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spdrun
11 years ago

Why would one assume that
Why would one assume that May-June were on the same straight like as Mar-April (especially since inventory has shot up about 50% in the last month)? With the increase in inventory, June doesn’t seem right, or maybe the effect will be seen in July.

ctr70
11 years ago
Reply to  spdrun

Inventory may have “shot up”,
Inventory may have “shot up”, but from an already very low level. So even after inventory going up a little, it is still extremely low and has a long way to get to anywhere close to normal.

(former)FormerSanDiegan
Reply to  spdrun

spdrun wrote:Why would one
[quote=spdrun]Why would one assume that May-June were on the same straight like as Mar-April (especially since inventory has shot up about 50% in the last month)? [/quote]

Nobody assumed anything. That’s simply what the PPSF data show.

ocrenter
11 years ago

Assuming cyclical nature of
Assuming cyclical nature of the housing market, with peak in late 70’s, trough in mid 80’s, peak again late 80’s, trough again in the mid 90’s. The average time from peak to trough about 8 years.

The last peak was suppose to be 2003, which would have meant a typical trough in 2011, which means the current increasing price is essentially getting us back to the regularly scheduled programming?

spdrun
11 years ago
Reply to  ocrenter

Not sure if I’m buying this.
Not sure if I’m buying this. Peak was in 2006, putting trough in 2014 or so. Furthermore, observe:
http://www.deptofnumbers.com/asking-prices/california/san-diego/

Prices flat in July. Inventory up about 60% since trough in Feb, mostly in one month.

ocrenter
11 years ago
Reply to  spdrun

spdrun wrote:Not sure if I’m
[quote=spdrun]Not sure if I’m buying this. Peak was in 2006, putting trough in 2014 or so. Furthermore, observe:
http://www.deptofnumbers.com/asking-prices/california/san-diego/

Prices flat in July. Inventory up about 60% since trough in Feb, mostly in one month.[/quote]

Sorry, I should have been clearer. I meant the peak was suppose to be 2003, instead of the persistent rise fueled by the loose lending, the peak was extended to 2006 and that price then lasted for another couple more years. So essentially the artificial price peak delayed the natural cycle by about 5 years.

pemeliza
11 years ago

Nice observation ocrenter.
Nice observation ocrenter. So if 2011 was the low then the new peak should be somewhere around 2019? This is a guess but I feel that prices were about 50% higher in 2003 than at the last late 80’s peak so maybe we should expect prices in 2019 to be about 50% higher than 2003 prices which sounds pretty reasonable. In fact here is a bread and butter house in 92103 near Balboa park that just traded at very close to (late) 2003 price levels.

http://www.sdlookup.com/MLS-130027390-3427_Herbert_St_San_Diego_CA_92103

So that means we need around a 50% gain from today’s prices in the next 6 years for the cycle theory to play out.

spdrun
11 years ago
Reply to  Rich Toscano

You speak as if lower home
You speak as if lower home prices are a thing to be concerned about instead of celebrate.

As a 30-something who’s buying rental property in NJ and CA, I take the latter view. Mo’ chaos = mo’ opportunity. As to the idiots who bought during the 2003-2007 bubble, why should I care about ignorami like them keeping their homes? Fuck’em.

spdrun
11 years ago
Reply to  Rich Toscano

Sorry if I misunderstood. If
Sorry if I misunderstood. If you’re of the “let those who made bad investments sell short and let (divinity of choice) sort ’em out” school, then I’m with you.

speaker
11 years ago
Reply to  Rich Toscano

I would like to point out
I would like to point out that residents in those zip codes listed in JtR’s blog post are not bothered by a 1% jump in rates. Those are high income zip codes. The residents in those zip codes are not affected by higher rates today because not only do their incomes allow them flexibility, but those zip codes are dominated by high down payments from owner occupiers.

Besides, shouldn’t there be a lag for payment shock to show up in sales anyway?

Jazzman
11 years ago
Reply to  speaker

According to Nick Timiraos
According to Nick Timiraos WSJ rates need to be 6% and prices up 20% before homes are unaffordable, but on a $450 k home the new rates add $250 to the monthly nut, which will sideline some buyers rather than generate new demand. Jim Klinge said the crazy pool of buyers has diminished considerably. Prices have already flattened apparently. But with supply still at 1.5% of households, it should continue to put upward pressure in prices. Or will it this time? Tighter credit, high levels of personal debt relative to incomes, unemployment, insurance costs on FHA, less investment/foreclosure activity …and now higher rates. Whatever, Helicopter Ben will come to the rescue if things falter.

The-Shoveler
11 years ago

Probably a large percentage
Probably a large percentage of those who bought at the peak will continue to ride it out at this point IMO.

2009 yea they probably were a lot easier to give up on it.

spdrun
11 years ago
Reply to  The-Shoveler

Doesn’t matter. If prices
Doesn’t matter. If prices drop, the market will be again dominated by short-sellers, as it still is in parts of my area — I doubt that MOST people own for cash. Here’s hoping.

Low inventory AND lower prices suits me fine.

Jazzman
11 years ago
Reply to  spdrun

spdrun wrote:Doesn’t matter.
[quote=spdrun]Doesn’t matter. If prices drop, the market will be again dominated by short-sellers, as it still is in parts of my area — I doubt that MOST people own for cash. Here’s hoping.

Low inventory AND lower prices suits me fine.[/quote]

So much focus on the monthly nut and affordability, but price is what it boils down to. I hope it becomes more relevant again. The tail has been wagging the dog for too long.

spdrun
11 years ago
Reply to  Jazzman

jazzman – you’re implying
jazzman – you’re implying that Bubble Bennie CAN actually come to the rescue with more QE. The headline yesterday was that we may be in a recession (aka negative GDP growth) despite four years of QE programs.

I think some markets are also more price (as opposed to nut) sensitive than others. Seems like people buy on monthly payments more in the Southwest and South. But go to places like the Northeast and Texas, and you end up with a lot more lending on portfolio, where you need 15-20% down at least to get your foot in the door.

Most of those markets are more steady than the wild gyrations we’re seeing in CA, FL, AZ, and NV.