The housing bubble bursts! Where's the bottom?

[bfdd]

I do agree that there is room for houses to go down but I would think it's probably only ~10%. At this point we're largely back at 2002-3 prices. How have we "lost" 10% of its middle class jobs in an irretrievable way? The 11% number is questionable without knowing what the historical rate was.

lol please... houses have quite a bit to come down in certain regions. Southern California is practically off limits to all but very few, unless you want to get stuck with some ridiculous mortgage still. Average income for the city I live in is like just over 60k, average house price is still damn near 10x's that. That is not anywhere near where housing needs to be. The cost of living has to come down in order for Americans to be competitive, we've allowed to much speculation and market manipulation into our housing market. It's broken and without a collapse I never see it righting itself. Just an infinite loop of bubbles and us propping them up.

 

[hal2kilo]

"The housing bubble bursts!"

I think you are a little late to the game.

In fact many places the prices have settled or even gone up. If you live in DC or inside the Metro line the prices have gone flat or gone up. There are flippers again in DC flipping places for profit.

I grew up in Arlington and still have family in the area. I was a second generation government worker child and two of my brothers work for the good ole USA. The DC area lives on the largesse of the nation. My brother lives in Loudon country which has been declared the richest county in the country for a forth year in a row. That ought to tell you something.

The corporate leeches and lobyists make me not recognize the old high mean income of basic government workers I grew up with i.e. not extreme wealth but everybody was doing OK.

I'm still sucking off the tit of the government though, as I work as a militarycontractor on the other end of the continent.

Finishing my thought. Youare living in a fantasy land compared to the nightmare of the housing market in most of the rest of the country.

 

[LegendKiller]

lol please... houses have quite a bit to come down in certain regions. Southern California is practically off limits to all but very few, unless you want to get stuck with some ridiculous mortgage still. Average income for the city I live in is like just over 60k, average house price is still damn near 10x's that. That is not anywhere near where housing needs to be. The cost of living has to come down in order for Americans to be competitive, we've allowed to much speculation and market manipulation into our housing market. It's broken and without a collapse I never see it righting itself. Just an infinite loop of bubbles and us propping them up.

The 10% was an average number. Plenty of people in SoCal can afford the houses, CA has always been expensive relative to the country and always will be. I don't have my data with me but CA prices are already far lower than peak prices.

 

[spidey07]

lol please... houses have quite a bit to come down in certain regions. Southern California is practically off limits to all but very few, unless you want to get stuck with some ridiculous mortgage still. Average income for the city I live in is like just over 60k, average house price is still damn near 10x's that. That is not anywhere near where housing needs to be. The cost of living has to come down in order for Americans to be competitive, we've allowed to much speculation and market manipulation into our housing market. It's broken and without a collapse I never see it righting itself. Just an infinite loop of bubbles and us propping them up.

Location, location, location. Move to somewhere not fucked up like CA.

 

[bfdd]

The 10% was an average number. Plenty of people in SoCal can afford the houses, CA has always been expensive relative to the country and always will be. I don't have my data with me but CA prices are already far lower than peak prices.

sure they can afford houses, just like the people a few years could afford houses. they really can't they just think they can. when i was making 80k a year living here, there's no fucking way in hell i would have bought a goddamn 600,000 dollar house. that's almost 10 times my yearly income before taxes, how fucking dumb does one have to be to do that? sure i could have afforded it, but why would i want to? put myself in the hole like that... please

Location, location, location. Move to somewhere not fucked up like CA.

spidey I don't disagree with you, i completely expect it to cost more here, but the income to housing disparity here is absolutely ridiculous.

 

[LegendKiller]

I grew up in Arlington and still have family in the area. I was a second generation government worker child and two of my brothers work for the good ole USA. The DC area lives on the largesse of the nation. My brother lives in Loudon country which has been declared the richest county in the country for a forth year in a row. That ought to tell you something.

The corporate leeches and lobyists make me not recognize the old high mean income of basic government workers I grew up with i.e. not extreme wealth but everybody was doing OK.

I'm still sucking off the tit of the government though, as I work as a militarycontractor on the other end of the continent.

Finishing my thought. Youare living in a fantasy land compared to the nightmare of the housing market in most of the rest of the country.

I remember moving to Reston 5 years ago. The company I worked at (a major finance company) was full of bright people, a lot of McKinsey-ish consultants. Yet, every single one of them refused to believe that DC was going to face a downturn, it was amazing to me that people were so clueless. Prices in Reston are certainly lower.

 

[LegendKiller]

sure they can afford houses, just like the people a few years could afford houses. they really can't they just think they can. when i was making 80k a year living here, there's no fucking way in hell i would have bought a goddamn 600,000 dollar house. that's almost 10 times my yearly income before taxes, how fucking dumb does one have to be to do that? sure i could have afforded it, but why would i want to? put myself in the hole like that... please

spidey I don't disagree with you, i completely expect it to cost more here, but the income to housing disparity here is absolutely ridiculous.

Median home price in CA is far lower than 600k.

http://articles.latimes.com/2010/apr/16/business/la-fi-home-sales16-2010apr16

 

[hal2kilo]

I remember moving to Reston 5 years ago. The company I worked at (a major finance company) was full of bright people, a lot of McKinsey-ish consultants. Yet, every single one of them refused to believe that DC was going to face a downturn, it was amazing to me that people were so clueless. Prices in Reston are certainly lower.

It reminds me of remarking to a person who was at my Dad's funeral visitation, remarking how it appeared that the area appeared to be recession proof. He responded that there were quite a few losses. I still did not see For Sale signs all over the place, shopping centers were still being built, and the Broadlands was still expanding.

Also, the house I grew up in had been torn down and a huge house was being built which occupied a large part of the property. I would say, this was happening to 1 in five of the houses in my old neighborhood. I'm assuming my old house sold for a minimun of 350k and the house being built on it was about the same cost to build minimum wize. This of course is a house within 2 miles of the East Falls Church Metro station.

 

[Zebo]

Banks are still playing games with MTM hiding their insolvency and needed forced liquidation to hit bottom. If jobs and incomes do not recover they will not be able to hide forever and you'll see another crash. Rising interest rates present a double whammy. In sum I don't think you have seen anything yet.

 

[wuliheron]

Banks are still playing games with MTM hiding their insolvency and needed forced liquidation to hit bottom. If jobs and incomes do not recover they will not be able to hide forever and you'll see another crash. Rising interest rates present a double whammy. In sum I don't think you have seen anything yet.

I guess eating the rich starts to look much more appetizing when you're starving.

 

[WhipperSnapper]

Idiocy.

Point me to ONE published/broadcast liberal who said "it's all Bush's fault".

Perhaps it's not all Benedict Bush's fault, but it did happen on his watch. Perhaps if Bush and his buddies hadn't supported less regulation it wouldn't have happened or wouldn't have been so bad. I wouldn't be surprised if the Bushes and the Republicans knew exactly what was going on and what was going to happen but stood idly by knowing that it would enrich the coffers of the haves and have mores.

 

[hal2kilo]

Perhaps it's not all Benedict Bush's fault, but it did happen on his watch. Perhaps if Bush and his buddies hadn't supported less regulation it wouldn't have happened or wouldn't have been so bad. I wouldn't be surprised if the Bushes and the Republicans knew exactly what was going on and what was going to happen but stood idly by knowing that it would enrich the coffers of the haves and have mores.

No way the Bush Admin was looking the other way and whisling past the graveyard.

 

[WhipperSnapper]

40% of all sales are short sales or foreclosures. It's buy, buy, buy time. The people that can afford the houses they are buying will lift prices up while poor financial decisions of others will be our gain. Supply and demand, live it, learn it, love it.

We will never see a time like this to buy in our lifetimes.

Are you certain that the prices are going to go up again and that now is the time to buy? What happens if you shell out $150,000 for a home that used to sell for $300,000 and it drops further in value?

The supply of labor worldwide relative to the demand for labor (wealth, capital) dictates much lower wages and a standard of living for Americans. (Supply and demand, you know, live it, learn it, love it--or hate it.)

This means that fewer and fewer Americans will be able to afford $100,000 houses. How are recent college graduates who are burdened with student loan debt and who could not find jobs in their fields (essentially becoming unemployable in them and losing the value of their college degrees) and who ended up working for $10/hour supposed to be able to purchase all of these homes? According to one study we've lost 10% of our middle class jobs. In the meantime the costs of food, gasoline, and health care have increased, which constitutes a diversion of money that might otherwise be spent on housing.

I don't think the housing market is ever going to recover. I think it's going to end up in a death spiral (like what Jhnnn suggested might be possible). The prices will just have to come down to the point where student loan indebted college graduates earning $10/hour and other people earning $10/hour can afford them.

When you think about the state of the U.S. economy and the outlook for the future, buying a home is very scary. Unless you're looking at a modest $50,000 house or condo where the payments will be the same or cheaper than rent, it's scary. (Even those modest properties could still decrease in value.)

 

[WhipperSnapper]

I do agree that there is room for houses to go down but I would think it's probably only ~10%. At this point we're largely back at 2002-3 prices. How have we "lost" 10% of its middle class jobs in an irretrievable way?

The lost middle class jobs are not metaphysically irretrievable, but for all intents and purpose they are irretrievable without a political revolution. Basically, when tens of millions of people in impoverished countries also want to work those same jobs and when a great many of them are capable of doing so (or of even doing a better job), those jobs will end up being lost irretrievably, at least at previous wages. You might say that we're replaced middle class manufacturing and white collar jobs with low wage service jobs and that it is a permanent condition (barring a political revolution).

The 11% number is questionable without knowing what the historical rate was.

That's a good point. I wonder what the empty home rate was before. 11% does seem like a high number, though.

 

[blackangst1]

The worst may be still to come in my home state:

http://www.phoenixrealestate247.com...phoenix-homeowners-have-underwater-mortgages/

70% of Phoenix Homeowners have more mortgage than home, according to a recent study by Zillow.com. Even if we take into account the fact that Zillow seems to almost always be off by 20% either way with their numbers that still balances out to a pretty hefty number.

With Arizona home pricing in most areas at the same level it was in 2000 these are the lowest prices we’ve seen in a decade and even some people who “rode out” the peak are seeing themselves with upside-down mortgages. The number will probably continue to grow as we see 2011 not brining much equity to these homeowners.

70%!!!!

 

[Zebo]

The lost middle class jobs are not metaphysically irretrievable, but for all intents and purpose they are irretrievable without a political revolution. Basically, when tens of millions of people in impoverished countries also want to work those same jobs and when a great many of them are capable of doing so (or of even doing a better job), those jobs will end up being lost irretrievably, at least at previous wages. You might say that we're replaced middle class manufacturing and white collar jobs with low wage service jobs and that it is a permanent condition (barring a political revolution).



That's a good point. I wonder what the empty home rate was before. 11% does seem like a high number, though.

This too.

When mainstream Orwellian economists tout "globalization" what they really mean is "poverty is wealth" and presidents and politicians since Clinton have pimped this meme which only enriches transnational corporations and turns workers into serfs who can not even afford to pay their house payments. It's too ingrained now and not going anywhere. Plan on houses being worth a lot less.

They hid selling you out for a long time with giving you unreasonable credit (nodoc, 3% down etc) and public debt. First is tapped, very few blue chip borrowers left. Second will be tapped out soon. Illusions will be over and your equity with it.

But on the bright side iphones will still be cheap for those who have a job left. But most of your paycheck will go to wealthy Treasury holders who sold you out so maybe not.

 

[Zebo]

Are you certain that the prices are going to go up again and that now is the time to buy? What happens if you shell out $150,000 for a home that used to sell for $300,000 and it drops further in value?

The supply of labor worldwide relative to the demand for labor (wealth, capital) dictates much lower wages and a standard of living for Americans. (Supply and demand, you know, live it, learn it, love it--or hate it.)

This means that fewer and fewer Americans will be able to afford $100,000 houses. How are recent college graduates who are burdened with student loan debt and who could not find jobs in their fields (essentially becoming unemployable in them and losing the value of their college degrees) and who ended up working for $10/hour supposed to be able to purchase all of these homes? According to one study we've lost 10% of our middle class jobs. In the meantime the costs of food, gasoline, and health care have increased, which constitutes a diversion of money that might otherwise be spent on housing.

I don't think the housing market is ever going to recover. I think it's going to end up in a death spiral (like what Jhnnn suggested might be possible). The prices will just have to come down to the point where student loan indebted college graduates earning $10/hour and other people earning $10/hour can afford them.

When you think about the state of the U.S. economy and the outlook for the future, buying a home is very scary. Unless you're looking at a modest $50,000 house or condo where the payments will be the same or cheaper than rent, it's scary. (Even those modest properties could still decrease in value.)

Hit nail on head again.

Demand comes from bottom up. When bottom is doing shitty so is demand for your warez, like housing.

There are several factors working against having consumer demand again.
1. Americans are tapped out credit wise already and banks have no way to extend them further. e.g. extend and pretend. And there will certainly be no more no docs or other loans w/o skin in the game like before.
2. Americans are now in competition with people who think a bowl of rice is rich, this wage hardly will pay several hundred thousand dollar mortgages.
3. Americans are coming to a point govt won't be able to fake it for them anymore as it goes insolvent or sudden stops. 2 trillion a year debt fed back to Americans pockets is unsustainable. Then what?

Go ahead Spidey and buy if your think it's a sound investment but as a former home builder and turner I'm not touching it until we figure out how to get money back in Americans hands again, all sign point to the opposite IMO.

 

[dmcowen674]

Its all over the news that housing is worst in U.S. since records have been kept.

Suze Orman said that Bush destroyed the Country that even Obama can't save it.

Put a fork in it.

Its just a matter of who stays behind to turn off the last light bulb.

 

[Londo_Jowo]

Its all over the news that housing is worst in U.S. since records have been kept.

Suze Orman said that Bush destroyed the Country that even Obama can't save it.

Put a fork in it.

Its just a matter of who stays behind to turn off the last light bulb.

I believe you voted for him.......not once....but twice. Please make your reservations to Somalia, we'll take care of the lights long after you're gone.

 

[phillyTIM]

Why does our economy need all these new houses? I mean, who's gonna live in them? The baby boomers, who are the population bloat (and I do not mean that in a negative way) of our Country, are starting to pass away and their numbers are receding. There is less of need for greater numbers of houses.

With all these way overpriced half-million (plus) dollar, 100 year old houses around here (especially in areas such as Philadelphia), why do we need MORE houses built?

Certainly there are epidemics of of areas where those old, decaying half-million (plus) dollar houses could be demo'd/redeveloped - if anything. A kind of 'new deal' redevelopment project could be proposed and provide decent, affordable housing and to rejuvenate the economy (*cough* jobs). Couldn't it?

I'm sure I'm over-simplifying things and it may not be the full solution, but it could be the beginning of something.

 

[Capt Caveman]

Its all over the news that housing is worst in U.S. since records have been kept.

Suze Orman said that Bush destroyed the Country that even Obama can't save it.

Put a fork in it.

Its just a matter of who stays behind to turn off the last light bulb.

Hopefully, this jackass will leave the country and this forum sooner than later.

 

[Capt Caveman]

As Spidey has mentioned, never been a better time to buy. Looking into purchasing a new rental property. Where I live, two bedroom condos/townhouses can be rented out for $2.8k/month. It's all about location, location, location.

 

[spidey07]

<snip>
Go ahead Spidey and buy if your think it's a sound investment but as a former home builder and turner I'm not touching it until we figure out how to get money back in Americans hands again, all sign point to the opposite IMO.

You'd be crazy to buy a NEW home right now but there are serious deals to be made out there and super low rates to boot. Developers are getting killed so I can understand why you wouldn't go near it. Buying is picking up nicely, at least in my area. Prices are also ticking up steadily. It's a risk I can take because of the tremendous opportunity.

As far as bottom, that all depends on location.

 

[Texashiker]

The housing bubble bursts! Where's the bottom?

What are your wages compared to 10, 15 and 20 years ago? Have your wages tripled in the past 10 years? How about tripled in the past 5 years?

Like most Americans, your probably making close to what you were making 10 years ago, maybe even 15 years ago.

Look for the price of housing to adjust back to the same price to when people could afford to buy a home. This might be prices 15 years ago, it might be prices 20 years ago.

Personally, I would like to see the price of housing adjust back to what they were back in the 1980s and 1990s. That was the last time I remember an average middle class family actually being to afford a home.

 

[phillyTIM]

What are your wages compared to 10, 15 and 20 years ago? Have your wages tripled in the past 10 years? How about tripled in the past 5 years?

Like most Americans, your probably making close to what you were making 10 years ago, maybe even 15 years ago.

Look for the price of housing to adjust back to the same price to when people could afford to buy a home. This might be prices 15 years ago, it might be prices 20 years ago.

Personally, I would like to see the price of housing adjust back to what they were back in the 1980s and 1990s. That was the last time I remember an average middle class family actually being to afford a home.

Amen, to all the above - you hit my nail right on the head, in most respects! It's a shame that Housing, a hallmark of the average person's dream, has become such a played-with commodity to riches.