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Will an increasing loan delinquency rate and rock bottom cure rates cause another housing price crash? Read and post your thoughts.
The article recommends that people in areas particularly hit by the bursting of the bubble stay out of the housing market at least through 2011 and that appears to be sound advice.
I have anecdotal evidence that Californians have a way to go still in understanding their bubble market. Friends/relatives on my recent trip to visit Los Angeles kept asking when I'm moving back now that "housing is cheap."
I wondered about this, so I looked up the San Diego zip code I grew up in.
This is in the same neighborhood of 1970's condos w/ tiny patios.. would probably have listed at $480,000 - $500,000K at the height of bubble craziness... now for the bargain price of $350,000. They brag it's the lowest priced 3 bedroom in the whole zip code. No pictures of the inside tell me it's not in good condition or updated. It's 1100 square feet, has one space in a shared garage that doesn't even have a clicker unless they've updated that since my last trip there!
I have anecdotal evidence that Californians have a way to go still in understanding their bubble market. Friends/relatives on my recent trip to visit Los Angeles kept asking when I'm moving back now that "housing is cheap."
I wondered about this, so I looked up the San Diego zip code I grew up in.
This is in the same neighborhood of 1970's condos w/ tiny patios.. would probably have listed at $480,000 - $500,000K at the height of bubble craziness... now for the bargain price of $350,000. They brag it's the lowest priced 3 bedroom in the whole zip code. No pictures of the inside tell me it's not in good condition or updated. It's 1100 square feet, has one space in a shared garage that doesn't even have a clicker unless they've updated that since my last trip there!
You say, sarcastically, the condo is a bargain price of $350k. Are you suggesting that price is still high? If so, what price do you think is fair for that condo?
If you were trying to include property information, the link requires a sign-in.
Last edited by Marka; 09-07-2009 at 03:29 AM..
Reason: url removed
Folks, if you think back to the situation that led to the real estate markets getting terribly jammed and prices tumbling the impact of CAPITAL had more to do with it than anything else.
There are deals closing now and that is because the lenders are SOAKING in capital. Sure some places are hurt by low appraisals or too many unsold units, but that points to a more modest type price retreat than some massive fall off a cliff price erosion...
Sure, things COULD change in some dramatic way, but just as I did NOT see every last person whose home has "on paper" experienced 300% one year appreciation rush to cash in, nor do I think some unheard of majority of people will flush away their homes at 40% discounts...
There is ABSOLUTELY a "see saw" between spending and savings. The "quick hit" of Cash for Clunkers and other shots in the arm vs longer term benefits of reduced debt load and better returns are yet to be fully understood.
Household incomes are most flat, which sure beats a decline, but the toll that will come from more job losses and the resultant push back in some sectors as overworked employees demand high salaries will ripple through different companies / regions. Areas with large number of mobile, highly skilled workers will fare far differently than those tied to old fashioned labor agreements...
We are nowhere near the bottom in bubble areas. I think we will overshoot the bottom in around 5 years, if only for the reason that interest rates have nowhere to go than up and people will have to settle for lower wages indefinitely.
Folks, if you think back to the situation that led to the real estate markets getting terribly jammed and prices tumbling the impact of CAPITAL had more to do with it than anything else.
There are deals closing now and that is because the lenders are SOAKING in capital. Sure some places are hurt by low appraisals or too many unsold units, but that points to a more modest type price retreat than some massive fall off a cliff price erosion...
Sure, things COULD change in some dramatic way, but just as I did NOT see every last person whose home has "on paper" experienced 300% one year appreciation rush to cash in, Well of course not - most people tend to live in their homes for several years and, the majority of those people were convinced that PROPERTY ALWAYS INCREASES IN VALUE so why would they get out of the elevator when it seemed to only be heading up?nor do I think some unheard of majority of people will flush away their homes at 40% discounts...nobody who can avoid it will be "flushing away their home" BUT you can't stay in your home indefinitely if you can't pay the mortgage - be that through unemployment or through a large hike in payments - having to actually start paying down capital after an interest only period or by interest rate readjustment.Not to mention those who bought at peak, have seen their property plunge in value with no sign of recovery any time soon and who are seriously wondering if it's even worth staying in the home....unfortunately for the RE market and those who ARE paying their way there are many who are quite prepared to take the hit on their credit score and walk.
There is ABSOLUTELY a "see saw" between spending and savings. The "quick hit" of Cash for Clunkers and other shots in the arm vs longer term benefits of reduced debt load and better returns are yet to be fully understood.
Household incomes are most flat, which sure beats a decline, but the toll that will come from more job losses and the resultant push back in some sectors as overworked employees demand high salaries will ripple through different companies / regions. Areas with large number of mobile, highly skilled workers will fare far differently than those tied to old fashioned labor agreements... The Associated Press: Flat incomes raise doubts about economic recovery
I think it is perfectly possible that things could change in a dramatic way.
The $US is not a currency in good health and the economy is effectively running on fumes.
While it is possible, the odds are strongly against a dramatic shift because the inherent desire of US politicians to remain in power and the fear of constituents that the "devil they know" is better than the "new guy".
I strongly believe that when the final chapters are written on the factors that made the collapse of the real estate bubble so extraordinary, one of the things that will percolate near the top was the disconnect from much disliked Bush/Cheney WH toward the other GOP candidates -- there was so much uncertainty that a hand off would not be fumbled that many forces lined up behind the Dems, and specifically Obama/Emmanual, oops I mean Biden... The "Wall Street Connection" to this administration is the strongest in a long time...
While it is possible, the odds are strongly against a dramatic shift because the inherent desire of US politicians to remain in power and the fear of constituents that the "devil they know" is better than the "new guy".
I strongly believe that when the final chapters are written on the factors that made the collapse of the real estate bubble so extraordinary, one of the things that will percolate near the top was the disconnect from much disliked Bush/Cheney WH toward the other GOP candidates -- there was so much uncertainty that a hand off would not be fumbled that many forces lined up behind the Dems, and specifically Obama/Emmanual, oops I mean Biden... The "Wall Street Connection" to this administration is the strongest in a long time...
I don't think it would have made a blind bit of difference who was elected.
The "Wall Street Connection" - corporations lobbying and influencing Government is one of the reasons we are in such a dire mess today - and it has been around for a LONG time.
Deregulation of the financial industry is one of THE biggest factors which has contributed to allowing pure and overwhelming greed to override any kind of economic common sense and prudence. And both Democrats AND Republicans have played their parts in facilitating this.
Lend, lend, lend so the masses can have their luxuries made by underpaid, exploited workers in third world countries and everyone can "feel" rich. Lend to those that should never have been able to borrow. Charge them for every cent borrowed and grow fat on the profits. Bundle up those toxic loans and sell, sell, sell...........making money hand over fist. All "backed" by illusionary property "values".
It was an unbridled orgy of lending that has screwed this economy beyond imagining.
And has left the RE market in tatters.
Jobs disappearing, currency devaluing, national debt at $11,000,000,000,000 - and yet, and yet! - the thread about granite countertops is still buzzing
Deckchairs on the Titanic..................
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