patrick.net

Even 0% rates won't prevent the continuing housing price slide.

And what about the increase in foreclosures for high-end real estate throughout the Bay, posted yesterday?

snyderkv says

person making the claim that should provide reputable resources to back there claim

Just like the 20 years of "prices never go down" rhetoric that was pushed at everyone by the whole housing industry. Now you realtard know that the scam is up and you have to appear like you have facts to back up the "buy now!" chants. Give it up! Be honest with people. Now is probably the worst time ever to buy a house. I can't say that for sure, but all data that I have been following for the last 10 years has me worried enough to make that claim. The only people that should be buying in this market are the ones that don't mind taking a haircut or the ones in the trenches getting 30-40% off of the averages on distressed. Everyone else, just back away and let the crap settle. There will be books written about these next 5 years and they will not be pleasant to read.

RentingForHalfTheCost says

Now is probably the worst time ever to buy a house.

Worse than 1st quarter of '07?

Umm he said he knows that prices are falling, but I don't think anyone can paint a realistic picture for prime areas in the Bay Area or SoCal falling 65% like some are claiming. That's just ridiculous. Unless jobs totally disappear from those areas, which would be the implosion bmwman91 is explaining.

I'm looking to buy too, and I hope prices drop more, but if they drop 65%, I might as well move to a Somali pirate village, it would be safer.

RentingForHalfTheCost says

We are still overvalued and no where near national real values based on income and norms.

Are you refering to the BA only? Because in most of the country we are back to historical norms.

StoutFiles says

RentingForHalfTheCost says

Now is probably the worst time ever to buy a house.

Worse than 1st quarter of '07?

Absolutely! In '07 you didn't have to risk any of your own money. You could actually move from being a renter to a home owner and never make a mortgage payment. I actually had a few friends that did this and after a year of no mortgage just walked away. Net effect was they lived for 12 months or more free.

Now you need a down payment and you are risking that money in a market that is still searching for itself. Being leveraged 20 to 1 or 10 to 1, in a market that is still falling makes no sense to me.

House prices are falling, but there are *exceptions*. As the old saying goes, "the exception proves the rule."
I made an excursion out of Santa Cruz Sunday to an undisclosed town to help my friend pick up something.
We stopped at an In-n-out Burger and he was ranting about houses, etc as usual. He was once a house "millionaire" but now he's just a guy with a mortgage and he's always hoping things "come back".
We saw lots of slack jawed punks with baggy pants, hats on backwards and expensive sneakers. We saw lots of little kids from the third world parents who dropped out of high school in Oaxaca. We sall all kinds of kids who probably cannot write a paragraph that makes sense on pain of death.
I asked him "Looking around you, whom do you see that you would lend $400K to? Who among these slackers and losers would you predict saves up the 20% down on a house that costs $500K? $400K? $300K?"
Houses are going down because the skills and education and habits of the residents never qualified them to buy those bubble houses in the first place.
You pay house down payments with savings from your income. You pay mortgages from your income. Graduating with an associates degree in underwater basketweaving or chincana wisdom and history, etc doesn't qualify you to buy jack shit.
On zillow you see the huge % of houses in foreclosure and year over year decrease of prices, and with 15% unemployment those girls from the third world pushing baby strollers won't be putting down $80K cash nor qualifying for any kind of mortgage ever.

bmwman91 says

All I can do is keep waiting since the small percentage price-slides do add up over time.

Yup, you can drop 5% yoy forever. However, you will never hear a realtor say "Housing prices never go up" at any point in that cycle. That would make them honest enough to change careers. ;)

bmwman91 says

prices are essentially flat

You take the one deflection since the falling start in 2007 and start making claims of flat? The whole reason why the market didn't keep falling was because of market manipulation by injecting billions of dollars into the problem. The housing credits, the mortgage adjustments, the foreclosure freezes, etc. Remove these instruments and what appears to be a fake bottom would not have happened. However, it will take more than billions to fix a trillion dollar problem. You need to understand the deflection before saying it stands for something.

tatupu70 says

I'm not sure how anyone can argue with a straight face that prices are cratering or collapsing now. Especially when compared to 2007 - 2009.

Could it be that

1) The BA has delayed the effect due to the wealthy being able to weather the storm better here? And that our comeuppance is comin'?

2) The area never competely deflated after the dot-com bubble?

3) Many people in the BA believe(d) that the BA defies gravity, invested accordingly, and may learn yet that it does not?

I can't find a decent house in Fremont area. Old dilapidated houses are selling for half a million and inventory is so low that I can't find a decent house..

What is going on?
I wish the interest rates go up and prices finally fall to decent levels.

RentingForHalfTheCost says

bmwman91 says

prices are essentially flat

You take the one deflection since the falling start in 2007 and start making claims of flat? The whole reason why the market didn't keep falling was because of market manipulation by injecting billions of dollars into the problem. The housing credits, the mortgage adjustments, the foreclosure freezes, etc. Remove these instruments and what appears to be a fake bottom would not have happened. However, it will take more than billions to fix a trillion dollar problem. You need to understand the deflection before saying it stands for something.

This is my point. Prices are flat because of market manipulation. I completely agree that, without that manipulation, prices would have tanked right back to the inflation line in the desirable parts of the Bay Area. Instead, SF & SJ dropped off the peak & then flat-lined, while shitty places continued their proper downward spiral.

Back to the point though, I do not see these manipulative measures going away. There is too much money tied up in high Bay Area RE prices, and those that leech this money from it are doing everything in their power to keep prices up.
- The local & state governments have a very vested interest in high prices since they are in dire need of money (property tax). Although they do need to RAISE taxes, which would push prices down, the next two groups put immense pressure on them not to.
- The NAr/CAr lobby hard to get legislators to prop up prices since they suck on commissions. They may also worry a little about their credibility after, "houses always appreciate."
- Existing property owners vote to keep prices high & vote to keep stuff like the MID & Prop 13 in effect since it directly affects them.

This says nothing of whether or not these practices are sustainable though. CA is broke as hell as a whole, and many municipalities are standing on the edge of bankruptcy. There may well come a day when the state declares bankruptcy, and at that point, we will have much larger worries than housing prices. As Gorak_K astutely points out, the circumstances surrounding a massive implosion in housing prices in the Bay Area would likely mean that almost anywhere else is better than here. Prices will implode if:
- The local economy dies and the high paying jobs disappear.
- The state goes bankrupt & cuts off the supply of welfare/entitlements, police, fire & medical services. Then we get MILLIONS of unproductive people with no idea of how to support themselves roving the area struggling to survive, at the expense of anyone else that happens to have things they want & need.
- A massive earthquake hits, demolishing many structures & killing hundreds, scaring all of the out-of-state transplants back to fly-over land & their home countries.

If the first 2 happened, I would be gone from this area. All I can really hope for is #3 because I've lived through earthquakes before & they aren't so terrible if you are properly prepared (which I am).

Please don't take me as arguing FOR higher prices, or even the current ones. I don't like the current pricing. However, approaching this objectively, it does not matter what I want or how badly I want it. The facts indicate to me that SF & SJ will remain relatively expensive. I wish they wouldn't, but I am not going to kid myself into believing that prices will fall 50% with the area still keeping the existing desirable traits.

tatupu70 says

I'm not sure how anyone can argue with a straight face that prices are cratering or collapsing now. Especially when compared to 2007 - 2009.

That is obviously not the case. What is not obvious is that the collapse of 2007-2009 is, actually, you know, "over".

If my thesis that the bogus valuations gave us the "growth" of 2002-2007, then we may have in fact put a bullet in our collective middle-class heads and we'll be lucky to get back to 1997 nominal price levels when the dust in fact fully settles.

This particular thesis, as I mentioned above, would have to discount more aggressive monetary intervention by the Fed.

Not that QEs 1-5 did anything for the Japanese.

Goran_K says

If the area you're in isn't at rental parity

I'm not waiting for rental parity (which may not come for the reasons I postulate on every chance I get here), I'm waiting for the annual price drop to be less than rent. . .

realitycheck says

I wish the interest rates go up and prices finally fall to decent levels.

http://research.stlouisfed.org/fred2/graph/?g=4RG

blue line is middle class debt/wages ratio (systemic leverage)
red line is the Fed rate

Note the -2 label on the right. Does the St Louis Fed know something we don't ???

; )

Everrything is relative, depending on your point in time reference, you could say that prices are up, falling, or flat.

Now vs jan 2010 = flat
Nowvs jan 2005 = falling
Now vs jan 1982 = up

When I look at the charts, it surely looks that prices have fallen for a couple consecutive months, and overall for about five years. To put things in context, I feel its necessary to include the gov efforts to buck the trend of 07-09 with all the gimmicks

People stay in a house for seven years on average, so that ought be a fair time frame for comparison purposes. As someone that uses a house for its utility (a shelter), price would be a concern only when trading (buying/selling).

All things considered, if I were in the market to buy a mortgage for a house, I wouldn't be in any kind of hurry right now. Good things come to those that wait, and imo those that wait will see

-lower rates
-lower prices
- and as a bonus, more subsidies from the taxpayer

To buck the current trend, I believe we will need

- improving employment #'s
-improving wages
- better accesibility to credit (and demand for debt)

In the zero sum world we live in, housing dollars are waging war against energy (which includes food) and healthcare dollars, which are both still following higher price trends. You have to eat, the fedgov is mandating that we flow more $ towards the health insuarnce complex, and while we need shelter, there is plenty of that to go around

The easiest solution to the rental parity 'problem', is to raise rents

errc says

The easiest solution to the rental parity 'problem', is to raise rents

And sadly, that is what seems to be happening. It certainly was the case in 2010 all across the Silicon Valley, at least in managed apartment complexes. Folks in privately owned rentals fared a little better it seems.

I'm not questioning whether or not US paper is in demand. I'm challenging the assertion that the reason they lowered the rates to 0%, was because of high demand for US dollars.

"The entire world is demanding as much U.S. currency as possible, which is the reason why interest rates are near zero."

-This statement is false. Look up "Correlation does not imply causation" if the reasons for this still elude you. Sorry I don't have a graph to demonstrate that.

Prices are falling here on Long Island.

You do understand that the rate on 3-month to 2-year government bonds ranges from 0% to a staggering .25% right?
I saw last week that the Treasury will decide by May if they will be offering negative interest rates for their auctions. Some bonds are already traded with an effective negative rate. No reason that the primary dealer should be the only beneficiary.

Lester Appleton-Young says

I can't find a decent house in Fremont area. Old dilapidated houses are selling for half a million and inventory is so low that I can't find a decent house..

What is going on?

Not really. Nothing is selling in Fremont. Did you expect anything to sell there given the prices?

Nothing for sale in SF under 600K except in sketchy neighborhoods or deep in the fog belt.

I can't believe I'm contributing to this idiot's thread. Well, he'll like this: banks are starting to throw in the towel on the high end (although this story applies to expensive and cheap houses) . To paraphrase John Paul Getty: If you owe the bank $100, that's your problem. If you owe the bank $1 million on a non-recourse loan, that's the bank's problem.
Banks, accelerating efforts to move troubled mortgages off their books, are offering as much as $35,000 or more in cash to delinquent homeowners to sell their properties for less than they owe.
Lenders have routinely delayed or blocked such transactions, known as short sales, in which they accept less from a buyer than the seller’s outstanding loan. Now banks have decided the deals are faster and less costly than foreclosures, which have slowed in response to regulatory probes of abusive practices. That reminds me of a saying by AF...

ContStinks DeGroot says

realitycheck says

I can't find a decent house in Fremont area. Old dilapidated houses are selling for half a million and inventory is so low that I can't find a decent house..

What is going on?

I wish the interest rates go up and prices finally fall to decent levels.

Not really. Nothing is selling in Fremont. Did you expect anything to sell there given the prices?

Living in the empty skulls of realtors. Rent-Free.

Infact houses are selling in Fremont. Decent houses go fast and are going for more than half a million! I am waiting and waiting....

Schizlor says

'm not questioning whether or not US paper is in demand. I'm challenging the assertion that the reason they lowered the rates to 0%, was because of high demand for US dollars.

Yah, what he said. Remember, also some of that demand for U.S. notes/dollars is actually coming from the fed themselves. Don't lump that in with world demand, lump that in with mortgage rate manipulation to divert a national crisis in housing. They wouldn't do this if they didn't see a very real problem bearing its ugly head. Think about it. The true numbers (not the NAR manipulated numbers) must be scary as hell for this to happen. I'd love to see them.

realitycheck says

half a million

Remember, you couldn't get a 1bd/1ba condo in Freemont for half a million in 2007. Just give it time to flush out. Telsa is not the saving grace of Fremont. It will not explode because of the BART extension or a new stadium. Fremont will be exactly what it is now in 10 years, except much more reasonably priced homes.

RentingForHalfTheCost says

They wouldn't do this if they didn't see a very real problem bearing its ugly head. Think about it. The true numbers (not the NAR manipulated numbers) must be scary as hell for this to happen. I'd love to see them.

I can't believe that someone "liked" this comment. The Fed ALWAYS does this during times of recession. This is one of the first tricks out of their bag.

I thought the government is printing money to buy back their own bonds = keep interest rates low - is that not the mechanism?

SubOink says

I thought the government is printing money to buy back their own bonds

That would be "quantitative easing" and other Fed interventions.

Theoretically this would be visible on the Fed's balance sheet:

http://www.federalreserve.gov/releases/h41/current/h41.htm

which shows that the Fed has in fact "printed" $467B over the past year, pushing its balance sheet from $2.5T to $2.967T, a rise of 25%, which does strike me as pretty aggressive. ($360B of this money add was in fact net Treasury purchases).

But this has not been helicopter money so it is not as inflationary as monetarist theory asserts.

What was helicopter money was:

http://research.stlouisfed.org/fred2/series/CMDEBT

I was reading Steve Keen's book today (Debunking Economics) and was pleased as a peach to see somebody FINALLY making this obvious observation that debt take-on is income as far as demand goes.

bubblesitter says

Even 0% rates won't prevent the continuing housing price slide.

Not unless I can take out a no-fee, no closing cost, 200-year balloon mortgage where I don't have to make the first payment for 200 years, and the property tax appraisal is for much, much less than the sales price.

If all of these conditions are met, I'd buy a house at the current prices. I figure that inflation will make the price reasonable when I finally have to pay it.

Dan8267 says

no-fee, no closing cost, 200-year balloon mortgage

Haha. Nice way to put it.

Dan8267 says

I figure that inflation will make the price reasonable when I finally have to pay it

That could very well be the most intelligent thing I have ever heard on this list. I am hoping the same and all indicators of everything I have read in paperback and online seem to point in that direction. It might take some time, but time is what I have in abundance. Wage inflation coupled with housing price collapse because of rising interest rates could very well be the future of this country. Imagine people having to work hard to save, rather than watch their paint and wood age and deteriorate to become wealthy. Seem more logically to me.

RentingForHalfTheCost says

snyderkv says

person making the claim that should provide reputable resources to back there claim

Just like the 20 years of "prices never go down" rhetoric that was pushed at everyone by the whole housing industry. Now you realtard know that the scam is up and you have to appear like you have facts to back up the "buy now!" chants. Give it up! Be honest with people. Now is probably the worst time ever to buy a house. I can't say that for sure, but all data that I have been following for the last 10 years has me worried enough to make that claim. The only people that should be buying in this market are the ones that don't mind taking a haircut or the ones in the trenches getting 30-40% off of the averages on distressed. Everyone else, just back away and let the crap settle. There will be books written about these next 5 years and they will not be pleasant to read.

Saving this choice quote as I just saw that other thread where RFHTC said leaving the site, and I wouldn't be surprised if he engaged in a massive deletion campaign before he left.

In a nutshell, this quote, written on 2/7/2012 epitomizes who he was and his predictions on the future of the housing market, circa 2011-2013...

CDon, he still has over 3 years on his prediction. I have no dog in this debate, but I thought I should point that out. In 3-4 years, a lot can happen.

APOCALYPSEFUCK is Shostakovich says

The only growth industry is meth production and sale.

Of course housing prices should be doubling every month!

Only in Stockton!

APOCALYPSEFUCK is Shostakovich says

The dollar is worthless.

No one will hire unless you can prove you'll work for half of what a Chindian will ask for.

Mortgage rates are doubling per hour.

Oligarchs appear on their front lawns to demand blow jobs from their paper boys and landscapers, any subhuman fuck that works for a living.

The only growth industry is meth production and sale.

Of course housing prices should be doubling every month!

We can't even produce quality porn anymore!!!

It's being outsourced to Bangladesh where you can film the Dhaka 500 by paying the woman a chicken.

Mick Russom says

working jobs we hate so we can buy shit we don't need. We're the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our great war is a spiritual war. Our great depression is our lives.

Well said.
Enjoy the wealth effect!

Facebooksux says

We can't even produce quality porn anymore!!!

It's being outsourced to Bangladesh where you can film the Dhaka 500 by paying the woman a chicken.

There's such a thing as quality porn?

John Bailo says

Well...but actually we are. The life of a millionaire from the 1960s with jet travel, international resorts, garage door openers and sports cars is well within the reach of a middle class family. Or would be except for one factor.

Perhaps but the 1960's millionaire had a private jet, a private house in Malibu/Maui/Bermuda/wherever, a chauffeur to open garage doors, and sports cars that no middle class person even today can afford:

http://jalopnik.com/391696/1961-ferrari-250-gt-california-sells-for-10976000-setting-world-record-as-most-expensive-car-ever

http://wheels.blogs.nytimes.com/2012/01/23/4-62-million-mercedes-gullwing-leads-strong-auction-weekend-in-arizona/