Work with me people, work with me...
And remember, this crash doesn't end until the majority of Americans find their way to "Despondency".
In other words, thanks to cheerleaders at the NAR, the ramen eaters and rolodex-of-reators Catherine Reagor, we've still got a long, long, long, long way to go.
Unfortunately, I think we're still somewhere between Denial and Fear.
March 28, 2008
Been awhile. Let's do it. Where are we now?
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Long time reader, first time caller.
In the land down under, Australia, everyone is still firmly in the euphoria stage with perhaps the barest hint of worry.
With Perth (you know, that pimple on the butt of the world) now one of the most expensive places in the world to buy a shack.
Cheers
Fritz
Denial for most (those who's ARM's are yet to reset)......fear for some.
Still early stages Keith.
I actually went through the despondency and depression stage ending about last January. Now with all the free dough being given out by the fed for garbage bags of delinquent mortgage loans I am close to entering the "hope" part of the cycle.
We need an interactive world map for that!
I'd paint Russia with anxiety, Eastern European countries with desperation, and UK/Spain with panic.
In my neck of the woods, near Baltimore, MD, I would have to think we're in the Fear stage. Hearing people complain about the economy that I did not hear just 6 months ago. More for sale and foreclosure signs. I know families that are splitting up.
But nationally, I have to believe that we are at the Desperation/Panic stage. Look at the Jan swoon of the Dow, Bear Stearns (and most importantly, the WAY Bear went down so quickly on Sunday). Look at the Stimulus, which went through quickly (for Washington.) Grasping at straws is a sign of desperation bordering on Panic. And naturally, the dumbest, most cutting edge morons in Clownifornia, Nevada, and Florida are leading the way down and have already hit bottom. Others moving toward capitulation. Their stupidity has dragged the "What, me worry?" crowd from Ignorance is Bliss to "OH MY GAWD, HOW WILL WE GET REELECTED IF THE SHEEPLE AREN'T FOOLED?"
Housing Panic is here, at least nationally!
Some in denial
Most in fear
A few approaching desparation
"Mild Recession" talk means we are still in the denial phase.
DENIAL, DENIAL & DENIAL (i think we are stuck in that loop)
As a REIC insider, I agree with Keith. I too believe we are somewhere between Denial & Fear.
I'm seeing lots of homeowners refusing to believe their homes could have gone down in value. But they are getting worried.
The banks that have all these REO homes they have taken back in foreclosure are starting to dump them at low prices so they are not left holding the bag.
Based on first-hand experience the suburbs of Tampa are still in denial:
1. Our HOA passed draconian new deed restrictions overwhelmingly in the belief that this would save property values. The people pushing hardest for the rules changes could be poster children for "f*cked buyers" -- Boomers, HELOC addicted, lots of toys bought with borrowed money.
2. A reasonable *cash* offer I made recently on a piece of land outside the county's urban service boundary was rejected despite the fact that I was gaving the owner a 50% profit on his 2005 purchase price. He wanted 150% return on a three year investment.
Yep. Still in denial for the mos part.
Used to be, housing never goes down. Now it's well housing may go down, but not MY house and not MY neighborhood.
I showed a riend of mine from Orlando a chart showing Orlando's median price free fall. His reply was yea, but that's areas X Y and Z. My area is different because.........
I didn't feel like getting into it so I dropped it. But man, it surprised me that even now, 2 years into this thing, and especially in Florida there is still so much head in the sand.
In Florida it all depends on who you ask. People in the Real Estate Insdustry: Buiders, Loan Officer, Brokers and RE Agents are in the at the Fear Point (some still in Denial).
I think we're somewhere between fear and desperation. We're definitely not in the denial stage anymore, what with the MSM reporting precipitous drops in national home prices and major banks going under. I don't think we're in full-blown panic either, since Joe Six Pack still hasn't put his Hummer on Craigslist. This point may come in the next 12 to 18 months as the bulk of ARMS reset, more financial institutions go under, and the overall economy goes into the toilet.
Desperation arriving in CA, FL, AZ.
Fear in most other areas.
Denial still in a few places... DC,NY, Boston.
In Pacific NW they are still just coming over the top of the curve.
Remember all real estate is local.
Its always a great time to buy.
Is there an enjoying the thrill of free fall phase?
FEAR................
Dny
I would say in America, we are depending on your situation, somewhere in anxiety, or denial. People have really not cut back yet. Just like an alcoholics, we will deny until we bottom out. Bottoming out is a slow painful process. How may of you remember a time when credit was hard to come by?
I would think we are in a panic at this time however the uneducated are still in denial with no clue of what is going on. In general people don't want to hear it. They think I am not a happy person. As long as the weather is nice and Idol is on then don't worry be happy!
Rich in fl
Yeah, I'd say the suits are heading for desperation but the proles are still in fear.
I disagree with the entire premise of this chart.
I agree that the talking heads, the professionals, and the "experts" are somewhere between the denial and fear stages.
However, J6P is not even on the chart because the chart presupposes that people actually think about these things and at least somewhat care or follow market events.
"Retarded" is not a stage on the chart, and that's where the large majority of people are. I think that's why whenever you post this chart (for well over a year now), the consesus is that we are still in the denial stage -- "denial" is the closest thing on the chart to "clueless".
By the way, Pierce is the new Celebrity Apprentice!
Yep, between denial and fear. However, I think the move to fear will be sudden and soon. We've hung on to denial as long as we posibly could. God Bless the Sheeple, for they were truly duped in every stage. They've been taught to invest for long term, trust their financial adviser, diversify, and their nest eggs will be fine in the end. Little do they know what is lurking underneath the economic surface. My Grandmother and Parents refuse to move investments out of the dollar-based safe-havens they've had for 30 years. Without almost having a PhD in economics, how are they supposed to fully understand what is going on right now. I can understand why they would resist such a change, they have weathered ups and downs for years and always come out ahead. Their investments have always proved trustworthy in the end. But now is different I tell them and they don't believe me. My Grandparents were farmers and paid cash for everything all their lives and saved every penney. She doesn't deserve to have her savings wiped out as I fear will happen.
Denial bleeding into fear.
I think the US is in fear. To trip the wire into panic, we need a couple of major unexpected failures that can't be papered over the way Bear Stearns' was.
I've been predicting Citi as the trigger, and I'll stand by it. I thought April of this year would be the end of Citi, but it's looking like a more protracted crash.
Denial, promoted by the fed, edging toward fear. Maybe panic in the peak bubble areas, maybe.
fear
.
75% in Denial
20% fear
5% desperation
Where?
SoCal local
.
I think were in a quagmire wrapped in fear and desperation.
An illegal and private bank like the Federal Reserve shouldn't be buying out Bear Stearns with straw buyer.
YOU HAVE TO CHECK THIS OUT! Americans are having a hard time changing dollars into Euros in Amsterdam. Not Zlotys or Pesos... Dollars. Watch it fall baby.
http://www.reuters.com/article/ousiv/idUSL1758265520080317
IMO, anxiety.
I still hear talk of people applying for mortgages and getting a "great deal".
tangelo - hilarious comment. You are right, a big slug of the population should just go in the "retarded" category.
In my locale (Cleveland area) it is despondency. We never went up much in the rust belt, but we sure have come down hard. People are just putting their head down and weathering the storm - the economy is bad and is accepted as such. No one even talks about real estate except to say "it sucks". Most people here are local to the area and not going to move, so they just don't even talk about it.
It is funny because we are one of the few areas being helped immensely by the weak dollar. The strong dollar policy since the late '70's has brought winners and losers. Cleveland has been a huge loser. But now, with large increases in energy costs and the weak dollar, manufacturing activity has actually picked up. Employers are looking to hire skilled manufacturing workers. There are 2,000 open positions in our metro area for these types of jobs and retraining is going on to fill them.
I believe we are going to see a re-allocation of wealth away from the coasts who produce intangible wealth (finance, marketing, entertainment) back to the heartland who produce hard assets including manufactured goods, food and commodities.
Some in desperation, some in panic mode and a many have capitulated. They are now despondant. But we are not done yet. BRAHAHAHAHAHAHAHA!!!!!
I am shocked... how can this be happening.
________________
http://tinyurl.com/yovvv9
Fed May Rethink Greenspan's Hands-Off Approach Towards Bubbles
By Craig Torres and Vivien Lou Chen
March 28 (Bloomberg) -- Federal Reserve officials may be rethinking their aversion to acting against asset-price bubbles, an article of faith during former Chairman Alan Greenspan's 18 years at the helm.
After this month's near-collapse of Bear Stearns Cos., Minneapolis Fed Bank President Gary Stern -- the longest-serving policy maker -- said in a speech yesterday that it's possible ``to build support'' for practices ``designed to prevent excesses.'' New York Fed President Timothy Geithner, whose district bank took on almost $30 billion of Bear Stearns assets to rescue the firm, argued two years ago for a larger role for asset prices in decision-making, and there's no indication his views have changed.
For Fed policy makers, ``the consequences of their permissiveness have become so disastrous that they simply can't keep singing the same old tune in public,'' said Tom Schlesinger, executive director at the Financial Markets Center in Howardsville, Virginia.
Here at ground zero (Bakersfield, CA) we're in desperation. Short sale is a household word. List prices have fallen about 20-30% from peak, and they're still not selling; inventory remains at record high levels. Realtors have tried the whole "with prices becoming affordable, now's a great time to buy..." thing, and it has failed. Lenders just will not approve families that make 50K a year to buy a 250K home with $0 down. Every week I talk with people who are in pre-foreclosure status and they're frustrated with their servicers, because they won't accept pre-2002 price offers.
There's also the fact that smart buyers are still reluctant to pay $210-$230K for a home that actually sold for $140K in 2002, even if the sales price includes a 20% reduction from the peak.
"Retarded" is not a stage on the chart, and that's where the large majority of people are. I think that's why whenever you post this chart (for well over a year now), the consensus is that we are still in the denial stage -- "denial" is the closest thing on the chart to "clueless".
===========================
OMG, that's fantastic, finally a category I can relate to, CLUELESS. There is, as I have stated before, no description on the chart for where I live, since there was never a run up in prices. You gotta go up, in order to come back down again. The only thing close would be our one development with it's very large, pricey, but admittedly well built Mcmansions, but they are a separate entity unto themselves, and don't affect any comps, except in the development.
The broader economy, and the ramifications of its collapse, is finally starting to seep into the local mentality. The credit/ARM problem is creeping into small town America. People with small modest homes, at small modest prices, can't sell.
Homes are coming up empty, then vandalized and blighted, then having a "Notice of Abandonment, Will Take Legal Action" sticker on the front door from the zoning officer.
But the zoning officer can't slap a lien on the owner to maintain the property when he can't even find out who the property owner is. A trash out here, a Jewish lightening there, and people are finally beginning to talk among themselves.
But unfortunately its still at the "Gee, Do you think we MIGHT have a problem" stage.
All real estate is indeed local. It’s too bad that the damage is not.
Denial...plain and simple.
People just don't want it to go away...
desperation due to forced sales
Anger/Denial. Home Depot looks like the Neutron Bomb dropped as the euphoric punch bowl crowds are gone and only a few shell shocked/drunk Boomers are still walking around. The cost accounting (lights, heat/air cond, employees) of mall sized Home Depot stores with little shoppers means major downsizing after those rebate checks of borrowed money get spent.
Well here in Orlando the outskirts really there our a lot of homes sitting now for a few yrs .PRICES HAVE COME DOWN ON SOME AROUND 90,000 The only way I feel prices will stop dropping is if we all geta big raise.
I think you're all idiots for the most part. :)
Individual people are between denial and fear: they fear it's true but deny it publicly/outwardly.
The forces/powers that be are either in desperation or outright panic. They're repricing stuff @ .40/dollar if that, you can't get a loan without 20% down AND a valid appraisal, banks are sending homes into foreclosure rather than renegotiate and eeking a slightly smaller profit vs a loss. The chickens have their heads cutoff and are a mess.
Me? Things seem to be stablizing in my neighborhood - they've cleared out all 15 of the houses they were trying to sell and just did another 3% price-drop for base-price (compared to the 19% last summer/fall) to move it all. I think we're nearing an equilibrium: significantly higher than a few years ago, but inline with current incomes (sorry you're all just poor).
Could be a dead-cat bounce, could be bottom: I'm just waiting for my handout from Uncle Bushy/Aunty Hillary/Uncy Obama, and then I'll decide whether or not to cut and run. :D
Down 10% or so? No problem, I'll be even in 2-5 years. Down 20%? Ehhhhh...not likign that. Down 30-50%? Here's the keys, have a nice day. :)
I'm in Calgary, Canada and we are between fear and moving slowly towards denial right now.......roughly 12-24 months behind you guys.
PERSONALLY, I'M IN THE RELIEF STAGE...
CALLED ANGELO, THANKED HIM FOR THE LOAN. CHECK...
FILED BANKRUPTCY. CHECK...
MAILED ANGELO BACK HIS KEYS (MY SPARE SET). CHECK...
FILED MY 2007 TAX RETURN FOR MY BUSH BAILOUT MONEY. CHECK...
SITTING AROUND IN ANGELO'S FORECLOSURE HOUSE RENT FREE WAITING ON MY REBATE CHECK...
DOPES!!!
This is easy.
The Fed has been taking DESPERATE measures and our banking system is in DESPERATE shape. Many home-debtors are DESPERATE.
We are solidly in the DESPERATION phase of the cycle.
Many of you are saying "denial".
No, I believe we're past that. The mainstream media, the Fed, the President...all have acknowledged the crisis. Very extreme measures have been taken that indicate real desperation.
Only the most ignorant and unsavvy lumpen are still in denial.
After reading about this stuff on the internet for over three years now, I think what is happening is so predictable, and the captains of the economy knew this stuff earlier and stronger than I did. When men of power cannot stop an inevitable event, they always turn to amplify that event as the only way they can exert any control.
The other thing I have learned is that this is a "long emergency" and although everything is happening it takes a really long time and the captains of the economy have a lot of tools that can hold up the straw on this camel's back for a few more days.
We should be thinking about a few things, such as pulling in some of our projected force from around the world, and accelerating parole or in some way making some plans for the huge prison population.
As I understand it, two of the worse side-effects of the collapse of the former Soviet Union was that they had to strand their servicemen overseas and the mass release of the prisoners when the prison system became unfundable overnight. The servicemen had to buy their own tickets home, and some of the released prisoners fell in league with some of the out-of-work police, intelligence and military personnel to form the so-called russian mafia.
i think we are in HOPE right now. we were in panic the sunday of bear stearns and the media tells me rates are real right now. i think the media thinks this chart takes place over one month
Tangelo mozilo - I agree with you. Most people arent informed enough to be thrown into one of these categories.
Furthermore, I don't understand how all the BH's on this site can't say we're at least in Panic? Oh wait, I can: Because they're all so biased against the housing market.
Lets look at the facts here:
1. Pheonix, Florida, Nevada, and California have tanked. Kieth just had a post the other day about how ridiculously low some of the prices in Fla are getting (see "Its now buy one get one free in Florida").
2. The Case/Schiller index shows big losses nationwide (Again, posted on the main page by Keith)
3. All you hear in the media is horrible housing market, horrible credit market, recession, recesion, recession, and bailout
How all these factors don't lend themselves to Panic is beyond me. Seriously, did you people even watch the video about the housing sales in Florida? One guy bought a 2700 square foot, 3 car garage mansion for 217k, a house that would have run close to 800k 2 years ago. That's a firesale folks, which is a term that gets thrown around on this site fairly frequently. Firesales involve panic, and wreak of capitulation.
Just because Jow Blow realtor says its a great time to buy doesnt mean they actually beleive it. Afterall, used car saleman have been known to lie to make a buck. That aint denial, its just lying.
As a national market, we are entering Panic. Many regions, however, are exiting Panic to capitualtion.
One thing's for sure, people on this site, people who've lost their homes, people who arent paying their mortgages, the media, and many others know how bad it is now, and definately arent in denial.
Denial. Folks still trying to milk HELOCs, CCs or anything they can get their hands on .... quick. Fear starts when these run out IMO.
Fear approaching desperation.
Should hit desperation right after the election.
If all real estate is local, then locally here in Austin we are still in the Denial stage. Inventories have skyrocketed yet most sellers are refusing to lower prices significantly. I think Keith pretty much nailed it with the national average somewhere between Denial and Fear, since unfortunately I think there are several markets like Austin nationwide that believe they are immune.
Mostly denial here in NEPA, even the people who are getting foreclosure notices still think that their house is different and it will sell in time for the price they need.
A two bedroom in a development a few miles outside of town just went up for 174K...they paid 158K for it exactly one year ago. Comps for this property? 99K.
A scant 30 miles away in the heart of the Poconos, though...fear has set in. Boarded up homes, fire sales in new developments (houses that were 259K new are going for 50K) and the gangs and crackheads moving in. Racial slurs being painted on homes...it is UGLY.
Things right where I am never got as ridiculously high as out there, but most morons putting up their houses this spring for unrealistic prices are those who bought at peak and are truly FBers. And when you say 'wow, you're never going to get that' they blink and say 'but we paid blah blah blah and housing never goes down, DOES IT????' I grin and say 'it's not totally about THAT, it's mainly the fact that your potential buyer can no longer lie about his income to pay the price you're asking and get a loan'.
I'm having way too much fun with this, I know. But I HAVE to try and scare them. They DESERVE it for looking down their noses at me in my efficient 2002 car and rolling their eyes if I mentioned that I rent.
Denial. Folks still trying to milk HELOCs, CCs or anything they can get their hands on .... quick. Fear starts when these run out IMO.
_______
NEWS FLASH: They pretty HAVE run out.
i think we are in HOPE right now. we were in panic the sunday of bear stearns and the media tells me rates are real right now. i think the media thinks this chart takes place over one month
_______
Goodness, no!
There is much, much lower to go in sentiment -- and our country's economic condition -- over the next unknown number of years before widespread, well-founded hope can return.
I guess between denial and fear in Seattle. Still more denial then fear.
Hey.. we're at fear level.. because most people in Florida are still in denial they can sell their house at the prices they are asking..
Traysea
oh, I forgot to add... I am hopeful for my situation while I wait for the others to get the "Memo" on the housing market and bubble.
I sold my house for a loss last month (due to a re-location with my job)--however I am safe for now in my pretty rental... while I watch the same house across the street sit on the market for 350k.. I pay $1400 per month and that includes trash/water and lawn service. Hard to beat that in a nice new house in Orlando!!
Traysea
Keefer said:
'Unfortunately, I think we're still somewhere between Denial and Fear'
You've got your finger on the Realestate pulse
you are right on!
PS. stick to what you're good at.
(Housing.. :-) )
I'm seeing a blend of fear and hope. I just spoke with an "investor" friend who has purchased 4 homes in Sacramento in the last 3 weeks. He wants to get them under $125 a sqft. He said he's been competing against multiple cash offers.
These places don't cash flow yet but he thinks prices will come back in the next 5 years and wants to make sure he doesn't miss the bottom.
I think he's catching the knife, but he doesn't want to hear it.
It depends on who you ask.
Here is a bunch of people in between euphoria and anxiety- not too much fear yet:
Subaru snowflakes
Remember, a lot of people, even in late 2000 or into 2001, thought that there would be no implosion of the tech bubble and it was just a correction.
Sure, among readers of this here blog we find agreement that it might not be a great time to buy, but beware your confirmation bias. There are people right now looking at new homes because they believe the ongoing sales pitch that it is the only way to build great wealth, and prices double every ten years. The private Federal Reserve banks are doing everything they can to keep lenders funding new loans for overpriced homes. Paying rent is still "throwing your money away." Somebody who has financed a huge house and an expensive car is still "successful", even if they can barely handle the payments and are literally mortgaging their future.
Judging by their actions, I'd have to say that the PTB (powers that be) are in full fledged panic mode right now, even if they say otherwise in public.
I'd say most of the public is now out of the denial mode at this point. Just look at the consumer confidence numbers and 3/4 of the population thinks were in a recession right now. Fear is everywhere and desperation will hit in the fall when no one is able to sell their debt trap house.
Jymkata
Yeah, there are a lot of sympoms of fear etc. but when you look at the prices in Orange County, it is still denial.
We are definitely right between Fear and Panic, at that little node called, DESPERATION.
It depends what part of the country you're in. Many are banking on this spring selling season to sell their home for enough to get out of the mess they're in. When the selling season is over and they're still stuck with the house then it's panic/desperation time.
We are not in a recession. We had positive GDP growth... 0.6% (Until they revise the numbers.)
In Sacramento I think we are between denial and fear. Everyone wants to find a reason the believe that the bottom is here (Investors are buying! The median price is down!) and that things will be better over the summer. However, the median price is still way too high for the median income and the California budget problems mean that most of the local workforce will not be getting a raise this year and may even lose their jobs (this is where the fear kicks in).
Nationally I see the Bear Stearns deal as another form of denial. The Fed and Wall St think that a few band-aids will fix everything when the problems are really more systemic and will take years to work out.
Still on FEAR level. We won't see desperation until there's a tsunami of lay-offs on Wall Street, and the credit cards market crashes.
Next phase, DESPERATION, is coming up fast.
How appropriate for the times. I'm listening to Tear You Apart by She Wants Revenge, while doing my taxes. Wooohoooo!
People, people, we'll only enter DESPERATION when your clueless moronic co-worker (usually Gen Y), drops the childish twitter and starts paying attention to finances. You know, the same moron who's in love with Obama? Measure the scale by observing those retards who work with you. It works like a charm.
PKK here (grandma)
We're on fear. People know there's something vastly wrong afoot. They know it's more than slow economy, more than some jobs lost, more even than subprime hanky panky. There's a sense of something wicked and dreadful on it's way.
Even though the average American is not well informed about the mathematics of finacials, and prefer to get their info in very simple terms for their own needs, subconsciously, we've absorbed more knowledge than we think. Given that, we're hearing about some really large scale problems, we know we shot the wad on the War in Iraq, we know we are, singularly and collectively in debt, as the commercial says, up to our eyeballs. So there isn't a lot of denial about there being a general problem. What is in the process of reaching the forefront of consciousness, is that.....
IT DOESN'T ADD UP, BY ANY THEORY, ANY PLAN, ANY COMBINATION OF IDEAS, ANY AMOUNT OF MONEY PRINTED, THAT THIS SITUATION CAN BE FIXED.
WE CAN NOT SAVE OURSELVES.
HELP ISN'T COMING.
IT'S LIKE SOME TRAGIC GROUP, FACING THE INEVITABLE.
THINK MASADA, THE ALAMO, CUSTER.
QUITE A FEW PEOPLE REALIZE A DEPRESSION OF UNKNOWN QUALITY AND EXTENSION IS COMING.THAT RECOGNITION IS FILTERING THROUGH TO
PEOPLE. WE PRETTY MUCH KNOW JUST BELOW THE SURFACE, THAT WE'RE IN FOR IT.
Ben Stein on Easter: we're not in a Depression. Guests on I think it was Tim Russert and Chris Matthews:
we're not going to have a recession. You know that's the first admission, couched in a negative.
Soon, someone of distinction will make a public acknowledgement that we are in a really bad place and we don't seem to know to do to remedy it.
Does anybody out there know if it would be possible to just shut down the derivatives market, close it, and acknowledge the theory on which it was based was flawed and will bring too much suffering if allowed to continue. Nobody owes anything as of such and such a date and party is over. Go home. To have a stop wall.
We are definitely right between Fear and Panic, at that little node called, DESPERATION.
_______
Absotively.
in the affluent towns of the SF peninsula (Palo Alto, Menlo Park, Los Altos, etc), I'd say we're still between Anxiety and Denial. Prices are flattening, but no material drops yet and most folks think 'it's different here"
Between Desperation and Panic of course.
OMG, that's fantastic, finally a category I can relate to, CLUELESS.
I agree. There should be a CLUELESS phase along the curve. Obama's base: MTV-Pot Smoking-Twitter-College Idiots, Welfare Parasites In Ghettos, $10k Handbag Hollywood Celebs, and Low Life Rappers, wouldn't know the difference between discount window or GDP even if bit them on the a$$. Strangely enough, those are the morons picking the next president for you.
Between Desperation and Panic of course.
"How all these factors don't lend themselves to Panic is beyond me. Seriously, did you people even watch the video about the housing sales in Florida? One guy bought a 2700 square foot, 3 car garage mansion for 217k, a house that would have run close to 800k 2 years ago. That's a firesale folks, which is a term that gets thrown around on this site fairly frequently. Firesales involve panic, and wreak of capitulation."
********************
The point of the chart is not simply about housing. The housing market (at least in vegas, cali, fl, and AZ) probably is in the panic stage. What we're talking about is the overall economy which has been driven by a massive credit bubble for years. Right now, we're in the fear stage as everyone is wondering where the bodies will pop up. What tips the economy over into panic (with its cascading failures and collapsing asset prices across the board) is when the bodies show up somewhere they aren't expected, or with unexpected force. Securitized credit card debt, car loans, prime mortgages, and student loans are are the four horsemen of the financial apocalypse.
With the DOW at 12,500 we are NOWHERE NEAR either panic or desperation - but I think a bit of fear has set in.
When the DOW goes under 10k then you'll have Fear and when it goes to 7 or 8k then you'll have Panic.
Desperation doesn't happen for a long time yet.
I will say this though - the SPEED at which this is all happening recently is certainly been cranked up quite a few notches.
Check the Case-Shiller numbers for the Acceleratio n in Deceleration :) If prices continued dropping just at the level they have in the last two months, we are looking at ANOTHER 24 percent drop in housing prices by the fall.
Then you'll see some panic.
Regardless of what the Fed does, or what people *think* property is worth, the market is self-correcting itself.
At some point, housing prices will make sense again, but there is still much more price reducing to go - especially with the *Alt-A* and *Prime* mortgage mess now surfacing.
The beach cities especially will be hit even harder by the *Alt-A* and *Prime* mess, which is becoming more and more apparent as house debters scramble on the weekends putting up their for sale signs.
anon 5:56,
interesting comments on the subaru blog and typical of the stupidity out there.
people will learn the hard way
you are correct that this is just like 2000/2001 when people thought the nasdaq at 3500 was a steal
I think "clueless" makes a great addition to that graph.
I am truly stunned at the level of ignorance of the average joe in this country. (USA) It is remarkable.
Where I live (northern California) the general talk is still that the Bay Area is "special" and immune" to this sort of downturn. Despite the fact that prices in San Francisco have already dropped 14% according to statistics.
There are the select few that know what is going on. But in general, I swear everyone here is oblivious. Houses and condos languish on the market for months. Price reduced signs even in the more affluent areas. And still people think everything is honky-dory.
I think we will get a nice revelation in my area towards the middle to end of this year when all those alt-a loans begin to reset and job losses mount.
Definitely in fear.
The idiots in denial are slowly being left by the wayside. When they finally realize what is going on they will stick their thumb out.
Hoping for a free ride.
The jet plane marked "PRICES" has a LOT of altitude to lose. Prices are still pretty stratospheric.
Exploding ARMed mortgages have yet to explode for a lot more people. There are a lot of first time homedebtors who bought during the price climb with the explosive mortgages that are still ticking.
In today's paper I read about a pharmacy tech making $45,000/year with a condo with a purchase price of $250,000. You KNOW her mortgage's timer is about up. The financial advisor/columnist of course recommended a refi to a fixed rate. The fun part is she STILL faces higher monthly payments. The columnist should have advised "Mail the keys to the lender" instead!
A 4% teaser rate to a 6% fixed rate still represents a payment 1.5 times the teaser payment!
What we have is a weapon of mass destruction in the form of millions of these explosive mortgages ticking away. It's like Saddam's million tonnes of ordinance being used by the insurgents for car bombs. Any one car bomb does little but it's the aggregate of all the car bombs that makes the WMD.
The real teaser with the ARM is not the rate at first but that it's like letting al Qaeda parking a car bomb that explodes but as you stand in the street the house still stands. THAT is the teaser.
Hey Fritz commenter number 1 - just what is up with Australia? They were the first to enter the housing boom, the boom has run up the most and they look like being the last to leave. Australia is still in late 2006
Paulson, Bush, and Bernanke, are in panic.
The retarded sheeple don't really give a crap. Like dopes said, they are living rent free, waiting for their rebate check.
I agree with Tangelo. 90% are in "retarded" 5% are in worry/denial 4% are in anxiety and the top 1% of the rich wealthy insiders are in full blown panic because they created this mess and they know how bad it really is.
The government and banks are in panic mode
The realtors are in denial as usual
The FB's are in despondency
Everyone else is oblivious
Well, here in Portugal we´re still in the "bullshit" phase, mixed with denial. Realtors talk about rising prices and market upturn year after year (against all fundamentals forgeting the fact that we have sufficient housing for the triple of the current population and a popular website lists about 700 000 properties).
Still, the situation is very weird and sui generis. Prices in the capital Lisbon are increasing (although at very tiny rates) in a city that now has less population (due to housing prices) than in 1930 and twice the size. Demand is down due to record unemployment, interests raise and lack of job security. There are hundreds of thousands of vacant apartments yaers in a row. And the average sale time for a property is about 13 months (up to 3 years in some newly built areas).
"A 4% teaser rate to a 6% fixed rate still represents a payment 1.5times the teaser payment! "
It doesn't work like that. A loan of 6% is not 150% the monthly payment of a 4% loan. One more example of people who have no clue about basic finance giving out financial advice.
You sound like that fool Dave Ramsey who thinks now is the best time ever to buy real estate and stocks.
>>>>Desperation arriving in CA, FL, AZ.<<<<
Hardly into desperation in AZ - prices are still too high. Still in denial here . . .
I would say we mostly are in "fear" stage. Certain parts of country (i.e., Central Valley California) is in "desparation" stage.
I think that we all pass "denial" stage.
From what I have seen in Australia the rising price of commodities is creating a boom economy.
Their central bank is currently raising rates to cope with inflation that is getting out of control.
Should the price of gold on any of their other major exports decline this will change.
Here in SF people still believe that we are "different" & "special" even when you show them that the city did decline in the last RE cycle.
Seller's are midway between denial and fear, the mythical land of confusion.
Denial
"This BS will blow over soon."
Confusion => *You are here*
"Huh, how could this be happening?"
Fear
"Holy crap, we really are going to lose everything!"
Pretty much in the Fear stage, with outliers in Denial and Desperation.
The Fed: Desperation
The White House and dumba$$ in-laws pushing us to buy a house because prices will never be lower in FLA: Oblivious
Tallahassee: Denial
In OC, Cali:
Between Denial/Anxiety, depending upon the location. South County (the area of 'charmed life & living') is the denial/anxiety component. The northern end of the County is having a hard time, esp. Santa Ana, where there's a high Latino demo (who knows -- maybe prompting all the illegals to go back to Mexico, where the peso is probably in better shape). The South County community of Aliso Viejo is a pretty good indicator of what's to come, in terms of the Desperation Point in the cycle. Its primarily a white, lower to mid-middle class demographic that played the re-fi, HELOC game to the max. They over-extended themselves & acted like they were entitled gentry - when in fact they're the average J6P with little-to-no education. Now they're losing jobs - esp. the self employed who can't SELL their products/services to their regular clientel, b/c those markets have down-sized and penny pinched in recognition/anticipation of the times. These 'home-debtors' are now sitting on land-mines, with no way out. Neighborhoods are going into VERY RAPID decline b/c the HOAs are going broke & the home-debtors don't have the disposable income to spend on non-necessities -- like landscaping, broken windows and peeling off paint.
Tuition and extras at local schools are high & services are being cut to the marrow. Most of these people commute & gas has reached prices we've never had to deal with. To use Andrew Hac's terminology: These people ARE now, or rapidly approaching, toasted-&-BBQ'd-snapper-turtle-on a-stick realities.
I was talking to a realtor friend, who lives in Aliso Viejo, who says things are "eerily quiet" there. While his neighborhood was once a Flamingo Road of gossip and busy-bodies, the neighbors are now staying inside ("Isolation" = part of the Depression aspect of the cycle). One dope who was on the town's community association board (called AVCA - Aliso Viejo Commy Ass'n), now has his house on the market for the DENIAL price of 800K (value: 550K - maybe). Nothing special about the guy's home -- in fact, I'm told its kind of goofey. The realtor ran the financial history on this guy's place & says that if he's lucky enough to sell (at that price, no way)-- he'll MAYBE get $60,000 out of it (oh, and BTW, the guy's a 'real estate attorney' Bahahahaha!). This, just one example of the foolishness of this particular demographic and their entitlement and/or pathetic need to create a false illusion of wealth.
Other places, like Turtle Ridge & Newport Coast - are in total Denial, believing their homes are very special. Guess what? There has been a tremendous increase of high end rentals in Newport Coast -- seeking rents as high as $14,000/mo. They know they can't sell & are looking to ride this out. The only problem: We haven't even begun to see the financial wreck and ruin coming our way.
My neighbor was in England over Easter: $30 hamburgers!! Once that comes our way...major panic the likes of 1929 -- when the financial markets were completely unregulated as the sub-prime/CDO ponzi schemes we've experienced today.
But, hey...all we see is Hillary & B.O. and that side-show. The Emperor if Fiddling while Rome is Burning.
If you correlate the S&P/Case/Shiller index for home values we are still up around fear and anxiety level. Is this a good correlation? Just an observation.
Keith, i agree 100% with you: we are somewhere between denial and fear. Still a long way to go.
I think this graph should have an additional phase (between denial and fear) called: RECOGNITION. The recognition phase is when the majority stops denying there's a problem and recognizes that it exists but they are not yet fearful because 1) they don't truly understand the nature of it or its repercussions, or 2) they do understand but are waiting to see what others around them are going to do...sell or keep holding.
For #1, they still need to do the research to understand what could happen to them. Once they do this, and find out they are screwed, they then enter the FEAR stage.
For #2, they understand what could happen to them (unlike those in #1) but since they don't see prices falling materially in their locale they are not in the FEAR stage. Once materially falling prices start to hit their area, then they enter the FEAR stage.
I'd say fear, with a candy-coating of "everything is fine". People aren't willing to admit how freaked out they are, to themselves or each other.
We just got a new Super Wal-Mart, and I had to go there for some cheap plastic cr@p (don't go there normally, wanted to check it out though). Got an awful vibe of hushed up fear that I've never noticed before. So, fear / denial seems to be where I think we're at.
People are chicken to admit that they're poor to their peers as it hurts their self-image and social "standing". We've gone from being a define-yourself by who you are society to a define-yourself by what you appear to "own" society.
A little bit of honest poverty is good for the soul and for empathizing with others' condition. However there's a big difference between actual poverty through no fault of one's own and being broke because you were greedy and grasping. The latter people don't deserve assistance, it's a total moral hazard.
Unfortunately, now so many Christians think God wants them to be rich! If you're not rich, you must have done something to offend Him! True morality has been replaced by shameful excess. These people will try to keep up appearances as long as possible. Things will go downhill fast once we're at the point where those secretly in distress are forced to admit their true status to each other.
Denial or just plain ignorance is rampant here in Minneapolis.
For nothing more than morbid curiosity, I took a look at a 1964 era townhouse in a complex where units probably sold for 90k-120k back in 1999.
The realtor was in full BS "great time to buy" mode and pulled out all the lines (lies) as I toured the unit.
They are listing at 180k.
I only challenged a couple statements, just enough to let her know it was time for her to shut the hell up, thanked her for her time, and left.
I drove home fairly depressed.
I am getting the impression that it will be fall 2010 at the earliest when I should even consider buying.
You just can't buy a house until these sellers become horribly desperate.
Even though this realtor was obviously desperate, (I could smell the fear, and the look in her eyes was that of a drowning woman) she is still operating as if there is a sucker around every corner.
I have faith that after this depression cleanses the earth, there will be no more of this nonsense. At least until the next go around.
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