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Chet, at least in so cal, the RE market has much more to fall. Most areas of LA and OC are still
In the 2003-2004 price range and bubblelicious as can be at 6-8x area incomes, along with 5x income of those buying.
I recently ran a search on Redfin of homes sold in the past three months vs listings. What I found was:
1. Often list prices of all properties in an area were 20-50% higher than comps.
2. There is a listing to sales ratio in many areas of around 10:1
The above factors would seem to indicate that a huge price correction is in store.
Put another way, I make a very middle class income, roughly double the average household income in los angeles, but if I desire a commute under 1 hour, there is exactly one portion of LA that is middle class where I can currently afford to buy. It would be a 1950's home around 1100 sq ft.
Townhomes and condos, after accounting for HOA's, are not much cheaper.
In the meantime, ill keep renting at $1600 a month in an upscale area.
I get tired of the ridiculous "the sky is falling" posts that link to blog posts of some genius whose premise is pretty much like that of Cubs fans gone mad -- "wait till next year"....
If there is/was any evidence that the lenders (and regulators, and government backed enterprises and direct government lending agencies ,and and and ...) will ALL abandon the course they've been on for about three years now and LIKE A DAM BURSTING the whole system will collapse and we'll suddenly be awash is houses so cheap that it'll make the Yugo look like a luxury car is JUST SO PAINFULLY IGNORANT that I can't help but do some "counter ranting"...
Good enough?
Oh, and as a former landlord I completely agree with folks that really do the math on RENTING vs BUYING and if that works for their needs I encourage them to do what makes sense for them. If they choose to never save up a downpayment and rent till they die no skin off my back. I just dislike their smug "owners are stupid" attitude. Guess what, LOTS of owners, myself included, did the math a heckuva long time ago, saved up our 20% down, determined that owning was an AWESOME move financially at the once minuscule premium that buying represented and we are sick of whiners who think they are entitled to have short commutes and pleasant neighborhoods. If their income won't support the kind of home they desire there are multiple ways to attack the roots of that problem. As a real estate agent I enjoy helping potential buyers find the "good values" and if that includes figuring how to buy an older home and improve it in a way that truly will meet their desire to have something reasonably up-to-date and not outrageously expensive all the better..
Last edited by chet everett; 01-18-2011 at 07:59 PM..
A whole lot of people made really horrible decisions to purchase homes between 2003 and 2007. And then quite a few other people made pretty bad decisions to purchase homes from 2008-2010 and then also lost their jobs. In the entire Southern California RE market...LA, OC, San Diego, IE, this led to prices increasing by 2 1/2 to 3x in a period of about 8 years....unprecedented. At this point it really matters little how far prices dropped. They still have a LONG ways to go in this area. Yeah in Killean, Texas(ostensiably the lowest price RE market in the nation) there will be little correction as there is built in military demand AND the market never shot up like it did elsewhere. But in many of the big cities....theres still a lot of deflating going on.
I get tired of the ridiculous "the sky is falling" posts that link to blog posts of some genius whose premise is pretty much like that of Cubs fans gone mad -- "wait till next year"....
If there is/was any evidence that the lenders (and regulators, and government backed enterprises and direct government lending agencies ,and and and ...) will ALL abandon the course they've been on for about three years now and LIKE A DAM BURSTING the whole system will collapse and we'll suddenly be awash is houses so cheap that it'll make the Yugo look like a luxury car is JUST SO PAINFULLY IGNORANT that I can't help but do some "counter ranting"...
Good enough?
Oh, and as a former landlord I completely agree with folks that really do the math on RENTING vs BUYING and if that works for their needs I encourage them to do what makes sense for them. If they choose to never save up a downpayment and rent till they die no skin off my back. I just dislike their smug "owners are stupid" attitude. Guess what, LOTS of owners, myself included, did the math a heckuva long time ago, saved up our 20% down, determined that owning was an AWESOME move financially at the once minuscule premium that buying represented and we are sick of whiners who think they are entitled to have short commutes and pleasant neighborhoods. If their income won't support the kind of home they desire there are multiple ways to attack the roots of that problem. As a real estate agent I enjoy helping potential buyers find the "good values" and if that includes figuring how to buy an older home and improve it in a way that truly will meet their desire to have something reasonably up-to-date and not outrageously expensive all the better..
Since when has CNBC and RealtyTrac become blog posters? The article linked to this post was from CNBC. No one posted a direct link to a blogger. If you found your way there by some other route then that is not anyone's fault but your own. You chose to read this post. I have gotten tired over the last few years of real estate agents always saying things were okay, looking better, and a good time to buy when actually the reality was the complete opposite.
So Chet with rising property taxes throughout the counties of states, high unemployment that has no end in sight, Gen X downsizing their homes, younger generations not buying homes but renting instead, a HUGE foreclosure and shadow inventory that is up to at least 3-4 years to get rid of, states that are going bankrupt----thinking of filing bankruptcy, etc..... how in the world can you say that the sky isn't falling with the housing? What would it take? Please enlighten me how you think housing in the near future is going to look good.
Tell the people that have lost 30-50% equity in their homes that the sky hasn't fallen, and see what they say to you.
You are so very very very very mistaken and YOU will suffer for your errors more harshly than you can imagine...
The reality of people making TERRIBLE DECISONS cannot be blamed on anyone other the decision makers themselves!
Efforts to swing more fools over to the "doom and gloom" nonsense is NOT WORKING and despite the hangover of over extended idiots deciding they should be entitled to walk away from their obligations it is clear that some financial institutions are still INCREDBIBLY PROFITABLE and smart people that work for such firms, or invested in them are indeed NOW HANDSOMELY REWARDED.
If they choose to put some of those rewards into expensive houses I sorta hope they do "thumb their noses" at goofballs that put up with the crummy rental they have convinced themselves are " good enough "...
The gap between folks who can rationally analyze situations and make wise choices from the unemotional data that continues to point to a remarkably robust economy and those that seek out the most ridiculous hype and borrow into their bitter holes will grow faster and wider.
Quote:
Originally Posted by whathousingrecovery?
Since when has CNBC and RealtyTrac become blog posters? The article linked to this post was from CNBC. No one posted a direct link to a blogger. If you found your way there by some other route then that is not anyone's fault but your own. You chose to read this post. I have gotten tired over the last few years of real estate agents always saying things were okay, looking better, and a good time to buy when actually the reality was the complete opposite.
So Chet with rising property taxes throughout the counties of states, high unemployment that has no end in sight, Gen X downsizing their homes, younger generations not buying homes but renting instead, a HUGE foreclosure and shadow inventory that is up to at least 3-4 years to get rid of, states that are going bankrupt----thinking of filing bankruptcy, etc..... how in the world can you say that the sky isn't falling with the housing? What would it take? Please enlighten me how you think housing in the near future is going to look good.
Tell the people that have lost 30-50% equity in their homes that the sky hasn't fallen, and see what they say to you.
The reality of people making TERRIBLE DECISONS cannot be blamed on anyone other the decision makers themselves!
Efforts to swing more fools over to the "doom and gloom" nonsense is NOT WORKING and despite the hangover of over extended idiots deciding they should be entitled to walk away from their obligations it is clear that some financial institutions are still INCREDBIBLY PROFITABLE and smart people that work for such firms, or invested in them are indeed NOW HANDSOMELY REWARDED.
If they choose to put some of those rewards into expensive houses I sorta hope they do "thumb their noses" at goofballs that put up with the crummy rental they have convinced themselves are " good enough "...
The gap between folks who can rationally analyze situations and make wise choices from the unemotional data that continues to point to a remarkably robust economy and those that seek out the most ridiculous hype and borrow into their bitter holes will grow faster and wider.
So, in classic fashion - you blame the folks who lost their jobs instead of the "incredibly profitable" companies? Awesome. Over 1 in 5 people are un(der)employed while companies "make" money by continuing to reduce operating costs (aka layoff and outsource)... or maybe you mean the Primary Dealers of The Fed who are being handed 10s of billions a day to keep the stock market green and line their pockets with millions in fees for doing nothing except buying AAPL and NetFlix - all so we can preserve the wealth of the richest folks via the SP500? Sure the TBTF hand outs to take a bailout are probably on your "handsomely rewarded" list. Way to take on no risk and just fall on the pillow of our tax dollars. Seriously, what a joke. These companies are not making money and profitable in the way that you insinuate AT ALL... Fundamentals?! Please.
So yeah - "faster and wider" for sure... But don't sit there and pretend it's a "robust economy". Let's fudge GDP by stacking inventories, let's believe the BLS with their UE and CPI data. What inflation, right?! I mean come on, flat screens are still cheap - who cares about the price of energy and foodstuffs. Who cares about what is happening globally. Who cares about how municipalities at every level need to raise taxes just to meet their MINIMUM debt obligations. Who needs a budget when my ETF is doing awesome! I eat ETFs for breakfast and pay more for housing... Housing is going UP!
Seriously, Bernanke has all but abandoned housing and you best hope that those GSEs keep lending through insolvency and rising interest rates. Even then the downward pricing pressure on homes is incredible.
The reality of people making TERRIBLE DECISONS cannot be blamed on anyone other the decision makers themselves!
Efforts to swing more fools over to the "doom and gloom" nonsense is NOT WORKING and despite the hangover of over extended idiots deciding they should be entitled to walk away from their obligations it is clear that some financial institutions are still INCREDBIBLY PROFITABLE and smart people that work for such firms, or invested in them are indeed NOW HANDSOMELY REWARDED.
If they choose to put some of those rewards into expensive houses I sorta hope they do "thumb their noses" at goofballs that put up with the crummy rental they have convinced themselves are " good enough "...
The gap between folks who can rationally analyze situations and make wise choices from the unemotional data that continues to point to a remarkably robust economy and those that seek out the most ridiculous hype and borrow into their bitter holes will grow faster and wider.
Z
I'm a little surprised at your statements as I've found you in the past to be a very rational poster.
Anyway, at least as far as So Cal goes, sales are plumenting and what is actually happenening is contrary to what you post:
If they choose to put some of those rewards into expensive houses I sorta hope they do "thumb their noses" at goofballs that put up with the crummy rental they have convinced themselves are " good enough "...
I'm wondering if the characterization of renters as "goofballs" who are living in "crummy" housing is a bit out of date, or at least inaccurate for many locales. I get that many real-estate agents are frustrated with the renting-is-safer mentality (ours certainly is), but with the current economic uncertainty, I'm not sure how one could argue that buying a house is the safe play.
In our case, the "crummy rental" is a 5600 sq.ft. 6 bed, 4 bath McMansion on .5 acres in a country club community in NC. It rents for 2/3 of what the mortgage would be if we had bought it. Nothing in our neighborhood can be sold at anywhere near the original asking prices, and most sellers simply give up after a year or two on the market--staying put or becoming landlords. Many, many smart, upper-middle class buyers around here have concluded that renting for awhile to see where the market goes is a reasonable option.
Perhaps sellers will eventually capitulate and lower prices. Perhaps buyers will suddenly decide that homes really are worth a lot more than they think. Who knows, but why gamble? Why not wait a couple years in a great-looking rental and see what happens?
For the folks that are capable of truly being rational about the "rent vs buy" decision, and understand the risks that go along with EITHER SIDE of that decisions I have nothing but respect.
The goofballs I refer to are those that can not see that even in pieces they themselves quote / link to their are OPPORTUNITES for both investors and buyers and for them to have this "renting is the ONLY WAY to STICK IT TO THE LENDERS " warped mindset I have to call them out.
Did no one else see in that report that since fixed up REOs sell quicker and for more money that is one wants a bargain they ought o gonfor the run down place stuff that needs work, and they ought to act quick before some INVESTOR beats 'em to it and then profits as they dawdle...
If you are investor, and not merely a desperate homeowner turned temporary landlord,the way to profit from rentals is to make more OVER THE LONG HAUL than it would otherwise get from selling. Believe me there have been many periods when rents have not just increased, rental units themselves have all but impossible to find. When Silicon Valley programers pack foru and five into a three bedroom home or oildmfield workers in Houston drive daily from Louisiana becuase of NO rentals that is a situation no with a famikynwnats to face...
The economy will come back to a healthynstste andnwhenit does the emotional fools will be left out inn the cold.
For the folks that are capable of truly being rational about the "rent vs buy" decision, and understand the risks that go along with EITHER SIDE of that decisions I have nothing but respect.
The goofballs I refer to are those that can not see that even in pieces they themselves quote / link to their are OPPORTUNITES for both investors and buyers and for them to have this "renting is the ONLY WAY to STICK IT TO THE LENDERS " warped mindset I have to call them out.
Did no one else see in that report that since fixed up REOs sell quicker and for more money that is one wants a bargain they ought o gonfor the run down place stuff that needs work, and they ought to act quick before some INVESTOR beats 'em to it and then profits as they dawdle...
If you are investor, and not merely a desperate homeowner turned temporary landlord,the way to profit from rentals is to make more OVER THE LONG HAUL than it would otherwise get from selling. Believe me there have been many periods when rents have not just increased, rental units themselves have all but impossible to find. When Silicon Valley programers pack foru and five into a three bedroom home or oildmfield workers in Houston drive daily from Louisiana becuase of NO rentals that is a situation no with a famikynwnats to face...
The economy will come back to a healthynstste andnwhenit does the emotional fools will be left out inn the cold.
When do you think that is going to happen given the current state of affairs with the United States? Sorry this isn't 1980 anymore. This country is in big trouble unless it pulls its head of its rear end. This goes way beyond housing.
It's funny, "people being left out in the cold" was sorta the same thing real estate agents were saying back in 2006/07. Remember, "you better hurry up and buy a house before you will be priced out of the market." LOL
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You are so very very very very mistaken and YOU will suffer for your errors more harshly than you can imagine...
