Housing Rolling Along 2

The deviation from trend of California is striking, none more than this chart of Fresno, Ca (Central Cali).

Will Fresno and the rest of California eventually correct to the tune of 40%??? Can this chart simply level off in a sideways movement for the years necessary for wage gains to make the fundamentals work out for recent buyers??? Can this chart continue this parabolic movement it has enjoyed the last five years??? Is it really different this time???

Fresno,%20CA.png
 
Quote from Lights:

in nyc, it costs about a million for a 2 bedroom condo in midtown. assuming one puts down a decent down payment, about the same as leasing. $4,000/month.
More...

Which may be why people are leaving these bubble areas in droves....OWP

http://www.nynewsday.com/news/print...035dec01,0,7022825.story?coll=ny-linews-print
"More Long Islanders say they are considering moving away amid difficulties paying for the high cost of housing, a new poll has found. The poll found the biggest jump in those considering leaving Nassau and Suffolk counties came among those the local economy can least afford to lose, adults between ages 50 and 64."

"Carrie Gallagher said this group may be choosing to cash in their home equity and move to a place where their dollar stretches farther. They also may be following grown children. 'This is where Long Island can really get into trouble,' Gallagher said. 'These people are in their peak earning years' and thus contribute significantly to the local economy."

"Last year, Anthony Panariello, 49, sold his home on Long Island for $510,000, making a hefty tax-free profit. He spent about half of that to buy a brand-new, mortgage-free house in Florida. 'I've come across, in my development alone, maybe 20 people from Long Island who came here around when I did or more recently,' said Mr. Panariello, who lives in St. Augustine."



http://www.presstelegram.com/news/ci_3266521
"Continuing a recent trend, enrollment in area school districts declined this fall, resulting in millions of dollars of lost state revenue and forcing districts to weigh more budget cuts. District officials say the trend may be the result of rising home prices driving families to cheaper housing markets in the Inland Empire and other states."

"In the Long Beach Unified School District, enrollment this fall fell to 92,949 students, down 2,534 students from last year, said district spokesman Chris Eftychiou."

"Together with a decline of 1,554 students last year, the drop means the loss of more than $20 million in state funding, based on the district's average daily attendance, he said. It's unclear whether the two-year decline represents a long-term trend, he said. But as many as half of school districts statewide have also reported lower enrollment, Eftychiou said. 'So Long Beach is not alone,' he said."

"The Norwalk-La Mirada Unified School District's enrollment is expected to decline by about 600 students this year, district officials said. Combined with a drop last year, the decline means about $5.6 million in lost state revenue. The drop this fall was 'unbelievably' greater than expected, said Superintendent Ginger Shattuck."

"'It means cuts,' she said. 'We have to take a look at cutting for next year. And it's a huge detriment to our (labor) negotiation process, because we want to give our employees a raise.' The district's board of education will be studying options for creating savings, including possibly closing some schools, she said."
 
Pasted from the new web site "Another Fu@ked Borrower".

http://anotherfuckedborrower.blogspot.com/
Thursday, December 01, 2005
Stock market bubble vs. Housing bubble...a lesson in LEVERAGE
We can all pretty much agree that there was a stock market bubble....right? Anybody disagree there??

Ok, good.

If a person wanted to buy $500,000 worth of stock, how much money would they need???

- Answer: $250,000 if they were buying on MARGIN.

Margin in the stock market is 2:1. You want to buy 1.5 million worth of pets.com, then you need to come in with $750k of your OWN money. The investment houses do not hand out margin to everybody. They want to know that the investor has the ability to repay them in the event the investment drops.

So where am I going with this...

If you want to buy a $500,000 house, how much money would you have to put down???

- Answer: nada, zip, zero. You get the $500,000 house with ZERO risk!
- Answer 2: The bank would give you $15,000 and let you finance 103% of the value of your house!!!
How many brokerage houses would give you $500,000 to buy stocks...and throw in an extra 15k so you could buy a fancy computer in which to "trade" on??? Yeah, sound pretty eff'n stupid doesn't it.

So that means a bwr on stocks is at 50% margin, where a bwr on a house can be at 100% margin...or more.

You can buy a $1.5 million dollar property with ZERO money down...and STATE your income to do it.

DOES ANYBODY ELSE SEE HOW THIS COULD BECOME A PROBLEM?!?!?

I need to dig up the actual statistics again, but there is a rather large percentage of first time homebuyers using 100% leverage to purchase their home. Not to mention other borrowers that are doing it as well.

What happens in the stock market if your "investment" goes down and you are on margin??

-Answer: You get a Margin Call. You have to pay enough money to get it back to where you are at the 2:1 ratio. If you borrowed 250k to purchase 500k of stock...and the stock dropped to 400k. You would have to cut a check for 50k so that you would only be "borrowing" 200k on margin.

What happens if your $500,000 condo conversion takes a dive to 400k (I know that would NEVER happen...but lets just ASSUME it might)?? What happens??

We don't really need to answer it now...we will get to watch first hand what happens when tens of thousands of people bought property with 100% leverage...and they owe more than their property is worth.

All of that said, I'll leave you with a question:

How bad do you think the stock market bubble would have been, if we let people invest 100% on margin, AND they got to "state" their financial ability to repay the brokerage houses before doing so???

posted by SoCalMtgGuy at 12:05 AM
 
Quote from onewaypockets:

Pasted from the new web site "Another Fu@ked Borrower".

http://anotherfuckedborrower.blogspot.com/
Thursday, December 01, 2005
Stock market bubble vs. Housing bubble...a lesson in LEVERAGE
We can all pretty much agree that there was a stock market bubble....right? Anybody disagree there??

Ok, good.

If a person wanted to buy $500,000 worth of stock, how much money would they need???

- Answer: $250,000 if they were buying on MARGIN.

Margin in the stock market is 2:1. You want to buy 1.5 million worth of pets.com, then you need to come in with $750k of your OWN money. The investment houses do not hand out margin to everybody. They want to know that the investor has the ability to repay them in the event the investment drops.

So where am I going with this...

If you want to buy a $500,000 house, how much money would you have to put down???

- Answer: nada, zip, zero. You get the $500,000 house with ZERO risk!
- Answer 2: The bank would give you $15,000 and let you finance 103% of the value of your house!!!
How many brokerage houses would give you $500,000 to buy stocks...and throw in an extra 15k so you could buy a fancy computer in which to "trade" on??? Yeah, sound pretty eff'n stupid doesn't it.

So that means a bwr on stocks is at 50% margin, where a bwr on a house can be at 100% margin...or more.

You can buy a $1.5 million dollar property with ZERO money down...and STATE your income to do it.

DOES ANYBODY ELSE SEE HOW THIS COULD BECOME A PROBLEM?!?!?

I need to dig up the actual statistics again, but there is a rather large percentage of first time homebuyers using 100% leverage to purchase their home. Not to mention other borrowers that are doing it as well.

What happens in the stock market if your "investment" goes down and you are on margin??

-Answer: You get a Margin Call. You have to pay enough money to get it back to where you are at the 2:1 ratio. If you borrowed 250k to purchase 500k of stock...and the stock dropped to 400k. You would have to cut a check for 50k so that you would only be "borrowing" 200k on margin.

What happens if your $500,000 condo conversion takes a dive to 400k (I know that would NEVER happen...but lets just ASSUME it might)?? What happens??

We don't really need to answer it now...we will get to watch first hand what happens when tens of thousands of people bought property with 100% leverage...and they owe more than their property is worth.

All of that said, I'll leave you with a question:

How bad do you think the stock market bubble would have been, if we let people invest 100% on margin, AND they got to "state" their financial ability to repay the brokerage houses before doing so???

posted by SoCalMtgGuy at 12:05 AM
More...


This assumes there is a housing bubble... which there is not!!

only 100% up room to go baby$$

Thanks Cramer!
 
How is that borrower screwed. I would say that the consumer may have been quite rational.

Especially if he lives in a state where lenders can not go after borrowers for deficiency judgments
 
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