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I would agree with you. Alt-A mortgages are starting to default and the peak is six months out. These mortgages are going to be much larger values.
A little anecdotal evidence. My friend is out looking in Summerlin for foreclosures and he's finding plenty of expensive Mercedes in the driveways. Maybe they're all people who just live beyond their means in all ways. Some of them at least can most likely afford the payments, they just decide to walk away anyway because their homes are worth so much less than they owe. Better hope that doesn't catch on.
Quote:
Originally Posted by Coop01
The real wild card if there is one is the election. Lots of things happen before an election. There might even be some significant movement downward in oil prices before then. I'd go so far as to predict "Happy days are here again" before the election.
I think oil will drop too, it's been quite a quick and massive jump up. Probably not for long however. Oil is still a long term up though because of declining supply. If Iran gets attacked, then look out.
Some one will find the Nevada equivalent of the Delta Smelt in Lake Mead and the 9th circuit Federal Court will limit the amount of water that can be drawn off which will compound an already severe problem. Look for lawsuits when LV trys to acquire water from other counties. The fight has always been about water in the west.
Wonderful. That would raise prices though if they stopped building.
Just because mortgage apps are down doesn't mean that it's a direct contradiction of sales volume being up. Many of those mortgage apps in the past few years were re-fis, not new home purchases. The re-fi market is probably way down.
I disagree with the poster who said we'd be seeing oil prices down and real estate pick up before the election. My guess is that it happens after the election after the uncertainty of who will be in charge is resolved. But whether it's in 6 months or 18 months, I do think the turnaround is coming in about a year.
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Quote:
Originally Posted by jpk
Just because mortgage apps are down doesn't mean that it's a direct contradiction of sales volume being up. Many of those mortgage apps in the past few years were re-fis, not new home purchases. The re-fi market is probably way down.
I disagree with the poster who said we'd be seeing oil prices down and real estate pick up before the election. My guess is that it happens after the election after the uncertainty of who will be in charge is resolved. But whether it's in 6 months or 18 months, I do think the turnaround is coming in about a year.
Bingo. Not to mention all of the order taker LO's that have gotten out of the business in the last year. Many of those guys just threw scenarios at the wall to see which would stick, so applications had no direct correlation to fundings either. Less unqualified applicants plus more professional loan officers that know how to pre-screen clientele plus less refi activity equals less applications.
I personally think that oil prices will drop after the election assuming that the Democrats get in....I think OPEC has been raising prices to achieve exactly this.....they want the Repbulicans out because the Dems are more 'politically favorable" When oil drops Real Estate will start up again....
I personally think that oil prices will drop after the election assuming that the Democrats get in....I think OPEC has been raising prices to achieve exactly this.....they want the Repbulicans out because the Dems are more 'politically favorable" When oil drops Real Estate will start up again....
Don't want to get off-topic but OPEC or "Big Oil" does not set the price of crude oil. Member countries can influence the price by changing production levels. For a better explanation, here is a link:
Commodity speculation aside, unless crude output is increased to meet demand, I don't see a significant drop in prices now or after the election. I'm much more interested to see how the FED will handle rising inflation and the weak dollar. If they choose the Volcker approach of the late 70/80's it's going to get real interesting.
I would agree with you. Alt-A mortgages are starting to default and the peak is six months out. These mortgages are going to be much larger values. The real wild card if there is one is the election. Lots of things happen before an election. There might even be some significant movement downward in oil prices before then. I'd go so far as to predict "Happy days are here again" before the election. The value of my place has dropped 49% in three years based on a sale of the identical floor plan in my area last month.
The REOs will clear out and that will keep the Realtors busy at least on the lower end of the market. There are enough suckers out there to nibble in this market for possible rental units. It will be painful but it will eventually recover but it will never be like it was in the past 7 years.
Some one will find the Nevada equivalent of the Delta Smelt in Lake Mead and the 9th circuit Federal Court will limit the amount of water that can be drawn off which will compound an already severe problem. Look for lawsuits when LV trys to acquire water from other counties. The fight has always been about water in the west.
Sounds like vegas has jumped the shark, which isn't an easy thing todo, being landlocked!
In terms of volume the peak of the REPO cycle is on us. It is going to be with us for a long time. But it is with us.
I always touch on volume, price and inventory. All indicate we are at or near bottom. All could be wrong. Attempts to ascribe local behavior to macro drivers are generally unsuccessful.
You are free to wait as long as you want. But the market is also free to do whatever it wants.
And now analysts are seeing a pick-up in PRIME defaults. More credit drama looms on the horizon.
Yes, the housing market will do what it wants, but there are always fundamental drivers. You can have overreaction, but always to the drivers. We are likely to see an overreaction to the downside, and before we see any real turn the fundamentals have to improve. But they are only deteriorating.
Markets certainly can decouple from the macro picture, but only when the local fundamentals are different. So what are the fundamentals that say this is a bottom or turning point? There aren't any. Volume and supply are merely descriptive statistics that may or may not be indicative of the fundamental picture. And even when the fundamentals are ripe, you still need a catalyst. Without catalysts and changes in sentiment, valuations would rarely diverge from their fundamental theoreticals.
And now analysts are seeing a pick-up in PRIME defaults. More credit drama looms on the horizon.
Yes, the housing market will do what it wants, but there are always fundamental drivers. You can have overreaction, but always to the drivers. We are likely to see an overreaction to the downside, and before we see any real turn the fundamentals have to improve. But they are only deteriorating.
Markets certainly can decouple from the macro picture, but only when the local fundamentals are different. So what are the fundamentals that say this is a bottom or turning point? There aren't any. Volume and supply are merely descriptive statistics that may or may not be indicative of the fundamental picture. And even when the fundamentals are ripe, you still need a catalyst. Without catalysts and changes in sentiment, valuations would rarely diverge from their fundamental theoreticals.
Nope...real world does not work that way. There is, of course, coupling between the macro and the local. If the US goes bad...Vegas goes bad. But how bad does Vegas go? Different subject. And heavily influenced by local parameters.
"Catalyst" is right up there with the old "paradigm shift". Both are terms used by various pundits for the post mortem. They are simplistic attempts to explain the interaction of large numbers of processes in simple terms. They are simplifications to explain the complex...not causals.
The are never applicable before the event occurs...only after the body is found.
The available statistics indicate a bottom. Those who don't think it is a bottom disagree...pointing out the lack of a "catalyst". If it is the bottom it will later be explained by finding the "catalyst". The new strip development will adequately fill the role.
Nope...real world does not work that way. There is, of course, coupling between the macro and the local. If the US goes bad...Vegas goes bad. But how bad does Vegas go? Different subject. And heavily influenced by local parameters.
"Catalyst" is right up there with the old "paradigm shift". Both are terms used by various pundits for the post mortem. They are simplistic attempts to explain the interaction of large numbers of processes in simple terms. They are simplifications to explain the complex...not causals.
The are never applicable before the event occurs...only after the body is found.
The available statistics indicate a bottom. Those who don't think it is a bottom disagree...pointing out the lack of a "catalyst". If it is the bottom it will later be explained by finding the "catalyst". The new strip development will adequately fill the role.
You have to be kidding me. You have no idea what my background is. And, sorry, I don't go to engineers for investment advice. But thanks for the completely misguided definition of a catalyst.
"Catalysts" are most definitely not oversimplifications. It is a term used by professional analysts, and pundits trying to sound professional. Catalysts are real. Easy credit is an obvious catalyst we've seen multiple times in forming of bubbles in multiple asset classes. The good analyst can tell you why that is the case. The simplification is pretending like there is only one catalyst, or that there aren't competing catalysts.
Catalyst, by definition, is causal. That whole discourse is a rather poor attempt to dismiss sound analysis. It certainly IS NOT indicative of investment training. Good analysts identify and recognize the catalyst ex-ante The expertise comes in identifying the interactions and what has the dominant influence.
Your entire post is spoken like any number of "bulls" of various asset classes. Short of fundamentals and critical of sound theory when you actually take the time to put down the pom-poms. I mean, do you even understand what the term "decoupling" means? If you are saying Vegas is turning or will turn, but the macro economy is worsening, then you have to have a reason WHY Vegas would decouple from the macro in such manner. No, how far down Vegas goes IS NOT a different issue, it is THE issue (if you think the larger trend is down). And what circular logic - those who disagree "point out the lack of a catalyst"?!? Ummm, no, they disagree with you BECAUSE they see no catalyst. You know, because people actually ANALYZE the market, looking at the fundamentals and forecasting the valuation drivers...NOT relying on some cheap charting techniques to imagine a trend. Your case is apparently based on faith, and very short trends (if you can call it that) in a few indicators. Please, you tell me the market is stabilizing or turning but you can't tell me why? Anyone can look at a few data points and proclaim a trend, I'm asking for something a bit more substantive because, as opposed to your misguided criticism of "catalyst", ex-post people are always able to identify why some data points were false indicators.
Simple question. What is the catalyst? Any analyst can identify one. Time will show whether your analysis was good and sound, or garbage. Volume is indicative of what has happened. It may be correlated with past movements, but says absolutely nothing about the future. This has been a real estate bubble, and you are forming opinions on past indicators that most likely are losing their predictive power in a different market environment. When you have drastic disconnects from fundamentals, as you do both up and down in bubbles, the old "reliable" indicators fail.
The new Strip development is over a year away. CityCenter reported AWFUL sales results last quarter. We'll see what next quarter brings. And an increase in supply isn't particularly what I would call a positive catalyst FOR PRICE. You keep talking volume, but how many of your buyers move because of volume, and not price? Only a realtor talks about volume as an indicator of health. For crying out loud, MORE SUPPLY is turning this market? Maybe volume, but buyers and investors care about price.
From what I've seen the inventory is still higher than this time last year, despite a few months of improved sales. How is that indicative of a bottom? To me it says that despite increasing volume, there's still more supply than demand, which should continue to push prices down.
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