What Was That Sound?

[WrongWay 0]

alarmists annoy me.

Alarmists like the head of Fannie Mae and Freddy Mac that say the bottom is WAY away? The worst loans that are going to have the highest defaults were written in late 2005/early 2006, and had a 2-year fixed or 4-year fixed, which will be ressetting in record numbers in fall 2007-spring 2008, then again in 2009/2010.Alarmasts like the U.S. Congress that have forecast 2 million foreclosures in the next 2 years? Alarmists like the N.Y. Times that says we're in truly unprecidented levels of homeprice/income levels?Alarmists like the banks that have "rescue" teams out in force, looking to do just about anything they can to lock people into their home they can't afford?Alarmists like the sub-prime industry that has had 22 brokerages go bankrupt? Like the others that are setting asside hundreds of billions of dolalrs, as a first wave of losses. Alarmists like the home builders that are walking away from deposits, offering huge incentives, and "hoping" it improves a year from now?How many people didn't realize what was happening in 2002 when the NASDAQ went pop? Were the poeple warning them, talking about it, alarmists?What we've seen up to this point is one market going up, then popping, with the scammer/flippers moving to the next market, causing the next run-up, only to leave that market, and move to the next. As people have pointed out, this "pop" is old news in Chicago, South Florida, and San Diego. It is just getting REALLY bad in Vegas. Well, they're out of markets, and the money has been shut down, so the damage they have done will finally be seen in the national stats.Any market that had a massive run up is going to see a long and slow decline... some places not so slow.When will we know it is done? When foreclosures drop. When the MLS listing drop. When there are no more "flip this house" and "flip that house" and "what's my house worth" and "bought and sold" and "designed to sell" and other shows about house value. When you finally stop hearing all your co-workers talking about property values. When the Housing Affordability Index in your area is back to historic norm. When you can buy a house without an ARM, interest-only, negative amortization. When you can buy a house for about the same payment as it could rent for.When these things happen, then house prices adjusted for inflation can start up again. When will they get back to these levels, adjusted for inflation? Depends on if there is another bubble. It would take another massive bubble like this one to push house prices this far from the fundamentals.

[RhinestoneCowboy 2]

I have a fixed rate mortgage that I can afford. Is my world going to asplode?

[WrongWay 0]

I don't get why everyone is telling this guy to shut up..

5 stages of grief.denialangerbargainingdepressionacceptance.Seems these poeple are still in denial. If poeple would just stop talking about it, it would stop. Sorry, but bubbles go UP form people talking about it. They come back down based on fundamentals.In the late 90s, tech stocks went up because people were talking about them. They came back down when they started going bankrupt one after another becasue, oh, profits do matter after all. You can't just have unprofitable revenue growth...The housing bubble isn't popping becuase people are taling about it. It is popping becuase people can't buy homes without risky loans, those risky loans are causing mass foreclosures, the spigot of money has finally been turned off, we've over built, and builders have tons of under construction developments that they have to finsih or they go bankrupt.The supply is way higher than the demand... that isn't about people talking about it. Anger will hit soon. That will be when people start demanding people go to jail.

[mk 11]

No one who is asking wrongway to stop posting this stuff is in denial or angry. we find it annoying that he's trying to present himself as some kind of oracle who is predicting a major market meltdown when every major media outlet has been reporting this information relentlessly for more than a year. markets get overblown and then get corrected. this happens...all the time.

[Yoda 1]

No one who is asking wrongway to stop posting this stuff is in denial or angry. we find it annoying that he's trying to present himself as some kind of oracle who is predicting a major market meltdown when every major media outlet has been reporting this information relentlessly for more than a year. markets get overblown and then get corrected. this happens...all the time.

Exactly, most people aren't saying that he is wrong. Just that he is getting annoying about it. This isn't CNN breaking news.

[hblask 1]

Maybe you're right....http://www.nytimes.com/imagepages/2006/08/...eon_graph2.htmlOr maybe not.....20% run ups above the norm in 1970s and 1980s took a decade to get back to inflation adjusted levels. This 86% above the norm is going to take WAY longer. Good point. I was nuts to say a decade. I should have said NEVER to be reached, ever again on an "adjusted for inflation" basis.

:D :D NEVER! WE'RE ALL GOING TO DIE! THE SKY IS FALLING! GET OUT OF REAL ESTATE!Or have a timeframe of more than six months when you make a major purchase.One of the two.

[WrongWay 0]

No one who is asking wrongway to stop posting this stuff is in denial or angry. we find it annoying that he's trying to present himself as some kind of oracle who is predicting a major market meltdown when every major media outlet has been reporting this information relentlessly for more than a year. markets get overblown and then get corrected. this happens...all the time.

Once again, not all of us are in Chicago. Some of us are in ares of the country where we're told that this moth would be the bottom. The "experts" were sure the Spring buying season would make all okay again.

Exactly, most people aren't saying that he is wrong. Just that he is getting annoying about it. This isn't CNN breaking news.

So.... ummm.... stop readin this thread.Breaking news. March pending sales should be WAY up from February because February numbers were horrid due to weather and March is the start of the big Spring spending season. Ooops. Down 4.9% from February. Inflation still looks bad...

[hblask 1]

I supposed I would have been nuts back in 2000 to talk about a drop in the S&P 500 that would take a decade to recover. Only 6 years later. Hmm... that high of 1370-ish reach back in Feb 2001. Well, adjusted for infaltion that would be 1550-ish today. Let's check, 1482. Nope. 6 years, and not back yet.Or the NASDAQ. That was nothing but up, up and up. New economy and all.Oh... you can't really compare today's NASDAQ to 2001 becasue too many companies that used to be in the NASDAQ are long ago delisted. Gone, poof, history.

Geez....at first I thought you were serious and had a marginally reasonable point. Stocks are not like houses. People do not buy them for the same reason. And yes, 6 years after one of the biggest drops in market history, and we're almost back to INFLATION ADJUSTED levels (assuming you got that adjustment right, which I now doubt). Everyone should know the appropriate timeframe for stock market adjustments is a minimum of 5 years, and probably 10. Considering that this crash was one of the worst in history; considering that many indicators are above where they were; and most importantly, considering that STOCKS ARE NOT HOUSES, it looks to me like you are just trying to spread fear.Will the housing correction continue? It might, it might not. Will real estate appreciate at approximately 4% over any reasonably long term (say, greater than 5-7 years)? Absolutely. Will there be exceptions to that? Absolutely. Is this one of them? Nobody knows. Not, not me, not you. Invest for the long term, prepare for worst case scenarios, diversify. Nothing new here, move along.

[hblask 1]

I don't get why everyone is telling this guy to shut up.. I think this thread is amazing and informative, and I can't believe anyone would want him to shut up about it... Is it because many of you have bought overpriced houses you can't afford, and are about to lose your ***, and want to keep your heads buried in the sand? Because I can't possibly think of a rational reason why people would want him to talk less about this issue. If you don't like the topic, stay out of the thread.

Because he has crossed the line from "cautious advice" into "sky-is-falling nutcase." The original post had information that anyone with real estate should take into consideration. Everything after that borders on maniacal, with several crossing well into that territory.

[hblask 1]

I have a fixed rate mortgage that I can afford. Is my world going to asplode?

The OP needs to read this post a couple dozen times. A large portion of homes are owned by responsible people with affordable payments. They are the reason his alarmist posts are a bit over the top. There are always enough people just happy to stay put to keep houses from crashing too much. Yes, it can happen, but not the same way the stock market does. If anyone has purchased more real estate than they can afford on the theory that they can make a quick buck and get out, yes, they should be VERY concerned. But not even because of the current situation (although that certainly doesn't help). They should be concerned because they make very bad investment decisions that will haunt them their whole life. It doesn't matter whether it's the stock market, real estate, gold bars, or Beanie Babies. If you ignore history and buy more than you can afford to lose with the notion of making a quick buck, eventually you will go broke.So if the OP is just telling people who have over-extended themselves that they made a bad financial move, I have to agree. But why the hype? I would tell them the same thing about the stock market right now, or gold, or hog futures.

[WrongWay 0]

Geez....at first I thought you were serious and had a marginally reasonable point. Stocks are not like houses. People do not buy them for the same reason.

Really? Bacause in 2005, 1/3rd of houses were purchased as "investment properties". And that is just the official numbers. To get the best rates, you have to at least claim to be an owner/occupant. Even those that did buy to live in the house, over 70% indicated that one of their major reasons for buying was as an investment.

And yes, 6 years after one of the biggest drops in market history, and we're almost back to INFLATION ADJUSTED levels (assuming you got that adjustment right, which I now doubt).

The data is so hard to check.... http://www.westegg.com/inflation/The NASDAQ was the market that took the biggest drop. It was the bubble market. It went from 6000 to 1200. An 80% drop. It is only at 2500. HARDLY back to near prior levels.The S&P was "only" took a 60% drop, partly on regression, and partly on flight from stocks. So, 7 year later, you've made nothing and are still down 5%.

considering that STOCKS ARE NOT HOUSES, it looks to me like you are just trying to spread fear.

I'm not trying to spread fear. I'm jsut telling people what is happening.

Will the housing correction continue? It might, it might not. Will real estate appreciate at approximately 4% over any reasonably long term (say, greater than 5-7 years)? Absolutely. Will there be exceptions to that? Absolutely. Is this one of them? Nobody knows. Not, not me, not you. Invest for the long term, prepare for worst case scenarios, diversify. Nothing new here, move along.

And when houses double in prices in your are in 3 years... should you reasonably expect them to be flat for 25 years to get back on that 4% track? Where you are wrong, is your statement that houses are not stocks. For a huge chunk of people, houses bacame stocks.

[WrongWay 0]

I have a fixed rate mortgage that I can afford. Is my world going to asplode?

If you're not "in the bubble", you're fine. I myself have a house that when bought in 2002, cost $130K, but now has houses around it on the market listed at $260+. A year ago they were selling for $280K.I chose not to sell, take the profit, and jump into a $300K+ house. I haven't even taken out a HELOC. For myself, I ignore the phoney bubble prices, and plan to stay in my house for 40 more years. Poeple like me, and others locked into a good fixed rate loan where they can easily make payments, that have no intention of buying or selling anytime soon have nothing to woory about, except the implosion in housing pushing the economy into recession.Everything in this thread is directed at the large number of people that ARE in the bubble. People that bought investment properties. People that have high risk loans. People that are thinking of holding a property a few years until the market recovers. People that are thinking of buying today.

[WrongWay 0]

I guess the CEO of Centex Homes is a "the-sky-is-falling-nutcase":http://money.cnn.com/2007/04/30/news/compa...sion=2007043019"In a statement, Tim Eller, the company's chairman and chief executive, said the company was scrambling to deal with what he characterized as "one of the most difficult markets in 25 years" and he acknowledged that he still sees "uncertainty in many of our markets." "The L.A. Times staff writers are "the-sky-is-falling-nutsaces"http://www.latimes.com/business/la-fi-auct...-home-headlines"There were 5,977 foreclosed homes on the auction block in Southern California in the first three months of the year, up from 711 in the same period last year""There were six homes on the block this day. They were bought in 2005 and 2006, at the crest of the housing boom, by buyers who financed the entire purchase. That means the homes are probably worth the same, or less, than the amount the buyers owe.No one bid."

[strategy 4]

Once again, not all of us are in Chicago. Some of us are in ares of the country where we're told that this moth would be the bottom. The "experts" were sure the Spring buying season would make all okay again.

Dude, it's not just Chicago. I am about as far removed from the real estate industry as one can get (poor college student, wasn't interested in business until very recently) and I noticed a LOT of news about this stuff over the last year, both in blogs and news releases. Hell, even my accounting professor mentioned the coming troubles with housing back in mid-january.

[mk 11]

Everything in this thread is directed at the large number of people that ARE in the bubble. People that bought investment properties. People that have high risk loans. People that are thinking of holding a property a few years until the market recovers. People that are thinking of buying today.

These are people who are both too stupid to understand the nature of interest rates and then too stupid (and proud) to ask someone who does understand interest rates for advice before buying a spec home. i, for one, don't feel the least bit bad for these people. can't wait for them to puke at the low so i can buy.

[Balloon guy 158]

If we allow more immigration, there would be a higher need for housing, which could stop the reversal of the housing market.BTW the average new home over $5 Million in my area sells in 4 days of listing.Used ones are taking a little longer.Biggest difference between stocks and homes, is that you have to live somewhere. Therefore homes will always have value

[Balloon guy 158]

Exactly, most people aren't saying that he is wrong. Just that he is getting annoying about it. This isn't Fox breaking news.

FYP

[WrongWay 0]

Biggest difference between stocks and homes, is that you have to live somewhere. Therefore homes will always have value

And that value is set long-term by fundamentals. Namely, what they cost to build, what they could rent for, how much people can afford to pay. Unfortuanlty, all of these are way out of whack right now, and all three will greatly contribute to a decline in prices. 1) Because price was way above cost of construction, there are lots of projects underway. Since they have to be completed, they will be built and sold for whatever the builder can get. More supply into a saturated market.2) People that have taken their prices of the market to rent at a loss, won't do that for long. With record vacancies keeping rent down, those huge numbers of investmetn properties won't be out of the market for long. Cheap rents and falling prices will keep the few qualified buyers on the sideline.3) People were only able to buy due to the easy availability of risky credit. With that going away, lots of poeple that don't realise it is a bubble, and would be stupid enough to buy in, can't qualify.I'd love for someone to try to make a case as to why now is a good time to buy. Why now is a bad time to sell, assuming you can. Why if you're in a home you really can't afford, have no equity, and just had your ARM reset, why you should even try to hold onto the anchor.

[meservery 0]

BTW the average new home over $5 Million in my area sells in 4 days of listing.

Thats only because the very rich are getting even richer. The middle class in this country is getting squeezed.Who gives a fukk about brazillionaries?!?

[hblask 1]

I'd love for someone to try to make a case as to why now is a good time to buy. Why now is a bad time to sell, assuming you can. Why if you're in a home you really can't afford, have no equity, and just had your ARM reset, why you should even try to hold onto the anchor.

I don't think anyone is making the case that now is a good time to buy or a bad time to sell, only that you are not some insider with a secret wealth of information that is inaccessible to the common folk, and that this information somehow makes you more prescient than the millions of others who have similar information and are making financial decisions on a daily basis. Also, your claims are exaggerated for effect. There have been chicken littles running around since the dawn of time; the wise know exactly how much weight to put on their opinions (not to be ignored, just weighted properly). Yes, things are looking ugly right now. Everyone knew this was coming for five years. Nobody knows if it's the bottom of the slide or just the beginning. No, you don't. Nope. Because each bit of bad news could be the LAST bad news, or it could be the bad news that starts a further tumble. No, you don't know which it is.

[WrongWay 0]

Nobody knows if it's the bottom of the slide or just the beginning. No, you don't. Nope. Because each bit of bad news could be the LAST bad news, or it could be the bad news that starts a further tumble. No, you don't know which it is.

There is data out there to base an educated opinion on. What is causing the drop?1) Credit crunch. This really just hit in the last month, and it is BAD! Fewer houses are going under contract, and more that are under contract are falling out due to inability to get loans. Falling demand.2) Over supply. Vacancy rates at record high. Housing starts still high. MLS listings climbing fast. Foreclosures up huge. $2.5 trillion in ARMs scheduled to reset in the next few years, 2 million homes expected to foreclose in that wave. High and rising supply.3) Non-affordability. The long-term fundaments in housing price are cost of construction, cost of rent, and affordability. All of these metrics indicate houseing is way over priced.... in many areas.So, I ask again. What happens in a market driven economy when demand is falling, supply is high and rising, and the price is well above fundamental resistance levels?Sure, I don't "KNOW" prices are going to fall back to the fundamental levels in the bubble areas. But I'm holding the nut full-house, and you're all-in, drawing to one out on the river hoping to hit a straight-flush. I don't KNOW that you're not going to hit, but we can make some reasonable guesses as to how the hand will end.

[hblask 1]

There is data out there to base an educated opinion on. What is causing the drop?1) Credit crunch. This really just hit in the last month, and it is BAD! Fewer houses are going under contract, and more that are under contract are falling out due to inability to get loans. Falling demand.2) Over supply. Vacancy rates at record high. Housing starts still high. MLS listings climbing fast. Foreclosures up huge. $2.5 trillion in ARMs scheduled to reset in the next few years, 2 million homes expected to foreclose in that wave. High and rising supply.3) Non-affordability. The long-term fundaments in housing price are cost of construction, cost of rent, and affordability. All of these metrics indicate houseing is way over priced.... in many areas.So, I ask again. What happens in a market driven economy when demand is falling, supply is high and rising, and the price is well above fundamental resistance levels?Sure, I don't "KNOW" prices are going to fall back to the fundamental levels in the bubble areas. But I'm holding the nut full-house, and you're all-in, drawing to one out on the river hoping to hit a straight-flush. I don't KNOW that you're not going to hit, but we can make some reasonable guesses as to how the hand will end.

I guess you're right, those other 20 million people with the same information are idiots.

[WrongWay 0]

I guess you're right, those other 20 million people with the same information are idiots.

Who are these 20 million poeple that disagree with me? Excluding the insiders, the realtors and broakers that have a vested interest into talking you into buying, who is saying that now is the time to buy or hold? Heck, even the NAR has come out and predicted that the median price will fall year-over-year, for the first time since they've been reporting. They make money on transactions, and fewer and fewer are happening due to lack of buyers and sellers not dropping their prices. The realtors are doing their best to walk the fine line between luring in buyers while subtly telling sellers that they need to drop thier prices if they want to sell. With falling sales, as just reported today, they are obviously not doing well.I'm not arguing with poeple that disagree with me based on the data. I'm just trying to wake up those that haven't looked at the data yet that may get sucked in by a local realtor telling them it is a great time to buy.No, it is not a great time to buy. It is a horrid time to buy. Ignore the realtor that just wants the comission.

[hblask 1]

Who are these 20 million poeple that disagree with me? Excluding the insiders, the realtors and broakers that have a vested interest into talking you into buying, who is saying that now is the time to buy or hold? Heck, even the NAR has come out and predicted that the median price will fall year-over-year, for the first time since they've been reporting. They make money on transactions, and fewer and fewer are happening due to lack of buyers and sellers not dropping their prices. The realtors are doing their best to walk the fine line between luring in buyers while subtly telling sellers that they need to drop thier prices if they want to sell. With falling sales, as just reported today, they are obviously not doing well.I'm not arguing with poeple that disagree with me based on the data. I'm just trying to wake up those that haven't looked at the data yet that may get sucked in by a local realtor telling them it is a great time to buy.No, it is not a great time to buy. It is a horrid time to buy. Ignore the realtor that just wants the comission.

Millions of people make financial decisions every day (do you deny that?). Believe it or not, you are not unique or on the cutting edge. If you were, you'd be hanging out with Donald Trump instead of pushing your real estate ideas on a poker forum.One last thing to point out in your arguments:Historically high price increases (good news) = end of the worldHistorically high foreclosure rates (bad news) = end of the world.So for you, both record good news and record bad news = end of the world. In your view, the record good news cannot continue, but the record bad news can. Interesting.I think we are finding out more about your worldview than about any market conditions.

[WrongWay 0]

Look... Here is the kind of crap us hicks out here in the sticks are being given....http://www.eastvalleytribune.com/story/88852"Housing market trend is upward, analyst saysMisty Williams, TribuneValley developers took out more home building permits for the fifth month in a row in March, "That the headline and the sound bite. When I talk to people I work with , this is what they're basing their "I'm going to rent it out for 2 years, waiting for the market to recover" decision on.You actually have to read the headline to see that sales are down.Oh, and if you just skim, you may miss this,"With a rising number of subprime borrowers beginning to miss mortgage payments, skittish lenders have done away with 100 percent financing, stated-income loans and other types of mortgage products, as well as requiring higher credit scores. It’s becoming tougher for everybody to obtain financing, not just for first-time homebuyers, Brown said. “I think that’s the dark cloud that’s on the horizon,” he said. "Wow, an industry insider that has a vested interest in painting the rosiest picture possible, whos ability to put food on the table is based on getting you to buy a house, says there is a dark cloud on the horizon. Guess this is an old story, not a developing one. Guess he is a the-sky-is-falling-nutjob.The tightening of credit within the last month is a game changer... It has kicked the foundation out from under the market. Some people haven't realized that yet.