patrick.net

Wishful thinking. The bulls all own homes and are frightened of losing equity, so they remain in denial.

That is so true. All my friends who are homeowners have been in incredible denial for years. They can't read the logic of a possibility. I understand it. It's an emotional attachment.

90% of my friends who own homes have been saying we're at a bottom literally continuously since 2007. It's pretty interesting how widespread it is - absolutely everyone thinks that where *they* live is "different" and that each passing month of lowering prices must be the last one, and doesn't apply on their block...

What amuses me as that correction started in 2006-2007 and people(existing homeowners) were calling bottom already in 2009. Like 10 years of crazy appreciation was okay but 2 years into down turn and we are fine....it is going to start recover now...

I remember talking to someone in 2007 who had bought property in Vegas as an investment. I told them they should think about selling it since there was likely to be a downturn in prices. But they informed me that no, the downturn had already happened and was over with.

bubblesitter says

What amuses me as that correction started in 2006-2007 and people(existing homeowners) were calling bottom already in 2009. Like 10 years of crazy appreciation was okay but 2 years into down turn and we are fine….it is going to start recover now…

Why do you think it's going to a symmetrical rise and fall? Better to look at price/rent or price/income ratios. If those are OK, it doesn't matter if it's been 1 year or 15 years...

I think prices are correct in my area.

Let's look at a typical lower end home in San Francisco.

You should be able to get one for $450k or so in the south eastern neighborhoods.

Put 20% down ($90k). You will need a loan of $360k. The mortgage for that is around $1800/month. Income requirement for a safe mortgage is $5400/month, or $65k/year. That's couple earning $32500/year. San Francisco minimum wage is nearly $10/hour. A couple earning minimum wage has a household income of $41k. If prices go any lower, you will soon be competing with minimum wage earners. Do you guys realistically think market conditions will allow minimum wage earners to be able to afford a home?

Vain says

I think prices are correct in my area.
Let’s look at a typical lower end home in San Francisco.
You should be able to get one for $450k or so in the south eastern neighborhoods.
Put 20% down ($90k). You will need a loan of $360k. The mortgage for that is around $1800/month. Income requirement for a safe mortgage is $5400/month, or $65k/year. That’s couple earning $32500/year. San Francisco minimum wage is nearly $10/hour. A couple earning minimum wage has a household income of $41k. If prices go any lower, you will soon be competing with minimum wage earners. Do you guys realistically think market conditions will allow minimum wage earners to be able to afford a home?

Your fuzzy math is what got us into this problem in the first place. You act as if taxes don't exist!

Vain - 1) coming up with $90k - that's the hard part.
You also need to include taxes & insurance into your mortgage payment (unless you pay them separately, but from all that I have read, most don't, at lest not initially)

If rates hold (or go lower due to QE2) then yes, we are close to a forced bottom in most areas.

Vain, I think current DTI is 0.31 and 0.43 front and back. So, do your math again with that ratio, and see if bank will give 65Kers 360K loan at 30yrs/4.3%. I can hardly think so. If I were one of those 65K'er, I wouldn't take 360K loan even if I could. 5400 gross, 3500 or so net/mo, and take 1800/mo for mortgage gives you 1700/mo in your hands. 1700/mo for prop tax, HOA if any, util, auto loan, credit card payments, food, cloth, health care, expenses for the kids, transportation, maintenance and other fees in place like SF? You gotta think twice about it before taking it.

ECCB, your notion about QE2 is interesting point. Burnake implied it several times before. Not sure he will pull the string soon or not. But the effect of stimulus is wearing out, and the Fed is feeling the need of another massive scale monetary injection. With tax payers money or by crying out loud in front of chinese? Anyway, that I think, will force the RE market shake even in those resilent places like SF, DFW and DC if happens. One of the reason why inflation is not kicking in regardless of all those money government spent is those banks and manufacturers keeping themselves in low profile, holding money for the balancing purpose. I think they should fire Burnanke and Geithner, and the start squeeze those banks instead though, who am I to say the government what to do?

EastCoastBubbleBoy says

Vain - 1) coming up with $90k - that’s the hard part.

ECBB, seaside,
I agree coming up with the down payment may be tough. Having a loan a bank says is "safe" does not mean it is safe for me to get. But there are lots of suckers out there so you may have to wait all of them out. I personally am tired of waiting. I am constantly putting offers on what we think the home is worth. If we get it we get it. If we don't we don't. We've backed out of 2 short sales to date since the bank was dragging it on and only accepting the offer once the prices appear to be declining.

http://money.cnn.com/video/news/2010/10/05/n_whitney_banks_housing.cnnmoney/

There's some mention at the end about possibility of double dip in housing sector.
Some of you don't like whitney, I know, I know. I am posting this because of the other lady. :P

This one didnt get the memo either...for a 3000 sq ft home its worth $600K.

http://www.redfin.com/CA/San-Jose/6528-Leyland-Park-Dr-95120/home/1311146

Property History for 6528 LEYLAND PARK Dr
Date Event Price Appreciation Source
Oct 01, 2010 Price Changed $900,000 -- MLSListings #81019940
Sep 19, 2010 Price Changed $925,000 -- MLSListings #81019940
Sep 09, 2010 Price Changed $950,000 -- MLSListings #81019940
Sep 03, 2010 Price Changed $975,000 -- MLSListings #81019940
Aug 20, 2010 Relisted -- --
May 27, 2010 Delisted -- --
May 21, 2010 Price Changed $995,000 -- MLSListings #81019940
Apr 23, 2010 Listed $1,025,000 -- MLSListings #81019940
Apr 23, 2010 Delisted -- --
Jan 21, 2010 Price Changed -- --
Jan 11, 2010 Listed -- --
Mar 15, 2007 Sold (Public Records) $1,311,500 10.4%/yr Public Records
Mar 02, 2007 Delisted -- --
Feb 22, 2007 Listed ** --
Sep 03, 1997 Sold (Public Records) $509,000 -- Public Records

Still think the double dip is coming?

http://finance.yahoo.com/news/Home-loans-for-purchases-rise-apf-775022902.html?x=0

thomas.wong1986 says

This one didnt get the memo either…for a 3000 sq ft home its worth $600K.
http://www.redfin.com/CA/San-Jose/6528-Leyland-Park-Dr-95120/home/1311146
Property History for 6528 LEYLAND PARK Dr
Date Event Price Appreciation Source
Oct 01, 2010 Price Changed $900,000 — MLSListings #81019940
Sep 19, 2010 Price Changed $925,000 — MLSListings #81019940
Sep 09, 2010 Price Changed $950,000 — MLSListings #81019940
Sep 03, 2010 Price Changed $975,000 — MLSListings #81019940
Aug 20, 2010 Relisted — —
May 27, 2010 Delisted — —
May 21, 2010 Price Changed $995,000 — MLSListings #81019940
Apr 23, 2010 Listed $1,025,000 — MLSListings #81019940
Apr 23, 2010 Delisted — —
Jan 21, 2010 Price Changed — —
Jan 11, 2010 Listed — —
Mar 15, 2007 Sold (Public Records) $1,311,500 10.4%/yr Public Records
Mar 02, 2007 Delisted — —
Feb 22, 2007 Listed ** —
Sep 03, 1997 Sold (Public Records) $509,000 — Public Records

You disprove your own point with these posts Thomas. Yes, in your mind it is worth $600k, but it's listed at $900k. Fine, they've been dropping their price, but you don't know where it will end up selling. It's not gonna be $600k though. And it certainly doesn't seem to be crashing down to the 97 price of $509k.

bubblesitter says

Look at Thomas’s posting. Home price correction in CA and BA is still on going. Look at all the MLS history of a home prices on redfin. Just because banks can’t clear the backlog of inventory doesn’t mean house prices have bottomed. There was no bottom in 2009.

Thomas' posting prove nothing. If I buy a house for $500k and then list it for $1M and it doesn't sell, then drop the price to $900k or even to $800k and it sells, the price still went up. Just because they are lowering their list price doesn't mean prices are dropping overall. The same house could have been listed at $600k and then sold for $700k - that wouldn't necessarily mean prices are going up. You can't tell anything from the listing histories other than some people are pricing things higher than they should.

mthom says

You disprove your own point with these posts Thomas. Yes, in your mind it is worth $600k, but it’s listed at $900k. Fine, they’ve been dropping their price, but you don’t know where it will end up selling. It’s not gonna be $600k though. And it certainly doesn’t seem to be crashing down to the 97 price of $509k.

Your in for a shocker if you think prices will not head down to 97+inflation.
Fact is we may even go down further to nominal 97 prices. Yes! $509K and less...

There were many home like this 3000 sq ft $1-1.5M which sold at peak years and will
be underwater for many years. Many will sell at a loss, and that will push lower tier homes
even lower for years to come.

PS. Dont tell the owner of the home in the link prices are going higher!

'The greater bay area' includes a lot of places that have crashed hugely - but also areas that have only begun. "Asking prices" only indicates what sellers are hoping to sell for, sale to list % is trending down again.

Also -
There were 811 NoDs in San Mateo County in September, 2010.
There were 911 in August.
There were 610 in July.
807 in June.
813 in May.
840 in April.
1021 in March.

That's a lot of defaults in "rich" San Mateo County. What do you think all these defaults (on top of existing foreclosures and bank owned) will do to the market??

Hey this topic has nothing to do with Ice Cream, I feel so cheated.

EastCoastBubbleBoy says

Vain - 1) coming up with $90k - that’s the hard part.

This may be too personal of a question, but since we only know by your Alias there's no harm in asking. You been a member of this website since before I joined in 2006. How much have you saved towards a down payment to buy a house.