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Has Housing Really Bottomed?

By ZMan   Follow   Sun, 8 Jul 2012, 2:30pm   9,709 views   135 comments
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This is a question for all. Have we really seen the bottom in the housing market, with all the foreclosures, lack of demand??...
If people are not working, they are not buying.
Don't we have to see some stabilization in the Job market before we get stabilization in the housing market?

http://www.dailyjobcuts.com

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1. inflection point Follow Befriend 4 threads 266 comments Fremont, CA

   96   7:54pm Tue 10 Jul 2012   Share   Quote   Permalink   Like   Dislike   I like to consider my interest in buying a house much like fishing adventures. the fish just are not biting.

2. New Renter Follow Befriend (3) 13 threads 2,219 comments San Jose, CA Premium

   97   9:20pm Tue 10 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   mell says Funny how this always boils down to predicting where house prices go. The job market in tech definitely has heated up again due to smart investor money parked on the sidelines during the crash and fueled by relentless artificially low interest rates, but mostly for senior positions and the interview process is much longer and harder than during the dot-com bubble. In fact a lot of companies have positions open for 6-12 months, churning though potential candidates and claiming the cannot find any rockstars. If you talk to a few recruiters you will find out that it is very hard to place engineers for them, so they stepped up their game and mass-email anybody who could be a potential match. House prices may show some swings in the future, but even if they go up temporarily, it will not be sustainable as real wages continue to stall or decline. $120K per year just pays the bills for a 3 person family (1 child), usually you need double income. As soon as the new venture capital dries up and backers remove their support for flailing companies you will see layoffs again. And if the main breadwinner loses their job, they will lose their house unless they have lots of savings/investments. Taking again that $120K per annum salary, any property buy above $500K is financial stupidity IMO and everything over 400K is risky - if you rent, try to stay around $2500 (excl. utilities) or below. What you say? What do I say? I think you've been snooping around my mind!

3. bmwman91 Follow Befriend (7) 37 threads 1,539 comments Mountain View, CA bmwman91's website Premium

   98   9:49pm Tue 10 Jul 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected   Randy H says I wish I could say pay isn't increasing given the number of software sorts I have to support in my cost center budget. But the fact is I'm being forced to adjust pretty aggressively right now just to compete for talent. I gave my top 20% performers between 9-15% earlier this year and I'm still losing people to competition. And we're supposedly one of the top 12 highest paying software firms, so I'm reluctantly and disgustingly forced to realize that there is indeed wage pressure in the system. I thought this would last only a few months and was a blip, but it's now a year in the making and only getting worse. I won't call it the making of a new tech bubble yet. But having been here when the last one formed back in the early/mid 90s, I will say that parts of the dynamic are starting to feel familiar. Interestingly, many of these same housing arguments were going on then as the post Loma Prieta housing slump was yet to truly turn around. We bought our first home in Redwood City for 20% less than the seller paid and the conventional wisdom was that there was no bottom in sight for housing. Capitulation had yet to occur -- although when it did about 2 years later it was too late for most people to take advantage of it. I'm with you here. I am pretty well aware of what is going on at Apple, Google and Microsoft down in the Silicon Valley since I work at one (hardware engineer), and large numbers of my coworkers have been poached by the other two. I got a very large raise, partially as a result of a threat to go to a competitor (gotta play the game, sadly), and I know that my friends that left are getting big stock awards and bonuses from their employers. Considering all the reports about how precarious the job situation is across the nation, the competition by companies here to retain talent seems sort of absurd. I have only been out of college for 5 years though, so maybe it is always that way. It does seem like there is no shortage of engineers, just a shortage of good ones. A number of my former coworkers that work in software also bailed for various start-ups. The one that went to Zynga 6 months ago must be pissed, based on what I have seen ZNGA's stock price do. I am still largely at a loss when I try to describe what half of the software start-ups actually DO in the valley, but the VC funds seem to be flowing anyway. "No man, it isn't a server farm offering remote storage, it's the CLOUD SOLUTION man, totally different!" "No man, it isn't a color balance tweaker and image storage site, it's a SOCIAL NETWORKING PATHWAY and we'll figure out how to make ad money later, totally different!" "No man, it isn't money from spamming ads that we are after, it is INTELLIGENT TARGETED ADVERTISING WITH HIGH RELEVANCE and people will totally buy stuff once we connect them with the right products. It isn't about making money NOW, it is about making money LATER but IPOing before our awesome technology takes off! It's the new NEW PARADIGM, man!"

4. Randy H Follow Befriend (5) 44 threads 4,602 comments Los Altos, CA Premium

   99   9:57pm Tue 10 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   The economic theoretical reason is called "wage efficiency theory"...or as I call it, "wage inefficiency theory". It comes down to inertia: companies are most rational to continue to escalate their bets on the known resources even beyond the intuitively quantitative break even point. More to the point, contact me if you're interested in being poached. My peer who runs the infra division is more desperate than I am right now.

5. Peter P Follow Befriend (4) 117 threads 17,655 comments Premium

   100   10:36pm Tue 10 Jul 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected   It is taking much less time for the economy to undergo paradigm shifts. If one happens to be in an ebbing industry, there is no way for his conditions to improve just by macroeconomic changes. It is increasingly important that one does just something in the right place at the right time, as opposed to doing something "right". The world is becoming a giant casino. Or perhaps it already is... we could have been born in Somalia!

6. Randy H Follow Befriend (5) 44 threads 4,602 comments Los Altos, CA Premium

   101   4:41am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Most eloquently described by Taleb in Fooled by Randomness. I think it's always been this way. I'm not a believer that there ever were "good old days".

7. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

   102   6:17am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Call it Crazy says The old lady has been haunting me to buy a house again Uh oh.

8. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

   103   6:25am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Call it Crazy says trying to "guess" which way the economy is going to go... "Never make predictions. Especially about the future." You want a "factor of safety" in any major financial decision, so it's good to think of "what if" scenarios. Like "what if the economy goes tits-up?" Call it Crazy says My options, put down a good chunk and go the 15 year route (or shorter) to maximize my equity.... or.... totally leverage the sucker and go FHA 3.5% down and go max on the 30 years and keep the cash in my pocket (and bank the difference). By what you said above, If inflation continues, it also becomes free money to finance, so let the bank hold the tab.. If you have a wife that likes to blow cash on frivolous stuff, it might be best to do the 15 year route and have as much cash as possible "tied up" in the house. ;-) Where do you live? Do you live in an area subject to wild RE price swings like CA?

9. Call it Crazy Follow Befriend 229 threads 2,781 comments

   104   6:41am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike (2)   wthrfrk80 says If you have a wife that likes to blow cash on frivolous stuff, it might be best to do the 15 year route and have as much cash as possible "tied up" in the house. ;-) Ha ha... thank god she doesn't spend on the frivolous stuff!! But... she loves to "start" home projects that I get to "finish", that's why I bailed on the last house.... I'm getting too old to be doing this crap and be her handyman........ wthrfrk80 says Where do you live? Do you live in an area subject to wild RE price swings like CA? That is the BIGGEST issue.... I'm in NJ and it looks like there's going to be a big wave of foreclosures this year. You know what they will do to the property values... That's what makes me "gun shy" on buying again until it looks like this area gets close to the bottom... We've been driving around looking at different areas and the number of "shadow houses" is enormous in Central NJ.... and the majority that are actually on MLS are short sales or foreclosures.....

10. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

    105   6:47am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Call it Crazy says But... she loves to "start" home projects that I get to "finish", that's why I bailed on the last house.... I'm getting too old to be doing this crap and be her handyman........ Solution: RENTING! Call it Crazy says That is the BIGGEST issue.... I'm in NJ and it looks like there's going to be a big wave of foreclosures this year. You know what they will do to the property values... That's what makes me "gun shy" on buying again until it looks like this area gets close to the bottom... Not only that, much of the local RE market is probably tied to the Wall Street Casino Economy, right? What happens the next time the bets go bad? My two-cent advice: keep renting

11. Call it Crazy Follow Befriend 229 threads 2,781 comments

    106   6:49am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike (2)   wthrfrk80 says You want a "factor of safety" in any major financial decision, so it's good to think of "what if" scenarios. Like "what if the economy goes tits-up?" The benchmark that I've been using is to find a house that my mortgage payment is comparable to the local rent payment on a comparable house. But, unlike many others that come here, I don't base it just on the dollars to dollars of monthly payment comparison. I also factor in and budget for repairs, upgrades and maintainance (and with my wife, I have to budget HIGH) as well as amoritize the closing costs on both sides (buying and selling) which very few factor into the equation. If I can get those numbers to equal out, then I might consider it..

12. tatupu70 Follow Befriend (3) 15 threads 5,643 comments

    107   6:52am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Call it Crazy says But, unlike many others that come here, I don't base it just on the dollars to dollars of monthly payment comparison. I also factor in and budget for repairs, upgrades and maintainance (and with my wife, I have to budget HIGH) as well as amoritize the closing costs on both sides (buying and selling) which very few factor into the equation. Without getting into logic of including upgrades again, that's the right way to do it. But you should also factor in the principal repayment and tax savings as well. Not sure why you think others that come here don't include repairs and maintenance though. I think almost everyone smart enough to have found this website is also smart enough to factor in maintenance costs...

13. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

    108   6:57am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Call it Crazy says I also factor in and budget for repairs, upgrades and maintainance (and with my wife, I have to budget HIGH) It sounds like your situation is somewhat unique. Any house you might own looks like a real money pit for you. How long will your wife tolerate renting? Are diamonds cheaper than your wife's remodeling projects? If so, buy her diamonds. At least they tend to hold their value. And you don't have to pay property taxes on them.

14. Call it Crazy Follow Befriend 229 threads 2,781 comments

    109   7:06am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike (2)   wthrfrk80 says You want a "factor of safety" in any major financial decision, so it's good to think of "what if" scenarios. Like "what if the economy goes tits-up?" That's my other part of my decision... if the economy goes tits-up. I believe the economy is going to go tits-up, the question is, will it be a "A" cup, "B" cup or "DD" cup?? I don't have a crystal ball.. Then, where is the "safest" place to be when it goes tits-up... in a rental dealing with a landlord and his financial problems or in your own house dealing with a mortgage/bank?

15. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

    110   7:09am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Call it Crazy says Then, where is the "safest" place to be when it goes tits-up... in a rental dealing with a landlord and his financial problems or in your own house dealing with a mortgage/bank? Yeah that's hard to say. Personally, I'd rather be the renter dealing with the landlord. If the economy is tanking, rents might even go down. Unlike mortgage payments.

16. Call it Crazy Follow Befriend 229 threads 2,781 comments

    111   7:13am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike (2)   wthrfrk80 says How long will your wife tolerate renting? Are diamonds cheaper than your wife's remodeling projects? If so, buy her diamonds. At least they tend to hold their value. And you don't have to pay property taxes on them. I can probally push her for another year or so on renting... it already cost me having to get her a new car to trade off on going into the rental. But if I waited another year to sell the past house, I would have lost another $30K - $40K in equity, not to mention the costs and money on more house projects... plus what I save on the rent vs. old mortgage now, the net affect, I come out ahead on the dollars..

17. Call it Crazy Follow Befriend 229 threads 2,781 comments

    112   7:21am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike (2)   wthrfrk80 says Yeah that's hard to say. Personally, I'd rather be the renter dealing with the landlord. If the economy is tanking, rents might even go down. Unlike mortgage payments. I don't think rents will go down in this area... the majority of "landlords" are actually underwater and can't sell, that's why they are renting their houses. They still need to cover their monthly nut... Plus when the foreclosures pick up this year, I think that will only make rents go up, as more people will be kicked out and will need to rent. I find out next month what my landlord plans to do for the following year. The had originally tried to sell, but couldn't get their price, so they rented it instead. But, the house prices have fallen the past year, so I don't know if they will cut their losses and sell or continue to rent it out...... that's the part of renting that SUCKS!! not having a permanent place year after year.

18. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

    113   7:27am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Call it Crazy says that's the part of renting that SUCKS!! not having a permanent place year after year. True, but you might have to move year after year anyway. There is no job security anymore.

19. New Renter Follow Befriend (3) 13 threads 2,219 comments San Jose, CA Premium

    114   7:44am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   bmwman91 says It does seem like there is no shortage of engineers, just a shortage of good ones. What would you consider a "good" engineer?

20. bmwman91 Follow Befriend (7) 37 threads 1,539 comments Mountain View, CA bmwman91's website Premium

    115   8:09am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   New renter says bmwman91 says It does seem like there is no shortage of engineers, just a shortage of good ones. What would you consider a "good" engineer? It's pretty subjective in my book, but here's my take. I'd sum it up with, "you are either born with it, or you aren't." If you work in tech/engineering, you know that there are just some people that can see something once and understand it fundamentally, whereas others have to work really hard at it and may just end up memorizing facts about it rather than understanding it. On top of that, the individual needs to possess a high level of personal interest in technical subjects and passion for learning and understanding everything around them. It's the only way to keep from stagnating and burning out in this field. If you can't have fun doing it, you probably won't last too long in engineering, which is why I assume that so many engineers go the management-route after 10-15 years.

21. Call it Crazy Follow Befriend 229 threads 2,781 comments

    116   8:13am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike (2)   wthrfrk80 says True, but you might have to move year after year anyway. There is no job security anymore. That's absolutely true... there is no security anywhere... The other part of my calculations is to make sure we would be able to cover the mortgage payment if one of us loses their job.

22. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

    117   8:43am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Call it Crazy says The other part of my calculations is to make sure we would be able to cover the mortgage payment if one of us loses their job. That's a very important thing to consider, yes.

23. New Renter Follow Befriend (3) 13 threads 2,219 comments San Jose, CA Premium

    118   9:06am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   wthrfrk80 says Call it Crazy says The other part of my calculations is to make sure we would be able to cover the mortgage payment if one of us loses their job. That's a very important thing to consider, yes. Nah, buy with 3% down and just squat. At this point your finances are only needed to qualify.

24. edvard2 Follow Befriend 34 threads 2,111 comments

    119   9:06am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   thomas.wong1986 says Over the long run, they do, and like Shiller points out using years of data. We are too focused on here and now and ignore long term fundamental performance to understand the norm. Cannot ignore simple price to income (or rent) rations which indicate normal prices with low risk. What your proposing is akin to speculation.. Maybe and maybe not. Sure- I would agree that on a broad national level that might hold true. I am not totally in disagreement with you but in the case of those numbers it takes decades of result to come to a conclusion. Should potential homebuyers spend several decades waiting for those numbers to "make sense"? I spent over 12 years saving and I am every bit up there on agreeing that the cost of real estate is ridiculous in the Bay Area. I've also lived here long enough to see that despite all forms of reasonable logic, the application of historical data, and all other common sense that this area doesn't at all act predictably and is prone to wild swings up and down. The bottom line is that everyone has to make that decision. In our case we saved, we waited, and we bought a house that we could afford and did so on a conservative basis: the overall cost is less than 1/4 of our monthly income, or about the same as what we paid in rent. Even the choice of where to live in the Bay Area can be a major point of that decision: For us the East Bay was the right choice financially. Not so much for SF or the Peninsula.

25. New Renter Follow Befriend (3) 13 threads 2,219 comments San Jose, CA Premium

    120   9:11am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   bmwman91 says If you can't have fun doing it, you probably won't last too long in engineering, which is why I assume that so many engineers go the management-route after 10-15 years. Yes, that's no different than straight up science. A case of Asbergers syndrome dosen't hurt either.

26. New Renter Follow Befriend (3) 13 threads 2,219 comments San Jose, CA Premium

    121   9:13am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   bmwman91 says I'd sum it up with, "you are either born with it, or you aren't." If you work in tech/engineering, you know that there are just some people that can see something once and understand it fundamentally, whereas others have to work really hard at it and may just end up memorizing facts about it rather than understanding it. There must be very few "good" particle physicists then.

27. bmwman91 Follow Befriend (7) 37 threads 1,539 comments Mountain View, CA bmwman91's website Premium

    122   9:16am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   New renter says Yes, that's no different than straight up science. A case of Asbergers syndrome dosen't hurt either. lol...well, you do also need to have a balance of social skills too. It's hard to get things done when everyone hates working with you, although it isn't unheard of. So yeah, I sort of forgot about the social skills part! I think that I left it out because it seems sort of like a basic assumption, but I can imagine how people might see "engineer" and "socially adept" as being mutually exclusive.

28. bmwman91 Follow Befriend (7) 37 threads 1,539 comments Mountain View, CA bmwman91's website Premium

    123   9:18am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   New renter says There must be very few "good" particle physicists then. Scientific research is a bit different than engineering. You really can't be a particle physicist with a bachelor's in physics, whereas you can be a pretty good engineer with a BSxE degree if you have the mind and drive for it. Scientific research requires a much higher level of academic rigor than engineering, for the most part.

29. Randy H Follow Befriend (5) 44 threads 4,602 comments Los Altos, CA Premium

    124   9:35am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Finding an engineer who doesn't always think he/she is always right about literally every topic anyone ever brings up is the hard part. I had an experience where I had to throw one of our engineers out of a meeting because he wouldn't stop trying to argue revenue recognition rules with our accounting team. Another where one of our top engineers-turned-manager decided he could stop following SOX rules simply because he'd deduced they were "wrong".

30. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

    125   9:54am Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Randy H says Another where one of our top engineers-turned-manager decided he could stop following SOX rules simply because he'd deduced they were "wrong". lol. Wow, that's pretty bad yes.

31. Call it Crazy Follow Befriend 229 threads 2,781 comments

    126   7:46pm Wed 11 Jul 2012   Share   Quote   Permalink   Like (1)   Dislike (2)   New renter says What would you consider a "good" engineer? A guy that doesn't crash the train???? :) . Sorry, I couldn't help myself.......

32. thomas.wong1986 Follow Befriend 16 threads 4,426 comments

    127   8:01pm Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike   Randy H says I had an experience where I had to throw one of our engineers out of a meeting because he wouldn't stop trying to argue revenue recognition rules with our accounting team. Another where one of our top engineers-turned-manager decided he could stop following SOX rules simply because he'd deduced they were "wrong". yes.. they are a fun group when it comes to RevRec.. its just comedy ! Its better they dont interface with customers.. and make no promises to future products or updates .... "Only when and if available" should be the only thing they should be allowed to say. The most extreme case im aware of ... was when an engineer ordered, approved without management knowing a ton of equipment to create their own Engineering Lab at their house.. Yes, he build a R&D LAB in his home using company funds.

33. thomas.wong1986 Follow Befriend 16 threads 4,426 comments

    128   8:13pm Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike (1)   edvard2 says Should potential homebuyers spend several decades waiting for those numbers to "make sense"? I spent over 12 years saving and I am every bit up there on agreeing that the cost of real estate is ridiculous in the Bay Area. They should understand the risks they are taking.. else wait. Certainly thinking that prices ALWAYS go up and never down they committed financial suicide ... But even today, we are still ignoring that prices go down, with all this talk of RECOVERY, as if prices will swing up like a bubble.

34. Peter P Follow Befriend (4) 117 threads 17,655 comments Premium

    129   10:24pm Wed 11 Jul 2012   Share   Quote   Permalink   Like   Dislike (1)   Protected   It has been established that engineers have 0 EQ in general. However, wanting to be "right" is not unique to engineers. This is the primary reason why there are bubble deniers.

35. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

    130   6:16am Thu 12 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   EQ?

36. New Renter Follow Befriend (3) 13 threads 2,219 comments San Jose, CA Premium

    131   9:40pm Thu 12 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   thomas.wong1986 says Yes, he build a R&D LAB in his home using company funds So? I've knows several engineers with machine shops in their garage who used them to manufacture company products. If he's doing primarily company work at home the company SHOULD pay for the equipment. Its a good solution for engineers with kids at home who might otherwise have to work short hours to take care of their kids.

37. Randy H Follow Befriend (5) 44 threads 4,602 comments Los Altos, CA Premium

    132   9:49pm Thu 12 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   EQ= emotional quotient for corporate types, EQ = equalizer for musicos and stereophiles, EQ = EverQuest for aging gen x mmo gamerz

38. Peter P Follow Befriend (4) 117 threads 17,655 comments Premium

    133   9:52pm Thu 12 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Also, for Perl... $eq eq '0'

39. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

    134   6:40am Fri 13 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Randy H says EQ= emotional quotient for corporate types, EQ = equalizer for musicos and stereophiles, EQ = EverQuest for aging gen x mmo gamerz Got it. As an engineer I use the term "P-factors" to describe all of the bullshit that can't be reduced to mathematics and science. I.e. (People, Perception, and Political) factors.

40. freak80 Follow Befriend (4) 52 threads 4,416 comments Corning, NY Premium

    135   6:41am Fri 13 Jul 2012   Share   Quote   Permalink   Like   Dislike   Protected   Example: "yeah, everything works fine in our company, save for the goddam p-factors."

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