Friday, January 23, 2009

The decline in existing home prices accelerated in November

From CNN Money:
A new government report reveals declines that are steeper than usual — even for this market. ...

The Federal Housing Finance Agency (FHFA) reported that home prices fell a record 1.8% for the month, compared with October... That follows losses of 1.2% and 1.1% in the two previous months. For the 12 months ended November 30, prices fell 8.7%, which was the largest 12-month price drop ever for the 17-year-old index.

"We've been seeing an acceleration in the rate of housing-market decline," said Mike Moran, a real estate analyst with Daiwa Securities. ...

"The news in the housing markets has just been dreadful," said Moran.

That bad news includes foreclosure rates that are still on the rise, record-low homebuilder sentiment and reports of modified mortgages quickly going bad again.

155 comments:

  1. I actually have friends who think the price of homes is going to stop going down and go back up come middle of 2009.

    They think the bailout money and Obama's proposals are going to help.

    ReplyDelete
  2. "I actually have friends who think the price of homes is going to stop going down and go back up come middle of 2009."

    Sounds like you aren't much of a friend if you are mocking them behind their backs.

    ReplyDelete
  3. The whole real estate debate is becoming ridiculous and sickening. No one can control prices! Bring the site down. Go find something lucrative and constructive to do!

    ReplyDelete
  4. Anonymous said...
    The whole real estate debate is becoming ridiculous and sickening. No one can control prices! Bring the site down. Go find something lucrative and constructive to do!

    You don't need to read this site if you don't want to. But that's not your real concern is it? No, you're upset that OTHER PEOPLE are reading Bubble Meter. Why does that upset you? My guess is your job is dependent on the real estate market. But, as you said, no one can control prices. They will continue falling whether Bubble Meter exists or not.

    ReplyDelete
  5. ""Sounds like you aren't much of a friend if you are mocking them behind their backs.""

    Mocking? Wow...you've got some serious insecurity and sensitivity issues. What part of what I said was mocking other than re-iterating what they expressed to me?

    Are you one of those people who can "feel" what someone says in cyberspace?

    If so, can you teach me your skill?

    ReplyDelete
  6. Unfortunately, Noz, a lot of the people who comment on this blog chose to hurl insults as a substitute for intelligent discussion. When everybody in America knows that housing prices are plunging, how can real estate professionals respond to that? They hurl insults. It's one of the few options they have left.

    ReplyDelete
  7. James:

    Apparently so. It's quite sad but a good point you make.

    ReplyDelete
  8. Zon,

    Have to agree with the others. Chill out.

    ReplyDelete
  9. James,

    You might want to post this article. It could make for an interesting discussion.

    World's Best Places for Real Estate Buys

    by Matt Woolsey
    Thursday, January 22, 2009
    provided by FORBES.com

    Washington, D.C., traditionally takes a back seat to world cities like London, New York and Tokyo when it comes to real estate investment.

    That's likely to change.

    Thanks to a proposed $1 trillion wave government spending, investors are flocking to D.C. for opportunities in the commercial and residential real estate markets. All these new programs will need offices, after all, and their employees will need places to live.

    This year, Washington leapfrogged London for the first-place ranking in the world's best cities for real estate investment. ...


    http://finance.yahoo.com/real-estate/article/106474/World's-Best-Places-for-Real-Estate-Buys

    ReplyDelete
  10. "I actually have friends who think the price of homes is going to stop going down and go back up come middle of 2009."

    You actually have friends? No, that isn't the point you were trying to make.

    What you said was essentially: "My idiot friends think the bottom is near. Can you believe that!?"

    Look, human nature is universal. Get it? Your thoughts and feelings are unique to you, but they aren't unique to humanity. So when you say you "actually have friends", we know what you really mean.

    ReplyDelete
  11. ANON:

    Actually no...that isn't what I was trying to "essentially" say.

    But what I think YOU were trying to say is that YOU have some really big personal problems and when someone states something, you take everyone as a personal attack and a negative.

    So look, screwed up mentality like yours is actually common. Get it? So when YOU say "What you essentially said...", we all know that's really code for "I'm a bit f**ked up in the head and paranoid and have to interpret everything as a personal attack."

    I hope that clears things up.

    You do sound awfully bitter....you losing your house? Did I hit a nerve?

    ReplyDelete
  12. Nozzle,

    Its all good. You're a pompous ass; that's my whole point. It has nothing to do with my personal life. But when you ACTUALLY come here and write about your "friends", it obviously has something to do with YOUR personal life.

    Nice denial of the obvious, by the way. Care to try again? Next, try something along the lines of "I work in a retirement home and my friends all have dementia, which is why they ACTUALLY think that we're near bottom."

    Give it a whirl. See how it plays.

    ReplyDelete
  13. ANON:

    Grow some balls and put a name to your pathetic online face....I suggest pussy. Will that work for you?

    It has everything to do with your personal life. Seems like you're the only one singled out here who has a problem with my simple statement. I wonder why? Nothing personal of course.

    Now go talk to shrink before your feeble brain melts down.

    And also see a financial counselor before your bitterness about losing your home overwhelms you.

    Thanks for playing.

    ReplyDelete
  14. Nozzle, my name is Robert. Feel better? I hope so.

    You can invent any manner of scenarios about me if it will help you sleep better at night.

    Try this one: I live in a refrigerator box because I lost my home last April and my job last September.

    All better now? Say hi to your "actual" friends for me.

    ReplyDelete
  15. Been absent for a little while. Then I come back to the blog and see that RE agents and other housing heads are back as well. Oh, the bitterness of their posts.... Gotta laugh at them.

    Lance, good try posting that Forbes article, but it's all based on speculation of what Obama may or may not be able to do, and therefore hardly something to base one's decision on. Let's remember that already, Congress (including Democrats) is giving him a hard time on his stimulus plans.

    -SSH Anon

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  16. I haven't read this blog for a while, and for some reason I decided to check it out again today.

    ...and oh #$!@ Lance is still posting! THE lance!

    What drives him to humiliate himself the way he does?

    ReplyDelete
  17. As much as I wish to be able to afford a home on my measily $100K salary. I wouldn't say the housing has dropped enough for Lance to actually be humiliated. Homes in Potomac are still 500% higher in price than they were before the bubble started.....a drop in $20K every 6-8months isn't really a correction. Lance has nothing to feel humiliated about really. Im still waiting for prices to be affordable and have been renting a looooooooooong time

    ReplyDelete
  18. Anonymous said...
    "I haven't read this blog for a while, and for some reason I decided to check it out again today.

    ...and oh #$!@ Lance is still posting! THE lance!"


    That is Lance's first post in a very long time. By the way, welcome back Lance.

    ReplyDelete
  19. Lance said...
    James,
    You might want to post this article. It could make for an interesting discussion.


    Swell article Lance. I’m surprised however that you did not post a link concerning rising foreclosures, the failure of Fannie/Freddie and other institutions, growing unemployment, the latest homebuilder sentiment, or any of the bailouts going around.

    ReplyDelete
  20. Yes, Robert. Even more reasons why someone like Anon 3:00 has reason to say 'Im still waiting for prices to be affordable and have been renting a looooooooooong time'. Do you still think it was a good idea to tell people here in Washington to wait to buy like you did some years back?

    ReplyDelete
  21. And remember Robert, I never advocated irresponsible buying, just buying by those who could both afford to buy (with sacrifice if need be) and those with sure enough plans to know they'd be staying in the area at least 5 years. Where we disagreed was whether anything of value would fall significantly in price. Whether there would be fire sales and "blood in the streets". There hasn't been. And anyone counting on that to "get an incredible deal" ... is still waiting ... like Anon 3:00.

    ReplyDelete
  22. The reasons an "Anon" leaves a message are dubious at best. Not a good reason to buy. " Honey, I read an anon post on a blog that says renting is not a good idea! BUY BUY BUY". Its always the same with you Lance, stimulate buying, its the only tool you have to try and save your investment.

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  23. Lance,

    Could you state why you think it's a good reason to buy right now?

    ReplyDelete
  24. "Lance has nothing to feel humiliated about really. "

    Are you kidding? This is the same dummy that continually claimed there was no bubble, and that prices wouldn't fall, long after prices were already falling.

    Just go look up some of his old posts.

    ReplyDelete
  25. Noz,

    There's no such thing as a 'good time' or a 'bad time' to buy. People who aren't ready to take responsibility for themselves look at the world as 'favorable' to them or 'unfavorable' to them. And them make themselves subject to the whims of 'the market'. Be it a real estate market, a job market or any other situation where they could instead be the masters of their own destinies. Fear can immobilize otherwise smart people.

    ReplyDelete
  26. It is now a good time to buy a Crysler, because prices are rock bottom. 2004-2006 was a BAD time to buy a house because you paid too much and are now subject to the whims of the market, government, buyers etc...

    ReplyDelete
  27. Lance,

    There is an element of fear that I agree can immobilize people.

    But where I disagree is if there is a good or bad time.

    When someone sits down and looks at the numbers and does some calculations, it is clear that NOW is a bad time to purchase real estate in the conventional way versus a few years ago when it was a very good time to purchase real estate in the same way.

    If I were very wealthy..i.e....didn't have to hold a regular job, could buy whatever I wanted regardless of price, etc etc, then purchasing now or later would not matter at all.

    But given that I am a regular joe and need to work, I need to take steps forward wisely and safely so as not to incur huge penalties not only economically but also TIMEWISE.

    Were I to buy a home now, I'd be stuck with it. Were I to have bought a home two years ago at the peak, I be stuck with it even more so.

    My payments would be exorbitantly high, my property taxes would be through the roof, and my life choices would be severely limited because I'd be chained down by a home I can't rent, can't sell, and have to be forced to keep a job that I may not like.

    The fear of lack of understanding the situation is what paralyzes most people. And rather than sit down and crunch numbers, people listen to who says what and make decisions that way.

    For most, this is a BAD time to buy because of high initial costs, high property taxes that will stay with them throughout the lifetime of their ownership, and high payments even with low interest rates.

    With rapidly declining job markets, even more tightening credit markets, probable increases in interest rates sooner than later, all the trends point to people not being able to buy comfortably..if at all.

    With increasing foreclosures due to stupid buyers and dumbass owners, the flood of homes will drive prices down.

    All this talk about stimulus and bailouts...where is the money coming from? Printing? OK...so they print. What will that do to our economy?

    Let's assume that home prices...from today...do not go down any further. They stop right here.

    What is that going to do to people who want to buy homes but can't on their salaries that are 10-12 to 1 of the mortgage payment?

    Could this be a global attempt by banks to raise the affordability bar in general and increase the amount of income (traditional) from 28% of one's salary to say 40%? Could that be it?

    I guess for people who have a lot of money saved up, they can walk into a sale and put a lot of money down and be done with it. That is a minority in this country, not a majority.

    Banks are now asking for 20% down or more. On homes priced on average $500K or more in metropolitan areas like LA or DC, we're talking $100K or more. Not including closing costs, moving costs, repairs, furniture, insurance, etc etc etc...an easy $120K or more required for a $500K home purchase initially...followed up with $2500+ of monthly payments or more.

    Does this seem logically to people when such homes were selling for half that much a mere 7-8 years ago?

    My salary hasn't gone up 2-3 fold...has anyone elses?

    ReplyDelete
  28. Lance said...
    Yes, Robert. Even more reasons why someone like Anon 3:00 has reason to say 'Im still waiting for prices to be affordable and have been renting a looooooooooong time'. Do you still think it was a good idea to tell people here in Washington to wait to buy like you did some years back?


    Are you kidding? Rhetorical question Lance?

    Lance, believe it or not, we BHs have moved on.

    It is now accepted that there was a housing bubble. Housing prices were inflated and at a disconnect from fundamentals. We are now a couple of years into a recession. Unemployment and foreclosures are rising. The government has and will throw trillions of dollars at the problem. And you want to know if I think it was a good idea to purchase at the top of the market, during a bubble? Please.

    You’re still stuck in speculating and arguing against a housing bubble that was, and has come and gone. Move on. I suggest tuning into the History Channel. They are currently running a documentary on the bubble and the effects of which on the economy. It’s pretty rudimentary, it was what the BHs were saying in the past, but it should get you caught up to speed.

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  29. Noz said...

    My payments would be exorbitantly high, my property taxes would be through the roof, and my life choices would be severely limited because I'd be chained down by a home I can't rent, can't sell, and have to be forced to keep a job that I may not like.


    Great post Noz, same here. I am currently debt free and have enough in savings to live on for a year or more if (God forbid) I should loose my job. If I had purchased a home in the last few years, even “purchased within my means” I could not enjoy the financial freedom I have today.

    I have yet to have to trim the hedges, mow the lawn, or perform regular maintenance on a home for a few years now. Home ownership is looking like a noose to me.

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  30. "It is now accepted that there was a housing bubble" outside the beltway.

    The story is different close in.

    Given that the government is tossing trillions around, it's not certain what will happen.

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  31. Thanks for the article, lance. I'm always amazed by people on this site--are you really looking for a house around DC? If you are, like me, you probably haven't seen prices drop that much, especially for modest homes in core areas with good schools. Will they ever drop significantly? Maybe, but then there are two sides to every story.

    Will the massive deflation our economy is facing overwhelm the local job market? That is the crucial question here. Put another way, which is more important for housing demand in the core, the two GS12-income family, or the incredible destruction of the credit markets? I'm not smart enough to know, but it looks like those GS-12 couples (and their lobbyist lawyer friends) are holding strong. Maybe an Obama admin will start RIFing people, but I doubt it--more likely to increase the federal workforce. anyway, my 2c.

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  32. Bought a townhouse on Capitol Hill, DC in 2006. Financed with a 80/15/5 30-year fixed loan. By the end of the year, we'll have paid off everything but the 30-year mortgage. That'll bring our total monthly housing payment (loan & escrow) to about 25% of our monthly income. Based on the latest appraisals, we've got about 20% equity.

    So yeah, buying seems like a good idea in retrospect. I guess if we'd bought in Manassas or something, we'd feel differently.

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  33. Noz,

    Prices go up, prices go down. It was actually much more difficult to buy a home in the early 80s when interest rates were approaching 20% than it was over the last decade, but people got through it.

    The point I was making is that you need to be in charge of your own destiny and adjust to things going on around you. If you sit around waiting for prices to fall, you're not in control ... you're counting on factors over which you have no control. But those people in control aren't doing that, so as those who sat around waiting for a supposed bubble to burst are now finding out, waiting on the vagueries of the market isn't helpful. They're still in competition with those who took control of the situation. Yeah, they can now go out and get a "bargain" on the type of place (in the location) they didn't want in the first place ... but not the places they really want. In effect, believing in a bubble is a cop out. Yeah Robert ... you and your ilk have gotten people to buy that term "bubble" ... but ask anybody who's seriously in the market like Anon 6:31 and you'll see that nothing busted ... expect the crap that was never worth the asking prices for it to begin with. Btw, how long have you been renting now? Remind me, have you ever owned your own home?

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  34. Actually I agree with you regarding taking your destiny into your own hands.

    But smart people don't sit around and "wait" for prices to drop.

    They search, see, figure things out, compare, etc. Buying a home and "thinking" you're in control has nothing to do with being smarter or more in control than someone who does not.

    You will always find areas in real estate where a wealthier group of people are battling it out amongst themselves to buy and sell. That is not what I am talking about.

    I am talking about the average person who has to work for a living and has to sacrifice a lot to buy a home. For people like this, we are living in a "bubble." We are living in a time when home price far far out stripe incomes and savings.

    I'm not sure why you are so resistant to admitting that. Times like these can offer opportunities to people who can AFFORD such high prices without worrying about layoffs, job transfers, low income, immunity to slow economies, etc...i.e. the wealthy.

    People who sit and wait and save money for home prices to come down and THEN buy are just as much in control, if not more so, than the fools who bought into the "home prices can only go up" crap and are now groveling on their knees for a bailout they don't deserve.

    And no...I don't own an home. And frankly that has no bearing on understanding the market or knowing what to do.

    The situation is very simple. Prices went to far up. They will come down. Some areas will be hit harder (much harder) than others. Wealthier areas will not (perhaps...because there are many wealthy areas in LA that are affected quite a bit).

    Unless there is some new economic force that we do not fully understand, a very tight credit market coupled with very high prices of homes and losses in jobs and a failing economy which is made worse by a country of people who, for the most part, have negative savings, is going to push home prices down.

    There was absolutely no solid justification for home prices to have doubled, tripled, or quadrupled in the last 7 years...none. No foundation for it other than artificial forces at work. This is, by definition, a bubble.

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  35. There was absolutely no solid justification for home prices to have doubled, tripled, or quadrupled in the last 7 years...none

    Manifestly false. At least as regards certain areas within the District. I think, on this blog, that we're bumping up against the "Three Blind Men & The Elephant" problem.

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  36. So what were the pressing reasons for such large home price increases? Don't say supply and demand...because that is nonsense.

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  37. Notice the guy said parts of the district - exactly right.

    What Noz doesnt seem to understand is that the large 2-2500 foot row houses that were "worth 600K" were selling for 200K on the assumption that some day, this will no longer be gangland - some day, people will not use these houses for crackdens - some day, these houses will be worth something.

    130 years after they were first buit - that someday has come.

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  38. I understand it perfectly...such problems exist everywhere.

    What you don't seem to understand is that such neighbourhoods with such homes existed already that were not in gangland areas and prices of these homes went up by the same amount.

    No gentrification required. So what excuse do you have for those homes and areas?

    I can't believe there are people who actually think home values increasing 2-4 times in a short period of time and mortgage to income ratios being above 50% is "normal," justtiied, or logical.

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  39. "There was absolutely no solid justification for home prices to have doubled, tripled, or quadrupled in the last 7 years...none."

    Actually there was. Yes, there were the reasons ibc mentioned, but there was also the fact that we had easy money. And no, we didn't have easy money because there was a worldwide conspiracy of bankers out to get us, but because the bankers (or rather the financial system) was responding to a worldwide massive shift in how effectively and efficiently our resources could be used. In brief, we had the coming of new "tools" (computers/Internet/ telecommunications) which allowed us to interact as "one world" in a way we'd never been ablt to before AND we had an unleashing of human resources to use these new tools from formerly isolated/non-participatory places such as China and its quarter of humanity and countries behind the iron current. We had a "big bang" of REAL value coming about.

    The final piece will be the massive inflation we should expect with the massive bailouts. The government has to "print money" to fund these bailouts. Assuming they succeed (and they will sooner or later), that means we'll have lots more dollars chasing the same number of goods and services. And THAT can only result in inflation as people are bidding for the same things.

    Also Noz, I wasn't speaking about the wealthy. I was speaking about those people who decided to be in control of their futures and recognized that "not putting their lives on hold" was the best way to do it ... Even if it meant buying a home that might have been a lot smaller than they really wanted or maybe a lot farther from where they wanted to be. They made do with what they had under the cards they were dealt. They didn't hold off "hoping" for the cards to change. As lots of people are now finding out, that's very risky. What do you think will happen to home prices if inflation hits?

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  40. Noz, weren't you hear in the 1990s? Cleveland Park and Tenleytown were littered with crackhouses and prostitutes were shooting up in the streets. That's why house prices were 1/3 there of what they are now.

    ReplyDelete
  41. Easy money isn't a reason...it's an artificial stimulus that created a bubble.

    Also, you don't have to put your life on hold simply because you choose not to buy a home. I'm not sure where this stigma comes from.

    Your inflation scenario will not help. It will weaken the dollar and proportionally lower affordability...making matters worse. And we'll be back to where we were two years ago at a peak ready to collapse. So how is that going to help?

    Responsible, reasonable, and rational people have waited and will continue to wait for prices of homes to come more in line with fundamentals. Unless there is an absolute pressing reason to purchase a home now, most people buying NOW will lose money in the short term, break even in the middle term, and go back to making 2-4% per year in appreciation in the long term as has been the case for housing for at least over 100 years now.

    I'm afraid the wealthy are the only ones who can afford to "not put their lives on hold" without any penalty economically or time-wise. Most others have to sacrifice an awful lot to stick themselves in home that a mere few years ago was 1/3 of what it is today.

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  42. "I'm not sure why you are so resistant to admitting that."

    Pride of course, lance made a big fool of himself trying to deny that there was a housing bubble. Now here he is, years later, still trying to find some way to say he was "right."

    Check it out...

    ==============================
    "An increase in rates may cool some real estate markets, but it will hardly make a dent in the District's... The real estate there has gone up in value like real estate everywhere, but not nearly enough to reflect it's real value and where it is headed. All one needs do is look at places like Manhattan to see how undervalued the District still is." -Lance June 11 2006

    "I can only speak for what I am seeing the in District, but I really don't think house prices here will decline in the least. Condos probably will go down a bit considering all the new ones currently being built, but even that longterm will do alright. The fundamentals are that there is a lot more money coming into DC (and the DC area) due in part to the tremendous growth of the IT industry here partly owing to 9/11."- Lance June 11 2006

    "Longterm prices have not dropped and they will not drop in the District or even in the surrounding area in general. (B) As the quote you found says, I did predict that condo prices would go down for a short period (12 - 18 months) and that prices on houses in the District would flatten out during that period before resuming normal growth trends. And guess what, that is EXACTLY what is happening! Yes, post my quotes on your fridge ... it might help you (and Robert) to finally get it ... and to quit reading in your own biases. Simply put ... there won't be a bubble bursting ... because there is no bubble."- lance 28 Nov 2006 (ellipses as written)

    "Looking at it in comparison to the median income in other parts of the country IS reasonable ... and the DC area cities and counties have among the highest median incomes anywhere in the country ... yet our housing prices don't come close to the levels of housing prices in places like the northeast or the west coast. Doesn't that tell you something about how UNDERvalued (i.e., underpriced) our real estate is? WE've got more money to spend on real estate than a lot of other metro areas ... but we pay a lot less." -lance 29 Nov 2006 (ellipses as written)

    "Since when have you ever seen the media play down anything? There isn't a collapse and there won't be a collapse. Just like there never has been a collapse. This isn't a stock. People can't just up and decide one day that they want to "dump" their house before it's worth nothing." -lance 6 Oct 2006

    "I guess you might hope if you'd made the mistake of not buying sooner, but nope, it'll sell ... prices have continued to rise here as in any other place where real value has been accruing. (I.e., Just about every other place in the DC area other than Purcelleville ... which incidentally is NOT in the DC area anymore than Gary Indiana is in the "Chicago" area. Yep, you can get here from there, but you're not participating in life here ... You don't even have the same "local" channels on your cable or satellite system.)" - lance 23 April 2007 (ellipses as written)

    "Say what you will. As someone reported last week, the YoY in my zip code (20009) went up AGAIN to something like 10% as of the latest MRIS report. Like I've said all along, there is NEVER a bad time to buy ... just people who don't know how to buy smartly ... under ANY market conditions." - lance 9 Oct 2006

    (In the Nov 2006 MRIS data lance's zip was in fact up 9%, from 440k in Sept 2005, to 480k in Sept 2006. Of course, since then, 20009 hit 449k in Sept 2007 and then 419k in Sept 2008.)


    And if there is one single quote that sums up Lance's expertise...


    "It's like David always said, by the time a story appears in the MSM (mainstream media) it is old new. Redskins, you need to concede ... it's over. The BH claim that subprimes will cause the so-called bubble to burst has been debunked. Your theory had its day in the sun and got proven wrong when the big investment banks pulled the facts out of their back pockets and laid to rest the BHs' claim ... Unless you have a new theory to propose, I don't see how discussing a dismissed and debunked theory is useful. It's time to admit you were wrong." - lance 16 March 2007


    LOL

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  43. ANON412:

    Come to LA...plenty of nice homes in nice areas that had homes 1/3 the price of what they are now....and no crack houses to blame that on.

    ReplyDelete
  44. ANON (January 26, 2009 1:17 PM)

    Thanks! Nice post.

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  45. Noz, I was being sarcastic. :)

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  46. Also median prices for Dec 2008 in 20009 were $325,000.

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  47. You gotta love that line:

    ""Like I've said all along, there is NEVER a bad time to buy ... just people who don't know how to buy smartly ... under ANY market conditions."""

    ANY condition....that's bold.

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  48. Noz said...
    I understand it perfectly...such problems exist everywhere.

    No - really they dont. Not like this. I sincerely doubt you had running gang shootouts in areas you want to live. The closest example for you would be Compton.

    "What you don't seem to understand is that such neighbourhoods with such homes existed already that were not in gangland areas and prices of these homes went up by the same amount.

    No gentrification required. So what excuse do you have for those homes and areas?

    LET ME BE CLEAR - THERE WAS A BUBBLE, PRICES WILL COME DOWN. What you cant even seem to consider is that two forces (a bubble and gentrification) could be playing on prices at the same time.

    1. Nicehood - goes from 100K-150K over 6 years. Prices down 30K since. Nothing in the neighborhood has changed - therefore its easy to conclude MOST, if not ALL this runup was a BUBBLE, and prices will continue to come down.

    2. Ganghood - goes from 100K to 170K over 6 years. Prices down about 5K since. There has been significant and substantial change in this area. Therefore, its easy to conclude that SOME of this runup was a BUBBLE and SOME of this RUNUP was GENTRIFICATION.

    Is this really that hard for you to comprehend?

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  49. LOL,

    Thanks you saved me the trouble of re-writing this valuable advice. I hope it can help othets not buy into the 'failure mentality' of the Bubblehead beliefs.

    ReplyDelete
  50. Lance said...
    Btw, how long have you been renting now?

    Long enough to be debt free.

    Remind me, have you ever owned your own home?
    Nope, but that is not to say that I have never lived in a home that I did not pay my own mortgage on.

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  52. Robert said...Gentrification = new paradigm

    Yes - thankfully someone got it!

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  53. Noz,
    You’ve made some spot on comments. I don’t know how long you’ve been visiting the blog, but you’re hashing out pre-bubble issues with Lance after the fact.

    If you’re working on some ides and using Lance as a sounding board, I applaud your efforts and more power to ya. If you think you’re going to have logical conversation and banter, stop now.

    Hypothetically speaking, if you woke up tomorrow and the Fed had to take over Fannie/Freddie, bailout a few banks and the auto industry, do you think Lance would modify his hypothesis?

    ReplyDelete
  54. Noz, Don't ask Robert for advice on buying a house. He's never owned one, and never will because he'll always find a reason not to. 3 years ago he was saying that if what happened this year happened, that he'd buy. He still hasn't, has he? Why? You see he always thinks "there'll be a better opportunity down the road." Could it be that he's just affraid to commit ... to this ... or anything/anyone ... ?

    ReplyDelete
  55. Lance said...
    Noz, Don't ask Robert for advice on buying a house. He's never owned one, and never will because he'll always find a reason not to


    That’s interesting Lance. If I recall correctly, you purchased in ’05. I am truly impressed that you have paid off your mortgage in such a short amount if time. I must admit, I did not come close in paying off my mortgage in such a short time frame.

    However if I recall even further, you indicated that it was not a smart move to pay off your mortgage (tax benefits and all). What made you change your mind?

    3 years ago he was saying that if what happened this year happened, that he'd buy. He still hasn't, has he? Why?

    Interesting Lance. I have often said that when real estate returns to fundamentals, namely affordability indexes and own/rent ratios, I would purchase.

    To return to these fundamentals, home prices would have to fall much further than they already have. I have yet to notice such data locally, in MRIS, MSM or any other source. You seem to have found numbers that show such a drastic drop? This drop you have discovered runs counterintuitive to the arguments you have put forth even in the last few hours. I’d like to see those numbers and would like to know how you obtained them before the NAR could publish them, and even before the MSM could report on them.

    You see he always thinks "there'll be a better opportunity down the road." Could it be that he's just affraid to commit ... to this ... or anything/anyone ... ?

    Great insight there Lance. Just a few days ago I noticed a new foreclosure on the market. It turns out, this new listing was a home I looked at and made an offer on some time ago. Now, some would have said that I “missed an opportunity” on that first offer. Well, what’ya know. Here is the same home back on the market. Foreclosed on. Bank owned. Adding yet one more listing to the MLS. Turns out, there are about 99 other comparable homes on the market. Well, not quiet comparable. The other 99 have some features that I desire more in a home and are now at a lower price point. I now have fewer buyers to compete with, prices on these homes are going down each month, inventory is still at record highs and all indicators show that it will keep going up, DOM is still excruciating long, and even more foreclosures are coming down the pike. Like I said, I’m debt free, and my down payment is only growing larger.

    Interesting dilemma I have here Lance. Should I just go ahead and settle for this one in foreclosure, or should I take my time, check out the other 99 and make an informed, planned decision in which the cost keeps getting lower? Such a tasking dilemma. I just wonder how many other people are in my situation. I wonder, if we all band together, could we get a bailout to help us through these difficult times?

    ReplyDelete
  56. ANON (January 26, 2009 1:53 PM:)

    Actually I do understand things very well...you don't need to tell me what I do and don't understand.

    No - really they dont. Not like this. I sincerely doubt you had running gang shootouts in areas you want to live. The closest example for you would be Compton.

    No I don't live in those areas and I don't need to live in those areas. You don't understand my point. My point is that gentrified areas that ALREADY exist also went up in price the same amount....so gentrification is not a reason.

    LET ME BE CLEAR - THERE WAS A BUBBLE, PRICES WILL COME DOWN. What you cant even seem to consider is that two forces (a bubble and gentrification) could be playing on prices at the same time.

    I'm glad you're being clear...because the bubble affects everyone...not just the gentrification areas. If anything, it will affect the up and coming areas more rapidly than the ones that are already established.

    1. Nicehood - goes from 100K-150K over 6 years. Prices down 30K since. Nothing in the neighborhood has changed - therefore its easy to conclude MOST, if not ALL this runup was a BUBBLE, and prices will continue to come down.

    2. Ganghood - goes from 100K to 170K over 6 years. Prices down about 5K since. There has been significant and substantial change in this area. Therefore, its easy to conclude that SOME of this runup was a BUBBLE and SOME of this RUNUP was GENTRIFICATION.

    Is this really that hard for you to comprehend?


    Actually there are plenty of areas that are being gentrified in downtown LA...many lofts, wine bars, etc...all of which are losing value fast...and all with the help of gangs....just crappy areas instead. Why? Because you can gentrify as much as you want. When the areas are still next to crap, they are going to still be next to crap.

    And guess what happens in a collapsing and contracting economy? Well...you can guess.

    ReplyDelete
  57. ROBERT:

    Noz,
    You’ve made some spot on comments. I don’t know how long you’ve been visiting the blog, but you’re hashing out pre-bubble issues with Lance after the fact.

    If you’re working on some ides and using Lance as a sounding board, I applaud your efforts and more power to ya. If you think you’re going to have logical conversation and banter, stop now.

    Hypothetically speaking, if you woke up tomorrow and the Fed had to take over Fannie/Freddie, bailout a few banks and the auto industry, do you think Lance would modify his hypothesis?


    Good points.

    I've not frequented this place much at all actually. But I do frequent other blogs and I'm frankly very surprised at how PRO housing this one is.

    It's actually quite funny. I've had battles of pricing and price drops and future conditions over at the Vancouver blogs too...and it has the EXACT same crowd over there. Even more so actually because the person representing the main ideas is a Realtor...and while he believes price drops will occur, he has the belief that they will be no more than 20-40%.

    Well...up until October of last year, the prices of properties in Vancouver proper...a city that is FAR more desirable a FAR better of a city to live in that DC could ever be, guess what's happening?

    Indeed...prices since last October have already crumbled more than 20%. In a mere 3 months. And there is no end in sight.

    And believe me, gentrification is the name of the game over there...with a big push to get their druggy areas cleaned up, the coming Olympic village built FAST, etc. All the reasons to see price hikes.

    But the prices are crumbling. You'd not believe the number of people who were talking about gentrification of Vancouver, of how great the job market is, about how wealth Asians are coming to snatch things up, about how unstoppable condo building is currently....and my favorite..."It's different here." Sure it is.

    Now..condo developments are "going up in flames" for mysterious reasons. People are bailing on their down payments for units that are to be ready in a year or so. A complete mess.

    So when people say things are different everywhere, they haven't looked hard enough to realize the same things are happening all over the world..let alone the country.

    ReplyDelete
  58. "Thanks you saved me the trouble of re-writing this valuable advice. I hope it can help othets not buy into the 'failure mentality' of the Bubblehead beliefs."


    Oh good, then you will like all of these other little bits of insight as well!

    "The window of opportunity for those who have been sitting on the sidelines waiting to purchase is quickly slipping away, however I suspect most bubbleheads will miss it. I just hope they are on here a year from now explaining why they are still "waiting it out." The justifications will be interesting to hear."-lance 25 Sept 2006

    "Given that the experts have already stated that what happens with the subprime loan market won't have more than a negligible effect on prices, what is your basis for claiming otherwise? I.e., How is it that you are in a better position to know than they are?"- lance 2 April 2007

    "That's right that's right ... That tiny speck of the market that was only buying the cheapest of places to begin with is going to be soooo missed ... You bubbleheads will grasp at any straw, won't you. Your theory is over. It was debunked the minute the big investment firms revealed how very little the default of a few subprimes was going to affect them. The entire BH theory was predicated on the assumption that defaulting mortgages would cause a surge in supply and a corresponding plunge in prices. Well, the catalyst for that surge has been debunked and your theory exposes as fraudulent. Admit you were wrong. It's over. It's just a regular business cycle. And we've indisputably aready bottomed out. Where does that leave you with your far fetched theory?" -lance 22 March 2007

    "I'd say it's only surprising because the MSM (mainstream media) have bought on to the unfounded BH theory. Anyone with any experience knows this is just a normal business cycle, and the downside of the cycle was already ending a few months ago when David [Learah] was making his accurate predictions and David J. was still putting out inacurate ones. I can't help but wonder how many people got hurt listening to the BHs ..." lance 24 March 2007

    "Sorry, no, there's no depression on its way. On the contrary, we're on the verge of a world economy with an efficiency and scale of economics well beyond the dreams of anyone until just recently. It's what is being referred to as the Pan-Global economy. And rising real estate prices are but one sign of its emergence." - lance 29 oct 2006

    "David, when you get tired of waiting for the burst that is never going to happen, I hope you at least have the decency to admit you were so so wrong!"-lance 22 Feb 2007


    etc etc etc

    Lets face it, lance is essentially a fountain of stupidity and is incapable of admitting he was wrong more or less across the board.

    ReplyDelete
  59. Lance....

    I don't understand why you play the weak card of "if" someone hasn't owned a home, then they are of no value when giving advice. That is pure bullshit and you know it.

    Frankly, RIGHT NOW, I'd rather take advice from friends who are sitting on $300-500K in liquid cash from saving the last 8 years rather than the friends who are down $200K-300K from their "wise" home purchases a few years ago.

    If I were to follow your advice, then I really shouldn't take advice from current home owners because they are, for the most part, either upside-down on their mortgages or are breaking even after 8 years of ownership.

    I'm not sure if you realize this but a home is a liability, not an asset. And if one is wise with their money, he or she can save as much money while renting as with a home appreciation. You're basing home ownership perks on the last few freak-show years of greed, easy lending, and out-right fraud in the mortgage and housing industry. Not an environment which I categorize as good.

    If you think buying a home at anytime is your cup of tea, more power to you. If you can pay off your mortgage in 4 years, as Robert seems to have indicated, great...perhaps you are in a profession that makes a lot more money than the average Joe as I pointed out earlier.

    In either case, your situation doesn't seem to be indicative of the normal working person because I know of no one personally who can pay off a home in 4 years.

    You have to understand that home ownership is not a bad thing. It's a personal choice that limits most people to a certain lifestyle...albeit a lifestyle they usually are willing to have.....but a restrictive one.

    I'll give you my own personal take on this which I very rarely do.

    My wife and I spend $1K on rent...we live in a 1 bdrm apt and are itching to get out. For the last few years, we've made 6 figures and have saved up few hundred thousand dollars.

    We've saved up about the same amount as many people we know have made on their homes...with the exception that WE still have the money that's gaining interest while many have borrowed against it and have purchased toys, bought other properties...whatever. They are neck-deep in debt and like the masochistic pleasure of being a landlord. More power to them.

    So what do we get out of it?

    Well...we go out a lot. We don't need to skimp on what we eat. We eat VERY WELL. We travel. We travel often. We experience new things. We don't need to be stuck in our home because we can't afford a weekend get away.

    We buy whatever we want to buy. We don't have to worry about pinching pennies. We don't have worry about a budget. We pay off our expenses every month free and clear.

    When we do buy a home, it'll be in a comfortable, controlled fashion. Not because I worry about hitting bottom. But because I want one.

    But one thing I will make sure is that when do buy, we get the best possible deal. Which means that the market has stabilized, the prices are more in check with incomes, and we can sustain a mortgage with one income. If that doesn't happen, we won't buy a home. It's that simple.

    If all goes well, and things remain the way they do job-wise, etc...we'll be just fine. If not, we'll still be just fine because we're not submerged in a mortgage we can't afford.

    Right now, our pillows feel very very soft at night.

    ReplyDelete
  60. NOZ, not fair.

    "Frankly, RIGHT NOW, I'd rather take advice from friends who are sitting on $300-500K in liquid cash from saving the last 8 years rather than the friends who are down $200K-300K from their "wise" home purchases a few years ago."

    and

    "We've saved up about the same amount as many people we know have made on their homes...with the exception that WE still have the money that's gaining interest while many have borrowed against it and have purchased toys, bought other properties...whatever. They are neck-deep in debt and like the masochistic pleasure of being a landlord. More power to them."

    I've watched this and other real estate blogs. Two years ago, renters said they had big savings and investments. After the stock market crash last year, they stopped saying that. I believe that many have lost 1/3rd to 1/2 of their savings/investments. The Dow, NASDAQ, and S&P verify that belief.

    I can't speak for your House owning friends but my close in SFH has NOT lost value. It's not in the District but is in Northern Virginia. I have NOT run up my debt, in fact, I put an extra $1,000/month toward my mortgage just because I can.

    Here's the disconnect:

    "we live in a 1 bdrm apt and are itching to get out." and "We don't need to be stuck in our home because we can't afford a weekend get away."

    I live in a SFH in a older wooded neighborhood, walking distance to excellent services and entertainment. I'm not "stuck" in my home.

    ReplyDelete
  61. "Noz said...

    Actually there are plenty of areas that are being gentrified in downtown LA...many lofts, wine bars, etc...all of which are losing value fast...and all with the help of gangs....just crappy areas instead. Why? Because you can gentrify as much as you want. When the areas are still next to crap, they are going to still be next to crap.

    And guess what happens in a collapsing and contracting economy? Well...you can guess."

    Maybe thats it - maybe because the LA economy is crumbling you assume everywhere is. Maybe if our economy was crumbling your argument would bear out.

    Thing is, LA is losing thousands upon thousands of jobs - DC is gaining thousands upon thousands of jobs. See the difference?

    ReplyDelete
  62. Noz,

    If you're going to converse with Robert, you need to understand he oftentimes invents/distorts the "facts" that he then uses as the basis for his arguments pro/against whatever. For example, he knows I didn't become a first time home buyer in 2005 ... and it's been explained to him many times over that the benefits of homeownership (i.e., for example equity building) carry over as one "steps up" from one home to another. So if I have equity in my home, it's not all from the last 4 years ... but is a cumulative gain from over the years that I have been a homeowner. Which is of course a good reason not to delay homeownership ... but which Robert will never permit himself to understand. And no, don't worry, I don't have my home paid off ...

    Btw, your constantly comparing yourself to others thinking "they" must be more wealthy/capable than yourself is self-defeating. As I've said before, buying my first home was a real sacrifice. It meant no vacations, no meals out, no "a lot of things" for a few years. But it paid off in the end. That's how life works. Yes, you can have your cake now (take the weekend trips, "eat well", etc.), but then don't count on having your cake later.

    ReplyDelete
  63. Lance said...
    Noz,

    If you're going to converse with Robert, you need to understand he oftentimes invents/distorts the "facts" that he then uses as the basis for his arguments pro/against whatever. For example, he knows I didn't become a first time home buyer in 2005 ..


    I didn’t say you were a first time buyer in '05, or any other year.

    And no, don't worry, I don't have my home paid off ...

    You're not a home owner? So,when you say:

    Noz, Don't ask Robert for advice on buying a house. He's never owned one,

    Does that apply to you too?

    ReplyDelete
  64. "I can't speak for your House owning friends but my close in SFH has NOT lost value. It's not in the District but is in Northern Virginia. I have NOT run up my debt, in fact, I put an extra $1,000/month toward my mortgage just because I can."

    Noz assumes everyhomeowner is in way over his head which severely affects his judgment.

    Like you anon, I live in close in NOVA and bought during the bubble. I figured prices could go down, but I didnt care, I really hated renting that much.

    I am however in now way underwater. Appraisal when I refinanced indicates I lost 6% from peak. Equity position is still 20%. I save 1,500 a month above and beyond maxing out the 401K, and a few separate IRAs. I travel to europe twice a year, eat out often in my walkable community filled with restaurants.

    Shockingly to Noz, most of my neighbors are like me. To date, I have not seen a single foreclosure sign - not one.

    I will stop now, because this will come off too much like bragging. If I lived like NOZ, I could probably retire 5 years earlier than I plan (age 50 instead of 55). If I lived like I lived in college, I could probably retire 10 years earlier than I plan. If I lived in a van down by the river, I could retire in 10 years. However, to me, live simply not worth living like that.

    If I had my way, would I like having purchased at a lesser price? Sure. However, here we are 4 years later - and prices are no where near 2004 levels or before. There is no way in hell that "for me" renting one more second was worth it - and just because I bought, does not mean I am underwater.

    ReplyDelete
  65. Shockingly to Noz, most of my neighbors are like me. To date, I have not seen a single foreclosure sign - not one...

    Ah right, but since home prices in exurban Las Vegas are crashing, you, poor soul, are in deepest denial.

    ReplyDelete
  66. Anon 8:06,

    You did a great job of illustrating that homeownership is all about trade-offs and choices. To each his/her own. There's nothing wrong with someone owning and there's nothing wrong with someone renting. What I do find wrong though is when those who choose not to buy, try to justify their choices by putting down those who chose to buy. And what that tells me is that they aren't all that confident in their choice. If they were, they'd have no reason to criticize those who made a different choice.

    ReplyDelete
  67. With all this talk about how DC in its inner suburbs are doing fine and even if you bought in 2005 or 2006 you're not in any trouble, here's one listing:

    http://www.redfin.com/DC/WASHINGTON/1513-VERMONT-Ave-NORTHWEST-20005/home/9874007

    They bought in 2005, and are now selling for $45,000 (4%) more, if they get their asking price. So with the 6% of realtor fees, and paying the buyer's closing costs (pretty much the standard these days), they're losing money.

    Now, yes, it could be a heckuva lot worse if they had bought in an outer suburb somewhere, but I think this shows that buying a house is never a risk-free proposition. I mean, this is Logan Circle, and these people can't even break even. This is happening all over the nice and recently-gentrified neighborhoods of DC, and this listing isn't even close to one of the worst ones. And they'd probably be fine if they were able to stay in their house until 2020, but you can't always predict where life will take you and when you'll need to sell.

    Also, just because you rent doesn't mean you can't live in a house. Lots of houses for rent, just as lots of apartments and condos are for sale.

    ReplyDelete
  68. Not particularly representative, though. The "gentrification premium" had pretty much run its course in Logan Circle by 2005.

    I'm actually pretty impressed that such an expensive property in an established neighborhood has held its value so well. I think you've done pretty well if you buy a $1.3 million house, sell 3 years after the purchase, and you're only down, what, $20k?

    ReplyDelete
  69. So, what, this is like, "0 is the new up" ?

    And only down $20k assumes they get asking price. The zestimate and tax assessment are 200k lower -- most places have been selling lower than zestimates and tax assessments.

    ReplyDelete
  70. Here are a couple others:

    http://www.redfin.com/DC/WASHINGTON/1915-BELMONT-Rd-NORTHWEST-20009/unit-1075/home/10174606

    - Condo in Kalorama going for less than 2005 price (since then a Harris Teeter has opened a few blocks away, something I would think would raise property values)

    http://www.redfin.com/DC/WASHINGTON/2120-VERMONT-Ave-NORTHWEST-20001/unit-617/home/11746578

    - Condo off of U Street going for less than 2007 price.

    ReplyDelete
  71. And my with all these examples isn't obviously that these people trying to sell their homes are screwed: they're not. They'll probably make out fine. They could be a lot worse off. But they would be *better* off if they had rented (paying less for a comprable property) and waited to buy until prices were lower.

    ReplyDelete
  72. "Anon said

    They could be a lot worse off. But they would be *better* off if they had rented (paying less for a comprable property) and waited to buy until prices were lower."

    Anon - once prices are falling, I agree with you, its not a bad idea to wait. You can see the rate of decline - its here now. You can likely see when its flattening. If you are willing to wait that long - not a bad idea to wait.

    Heres the thing though. I know people who didnt buy in 2002, because they knew it was a bubble, and wanted 2001 prices. Prices rose further in 2003, further still in 2004, further still in 2005, and further still for part of 2006.

    If the rate of decline is any indication in the close in neighborhoods. 2004 pricing (or slightly below) looks to be close to the bottom. I suspect we will see that in 2010.

    So in this case, our poor soul will have waited 9 YEARS to buy his house, and will still pay a huge premium over his 2002 price he rejected. Its possible too that he has been (and I hate to say this) priced out forever.

    Moreover, even if he were to get back to say, 2002 prices. He has now spent about 1/5 of his entire adult life watching, waiting and renting. Sorry, but 1/5 of my adult life is worth alot to me - no chance I would ever rent that long.

    Your example is very true, but here is the flip side of the coin. The most salient bloggers recognized this bubble early on and decided to wait. Unfortunately, except for places like CA, AZ, etc. it looked like trying to time the market was the biggest mistake of their lives.

    ReplyDelete
  73. Well, I think that in the areas that didn't see gentrification in the 2000s we'll get back to 2000 prices, so someone who didn't buy 2002 would eventually be vindicated if they weren't looking in those areas. But it's true, 10 years is a long time to wait if you don't like renting. I personally don't mind it. I rent a house, and I get a front porch and a yard but I don't have to pay to fix things when they break. And while my rent cover's the landlord's mortgage, it doesn't pay for that maintenance or the property taxes.

    ReplyDelete
  74. "Well, I think that in the areas that didn't see gentrification in the 2000s we'll get back to 2000 prices, so someone who didn't buy 2002"

    Could be - out of curiosity, what is your shot in the dark guess about where things end up. Mine is as follows

    DC - 2004 prices (or slightly above)

    Arl - 2004 prices

    Alex - 2004 prices

    Fairfax - 2003 prices (or slightly above)

    Loudoun - 2003 prices (or slightly below)

    PWC 2002 prices.

    Thoughts?

    ReplyDelete
  75. Actually - sorry I was looking at old data. My projections are as follows

    DC - 2004 prices

    Arl & Alex 2004 prices (or slightly below)

    FFx - 2002 prices

    Loudoun - 2002 prices

    PWC - 2000 prices (or slightly below).

    This assumes 2009 has price declines similar to 2008, and then 2010 has very very slight declines (also when we bottom). Just a shot in the dark, but its my 2 cents.

    ReplyDelete
  76. Well, I'm obviously a lot more pessimistic than you.

    DC - 2002 (will vary a lot by neighborhood, but this is my guess for the average)
    Arl - 2002 (same as above)
    Alex - 2002
    Fairfax - 2000
    Loudoun - 2000
    PWC 2000

    The frustrating thing is that it'll take 3-4 years to see who's right.

    Oh, and for all of these guesses I mean prices in real terms, adjusted to the CPI. If you are talking norminal prices then we could be a lot closer to agreement.

    ReplyDelete
  77. Sorry - I was speaking in nominal terms. So maybe we arent that far apart. I still think I am a bit more optimistic than you because of how quickly the area inventory is being drawn off.

    http://www.recharts.com/nova/nova.html

    By this summer, assuming it follows the trend of the last few years, it looks like we will have 1/2 the inventory we had in 2006.

    Note, if inventory starts to baloon again, I will rethink my guestimates. However, with the inventory being drawn down at such a rapid pace, it doesnt seem like these very steep price declines can continue much longer.

    ReplyDelete
  78. ANON (

    NOZ, not fair.

    I've watched this and other real estate blogs. Two years ago, renters said they had big savings and investments. After the stock market crash last year, they stopped saying that. I believe that many have lost 1/3rd to 1/2 of their savings/investments. The Dow, NASDAQ, and S&P verify that belief.

    I can't speak for your House owning friends but my close in SFH has NOT lost value. It's not in the District but is in Northern Virginia. I have NOT run up my debt, in fact, I put an extra $1,000/month toward my mortgage just because I can.

    Here's the disconnect:

    I live in a SFH in a older wooded neighborhood, walking distance to excellent services and entertainment. I'm not "stuck" in my home.


    That's my point. You've put away a grand a month while we've been traveling the world and putting away $7G's a month.

    Now, if you make enough to do be able to do everything, then I guess you're in a different income class altogether than non of this matters.

    If prices don't correct themselves, then there will be no movement in the future.

    ReplyDelete
  79. ANON (January 27, 2009 8:06 AM)

    Noz assumes everyhomeowner is in way over his head which severely affects his judgment.


    Actually I don't assume that. What I do say is that people who bought high are suffering now. If you deny that, then the conversation is over. For me to go and buy now while prices are still high is stupidity...particularly in the face of declining home values. Why would I do that to myself? If you think that's smart, more power to you....knock yourself out.


    Like you anon, I live in close in NOVA and bought during the bubble. I figured prices could go down, but I didnt care, I really hated renting that much.


    You'll be in for a surprise I suspect.


    I am however in now way underwater. Appraisal when I refinanced indicates I lost 6% from peak. Equity position is still 20%. I save 1,500 a month above and beyond maxing out the 401K, and a few separate IRAs. I travel to europe twice a year, eat out often in my walkable community filled with restaurants.


    It depends on what you are paying for your mortgage. If I purchased a home 9 years ago, I'd also have the free and clear lifestyle I have now...even if my mortgage was upside down.


    Shockingly to Noz, most of my neighbors are like me. To date, I have not seen a single foreclosure sign - not one.


    I'm surprised...a quick google search revealed a tonne.

    http://bubblemeter.blogspot.com/2008/12/washington-dc-metro-area-foreclosures.html

    THANKS JAMES!!!

    And also...

    http://washington.bizjournals.com/washington/stories/2008/10/20/daily68.html?surround=lfn&brthrs=1

    http://dc.oodle.com/housing/sale/foreclosure/-/-/usa:dc:washington/+5/

    Don't know how accurate that sum is or what status they are in...but something is popping up.

    So I don't know...perhaps you should broaden your search beyond your block?


    I will stop now, because this will come off too much like bragging. If I lived like NOZ, I could probably retire 5 years earlier than I plan (age 50 instead of 55). If I lived like I lived in college, I could probably retire 10 years earlier than I plan. If I lived in a van down by the river, I could retire in 10 years. However, to me, live simply not worth living like that.


    Bragging, my dear blogger, nothing you've said is impressive in any way. We don't take short cuts...we just live it up without a home. Does that burn you in any way?


    If I had my way, would I like having purchased at a lesser price? Sure. However, here we are 4 years later - and prices are no where near 2004 levels or before. There is no way in hell that "for me" renting one more second was worth it - and just because I bought, does not mean I am underwater.


    Sounds like your trying to justify the fact that you overpaid and are in fact underwater.

    I'm sure you'll be fine in about 10 years. Just hang on.

    ReplyDelete
  80. ANON: January 27, 2009 10:07 AM

    So in this case, our poor soul will have waited 9 YEARS to buy his house, and will still pay a huge premium over his 2002 price he rejected. Its possible too that he has been (and I hate to say this) priced out forever.

    Moreover, even if he were to get back to say, 2002 prices. He has now spent about 1/5 of his entire adult life watching, waiting and renting. Sorry, but 1/5 of my adult life is worth alot to me - no chance I would ever rent that long.

    Your example is very true, but here is the flip side of the coin. The most salient bloggers recognized this bubble early on and decided to wait. Unfortunately, except for places like CA, AZ, etc. it looked like trying to time the market was the biggest mistake of their lives.


    That's fine if you are drooling at the mouth to buy a home..for whatever reason.

    Some people put their lives on hold to buy...like you. Others don't. You're assuming people are sitting there twiddling their thumbs for 9 years to buy.

    It's apparent you would....but many others don't put their lives on like you may. The power of consumerism and consumption can be overwhelming I'm sure. There were a lot of people out there at one time running around like idiots outbidding each other because they "had to have a home" and "bought into the save taxes over renting even though I'm getting creamed on the home price" crap. The "gotta have it" disease we say.

    I'm sure it sounds familiar.

    ReplyDelete
  81. ANON (January 27, 2009 6:37 AM)

    Maybe thats it - maybe because the LA economy is crumbling you assume everywhere is. Maybe if our economy was crumbling your argument would bear out.

    Thing is, LA is losing thousands upon thousands of jobs - DC is gaining thousands upon thousands of jobs. See the difference?


    Really? I'd like you to list what jobs in DC are being created that support such an overpriced housing market? What are the average salaries of these jobs? Are they as high as what the average salary in LA is (among the highest)?

    And please pray tell...what country do you live in? Because last I checked most if not all LARGE us cities in the US are getting hit VERY hard.

    ReplyDelete
  82. LANCE:

    Noz,

    If you're going to converse with Robert, you need to understand he oftentimes invents/distorts the "facts" that he then uses as the basis for his arguments pro/against whatever. For example, he knows I didn't become a first time home buyer in 2005 ... and it's been explained to him many times over that the benefits of homeownership (i.e., for example equity building) carry over as one "steps up" from one home to another. So if I have equity in my home, it's not all from the last 4 years ... but is a cumulative gain from over the years that I have been a homeowner. Which is of course a good reason not to delay homeownership ... but which Robert will never permit himself to understand. And no, don't worry, I don't have my home paid off ...


    Not worried...just curious if what Robert stated was true and if so how.

    Delaying home ownership in a declining market is an excellent thing. I will lose alot of money if I purchase a home now that is losing value. I'm not sure why you don't understand that very simple concept. When you add in the costs of maintaining a home, other fees and taxes, etc...the average appreciation of a home in a normal market is minimal.

    The benefit of owning a home comes down to having some extra freedom to do what you want with the place you live in..if that is of interest to you. If not, it has little value. Economically, a home is nothing other than a tool that forces you do put away money for the long term. Assuming of course you don't need to sell during a downturn...then...as we are witnessing, people are screwed.


    Btw, your constantly comparing yourself to others thinking "they" must be more wealthy/capable than yourself is self-defeating. As I've said before, buying my first home was a real sacrifice. It meant no vacations, no meals out, no "a lot of things" for a few years. But it paid off in the end. That's how life works. Yes, you can have your cake now (take the weekend trips, "eat well", etc.), but then don't count on having your cake later.


    Of course I have to compare because the folks who can do what we do and maintain the lifestyle we have AND own a home IN THIS MARKET have to be wealthy. It's a simple case of arithmetic.

    Also, you chose to sacrifice to buy your first home. Many people want to do that and are willing to do so. Many people also DO not want to sacrifice and will purchase a home when they feel they don't need to and the time is right. Like myself.

    So it has paid of for me as much as it has for you apparently. That is how life works yes indeed.

    No you can't have your cake and eat it too. Because I'll bet the house you bought in 2005 you couldn't have afforded comfortable a year and half later when prices were even higher.

    But of course that's a moot point because you believe it doesn't matter when you buy a home..so long as you buy it.

    ReplyDelete
  83. Noz - are you really that dense. I showed you last week - we are losing construction and retail jobs and gaining business and professional services jobs.

    As far as the salaries go - I would suspect they are in the 100K range. Turns out the two wealthiest counties in the entire US are right here in the DC burbs - I expect those new jobs to be of the same type.

    ReplyDelete
  84. ANON:

    Show me the numbers again with salaries attached to them. I'm not going to take your "assumptions" as correct.

    Good point you made about being the "wealthiest"...goes straight back to what I said earlier. Perhaps your denseness got in the way?

    Either way, thanks for proving my point...and oh....don't forget those hard numbers.

    Thanks!

    ReplyDelete
  85. Hmmm - Noz seems to spend an inordinate amount of time and energy here. Post after post about an area he has absolutely no idea about (see his web citations above for how clueless he really is). He tells us stories about the righteous Kings County Shills, and the battles he has waged on the Vancouver blogs. Seems like a lot of time and energy for someone who claims to not care about whether another area is doing better or worse than LA.

    ReplyDelete
  86. Actually ANON, I'm just keeping you company and find your energy level exhilarating!

    I'm here to do nothing other than call out people like you. It doesn't matter to me what other places are doing relative to LA. Well..Vancouver matters because we may move there.

    But otherwise, it's simply a matter of calling your bullshit out...nothing more.

    And by the way, I'm home today...working from home actually. So that's why I have lots of time to make you look like an anonymous dolt.

    ReplyDelete
  87. OK Noz given that you are the experts expert, why dont you tell me SPECIFICALLY how you think this area will do. My guesstimates for median prices are as follows (in nominal terms)

    DC - 350K
    Arl - 407K
    Alex - 355K
    Ffx - 308K
    Lou - 270K
    PWC - 135K

    Most of the loss occurrs in 2009, with the bottom coming in Mid 2010.

    This assumes the US economy continues to erode significantly, causing the administration to throw serious cash at the problem (with the typical 1-2% eaten up here locally in admin fees).

    Note, if the economy starts to shore up real quick, I may revise my stats down. Otherwise, this is my predictions.

    OK Noz, I have shown you mine, how about yours

    ReplyDelete
  88. Sondis, have you looked at recent MRIS stats? DC is already at 350k. Are you saying you think it's not going to fall any further?

    ReplyDelete
  89. Sondis, have you looked at recent MRIS stats? DC is already at 350k. Are you saying you think it's not going to fall any further?

    Anon - that is MRIS for the month of december. In a few weeks MRIS will add together all of the 12 months, and give us a median number for 2008. Given how DC spent most of spring 2008 in the 425K level. I expect that for the year (2008), DC will come in around 422K.

    Thus my prediction for 2009 is the same - given the seasonality of DC, I expect the price to rise above 350K in the spring, fall below it in the autumn, and average out for the year 2009 at approx 350K. Make sense?

    ReplyDelete
  90. This blog used to be more amusing.

    We used to have several different dedicated real estate pumpers who would dream up elaborate theories to explain why buying real estate at the top of the biggest bubble in history was a good idea.

    Now, they were of course a bunch of idiots, but at least they helped pass the time while we watched the last days of the bubble.

    Now... well now all we have left is lance(and some of his anonymous sock puppets)... and even he has given up on inventing amusing theories of economics that invariably support his decision to buy in 2005.

    Instead all he can do is repeat the same tired cliches about how, "it is always a good time to buy if you don't mind losing tens if not hundreds of thousands of dollars over the next couple years..."

    Lets face it, buying into a bubble is unquestionably a financially stupid idea. If your ego demands that you "own" a home and you are too impatient to wait until prices have dropped... fine, waste some money, nobody will care if you do.

    Just don't expect to badger those of us who don't mind delaying gratification in return for a bigger reward into following your example.

    The lances of the world will never admit they were wrong. Even to this day he won't admit that he spent YEARS on this blog trying to convince people that there was no bubble, prices wouldn't fall, etc.

    Pride drives him to continue to try to argue his case long after he has been dismissed as the fool he is.

    The beauty of things is that it just doesn't matter what he does at this point. Those of us who understood what was happening and ignored his crappy advice and hilarious predictions are now seeing our patience pay off.

    So go ahead lance, lie, spin, insult, and in short... keep it up.

    Your whole act has been overcome by events.

    ReplyDelete
  91. I see what you're saying, but I didn't think prices were that seasonal. Volume sure, but not prices.

    ReplyDelete
  92. "I see what you're saying, but I didn't think prices were that seasonal. Volume sure, but not prices."

    Yeah - its pretty interesting up to a 100K swings over the course of a year isnt uncommon.

    How ya coming Noz? Whats it gonna be???

    ReplyDelete
  93. Sondis,

    Thanks for the numbers...but I asked for salaries in DC and how people believe in this economy that's going to stand up to home prices in the "untouchable" areas.

    Again, if the untouchable areas are made up for wealthy people, it really doesn't apply to the average joe now does it.

    So where are the job numbers and salaries that go with them?

    The economy turn around soon? I have no idea how people here believe the economy will turn around soon. We are in big trouble. Are people that afraid to admit it?

    ReplyDelete
  94. ANON (January 27, 2009 1:08 PM)

    Great post but one thing I have to say is I care if these bozos go and buy homes at this time. Do you know why? Because it's these same dolts t that are now on their knees groveling for handouts and bailouts.

    "I didn't know it was in the contract."

    "I was a victim...."

    You know what I mean..we've heard it all.

    ReplyDelete
  95. Sorry Noz but im not doing any more homework for you. I gave you the job numbers last week - obviously you didnt pay attention - go back and find them yourself in one of the threads below... Now, as I told you before, My assumption is that a description "business and professional services" are high paying jobs - perhaps you think differently.

    I also said I think that the economy will get real bad real quick, (perhaps you didnt pay attention to that too). Thus, my assumption the gubbamint will step up and do what it takes to get us out of a liquidity trap. If that doesnt happen, and the economy doesnt get worse, I think DC area prices will fall further.

    So contrary to the rest of the US, if the economy really tanks, this area will do as I suggest. If the economy doesnt really tank, the price decline in the DC area will be more severe.

    In any event, thats it in a nutshell. I cant help but notice how you ducked my question about median prices. I posted my numbers, where are yours???

    ReplyDelete
  96. I'm not the one claiming salaries are rising and jobs are being created in your area. I'd like to know where your assumptions are coming from. The burden is on you. My claims are from the overall economic outlook and trends throughout the country....which are by now very clear and indicative of what is to come. You think otherwise...then you prove it.

    Seems to me you're dead in the water. Let me know where you get your numbers for jobs and salaries...until then, there is no reason to believe DC prices won't fall...like everywhere else.

    Median prices are not indicative of a strong market. They are indicative of what types of homes are ON THE MARKET. A rising median price can also be due to lower priced homes dropping off the market....EXACTLY as was the case in Los Angeles. It took people a while to understand this phenomenon and realize that median values are used by shills more than economists and people with intelligence.

    Now...what were you saying about salaries and jobs? Where are they? What are your assumptions? Or are are YOU going to dodge those questions AGAIN?

    I've got time...how about you?

    ReplyDelete
  97. Noz - see on page 4 where DC is gaining jobs while LA is hemmoraging them away.

    See page 5 where DC is losing low paying jobs like construction, but gaining high paying jobs like "professional & business services"

    http://www.cra-gmu.org/forecastreports/08forecasts/WashingtonEconomy-HousingMarketDAARDec17.pdf

    ReplyDelete
  98. OK Noz I did it, I gave in and gave you the numbers you wanted. For the record, this is the same info I gave you in this exchange:

    http://bubblemeter.blogspot.com/2009/01/most-popular-relocation-cities.html

    Now its your turn. Price predictions please?

    If I know you well, (and I think I do), you will continue to duck my request. I think you will come up with some other excuse for why my answer is insufficient - typical keyboard cowboy - press him on specifics and he will flail away.

    This is your chance to prove me wrong NOZ. The ball is in your court. You can either answer or continue to flail away, claiming I didnt do this or that to your satisfaction - pathetic, but oh so predictable.

    ReplyDelete
  99. Let me try and predict your next flailing response - my guess is you will come back and say I didnt provide you salary information - truth is, I have none, I am making the assumtpion the words "business and professional services" is high paying.

    So theres the soft underbelly of my numbers. In fact, let me just go ahead and say it, point to you. I am making an assumption, and I acknowledge my assumption could be wrong. Maybe business and professional services means low paying jobs.

    Either way, that assumption is baked into my price numbers above - you know the ones, the ones you have been evading for hours now.

    So there we go Noz - I gave you everything you want. Its now your turn to show me up by providing specifics on this area, just like I have asked you time and time again.

    Im sure right now you are thinking, jeez, I really dont want to provide numbers - what else can I do to evade? Sorry friend but time is up. We all know the limitations of medians - they are what they are. Lets see if you can give a straight answer or not. Ball is in your court - answer the question or flail.

    ReplyDelete
  100. In fact, let me go one further, I will bet anyone here and give 2:1 odds that Noz will not provide an answer that has specific numbers.

    Come on people, its a suckers bet! My bet is no numbers, and you all get the field, minutae, flailing, platiudes, etc. Any takers?

    ReplyDelete
  101. Sondis,

    I took a quick look.

    It's interesting...on page 7, both units sold percent change and average sales price percent change are on an increasing slope.

    On page 8, the median price is also on a steep negative slope too. It too 6 years from 1999 to 2005 to reach the peak. Projecting outward it will take six years or 2011 to theoretically stabilize. And look at the rate of decrease!!! Almost twice as rapid as as the increase!

    So if there is a stimulus package, at best it'll slow things down...but at a huge cost. It's all artificial.

    With that said, let's use the NVAR housing market graph data on page 9 I believe.

    The median (which I hate using but oh well...let's assume relative numbers for now) is at $335K. The slope is negative at a rate of about 100K per year decline from 07 to 08.

    Using a bell curve approach, we can predict that the turn around, will at best come in at around 2011, 2012...if we assume prices do not stay flat...which I think they will.

    But let's assume they don't. That puts a 50% probability of prices dipping down to $200K or so for median values. The upper 75% will be above $200K with the upper 95% being above 250K. The lower 5% will be below $150k which I believe is highly unlikely to happen.

    What we will see, in my opinion, are prices that will revert back to 2000-2001 levels. This will be an overshoot. On the way back up, we may again have another overshoot....because the system is reacting like a suspension system that is pushed down and released. Any damping may occur due to things like stimulus packages that are designed to reduce rates of change, not prevent them. If these actually stopped change altogether, it would make matters much much worse.

    By the way, here are two other analysts that refute what is said or indicated in the document from Dulles Realtors:

    http://www.bizjournals.com/washington/stories/2009/01/05/story4.html

    But even without any secondary opinions, the information from the document you posted clearly show a very strong momentum downward in housing...no ifs, ands, or buts.

    So anyone buying NOW is, in my opinion, making a mistake.

    ReplyDelete
  102. One more thing Sondis...

    You lost the bet.

    ReplyDelete
  103. Sondis said...
    my guess is you will come back and say I didnt provide you salary information - truth is, I have none, I am making the assumtpion the words "business and professional services" is high paying.


    Why assume Sondis? Family and household income is readily available. You may however need to extrapolate a few years.

    Unemployment info is also readily available .

    ReplyDelete
  104. Noz,

    Of course Sondis is correct. All you need do is ask yourself "Who's going to be doling out and overseeing all the billions of dollars that Obama is planning on giving out, and where will they be doing it?" Now, I grant you that being in LA you might not realize the amount of bureaucracy that comes with every dollar doled out, but if you understand how government works in general, you'll understand that Washington stands to benefit handsomely from the stimulus plan in this respect (in addition to getting lots of direct dollars such as the $200 million going to refurbish the national mall.) Also, it's important to know that Washington has experienced its greatest growth spurts in times of crises. The Civil War, the Great Depression, the Second World War, all these were periods of great growth ... and prosperity ... for Washington. Sondis is correct ... at least as far as Washington goes. He may not be correct about LA. Historically, the movie industry has also done best in bad times ... Movies are a place people retreat to in bad times. So LA may not be that bad off in the end.

    ReplyDelete
  105. "Let me try and predict your next flailing response - my guess is you will come back and say I didnt provide you salary information - truth is, I have none, I am making the assumtpion the words "business and professional services" is high paying."


    Why waste our time guessing?


    Here is some data from the most untouchable of untouchable areas, Arlington.

    http://www.arlingtonvirginiausa.com/statistics/_24.pdf

    As you can see from these charts there has been no dramatic increase in income during the bubble years.

    Just compare 2000 to 2005. There have been some increases... yes... but very modest ones.

    In 2000, out of every hundred Arlington HOUSHOLDS(these are not individual numbers) there were roughly 27 that were making $100k+. In 2005 out of every hundred households in Arlington there were roughly 30 making $100k+.

    Meanwhile housing prices have what? Doubled?

    That is why it is called a bubble...

    ReplyDelete
  106. "Of course Sondis is correct."

    lol!


    "That's right that's right ... That tiny speck of the market that was only buying the cheapest of places to begin with is going to be soooo missed ... You bubbleheads will grasp at any straw, won't you. Your theory is over. It was debunked the minute the big investment firms revealed how very little the default of a few subprimes was going to affect them. The entire BH theory was predicated on the assumption that defaulting mortgages would cause a surge in supply and a corresponding plunge in prices. Well, the catalyst for that surge has been debunked and your theory exposes as fraudulent. Admit you were wrong. It's over. It's just a regular business cycle. And we've indisputably aready bottomed out. Where does that leave you with your far fetched theory?" -lance 22 March 2007


    How do you like that lance? Even you have to admit that you are basically completely useless when it comes to economics.


    Subprime is a tiny spec of the market... it won't affect anything...

    It is a normal business cycle...

    We've indisputably already bottomed out...(March 2007)


    LMAO

    ReplyDelete
  107. LANCE:

    WTF are you talking about? The movie industry has never saved LA from any depression recession. It saves itself...and no one else.

    LA is hosed...going to the movies isn't going to pay anyone's inflated mortgage.

    ReplyDelete
  108. "Noz Said...
    One more thing Sondis...

    You lost the bet."

    I sure did Noz. For the record, I was wrong - you gave me a straighforward & specific response.

    Now, because your not from here, your response was a little hamfisted in that you didnt distinguish by area.

    You said: "what we will see in my opinion, are prices that will revert back to 2000-2001 levels."

    Lets be generous and give you 2001 prices which historical records indicate (as applied to the various counties around here are as follows:

    DC - 199K
    Arl - 250K
    Alex - 200K
    Ffx - 238K
    Lou - 238K
    PWC - 161K

    Again, for the record, my predictions are as follows:

    DC - 350K
    Arl - 407K
    Alex - 355K
    Ffx - 308K
    Lou - 270K
    PWC - 135K

    Basically, you and I are pretty close when it comes to Lou & PWC - & maybe Ffx if you factor in inflation (which I do not, my prices are nominal).

    The big difference between you and I is our assessment of DC, Arl & Alex - the 3 so called immune areas. I believe, thanks to substantial gentrification, declining inventory, shortest days on market, fewest Alt A loans (on a percentage basis), fewest foreclosures (on a percentage basis), trends (circa 2005-2009), etc, etc. that these three so called "immune" areas will continue to outperform the rest of the area.

    So there we have it in a nutshell. Perhaps the first time in the history of the bubble blogosphere that a speficic, quantifiable bet has been made. At the end of the day, one of us will be right, and one of us will be wrong. Bookmark this thread, and I will refer back to it in the months and years ahead as we can see who has a better feel for how this will all shake out.

    ReplyDelete
  109. "Anon said...

    In 2000, out of every hundred Arlington HOUSHOLDS(these are not individual numbers) there were roughly 27 that were making $100k+. In 2005 out of every hundred households in Arlington there were roughly 30 making $100k+. "

    This report, culled from census data indicates that in terms of 200K households, Arlington is nearly at the top of the heap.

    http://www.bizjournals.com/specials/pages/190.html

    ReplyDelete
  110. Sondis:

    Thank you for being humble enough to admit that...that is big of you.

    Back to the topic...one thing you need to understand is what you are stating is akin to me stating DC home prices are safe because the prices in Beverly Hills proper and Bel Aire are not going down.

    As I said before, I've always disclosed that the wealthy areas where people who are not "average joes" will be more resilient.

    So if people in Arlington are loaded and do not have money issues, perhaps the prices will stay up. Not sure...to be seen. Prices in very wealthy areas like San Marino near where I live have also come down YOY.

    My point is that A) prices will come down more than most people care to admit...and this is an national trend and B) creating jobs does not automatically increase property values and make things rosy.

    You're on about revisiting this. If anything, it'll be a lesson in our the wealthier areas stand up. If I can dig up some property values in wealthy areas around here, I will...just for comparison. And when I say wealthy, I don't refer to areas like Porter Ranch or Simi Valley suburbs that are filled with these pseudo-rich wannabes..but rather old money like in San Marino, Bel Aire.

    I pretty can tell what the answer will be anyway for these places anyway.

    ReplyDelete
  111. Noz,

    You're viewing DC with LA eyes. Our cities/counties and nearly as economically segregated as out west. For example, Arlington has some of the poorest neighborhoods in the DC area ... as well as some of the wealthiest. Ditto DC and Fairfax County. This great "wealthy vs. average joe" divide doesn't play into things here. And btw, if you're globe trotting AND putting $7K a month away you're hardly an average joe. You're far wealthier than most of us. In light of what you're telling us, it would be more accurate that you depict yourself as a very wealthy person who could buy just about any house/condo he wanted, but choses not to because doing so might dampen your wealthy lifestyle. There's nothing wrong with that. It's all a matter of choices. But please don't keep portraying yourself as "an average joe". Most of us don't have $7K a month to live on even before making a mortgage payment ... never mind having it to invest. You're definitely among the wealthiest 5% of US households ... and hardly average. I have a hard time feeling sorry for you when you say you can't find something you like within your means. Have you tried looking elsewhere than Beverly Hills?

    ReplyDelete
  112. SONDIS:

    This is food for thought here.

    I'm taking your numbers one step further, adding inflation, average ownership costs of 1%, and 3% commissions on the front and back end of the purchase/sale.

    We come up with numbers as follows:

    AREA COST COST CORRECTED OWNERSHIP COST TOTAL COST COMMISSIONS TOTAL COST CORRECTED CURRENT COST % DIFF
    DC $199,000 $238,800 1% $19,104 $17,664 $275,568 $350,000 21.26628571
    ARL $250,000 $300,000 1% $24,000 $21,210 $345,210 $407,000 15.18181818
    ALEX $200,000 $240,000 1% $19,200 $17,850 $277,050 $355,000 21.95774648
    Ffx $238,000 $285,600 1% $22,848 $17,808 $326,256 $308,000 -5.927272727
    Lou $238,000 $285,600 1% $22,848 $16,668 $325,116 $270,000 -20.41333333
    PWC $161,000 $193,200 1% $15,456 $9,846 $218,502 $135,000 -61.85333333


    Now...obviously as a snap shot, it is clear the first three areas have weathered the storm but the last for have not. What is interesting to note is at what point in the price graph are these values?

    That is to say, is PWC bottomed out and on a rise? Is DC actually at the peak and going to come down?

    We'll have to see. But my suspicion is that the first four places (I'm throwing in ALEX due to the low decline) are on a decline and we are going to see it happen in the next few years.

    ReplyDelete
  113. Lance,

    No I'm not. You're viewing DC as a place that is immune...and it isn't.

    Once you come to terms with that, you will understand what I'm talking about.

    ReplyDelete
  114. Oh...and the reason why I'm putting away that much money per month Lance is because I didn't buy at the wrong time...and have the ability to save money. Granted, I make the money, but I could also piss it away.

    Which proves my point again that buying a home as a right and wrong time.

    ReplyDelete
  115. "This report, culled from census data indicates that in terms of 200K households, Arlington is nearly at the top of the heap."

    So?

    Arlington was already wealthy before the bubble, it will remain wealthy after the bubble.

    The point is that Arlington didn't become hugely more wealthy while its housing prices were shooting through the roof. Put another way, the rising prices were not supported by rising income.

    This is not a case of gentrification, rising salaries, or any of the other lame theories lance has vomited onto this board.

    It is a simple case of a bubble.

    Arlington's decline will be slower because of the smaller percentage of distressed sales there, but it will ultimately return to its long term trend line.

    And where the hell are people getting this "immune" crap?

    Arlington is already way down.

    Arlington median sold prices,
    2004 433k
    2005 499k
    2006 500k
    2007 485k
    2008 430k

    Down 70k from the peak...

    That looks good compared to Prince William County, but that is a hell of a long way from "immune."

    Economics still applies in rich areas.

    ReplyDelete
  116. No I'm not. You're viewing DC as a place that is immune...

    RIF. Reading is Fundamental.

    ReplyDelete
  117. "No I'm not. You're viewing DC as a place that is immune...and it isn't."

    Yep, lance will refuse to acknowledge his various hilarious predictions during the bubble, but they are available for anyone to read.

    He has probably made up at least a half dozen different fairy tale scenarios... the only thing they all have in common is that they predict DC will continue to appreciate.

    This of course proves he made the "right" decision when he bought his $900k rowhouse with an interest only loan in the summer of 2005.

    While I am at it...

    "Most of us don't have $7K a month to live on even before making a mortgage payment ... never mind having it to invest." -lance

    If lance doesn't even have $7k a month before making his mortgage payment... well lets just say that does a lot to explain why he is so desperate for housing prices to climb. (He had enough dumb luck to carry some bubble equity into his purchase, but he still has a huge mortgage for someone with less than $7k a month to allocate to his various needs.)

    ReplyDelete
  118. Anon 10:46 ... learn to read, I said "most of us" ... I didn't say "I" ...

    But in any case, because I've been a homeowner for a while (and carried equity over) my monthly payments are far less than the average person pays for rent. I've seen rooms in group houses being rented for more than what I am paying per month. But that is the whole point. One can have many good reasons to rent vs. buy, but long term "paying less" shouldn't be one of them. Rents will always follow the economy and inflate accordingly. But once you've bought, you've locked in. And even if you move down the road, you've locked in and can take that with you as equity. Longterm, the value of real estate always goes up. The person who up the thread mentioned that she was paying the landlord's mortgage but that the landlord was paying everything else doesn't understand that her short term "gain" is just that ... short term. Long term she'll really have been helping her landlord pay for a long term investment whose longterm benefits will pay out only to the landlord. Again, there are many good reasons to rent. Saving money over the long run isn't one of them.

    ReplyDelete
  119. "Arlington is already way down.

    Arlington median sold prices,
    2004 433k
    2005 499k
    2006 500k
    2007 485k
    2008 430k

    Down 70k from the peak..."

    Anon - clearly you arent just showing Dec to Dec for all those years are you? I mean why not show the average of the 12 month data & get the whole shebang:

    2004 410K
    2005 499K
    2006 482K
    2007 475K
    2008 441K (my estimate, MRIS isnt out yet).

    BTW - to say an area is immune is absurd - only lance would say something like that...

    ReplyDelete
  120. Anon@10:30 and Anon @11:42...This whole incomes havent matched rising home values isnt really applicable in land constrained areas like Arlington where the population has grown. If the population grows, but the land is completely developed, (i.e. you cant build outward) guess what happens? Prices rise.

    For example - assume in 2000 there were 5 people in the county with incomes as follows:

    50K 50K 80K 100K 100K

    Median income =80K

    Assume there were 3 houses, bought by those with the top 3 incomes. Home prices are:

    150K 150K 240K 300K 300K.

    Median price =240K

    Now fast forward to 2008 suppose the population rose from 5 to 7

    50K 50K 50K 80K 100K 100K 100K

    Median income =80K

    Assume because of land constraints, the same 5 houses exist. What will the prices be?

    150K 240K 300K 300K 300K

    Median price =300K

    So in this second example, the last 2 people become renters - priced out forever.

    Note, this doesnt happen in suburban areas where they meet demand by building more houses. Sure in areas like Arlington they can build vertically (i.e. condos), but they are generally a poor substitute).

    Granted, I dont know for sure this is what happened in Arlington, since I dont care about it in the slightest, but all you who think median income has to move in relation to median price havent realized how this isnt really applicable where you have land constraints.

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  121. Lance said...
    But in any case, because I've been a homeowner for a while


    What the heck Lance? You’re a homeowner, then you don’t have your mortgage paid off, now you’re back to a homeowner again.

    Sure you’ll mention fractional ownership or “closer to owning than not”…..but have we learned nothing from this economic charade? Debt is not wealth. Having debt does not convey ownership, if it did, they’d be fewer foreclosures.

    Rents will always follow the economy and inflate accordingly.

    And deflate accordingly. (So will home prices)

    But once you've bought, you've locked in. And even if you move down the road, you've locked in and can take that with you as equity.

    Yep locked in. But if you’re locked in, how can you “move down the road”?

    Longterm, the value of real estate always goes up.

    Come on Lance, throw in a “buynoworforeverbepricedout” while you’re at it.

    The person who up the thread mentioned that she was paying the landlord's mortgage but that the landlord was paying everything else doesn't understand that her short term "gain" is just that ... short term. Long term she'll really have been helping her landlord pay for a long term investment whose longterm benefits will pay out only to the landlord. Again, there are many good reasons to rent. Saving money over the long run isn't one of them.

    And just who is advocating renting long term? Not Noz. Not Anon. Not me. Renting until fundamentals return, and it makes economic sense to buy?........

    ReplyDelete
  122. Sorry - I meant 5 houses - let me restate:

    F"or example - assume in 2000 there were 5 people in the county with incomes as follows:

    50K 50K 80K 100K 100K

    Median income =80K

    Assume there were 5 houses, bought by those with the top 5 incomes. Home prices are:

    150K 150K 240K 300K 300K.

    Median price =240K

    Now fast forward to 2008 suppose the population rose from 5 to 7

    50K 50K 50K 80K 100K 100K 100K

    Median income =80K

    Assume because of land constraints, the same 5 houses exist. What will the prices be?

    150K 240K 300K 300K 300K

    Median price =300K

    So again, in land constrained areas, it is very easy to have home prices rise while incomes remain stagnate. Have you ever wondered why people pay a ton of $$$ for what looks like a shack in arlington? This is why - its all that is available.

    ReplyDelete
  123. Sorry - another mistake now corrected:

    For example - assume in 2000 there were 5 people in the county with incomes as follows:

    50K 50K 80K 100K 100K

    Median income =80K

    Assume there were 5 houses, bought by those with the top 5 incomes. Home prices (at 3X income) are:

    150K 150K 240K 300K 300K.

    Median price =240K

    Now fast forward to 2008 suppose the population rose from 5 to 7

    50K 50K 50K 80K 100K 100K 100K

    Median income =80K

    Assume because of land constraints, the same 5 houses exist. If the 7 people are competing, they will go to only the top 5 incomes - meaning (if prices are 3X income):

    150K 240K 300K 300K 300K

    Median price =300K

    I think this was clear before, but I wanted to restate it just in case. Its not immediately obvious, but another reason why "incomes havent risen with prices" isnt always a good argument - especially in places like Arlington.

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  124. "I think this was clear before, but I wanted to restate it just in case. Its not immediately obvious, but another reason why "incomes havent risen with prices" isnt always a good argument - especially in places like Arlington."

    lol

    I am sorry, but I just hope this is some kind of a joke.

    First off, the population in Arlington grew only slightly between 2000 and 2005. (3.4% in case you care)

    http://www.arlingtonvirginiausa.com/statistics/_02.pdf

    Second off, the housing stock in Arlington grew significantly during that timespan due to new construction.

    http://www.arlingtonvirginiausa.com/statistics/_35.pdf

    (Note that the above chart is comparing five years of building to entire decades.)

    Third off, increased pressure on prices due to growth in population would also drive up rents, and rents in Arlington haven't done anything similar to what purchase prices have.


    In short, it is a bubble, and if you are honestly going to try to argue otherwise you got to this blog about 4 years too late.

    There is no longer any real debate about whether or not what we saw was a bubble, now the only question is exactly what form the collapse will take.

    We have seen total freefall in some portions of the region, and have seen a gentler but still rapid drop in values in places like Arlington.

    Exactly where things will bottom out is worth some discussion, but don't waste our time trying to argue that it wasn't a bubble with half baked analogies.

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  125. Lance,

    Renting to save money is definitely a long term strategy.

    You just don't seem to get it. The only thing you seem to be looking at are profits on homeownership based on purchase and selling price. When you factor in property taxes, maintenance, higher bills for heating/cooling, repair, higher mortgage, etc....as I have said, it's been very well established that buying a home is a liability and overall appreciation is not a good reason to buy a home at all.

    One other thing you don't understand is not everyone wants to be a landlord. Not everyone wants to waste the next 30 years of their life waiting to benefit from their investments.

    Live for today and a little beyond for a change..you may actually like it.

    ReplyDelete
  126. ANON January 28, 2009 11:59 AM

    NONSENSE....if that were the case, prices in LA would not be going down because there really isn't much area to build anymore. So no..prices don't go up just because there is no more land...that's rubbish.

    ReplyDelete
  127. In a normal market, where it costs roughly the same if not slightly less to buy than rent, buying absolutely makes sense over the long term, provided you plan to stay put for a while.

    The problem is when dimwits like lance misunderstand things to mean "It doesn't matter how much you pay! Buy buy buy! Real estate always goes up and when it does you will be glad to have made all that free money!"

    If you buy into an overpriced market that then drops a good chunk before stagnating for a long while, well it doesn't matter how long the timeline is, a renter that saved their money stays ahead indefinitely.

    ReplyDelete
  128. "Noz said...

    NONSENSE....if that were the case, prices in LA would not be going down because there really isn't much area to build anymore. So no..prices don't go up just because there is no more land...that's rubbish."

    Noz prices are going down because there is/was a bubble - that bubble was everywhere.

    However thats beside the point. Seriously, do this mental exercise with me.

    Incomes in an area

    50K 70K 80K 90K 100K

    Median = 80K

    5 homes in an area all at 3X income - home prices will be

    150K 210K 240K 270K 300K

    Median = 240K

    In this case, there are homes for everyone, supply and demand are in balance, and no one is priced out.

    Ok now assume the population doubles, but incomes remain spread out thru the income spectrum, but same number of houses as before.

    Incomes

    50K 50K 70K 70K 80K 80K 90K 90K 100K 100K

    Median income 80K

    Again, assume only the same 5 houses exist. If all 10 people are competing for those houses, (i.e. you have an imbalance of supply and demand) those 5 with the highest incomes will win out. Thus in this case, home prices (again at 3X income) will be:

    240K 270K 270K 300K 300K

    median home price = 270K

    Again, im not one of those Arlington pumpers, but this whole incomes must rise with prices thing is misplaced. Its a basic supply and demand issue. You have a shortage, and the only way to combat a shortage is for prices to rise to a new market clearing price.

    ReplyDelete
  129. Also, your comment

    "if that were the case, prices in LA would not be going down because there really isn't much area to build anymore. So no..prices don't go up just because there is no more land...that's rubbish."

    Again, think of it in the context of The bubble where everyone had more money. So instead assume everyone could purchase at 4X income or 5X income or 10X income.

    In each of these cases, once you take that 4X artificial constraint away, and drop it back to 3X, prices will fall, no question. However, that doesnt solve the basic economics problem, a limited supply in the face of excess demand. Econ 101.

    ReplyDelete
  130. "Anon said.

    Second off, the housing stock in Arlington grew significantly during that timespan due to new construction."

    How many of those were teardowns versus new construction (i.e. vacant land)? My guess is its more of the former, meaning you arent adding anything to the purchasing pool? Second, how many of these were intended for rental, meaning they too are not part of the limited purchasing pool?

    "Third off, increased pressure on prices due to growth in population would also drive up rents, and rents in Arlington haven't done anything similar to what purchase prices have."

    Rents also do not have to pan out completely in urban areas. The difference is income approach (i.e. rents) versus highest & best use approach.

    For example, assume you have a 2 story rambler in the heart of a business district. The place would rent out for 2K a month. Meaning under an "income approach" it would be worth 360K (or whatever your multiplier is). In this case, you assume the house should be worth 360K.

    However, suppose because of where it is located a developer, wanting to tear it down and put up a 30 story condo building he can lease for say 4.6 Million, as long as he can get his land costs in at 700K or less.

    So on the one hand, you have a buyer looking to live there, offering 360K. On the other, you have a developer willing to offer you >700K. Whats it worth?

    In this case, the only way the buyer looking to live there will win out is if he offers $700,001, pricing out the developer who looks elsewhere.

    At the end of the day, it all comes down to suppy and demand. Honestly, I think all those yahoo calculators on prive versus rent or realtor dogma on incomes in line with prices have really poisoned the buying population out there. I really think economics, especially economics dealing with scarsity should be a required course for any home buyer.

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  131. This comment has been removed by the author.

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  132. "Live for today and a little beyond for a change..you may actually like it."

    Ever read Darwin? ;)

    ReplyDelete
  133. "If you buy into an overpriced market that then drops a good chunk before stagnating for a long while, well it doesn't matter how long the timeline is, a renter that saved their money stays ahead indefinitely."

    Exactly. I think this statement sums it up really well.

    ReplyDelete
  134. But the more important question is why would you even consider buying a home that is going to drop a good chunk before stagnating for a long while. One has choices. You don't have to buy badly.

    ReplyDelete
  135. "One has choices. You don't have to buy badly."

    Exactly. That's why many of us have chosen not to buy in DC for the past few years.

    ReplyDelete
  136. And that's a cop out.

    If you're in a position to buy (i.e., planning to stay 5 yrs, have something to put down, etc. etc.), there are places out there you can buy that will fit your budget and fit your needs. It's just a matter of doing your homework ... and leg work. If you are holding out thinking "I'll get something I otherwise couldn't afford if I wait", then I ask you to consider two things: (1) Do you really want to be buying something that is dropping in value? If it's dropped now, what's to guarantee it won't continue dropping long into the future. A loser property is a loser property. Period. (2) If the economy is tanking and people are being forced to sell for cheaper because assets are in free fall, how do you know your down payment assets aren't going to be in the same free fall?

    Lastly, a word of advice, don't evaluate a home purchase like you would an investment. Despite what the Realtors tell you, a home is not a financial investment. It's an expense ... and your aim should be to minimize that expense. Buy smart and that is possible under any market conditions. And once you've accomplished that, then you can begin to reap the non-tangible, non-monetary rewards of owning your own home. As one poster on here used to say "Not only can you paint the walls whatever color you want without having to ask permission first, you don't have to worry about the landlord walking in you while you're sitting on the shitter."

    ReplyDelete
  137. ANON:

    In a normal market, where it costs roughly the same if not slightly less to buy than rent, buying absolutely makes sense over the long term, provided you plan to stay put for a while.

    I agree..but you'd have to have gotten a REALLY killer deal to have that to be true. Plus all the initial costs, downpayment, etc...


    The problem is when dimwits like lance misunderstand things to mean "It doesn't matter how much you pay! Buy buy buy! Real estate always goes up and when it does you will be glad to have made all that free money!"


    Indeed...these idiots have been saying this for the last....oh 7 years?


    If you buy into an overpriced market that then drops a good chunk before stagnating for a long while, well it doesn't matter how long the timeline is, a renter that saved their money stays ahead indefinitely.


    Perhaps in about 40-50 years you'd come out ahead...but anything before then, renting would be cheaper all things equal.

    ReplyDelete
  138. ANON:

    Again, im not one of those Arlington pumpers, but this whole incomes must rise with prices thing is misplaced. Its a basic supply and demand issue. You have a shortage, and the only way to combat a shortage is for prices to rise to a new market clearing price.

    Supply and demand are really not the issue. Cheap money was the issue. If money tightens, no one can buy, prices will come down. Look at San Diego. It was probably the first area in the US to crash. It crashed hard WHILE people where coming into San Diego...hordes of them..with jobs galore.

    Check out Rich Toscano's blog regarding SD and see that he proves that with impeccable data. Don't buy into that supply/demand nonsense that realtors and the likes would love.

    ReplyDelete
  139. It sounds like you're forgetting that unlike a mortgage payment, rent can and does rise over the course of one's occupancy of a property.

    ReplyDelete
  140. LANCE:

    And that's a cop out.

    Do you understand the concept of someone MAY NOT want to buy?

    I'll take it one step further. Someone MAY NOT want to buy in a rapidly DECLINING market. Why would any sane person? What possible sado-masochistic reason would anyone have to waste their time looking for a place at a time when prices are falling and will continue to fall?


    And why are you regurgitating things that I and others have already TOLD YOU to make you understand?

    Not only can you paint the walls whatever color you want without having to ask permission first, you don't have to worry about the landlord walking in you while you're sitting on the shitter."

    Uhhh...you won't have to worry about those things if, AS YOU SAY, rent smart and do your research before moving in and renting.

    Honestly Lance, it's not that hard....really.

    ReplyDelete
  141. Noz,

    If someone doesn't want to buy ... then why are they looking in the first place? The whole price issue/bubble becomes a non-issue for them. No, we're talking about people who do want to buy but either can't (really aren't qualified to buy anything) or are afraid to make a commitment now for fear that they'll miss out on something better in the future. They're "40 year old virgins" ... still waiting for a better offer. And the more I listen to posters here the more I believe this to be so. The comments are so nasty that only someone with issues would react like that. People confidant in their own decision making abilities who have the wherewithal to follow through on their decisions, don't react with the childish words I keep reading on here. I was hoping someone that people had grown up a bit. But I guess that was asking too much from people who are either bitter that they can't buy anything ... or afraid to commit to buy.

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  142. Lance said...
    No, we're talking about people who do want to buy but either can't (really aren't qualified to buy anything) or are afraid to make a commitment now for fear that they'll miss out on something better in the future.


    No we’re not. You are talking about those two circumstances and have categorized most, if not all people who do not buy in that light. There are other reasons Lance (making financial sense is a big one to us BHs).

    ReplyDelete
  143. Anonymous said...
    Again, im not one of those Arlington pumpers, but this whole incomes must rise with prices thing is misplaced.


    If incomes do not rise to match prices, at some point does affordability become an issue? By your reasoning, it will not.

    This is why we had a housing bubble. An attempt was made to replace income with toxic mortgages. The attempt failed. This leads us back to affordability (income), a historic fundamental marker.

    Was the supply/demand relationship associated more with the number of homes on the market, or rather the supply of money available for the market? Take away this supply of money, and we revert again to income.

    ReplyDelete
  144. "Again, im not one of those Arlington pumpers, but this whole incomes must rise with prices thing is misplaced. Its a basic supply and demand issue. You have a shortage, and the only way to combat a shortage is for prices to rise to a new market clearing price."

    Except for the problems already pointed out with your scenario.

    The population in Arlington is grew very modestly during the bubble.

    New construction added units anyways, so there is no "shortage" anyways.

    You have been given the stats:

    It wasn't rising incomes, incomes rose only slightly.

    It wasn't rising population, population rose only slightly.

    It was a bubble, accept reality and move on.

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  145. "How many of those were teardowns versus new construction (i.e. vacant land)? My guess is its more of the former, meaning you arent adding anything to the purchasing pool? Second, how many of these were intended for rental, meaning they too are not part of the limited purchasing pool?"

    Many were teardowns or otherwise construction that didn't add to Arlington's total units, but Arlington's total units still rose a good bit.

    The new condo towers alone guarantee that. (Some of which are now going apartment because of weakness in the Arlington market, but they certainly weren't during the bubble.)

    "For example, assume you have a 2 story rambler in the heart of a business district. The place would rent out for 2K a month. Meaning under an "income approach" it would be worth 360K (or whatever your multiplier is). In this case, you assume the house should be worth 360K."

    This can happen, but it isn't common, certainly not such an extreme example.

    All of Arlington didn't suddenly become more valuable for some other use at the same time the rest of the country was experiencing what is known as a "bubble."

    Prices shot up in Arlington during the bubble because Arlington itself was experiencing the bubble.

    Again, if you want to argue about whether or not there is a bubble, buy a time machine. As of today nobody but the various trolls and "it can't happen in my neighborhood" real-estate-pumpers are still questioning the bubble.

    ReplyDelete
  146. "Perhaps in about 40-50 years you'd come out ahead...but anything before then, renting would be cheaper all things equal."

    Nope, assuming the money saved by the renter is giving some reasonable rate of return it will put the renter ahead forever.

    Housing doesn't appreciate that quickly, the thing that can make it profitable is the high leverage.

    If a prospective homeowner took idiot lance's advice and flushed a huge chunk of money down the toilet by rushing in and buying at the top of a bubble... by the time they have reached "even" again(which could easily be 10+ years) the renter's savings will have been building for years.

    In such a scenario the renter will continue to pull farther and farther ahead, forever.

    ReplyDelete
  147. "No, we're talking about people who do want to buy but either can't (really aren't qualified to buy anything) or are afraid to make a commitment now for fear that they'll miss out on something better in the future."

    LMAO

    No lance, we are people who understand finance, and economics, far far better than you.

    We can look at an obvious bubble and make the smart decision not to throw money away using leverage to buy an incredibly expensive declining asset.

    Bubble's aren't common, a bubble like what we experienced is exceptionally rare, perhaps even unique, but nonetheless it formed and anyone with a clue could tell that buying would be a major financial mistake.


    Hey, you forgot to explain what you were thinking when you said this:

    "That's right that's right ... That tiny speck of the market that was only buying the cheapest of places to begin with is going to be soooo missed ... You bubbleheads will grasp at any straw, won't you. Your theory is over. It was debunked the minute the big investment firms revealed how very little the default of a few subprimes was going to affect them. The entire BH theory was predicated on the assumption that defaulting mortgages would cause a surge in supply and a corresponding plunge in prices. Well, the catalyst for that surge has been debunked and your theory exposes as fraudulent. Admit you were wrong. It's over. It's just a regular business cycle. And we've indisputably aready bottomed out. Where does that leave you with your far fetched theory?" -lance 22 March 2007

    oops!

    ...and yet you want to offer us advice?

    You won't even explain what kind of crack you were on when you said the various stupid things quoted above...

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  148. LANCE:

    Someone may not want to buy WHEN YOU want to buy...do you understand that fundamental difference? But looking is part of the fun....and I enjoy watching prices fall and sellers squirm.

    ReplyDelete
  149. "Noz said...

    Check out Rich Toscano's blog regarding SD and see that he proves that with impeccable data. Don't buy into that supply/demand nonsense that realtors and the likes would love."

    I like Rich. I only buy into the supply and demand "nonsense" that rich loves:

    http://voiceofsandiego.org/articles/2006/11/28/toscano/967housesupply.txt

    http://piggington.com/demand_and_must_sell_supply


    "Robert said...

    If incomes do not rise to match prices, at some point does affordability become an issue? By your reasoning, it will not."

    Affordability is ALWAYS an issue - I cannot stress this enough. In supply constrained areas, the pricing mechanism will simply follow the demand - to those that can most afford it (i.e. those that can price out the others). However, it cannot go past that point - supply and demand curves would not intersect and we would have a market failure.

    "Robert said...

    Was the supply/demand relationship associated more with the number of homes on the market, or rather the supply of money available for the market? Take away this supply of money, and we revert again to income."

    I think it was more bubble than supply/demand, but what I am pointing out is it is clearly BOTH. In areas where prices CRATERED the instant the easy money went away, we know it was 100% bubble - pure and simple. In areas where prices SOFTENED when the money went away, its debatable as to what portion was increased demand, and what was bubble. This is what the unwinding is showing us now. That said it looks likely to be somewhere between 1% to 99% bubble, not 100% bubble like in PWC.

    "Anon said

    The new condo towers alone guarantee that."

    Agreed...

    "Anon said...(Some of which are now going apartment because of weakness in the Arlington market, but they certainly weren't during the bubble.)"

    EXACTLY - they are proof positive of a bubble. Condos by their nature are "generally" an inferior good, and its no surprise they are reverting back to apts to meet the bubble buyers who couldnt buy when the buble credit went away.

    "Anon said:

    This can happen, but it isn't common, certainly not such an extreme example."

    Thanks for at least conceding that. Here however we disagree. There are examples far more extreme than this. Most of them are seen in places like hong kong, singapore, etc. but belive me, this is nothing compared to how extreme it can get (assuming the govt doesnt exercise eminent domain)...

    "Anon said...

    All of Arlington didn't suddenly become more valuable for some other use at the same time the rest of the country was experiencing what is known as a "bubble."

    Prices shot up in Arlington during the bubble because Arlington itself was experiencing the bubble.

    Again, if you want to argue about whether or not there is a bubble, buy a time machine. As of today nobody but the various trolls and "it can't happen in my neighborhood" real-estate-pumpers are still questioning the bubble."

    No offense to you anon, but this is what I hate so much about these blogs. I am posting to real world examples for all that econ 101 stuff we learned (and most of us forgot) in high school. Suggest any possibility other than pure 100% bubbly goodness, and you get a response about "you think its different here" or "your neighborhood isnt special". Why does it always come to that?

    I come here sometimes because I see some staid reasoning skills - and I cant help but offer alternate possibilities. Feel free to question my rationales as did Robert with his pogniant question/example. We all get snarky from time to time, but please dont ascribe fictitious notions to my intent. Thanks

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  150. ANON:

    Did you even read Rich's posts? Obviously not...he mentions nothing about traditional supply/demand.

    And he's already proven in other posts on his blog that supply/demand and also the traditional notion of influx of people has been nicely disproven for SD.

    Next time, read what you post.

    Maybe you should have read this before looking a little out of place:

    http://piggington.com/bubble

    Enjoy!

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  151. "In areas where prices SOFTENED when the money went away, its debatable as to what portion was increased demand, and what was bubble."

    The so-called "immune" areas have far more than softened, and they aren't done yet.

    I guess that is one of the things that irritates me the most about discussing this topic, people act like just because a certain area hasn't yet fallen as much as expected, that it won't. Maybe you aren't doing this, but I have seen it more times than I can count.

    Back when the bubble was first starting to burst around the edges of the city we had people saying: "oh those areas don't count, they are SOOO far out!"

    ...but things moved in, and we started seeing pries drop in areas that had long been considered part of the DC area. At that point we were informed that those areas are still "outside the beltway" and thus didn't count.

    ...then things began to fall inside the beltway...

    etc etc

    Every step of the way through this process we have had people saying some variation of "oh, well... obviously areas closer in are immune," only to find that they of course aren't.

    This is a process that will still be unfolding several years from now, without a doubt. If you look at any previous serious bust you are talking about 6-8 years at a minimum before you have truly bottomed out. We are maybe 3 years into this one.

    Obviously not all areas will fall in lockstep, but that was never expected anyways.

    "Thanks for at least conceding that. Here however we disagree. There are examples far more extreme than this. Most of them are seen in places like hong kong, singapore, etc. but belive me, this is nothing compared to how extreme it can get (assuming the govt doesnt exercise eminent domain)..."

    Of course it CAN be more extreme, but there is zero evidence to suggest such a thing has happened.

    I don't see any reason to doubt some portion of the value gained during the bubble was real, certainly the rebuilt and newly built houses added some value for instance, but the large majority of the increase in price was due to the same thing it was everywhere else the bubble was seen.

    "No offense to you anon, but this is what I hate so much about these blogs. I am posting to real world examples for all that econ 101 stuff we learned (and most of us forgot) in high school. Suggest any possibility other than pure 100% bubbly goodness, and you get a response about "you think its different here" or "your neighborhood isnt special". Why does it always come to that?"

    Well, part of my response is due to your initial analogy with the incomes. Honestly, that was just terrible. Econ 101 maybe,(or really statistics) but clearly not what happened in Arlington.

    We get so many people on these blogs that seem to think they can drive housing prices up just by dreaming up scenarios to justify bubble prices, and then demand other disprove them. Once disproven, they return to the drawing board to invent a new theory that will give the result they want, or just wait a little while and repeat the old one.

    So when I see someone suggest "hey, maybe the population of Arlington just surged, resulting in a much smaller percentage of the inhabitants owning homes than was previously the case, at the exact same time everywhere else experienced a bubble..."

    The flaws were obvious, and huge... here we go again...

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  152. Anon at 1:09 I understand your concern about the pumpers. I hear alot of that, and I guess that was a huge problem back in the day. But see the flip side, what one views as "pumping" another may view as the public vetting process whereby we learn things.

    Maybe its just the academic in me, but I wonder about areas that havent fallen as much. My inital assumption was the high priced areas would fall first, followed by the mid and low - wrong. My secondary assumption was it would be a simultaneous deflation across all classes (i.e. remove the credit remove the prices) - wrong again.

    When your assumptions are so often wrong, its necessary to go back to the drawing board and see why you arent getting it. So in that regard, I am guilty as charged, I am one of the primary cookers of new theories on various blogs.

    The most common response I hear is:

    Just wait, its coming.
    or
    Your just wrong about XYZ
    or
    Your a realtard/troll/pumper

    Really?

    Theres a post hoc, ergo propter hoc quality to the bubble blog that limits its usefulness. Look at the guy above you, he posted something about "traditional supply & demand"...WTF??? I guess a good portion of the posters here have a lot of emotional blood sweat and tears invested in this so I guess I should not be surprised. Still, the thing is, this bubble has so broken the mold, this is probably the best source of information out there (scary huh)!

    If you told me this is playing out exactly the way you expected, no offense, I would say you are nuts or in denial. I dont think this has played out in the way anyone has expected (including the Shiff, Shiller & Roubinis) of the world.

    Thats why I think its important to continue to question and question and question. There are some blogs, (mostly dedicated to FL bubbles interestingly), where I am convinced that in the year 2015 there will be a bunch of posters there saying.

    Its coming,

    Your just wrong,

    Your a realtard.

    Those blogs are clearly infected with some sort of strange groupthink which I plan to write a book about later. In the mean time, I still want to figure out this bubble, and I am hopeful the more reasonable blogs, with a little prodding can do it.

    Regards - Shane

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  153. Noz - I just read your piggington link. As luck would have it, I am pretty sure, a colleague of mine wrote an article stating how Rich was UNDERESTIMATING the problem. (i.e. the correct measure is not pure population growth, but household formation growth). I will try to find that article tonight.

    Thanks for that trip down memory lane though...

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