The Housing Bubble

spend ho ! any thoughs on RE as inflation hedge after a 2 year price decline ?
gop spends big and dems spend more
http://news.yahoo.com/s/ap/20060317/ap_on_go_co/congress_spending

1989 vs. 2006
review the diferences

I’m going to be out of town for a week (in Boulder), away from the So Cal bubble. But there’s been so much talk of a standoff lately between home buyers and home sellers that I couldn’t resist putting together this page to entertain us. (Best viewed with IE.) Enjoy!

Illegal immigration turning California into a third world country and its implications for residential real estate in California and elsewhere.

while house prices are surely overvalued in real terms, if we get hyperinflation houses will end up being a good invesmtent. true or false?

inflation vs.hyperinflation vs. deflation.
is inflation present just in ‘investment assets’ or other itesm too, and what will happenwhenthe asset buble music stops? will our lenders overseas get angry and force us to readjust the USD downward? or will we see deflation trigeered by high interestrates? and if there is an adjustment, will it stop shortly, or will it morph into hyperinflation/stagflation like the 1970’s that never stops.
and what will the interestrate nevironment look like during that time
(long rates ,short rates, mortagge rates, prime, subprime…etc)

Every bubble reader should enjoy this article about why the FED is really eliminating the M3. Very interesting article — this author sees big problems ahead — hyperinflation.

I would like to know what sale pitches the realtors are using right now to even get buyers to buy in a down turning market . Buyers have more inventory to look at ,but so what , homes are still over priced . I suspect the agents are selling based on “get in now before the interest rates go up more “

Let’s hear from readers on ‘risk premiums’ that should be considered when moving from one part of the country to another. For example, I read a site where a home owner said that a piece of property in Missouri was overvalued because of tornadoes and he has had to replace his roof three times. What about the heating costs of homes on the east coast? Cooling costs in the southwest? Water rates in the west and availability of water? Hurricanes in the Gulf coast? Flooding in Hawaii, has that identified property that should sell at a discount now because of location? Areas of high crime and gang activity? Etc.

The Toll brothers site that someone recommended reading on another thread here :(Toll Brothers’ CEO Optimistic - 7.5% Would Be Fine!) said that it no longer existed or could not be found. Must have a Toll Brother Troll visiting your Blog site.

Many people are puzzled by the phenomenon of falling sales numbers paired with increasing median prices. Two common explanations are that 1) buyers are purchasing fancier homes that have been discounted (”I bought this mansion at a $150K discount!”) and 2) the prices went so high last summer that even though they’re dropping now, they’re still higher than they were a year ago. Maybe someone else has a more elegant or compelling way of phrasing these explanations (or better yet, some solid data to confirm or refute these hypotheses).

UK after 20 months of decline off ? 5%.
how are we different

During the Dot.com bubble I don’t recall many expert saying we would see a 80% drop in the Nasdaq (mayber Schiller at Yale).
I would like to see quotes from when the market started to turn that parallel today’s “soft landing” comments.

I don’t understand the confusion over median price. After median is just the number smack in the middle, nothing more. For instance if you sell 21 homes and 10 sell for 100,000, 1 sells for 500,000 and let’s say the rest sell for 600,000 then the median is 500,000. The median is up it because more expensive homes sold than inexpensive homes.

I like the topic of UK price declines ofn only 5% and how are we different. Australia is not seeing big declines either. Why not and why are we different?

Simmssays…
americaninventorspot.com

There’s lots of speculation about what baby boomers are going to do as they retire. What are the baby boomers in your family (yourself, or other family members) planning to do (stay in the same home the always lived in, downsize and stay in the same community, move to a cheaper area, buy more real estate??)

My proposed topic is: “What is the most fitting form of punishment for David Lereah”?

Topic:
Per another posters comments to Lansner.

How would you set up a investigative journalism/sting operation to expose loan fraud?

It would be great to see something like the perverted justice/NBC hidden camera operations with cops waiting outside for loan fraudsters.

NBC
ABC
CBS

Who is going to do it?

The problem of loan and RE fraud isn’t as heinous as child abuse but it is much more pervasive and will impact a larger percentage of the population.

Can we discuss the worst market today? There are some strong candidates such as Phoenix, Miami, Las Vegas…
My immediate candidate is Phoenix with soaring inventory, punishing drought, ready buildable land available in all directions, and huge numbers of SFR’s “owned” by speculators. Perhaps posters could argue the case for their candidates.

Anyone notice what’s going on with REITS? Surprising to see them all breaking to new highs every day. Is the bubble shifting?

I am curious about the possible climate for Realtor resentment and backlash as the bubbles’ mighty hiss starts to blow down strapped homebuyers that had listened to advice and analysis from realtors.

For better or worse, the majority of homebuyers get their “take” on the RE market from Realtors or RE affiliated economist from these main sources:
-Stories in the local/national newspapers and on the nightly news with ‘RE expert” quotes.
-RE related Internet sites with the “local market conditions/forecast”
-Any contact with a Realtor when purchasing/selling/looking for a home.

And self education aside, it’s difficult to lay all the blame on them for believing these realtors because the complicit and/or lazy media give these spokespeople credibility by quoting them in NEWS ARTICLES as “real estate experts” which they may be, but biased ones to be sure.

As has been discussed countless times on this blog, the vast preponderance of comments by Realtors in the past few years have been decidedly declarative and never stated as “This is my opinion” or “This is how I see the market headed”. There’s nothing even close to a disclaimer amongst the babble.
Realtors, both nationally and locally all steer us in the same optimistic, almost utopic direction. They play to our aspirations with guaranteed home price appreciation and to our fears with being priced out forever.

I often wonder what David Lereah and Leslie Appleton-Young say to their cherished loved ones in the privacy of their homes about purchasing real estate in today’s market. I wonder if they advise them like they do the rest of us.

There are without a doubt, professional, competent Realtors out there working hard in all kinds of markets that will not deserve the scorn and retribution that may come their way. I call it, for better or worse, “Collateral Taint”, (mostly because it makes me chuckle :). However, when the leadership of the NAR is responsible for the quotes nationally and so many of the rank and file falls into step with their rhetoric, how will they be able to convince the pitch-forked angry mob that they’re one of the good ones.

So I ask you fellow bloggers:
How do you think the Realtor profession will be viewed in the post bubble era? And what, if any changes will come about in the aftermath, such as regulation similar to stockbrokers under the oversight of the NASD? Will the NAR choose to voluntarily change their culture of propaganda to remain credible or will it be done for them by public sentiment or legislation as the duped masses catch on that the guarantees that were promised are not the ‘money back’ variety.

“So I ask you fellow bloggers:
How do you think the Realtor profession will be viewed in the post bubble era?”

As Walmart greeters who found a new profession. After all, they have all the time in the world to make a sale; the rest will have had to get a real job.

I’d like to hear how people have educated their spouse who has made up their mind to buy a home in a bubble market, rather than waiting out the inevitable crash. My wife is a put your head in the sand, we have to buy a house this summer person and no matter what I do to educate her on the fundamentals I get, “what do you want to do rent forever”. How do you convince someone acting purely on emotion not reasoned sound judgment?

How about any word on specific folks that have been discussed to see where they are?

The idiot grandma in Sn Diego who refused to believe that the value of her overpriced gang area $1.1 M home had dropped. She said that someone buying her home wouldn’t mind paying an extra $100 to 200K, and was saying she isn’t a person of means.

Ismael in FL who quit his job to get a sign “Ismael buys houses”. Is he a truly FBer now.

The lady in Oakland who bought her 500 sq ft condo and couldn’t afford the IO payments now.

any others

will hurricanes reduce demand in florida? A new study doesn’t bode well for the next few decades.

“most scientists agree that people will need to brace themselves for stronger hurricanes and typhoons in the coming years and decades.”

This may have already been talked about since it is from November of last year, but what about this this issue of Business 2.0 talking about the “next real estate boom” over the next 25 years?

The absurdity of it is very interesting.

Last year some time there were a few stories of some wonder flippers. Wanted to know if there were any updates that anyone remembers.

There was the idiot grandma in San Diego who refused to believe that here POS in a gang infested neighborhood could actually have gone down in value and wanted $1.1M for it. She had bought another condo, and was stating something to the fact that someone who could spend $1M wouldn’t care if they added an extra $100or 200K. She also said that she wasn’t a person of means (of course if she got $1.1M, then she would).

Then the extreme idiot lady in Las Vegas that bought $4M worth of flipper homes in a new subdivision to then have the builder cut the new home price by $100K each (and she was ramroded into buying 14 of these McMansions at the higher price).

And then the fool that cashed out his 401K to buy dirt in Reno (for new condos). Did he lose his A$$?

The single mother in OAKLAND who bought a 500 sq ft condo in the ghetto for $217K on a 3 yr IO. The last part of the article stated that she knew Nov 2006 (or 7) would be her day of reckoning when the suicide clause would take effect, and she stated that she was already working OT and not able to make payments and cover other expenses.

And these are just a few that were actually mentioned in the paper, or on these blogs. Multiple by 100K’s for actual. Just curious abot these FBers

That Business 2 article, will go down as the Titanic story of ridiculous.

UK vs USA
this link may help
http://www.housepricecrash.co.uk/forum/index.php?showtopic=21928

I always see lists of the “worst” or most screwed area (like Phoenix, etc). But I am curious if you all think there are areas that will avoid taking major hits? Can any area of the country or just small particular areas or cities weather the storm? I’m just curious because my realtor (yah, I know he’s biased) keeps saying that my area (Fairfield County CT) is different than other areas of the country because of the wealth here. I don’t agree but am curious if you all think that some areas will not get hurt in the coming months/years.

Building in flood plains raises risks

Media attention surrounding the levee failures in New Orleans after Hurricane Katrina has brought national attention to the Sacramento area levee system.

Unlike other cities, where flooding may be severe but tends to occur on a localized scale, a major flood in Sacramento would spread for miles and run as deep as rooflines in some places. According to the Sacramento Area Flood Control Agency, more than 300,000 people and 140,000 structures are in the direct path of a serious flood in Sacramento.

Despite all the warning signs, homes continue to be built in flood prone areas that fail to meet the 100 year flood protection.

I can’t tell what the worst part of the business 2.0 articles is. The “megapolitans” they described sounded like they were like the megacities in Judge Dredd or BAMA in Willam Gibson’s cyberpunk novels. I can’t believe that anyone would be excited about building much less living in a place like that.

I live in northern Virgina, and I can’t believe how they hyped up Moorefield Station. They said that the Dulles metro line was going to make it there by 2012. That’s wrong. It’s 2015, and I’m a bit sceptical if that metro line will be built beyond Dulles. Considering that Fairfax country has lost population and will the 14000 condos (plus 28000 condos in the planning stages) they are building in Fairfax and Arlington why would anyone live in what they are planning for Moorefield Station if they work in Fairfax, Arlington, or DC?

Who’s responsible for pricing issues: Realtors or the homeowners?

Recently, we’ve seen lots of agents quoted in the media regarding sellers “getting real with prices”, along with bloggers commentary on the homeowner greed issue over the past couple years.

Here’s what is perplexing: Realtors continuously assert that they, for the most part, are the ones that can only reasonably come up with valuations, being that it is localized. Today’s Inman News article by Bernice Ross (author of “Waging war on Real Estate Discounters”)focuses on the inability of Zillow and others to come up with home valuations–in other words it should be left up to the professionals (ie appraisers or agents).

So my question is, since Realtors are so closely in tune with local pricing, do the homeowners primarily go with what they suggest–paricularly in a hot market? Or, are the homeowners really setting the prices? I’ve seen agents remark over and over that they do not set prices, homeowners do. But yet, from Bernice’s standpoint in her article, really an agent is most qualified because of the “human beings wisdom of experience.”

What gives? For example, I was in San Diego last weekend and visited a house listed by a Prudential agent that put the price of the home in a “range.” Seller will entertain offers between “$850,000 - 995,000.” Did the homeowner come up with this or did the agent?

Top story on Phoenix ABC TV News:
“Former Meth houses being sold to unsuspecting buyers”
http://www.abc15.com/#
see story “House of Horrors”

Poor phoenix is getting lots of bad press lately. During the winter, it is beautiful here - and yes, I’ve had several years experience living in “the OC”. I will admit, Summer here, not so great.

I’d like a forum discussing our losses, and what we have learned from them. My great CPA became a Financial Advisor in the height of the DotCom era. He put my IRA in Lucent, Xerox, Microsoft, and several other typical stocks that were popular at the time and required no analysis on his part. Loss approximately $15k. No loss so far in RE inasmuch as I bought in 1987, Paid it off, and I still live there.

Still a bit worried about where it’s valuation will go, diminishing our flexibility.

Thanks!

Sorry if this has already been posted:

USA Today - Home Loan Delinquency Rate Shows Increase
http://www.usatoday.com/money/perfi/housing/2006-03-16-mortgage-delinquent_x.htm

BayQT~