Housing market going to tank?

[LS20]

Ive heard a few people project that the housing market will continue to collapse, rates will drop down to 4, etc etc etc

What do you think?


as a related topic, I'm currently a renter. Im almost exactly 50/50 on whether I will move away from here in 3 years. My parents have some cash-money available, entertaining the idea that they could put a deposit on a house down here; I will pay mortgage and taxes and etc while I'm "renting" from them.. if I leave they'll simply rent it out.

I'm not sure how good of an idea this is. If the prices and rates drop within the next year, it doesnt sound too bad of an offer....

 

[JS80]

"continue to collapse"

Since when did this "collapse" begin?

 

[Krazy4Real]

Is JS80 the new and improved version of LS20?

 

[MrDudeMan]

Originally posted by: JS80
"continue to collapse"

Since when did this "collapse" begin?

i would also like to know...

 

[Miramonti]

Yes, it will continue to start to start to collapse.

 

[Steve]

Originally posted by: Krazy4Real
Is JS80 the new and improved version of LS20?

They're the next generation sedans from Infiniti.

 

[Triforceofcourage]

Nobody really knows

 

[DaveSimmons]

Stock index mutual funds at vanguard.com are a safer bet and a lot less work. Buy, hold, enjoy the growth in value.

 

[JS80]

Originally posted by: sm8000

Originally posted by: Krazy4Real
Is JS80 the new and improved version of LS20?

They're the next generation sedans from Infiniti.

One has an 8.0L V12 and the other has a 2.0L 4 banger.

 

[dullard]

Originally posted by: JS80
"continue to collapse"

Since when did this "collapse" begin?

Hmmm, lets see.

Numbers that are falling (when falling is a bad thing for housing):
1) Existing home prices peaked Jul 2006 and are 8.6% off from that peak.
2) Existing home sales peaked in Jun 2005 and are currently 11% off from that peak.
3) New home sales peaked in Oct 2005 and are 33% off from that peak.
4) New home stars peaked in Jan 2005 and are 37% off from that peak.
5) Home builder stocks peaked mid-2005 and are off ~40% from that peak.

Numbers that are records (in the last 2 months or so):
1) All-time record number of unsold new homes was reached in the last report.
2) All-time record number of empty homes (homes that are on the market with no furnature) was reached in the last report.
3) All-time record year-over-year price drop was reached recently.
4) I could go on and on.

 

[FoBoT]

search google news for "subprime"

example

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7iLhjv5Z7Pg&refer=home

March 9 (Bloomberg) -- U.S. Federal Reserve Governor Susan Bies said banks' losses from risky home loans made at low introductory rates are just beginning.

``What's happening is the front end of this wave of teaser- rate loans that are coming into full pricing,'' Bies said at a risk-management forum in Charlotte, North Carolina. ``So what we're seeing in this narrow segment is the beginning of the wave -- this is not the end, this is the beginning.''

 

[KarmaPolice]

I don't see the arguement in the housing decline. Sure there might be a decrease in value for a small bit but for how long? If you pick the right places to buy I don't see how its a bad investment..they cant great more land and the population should only grow(except if there is a nuclear holocaust or something). My parents bought a house next to a college...easy money.

 

[maddogchen]

here in CA theres a slow down, but certainly don't expect a collapse

 

[dullard]

Originally posted by: KarmaPolice
I don't see the arguement in the housing decline. Sure there might be a decrease in value for a small bit but for how long? If you pick the right places to buy I don't see how its a bad investment.

Read this.

Celia Chen, director of housing economics for Moody's Economy.com, says she thinks it will take until 2009 for prices nationally to reach the peaks hit in 2005. Take inflation into account, she said, and a full recovery could take more than 7 years...
But Dean Baker, the co-director of the Center for Economic and Policy Research and a leading proponent of the theory that there has been a bubble in housing prices, says that he believes it could take five to seven years before prices get back to their highs on a nominal basis. If prices are adjusted for inflation, he thinks that prices will never recover their recent highs.

Now lets look at history. Link to read. Notice how it takes 6-10 years for prices to recover. Take inflation into account and that becomes ~20 years to recover.

But you are correct in a way. Prices haven't fallen in all areas. A few select great areas will rise even in the worst downturn. Some stocks do well when the stock market crashes. Some farmers have great profits when there is a major natural disaster. Etc. Pick well, and you'll be fine. But what if there are no good places to pick in your area/city/state?

 

[bigdog1218]

Originally posted by: DaveSimmons
Stock index mutual funds at vanguard.com are a safer bet and a lot less work. Buy, hold, enjoy the growth in value.

What are you talking about? If he's a renter it would be asinine for him to put money into a useless fund instead of buying a home.

 

[KarmaPolice]

Originally posted by: dullard

Originally posted by: KarmaPolice
I don't see the arguement in the housing decline. Sure there might be a decrease in value for a small bit but for how long? If you pick the right places to buy I don't see how its a bad investment.

Read this.

Celia Chen, director of housing economics for Moody's Economy.com, says she thinks it will take until 2009 for prices nationally to reach the peaks hit in 2005. Take inflation into account, she said, and a full recovery could take more than 7 years...
But Dean Baker, the co-director of the Center for Economic and Policy Research and a leading proponent of the theory that there has been a bubble in housing prices, says that he believes it could take five to seven years before prices get back to their highs on a nominal basis. If prices are adjusted for inflation, he thinks that prices will never recover their recent highs.

Now lets look at history. Link to read. Notice how it takes 6-10 years for prices to recover. Take inflation into account and that becomes ~20 years to recover.

But you are correct in a way. Prices haven't fallen in all areas. A few select great areas will rise even in the worst downturn. Some stocks do well when the stock market crashes. Some farmers have great profits when there is a major natural disaster. Etc. Pick well, and you'll be fine. But what if there are no good places to pick in your area/city/state?

yeah but my parents are not in it for the short term...plus they rent it soo...i see no downside

 

[smack Down]

Originally posted by: KarmaPolice
I don't see the arguement in the housing decline. Sure there might be a decrease in value for a small bit but for how long? If you pick the right places to buy I don't see how its a bad investment..they cant great more land and the population should only grow(except if there is a nuclear holocaust or something). My parents bought a house next to a college...easy money.

There is enough land in texas alone so that every person in the US can have a half acre of land. The US is not running out of land.

 

[Kwaipie]

Originally posted by: smack Down

Originally posted by: KarmaPolice
I don't see the arguement in the housing decline. Sure there might be a decrease in value for a small bit but for how long? If you pick the right places to buy I don't see how its a bad investment..they cant great more land and the population should only grow(except if there is a nuclear holocaust or something). My parents bought a house next to a college...easy money.

There is enough land in texas alone so that every person in the US can have a half acre of land. The US is not running out of land.

One problem.

1. Texas

I've actually been sitting on the fence about purchasing my first house, I'm going to push it until next summer. Mortgage defaults are just getting started.

 

[LegendKiller]

http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html

the guy who crated that graph, shiller, wrote Irrational Exuberance, from which arthur levitt coined the term before the .bomb.

housing is tanking and will continue to do so for a another year or so. I project a decline of about another 15-20%, which will put us into a full blown recession. I then predict housing will stay nearly flat for another 5-7 years. adjusted for inflation, housing will decline about 40% from the highest. keep in mind that price declines also mean no inflation increase, eroding real value. I also predict that rates increase significntly due to increased risk in the market and a pullback from the largest mbs/whole-loan purchasers.

this sucker isn't even half way into the decline.

 

[Whoozyerdaddy]

A guy I used to work with has been waiting for the "crash" for five years. Five years ago he could have afforded to buy a house. (and of course now he'd have all that equity built up) Now he's up sh*t creek cause he can't afford to buy anything in his market. He's still waiting for the "crash."

I don't think you're going to see a nationwide crash. There will be local corrections and maybe even a small localized crash or two. But nothing wide spread. I don't think you're going to see home values skyrocket like they have been for the last 10 years or so, but that's a far different thing than a crash.

 

[D1gger]

Part of my business is residential real estate development, and we are currently being very cautious about our investments in residential development. I'm still bullish on commercial properties though.

 

[dullard]

Originally posted by: Whoozyerdaddy
A guy I used to work with has been waiting for the "crash" for five years. Five years ago he could have afforded to buy a house. (and of course now he'd have all that equity built up) Now he's up sh*t creek cause he can't afford to buy anything in his market. He's still waiting for the "crash."

I don't think you're going to see a nationwide crash. There will be local corrections and maybe even a small localized crash or two. But nothing wide spread. I don't think you're going to see home values skyrocket like they have been for the last 10 years or so, but that's a far different thing than a crash.

There is a difference between

1) Getting just a tiny bit up the base of the mountation, and waiting for the elevation to decline.

and

2) Climbing the mountain, starting to climb back down, and waiting for the elevation to decline.

For some reason, you've never been able to distinguish the two in the threads that I've seen you post. Waiting 5 years ago when all signs pointed towards further booms was stupid. Waiting now when all signs point towards a bust isn't stupid.

All crashes (housing, stocks, or whatever) occur (A) far later than people predict, (B) occur far faster than people predict once they start, (C) and last far longer than people predict. Seems like your friend forgot part A.

When buying a stock or other investment, you buy just AFTER it just starts to rise and sell just AFTER it has started to fall (you have to do it after and not right at the peaks because you can never predict a peak with any accuracy). Your friend saw it just starting to rise and stayed out. He did the exact opposite of what you should do.

 

[Cattlegod]

Originally posted by: LegendKiller
http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html

the guy who crated that graph, shiller, wrote Irrational Exuberance, from which arthur levitt coined the term before the .bomb.

housing is tanking and will continue to do so for a another year or so. I project a decline of about another 15-20%, which will put us into a full blown recession. I then predict housing will stay nearly flat for another 5-7 years. adjusted for inflation, housing will decline about 40% from the highest. keep in mind that price declines also mean no inflation increase, eroding real value. I also predict that rates increase significntly due to increased risk in the market and a pullback from the largest mbs/whole-loan purchasers.

this sucker isn't even half way into the decline.

just curious, what gives you the hunch? are you in real estate?

 

[FP]

My house has increased in value over the last 2 years. Made about 7% a year.

<---- Lives in California.

 

[LegendKiller]

No, I work for an investment bank in structured finance. basically, I sit around all day thinking about risk when we underwrite or directly lend to companies. I specialize in esoteric assets, like cell towers, leases, timeshare loans...etc, as opposed to common securitization products like credit cards or mortgage backed securities. I look at default and prepayment historical curves, delinquencies, interest rates , underwriting practices, loan servicing...etc. I then stress the assets to come up with scenarios that tell me where the risk is, how to mitigate it, and how to charge for it.

I am not a yahoo that just reads cnn, nor an uneducated tool, nor a re or mortgage hack. I get paid to think about risk/return and find out how I can make investors money while covering risk.

I also read a lot of rating agency and industry rags, such as asset backed alert, every week. all of them are worried and getting more so.