patrick.net

MM,

I agree with you. It seems as though there's an elephant dancing on the head of a pin and everyone is waiting for something to push him one way or another.

Here's my question:

We know wages are so far behind inflation there's no add'l dollars in most people's pockets....so.....where's the money coming from that allows for continued consumer spending? Housing is taking an ever increasing bite out of the budget, REAL inflation continues to be an issue, and people are still spending money like there's no tomorrow.....HOW??????

Back in the days of Prez Jimmy's economic nightmare, I was scrimping and saving while my friends were blowing and going. Fast forward and they are still on a spending binge and I'm looking for ways to NOT spend money. How in blue blazes do they continue to dodge the credit bullet?

I feel like I'm the last sober person at a drunken orgy.

The link to "The Star" was possibly.......... no, definitely the longest 28 seconds of my life. Sadly that includes several motorcycle accidents that were not quite as....... painful. Anyway!

The fact that the two Oregon towns represented showed little if any decline leaves me in NO WAY disheartened! They're not increases! Just having a "high end" market in Portland is something of a new development. So we're still kind of attached to it, unwilling to relinquish this new found status symbol. If nothing else Oregonians have an admirable sense of self preservation. Money doesn't come easy here and I'm supremely confident that push come to shove we'll distance ourselves from McAlbatrosses like an ugly girl at a dance!

In ways, having the RE market meet FAB's "Black Monday" would be a lot like hearing your nemesis..... your archenemy........pffft, a dickhead O.K? died in a car crash! You're numb. You're beside yourself with disbelief. How could this have happened? I didn't cut his brake lines (like I'd planned)? I didn't get to have one active part in dickhead's demise! (All my best laid plans, up in smoke?)

Oh in time you'll come to appreciate the fact that your karma (and trail) are clean and you didn't have to so much as lift a finger but for now you're just........numb.

SFWoman,

mike* had a great post 2 threads back that addressed this very scenario in some detail. He doesn't post often but when he does, he nails it.

If we can't get the workforce to save, maybe....... we can have/create a catalyst by which we can drive real int. rates into the neg? With favorable tax legislation already in place we can eliminate/diminish the need for savings/retirement accounts (which we know they don't much care for anyway!)

This is the inception point of Debt=Wealth. Obviously (they) grossly miscalculated our appetite for MEW and are now conceeding that further tweaking is necessary?

Woo hoo! Fort Collins, CO is forecast for a -6% bottom by February '07! I'm already seeing stagnation in DOM and lowered selling prices. I bet some ranges pressure into -15% though. Lots of people lost high end jobs in tech in the last two years. If you take two years ago as a baseline, the ratio of sellers vs. buyers has tilted almost 2.5x at this point. There's also a steady stream of foreclosure notices converting into REO. This jives pretty well with my plan to get a 6 month apartment lease and keep checking the market.

I've noticed a lot of REO and pre-foreclosures on $1M+ properties. A builder just finished a huge golf course development north of town (5000+ sq.ft. homes on the high end) and I don't think anybody is buying those.

It would be nice to have the drops now, but I'll be ready after the banks and flippers have a long, cold winter of taxes, HOA fees and heating bills on a bunch of empty properties.

The Moody's report seems disengaged from reality. The example I know reasonably well is Boston. They call for a peak in 3rd Q 06 (ie, just passed) and a 2.2% decline. It's already well documented by more than one source, the MAR and the Warren Report, that home prices have already dropped 6-8% YoY nominal, even more so real prices-wise. And they are continuing to drop. I call bullshit on them.

skibum,

Moody's definitely has a "dog in the fight". This type of 11th hour damage control is to be expected. I agree though, I'm predicting the White Sox will not make a post-season appearance this year! I'm staking my reputation on it!

Pink Slips at Intel's Hillsboro, OR Plant! Oh and Freightliner too!

All told it should be about 1,000 of the 17k workforce here locally.

I think there's about a 50% chance still that the Bay Area will undergo a soft-landing correction. Every time I see evidence of a harder-landing, I come across equally convincing soft-landing data.

DinOR,

Swan will have to change it's name to "Deserted Island" if it's a pretty severe downsize. Was Intel's announcement a result of their plan or part of some new news in the area?

Doug H,

LOL! That's a good one! It's incredible how much business we've turned away b/c of our "convictions". We refuse to dredge the Columbia River to allow the new deeper draft cargo ships up the channel, we sent our very last floating drydock to some 3rd world hole and are not allowing any real growth on Hayden Island either. I'm told the local infrastructure just couldn't handle a "big box" so they're putting a 24 month moratorium on building out there. 24 MONTHS! Sheesh. I'm trying to make it to Friday!

SFWoman,

I suspect we'll see a great deal more of people refinancing at higher rates. And yes it is "discouraging". Remember though, these were many of the same people that were rubbing their "low-low rate" in our faces just 18 months ago!

Re: your mum-in-law in Medford.

There are a great many things in life I have, can and will do without for 6-9 months (a sale just isn't one of them!) How long can you go without selling a house and still call yourself a realtor? I guess we're fixin' to find out!

See the link to my analysis of the San Francisco housing market

http://www.crimsonbee.com/house_graphs/sf_house_prices.html

The market was as over-priced when comparing house prices to mortgage rates and income in 1981 and 1989. In both cases affordability improved significantly because of a combination of falling house prices, decreasing mortgages rates or rising incomes. I would expect affordability to improve rapidly once again.

If house prices are flat this time it would mean that either incomes would rise significantly or mortgage rates would fall. Either of the two are unlikely this time.

If house prices are flat it would be unprecedented based on the history of the last 30 years. We do have only two previous example of such over-priced housing in San Francisco so I cannot say the results are statistically significant.

Says:

"...My dad kept ratcheting up the debt because he didn’t want my mom to know how bad things were... At the end of the day $800k in debt when you bought your house for $250k over 20 years ago doesn’t make much sense, but people do stupid things all the time.

I can’t say I know the mindset of the average joe, but people may still be in denial and trying to live the “dream” for as long as they can.
_____

Good, honest assessment. I believe your dad's cash-flow/debt scenario is being played out, more or less, throughout the country in various degrees.

No doubt, it's going to be interesting to see how the whole Baby Boomer socio-political-economic phenomenon shakes out. I know there are a lot of 50 something - 60 somethings still doing a lot of drugs.

It's as if we're on the economic leg of the same, strange, social, hippy-ass trip that started in the 60s.

Where/when does it all end? When the last Boomer has huffed his final bong hit, as a shot heard round the world, and Led Zep's Stairway to Heaven has been played for the last time on the only remaining, terrestrial FM station?

The prior quote should say:

"SQT Says..."

If you look at the RE industry, many people are treating mortgages like derivatives. It is worst than a derivative because many of the loans are obtained with no downpayment. You can gamble with someone elses money, risk none of your own and make a quick buck in the process. The problem that you run into is the ever decreasing supply of "greater fools". Give it time. This mess will work itself out and the prices will revert to the historical mean. There will be many people burned and it will be a painful adjustment.

Michael Holliday,

(And I'm perfectly serious here)

What would it take to get a "Housing Crash Radio Network" going? I realize that nearly every rugu on the financial airwaves has staked his/her reputation on a short lived and mild "correction" so it would have to be somebody totally new or a consumer advocate like Tom DiMartino?

I could really see a show like this taking off.

Caller, go ahead!

Hi, Michael?

Could you turn your radio down dear?

(Pause)

We have Doreen from Daly City, Doreen welcome to the show!

Mike, my husband and I got one of those IO loans and we were barely making the payment to begin with and now they've raised the payment by over $539! Can they do that?

Well Doreen you're what we call in financial circles like to refer to as scuh-rude! Thanks for calling!

No seriously, not sound bites from Schiller on NPR, but a 2 hour call-in type show?

thenuttyneutron,

Glen has brought that up and I'm glad you are as well!

Try getting the bank to loan you 1mm to play in the corn futures market. Why not? We do it all the time for people to speculate on houses!

For a goof I tried (w/a pretty solid fico) to get an "un-secured" loan to "expand" my personal practice. 50k max! This at almost 18%! 3-4 year term MAX! Good luck w/that.

MMAfia Says:

> Not every single market will have price drops occur
> at the same rate nor at the same time

Real estate "markets" are tough to track since a city like Burlingame may have a large number of homes in the hills sell for $2mm+ in a month showing a huge increase in both the average and median home price when every sale was for lower than the exact homes sold for last year...

I think there’s about a 50% chance still that the Bay Area will undergo a soft-landing correction. Every time I see evidence of a harder-landing, I come across equally convincing soft-landing data.

I also feel that soft-landing is a real possibility. Homes that we do not want may crash hard though. :(