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TheBreeze
ParticipantGreat posts Dave. Yeah, it’s amazing how literally no one in the MSM is talking about this. It’s like none of the Wall Street guys and none of the commentators on CNBC know how to value real estate. There is actually one commentator on CNBC — that women who reports on the California market quite a bit — who seems to have a clue. But other than that, nada.
I am really surprised by Cramer. I consider him to be a smart guy, but he really thinks that all that needs to happen is for the Fed to lower interest rates a bit more and everything will go back to being hunky dory.
The folks who get close to the root of the problem are those who mention that it is “difficult” to value the CDOs/MBSs. However, they never talk about why it is difficult to value them. One of the main reasons it’s difficult to value these things is because the home buyer at the bottom of the pyramid probably “stated” his or her income. To really get a handle on the value of these things, someone would need to investigate all the individual buyers and find out what their actual ability to repay is and how likely they are to repay. They would also need to estimate the value of each individual property based on rental rates in the area or what have you. Who the heck is going to do all that? Given the amount of work required to evaluate these things, you have to figure that at least a 10% reduction to market value (which no one really knows) will be needed to move these things.
ParticipantGreat posts Dave. Yeah, it’s amazing how literally no one in the MSM is talking about this. It’s like none of the Wall Street guys and none of the commentators on CNBC know how to value real estate. There is actually one commentator on CNBC — that women who reports on the California market quite a bit — who seems to have a clue. But other than that, nada.
I am really surprised by Cramer. I consider him to be a smart guy, but he really thinks that all that needs to happen is for the Fed to lower interest rates a bit more and everything will go back to being hunky dory.
The folks who get close to the root of the problem are those who mention that it is “difficult” to value the CDOs/MBSs. However, they never talk about why it is difficult to value them. One of the main reasons it’s difficult to value these things is because the home buyer at the bottom of the pyramid probably “stated” his or her income. To really get a handle on the value of these things, someone would need to investigate all the individual buyers and find out what their actual ability to repay is and how likely they are to repay. They would also need to estimate the value of each individual property based on rental rates in the area or what have you. Who the heck is going to do all that? Given the amount of work required to evaluate these things, you have to figure that at least a 10% reduction to market value (which no one really knows) will be needed to move these things.
ParticipantGreat posts Dave. Yeah, it’s amazing how literally no one in the MSM is talking about this. It’s like none of the Wall Street guys and none of the commentators on CNBC know how to value real estate. There is actually one commentator on CNBC — that women who reports on the California market quite a bit — who seems to have a clue. But other than that, nada.
I am really surprised by Cramer. I consider him to be a smart guy, but he really thinks that all that needs to happen is for the Fed to lower interest rates a bit more and everything will go back to being hunky dory.
The folks who get close to the root of the problem are those who mention that it is “difficult” to value the CDOs/MBSs. However, they never talk about why it is difficult to value them. One of the main reasons it’s difficult to value these things is because the home buyer at the bottom of the pyramid probably “stated” his or her income. To really get a handle on the value of these things, someone would need to investigate all the individual buyers and find out what their actual ability to repay is and how likely they are to repay. They would also need to estimate the value of each individual property based on rental rates in the area or what have you. Who the heck is going to do all that? Given the amount of work required to evaluate these things, you have to figure that at least a 10% reduction to market value (which no one really knows) will be needed to move these things.
ParticipantGreat posts Dave. Yeah, it’s amazing how literally no one in the MSM is talking about this. It’s like none of the Wall Street guys and none of the commentators on CNBC know how to value real estate. There is actually one commentator on CNBC — that women who reports on the California market quite a bit — who seems to have a clue. But other than that, nada.
I am really surprised by Cramer. I consider him to be a smart guy, but he really thinks that all that needs to happen is for the Fed to lower interest rates a bit more and everything will go back to being hunky dory.
The folks who get close to the root of the problem are those who mention that it is “difficult” to value the CDOs/MBSs. However, they never talk about why it is difficult to value them. One of the main reasons it’s difficult to value these things is because the home buyer at the bottom of the pyramid probably “stated” his or her income. To really get a handle on the value of these things, someone would need to investigate all the individual buyers and find out what their actual ability to repay is and how likely they are to repay. They would also need to estimate the value of each individual property based on rental rates in the area or what have you. Who the heck is going to do all that? Given the amount of work required to evaluate these things, you have to figure that at least a 10% reduction to market value (which no one really knows) will be needed to move these things.
ParticipantSupply also needs to be taken into account. If there are 1000 homes on the market and only 800 families who qualify to buy/rent them, something bad is going to happen to prices regardless of median income.
It would be interesting to know how overbuilt San Diego is right now. I seem to recall an article that discussed how the home ownership rate had gone up by a couple of percentage points in recent years, but the percentage of houses sold had gone up by something like 15%. This means that several buyers were buying multiple properties. No doubt a lot of these folks were qualifying with liar loans. When these homes come back on the market, who is going to buy them?
I think move-up equity is what allows higher-end homes to better hold their values. People moving in to higher-end homes are generally moving up and can bring some move-up equity to the table. Folks buying starter homes generally don’t have much to put down, so the prices of these homes more quickly adjust based on how easy it is to get a mortgage.
I don’t see how the median income doesn’t go down in San Diego over the next few years. Even if the rest of the nation doesn’t go into recession (unlikely), the downturn in RE-related income will decrease significantly thus driving down the median income.
ParticipantSupply also needs to be taken into account. If there are 1000 homes on the market and only 800 families who qualify to buy/rent them, something bad is going to happen to prices regardless of median income.
It would be interesting to know how overbuilt San Diego is right now. I seem to recall an article that discussed how the home ownership rate had gone up by a couple of percentage points in recent years, but the percentage of houses sold had gone up by something like 15%. This means that several buyers were buying multiple properties. No doubt a lot of these folks were qualifying with liar loans. When these homes come back on the market, who is going to buy them?
I think move-up equity is what allows higher-end homes to better hold their values. People moving in to higher-end homes are generally moving up and can bring some move-up equity to the table. Folks buying starter homes generally don’t have much to put down, so the prices of these homes more quickly adjust based on how easy it is to get a mortgage.
I don’t see how the median income doesn’t go down in San Diego over the next few years. Even if the rest of the nation doesn’t go into recession (unlikely), the downturn in RE-related income will decrease significantly thus driving down the median income.
ParticipantSupply also needs to be taken into account. If there are 1000 homes on the market and only 800 families who qualify to buy/rent them, something bad is going to happen to prices regardless of median income.
It would be interesting to know how overbuilt San Diego is right now. I seem to recall an article that discussed how the home ownership rate had gone up by a couple of percentage points in recent years, but the percentage of houses sold had gone up by something like 15%. This means that several buyers were buying multiple properties. No doubt a lot of these folks were qualifying with liar loans. When these homes come back on the market, who is going to buy them?
I think move-up equity is what allows higher-end homes to better hold their values. People moving in to higher-end homes are generally moving up and can bring some move-up equity to the table. Folks buying starter homes generally don’t have much to put down, so the prices of these homes more quickly adjust based on how easy it is to get a mortgage.
I don’t see how the median income doesn’t go down in San Diego over the next few years. Even if the rest of the nation doesn’t go into recession (unlikely), the downturn in RE-related income will decrease significantly thus driving down the median income.
ParticipantSupply also needs to be taken into account. If there are 1000 homes on the market and only 800 families who qualify to buy/rent them, something bad is going to happen to prices regardless of median income.
It would be interesting to know how overbuilt San Diego is right now. I seem to recall an article that discussed how the home ownership rate had gone up by a couple of percentage points in recent years, but the percentage of houses sold had gone up by something like 15%. This means that several buyers were buying multiple properties. No doubt a lot of these folks were qualifying with liar loans. When these homes come back on the market, who is going to buy them?
I think move-up equity is what allows higher-end homes to better hold their values. People moving in to higher-end homes are generally moving up and can bring some move-up equity to the table. Folks buying starter homes generally don’t have much to put down, so the prices of these homes more quickly adjust based on how easy it is to get a mortgage.
I don’t see how the median income doesn’t go down in San Diego over the next few years. Even if the rest of the nation doesn’t go into recession (unlikely), the downturn in RE-related income will decrease significantly thus driving down the median income.
ParticipantSupply also needs to be taken into account. If there are 1000 homes on the market and only 800 families who qualify to buy/rent them, something bad is going to happen to prices regardless of median income.
It would be interesting to know how overbuilt San Diego is right now. I seem to recall an article that discussed how the home ownership rate had gone up by a couple of percentage points in recent years, but the percentage of houses sold had gone up by something like 15%. This means that several buyers were buying multiple properties. No doubt a lot of these folks were qualifying with liar loans. When these homes come back on the market, who is going to buy them?
I think move-up equity is what allows higher-end homes to better hold their values. People moving in to higher-end homes are generally moving up and can bring some move-up equity to the table. Folks buying starter homes generally don’t have much to put down, so the prices of these homes more quickly adjust based on how easy it is to get a mortgage.
I don’t see how the median income doesn’t go down in San Diego over the next few years. Even if the rest of the nation doesn’t go into recession (unlikely), the downturn in RE-related income will decrease significantly thus driving down the median income.
ParticipantYeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?
I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.
Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.
ParticipantYeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?
I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.
Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.
ParticipantYeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?
I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.
Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.
ParticipantYeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?
I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.
Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.
ParticipantYeah, this is actually a pretty good plan. The politicians get to look like they’re doing something and no taxpayer money is involved. This is possibly the most intelligent thing the Bush administration has ever done. I wish politicians always came up with plans like this. Could you imagine how much better off we’d be if Bush was still talking about invading Iraq instead of actually having done it?
I kind of wonder if this plan wasn’t floated out there to get the public’s reaction. If the public had clamored for a bigger bailout, then Paulson probably would have floated a new plan that involved taxpayer monies. As it is, it looks like the public is against a bailout so maybe a huge taxpayer-funded bailout won’t happen.
Of course, I also wonder if this plan isn’t just a destraction. The real bailout may be happening out of site with the changing of how the GSEs, the FHA, and the Federal Home Loan Banks operate.
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