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Every other headline calling for more trouble in housing...
- Thread starter Copernicus
- Start date
Quote from ByLoSellHi:
If you read the data compiled by Shiller, what he refers to as the most alarming trend is for non-coastal areas, in moderate income areas, such as St. Louis, Missouri, to have seen appreciation rates of about 50% to 60% in the last 3 -4 years.
I don't have the exact stats, but those are pretty close.
Unless you can show income and wage gains of 50% to 60% in St. Louis over the last 3-4 years, which I assure you that you cannot, you have a disequilibrium.
This 'bubble' is not a purely 'coastal' phenomenon, as it was in the mid to late 80s.
Very horseshit argument BLSH. Is there a guidebook that says housing appreciation is tied to wage growth? Hardly. If anything only payments are tied to wages. With interest rates not even remotely mimicking the double digit levels of previous crashes, it's hard to believe that a guy in St. Louis can't carry a 150k home. (which buy's you a nice place in STL).
Just because an item becomes unaffordable doesn't mean it's intrinsically over priced. I think gold is unaffordable as well as too high to buy. I also think it's going to at least $1000 an oz. See the paradox?
Want to compare how many couples are wage earners to a generation ago? Or how many couples got married in their 30's after building equity in the RE market individually for years. Back in the 70's was it not unheard of for a single woman in her 20's to own a condo?
What kind of downstroke are people getting from inheritances? With asset inflation it's nothing for that great-aunt to leave you a quarter mil. Not to mention pensions. It's very misleading to look at household net worth when in fact the retired cop or teacher in that household may be picking up a 45k a year pension in a few years. What about cheap dollars?
Are RE prices keeping up with gold? Or ER2?
Homes are no more going to fill in the meat of this rally than the Dow ever filled in the 3,000-7,000 part of it's rally.
I've mentioned this many times before. Compared to stocks homes have lagged. SPX is up 10x in twenty years. Homes aren't.
With many cars now up to $100,000 in price am I to think home prices are obscene?
Will prices come in? Sure. They already have. Will they come in hard? Doubtful. Too many shorts and too much money out there.
We're headed towards Brazil. When these Mexican's start multiplying there'll be 400 million Americans in a flash. 100 million of them will be living in Shanytowns.
In response to the thread title, the media can usually be depended upon to tell main street what wall street has known for a long time and thus tends to be a lagging indicator.
Just like the big fuss over gas prices last year, by the time the media really started hyping it, the run up was just about over, the same thing earlier this year as crude was falling, the headlines were all but guaranteeing us sub $2 gas prices at the pump, and that coincided with the end of that pullback.
Another thing to consider is the analysts, true to form they downgrade the stocks after they've imploded. I'm not necessarily calling a bottom, but I wouldn't rule out the bottom being closer than the media makes it out to be. Once everyone is in agreement on wall street and main street, I think it's time to start looking the other way, and we seem to be close to that.
Just like the big fuss over gas prices last year, by the time the media really started hyping it, the run up was just about over, the same thing earlier this year as crude was falling, the headlines were all but guaranteeing us sub $2 gas prices at the pump, and that coincided with the end of that pullback.
Another thing to consider is the analysts, true to form they downgrade the stocks after they've imploded. I'm not necessarily calling a bottom, but I wouldn't rule out the bottom being closer than the media makes it out to be. Once everyone is in agreement on wall street and main street, I think it's time to start looking the other way, and we seem to be close to that.
Quote from Pa(b)st Prime:
Very horseshit argument BLSH. Is there a guidebook that says housing appreciation is tied to wage growth? Hardly. If anything only payments are tied to wages. With interest rates not even remotely mimicking the double digit levels of previous crashes, it's hard to believe that a guy in St. Louis can't carry a 150k home. (which buy's you a nice place in STL).
Just because an item becomes unaffordable doesn't mean it's intrinsically over priced. I think gold is unaffordable as well as too high to buy. I also think it's going to at least $1000 an oz. See the paradox?
Want to compare how many couples are wage earners to a generation ago? Or how many couples got married in their 30's after building equity in the RE market individually for years. Back in the 70's was it not unheard of for a single woman in her 20's to own a condo?
What kind of downstroke are people getting from inheritances? With asset inflation it's nothing for that great-aunt to leave you a quarter mil. Not to mention pensions. It's very misleading to look at household net worth when in fact the retired cop or teacher in that household may be picking up a 45k a year pension in a few years. What about cheap dollars?
Are RE prices keeping up with gold? Or ER2?
Homes are no more going to fill in the meat of this rally than the Dow ever filled in the 3,000-7,000 part of it's rally.
I've mentioned this many times before. Compared to stocks homes have lagged. SPX is up 10x in twenty years. Homes aren't.
With many cars now up to $100,000 in price am I to think home prices are obscene?
Will prices come in? Sure. They already have. Will they come in hard? Doubtful. Too many shorts and too much money out there.
We're headed towards Brazil. When these Mexican's start multiplying there'll be 400 million Americans in a flash. 100 million of them will be living in Shanytowns.
Aren't you in the industry?
At any rate, I don't know what you consider 'nice,' but I am in the development business, and I actually have an Aunt who lives in St. Louis. What I would consider a nice home in a decent, newer sub there costs $325,000+.
That's about a 2,800 square foot home with a 2 1/2 car garage, on about a 80'x140' foot lot - maybe three years old.
Those same homes were sold for $188,900 new, in 2003, in her subdivision. I remember walking through her home before she and my uncle bought it, and them asking my opinion on the quality, etc. I talked with all the salespeople, the builder, etc.
You do the math.
It's pointless to debate this with you. I've heard all the same arguments you're making now back in 2005, while I was spending 3 weeks at a time in Nevada and Arizona (while I also attend the ICSC convention), looking at the madness and frenzy surrounding Pulte, Centex, and KB Homes developments, as to why prices and demand would keep rising: massive influx of latino immigrants, real estate is so safe, tax breaks of home ownership, better investment than anything else, blah blah blah. These are the VERY same subs that the builders are giving 100k+ rebates on right now, plus free pools granite counters, plasma screen tvs, new car leases, and who knows what else (by now) just to get off their books.
No offense, but a current 2 million (maybe 2.5 million) vacant home inventory pretty much has laid those arguments to rest.
I don't think this is anywhere near the bottom. You do. That's fine.
We all place our bets in out own ways, some big, some small, some direct, some not so direct.
Only history will answer the question of whose hypothesis was closer to the truth.
Quote from Pa(b)st Prime:
A guy can go to Atlanta, Pittsburgh, KC, Charlotte, Cleveland, Milwaukee...I could go on and on...and find a kiss ass house for 300k. Hell a million in Milwaukee will buy you an estate on Lake Michigan.
So that means throughout the country one can buy a VERY nice home (I'm not even talking about 75k starter homes in Cedar Rapids) for what a handful of 530i's would cost. Not exactly bubblesque.
So unless we're speaking about a handful of metro areas on the West Coast or North East there's really nothing even expensive about housing prices let alone bubblesque.
I don't think anyone is saying there is a bubble in Cleveland. When people talk about a housing bubble, they mean areas that are up 300%, 400% in the last few years, where a piece of trash shoebox sells for 7 or 8 times the average salary of the area. A bubble is where price is way out of line with value. So unless Cleveland starter homes are selling for a silly multiple of what the average working joe earns there, then they are unlikely to collapse.
It's just like 2000 - it was tech that you wanted to bet against, not value stocks.
There are different problems in different areas putting downward pressure on prices.
In places like FL, NV, CA where you've had the big boom, its just a bust from the boom and it will be compounded by the reduction in ease of credit availability. My Mom has been trying to sell her penthouse beachview condo for almost a year now. At this point she hasn't got a chance of getting back what they paid for it 3 yrs ago.
In places like the rust belt, ie MI, OH, IL, you have the problem of declining spendable incomes as manufacturing completes its move offshore, now being compounded by the reduction in ease of credit availability. I don't think the decline here is anywhere near as much percentage wise just because we didn't go up as high in the first place, but then again, if unemployment starts climbing, added to the credit crunch, things will get pretty ugly, like the Detroit area is now. At least in FL or CA they are places people WANT to move to.
In places like FL, NV, CA where you've had the big boom, its just a bust from the boom and it will be compounded by the reduction in ease of credit availability. My Mom has been trying to sell her penthouse beachview condo for almost a year now. At this point she hasn't got a chance of getting back what they paid for it 3 yrs ago.
In places like the rust belt, ie MI, OH, IL, you have the problem of declining spendable incomes as manufacturing completes its move offshore, now being compounded by the reduction in ease of credit availability. I don't think the decline here is anywhere near as much percentage wise just because we didn't go up as high in the first place, but then again, if unemployment starts climbing, added to the credit crunch, things will get pretty ugly, like the Detroit area is now. At least in FL or CA they are places people WANT to move to.
Quote from traderdragon2:
On 1/12/07 I posted some foreclosure data for san diego. Here it is
Pre-foreclosures: 1714
Auction: 334
Bank owned: 1153
Now look at today:
Pre-foreclosures: 2097
Auction: 547
Bank owned: 1796
The numbers get worse every single month! Bottom? HA!
The trend is getting stronger.
So how does the trend look when you're at the bottom?
Quote from ByLoSellHi:
If you read the data compiled by Shiller, what he refers to as the most alarming trend is for non-coastal areas, in moderate income areas, such as St. Louis, Missouri, to have seen appreciation rates of about 50% to 60% in the last 3 -4 years.
I don't have the exact stats, but those are pretty close.
Unless you can show income and wage gains of 50% to 60% in St. Louis over the last 3-4 years, which I assure you that you cannot, you have a disequilibrium.
This 'bubble' is not a purely 'coastal' phenomenon, as it was in the mid to late 80s.
And how much has the value of commodities risen in the last 3 to 4 years? Lumber, Concrete, etc? The real estate prices were driven skyward by low interest rates, and now the value of the dollar has fallen so far that the prices are (virtually) justified by the cost of materials and labor.
SM
Quote from TM1:
In response to the thread title, the media can usually be depended upon to tell main street what wall street has known for a long time and thus tends to be a lagging indicator.
Just like the big fuss over gas prices last year, by the time the media really started hyping it, the run up was just about over, the same thing earlier this year as crude was falling, the headlines were all but guaranteeing us sub $2 gas prices at the pump, and that coincided with the end of that pullback.
Another thing to consider is the analysts, true to form they downgrade the stocks after they've imploded. I'm not necessarily calling a bottom, but I wouldn't rule out the bottom being closer than the media makes it out to be. Once everyone is in agreement on wall street and main street, I think it's time to start looking the other way, and we seem to be close to that.
Thank you. I was beginning to feel like the long ranger.
SM
Quote from Smart Money:
And how much has the value of commodities risen in the last 3 to 4 years? Lumber, Concrete, etc? The real estate prices were driven skyward by low interest rates, and now the value of the dollar has fallen so far that the prices are (virtually) justified by the cost of materials and labor.
SM
Lumber is 30% cheaper right now than at this time last year. I know this because I just spoke with my lumber supplier on Tuesday of last week.
Do you think local batch plants that produce concrete will load their concrete on tankers and ship it thousands of miles around the world, in search of a booming market?
This talk of BRIC has become so pervasive that it has warped peoples' sensibilities.
As housing construction continues to slow, material prices will continue to fall. You can bank on that.