Housing: 2006 thread, use the 2007 thread instead.

[dmcowen674]

Originally posted by: Vic

Originally posted by: LegendKiller

Originally posted by: dmcowen674

Originally posted by: dullard
Well, data today shows:
[*]Housing starts are plunging - down to the lowest level since 2000,
[*]Permits are falling - down to the lowest level since 1997, and
[*]Foreclosures are up 42% since this time last year.

This just isn't possible because the Republicans said so.

Come on Dave, this has nothing to do with Rep vs Dem. It has to do with rationality and moderation vs not.

Or perhaps optimism vs. pessimism? Confidence is a key factor in markets, and is what really creates boom and bust cycles. The only real reason that housing boomed was because of an irrational confidence, i.e. "you can't lose with real estate." Now we're seeing the flip side of that, an irrational lack of confidence, an "OMG! abandon ship!" There is IMO neither rationality nor moderation in either attitude.

As for Dave, he has finally come out and confessed the truth, that he is a Republican who voted for GW. I knew it all along.

quote:

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Originally posted by: dmcowen674
I've never said I hate Republicans, hell I've even been registered and voted Republican myself.
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I don't understand your point.

I have admitted many times I was duped for the 2000 Election.

I however was not duped again for the 2004 Election which is a lot more than I can say for the resident Republicans on here.

 

[Vic]

Originally posted by: dmcowen674
quote:

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Originally posted by: dmcowen674
I've never said I hate Republicans, hell I've even been registered and voted Republican myself.
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I don't understand your point.

I have admitted many times I was duped for the 2000 Election.

I however was not duped again for the 2004 Election which is a lot more than I can say for the resident Republicans on here.

I was not duped, Dave. I voted for Gore in 2000 and Kerry in 2004. Yet you have baselessly called me (and everyone else who doesn't agree with your incessant, ignorant trolling) a Republican countless times. And yet here you came again with that same trolling even though it has nothing to do with thread topic. You're the ultimate sheeple. A moron who interrupts any attempt at intelligent discussion with mindless bleating. One day it's "4 legs good, 2 legs bad," the next it's "2 legs good, 4 legs bad."

 

[LegendKiller]

Originally posted by: Vic

Originally posted by: LegendKiller

Originally posted by: dmcowen674

Originally posted by: dullard
Well, data today shows:
[*]Housing starts are plunging - down to the lowest level since 2000,
[*]Permits are falling - down to the lowest level since 1997, and
[*]Foreclosures are up 42% since this time last year.

This just isn't possible because the Republicans said so.

Come on Dave, this has nothing to do with Rep vs Dem. It has to do with rationality and moderation vs not.

Or perhaps optimism vs. pessimism? Confidence is a key factor in markets, and is what really creates boom and bust cycles. The only real reason that housing boomed was because of an irrational confidence, i.e. "you can't lose with real estate." Now we're seeing the flip side of that, an irrational lack of confidence, an "OMG! abandon ship!" There is IMO neither rationality nor moderation in either attitude.

As for Dave, he has finally come out and confessed the truth, that he is a Republican who voted for GW. I knew it all along.

It has nothing to do with optimism or pessimism. I can be as optimistic that my tulip bulb will be worth more than a small country, but that lead to be being duped. I can be as optimistic as all heck in 00 that the market will keep going up by 20% YOY. I can be as optimistic as possible that my house can outstrip the mean appreciation by a factor of 4 compare to the past 100 years, but that and a pound of sand won't get me anywhere.

Rationality will get you far. It's rational to think that if wee outstripped mean appreciation for 100 years by a factor of 4 that will we return to that mean. It will happen, one way or another. No amount of spit and wishes will keep this credit market together if the fundamentals do not support it.

It's funny that the only people at this point that think the fundamentals support the market, or a "soft landing" are mortgage brokers or RE agents. Their CEOs have abandoned them and have started to hedge Wall Street's expectations by lowering earnings forecasts. The capital markets are jittery because something unexpected has happened, secured credit has lead the downturn. What does this mean? Nobody knows.

Personally, I think that the only reason why unsecured isn't sucking wind right now is the last gasp of American consumerism before the holidays. People will go delinquent on mortgages or cars before they do on their CC's so they can buy Johnny that PS3 he wants.

Meanwhile, the equity cash out, through Refi or Home Eq continues to spur consumerism, at the cost of equity. As more owners become flipped that candle will finally be burnt out.

Some people are starting to wake up to the reality. I saw it on the Street when I was there on Monday.

 

[Eos]

Would you guys say that markets where the increase has been 'normal' will fare better during the next slowdown than markets where the increase has gone nuts?

 

[dullard]

Originally posted by: eos
Would you guys say that markets where the increase has been 'normal' will fare better during the next slowdown than markets where the increase has gone nuts?

In most cases, yes. In some areas people may always be nuts. But as a general rule, your idea should be correct.

 

[LegendKiller]

Originally posted by: eos
Would you guys say that markets where the increase has been 'normal' will fare better during the next slowdown than markets where the increase has gone nuts?

The big problem is that the high tide has raised all economic boats. People look at housing in a vacuum and think that their price won't go down because it hasn't gone up much. While that may be true, economically speaking, a massive shock to the economic condition of the country lowers the tide for all boats.

 

[dullard]

Nationwide median prices are down 1.2%. Sure, there are still some local areas where prices are going up. But, I think those are just the exceptions and possibly those exceptions will become more and more rare in the next few quarters.

 

[Eos]

I found some data in my local paper today. Locally, prices were up 17% from 2005-2006. Where we bought, prices were only up 2.9% in the same time. Some experts think this local jump will level out in about $9000 at $200k. They don't say the same thing for where our house is. tee hee

 

[conjur]

Local news:


Area foreclosures up 72 percent from last quarter
http://louisville.bizjournals.com/louisville/stories/2006/11/06/daily36.html

The number of properties in some stage of foreclosure in the Louisville metro area in the third quarter was up 72 percent from the second quarter, according to figures from RealtyTrac Inc.

There were 1,837 local properties in foreclosure, or one property for every 268 households, according to the Irvine, Calif.-based foreclosure data publisher.

Nearby metropolitan areas fared better. Cincinnati's foreclosure growth rate was 30 percent, while Indianapolis and Nashville's rates actually fell, by 2.5 percent and 2.3 percent, respectively.

Nationally, more than 318,000 properties were in foreclosure, a 17 percent increase from the second quarter.

This was finally talked about on local TV news last night.

 

[Vic]

Originally posted by: dullard
Nationwide median prices are down 1.2%. Sure, there are still some local areas where prices are going up. But, I think those are just the exceptions and possibly those exceptions will become more and more rare in the next few quarters.

Did you even read the article? Not "some" local areas are still going up, 69% of the metro markets are still going up. That's hardly an "exception." My market was up 12.3%.

Home prices down 1.2% in third quarter
Rustbelt markets and Florida lead the decline. Sales volume plummets nearly 13%.
By Les Christie, CNNMoney.com staff writer
November 20 2006: 2:13 PM EST

NEW YORK (CNNMoney.com) -- Once-hot housing markets cooled considerably this summer: The National Association of Realtors (NAR) reported Monday that the median price of a single-family house in the third quarter dropped 1.2 percent from a year earlier, continuing a reversal of fortune for sellers that started last winter.

Prices in the Northeast, down 4.8 percent, fell the most. Prices dropped 2.6 percent in the Midwest, 0.9 percent in the West and 0.1 percent in the South.

The Detroit market, buffeted by auto industry layoffs, suffered the largest loss; prices there plummeted 10.5 percent, to a median of $154,100.

Other rustbelt areas with drops included Canton, Ohio (down 9.2 percent to $112,300), Akron (down 8.4 percent to $118,200) and Bloomington, Illinois (down 8.5 percent to $156,300).

Three Florida metro areas were hit hard by price drops. In Sarasota, the median home now sells for $320,700, off a whopping 9.4 percent from last year; Palm Bay/Melbourne/Titusville prices sank 9 percent to $193,600; and Cape Coral prices plunged 8 percent to $255,400.

Sarasota condo prices also dipped, 11 percent to $275,600, the largest drop in any condo market.

Surprisingly, 102 of 148 metro markets had price gains while only 45 fell. One remained the same.

The best performing market in the country was Salem, Oregon, where prices shot up 24.7 percent from a year earlier, to $228,000.

Condo prices suffered more than single-family homes with the national median at $222,900 in the third quarter, down 2.1 percent from the same period in 2005.

The most expensive metro area in the nation was in San Francisco/Oakland, where the median home price is $749,400. Two areas, Decatur, Illinois and Youngstown, Ohio shared the distinction of having the lowest prices - with medians of just $86,000.

Last year at this time real estate was bubbling; prices were recording year-over-year, double-digit increases every quarter. Markets finally started turning during the first quarter of 2006 and now are in retreat.

Even more dramatic than the price drops was the fall in the number of sales. Nationally, the total numbers for sales of existing single family homes, condos and co-ops went down 12.7 percent compared with the third quarter of 2005. The decline was off the charts in Nevada, down 38 percent. Arizona, ( - 36 percent), Florida (- 34.2 percent), California (- 28.6 percent), Hawaii (- 25.8 percent) and Virginia (- 24.4 percent) also experienced steep drops.

 

[dullard]

Originally posted by: Vic
Did you even read the article? Not "some" local areas are still going up, 69% of the metro markets are still going up. That's hardly an "exception." My market was up 12.3%.

Yes, I read the article. But the article was 2 sentences long when I read it and posted it. CNN editing made it look like I didn't read the thing (notice the time stamp on that article is now nearly 4 hours AFTER I made the post linking the article).

So I jumped the gun a quarter. I bet my exception comments will be true next quarter (the quarter before this one there was only a small handful of metro areas with drops, now there are many more, and next quarter there will be a majority).

 

[Arkaign]

Hmmm

http://www.lansingstatejournal.com/apps...article?AID=/20061120/NEWS03/611200337

"The U.S. economy has been battered by a bigger-than-expected slump in housing but will keep growing next year as consumers get relief from soaring energy costs."

Can someone explain this article/statement? Did I miss something somewhere? If there is some coming relief from soaring energy costs then I'm very happy! Energy costs are becoming poison to our economy at large at all levels. I just didn't see any references in the article that supported the statement. Anyone have any links or idea what was referenced?

 

[dullard]

Originally posted by: Arkaign
Can someone explain this article/statement? Did I miss something somewhere? If there is some coming relief from soaring energy costs then I'm very happy! Energy costs are becoming poison to our economy at large at all levels. I just didn't see any references in the article that supported the statement. Anyone have any links or idea what was referenced?

Well, while oil prices at nearly $59/barrel are still historically high, they aren't the $75+/barrel they were just a short time ago. While natural gas is still reasonably high, it is far from what it was this time last year (saving typical home owners $50-$300/month in cold climates depending on the location).

Energy prices are higher than I'd like, but they are far better than what they were in the recent past.

 

[Slew Foot]

Originally posted by: dullard

Originally posted by: Vic
Did you even read the article? Not "some" local areas are still going up, 69% of the metro markets are still going up. That's hardly an "exception." My market was up 12.3%.

Yes, I read the article. But the article was 2 sentences long when I read it and posted it. CNN editing made it look like I didn't read the thing (notice the time stamp on that article is now nearly 4 hours AFTER I made the post linking the article).

So I jumped the gun a quarter. I bet my exception comments will be true next quarter (the quarter before this one there was only a small handful of metro areas with drops, now there are many more, and next quarter there will be a majority).

That and everyone knows that median numbers are a pile of crap. Try and sell a house in CA for 5% less than the price you bought last year and see how far you go. The central valley is pushing a 20% drop from the peak now.

 

[dullard]

Oct 2006 existing home sales are slightly up from Sept. The number of homes sold went up from 6.21M to 6.24M both annualized rates. However, prices are flat compared to Sept. That means, that the yearly price drop from Oct 2005 (the peak price in 2005 was in Oct.) to now is 3.5%. This yearly price drop is the biggest drop on record. And now we are about to enter the winter cycle where prices typically drop. It remains to be seen if prices will continue the historical winter drop.

 

[LegendKiller]

As Dullard mentioned above, housing took a kick in the nuts last month. The slide continues and the insiders deny it.


http://money.cnn.com/2006/11/28/news/economy/homesales/index.htm?cnn=yes

 

[Vic]

Originally posted by: LegendKiller
As Dullard mentioned above, housing took a kick in the nuts last month. The slide continues and the insiders deny it.


http://money.cnn.com/2006/11/28/news/economy/homesales/index.htm?cnn=yes

You're not an "insider," LK?

 

[LegendKiller]

Originally posted by: Vic

Originally posted by: LegendKiller
As Dullard mentioned above, housing took a kick in the nuts last month. The slide continues and the insiders deny it.


http://money.cnn.com/2006/11/28/news/economy/homesales/index.htm?cnn=yes

You're not an "insider," LK?

Not really. I handle stuff on the secondary market, but don't securitize mortgages. The company I work for sells most of what is originated, but I have nothing to do with that.

 

[LegendKiller]

Just got back from my vacation. Had some discussions with people on the street while we were in NYC. It was pretty interesting, since I discussed housing with not only bankers, but also risk-takers (bond insurance providers). The street is starting to get anxious about the housing market, they see potential weakness in the fact that a "perfect storm" can happen, the main catalysts for this would be even slightly increasing interest rates and a worsening economy and job outlook.

It is starting to tell in the derivatives markets, where credit default swaps are starting to come into the light. If you don't know what these are, basically, if you purchase a credit default derivative you are hedged (insured) against "bad stuff". It would look like this.

I, as an investor, bought 200MM in mortgage backed securities. I am starting to worry about the loan pool that backs my bonds, so I ask for somebody to accept some risk, in the form of a bond default. For them accepting the risk I pay them a premium, say .20%, on my 200M per annum. Now, written into the terms of the contract is that if the cashflows of my bond are insufficient (borrowers don't pay principal or interest which gets passed to me) or any other event of default (trigger breach, breach of covenant,servicer default...etc), and the bond reaches a certain default point, then the person who sold the derivative to me will pay me.

Essentially, it is a protection against downside risk. People are starting to pick up these contracts. Most of the time somebody else then flips those risks to another person, purchasing another derivative to hedge there risk, therefore the entire market bears risk, when wanted or needed.

Now, if the market goes down a little bit and there is some derivatives exercised, then a lot of people get rich, as risk-return premiums skyrocket. However, if the housing market tanks, then we are in for a lot of trouble.

People are getting inventive with these derivatives, going so far as to create "synthetic ABS" by putting credit default swaps into trusts to mimic an actual ABS transaction. This can open up a whole new can of worms.

Anyway, the long and short of it is that the market is getting antsy. If jobs keep going down and the economy keeps deteriorating , then we could have problems. People are even starting to doubt Greenspan (saw that post on GotApex). When people openly criticize people like Greenspan for being overly bullish, it could be a sign of others waking up.

Interesting times.

 

[Slew Foot]

Spring 0f 2007 is when the crap hits the fan.

BB's in a pickle right now, the dollar's starting to fall and inflation still remains above comfort levels. Raising interest rates is like tossing the entire subprime market out of their homes. SD and the central valley in CA are pushing 20% in terms of actual declines (as opposed to the BS numbers that the NAR put out). Glad I got out when the getting was good

 

[Vic]

It would be very unusual for a housing market to tank in the spring. Fall/winter is always when it's worst. And there have been tough times for some, as I expected. Now that the market is flattening instead of booming, there are many who weren't prepared and expected the party to go on forever.

OTOH, interest rates have dropped some, are quite good (back near the historic lows), and applications are up. If rates stay down, I'd expect a decent market come spring (although I hope that we do not go back to the boom mentality). A little shake-up now and then is not a bad thing IMO.

 

[Slew Foot]

The problem with the spring (based upon what I see here), is that everyone whose house didnt sell this year, is taking their home off the market for now and relisting it in spring "when the market is better". So youre going to end up with a flood of inventory again, probably more than last year, which will force prices down. Prices around here fell a little bit this spring, ttheylll fall a bit more next year.

 

[Vic]

Meh, that's nothing new. I've never lived in a neighborhood where at least a few of the homeowners didn't list every spring. Their logic (and I would ask) is that they're just waiting to get the right price. What you're seeing is not disaster, but a return to the pre-boom norm.

 

[Slew Foot]

Originally posted by: Vic
Meh, that's nothing new. I've never lived in a neighborhood where at least a few of the homeowners didn't list every spring. Their logic (and I would ask) is that they're just waiting to get the right price. What you're seeing is not disaster, but a return to the pre-boom norm.

Ouch

This is the pre boom norm?

 

[Vic]

Originally posted by: Slew Foot

Originally posted by: Vic
Meh, that's nothing new. I've never lived in a neighborhood where at least a few of the homeowners didn't list every spring. Their logic (and I would ask) is that they're just waiting to get the right price. What you're seeing is not disaster, but a return to the pre-boom norm.

Ouch

This is the pre boom norm?

I predicted the Sac market would be in for trouble more than 3 years ago. It's a special case that doesn't really concern me (except I told my GF's mother to sell a long time ago). Remember, California real estate doesn't reflect the national real estate market and never has. Scarcely a decade has gone by since the gold rush when California hasn't experienced a real estate boom and bust.