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Old 06-02-2009, 08:57 PM
 
Location: Montgomery County, PA
2,771 posts, read 6,262,967 times
Reputation: 606

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Quote:
Originally Posted by JG183 View Post
unemployment is a lagging indicator
Housing is an even more lagging indicator. Or do you think that these unemployed people will get financing to buy $400k houses, and then get jobs ?
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Old 06-02-2009, 09:07 PM
 
Location: NJ
12,283 posts, read 35,616,548 times
Reputation: 5331
Quote:
Originally Posted by JG183 View Post
can you link to a post, any single post, where anyone said this (not in jest) ...?

I think that every R.E. "bull" on here simply wants housing to stabilize (i.e. stop declining) because we know that housing is now, unfortunately, inextricably, linked to the health of the overall US economy.

to cheer price declines is to cheer the recession onward.

and that is what I'm questioning -- all the talk of wanting prices to come to some imaginary parallel with incomes is a diversion.
http://www.city-data.com/forum/9102958-post27.html

what does this mean? "If we all wait for it to bottom and then go up, you will never get the best price"

I counter we will wobble along the bottom for YEARS, and noone has to worry about getting the best price.
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Old 06-02-2009, 09:17 PM
 
Location: Montgomery County, PA
2,771 posts, read 6,262,967 times
Reputation: 606
Quote:
Originally Posted by JG183 View Post
can you link to a post, any single post, where anyone said this (not in jest) ...?

I think that every R.E. "bull" on here simply wants housing to stabilize (i.e. stop declining) because we know that housing is now, unfortunately, inextricably, linked to the health of the overall US economy.
Yes, it's linked. The bubble and excessive debt caused this. Asset price correction is the cure, not the disease.

Quote:
and that is what I'm questioning -- all the talk of wanting prices to come to some imaginary parallel with incomes is a diversion.
If they don't come down, who is going to buy houses, and how are they going to buy them ? Either they won't buy them, or, if we are to suspend belief and pretend that the easy-credit environment needed to preserve those asset prices persists, then they will buy them the same way they did in the bubble -- via excessive debt.

A tightening of credit means that asset prices have to go back to parity that is commensurate with affordability. There is no "wanting" or "wishing" about it. If I throw a ball in the air, we accept that it will come down. "Wanting" doesn't really enter into it (unless you're a RE bull expecting it to hang suspended in the air .... )
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Old 06-02-2009, 09:20 PM
 
636 posts, read 1,421,183 times
Reputation: 167
elford, i smell what you're cooking.
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Old 06-02-2009, 09:55 PM
 
Location: Canco, JC, NJ
229 posts, read 921,548 times
Reputation: 90
Quote:
Originally Posted by tahiti View Post
http://www.city-data.com/forum/9102958-post27.html

what does this mean? "If we all wait for it to bottom and then go up, you will never get the best price"

I counter we will wobble along the bottom for YEARS, and no one has to worry about getting the best price.
It means what it reads. If a house bottoms out at 100K, and then prices start to go up, and the news reports it, then we believe it, that 100K house is now up to $110K and rising.

Again, timing the absolute bottom is a luck thing. NO ONE can time the absolute bottom. As I have said before, I do not think there is another 10% drop left in prices. I believe we are in a recovery already. There will probably be another drop of some small percentage, there may be a hiccup or two, but I believe we are close enough to the bottom to buy.
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Old 06-02-2009, 10:22 PM
 
Location: Montgomery County, PA
2,771 posts, read 6,262,967 times
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Quote:
Originally Posted by millsan1 View Post
It means what it reads. If a house bottoms out at 100K, and then prices start to go up, and the news reports it, then we believe it, that 100K house is now up to $110K and rising.

Again, timing the absolute bottom is a luck thing. NO ONE can time the absolute bottom. As I have said before, I do not think there is another 10% drop left in prices. I believe we are in a recovery already. There will probably be another drop of some small percentage, there may be a hiccup or two, but I believe we are close enough to the bottom to buy.
It may indeed be true that timing the absolute bottom, as you put it is a crapshoot. Maybe prices will overshoot on the way down. If so, then by how much ? We don't know.

What we can be somewhat confident in is that valuation measures pertaining to housing are ultimately mean-reverting. The standard market models of interest rates incorporate mean-reversion, and there are very good economic arguments for this. Therefore, long term, we don't expect rates to blow up or stay low. Because rates ultimately determine financing costs, they have a very direct influence on costs. Besides rates, economic growth factors in. What this means is that valuation measures like price/income ratio, price/rent ratio, etc are mean-reverting. Therefore, one would reasonably expect these to return to historical norms, and if they are nowhere near there, it would be unwise to claim that this departure is sustainable.

I am curious as to what is your basis for believing that there will only be a further 10% drop. All the evidence I'm familiar with -- whether it's bearish signals from the market in weak sales numbers, upward pressure on rates, prediction markets that are punting on 15-25% more declines, the Case Shiller index dropping at an accelerating rate (2.5% last month) , affordability numbers still below historic norms -- these provide many different ways to look at where prices are headed, and it seems that whichever way you look at it, they're going down.

Having stated all that, I'm at least checking the listings, and there are some deals that look fantastic compared to 2006. But stepping back and comparing them with pre-bubble numbers puts it into perspective.
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Old 06-03-2009, 03:08 AM
 
19 posts, read 54,851 times
Reputation: 18
Very interesting reading everyones thoughts.

I have just rented a house in Millburn. The question is why did I rent not buy. I earn more than the median salary for Millburn but the properties for sale in Millburn offer no value. I am renting for less than 5% of the "market value" so when you factor in interest, real estate taxes and repairs of home ownership then at these levels i am way ahead of the game being a renter.

I will continue looking to buy but prices in this town have a way to come down. If a deal comes up i will buy and be more than happy to buy out my lease if necessary to get the right house.

Current figures show that the average price of a house in Millburn is 7 times average income which is just crazy. The market will not be stable until levels of 4 times earnings are reached.

I am not a super bear, I am just a realist.

Enjoy your house - dont be a slave to your house
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Old 06-03-2009, 06:41 AM
 
744 posts, read 1,403,608 times
Reputation: 182
Quote:
Originally Posted by millsan1 View Post
It means what it reads. If a house bottoms out at 100K, and then prices start to go up, and the news reports it, then we believe it, that 100K house is now up to $110K and rising.

Again, timing the absolute bottom is a luck thing. NO ONE can time the absolute bottom. As I have said before, I do not think there is another 10% drop left in prices. I believe we are in a recovery already. There will probably be another drop of some small percentage, there may be a hiccup or two, but I believe we are close enough to the bottom to buy.
The only thing that would cause housing prices to spike back up, as opposed to staying flat is a huge inflationary rise in all prices. And if that happens houses are no better than other assets which wise with inflation.

Remember the last real estate bubble, did you miss out if you didn't buy before prices started rising? The answer is no, since they meandered along the bottom for 5 years ('93-'98), why would this time be different? There's no need to pick the bottom, wait for prices to level out (i.e. rise at the rate of inflation) for a year or even two. Ignore the huge bubble in this chart, we all know about it, look at what happened after the last one - do you see a sudden rise in prices that made the bears miss "the bottom"?


Yes prices will rise, but they'll rise slower than inflation which means there's no rush.

Unless the hyperinflationary collpase of the US dollar happens. But the housing bulls all discount that option anyway.
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Old 06-03-2009, 08:00 AM
 
Location: New Jersey
4,153 posts, read 5,023,742 times
Reputation: 4203
Quote:
Originally Posted by NatasNJ View Post
Didn't you promise to stop your commenting on housing threads?
yeah, but like Brett Favre, I couldn't stay retired
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Old 06-03-2009, 08:01 AM
 
Location: New Jersey
4,153 posts, read 5,023,742 times
Reputation: 4203
Quote:
Originally Posted by elflord1973 View Post
do you think that these unemployed people will get financing to buy $400k houses, and then get jobs ?
hey, we've got a poster on here who's buying a house with no income !
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