[sdrebear]

My prediction is that rents will have a temporary spike during this transition in the real estate market then level out again. Rents will not rise nearly enough in the short term to prop up the housing bubble unless there is a massive influx of people to this area.

My opinion is based on two general lines of thought. First is that “housing is housing is housing”. What I mean is that there are a certain number of roofs in (say) San Diego. There are a certain number of people who want to live under those roofs. The flow between owner occupied homes and rented homes is pretty much a zero sum game (internally). Any real “shortage” in rental housing is caused just like it is for owner occupied homes – outside people relocating to the area. I don’t see too much of that right now so I think the internal pressures on rents will ease up rather quickly.

Without outside pressure on the rental supply, then those who are selling homes just to rent are really a non-factor. Meaning that “someone” had to buy their house from within the area therefore freeing up yet another property for either rent or owner occupation (who in that case gave up yet another local property somewhere… eventually down the road it likely reverts back to a rental somewhere).

There is however a “flow”, much like cash flow. The money is coming, but right now things are tight. When the boom happened, I remember many people scared that so many of their renters were leaving to become homeowners. Then the pressure was relieved some when so many apartments got “converted”. Now, everything is “converted” and more renters are starting to flow back. Well, this “flow” is leaving many homes (condos, etc) unoccupied (as we’ve seen the RE inventory rocket up). Many of those will be returned to the “rental” market and soften the load from the renters who have already returned to that market. It’s just an issue of timing really.

My second point as to why rents will (in my opinion) not rise enough to support this housing bubble to any degree is that renters have absolutely zero incentive to overpay for their home. There is no future upside for them, no future equity to be gained, therefore no reason to pay more than what they feel is relatively reasonable. The only incentive they have is not wanting to leave the area all together. That is a strong incentive, but that incentive is really already built into the rental market and has been for many years. We pay WAY more rent than most other parts of the country (save for NYC and other choice areas).

So, going above and beyond this (just to support someone else’s mistaken speculation on an asset) and other normal inflation factors will only serve to push more people out of the market entirely and reduce pressure on the rental market.

So, to sum up – Short term price spikes (relatively small) as rental supply remains low and potential renters increase then an easing as the properties these new renters left behind begin filtering back to the rental market (along with hundreds of unsold “conversion” inventory and new condo/home projects) to support the shifting demand.

[sdrebear]

I have to say good riddance to IPayOne. I have been defiant and refused to call the Sports Arena the “I Pay One” center. Mainly because I knew they wouldn’t last. I’m not at all against other business models in real estate and believe as a whole, they make the whole system better and stronger. However, IPayOne.com was founded by a bunch of crooks and thumbed their noses at a lot of good people along the way.

I’ve been doing online marketing for the real estate industry for several years now and can confidently say that most people don’t truly understand how the whole real estate universe is put together (I’m quite positive that I don’t). It is ridiculously complex with an unbelievable number of quite large and influential players involved. All of them have a piece of the puzzle and will fight to the death to maintain control of that piece. That makes inroads by technology very tough, expensive, and often fruitless. There is a TON of back slapping and hand shaking and laws in place to protect it all (or protect FROM it all as the title insurance guys found out last year).

Heck, most people still think the “MLS” is just one huge system that covers the whole country and includes every home on the market (I also guess they believe it’s controlled by NAR or something). That is all false.

There are hundreds of “MLS’s” all ferociously protecting their “territories”. The homes are only allowed on the MLS by the brokers “ok” and is called broker reciprocity. We are often able to access the “MLS” data for any given area due to a completely secondary system called IDX which is usually provided by a 3rd party provider (such as Superlative, LLC). Some MLS’s provide their own IDX service. This is how we get our data (which is not the same as what agents can have access to). Same data, just not as complete.

However… there is great demand on the consumer side for greater transparency in the real estate industry and they are looking to the internet for it. I don’t believe real estate agents will ever be completely eliminated from the process for the large majority of transactions, for many of the reasons sdrealtor mentioned. Each property is just too different and the transaction too large to make sight unseen (for most people). There are large liabilities involve as well. Yes, most of the time it gets covered over in the good times and gets horrible in the bad.

The internet will continue to play a huge part in real estate going forward, but there are many, many challenges facing a complete phase out of the real estate agent profession. Most of the change will come from the inside-out I believe. RE/MAX has very recently linked together all of its brokers (getting permission from every, or nearly every MLS in the country) to put together one of the very first complete MLS directories ever. If you thought Realtor.com was it… you were wrong.

[sdrebear]

Wow, advertised on Good Morning America, which drew in 80 people to the “professionally staged” open house and a “one day special price” and they could only identify 3 “serious” buyers, none of which could pull the trigger that day?

Hey, what is that whistling sound?

[sdrebear]

Hey sdduuuude,

I chose not to alter the real definition (just to support my point more strongly) which did include the word "certain".

"to consider probable or certain"

Don't you leave out the other word there, which is "probable" just to support your point.

You also illustrated my real point (much better than I did actually) which is that the term the analyst (hey, I used it right!) used, "at risk" was too vague and left open the opportunity for PS (and others) to use the 100% part of that risk assessment. Was it technically correct to assume that outcome could occur? Well, yes. Is it probable? I doubt it.

It was just the fact that people were killing her on the point when on the extreme technical side of the argument, she was actually within her rights to do that (even if it is "spin").

[sdrebear]

Dang it!! Add me to the Tract vs Track thread.

I kept saying "analysis", when I meant to write "analyst". Sorry for anyone who found that hard to read due to my error.

P.S. All good points lamoneyguy.

<walking off in shame> Man, I knew that was wrong…

[sdrebear]

lamoneyguy,

I’m not sure that in one post you can say that I’m at risk for hitting all 10 lights (meaning that there is risk in some degree for every potential outcome) and then in another post say that not all mortgage loans are “at risk”.

That’s a bit of a contradiction. Yes, there is some risk (however small) that any, or every loan in this country could default. Just as there is risk that I could hit every light. I may have failed to qualify the 30% with “reasonable risk”, or “high risk”.

Again, I just don’t like that the analysis said 19% of loans are “at risk”. Truthfully, all of the loans are at risk to some degree. Using the term “risk” is a slick way for an analysis to get his opinion and “prediction” out while being able to avoid putting down a hard number that could come back to bite him later. You see, by saying “risk”, he has a nice fat range of zero to 19% (even if he was slightly over 19%, I’m sure nobody would crucify him). If he said “expects”, he’d be held to a hard number of 19%. More than likely, that was his true meaning.

In the end, it is all semantics (as I believe you said in the other thread). We have a very rich language and we all use (or, should use) context to understand the writer’s message. I saw something much milder in PS’s title than some and caught the inference she was making. Other’s may not have. I can see the point being made by others (yes, it’s a stretch to directly link “risk” and “expect”), but I think way too much is being made of the “intent” of the writer (PS). I feel that she “read” Cagan’s meaning pretty well. The more you read analysis, you’ll see that they rarely speak in absolutes.

[sdrebear]

Whoops. We all “know” that? What happens if 30% default? Are you saying that nothing could happen in this country to force 19% (or more) of those loans to default? People say PS makes absolute predictions of the future. What was that?

You said that all soldiers are at risk, but we do not “expect” them all to die. But some will. It would be accurate to say that that percentage (some) is truly “at risk” of dying. That is an “expectation”, but certainly not an absolute (either direction, more/less).

The exact same thing was done in this case for loans. All of them are at some level of “risk”, but we do not “expect” them all to default. There is an expectation that some will. The assertion is that that a percentage (some) is truly “at risk” of default. Again, this is an “expectation” made by the analysis.

Explain to me how you look at all loans, see some you DON’T “expect” to default, and then put them “at risk”.

I agree that the heading is better served with a direct quote, but what she used does not actually alter the real intent of the analysis’ findings. I just felt that the seemingly overly enthusiastic criticism on this issue appeared more personal than it probably should have been. I too have seen PS write some things I don’t agree with (I literally cringe at some of the racial stuff), but on this particular issue, I think it’s being blown way out of proportion. I know it’s an accumulation of other things, but pick a better battle than this one. This just seems petty to me.

As with you, it’s just my opinion though, so feel free to disagree.

[sdrebear]

From Webster’s (you almost knew this was coming, right?):

expect

transitive verb
1 archaic : AWAIT
2 : to anticipate or look forward to the coming or occurrence of <we expect them any minute now> <expected a telephone call>
3 : SUPPOSE, THINK
4 a : to consider probable or certain {my emphasis} <expect to be forgiven> <expect that things will improve> b : to consider reasonable, due, or necessary <expected hard work from the students> c : to consider bound in duty or obligated <they expect you to pay your bills>

 

To say something is "expected" does NOT imply that it is "guaranteed". What it does do is to alternatively convey the message that (in this case) a percentage of loans "are at risk". Expectations do not always come true (as all risk is not warranted).

For example:
I expect to be stopped by 3 traffic lights on my way home as there are ten lights and all the data I have tells me that I get stopped at about 30% of lights. Will that happen? Who knows? But, I'm predicting that I'm "at risk" of being stopped at 3 lights. (Or, I could say that I expect to be stopped at 3 lights.)

I believe the "highlights" have been largely on the wrong terms. Here are a couple different ways the analysis' sentence could have been written. What changes in your mind when the highlighted words are changed? Is there a certain amount of increased "expectation" with the first?

"…about 19 percent of the 7.7 million ARM's taken out in 2004 and 2005 are at risk of defaulting."

"…about 19 percent of the 7.7 million ARM's taken out in 2004 and 2005 might be at risk of defaulting."

Both convey "risk" with very different levels of certainty.

If this analysis did not "expect" these loans to default, then he in turn would not consider them to be "at risk". What PS used here is called an "inference". Apparently not as effective (in this case) as a direct quote, but certainly easily deciphered and not worth this much effort to attack someone's whole motivation and credibility.

Interesting analogy with Iraq and the troops. However, not entirely accurate, nor complete. No, we don't expect all the troops to die (even though theoretically, they are all at some level of risk. However we do expect some of the troops to die (I'd bet there's even a percentage floating out there somewhere), which is the true use of a measure of "risk". That "some" is what an analysis "expects".  Similarly, every loan is at some "risk" of default, but we don't expect all of them to default, do we? No, only 19% of them apparently in this case.

So, I'd be inclined to say that the analysis is more at fault here for using "risk" as a term to define what he actually "expects" in loan defaults, as "risk" can be attributed to all loans, not just 19% of them (there are varying degrees of course which is the real issue here and why an inference for the stated "19% of loans are at risk" is appropriate). Poway Seller is actually MORE accurate in asserting that this analysis "expects" 19% of these loans to fail.

[sdrebear]

"But, he noted, in his defense: "Who knew last September how long this down trend was going to continue," after so many years of climbing upward?"

Me… < Slowly raising my hand at my desk and looking around. >

 

🙂

[sdrebear]

I love how people talk about “paying down debt” with a refinance of their home as though that debt magically disappeared.

What exactly do they think a cash-out refi is? It’s debt! And if you used that cash to pay off credit cards, you didn’t “pay down” that debt. You transfered it from an unsecured line of credit at xx.xx% interest to a line of credit secured by the roof you live under at x.xx% interest. That’s not paying it down. It’s shifting it sideways and stretching it out (not to mention putting a type of “deed” on your house for something that previously couldn’t touch it). If you sell your house and pay off the debt, then that extra debt is deducted directly from any appreciation you gained in your home. It still costs you.

If I borrow $20 from person A to pay my debt to person B, I’m still $20 in debt. A possibly future problem for homeowners is that those credit cards are still active! Now that we’ve used our house to finance past debt, we are fresh and ready to run up more on credit cards.

Plus, if that many people pumped that much cash into stocks and bonds, it would be painfully clear that it happened. Those markets are watched way to closely for that to not be noticed. What did happen was consumer spending. That has and will (IMHO) continue well into the future.

[sdrebear]

I'm doing the same thing unfortunately. I'm watching 4 direct neighbors chase the market down.

Two (with the largest townhomes in the complex – 3 bd, 3 ba, 1,500 sq ft) have been trying to sell since spring. They are direct neighbors to eachother (share a wall) and are now in a price dropping war of sorts. Both started in the $450k range. One dropped to $425 after 3 months. The other held (it's a bit nicer). Then the $425k dropped to $395 (bottom of a "value range" of $395 – $415, ummmm… ok) Still no sale 6 months later (guess nobody saw the "value"). The neighbor (nicer place) finally dropped to $435k and now with a magic marker on the flyers (even the flyers won't sell) $425k. They obviously believe their granite counters are worth $30k more than the tile ones in their neighbor's place.

We then had two new places go up in the last month. One is a 3 bd, 2.5 ba with approx 1350 sq ft. They want $395 too. I guess they aren't watching their neighbors. View of the pool, but that's about it.

4th seller is a 2 bd 2.5 ba. It’s the exact same place I'm renting for $1,550/mo (yes, I think even that’s too much when you can get a full house for about the same in this area). He’s trying to sell for $360 – $380. Getting there, but probably needs to be in the $325k range for a quick sale (at least below $350k to catch more people looking “up to $350k”).

First month on the MLS and they've had a few lookers, but no one even close to making an offer. I've been there nearly 7 months now and nobody has sold a unit. One person even took his off the market and rented it out. That was back in April.

This is in Mira Mesa, by the way. Across from a brand new condo conversion which is also seeing vertually zero sales over the past 7 months. I expect to see the "Rent Now" signs replacing the "For Sale" signs over there very soon.

[sdrebear]

I just wish people would take a seriously honest look at the motivations behind their actions.

Exactly why are the Christians asking the government to specifically and exclusively endorse their religion above all others?

Why are the atheists trying to remove references to even the most Deist version of “God” from everything?

I’ve done plenty of research on our founders and while quite religious, they understood (from some very fresh experiences we thankfully don’t have the misfortune of knowing in our lifetime) that a secular government was both proper and absolutely key to protecting the very religion they love so deeply. No, they never wished to completely remove reference to “God” or religion in general from all public arenas, but they absolutely meant to set limits on its use by the government in order to prevent the probable theocracy that would entail.

The founders certainly did not want Christians to take their reference to “God” as their own and use it as some sort of national mandate to push Christianity onto everyone else with public funds and manpower. I think Washington and John Adams (not to mention the entire Senate) were pretty clear about that with the Treaty of Tripoli where they specifically spelled out that this country [United States of America] was not, in any sense, founded on the Christian religion. Treaty of Peace and Friendship “Treaty of Tripoli”

This Treaty did not “establish” America as being a non-Christian country, but certainly showed the true mind-set of our founders. We can assume they were of the same mind when drafting the constitution. Despite being Christian, they did not want the government “founded” on that, or any other religion.

I certainly can’t speak any better on it than Mr. Jon Meacham, currently a managing editor for Newsweek. He has quite the background in religion to be sure and it would be just as important to read where he’s been as it is to read his thoughts on religion in our country today.

It would be helpful to open our minds a bit (from both sides of the issue) and understand better where we came from and how our founders have kept extremism in check (again, from both sides) for all these years.

Here is a summary of his latest book: American Gospel. There are three pages, and I hope you’ll read them all. Quite a clear explanation for both sides I feel.

Here is a quick Bio on Jon Meacham. I think it will help in believing he has the background to understand both sides of this issue better than most of us.

My frustration is mostly when people make arguments for their “side” without even a basic understanding of the real issues at hand. In the case of the Mt. Soledad Cross, when you state that you want that cross to stand on government land, then you are literally telling the government that you want them to help control your religion. As I’ve said, be careful what you wish for.

Forget for a second that it is an atheist leading the action against the cross’ location (I’m not saying he has the best intentions). Think only of the issue. The cross is on government land. When you take the emotion out of it and just look at the facts of the case, it’s actually a pretty easy call. That’s why the atheist won over 40 times in a row in court. He didn’t even have a lawyer the first few times, or the ACLU for that matter (he didn’t really need them).

[sdrebear]

Wow, didn’t expect to see your response over here in this thread.

For the record (and it’s easy to read in “Elections 2006” where it belonged), I never, EVER called anyone “Bible-beater”. I find it derogatory and inappropriate. I guess you missed the fact that I’m on your side (of religion that is, not handing the government control of our religious symbols).

I for one am happy Christianity is growing in China. I’m not sure why you thought I wouldn’t be. Fortunately, most of them that I’ve met know our constitution very well and are thankful we have the protection most other countries do not (especially one as censored by their government as China).

I realize that you are pretty galvanized in your desire to keep the cross on Mount Soledad. Again, I totally understand your position. I personally have no desire to remove anyone’s symbol from all public life (most private properties are viewable by the public). When you talk about government involvement, it becomes a whole different animal, that’s all. As innocent as it seems, that cross on that piece of property is a direct assault on all religion in this country. It’s unfortunate that it took an atheist to point it out as now it’s twisted into an attack on Christians.

When someone tells you they want to take the cross off the top of your own church… please call me and I’ll start the human chain myself. I believe you have the right battle, but the wrong war.

By the way, to comment on your topic here. I completely agree with you that consumption was way out of control and driven largely by equity loans. First time the savings rate was negative since the Great Depression. That alone should tell us something.

[sdrebear]

“jg”, when you refer to “nutty judges”, are you talking about all 44 federal judges who have, over the years, ruled unanimously that the cross should be removed? I wouldn’t really call that “losing”. Just because the forum of discussion is moving doesn’t change the fact that in court, on this issue, there has been a perfect record of defending the freedom of religion in our courts.

Oops, did we all read that last sentence correctly? That’s right! That Constitutional Amendment everyone is trying so hard to overcome was put in place to protect YOU (and me) and all of our religious beliefs from the influence of government. Asking the government to actively “help” in the “protection” of your religion is like asking a wolf to protect your steak from attacking squirrels. Who should we really be more worried about here?

That’s another argument I fail to understand. How are Christians being “attacked” in this situation? Nobody is going after your churches (are they?) Has anyone asked you to remove, or replace your church’s cross on their private land? Told you to change your church leaders, or what they are teaching you? Exactly who would ever have the power, or inclination to do such a thing? Hmmmm, let’s all think about it a little while. If you were thinking the government, YOU WIN! Now, what is keeping the government from having ANY say in what we do with our religion? Right again… the Constitution and its funny little “separation of church and state” rule that is supposedly suppressing your religious rights in some way!!! Who defends the constitution? Come on now. I know you know this… YES, the “nutty judges”!!! I know that was a painful road, but we’ve made it.

Look, I completely understand the emotional connection to the cross. It doesn’t really seem to be hurting anyone and the Mt. Soledad cross is beautiful up there on the hill. It’s not inherently offensive visually, but that was never REALLY the point. The point is that as a religious person, it is YOU (not some atheist) that should be marching up that hill, removing that cross and taking it safely to private church owned land (or any private land for that matter). It is YOU who should be protecting your religion from some government sponsored project who ultimately can only serve to bastardize your beliefs.

Here is a question. If there was a group called “Christians for the rescue of the Mt. Soledad Cross from Government Clutches” headed up by several local religious leaders, would the feelings of understanding start to creep in? If it was these leaders telling you that we need to save our cross from being used as a political pawn, would you then listen to them and see what is truly happening?

Unfortunately, I doubt you’ll ever see that group formed as our religious leaders are just as uninformed on this subject as most others are. They are out there fighting for the one and only thing that could possibly destroy our precious freedom of religion. I realize that it’s a long slippery slope to get to that point, but really… what is the point of taking that first step?

I will be the first in line to defend ANYONE’s religious symbol on their private land or person. It is our right in this country to practice our religion without ANY government involvement for or against our chosen path. That is a huge idea and took enormous forethought (and self control) by our founders to understand this and act accordingly. They knew that government always had and always would destroy true religious freedom if not protected. Perhaps even their own religion could be harmed when the next administration moved in with their own beliefs and forced change.

The allowance of one symbol on government land effectively endorses that religion (in this particular case, Christians) and more importantly, excludes all others. Unless you purpose that we also put up a Crucifix (yes, Catholics are often separated by other Christians, so I wouldn’t feel so “included” by this particular cross), Star of David, a Crescent Moon, a Buddha statue, an empty pedestal (for the atheist I guess), or whatever other symbols are out there that represent ALL of the people in this country (that our government is supposed to be representing), then the only real option is to remove the one symbol that is there, let our government display the one thing they can stand for (namely the flag) and return the cross to where it should have been built in the first place… safely and constitutionally protected at one of the many deserving churches who would love to give it a home.

I tried to choose my words carefully as I certainly didn’t want to demean anyone based on religion. Quite the contrary actually. I’m simply tired of people misunderstanding the purpose of this particular article of the Constitution and basically fighting to ruin the protections we all currently enjoy to worship as we please. I urge you to be careful what you ask of your government with respect to their involvement in our religion. You just might get it. Once that box is open, you may not like what future leaders choose to do with it. If you have any questions about the possibilities of this happening, please feel free to read the history of nearly any other country in the world (most have been around much longer than ours) to see how well government and religion have mixed.

[sdrebear]

Somewhat comical during that discussion, one of the journalists (I forget which one) basically admitted that he was going to bend to the will of his real estate sponsored newspaper.

He said that yes, his paper was largely supported by advertisement from the real estate industry and of course they LOVE to see home prices going up.

It seemed as though he was going to give a “but” statement saying he can see the market turning.

Nope! Followed up that strange admission with yet another bullish statement of why the prices wouldn’t really come down. Something about wanting to live closer to work, or something.

I almost spit out my coffee laughing when he inadvertently discredited his entire statement just before making it.

Very funny.

[Author]

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