the principal.

This math though is why it saves a LOT of interest in the long run by making extra principal payments early in the loan. If you make the principal payments early in the loan, each $1 you put towards the loan saves you around $3 over the life of the loan. Conversely, if you wait til later in the loan, your $1 towards paying down the loan doesn’t save you much more than that dollar.

[SDEngineer]

Bear in mind though that the banks (and courts) apparently haven’t been able to keep up with foreclosures – that’s essentially must-sell inventory that is just waiting in the wings.

[SDEngineer]

Bear in mind though that the banks (and courts) apparently haven’t been able to keep up with foreclosures – that’s essentially must-sell inventory that is just waiting in the wings.

[SDEngineer]

Bear in mind though that the banks (and courts) apparently haven’t been able to keep up with foreclosures – that’s essentially must-sell inventory that is just waiting in the wings.

[SDEngineer]

Bear in mind though that the banks (and courts) apparently haven’t been able to keep up with foreclosures – that’s essentially must-sell inventory that is just waiting in the wings.

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