April 05, 2007

HousingPANIC Stupid Question of the Day




Will the housing bubble and crash be just like the NASDAQ bubble and crash?

Here's one HP'ers thoughts:

So how will the GF's who bought that $800K McMansion feel when they find out that their neighbors bought a similar house in foreclosure for $400K? This is just like the NASDAQ. The first ones in and out made a fortune. The last ones get screwed. The ones who bought early and didn't sell will lose all their paper gains. Those on the sidelines watch the show and preserve their capital to pick up the bargains.

20 comments:

Anonymous said...

well


was it over when the germans bombed pearl harbor?!?

Anonymous said...

Same dynamic, longer time horizon to play itself out. The "margin call" for RE is much more complex, time and labor intensive than in stocks. It takes 90 days of defaults, negotiations, short sales, DILs (Deed in lieu), foreclosure and bankruptcy proceedings. Plus its spread out over several years as not all leveraged "share holders" are affected simultaneously as in the dot-bomb NASDAQ meltdown. This was Greenspan Inc.'s plan to avoid sever recession/depression from the dot-com fall out by transferring it to RE & then allowing for a slow deflation. RE became a little more volatile that planned due to exotic mortgage lending but a critical of mass was not tempted so after some initial greater pain than anticipated the plan will play itself out in accordance with their intent.

Anonymous said...

Not to mention the US dollar isn't worth the paper it's printed on.

real estate 101 said...

Rents are going up. Most renter's prefer to rent, not buy. The renter's priced out of the market don't/won't have the balls to buy. They'll still be renting in 2 years.
I see rent prices going up 10%/year as the demand increases for those subprime borrowers returning to renting.

Paul E. Math said...

I agree with anon 9:44 am. The chart for the real estate decline will look very similar to that of the nasdaq decline but the time increments will be further spaced apart. The real estate decline will take forever and there will be so many false bottoms that eventually everyone will get sick of it and give up.

I predict that TCDL loses credibility first so the NAR will hire a new chief economist/mouthpiece whose first act will be to call the bottom of the price decline. Which will be false. Eventually that new guy/chick will wear out his/her credibility and people will finally have lost faith in the NAR itself. Perhaps then the bottom will be real but it will last for several years. Like 2010 - 2015, give or take 5 years.

Anonymous said...

Does TCDL have a hand up his A*S like the sock puppet does?

LauraVella said...

Rents are going up. Most renter's prefer to rent, not buy. The renter's priced out of the market don't/won't have the balls to buy. They'll still be renting in 2 years.
I see rent prices going up 10%/year as the demand increases for those subprime borrowers returning to renting.

I don't think rents can go up 10% - they are already high, and with forclosures happening, these now new renters, will be broke and have a bad credit score, two things that a landlord doesnt want...I guess we will have to wait and see what happens in the rental markets.

Anonymous said...

"Rents are going up. Most renter's prefer to rent, not buy. The renter's priced out of the market don't/won't have the balls to buy. They'll still be renting in 2 years.
I see rent prices going up 10%/year as the demand increases for those subprime borrowers returning to renting.

"

Ding, ding, ding! Looks like we have a F*cked Borrower, or unemployed realtor for sure!!!!

My rent actually went DOWN 5% this year. So with all the money Im saving, Ill buy the shitbox next door to you for not only for HALF price, but for CASH!

Anonymous said...

"was it over when the germans bombed pearl harbor?!?was it over when the germans bombed pearl harbor?!?"

You meant to say "when the Italians bombed Pearl" didn't you?

Get your history right, dumbo.

Anonymous said...

Rents won't go up much.

Every person leaving a house makes the house vacant and alot of them end up as 'rentals'. At least for a while.

record number of empty housing units means rents probably won't rise.

Anonymous said...

Rents are NOT appreciating much above inflation, which is about right since rent is about 38% of CPI. You landlords better be careful what you wish for by the way. IF rents do shoot up, you can expect interest rates to follow suit. Higher interest rates will surely crack this asset bubble.

Rent apprectiation is in fact rolling over. And, what do you think will happen to rents when more and more of the estimated 2mm vacant home start to get rented out once the FB's realize they can't flip them for easy money -- mmmmm drop...

Anonymous said...

Real Estate 101- rents are not going up, they are going down due to the "shadow" rental market. That is, all the flippers and fb's who cannot sell are now renting out their homes, which is now taking business away from the traditional landlords.

I dare my landlord to try to up my rent, in fact, I am thinking of demanding a decrease.

keith said...

It'll be fun to lay Phoenix home prices 2000 - 2012 against that NASDAQ chart one day won't it?

Or Vegas, or San Diego, or Miami, or Boston, or Dublin, or London, or Barcelona, or .....

Anonymous said...

the top chart shows it:

the pre-bubble #ers are about the same as the post-bubble #ers. + a little more for inflation, general betterness.

That is what will happen with housing, eventually...

Anonymous said...

real estate 101 said...
Rents are going up. Most renter's prefer to rent, not buy. The renter's priced out of the market don't/won't have the balls to buy. They'll still be renting in 2 years.
I see rent prices going up 10%/year as the demand increases for those subprime borrowers returning to renting.

April 05, 2007 11:13 AM
--

B.S. rent somewhere else then. that is the joy and strength to renting. Jack my rent 10% will you?? Goodbye. THERE WILL LOTS OF PLACES TO RENT!

Anonymous said...

Laravella;
With all the unsold condos on the market you can be sure many will be turned to rentals competing directly with conventional apartments. Threfore, keeping rents low through supply and demand.

Ben Dover said...

real estate 101 said...
Rents are going up. Most renter's prefer to rent, not buy. The renter's priced out of the market don't/won't have the balls to buy. They'll still be renting in 2 years.
I see rent prices going up 10%/year as the demand increases for those subprime borrowers returning to renting.


Do you have any data to back this up? I didn't think so...
There are so many houses for sale / rent/ empty, there are PLENTY of rentals to go around, and rents are falling. You don't have to take my word for it. Look on Craigslist for any city of your choosing and get back to us.

I'm starting to see lots of cheap hardware store For Rent signs poping up, along with cutthroat prices and reduced deposits.

As far as "having the balls" to buy, you are right I don't have the balls to watch my hard earned dollars get slowly pissed away.

Now, go make some cold calls.

Anonymous said...

The chart for the real estate decline will look very similar to that of the nasdaq decline but the time increments will be further spaced apart. The real estate decline will take forever and there will be so many false bottoms that eventually everyone will get sick of it and give up.

Yeah, the rates of change during the increase (upslope of the bubble) are much sharper than the decline, as the upslope is effected by the fact that the seller often had multiple bidders, and the seller could sort thru multiple listings to find the right (i.e. highest) offer.

On the other hand, during a downward trending market, houses will sit on the market for months, if not years. There's certainly no glut of buyers to sort through, so the seller has to play the waiting game to decide if they should accept a single offer. They're wondering if they should wait for a upturn in the market or not.

Furthermore, the acceptance of an ego-insulting (although no doubt realistic) offer is not so likely at this point, unless the seller TRULY is in a tight bind. As desparation increases, people will have to witness much more pain before they decide they're in over their heads. The stages of grief in a downward spiral is "deny, deny, deny, deny, foreclosure".

All of this tends to stretch out the shape of that downslope, since let's be real here: there's also many home owners who enjoyed that fat run-up in equity, didn't do anything stupid (like re-fi), and can afford to wait it out.

However, events like the sub-prime meltdown will no doubt hasten if not accelerate the inevitable, once people realize that the bubble-inflating "free money" spigots (which fueled this market, in the first) have been shut off for failure to pay.

Anonymous said...

Rents up 10%? LMAO @ dumass

The problem is that rents cannot go to bubble prices because there is no funny money involved. A lettuce picker making $15K/yr can "buy" a $600K house with a suicide loan. A landlord cannot charge the renter more than he can afford to pay.

Besides, the vacancy rate is normal to high in many areas due to all the subprimers who left their rentals to become a first-time homedebtor.

My rent went down 13% last year and will likely stay flat when I renew. Even if it went up I would still be ahead.

Anonymous said...

I just closed on a condo in Florida. I went under contract pre-construction in 2004, and it did not close until last month. I missed out on being ablt to flip. I think its worth what I paid, but after commissions and closing costs, I'll lose a little bit, assuming I can find a buyer.

I tried to rent it out. There are so many condos for rent that I just about break even on paying just taxes, insurance, condo fees, and the leasing company's fees. The $1,200 in interest that I pay comes right out of my pocket. Renting is such a better deal right now that its crazy. Rents are going DOWN as all the new product, at least in the bubble areas, is coming to market.

Say - anyone want to buy a condo in Florida?