tag:blogger.com,1999:blog-18675105.post1688358509106486508..comments2023-12-30T10:06:37.450+00:00Comments on HousingPANIC - The Housing Bubble Blog with an Attitude Problem, 2005 - 2008: Regressing Toward the Mean: Here it is folks - the dirty list of how far real estate prices could/should crash city by citybloggerhttp://www.blogger.com/profile/06585266242070350399noreply@blogger.comBlogger44125tag:blogger.com,1999:blog-18675105.post-33049436855732790172007-07-03T04:37:00.000+01:002007-07-03T04:37:00.000+01:00jellybelly said... "Prices have come down about 10...jellybelly said... <BR/>"Prices have come down about 10 percent here. People are still buying. Maybe prices will suddenly unstick. I hope so, because I am renting (I'm no genius, but I can do arithmetic). I'll be waiting on the sidelines, socking away the money I save by renting against the day I can finally afford to buy."<BR/><BR/>Sorry Bubba, you're gonna be whipsawed by the Crack-up Boom. It's a term coined by Ty Andros to describe the unfolding scenario as credit becomes more important than the assests it finances. All this was predicted by long dead Austrian economists, Mises wrote:<BR/><BR/>"This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy. But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against "real" goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them. "<BR/><BR/>HPers hoping for that big drop in home prices are going to be bottom fishing -- most will be whipsawed when prices suddenly skyrocket. Their rents will increase dramatically at the same time houses are priced out of reach. Then the whole thing collapses and currencies are revalued.<BR/><BR/>http://tinyurl.com/36s96m <BR/><BR/>July 01, 2007 2:18 PM <BR/><BR/>--------------------<BR/><BR/>Gold, silver, and oil, and shares of the companies that produce them, will go up much much faster than overpriced housing. So home prices will indeed drop - in terms of real money (gold and silver).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-51690792658392833212007-07-02T22:43:00.000+01:002007-07-02T22:43:00.000+01:00Interesting that no one's commented on the analysi...Interesting that no one's commented on the analysis that follows the table of % declines:<BR/><BR/>If you are hoping to buy a home soon, compare the value of new homes to resale homes. Home builders cannot afford to have their homes sit on the market for months like most homeowners can. Builders, and particularly the largest builders, have been aggressively improving the value of their homes to sell them. Reduced prices, along with 6-7% fixed mortgage rates, might be a buying opportunity you may never see again.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-63540301547294455192007-07-02T15:04:00.000+01:002007-07-02T15:04:00.000+01:00Seattle and Portland were late to the game, so the...Seattle and Portland were late to the game, so their price corrections will be getting started in the second half of this year. Prices are flatlining here now, inventory continues to slowly rise, your seeing more new developments giving incentives to buyers, and flippers have left the market or are staring to panic.<BR/><BR/>Right now in Seattle, there are construction cranes everywhere. Bellevue has something like 13 construction cranes right now within a few block radius. Downtown Seattle you can't spit without hitting a crane.<BR/>Thousands of condos will be flooding the market in the next 18 months. All of these projects are ofcourse "luxury" condos where starting prices are 400K for a studio/1 bedroom and up.<BR/><BR/>I generally agree with the number posted on this article. Seattle is at least 30% overpriced right now v.s. the economics of this city. Salaries are nowhere near what you find in Cali for comparable jobs. Seattle is filled with a lot of california transplants which fuels the delusion. But because of that delusion and the stuipid ex-california transplants, while I see some price correction happening in Seattle, it won't be 30% unless the region goes into recession. 10 to 15% correction seems more likely unless some major recession happens.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-74514117268082011232007-07-02T14:50:00.000+01:002007-07-02T14:50:00.000+01:00DC is different? Yea, um, right. The government is...DC is different? Yea, um, right. The government is flush with money right? I suppose as long as we let them keep printing it and people keep swallowing BS inflation numbers. <BR/><BR/>There was an 15 story office building right outside DC beltway, finished in 1991, it was empty for about 6 years!<BR/><BR/>If you don't see DC prices falling, you are not paying enough attention. Stop listening to the media folks and see with your own eyes, comparing apples and apples. The shoebox house you could have bought for 550K back some years will now get you something pretty damn impressive just 5 miles outside the beltway. the bubble pops in the outer circle first and moves inward. If you are the exurbian super commuter type, you will find houses going for 40% of their top level prices with the next 2-5 years. <BR/><BR/>House price = Land price + cost to build. Cost to build is going down with enhanced manufacturing automation and reduced demand for supplies. Wait until the far east boom subsides and the west enters the next recession. So that leaves land price, if you are in the nicest areas inside the beltway, OK, prices will be fairly stable. But the outlying areas still have ample land.<BR/><BR/>Also, remember that in addition to civil service workers, most of the inner DC area is recent immigrants making 35K per year. The resets have just begun...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-33154296309145264362007-07-02T14:18:00.000+01:002007-07-02T14:18:00.000+01:00"It sounds to me like we already had a "Crack-Up B...<I>"It sounds to me like we already had a "Crack-Up Boom."<BR/><BR/>Did our long-dead Austrian economist have any thoughts on what comes next?"</I><BR/><BR/>Sure, what comes next is a DJIA at 100,000, but a loaf of bread costs $10, when you can get it. The economy based on paper money and electronic transactions breaks down amidst this financial "boom". To sustain the illusion of growth, credit has to be created in amounts so great that people no longer trust the value of the currency. <BR/><BR/>We are still in the early stages of the Crack-up Boom - bread only costs $1 a loaf, up from 75 cents last year.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-63899916052383476512007-07-01T23:00:00.000+01:002007-07-01T23:00:00.000+01:00"Sorry Bubba, you're gonna be whipsawed by the Cra..."Sorry Bubba, you're gonna be whipsawed by the Crack-up Boom. It's a term coined by Ty Andros to describe the unfolding scenario as credit becomes more important than the assests it finances. All this was predicted by long dead Austrian economists ..."<BR/><BR/>It sounds to me like we already had a "Crack-Up Boom." <BR/><BR/>Did our long-dead Austrian economist have any thoughts on what comes next?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-57665483452522288062007-07-01T17:47:00.000+01:002007-07-01T17:47:00.000+01:00"yeah, alot of people are buying because of the BR..."yeah, alot of people are buying because of the BRAC realignment supposed to bring tens of thousands of high-paying jobs to the baltimore area."<BR/><BR/>The BRAC talk is way overplayed to distract people from the fundamentals. Housing bulls here need something to hang there hat and this fits into the "we're different" line of thought. Also, The Sun (local newspaper) is a completely useless propaganda machine that trumpets. Although the areas around the 2 bases will gain some population, the run-up has already happened. <BR/><BR/>Also Baltimore is a city that has hemoraged 10,000's of private sector jobs over the last 8 years with major firms sold and leaving the state. It continues to post anemic private sector growth in spite of strong national growth. In spite of the thousands of spec condo units built on the harbor, the city still managed to lose population last year. It has not a single school that educated parents would send their children to and charges 2.25% of property value for "city services". <BR/><BR/>Due to its left-wing politics and taxation, MD is also a fundamentally unattractive place to do business. Politicians here are downright hostile to private industry. As a result, growth only comes from contractors, unprofitable healthcare start-ups, and others looking to be on the teet of the gov't.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-38137902168735622562007-07-01T16:46:00.000+01:002007-07-01T16:46:00.000+01:00Keith,do you have any opinion on the "SRS" ETF whi...Keith,<BR/><BR/>do you have any opinion on the "SRS" ETF which supposedly shorts a DOW real estate average and goes up 2% for each 1% drop in that average? <BR/><BR/>tks,<BR/>MacacaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-24398912585033827182007-07-01T16:44:00.000+01:002007-07-01T16:44:00.000+01:00I keep hearing that same BS excuse about DC being ...I keep hearing that same BS excuse about DC being "special" because of the fed. Most govt. workers get paid poorly, new ones were priced out of DC, and Fairfax and Montomery countines years ago. Most live in down in Fredericksburg and do the I95 carpool crunch. <BR/><BR/>yeah, alot of people are buying because of the BRAC realignment supposed to bring tens of thousands of high-paying jobs to the baltimore area. i know one young guy (max salary in military for him would be about $40,000) who bought a townhouse for $475K last year with that in mind. my question is what happens when the govt budget crunch results in cut backs or postponing implementation of the brac rules (they are "mandated by law", but who's to say they can't be "unmandated" due to a budget crisis?). <BR/><BR/>MacacaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-82757581274301323772007-07-01T16:12:00.000+01:002007-07-01T16:12:00.000+01:00Home prices still going up in Portland! Rents pro...Home prices still going up in Portland! Rents projected to go up 8.5 percent this year and another 6 percent in 2008. The current issue of Apartment Manager has a headline "Investors Strike Gold!"<BR/><BR/>Bitter renters like me are the only ones panicking here!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-896654335875557092007-07-01T15:18:00.000+01:002007-07-01T15:18:00.000+01:00"Prices have come down about 10 percent here. Peop...<I>"Prices have come down about 10 percent here. People are still buying. Maybe prices will suddenly unstick. I hope so, because I am renting (I'm no genius, but I can do arithmetic). I'll be waiting on the sidelines, socking away the money I save by renting against the day I can finally afford to buy."</I><BR/><BR/>Sorry Bubba, you're gonna be whipsawed by the Crack-up Boom. It's a term coined by Ty Andros to describe the unfolding scenario as credit becomes more important than the assests it finances. All this was predicted by long dead Austrian economists, Mises wrote:<BR/><BR/><B>"This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy. But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against "real" goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them. "</B><BR/><BR/>HPers hoping for that big drop in home prices are going to be bottom fishing -- most will be whipsawed when prices suddenly skyrocket. Their rents will increase dramatically at the same time houses are priced out of reach. Then the whole thing collapses and currencies are revalued.<BR/><BR/>http://tinyurl.com/36s96mAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-7552137511855121252007-07-01T11:54:00.000+01:002007-07-01T11:54:00.000+01:00I don't see D.C. area prices coming down that dras...I don't see D.C. area prices coming down that drastically, although the WaPo had a story yesterday about affluent suburbs seeing a rise in foreclosures. But then it devolved into a "pity the poor immigrant" lament. <BR/><BR/>A dump truck driver and his wife, (she cleans houses and doesn't speak English), "bought" a $549,000 home. That's just insane. I probably make more than they do combined, and I can't afford half that amount of house. Seriously, folks, math is math in any language.<BR/><BR/>This in not solely a boo-hoo immigrant story. The reporters do everyone a disservice by making it seem that way. <BR/><BR/>Prices have come down about 10 percent here. People are still buying. Maybe prices will suddenly unstick. I hope so, because I am renting (I'm no genius, but I can do arithmetic). I'll be waiting on the sidelines, socking away the money I save by renting against the day I can finally afford to buy.<BR/><BR/>I just hope the investor/landlord who bought the place I rent (way back in 2002) doesn't decide to sell out from underneath me until the fundamentals make a comeback in this area.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-7565246046496939782007-07-01T05:54:00.000+01:002007-07-01T05:54:00.000+01:00Good f cking luck with these numbers.But if it doe...Good f cking luck with these numbers.<BR/>But if it does drop this low I would be buying up everything in sight.<BR/>(in los angeles that is)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-34672060006271514142007-07-01T04:30:00.000+01:002007-07-01T04:30:00.000+01:00I'd love to see a separate number for Scottsdale, ...I'd love to see a separate number for Scottsdale, Arizona where 56% of loans in 2005-2006 were interest only, option-arm nonsense.<BR/><BR/>The 24% projected for Phoenix is *way* less than what's going to happen in Scottsdale. And Scottsdale's mess probably hasn't skewed Phoenix's number down at all because Scottsdale accounts for only 5% of the metro Phoenix population.<BR/><BR/>www.scottsdale-sucks.comFrank Rhttps://www.blogger.com/profile/07625929422222490759noreply@blogger.comtag:blogger.com,1999:blog-18675105.post-90401217859548835722007-07-01T03:11:00.000+01:002007-07-01T03:11:00.000+01:00Old Timer said... How many people who sold in 2004...Old Timer said... <BR/>How many people who sold in 2004-2006 actually got out of the game? I am willing to bet that at least 80% of those financial geniuses plowed it all back into more/bigger overpriced real estate. People who took out a HELOC are now indebted for life. You can walk away from a mortgage, but you can't walk away from a HELOC. <BR/><BR/>I'm out of the game and all in cash. Self employed with a falling income. Been here, done this. GONE FISHING! You can find me in the woods and on the street. You assume I have nothing and I like it that way!<BR/>--------------------------------<BR/><BR/>Yeah-this is the guy we all can learn from.I'm broke too.HehHeh.<BR/>Keep posting.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-79486518662506351902007-07-01T03:04:00.000+01:002007-07-01T03:04:00.000+01:00Keith Eureka I just figured out why we are stuck i...Keith Eureka I just figured out why we are stuck in denial, its the most important equation since e=MC2!!<BR/><BR/>GREED + REALITY = DENIAL!!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-45577892276713072082007-07-01T02:15:00.000+01:002007-07-01T02:15:00.000+01:00I keep hearing that same BS excuse about DC being ...I keep hearing that same BS excuse about DC being "special" because of the fed. Most govt. workers get paid poorly, new ones were priced out of DC, and Fairfax and Montomery countines years ago. Most live in down in Fredericksburg and do the I95 carpool crunch. <BR/><BR/>There is some propping of the housing market inside the beltway and downtown, but it won't be much.<BR/><BR/>Outside of the beltway it's gonna be pain. In Montgomery Co MD everything from Rockville on westward is gonna get hit. In Frederick MD Urbana and Adamstown will get wacked. And in VA, western Fairfax and Loudoun are gonna get burned hard.<BR/><BR/>No amount of gov't jobs and contracting is going to save Loudoun county from gettings what's comning to it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-11651490552872157262007-07-01T00:27:00.000+01:002007-07-01T00:27:00.000+01:00Anonymous said... I don't understand why Honolu...Anonymous said...<BR/><BR/> I don't understand why Honolulu isn't on his list.<BR/><BR/> June 30, 2007 4:54 PM <BR/><BR/>Because it's paradise.<BR/>Its an island.<BR/>They aren't making any more land.<BR/>Everybody wants to live there.<BR/>Real Estate always goes up.<BR/><BR/>Hahahahhahahhahahahha.<BR/><BR/>I was there in 1993 when they were saying the same things. Then the market tanked by nearly 50% in many areas. <BR/><BR/>You can get a 50 year old, single wall construction, termite infested, bug infested, wood rot, mold covered, screen door shack for 700000 and up in Honolulu right now. Oh, and the jobs pay about 1/2 of that on the "mainland". Honolulu's median income is something closer to 60K. <BR/><BR/>Lucky you live in Paradise baby!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-31046202443828505472007-07-01T00:23:00.000+01:002007-07-01T00:23:00.000+01:00Seattle sucksSeattle sucksAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-22856007011437320332007-06-30T22:34:00.000+01:002007-06-30T22:34:00.000+01:00We here in the State of Confusion I mean Colorado ...We here in the State of Confusion I mean Colorado are just starting to wake up. Regressing to the mean here will hurt like hell. Housing starts are down almost 50% from peak and dropping. MLS is up 56% since May 2005. They built way to many McMansions here and these crap boxes aren't selling. The malls are empty and so are the Walmarts and Sam's stores. When was the last time you were the only one in line at Walmart in the middle of a Saturday afternoon?<BR/><BR/>I sold last year and have tons of puts in the stock market and bonds in europe and the UK. Look for this to last 15 years at least. There are alot of people out there that would never buy again even if their credit would let them. Once bitten twice shy.<BR/><BR/>sequoia512Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-14592832503278509022007-06-30T22:31:00.000+01:002007-06-30T22:31:00.000+01:00Very true.Prices could drop even further.Followed ...Very true.<BR/><BR/>Prices could drop even further.<BR/><BR/>Followed by the fall will be massive unemployment which will sweep the nation in waves - across many professions.<BR/><BR/>It always takes time for people to get back on their feet first before they are ready to tie themselves once again to the debt machine.<BR/><BR/>The problem is, we're running out of time to make changes needed for this country to function as it should.<BR/><BR/>No sense trying to predict bottom - we'll all feel it when we get there.<BR/><BR/>Anonymous said... <BR/>In a bust, prices drop BELOW the long-term mean. I'd say add another 15% off to get the true bottom. And that's assuming the whole economy/dollar/debt market doesn't implode along the way.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-75715553714589597582007-06-30T22:04:00.000+01:002007-06-30T22:04:00.000+01:00How many people who sold in 2004-2006 actually got...<I>How many people who sold in 2004-2006 actually got out of the game? I am willing to bet that at least 80% of those financial geniuses plowed it all back into more/bigger overpriced real estate. People who took out a HELOC are now indebted for life. You can walk away from a mortgage, but you can't walk away from a HELOC. </I><BR/><B><BR/>I'm out of the game and all in cash. Self employed with a falling income. Been here, done this. GONE FISHING! You can find me in the woods and on the street. You assume I have nothing and I like it that way!</B>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-18542837020448543892007-06-30T21:35:00.000+01:002007-06-30T21:35:00.000+01:00"How many people who sold in 2004-2006 actually go..."How many people who sold in 2004-2006 actually got out of the game? I am willing to bet that at least 80% of those financial geniuses plowed it all back into more/bigger overpriced real estate. "<BR/><BR/>Nope...plowed it into gold and silver.<BR/><BR/>Won't be long now before this pays off as well.Roccmanhttps://www.blogger.com/profile/13941353492023923157noreply@blogger.comtag:blogger.com,1999:blog-18675105.post-73896292672959301442007-06-30T21:25:00.000+01:002007-06-30T21:25:00.000+01:00If even a 10% price cut is prolonged over a 5 year...If even a 10% price cut is prolonged over a 5 year period (3% inflation x 5 = 15%) then we really have a 25% inflation adjusted decline. Most people around SD who are still holding on to property (renting at a loss) are hoping the market will turn around in a few years. It is now just a slow grinding way down - each week another few give up. . .then houses/condos stand empty 6 months while the banks decide what to do with them. . .the big push by banks will be in November to get these off the books by Dec. 31.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-2964886718519289002007-06-30T21:14:00.000+01:002007-06-30T21:14:00.000+01:00Everyone realizes that 20% to 40% price declines w...Everyone realizes that 20% to 40% price declines will devastate the local economies, will force tens of millions into bankruptcy and foreclosure, and will cause economic devastation around the nation<BR/><BR/>Right?<BR/><BR/>Margin is great on the way up. The housing ATM sure was fun, we could go out and buy anything we wanted with the money raining from the sky!<BR/><BR/>But leverage really fu*king sucks on the way down. And it's no fun when they cut off the debt spigot<BR/><BR/>Get ready. Get seriously ready.<BR/><BR/>I'm spending tomorrow determining what other REIC and financial stocks to short (been like fish in a barrel lately), and how to better protect the savings I have<BR/><BR/>But I'll still lean toward manias, panics and crashes: Cash is King<BR/><BR/>Just not all US$bloggerhttps://www.blogger.com/profile/06585266242070350399noreply@blogger.com