Housing Rolling Along 2

Quote from traderdragon2:

An example of "buying panic". I think this played a role in the housing run up after interest rates kicked it off.

http://money.cnn.com/2006/11/17/real_estate/help_Basile_Neuffer/index.htm
More...

Cool article. Well written. However as someone who's lost 200k in a day (when I was their age) I didn't find their ordeal that horrible. It sounds like they payed up, then chose to leave California in a rush, failed to list the home with a realtor, priced it at an excessive profit and yet still scratched the trade.

I'm sure their story is typical. Many (nice) new homes in America are around 300k. In fact the median price is less than 220k. It doesn't exactly take Bill Gates money to make that mortgage payment. I'm sure the litany of guys on ET living in one room apartments in NYC, Chicago, California and London are paying as much in rent as many mortgage holders in Charlotte or Fresno are.

Just the fact that their house was near positive carry (1500 vs. 1700) tells me that even in this "overheated" valley town in central California, re-sale prices aren't rich!

I'm a long way from being a housing bull (too much inventory in the short haul) but I suspect the decline in most areas will be slight.
 
Their area is not representative of popular california cities.

330K will get you a shit hole condo in a bad neighborgood in san diego :D

Places where people really want to live in Cali have homes that size in the 800K to 1 million + range these days. Its insane.

Anyone with any kind of risk control is priced out of the market.

10 to 1 leverage with interest only and ARMs to buy a house is just not something i will ever do, and I can afford it a lot easier than most of my neighbors who are buying homes right now.

Id rather move somewhere cheaper and buy a nice house for cash.

As long as im in cali, and things are 2-3 standard deviations away from the mean, there is no way in hell ill buy. Ill take the difference I save each month on taxes and a huge mortgage and trade it for a 20-50% return each year.

There is no way the housing market can keep up with that, ive run the numbers. Buying for me would be idiotic. Ive owned homes before, but now? No way.

Besides, the trend has been straight down for a year here now. I see no signs of a bottom yet in san diego.
 
Quote from traderdragon2:

Their area is not representative of popular california cities.

330K will get you a shit hole condo in a bad neighborgood in san diego :D

Places where people really want to live in Cali have homes that size in the 800K to 1 million + range these days. Its insane.

Anyone with any kind of risk control is priced out of the market.

10 to 1 leverage with interest only and ARMs to buy a house is just not something i will ever do, and I can afford it a lot easier than most of my neighbors who are buying homes right now.

Id rather move somewhere cheaper and buy a nice house for cash.

As long as im in cali, and things are 2-3 standard deviations away from the mean, there is no way in hell ill buy. Ill take the difference I save each month on taxes and a huge mortgage and trade it for a 20-50% return each year.

There is no way the housing market can keep up with that, ive run the numbers. Buying for me would be idiotic. Ive owned homes before, but now? No way.

Besides, the trend has been straight down for a year here now. I see no signs of a bottom yet in san diego.
More...

havent even seen many signs of a top yet in SoCal..


No fear, no panic.. people still buying to flip, and nobody lowering prices imo
 
Quote from Pa(b)st Prime:

Cool article. Well written. However as someone who's lost 200k in a day (when I was their age) I didn't find their ordeal that horrible. It sounds like they payed up, then chose to leave California in a rush, failed to list the home with a realtor, priced it at an excessive profit and yet still scratched the trade.

I'm sure their story is typical. Many (nice) new homes in America are around 300k. In fact the median price is less than 220k. It doesn't exactly take Bill Gates money to make that mortgage payment. I'm sure the litany of guys on ET living in one room apartments in NYC, Chicago, California and London are paying as much in rent as many mortgage holders in Charlotte or Fresno are.

Just the fact that their house was near positive carry (1500 vs. 1700) tells me that even in this "overheated" valley town in central California, re-sale prices aren't rich!

I'm a long way from being a housing bull (too much inventory in the short haul) but I suspect the decline in most areas will be slight.
More...

I am beginning to think that way too, but am still concerned about a long drawn out but slow fall where prices keep slipping 0.5% a month or so... The next seven months should vbe very helpful in determining what exactly is going on... falling prices with rate cuts and we all know that we have a bigger problem than we all thought. I think it is very hard to gauge the upcoming slowdown at this time as it applies to the overall economy. All I know is this - from the wal mart sales figures - that the lower end consumer is tapped out, done, broke, no more money for anything. When the middle and upper class stop consuming, we may have some serious problems.

A rapid fall-off in housing prices isn't likely. But if it is a long, slow burn, who knows. The way the dollar is trying to devalue, just standing still is still a loss.

A flat market for five years means an opportunity loss. Take a million bucks, put it in a 5 year CD at 5%, and take it out with 283,000 in profit. Put it in the home, have it go nowhere, and you paid taxes and morgage for the priveledge of a poorly appreciating asset.
 
having seen a bunch of buying going on in my area of florida in the last two months, I think we are at an inflection point -- (to use an old word."

Lots of inventory, but buyers are back out right now. So will they chew through the inventory or will it be a long grind down.

great post drsteph.

I think the only thing that could trigger the big flop is So Cal.

Are those arm resets really going to be a ticking clock on the economy.

I am starting to think perhaps the fear is overstated - only becasue I cant believe prices have not come down faster. Where are all the painc sellers?
 
Drsteph, nice post . I must agree on most of the things you said specially about what I have been talking about- that correction can be in terms of time not price. But there a lots of people out there who can't /won't look at housing in terms of a surrogate for a CD that matures in 5 years at x%.

This is specially true when kids enter the picture. As long as the spread between renting and owning is not too wide in favor of renting, people with kids like to have that feeling of being "grounded" to an area, of being part of something bigger than their house-a neighborhood, a temple, church, a scholl district. This kind of "fuzziness" is hard to capture when you are renting for you can't decorate the house w/o permission, the landlord can terminate the lease, he can have it for sale and have buyers look at it while you are having dinner,etc. I've been in both situations and although there is definitely opportunity cost in buying in a rising mkt whihc then crashes, at a certain spread, the alternative ain't that palatable either.
 
I am also in SoCal and live across the street from 4 thats 4 new housing projects going up ... the first of which is nearing the completion stage. The sign out front use to say "Homes starting in the low $600's" has been replaced (no bit of a lie) with "Homes starting in the mid $700's" the other housing projects are higher then that .... dont know what to make of it as I see people have their houses listed for longer and longer ... I'm not in a spot where there is a whole lot of free space either .... curious sit but dont see it going down anytime soon... slowing yes down no
 
I'm a bear no doubt. To say the worst is over is not even remotely reasonable where I live, IMHO.

ARM/IO resets are killing people here in the Palm Springs area, homes haven't appreciated and the opportunity to refinance with an 80% LTV is not available. Realtors sold people a bill of goods about appreciation. People bought homes they couldn't afford using a reasonable loan product, only possible with a hybrid instrument.

Contractor friend just laid off half his nuts and bolts workforce. He does lots of tract homes and they aren't building new phases. Custom homes are still being built $$$$$ and commercial stuff is active. Residential = DEAD!

Here's a REAL WORLD example in my community.

2500 sq ft home 4/3 3 car. Listed last year (7/05) at 489K, price reduced to 419K (6/06), sold (8/06) - fell out of escrow (contigent on sale), price reduced again to 411K (10/06). Still on market.... ZERO that's right ZERO viewings in the past 2 months. A similar home, same model, down the street is listed for 344K, no showings in 4 months.

IMHO, both homes are a decent value in the 300-310 range, which is less than they sold for from the builder.

There are about 150 homes in the community and 35 are for sale and another 12-15 are for rent. Some of the homes about 10, have been on the market for OVER 1.5 year with no price reductions, still at 05 high asking prices. Yep, they really want to sell them.

And to top it off. Driving by the sign holders directing people to the new communities... I see my favorite sign "FREE POOL" Now tell me how the reported number for a home sold last year at 350K is the same this year if the same home at 350K includes a 40K pool. IT'S NOT!

The reported number are so full of fluff and bullshit it's not even funny. Pay 440K and get 86K back at closing, realtors suggestion. What's the real price paid for the home???? Don't laugh, that was roughly an offer presented by a friend of mine until the lender/bank nixed it.

And for us, the high $ homes are still moving, which has skewed the median numbers from a normal represetative population of sales for the area.

Greenspan is full of shit and always has been IMHO. The worst is over... LMAO
 
You might want to try opening your eyes then. Here are the stats from the local paper

These are median home prices for resale of single family homes.

Coronado: -64%
Carlsbad southeast: -32%
Point Loma: -31%
Poway: -28%
Escondido West: -25%


Quote from EqtTrdr:

havent even seen many signs of a top yet in SoCal..


No fear, no panic.. people still buying to flip, and nobody lowering prices imo
More...
 
like I said the last time this was posted. I doubt it stands for what you say it does.

i was out looking at the time the data was printed. it was clearly false in Carlsbad.

And it is clearly false if you look at zillow.

The charts are startging to show price per sq. foot reductions but nothing close to the quote you are choosing.

and I doubt the median price and price per sq foot could be off by that much. But I can be corrected.
 
You must log in or register to reply here.
Back
Top