How's real estate market in your area?

The real estate bubble has a much larger possibility of effecting the ENTIRE ECONOMY in a way that Enron never could. Im speechless, that you cant see the bigger picture.

Ive seen a lot of stupid assumptions on this board, but whats above there is probably the most idiotic example of misunderstating the obvious I have ever seen :D

Try considering the leverage involved here moron. With enron, you could lose 100% of your holdings. Leveraged 10 to 1 with a home,you could lose far more than 100% easily. DUH. I cant believe I even have to explain the obvious like this. Noobs.




Quote from sunggong:

I have read a lot of stupid shit on this board, but what's above there is probably the most idiotic statement ever.

Enron vaporized people's retirement plans and stock values to ZERO, but you're saying this "potential" crash can make "Enron look like a joke"?????

Speechless...
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If ya'll pay close attention to these threads and what I've ready, you'll know that Tallahassee, FL is defying the downtrend. Probably because we didn't participate in the uptrend very much and this place is more like south Georgia than North Florida. Back in 2002 and 2003, I used to count "for sale" signs in a few neighborhoods. I'm seeing less than I did then by a small margin, but way more than before. For example, in one townhouse community I saw the for sale signs go from about 15 in 2002/2003 down to only a few last summer. Since then it has slowed down and they have built up to about 10 signs. FWIW, prices are about 50% higher than they were then. I've also seen some price increases over the last year in one neighborhood that is on the upswing while a comparable neighborhood a couple blocks away is stagnant, or perhaps seeing 3 to 5% price drops.

I can tell you that a year and a half ago, I up a townhouse up for rent and after placing a classifed ad, I got maybe 3 calls in a week. We discontinued advertising in the paper and put an ad on the internet instead. Just last week we put an ad in the paper again, and averaged 4 to 5 calls a day. We had 7 calls in one day (Thursday). Our rent this time around is about 8% higher than it was a year and a half ago. This implies rents have climbed more than 8% in a year and a half. Oh yeah...and all my stuff is locked into low rate fixed notes.

On my own residence, I think I'm noticing a barely perceptible increase over the last year. My house isn't quite in the Mcmansion category, but its nicer than anything I ever dreamed I'd live in. The McMansions are kind of stagnant, and I'm seeing people dropping their prices. I want to upgrade to one, but prices are hardly dropping much while interest rates are climbing, so the payments are actually getting larger.

SM
 
And I pointed out how incredibly stupid this moron is who has no concept of LEVERAGE. LOL.

Lets see, typical SoCal couple puts 100K down on an 1.5 million dollar house. Sells it for a loss at $900,000.

What was their percentage loss?

Oh yeah, OVER, WAY OVER 100%.

Guy has $100K in Enron, and loses all of it. Total loss? 100%.

Which is worse? Oh yeah, REAL ESTATE. With that kind of leverage, potentially far worse than losing in Enron. Just like I said.


Too many little kids on these boards. :D


Quote from sunggong:
I pointed out how stupid it was when another poster was comparing the potential RE crash to Enron, saying that the RE crash will make Enron look like a joke.

You can't compare stocks to real estate.

Sigh.... [/B]
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sunggong,

Adding to what traderdragon said ... in Australia the working poor (my gardner for example) have been encouraged to not only take a loan beyond their means but supplement it by maxing out their credit cards. I would guess that the US is no less capitalist in its endevours to move more goods=property.

These guys never owned enron stock or its local equivalent so the impact on the economy is magnified by the fact that it impacts not just the "wealthy" but also the poor.

Not saying that it will happen, just that the impact would be dramatic because of leverage and breadth. We shall no doubt see over the next 3-10 years.
 
Dont forget all the people who bought with 10 to 1 leverage, then when the value went up, borrowed against the "home equity" and spent their gains.

Their losses could potentially make a 100% loss in Enron look like a complete joke.
 
Except this never happens, the buyer walks away and the loan co/bank holds the bag.....usually. duh???
...and that is what they call a foreclosure....ok?
Quote from traderdragon:

And I pointed out how incredibly stupid this moron is who has no concept of LEVERAGE. LOL.

Lets see, typical SoCal couple puts 100K down on an 1.5 million dollar house. Sells it for a loss at $900,000.

What was their percentage loss?

Oh yeah, OVER, WAY OVER 100%.

Guy has $100K in Enron, and loses all of it. Total loss? 100%.

Which is worse? Oh yeah, REAL ESTATE. With that kind of leverage, potentially far worse than losing in Enron. Just like I said.


Too many little kids on these boards. :D
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What's the logic here? That everyone bought their house at the peak price? Most didn't.

If you are going to argue, at least be more realistic about it, instead of presenting me with an extreme case, which is NOT really a good representation of the market.

You have to take appreciation into account for the past 2-5 years for these people with ARM IR. Hot markets like CA, FL, AR, NV all had an amazing appreciation rate over the recent years, with prices more than doubling over the 3-5 year period in some areas.

Most can afford to sit through 20, 30, or even 40% or more drop and still not be underwater with their investment as a result.

Check the history of real estate market. When is the last time we had 40% pullback in real estate? Some very small parts of the country that were previously very, very hot over the period of 5-10 years experienced this type of drop over the 5-10 year period (slow, gradual drop).

Almost everywhere else has never experienced 40% drop ever in the real estate price for single family homes in the modern history here in the U.S.

How many SoCal family that purchased 1.5 million home selling at 900k will be underwater? Very, very small number will experience loss like this.

Why? Because most paid significantly less than 1.5 million to begin with. Check out the appreciation rate for some parts of SoCal over the past 5 years. A lot more than 40% appreciation rate for sure. Even with 40% depreciation, most folks are NOT underwater because of what they have gained up to this point.

I can afford to let my house depreciate more than 50% and I'll still be up. What's the chance of my area experiencing 50% depreciation? I can't be 100% certain, but according to the history, it is not likely to happen.

Foreclosures will happen. Some people have bought their houses over-leveraged no doubt.

But most will not even come close to losing more than what they invested in, For that to happen, affecting majority of home owners, RE will have to correct far greater than 50% downward. And history says no way, so Enron comparison is not justified or plausible at all.

You folks make it sound like it's all doom-and-gloom. Some of you sound like bashers at Yahoo! Finance message boards.

Let's panic when the RE market actually experiences a major decline in median prices for at least 1 year period with inventory numbers increasing for at least 2 years. The type of slowdown we experienced so far has happened many times in the past.

Stock market has crashed multiple times in the past 100 years, but RE market has never even come close to crashing like the stock market. Now you tell me all of sudden, this time is different, and it's all doom and gloom, and it's going to crash....

I refuse to believe it at this point....
 
By the way traderdragon, is it your thing to come up with an unrealistic scenario and believe that to be true in real life?

I hope you don't have that type of philosophy in trading because you get your ass kicked.
 
The total dollars evaporating in CA alone will dwarf Enron losses... How's that?

I see assumption about buying at the top.

I also see assumptions about people enjoying the appreciation so a drop won't hurt. One problem... almost EVERY client of mine has re-fied and taking huge amounts of cash out of their homes (ATM) to buy depreciating assets. Pretty smart, HUH?

I have one really smart one that has been selling and re-buying his home every few years. Has 1.4-1.5 million in the bank from all the transactions. Works the account to meet his PITI and slowly has increased the balance. Will walk away when it all blows up.

I figure in my own complex of 120 or so losing a conservative 40K per units puts this 25-30 acres of homes at a loss from peak of say 4.8 million already. The house I live in could have sold for near 500K at the peak and now it would be LUCKY to garner a sale at 400-415K. So my number above is very conservative.

Two years ago there were ~1800 homes for sale in the valley, last year it was around 3400, this year, last month 7900 in the MLS.

My cousin just bought a house in Orange County and they are going to stay in it for a long time. That's their plan. Asking price $785K, offerred 685K, purchased for 705K. The place was on the market for 5 months, original ask 825K, with 2 refused offers above my cousins (745 and 753 when at 825K). The neighbors are pissed at the old homeowner for selling at 705K. Sign of the times.
 
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