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sorry to repeat, but IF (if) a drastic rate cut happens next year, shouldn’t it follow that the majority of risky loan holders will refinance and avoid the precipitous ‘reset’ decline ? wouldn’t the price decline in that situation stay limited primarily to entry-level homes, as they recede back to affordability?
if existing owners could afford to hang on to their homes regardless of the decline in values, wouldn’t they tend to keep them ? the glut and excess would then be related to flipper/ entry level homes…..

wouldn’t they…?

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option ARMs are in for a hard time, i agree. but aren’t the majority of these ARMs simple 3 /1 though? assuming most of them reset in ’07, that implies they’re at ’04 values. unless values have receded to pre-’04 by then, they should be ok, shouldn’t they?

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i understand it may not influence potential buyers (like in japan) but won’t it take care of ARM resets? won’t a low rate mitigate the ticking time bomb scenario with a flood of refis? “refi while rates are low. it won’t happen again” etc etc.

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i found it a little hard to believe too. not too sure how they drew those conclusions from the data. i think though, they did stress they didn’t want to analyze ‘price’ in their research

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sorry, clickable link

 

http://economistsview.typepad.com/economistsview/2006/09/what_caused_the.html

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that wasn’t ever the question…but i guess you were more interesting in smelling than reading

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i guess my question was more hypothetical. knowing that a market would soon head south, and if you didn’t own RE in it, but could (say), what’s the best you could do? the market could be anywhere, even here for the sake of argument.
is there an alternative to shorting?

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interesting observation. do you think it has to do with ‘seasonal’ slowdown before labor day…?

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interestingly, the line before that puts the quote in a slightly different context

“If you have been thinking about buying NOW is a great time. It really is a BUYER’s market. Interest rates are still attractive and there is plenty to choose from…”

tha might explain the infectious smile

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powayseller, i really appreciate posts like these. i firmly believe so many lenders will be in a pickle next year. keep it up.
if i had a choice we would’ve sold in may 06 (peak in LA). as a current seller i’m glad i managed to convince my wife to do this slightly late but infinitely better than waiting it out. it took a few months of convincing but she was really happy to see the solid data and basis everyone here has used to forming the argument.
i like your polemical approach. “If anybody thinks the worst drops are here, and it will level off, you are way wrong!” lol. makes you think.
i just hope i don’t get caught in the vortex as i sell. i will be honest about the situation as it unfolds. just for the record, i never doubted the bubble, i just had to wait patiently to make a joint decision…here goes wish me luck

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powayseller, thanks for the references. roubini's added to my favourites folder, i gawk at it all the time. just like with this site 🙂 i agree with you. i'm just making quasi-plausible assertions at the risk of being proven wrong.

to my untrained eye, it seems there are two factors – intrinsic (ARM resets) and extrinsic (job losses). don't know economics, is that micro and macro? anyway, if job losses are severe all bets are off, each segment will dip drastically. but if it's mainly about ARM resets, and rates hold steady or dip there might be a mini refi boom and the solvent people will buy more time…what do you think?

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hilarious.
i agree. there’s too much mutual confirmation regarding negative data. now that it’s public truth and hysteria is developing rather quickly, shouldn’t the contrarian viewpoint move further along ? joe and jane know the market is tumbling. it’s like an old slapstick skit. the crowd rushes in chasing someone. but he’s already outside. ten seconds later they rush out chasing him. but they never catch him…

what if the sales glut ensures only the bottom end of the market tanks? since the bottom end here is 700k, those will soon revert to mean. but will the middle home segment be as drastically affected ? idle theorizing, so please don’t be offended if this is sounding too naive. the people in middle segment homes are mostly second-time buyers and have put in ‘real money’ so wouldn’t they be more insulated to this drop? also wouldn’t they tend to hold on as long as possible and keep the value relatively higher…?

WW warren buffet do? i think he bet against the dollar…oops never mind

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in LA, listing this weekend. i know. too late, but i couldn’t do this before for other reasons…i can stay if the offers are too low and keep the property permanently so i’m not that scared (yet)…self-employed

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i don’t know which camp this advice fits in. it’s simple. if you need it and can afford it, buy it.

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so you’re convinced that all the media are lying? this is interesting because the big media you criticize were precisely the ones who empowered this war three years ago. were you challenging their ideas then? if you were, in all seriousness i’m impressed. but if like a lot of buyers in RE, you are convinced the facts are wrong, not you, then there’s not much to say. i thought perry was hilarious btw.
i’m all for independent research too. try a blog search at technorati. use google news. if you see a single definitive news sources that paints a pleasant picture, i’d love to read it

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