July 17, 2008

HousingPANIC Stupid Question of the Day

When will we hit bottom?

What will that look like?

92 comments:

Agent #777 said...

We are not even close yet. I am concerned it will look like nothing we have ever seen before.

keith said...

And stocks are not houses. I think the bottoms are going to be very different for those two.

Anonymous said...

2014, total devastation

housing prices drop on average 60-70%

hundreds and hundreds of banks collapse

corporations (auto, airline, some on DJIA and SP500) go belly up

store fronts sit vacant

many millions laid off

corporations purge their retirement programs

average wages drop significantly

taxes shoot to the moon

...getting the picture yet?

Anonymous said...

What will it look like?

Answer: Detroit

Anonymous said...

Housing will bottom in late '09/early '10 but we will only know it in hindsight in late '10/early '11 But no rush it will stay down for years. This will be after3-4 years of double digit drops (Case-Schiller). The long trough, along with the drops, of course is flat pricing in nominal terms & will actually be real price drops in real terms as inflation eats away at price and wages finally start to catch up with housing prices

Mike Hunt said...

It'll be like this Monday times 10.

California's bottom will occur when housing stays in a long downward spiral just like Japan and then they get hit with a 8.9 earthquake. That's when I'm calling bottom.

-Mike

hurly burly said...

Bottom: when houses again sell for 2.5X the average household income. The area I live in has an average income of $39K and the average house sells for $229K. We are nowhere near bottom.

My guess is 3-5 years of pain await.

michael said...

2-3 years after the last reset bomb.

can you put up that chart again?

FOA PAC COMMITTEE said...

"WHAT WILL THAT LOOK LIKE?"

EVER SEEN THAT PICTURE THAT'S BEEN MAKING ITS ROUNDS ON THE INTERNET FOR YEARS OF THE GUY IN A SUIT BENT OVER WITH HIS HEAD UP HIS ASS???

YEAH, THAT'S WHAT IT'S GONNA LOOK LIKE...

DOPES!!!

Anonymous said...

Better question - where do you want to be living on the way to and at the u shaped bottom?

Tallahassee or Salt Lake City?

Anonymous said...

we will hit bottom when we get there!

Anonymous said...

Gold And Oil For Soros

Wealth destruction took a day off Wednesday as illiquidity surfaced as a top issue at a major investment bank.

The market rallied in the wake of a lower oil price, Federal Reserve Chairman Ben Bernanke promised that Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ) were solvent, and new rules began to lean against avaricious short-sellers of bank shares.

Undoubtedly, this spike in bank shares was due in large part to hedge funds, which began covering some of the massive short positions they've built up over the past 18 months. For example, billionaire George Soros--Croesus was told--has covered much of his shorts in financial stocks. Why chance another public policy move by regulators to shut off this automatic feeding trough?

Soros finally shorted oil at $137 a barrel and put on a long position in gold; he expects to see gold hold its ground even if oil continues to decline. In fact, the gold bug clique believes in a consistent 10-to-1 ratio for gold and oil. It holds that either gold will rise to 10 times a barrel of oil ($1,350 an ounce) or oil will fall to $96 a barrel--one-tenth the present market price of gold. Croesus was told Tuesday that statistics spanning many decades support, on average, this 10-to-1 ratio.

http://www.forbes.com/2008/07/16/soros-gold-merrill-oped-cx_rl_0717croesus.html?partner=yahootix

homebuilder said...

When the median house price = 2.5X median household income, that should be the bottom. You will have plenty of time to catch it because house prices stay flat for a few years at the bottom after its reached.

The last RE bust started in 1987 and prices dropped until 1991. Prices leveled off after that until about 1997. In 1997 prices began to appreciate again but the parabolic bubble appreciation didn't start in earnest until 2002 when Greenspan's super low rates kicked in. The pattern of the next cycle should be the same as last time, but the price declines and the time periods should be larger and last longer. The total decline should be about 35-40% from the 2006 peak to the 2011/2012 trough to get back to normal levels of affordability. Prices will be flat after that for at least 5 years. Housing Bubble II should peak around 2025 give or take a year.

Anonymous said...

what with those who lent to borrowers being 50 to 90 percent down in stock price already...??????

Miss Goldbug said...

The housing market has just begun to collapse. The big hits coming 4th qtr, where prices will drop $200k across the board in all housing.

In cities Alameda & San Leandro, prices have already dropped $200k -300k.

I've been predicting this for 5 years now, but now I feel confidant it will happen.

Stock prices: I predict will fall another 20% more, with the bulk of that happening in the 4th qtr of this year. Market to remain flat for the next 5 years. Gold stocks will continue to be the most stable of all equities.

Veronica Lodge said...

RE: When will we hit bottom? What will that look like?

To "hit bottom" implies that the current downward plunge will have an end and at this low point, things will either stay the same or get better. Unfortunately, as far as the world economy and our standard of living are concerned, things will never get better.

As long as we are making gloomy predictions, I will look into my crystal ball in an attempt to see what other disasters are on the horizon.

In 2009, we will enter the final phase of our troubled existence, where world conditions never improve. All of the world's problems will simultaneously collide, with devastating results. Eternal war will replace any semblance of peace we once enjoyed. Governments, which once guaranteed us basic human rights and protection, will be replaced by martial law, enforced by gangs of murdering thugs.

Social Security, health care, adequate food, government entitlements, basic human rights, good jobs, efficient transportation and all traces of security will be things of the past. Disease will be rampant.

The fabric of civilization as we know it will unravel. Overpopulated nations will outstrip the earth's ability to support them. Migrating masses of refugees will further challenge the uneven distribution of the earth's wealth. Skirmishes over oil, land, food and water resources will escalate into larger and more destructive wars.

The elite class will be forced to make hard decisions as to who will be allowed to survive on our dying planet.

That's all for now, the crystal has gone dark.

vanilla ice said...

When will we hit bottom?

When everyone's yelling, get out, get out.

Stuck in So Pa said...

keith said...
And stocks are not houses. I think the bottoms are going to be very different for those two.
============================
I do think that we will see one last really big run up in stocks before they plummet into the abyss, after all, buy, or sell, = one keystroke.

Housing is already on its way down into the abyss, obviously, but all the government prop-up measures are going to delay the inevitable for God knows how long.

"How far down can this sub go Sir?

"All the way to the bottom!"

Anonymous said...

There are two factors:

1. the cost to own must be no more than 20% of the cost to rent a similar place

2. the credit crunch must end

Anonymous said...

The bottom is several years off.

It will look like HELL. Worse than most of us imagine.

brokersleaveyoubroke said...

In 2000 a decent house was about 2X my salary. I have been fully employed and received raises every year since then and now a decent house is about 4X my salary. I think we have a way to go yet.

The Housing Bubble Ate My Balls said...

When the NAR and it's Realtor™s say:

"Now is not a good time to buy."

Anonymous said...

No joke - prices are not budging where I live. It is a prime beach location and less than an hour commute to NYC. I do not think that prices in this area will fall, at least it is not even close to happening now.

Anonymous said...

It will be worse than the collapse of the Soviet Union in 1991, as Russians kept living in their houses, but most Americans will be out on the street. Money and all wealth other than Gold, Silver, etc. will become worthless. There will be shotrages of food (if oil runs out) & people will be dying in the streets. We will never recover and other nations will not really care, just like no-one cared about the USSR. So why not prepare now with guns & food?

Anonymous said...

I think when banks pull the 100% financing and insist on 2.5 times income, prices will come down fast. Maybe 1 1/2 - 2 years from now ... then it will sit there for a long time ..

Anonymous said...

When 90% of you are dead.
-The Elite

Nick said...

Don't ever count America out Keith and HP'ers. The bottom is already here and soon real estate prices will start heading up again, the stock market will go up again and everything will be fine. All of the folks predicting gloom and doom have done so for almost thirty years. It is almost like they want gloom and doom to happen. Once again, our nations greatness will prove them wrong again.

keith said...

Stocks are roaring now. Will it hold?

David said...

Looking at other models, I'd say the former Soviet Union presents a good one. Remember - they were governed by out-of-touch geriatric thugs who were stealing as much as they could and living the high life in their dachas while the rest of the country shivered and starved.

They got involved in an endless war in Afghanistan (we doubled down on Iraq, just because that Afghan wasn't bad enough), and blew all their money on an increasingly irrelevant military while their internal civilian infrastructure (what was supposedly providing the money to pay for that overblown military) rotted and collapsed around their ears.

Sound familiar yet?

The military pulled out of the mideast in shame and humiliation, the returning soldiers found that the government no longer had money to pay them. They took to the streets in rage and became the core of the new Vory V Zakone. The Soviet president was forced to go, hat in hand, begging from the countries that were their former enemies, who laughed and stuck the knife in deeper (when Pres. Obama is getting laughed out of China & Russia in 2 years, remember that). The ruble was worthless. Tanks in the streets, retirees found that their checks were still coming, but they no longer bought anything. The little old grannies (babushkas) resorted to drug dealing to earn the money to buy sausage.

Eventually, the Soviet Union broke up into smaller substates. Rich economic states (California, Texas), broke off and became their own countries. Ideologically backward states like Alabama, Kentucky, Tennessee will probably follow the Turkmen/Tajik model and descend into fundamentalist-run nightmare dictatorships, where citizens that fail to pray fervently enough to Cardinal Rush Limbaugh or first lady Ann Coulter are arrested and disappear.

keith said...

"soon real estate prices will start heading up again"

Nick, Nick, Nick. Where do we start?

It's impossible and illogical to think that house prices would go up anytime soon.

* Massive swelling inventories
* A wave of unending foreclosures
* Severe tightening for lending
* Job losses
* Loss of confidence

I could go on, and on, and on.

Home prices not only aren't going to be going up, they have much further to fall.

Please, humor us though, make an argument for how home prices could go up soon. Seriously, give it your best shot.

We're waiting.

consultant said...

For most of you (myself included), I hope you like what you are living in, because that's where you'll be for the forseeable future (5+ years).

All of these mutually amplifying events are a real pain to keep up with.

Here is a real expert on the oil situation, Dr. Ken Deffeyes. Here's what he has to say about our oil predicament: http://www.princeton.edu/hubbert/current-events.html

Peak oil + housing/mortgage meltdown + George Bush=bad future for all of us.

Anonymous said...

Looks like someone finally popped the oil bubble

Look out below

Stocks will love that

BelowTheCrowd said...

I commented on this on my blog yesterday.

In the last Socal downturn, prices peaked about 2.5 years after sales volumes did. So far that's been pretty much the case in this downturn too.

Last Socal downturn, prices bottomed a full 5.5 years after sales volumes did. Have we hit a sales volume bottom? There's some evidence that we might be getting there right now, but still unknown.

Bottom line to me is that the market bottom where I live is still a long way off.

Realistically though, you had about five years in which things were fairly flat at the bottom, meaning that there was never a rush to buy. Probably will be the case this time too. Meaning that in another couple of years, it may start making sense to buy around here if your timeframe is that of a normal resident, not a flipper.

Typically, a person who buys at the peak waits 10-12 years to see things come back to even.

More about Real Estate Prices Still Have a Way To Go, including some nice graphics and links on my blog.

-btc

Anonymous said...

My life fades
the vision dims.
All that remains are memories.
I remember a time of chaos
ruined dreams this wasted land.
But most of all, I remember the Road Warrior
the man we called Max.
To understand who he was, you have to go back to another time
when the world was powered by the black fuel
and the deserts sprouted great cities of pipe and steel.
Gone now swept away.

DaveO said...

The housing market has just begun to collapse. The big hits coming 4th qtr, where prices will drop $200k across the board in all housing.

What's funny is that the second half of 2008, which we are now in, is when Lawrence Yun says that the housing market will begin its rebound:

"What's in Store
The up-tick in the latest pending sales will help existing home sales to be modestly higher in the second quarter of this year versus the first quarter. The sales in the third and fourth quarters are anticipated to be notably higher. There are several underlying reasons:

Removal of "declining market policy" by Fannie and Freddie. Fannie Mae and Freddie Mac had imposed a "declining market policy" of requiring a higher down payment and higher credit scores in lending in regions where prices had been falling. However, that policy exacerbated the downturn by reducing housing demand. Given that "Fan and Fred" were created with the mission of providing credit in times of crisis - they decided to do away with that policy beginning this month (June 2008). This is welcome news in terms of maintaining underwriting standards without going overboard in being too stringent.
Significant reduction in conforming jumbo mortgage rates. Another very positive development is in the falling mortgage rates on conforming jumbo rate loans recently. In spite of newly enacted legislation early in the year raising the loan limit, the mortgage rates on these higher loans did not fall. However, Fan and Fred have become very active in purchasing these loans and mortgage rates have fallen by a full one-percentage point - e.g., from 7.5 percent to 6.5 percent. That is a great news for homebuyers in high-cost regions. (The super jumbo non-conforming loans still carry very expensive interest rates.)
More applications for FHA loans by borrowers who would have been subprime borrowers this time last year. Since the summer of 2007, home sales were hampered by a sudden disappearance of subprime loans. But FHA loan applications have been rising and I believe the FHA program will be able to bring some of the buyers who would have used subprime loans into government-backed loans that carry much lower interest rates.
Improving economy. The economy will see a growth of about 2 percent in the second half of this year. That will turn the job market to the positive side with net job gains possibly of 350,000 in the second half.
Home buyer tax credit. There is a better than 50-50 chance that the President will sign a big Housing bill from Congress before the 4th of July. The key element of the bill from my point of view is the temporary homebuyer tax credit. This tax credit will induce fence-sitters back into the marketplace.
Chain reaction buying. Many home sellers are not able to buy because they cannot sell their homes. However, there is always a bit of chain-reaction momentum that will build. An increase in buying unleashes existing sellers to buy the next home - and so forth.
As a result, I see improved sales in the second half of this year. Prices are more difficult to predict. More transactions have been occurring on the lower end. But we may begin to see more sales in the higher end with falling rates on conforming jumbo loans and from the chain-reaction factor.
"

k.w. - Southern Ca. said...

Well, since prices skyrocketted to something none of us had ever seen before, it's logical that the drop will be just as (actually even more) dramatic.

Once the "Alt-A" and "Prime" loan problems start kicking in (many people even with excellent salaries and credit scores chose mortgages with low upfront payments, hoping to flip after 2-3 years) we'll start seeing the drop in prices really accelerate downward even faster.

very concerned said...

Honestly, I can't conceive of it. Peter Schiff said in Crashproof that sacrifice and hardship will define the US experience for "generations to come." Scary. And crime is bad enough already. I'm thinking of leaving.

Anonymous said...

"Eventually, the Soviet Union broke up into smaller substates. Rich economic states (California, Texas), broke off and became their own countries. Ideologically backward states like Alabama, Kentucky, Tennessee will probably follow the Turkmen/Tajik model and descend into fundamentalist-run nightmare dictatorships, where citizens that fail to pray fervently enough to Cardinal Rush Limbaugh or first lady Ann Coulter are arrested and disappear."

I see this as the mostly likely outcome for the USA in the next 5-10 years. I just can't see how they can hold the whole country together given all the stupid problems that have surfaced in the last ten years. For the record, I also agree that the poorer states like AL/KY/MT/etc would probably not be good places to live. Head towards the coasts or the upper midwest/northeast if you ask me.

Anonymous said...

UBS

Anonymous said...

When the nukes start flying.......

Anonymous said...

"The big hits coming 4th qtr, where prices will drop $200k across the board in all housing.
...
I've been predicting this for 5 years now, but now I feel confidant it will happen."

Like the saying about a stopped clock being right twice a day...

Gus the Gas Guzzler said...

Oil prices dropping, gas will follow. I think I will go out and buy a Hummer today. I hear they are on sale (for now).

silly devestment said...

It’s dark at the bottom. I have been there.

Those with money use it wisely in ruthless negotiation against the cash strapped.

People tie up homes with tiny deposit checks and then drop out on contingency, wearing out the wounded home seller already behind on his payment.

Consumers cut back on everything nonessential.

Joblessness soars.

Credit cards max out.

People who owned homes move in with relatives after borrowing money to make the last few payments.

LA times restaurant equipment auction section expands.

Furniture gets cheap.

The "check in the mail" never comes.

Time moves slowly when things are bad. Very, very slowly.

Anonymous said...

"...When the NAR and it's Realtor™s say:

"Now is not a good time to buy."

July 17, 2008 4:45 PM"


You Sir, are a comedic GENIUS.

Anonymous said...

When the DOW hits 1300, and oil is $10 a barrel, then we might be at a bottom.

doug said...

When all of America resembles New Orleans!

Geat Post! said...

"silly devestment said...
It’s dark at the bottom. I have been there."

Great post, and timely too.

Thank you.

Anonymous said...

Head towards the coasts or the upper midwest/northeast if you ask me.


The coasts are expensive and prone to disasters. The midwest and south have the food and water

Anonymous said...

When the DOW hits 1300, and oil is $10 a barrel, then we might be at a bottom.

_______

Those two aren't gonna happen around the same time...more likely Dow at 1,000 with oil at $1,000 per barrel...with gold at $10,000 per ounce.

Only by then, the gummint will have tried to confiscate any gold (and silver) private citizens might have.

Think that's ludicrous?

Google "Executive Order 6102"

The big storms hasn't even hit yet. This has all been a warm-up for the real $h|tstorm.

Anonymous said...

Looks like someone finally popped the oil bubble

Look out below

Stocks will love that


_______

Oh my gosh are YOU premature...and ignorant, and brainwashed, and mentally lazy!

Oil takes a tiny dip and you think that "bubble" has popped. It's not a bubble, by the way -- despite declining US demand for oil, GLOBAL demand continues to grow and supplies continue to shrink. While demand grows faster than supply, WE DO NOT HAVE A BUBBLE.

Those as ignorant as you will be soon be educated in painful ways.

Dolt.

Anonymous said...

Don't ever count America out Keith and HP'ers. The bottom is already here and soon real estate prices will start heading up again, the stock market will go up again and everything will be fine. All of the folks predicting gloom and doom have done so for almost thirty years. It is almost like they want gloom and doom to happen. Once again, our nations greatness will prove them wrong again.

__________

What universe are you living in, Bozo? Been watching Hannity or some clown like that?

Anonymous said...

Soros finally shorted oil at $137 a barrel and put on a long position in gold; he expects to see gold hold its ground even if oil continues to decline. In fact, the gold bug clique believes in a consistent 10-to-1 ratio for gold and oil. It holds that either gold will rise to 10 times a barrel of oil ($1,350 an ounce) or oil will fall to $96 a barrel--one-tenth the present market price of gold. Croesus was told Tuesday that statistics spanning many decades support, on average, this 10-to-1 ratio.

______

Such ratios don't always hold.

If Soros REALLY shorted oil, rather than SAYING he dude so the lumpens would short it giving him a laugh and more liquidity to buy into, then I think he jumped the gun.

Oil may take a good dip, to be sure, but that will be followed in the not-too-distant future by MUCH more upward action.

The laws of supply and demand -- and the plummeting dollar -- dictate it.

Gold will most certainly go up, yessiree. Way way up.

You clowns all seem to get rattled on the tiny dips...it's those dips that should get you excited and trigger your buying.

Anonymous said...

"...When the NAR and it's Realtor™s say:

"Now is not a good time to buy."


_______

Which will only happen a few days after the nukes have hit.

Anonymous said...

keith, i have some home builders stock and some finanicals stocks i want to sell into this ralley? do you want to take the other side of that trader sir? please?

Anonymous said...

Blogger keith said...

Stocks are roaring now. Will it hold?

July 17, 2008 6:43 PM
---------------------------------

Nope! After hours trading leaves the S&P500 down for the day after being up over 2%.

keith said...

Short term I have no idea whether stocks will go up or down

But I can tell you when I see this level of panic and negativity, I feel more bullish

I'm patiently and very selectively buying, to hold, not to trade

Anonymous said...

Houses will have tall grass. Unrest in streets, of various kinds. Demonstrations, outbursts. Martial law at least sporadically. Curfew.
At some point there will be an announcement to go home and turn on television for directions. We will be told not to go to our bank. Grocery shelves will be come bare and/or missing many supplies. Food will become scarce because of grocers going broke. Cars will be abandoned, or lived in. Arson, and fires for various reasons, some on purpose, some accidental. Lots of illness as times worsen. I assume there will be vouchers at least for some time, for food. Lots of people living together, related or not. If
oil doesn't go down how will people keep warm, diesel is furnace oil; they will have to bunch up during the winter. Lots of broken house pipes and water damage due to unheated houses. Garden attempts everywhere. Police will be very stressed. Cities won't be able to pay employees; not sure how police will behave..

For more details, just read up on the Depression....

Grandma PK

David in SoCal said...

not close to bottom yet. still in major denial about the mess that is upon this once great country.

I think bottom will be when we join with Mexico and Canada... I am serious.

Anonymous said...

My take:

Housing will hit bottom when prices stabilize over a long period of time, when the market returns to its fundamentals.

The stock market will have to return to principles based on earnings and dividends, not speculation.

I firmly believe that commodities, metals, and energy are in a bubble that can either continue, or collapse. The hot money places the bets, and it's either win or lose. I can't afford to gamble, and many others are in the same situation.

Anonymous said...

We'll be closing in on the bottom when everyone thinks this is 1933 redux.

My guess is around 2011.

Got food?

beebs said...

We'll all be drinking dog piss out of rusty hubcaps before this market turns.

Anonymous said...

The financial system as we know it will collapse - worldwide. That will be bottom. It will be ugly and it will be scary and quite necessary to eradicate the rampant corruption and greed. Hopefully in years to come, our children will only have a vague recollection that something bad happened. I hope that in such a scenario we find that we are closer to the people we were after 9/11 than the people in the Mad Max movies.

G said...

Christ, why don't most of you just commit suicide now and spare yourselves the pain? Life as we know it isn't going to end.

Houses will fall in price, we will have a big fight with inflation, there will be a significant rise in unemployment. It will be uncomfortable for a while, but it will still be possible for intelligent individuals to thrive.

If the world is full of douchebags ,like the majority of the people in this thread, then I hope it does the universe a favor and implodes.

Anonymous said...

At least 2012 which is when the wave of Alt-A's rates will finish their resets. At that time their will be a huge glut of homes for sale and after those are sold off, a second wave of homes will be put up for sale by owners who wanted to sell but waited until the market improved. When all that is accomplished it will probably be well into 2013.

Anonymous said...

The 'bottom' will come in December when VP Cheney sanctions a bombing of the White House by a Blackwater 'special ops unit" to destroy all existing documentation/evidence of his Energy Task Force meetings.

ICEMAN said...

POSSIBLE MAJOR BREAKING NEWS!!!!

Unconfirmed reports of all Banking institutions throughout the entire country have been given a decree to offload all delinquent homes off their inventory!!!

AS OF MONDAY LENDING STANDARDS HAVE TIGHTENED!

All REOS ARE GOING TO BE DUMPED ON THIS MARKET!!

ABSOLUTELY NO LOAN WORKOUTS ARE TO BE EXECUTED!!!

If this is true, the crash in THE STOCK MARKET AND HOUSING MARKET has just went into hyperdrive!

HPrs, talk to loan workout reps or brokers or lawyers to find out if these statements are true. The rumors are flying that absolutely zero loan workouts from here on out.

Source: MARKET TICKER FORUM among others!!!!!!!!!!!

ICEMAN

Anonymous said...

when the living are envious of the dead.

J. Browning

emmy said...

No, not even close.
It will be very different, and with adverse effects. Maybe high inflation will kick in, and you'll be able to own your house, having been paid in inflated dollars. So how do you heat, travel, educate and what about food and health care needs? Government might help some, maybe, what isn't screwed up, but I think some communities will get it together and some will look like parts of Detroit, lawless, will infrastructure uncared for. People lived before with out the oil products binge, it can happen again. But this is downward pressure on our living standards, and that will probably bring some level of civil unrest.

Anonymous said...

Say they put in the stop gaps, and "confidence" returns. Just as things are fundamentally wrong with housing, we many other fundamental problems. The Laws of Nature can be ignored for a while, but not broken. Good news is in every crisis is an opportunity to learn, do it right next time, and with a little luck, we'll end up with a better, sustainable modus operandi. Sadly, we never change without a wake-up call.

j4311 said...

It's not denial: prices won't fall much more in places other than really bubbly places such as Phoenix, LV, Miami, etc. Have you seen some of the McMansions built on desert wasteland in the faaaaaarr exurbs of Phoenix? Those places will come down some but eventually will level out because they'll be considered affordable housing. However, it will be in your life that $100 will be considered as 'pocket change'. The USA must inflate, inflate, and inflate to revalue the dollar downward and reduce the real value of American debt. Other nations will also revalue so as to prevent a recession in their export-oriented economies. Houses will never return to 2.5x wages in some places unless those places are suffering from rampant crime. As for me, I will pay whatever the market demands for a safe place to live AWAY from crime- and drug-ridden areas. Housing will always be shockingly expensive in such areas and that is simply a fact of life! Those who can't afford $500 - $800K for a 'nice' place simply won't live in a nice area. Those who can, will, and won't sell for any less. There are a LOT of people with REAL money in the US - it's just the moronic bumpkins with none who make good new stories. To those with money - $800K for a nice house in a nice area is reasonable, and always will be, until it's more. Priced in dollars, it will be more, too, eventually. So if you measure your store in dollars, good luck. Not everyone measures their store in dollars, however. To some, dollars are simply a conveyance unit - that's all.

Anonymous said...

30 years from now .

Daddy ,tell me again about the Great Housing crash that took place when you were young .

Well son ,it was a very strange time indeed . America got into a financial pickle because a bunch of lenders made loans to people who couldn't pay the loans back on houses they bought . At the same time this was happening ,oil went up in price and the Fed Chairman at the time lowered rates which produced more inflation .America had already spend a lot of money on war regarding that 911 attack I was telling you about.

Corporations weren't giving raises to keep up with inflation and many American jobs were given to other countries that were willing to work for low wages .I won't bore you with a lot of the details ,but the situation got more and more grave as time went on.

Something had to give ,or the very survival of the American Way as a capitalist Country was at stake .

The American people got wise and they voted out all the corrupt politicians and replaced them with problem solvers . They got rid of the Federal Chairman at the time and a guy named Paulson who had a crooked little finger .

The new political group (I forget their names now ) solved the problems that were facing America at the time because they were willing to face them .Political correctness or catering to big business or fat cats was not on the new political regimes agenda .
Some of the cheap energy we enjoy today came out of that period of extreme emergency that had developed .These were very trying times from 2008 to 2018. I can't say that a lot of wealth wasn't lost during that period,and a lot of people ended up going to jail who were really the biggest players in this housing scheme that resulted in the big housing crash ,(I think one of the guys that went to jail was a guy named Mozillo ).

Anyway ,I was really young at the time this all happened . My parents were able to buy a really cheap house during that period of the real estate crash in prices .


Forget it, I'm dreaming .

Lost Cause said...

...getting the picture yet?

Uhh, Yeah...it looks like 2008?

And stocks are not houses.

You mean it won't be like the NASDAQ, which went up to 5000+ and never went back? Or the DOW which has been dead money for 8 years?

Lost Cause said...

When the lowermybills dancers stop dancing. Today they are humping the floor.

Anonymous said...

Smoldering, radioactive ashes...

Any questions?

Anonymous said...

Grandma PK said...
Garden attempts everywhere. Police will be very stressed. Cities won't be able to pay employees; not sure how police will behave..

For more details, just read up on the Depression....

We already know how the police will behave. They are doing it already. You will need a gun, and you will need to sleep by your garden every night because your veggies will be gone in the morning if you don't.

And if you have really studied the Great Depression you know that the entire world turns into black, white and shades of grey.

There will be no popcorn.

JaneZ

oneclickplus said...

Just keep accumulating cash. The bottom is somewhere between 2012 and 2014. This arm reset schedule (http://tinyurl.com/28n2hm) graphic which I'm sure many of you have seen tells the story. The rolling thunder of mortgage resets which translates into ongoing foreclosures, price drops, bankruptcies, credit freezes, financial market crises, stock market turbulence, unemployment spikes and now bank failures is clearly going to continue unabated into 2012. At that point, absolute despondency will linger for a few years. If you have a job where you are contributing to a 401k and you still believe that you should sock away as much as possible and "invest for the long term" - well, you are just getting robbed blind by Wall St. Stop feeding them bastards. Redirect your $$ into an insured CD and let Wall St buckle and collapse. At least that way, you'll have something to retire on. And circa 2012-2014, you can use your cash to buy some investable assets at rock bottom prices.

Nick said...

Anonymous Anonymous said...

Don't ever count America out Keith and HP'ers. The bottom is already here and soon real estate prices will start heading up again, the stock market will go up again and everything will be fine. All of the folks predicting gloom and doom have done so for almost thirty years. It is almost like they want gloom and doom to happen. Once again, our nations greatness will prove them wrong again.

__________

What universe are you living in, Bozo? Been watching Hannity or some clown like that?

July 17, 2008 10:16 PM

Hey asshole, I am a patriotic American who believes in our economic, social and political system. Unlike you, I have faith in our nation. We will pull through this crisis and emerge as even a wealthier nation. The rest of the world has no other option than lend us money because we have the world's largest economy. Let me repeat that you nucklehead WE HAVE THE WORLD'S LARGEST ECONOMY.

Nick said...

Blogger keith said...

"soon real estate prices will start heading up again"

Nick, Nick, Nick. Where do we start?

It's impossible and illogical to think that house prices would go up anytime soon.

* Massive swelling inventories
* A wave of unending foreclosures
* Severe tightening for lending
* Job losses
* Loss of confidence

I could go on, and on, and on.

Home prices not only aren't going to be going up, they have much further to fall.

Please, humor us though, make an argument for how home prices could go up soon. Seriously, give it your best shot.

We're waiting.

July 17, 2008 6:48 PM

Ok Keith, you asked for a rebuttal and here it is. America has the world's largest economy at almost 14 TRILLION DOLLARS. No one even comes close. Americans also have a TOTAL NET WORTH OF 50 TRILLION DOLLARS according to the Federal Reserve. So we have enough money to weather this economic storm that is coming. We are not like Bangladesh Keith. We are in good shape.

The world will continue to lend money to us and thus interest rates will continue to stay low. We are trusted around the world and that is why people put their money where their mouth is. With interest rates being low, the coming recession won't be that bad.

Look at history as our guide my friend. Every single time people have counted America out, we have roared back stronger, smarter and more capable than ever. We are a special lot in this world. We are ingenious, creative, intelligent and know how to weather hard times. While most nations and cultures falter, we look towards to these challenges and come out better than ever.

For the above reasons I outlined, I believe that the housing market won't come crashing down like you hope. Remember, people like you predicted a crash of stock prices. And look at stock prices today, granted they haven't gone up, but they have not crashed either.

Shirin said...

These bubbles have happened before. I think we might see bottom of the housing market sometime in late 2010, as the Fed will be forced to raise rates severely in order to combat hyperinflation the moment this election is over. (Them furriners just aint willin to buy our inflation anymore, Pa.) That will mean that the banks will have to tighten credit, and the recession will greatly worsen, crashing the stockmarket. There will be maybe a maximum of 2 years of combined depression/hyperinflation, as all our fiat money comes flooding back into the US, and then the US government will welch on its outside debt, claiming that it has been targeted by a cabal of terroristic counterfeiters, (true, but they happen to be at the Federal Reserve), will nationalize critical industries, will freeze all accounts, and will pay its internal debt off in a new fiat currency, possibly backed by "American Infrastructure" ala the Weimar Republic. This will end the globalism experiment. Walmart stock will really suck. Things will be kinda bad for awhile, but it'll turn around by around 2020 latest.

Anonymous said...

"Source: MARKET TICKER FORUM among others!!!!!!!!!!!"

So one rumor on a rumor mill board becomes breaking news on another rumor mill board.

The chances that all banks will follow some sort of mythological "decree" from some levithian with the power to compel them to do so is zero. The banks will continue to do workouts, continue to belt tighten, and continue to keep all the bastard lawyers busy with years of workouts to come.

Paul E. Math said...

L-shaped bottom. 2012.

Have a look at a chart of the different kinds of mortgages and when their rates reset. There is a bit of a valley in resets next summer so watch for a lot of clamour as there is a temporary lull in the foreclosure rate.

However, there is a big spike in option arm resets coming in 2011. And you know those option-arm mortgages were the worst of the worst. Also known as 'pick-a-payment' you could have a $1M mortgage and be paying just a few hundred a month on it. The rate of foreclosure on those will be astronomical, even compared to the recent subprimes.

Don't try to catch a falling knife.

Futurist said...

"Don't ever count America out Keith and HP'ers. The bottom is already here and soon real estate prices will start heading up again, the stock market will go up again and everything will be fine. All of the folks predicting gloom and doom have done so for almost thirty years. It is almost like they want gloom and doom to happen. Once again, our nations greatness will prove them wrong again."

I agree and disagree. I agree that things will not be as bad as HP'ers think, but I also disagree that homes will start going up again in the near future. People are just too gun shy, I think renting is going to reach a peak, and many of the investors that own property currently, and bought it correctly, will reap a good dividend in the coming years. The psychology about home buying has changed, from the banks as well as from the buyers. The fly by night "investors" have either been foreclosed or have walked, and the only ones left will be real investors that are well capitalized and frankly don't care what the paper value of their property is as long as the rent checks are steady. It can be argued that with housing prices going down, that it will be more affordable, but the problem with that is the credit crunch. Banks are not loaning money unless you have 20% or in the case of investor loans, at least 30% down and a history of landlording (at least to get even close to a prime loan) this wittles down competition nicely for landlords that hold good property right now. Renting will be the way to go for years simply due to the higher downpayment requirements and lack of liquidity. Prices will reach a bottom and then just stay there once the foreclosures taper off. investors will beat inflation through rent increases (although with wages stagnating - that could be dicey) There are just a lot of people who will not sell, and don't have to, and also the homebuilders will be mostly bankrupt so new inventory will be non-existent once the excesses are burned off (most are in exurbs anyway which is of no worry to good landlords with inner-city non-exurb property). But with 20% down payments being the norm, and Americans barely having a $1000 dollars in liquidity let alone a 20 or 30% down payment on even a house costing $100,000 - renting for a deposit of $900, and being able to have a backyard and the home "lifestyle" without the big cash outlay will become a very popular choice and a new norm.

As far as the stock market goes, it is anyones guess. Because most of the players in the market now are hedge funds, day traders and the quick buck guys, every media report will trigger an up or down market. Fortunately, I think that we have lost most of the scared money already, and now it is the people with stronger intenstinal fortitude. They don't break easy, but the shorts still have some feasting to do on oil and some banks. My bet would be on Natural Gas, Infrastructure, and maybe small amounts of alternative energy (Wind Solar). Anything else, probably is going to get you broke. On Natural Gas and Alternative Energy, let a couple of corrections happen, but then buy slow. The country has no choice but to build out failing infrasturucture in the coming years, and Natural Gas is really the only fuel that burns clean(er) and is abundantly available in the US without any congressional BS required. Even the Environmentalists like it.

Just my humble opinions - then again I could be totally wrong and we all die a miserable death - unlikely though.

Somewhat surprised said...

"As a result, I see improved sales in the second half of this year. Prices are more difficult to predict. More transactions have been occurring on the lower end. But we may begin to see more sales in the higher end with falling rates on conforming jumbo loans and from the chain-reaction factor."

I think that Lawrence and the National Association of Whores - oops Realtwhores is a hack, no question. However, he actually has been right (at least here in Phoenix). The prices have been ugly, but the volume has been off the charts. I am amazed at how sales have pcked up (mostly in closer locations, the far suburbs are ghost towns still). I have heard many explanations - Canadians hedging their bets on the Dollar, more affordibility so those that sat on the fence are buying to avoid the coming inflation fighting of the fed (if they ever fight it) etc.

Point being, as much as I hate the NAR, Lawrence actually has the figures (at least locally) to back it up this time (rare).

Gas is good said...

"Oil takes a tiny dip and you think that "bubble" has popped. It's not a bubble, by the way -- despite declining US demand for oil, GLOBAL demand continues to grow and supplies continue to shrink. While demand grows faster than supply, WE DO NOT HAVE A BUBBLE.

Those as ignorant as you will be soon be educated in painful ways."

I agree on one point - we do have an oil problem, however the consumption picture is in decline, but will not crash like a normal bubble. Here is why - simple demand. China is going to make gasoline quite expensive for it's citizens in the next month running up and during the Olympics because they do not want the world to see their filthy skies. Crude consumption by China will be cut in half by government mandate. Remember, they are still a communist country. Don't believe me - think about this: they are actually shooting missiles in to the sky to induce rain to clean the air during sporting events. That of course does not change the fact that you have a growing country of a Billion plus people who are going to own cars well in to the future and consuming oil with their morning donut in the future.

This drop may be painful in the short term, but will be profitable in the long run. Just buy while it is low.....lots of good prices in energy soon folks while the short term guys are panicked out and the long term guys buy more.

Anonymous said...

when rent to buy ratios get back to historical numbers. this number varies by city. in some areas it's already there. in some others it has a long way to go.

Anonymous said...

bottom is here in both stocks and housing. how do i know? because every tv station, newspaper and internet site is now saying don't buy houses and don't buy stock. which means it is the time to buy houses and buy stocks. you don't make money following the herd.

Anonymous said...

ICEMAN:

Get back on the meds dude. For your safety and mine.

wings said...

As the great economic wave of Kagunga makes itself known and felt in ripples of fear and trembling many things will happen, my children.

For one, people will start eating more burritos.

Why, you ask?

Well, because they are simple, cheap and nice to have around the house.

As a result of the panic and anxiety, coupled with vigorous consumption of burritos by the masses, much gas will be passed.

If we could only find a way to harness the flatulence, we might be able to aleviate some of the pressure in the manipulated energy market.

Now, that being said, there is much, much more catastrophe that awaits.

Oh, yes, houses will come down in price.

Men will become mice and probably end up farming rice in Thailand. But what of it?

Agrarian reformers have been calling for a reversion back to loincloths and whole earth living since the '60s.

What do you think all those hippie communes and nude beaches in Northern California are all about?

They're about rebalancing the Kagunga energies into a holistic synergy of peace, love and bon vivant!

You cannot tamper with the Chi flow of Mother Nature and not be punished. And now that time has come, my son!

You've all lived well! You've driven Hummers, and owned McMansions and drank wine and led frivolous lives of whimsicality, episodes of brief nudity at wild real estate parties, and concupiscence with loose mortgage broker women.

Now the time to pay the piper has arrived and you will be left holding the bag.

The financial cat's out of the bag and his sharp claws dig deep: your $100K+ real estate "career," on a mere C average high school education, is giving way to the reality that you must now toil for your bread.

Pick up a phone and telemarket for $8.00 and hour.

There, that's better.

See, taking the bus and living in a neighborhood where illegal aliens live better than you because they get free stuff from the government, while you slave for $8 and hour, is the new order of things.

Get used to it.

For Greenspan hath declared it: Kagunga!

Anonymous said...

Well folks, we already have examples of the bottom.

Look at Brazil in the 80s, high unemployment, stagflation, high security sections of towns like LeBlon, in Rio, with reasonable RE valuations while the rest of the city's neighborhoods become worthless and slum-like (a.k.a. Favela in Brazilian Portugeuse). In other words, a bifuricated society where some people have work or inherited/landed wealth, and a measurable way of life while a majority suffer with job losses and underemployment.

This hasn't occurred yet, as some middle class Americans still have jobs so that educated, middle income towns like Boulder Co exist, which are reminiscient of the good old days, etc. In the future, those pristine towns, like Stowe Vt, Bar Harbor ME, Aspen Co, will be for the well off and won't allow in newcomers without a background/credit check. That's the time when one leaves "the oasis" to explore let's say, Denver, that the carjackers are lined up at the stop lights, etc, and it won't only be another LA downtown retelling but a common occurrence, everywhere, where it was once safe and secure.

That's the bottom and we've got to wait until $5.5 oil, official 8-10% unemployment (real ~18%), the basketof non-EURO currencies (AUD/CAD/JPY) to USD to go up by another 25-50% and then we're there.

Anonymous said...

"The world will continue to lend money to us...We are trusted around the world..."

Craving a repeat, are they?

j4311 said...

Yeah folks -- it's fun to read the gloom and doom but you all must be in your 20s and never experienced the early 80s or early 70s... I've been there. You are all bashing Nick but he has a point: while the average cost of living might decrease for some, it won't decrease for all Americans. I live abroad at present, but when I move back and need to buy a home, I will want a nice home in a nice area and expect to pay a minimum of maybe 600K for this - I'll be ready too. There will be (and always have been) slums where I can live much cheaper but why should I? Inflation is a reality - but it always affects the poor more. If you have an income over $250000 you don't really care what milk costs and can afford $10 gas too -- hell here in Asia it's $8 and there are cars everywhere! To all doomers: it just won't be as 'bad' as you all think. You should ask yourself what put the fear in you. America lives in fear these days - it's palpable! Maybe you'll gain some resilience in your future after experiencing this bear market and recession.

Anonymous said...

The thing is, most people won't even know what it looks like when it happens. They will be optimistic when gas temporarily goes "down" to $10 a gallon.

The thing is, there are a lot of people that don't listen to you, Keith. But screw them; the only time you are going to get any attention from these people, is when they come home one day to find a big red sign on their lawn that reads "Foreclosure" with their shit packed in a garbage bag right next to it.

Some won't even wake up after that. It won't be until people are killing each other over a loaf of bread. For some people I honestly think it would take nothing less than that.

But I, and others like me, really appreciate the work you do. Ignorace is NEVER bliss, and you are always making a difference by informing others. If it was up to the fuckin media, nobody would be aware of anything other than sports.