Yahoo has headline "Welcome to the Bottom: worst is over for housing markets" (San Jose: renting, loans)

[RobE]

I think one thing to look at in all this is DTI (debt to income ratio). We live in a culture where we are up to hock to our eyeballs (not me; I don't owe anyone a penny) and, with credit card companies raising rates at the drop of a hat and more, more folks just walking away from their underwater houses every day and unemployment still rising, there just isn't going to be enough of a pool out there who can afford to to stay around 25-30% DTI and still own a house in CA. Yeah, the RE industry can go back to its bubble era practice of allowing a borrower's DTI to go to 50% or more, but all that means is another bust cycle before the last one has burned itself out since the jobs fixture is going to be sketchy for the foreseeable future.

[Charles]

Originally Posted by RobE

the media also does not tell you what prices those transactions have gotten or where they were.

Websites such as redfin provide sales history, sales price, and list price.

[steel7]

A local idiot real estate company are saying that house values will increase before the end of this year. Where in the hell are they getting this BS info ? My neighbor wants to sell her home now but they told her to wait till late oct cause the market will be better. She believes them & i dont.

[capt chill]

All I know is that the banks are still not really lending. A deal for the house next door here in NC fell through last month, originally sold for 340K now asking 260K and the bank balked. If you believe the media about green shoots you better shoot yourself in the head. We are really in for it. Have you noticed, everytime they talk up the economy the price of crude oil spikes. Up near 70 a barrel. One hurricane and we are at 3+ a gallon again. Its not getting better anytime soon. We are headed out to CA thursday to visit the daughter. I am trying to talk her out of staying in CA. She loves the weather and is making good money, but CA is broke and in trouble. But then again so is the entire country, Maybe she is right. enjoy the weather and the beauty of CA. But then again my sister bailed from Santa Barbara and went to Colorado....

[DowntownVentura]

Originally Posted by capt chill

All I know is that the banks are still not really lending. A deal for the house next door here in NC fell through last month, originally sold for 340K now asking 260K and the bank balked. If you believe the media about green shoots you better shoot yourself in the head. We are really in for it. Have you noticed, everytime they talk up the economy the price of crude oil spikes. Up near 70 a barrel. One hurricane and we are at 3+ a gallon again. Its not getting better anytime soon. We are headed out to CA thursday to visit the daughter. I am trying to talk her out of staying in CA. She loves the weather and is making good money, but CA is broke and in trouble. But then again so is the entire country, Maybe she is right. enjoy the weather and the beauty of CA. But then again my sister bailed from Santa Barbara and went to Colorado....

While you are all doom and gloom, your daughter sounds like she is enjoying herself. Perhaps you should listen to her rather than assume you know what is best for her.

California is not "broke and in trouble". I think California is learning how to manage our money. It would have been nice if we did this decades ago but we are on the right track now.

[malamute]

With the government handing out thousands of dollars for people to go out and buy a house, there's bound to be some sales, just like the government money being used to buy cars.

What happens when they stop putting this country into even more serious debt with these give-aways? Sales will drop drastically.

[DawnW]

There were a huge amount of ARM rates given out in 2005. I predict that 2010 will be even worse with housing because all of those will come due and people can't afford the house they are in for the price agreed to in 2005. More forclosures.

Combine that with the unemployment rate and people leaving CA in massive droves (particularly the working middle class who contribute to the tax revenue the most), and it may be far worse than people could imagine.

I am not typically a gloom and doom type, but the handwriting has been on the wall for a while.

I hope I am wrong.

Dawn

[SOON2BNSURPRISE]

Just thought of that Dawn. A friend reminded me that many home buyers went with the 5 year fixed arm that will now reset in 2010. Maybe those that bought were lucky and were able to refinance. Oh that is right the prices on homes declined and they could not do that. Maybe uncle Obama will bail them out too.

[jbunniii]

Originally Posted by SOON2BNSURPRISE

Just thought of that Dawn. A friend reminded me that many home buyers went with the 5 year fixed arm that will now reset in 2010. Maybe those that bought were lucky and were able to refinance. Oh that is right the prices on homes declined and they could not do that. Maybe uncle Obama will bail them out too.

I've posted these two links before but I think they should be examined closely by anyone considering buying real estate in the next few years, especially in California.

Mortgage reset schedule (may be a bit out of date, but it gives the general picture):

http://economist.mrwhipper.com/IMFresets.jpg (broken link)

Note that 2010 and 2011 will be just as bad, if not worse, than 2008. We are actually in the "eye of the hurricane" right now. The types of loans that will be resetting are Alt-A and Option ARMs, which were heavily used in the coastal cities, versus subprime which were more common in the inland areas.

Option ARMs are the worst type of loan in terms of ballooning payments. This "map of misery" shows where they are concentrated:

Map of Misery

Since the failure of these loans will primarily affect just a few states (mainly California), my guess is that the federal government will expend less effort trying to prop up these borrowers than they did with subprime, which were widespread across the country. And the California state government is not in a position to prop even itself up at this point. So my assumption is that most of the Alt-A and Option ARM borrowers are going to crash and burn, and that the real estate market in California is going to get a lot worse before it bottoms.

[BRinSM]

i wish they had that map of misery by city or county within CA.