patrick.net

In Addition to My First Reasoning:

I believe also that the bankers are smart, clever and savvy to know that 90-95% crash in value of real estate will trigger EXTREME shit loads of civil unrest.

They also needed some time to set things so they can control the peasants.

Such as...

Gun control, ability to detain anyone without any cause or valid evidence of anything, Acquiring of massive amounts of firepower, guns, armor and ammo by government agencies and introducing a strong police state before dumping the prices and the bubble.

They need some time to put all these safeguards into place otherwise their plan can fail if the masses get out of control, start rioting, looting, protesting and things can get way out of their hands and they won't be able to do anything if they don't put these safeguards in place.

robertoaribas says

like the bankers give a crap about civil unrest.

J.P. Morgan's "donation" of $6 million dollars to the NYPD says otherwise.

robertoaribas says

they are hoarding the houses

Of course. So they can be your landlord.

robertoaribas says

they've been shorting gold...

Because they know gold is manipulated and artificially high which they themselves pumped and now plan to dump.robertoaribas says

you are in crackpot territory now

Don't just tell me I'm wrong. Explain with some reasoning.

robertoaribas says

there is no help for you.

Neither is there for indentured slaves.

bump

It's already been said but I also believe that this is a bank and government created rally/bubble. Think about it: the government (and thus the Fed) is into housing through FNMA et al for trillions. They simply can't afford a crash. Thy also can't be made whole unless the housing market turns around. In some lower cost area this will just mean a return to normal pricing. In high demand areas and thriving urban areas this will mean savage competition for housing, between investors, flippers, and end users. This will keep prices rising, but since people are required to be qualified buyers this time, the loans will be much more solid. Not to mention that many houses are still being bought for cash.

Example: I was outbid on a home a month ago by Chinese with cash who offered 40k over asking price, no contingencies. Not only did I lose the house but a new COMP was automatically set, at a much higher price. This is the effect of people who offer so high. They need no appraisals, just sign and buy and set the new price for the area. As prices rise, this will continue to happen until RE no longer appears to be a good deal to such buyers. Then the other end users (like me) will have a chance to buy, but at inflated prices. So the choice then becomes: rent or own?
Rising interest rates would harm this scheme, but currently they are still low enough for it to move forward. I'm betting that Benny will continue to do everything needed to keep rates low until the government entities are made whole through foreclosure of deadbeats and resale of their houses at prices able to sustain balance sheets. These foreclosures will take time to complete. I'm saying two or three years. So my prediction is for low rates to last at least that long, providing for a sustained increase in home prices for the next four or five years.
Fundamentals only seem to matter in poor areas or areas without much work.

Quigley says

Fundamentals only seem to matter in poor areas or areas without much work.

Beverly Hills lost 50% of value in the early 90's.

I think fundamentals are just usually delayed in wealthy areas but I think they have the potential to eventually hit and hit hard.

Robber Baron Elite Scum says

Beverly Hills lost 50% of value in the early 90's.

I remember that. I also remember NO ONE wanted my condo in the San Fernando Valley for 10 years. Surely, this is part of my belief structure.

You asked what I think and why.

1.) I enjoy reading your 'crackpot' threads, thanks.

**Note** I certainly can't 'prove' every opinion and statement of mine, but will provide as much backup as possible.

2.) I think this is still a bubble and suckers rally. Under 'normal' circumstances, economic fundamentals, we would have a repeat of 50% drop in values in Beverly Hills again. (Don't think the REIT's and others want that again, personally) I don't agree with your 90 - 95% drop in value statement.

3.) Lets start with a basic analysis of 'Quantative Easing'.

"Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the national economy when standard monetary policy has become INEFFECTIVE. A central bank implements quantitative easing by buying financial assets from commercial banks and other private institutions, thus increasing the monetary base."

Two words are key here, I put one in uppercase, 'unconventional' and 'ineffective'. So, to me, this is saying this is an option done when all else fails. I want to further explain. This does not mean booming, robust, fluid, expansive, healthy, profitable, etc. It's a desperate measure, last resort, and by definition 'unconventional'.

Further dissection, 'increasing the monetary base'. I think that means more money for someone. Is it me? I don't fucking think so. I'm offered to apply for a mortgage on a 225K undesirable property in Reseda at this moment in time. So, who is getting this 'increase in the monetary base'?

4.) Red Flags. They are everywhere. Everyday it is easy to find bull and bear real estate articles, sometimes on the same website ! So, which is correct ?

5.) In my opinion, the 'Mandy Lifeboats' user post above sums it up nicely. In a nutshell, this time, this crash, the banks were insolvent. No one wants bankrupt cities from no tax revenue, horrible, depression era unemployment, etc.
So, we are stuck with this reality of letting the banks get solvent again before we move forward.

I could go on and on, interest rates, low inventory, but I will stop here.

The only way prices will fall back below where they were a year ago would be if rents fall appreciably, and rents are still flat or rising slightly in most markets. As it is now, a major factor in the short supply is investors sopping up inventory. If rents stay flat and RE falls 20-30%, in addition to my pent up cash, I'd be yanking my 401k and selling blood to start buying more investment properties. I am not alone on this and supply would have to increase almost 1000% before it could even begin to outstrip the cash that would step in to purchase it.

The only way rents will fall appreciably is if unemployment skyrockets or we get into a deflationary trap of some sort, neither of which seem to be going on at the moment.