tag:blogger.com,1999:blog-13164186.post115616975399250540..comments2024-01-27T19:26:32.604-05:00Comments on Bubble Meter: David Lereah Continues To Spout 'Soft Landing' BSDavidhttp://www.blogger.com/profile/11169148764438565562noreply@blogger.comBlogger146125tag:blogger.com,1999:blog-13164186.post-1156274740246495272006-08-22T15:25:00.000-04:002006-08-22T15:25:00.000-04:00Losing a few dollars is not the end of the world.Losing a few dollars is not the end of the world.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156271320409881732006-08-22T14:28:00.000-04:002006-08-22T14:28:00.000-04:00Detroit is where my brother is trying to sell his ...Detroit is where my brother is trying to sell his house for a year. He has successfully chased the market down, and the housing market is so much worse now.<BR/><BR/>I am not going to nag him, but he exhibits the same psychology that hhs say will protect the market "it's a great house", "I don't want to sell for less than I paid", etc.<BR/><BR/>I told him that what he wanted and what the market dictates are two different things.<BR/><BR/>I'm sad for him, but he is smart enough to see what I see, I hope for the sake of himself and his family that they cut and run, if they wait too much longer, I think they'll be writing a check rather than just losing part of their downpayment.<BR/><BR/>It is a sad state of affairs, but it is up to the individual to mitigate his losses. Those who don't suffer greater ones.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156269415560286072006-08-22T13:56:00.000-04:002006-08-22T13:56:00.000-04:00in communities like detroit. the suburban area ar...in communities like detroit. the suburban area are seeing drops of 30% from last year. these are not bubble areas, these are tough economic times areas. with ford and other auto related companies tanking: plus military cuts, sunbelt areas are not going to get the baby boomers and their money like they thought. my parents have a 5 acre spot in kentucky for 140,000 last year. 3 hours from saint louis, nashville and louisville. the money they have saved is incredible. they can travel whenever they want to and when they die, they are breaking up the lot to 5 pieces and selling the land for their children.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156267380313851222006-08-22T13:23:00.000-04:002006-08-22T13:23:00.000-04:00People saying that housing doesnt react quickly is...People saying that housing doesnt react quickly is not really true, it used to be. When people put 20% down on a home, the mentality was a lot different then people who finance the whole thing. 100% financing as dramatically changed how the sector operates. I am completely shocked at how fast the housing market is deteriorating. I really thought it would be something like the 90s where home prices stayed flat for 10 years. We had a peak in October and things basically just jumped off a cliff.<BR/>Lance, you even have to admit you are shocked about how fast things have turned in the housing market!<BR/><BR/>so back to the real question. I say a hard land is probaly a 20% drop in a year. A soft landing would be anything less then that on the same time frame. 20% over two years would be soft, somewhat.<BR/>the real bobAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156266008965805652006-08-22T13:00:00.000-04:002006-08-22T13:00:00.000-04:00"I don't understand your problem."His problem is l..."I don't understand your problem."<BR/><BR/>His problem is long lonely nights with a bottle in an apartment he'd rather not be in.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156265590670399862006-08-22T12:53:00.000-04:002006-08-22T12:53:00.000-04:00Anony (9:46am),If he's left holding the bag for 10...Anony (9:46am),<BR/><BR/>If he's left holding the bag for 10 years, but his/his spouse's salary supports it, and he's happy, what do you care?<BR/><BR/>I don't mind responsible buyers, and if they want to buy in what I consider an overpriced market, what does it matter to me?<BR/><BR/>I care about careless credit because that directly influences me. If someone is richer than I, so what? If someone borrows irresponsibly, then that is *everyone's* problem. These are different issues.<BR/><BR/>Renting isn't a viable option for some people, and if they are willing to pay (what I consider) a premium for owning in this market, and they can afford it, bully for them. I don't understand your problem.<BR/><BR/>HAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156265162363209092006-08-22T12:46:00.000-04:002006-08-22T12:46:00.000-04:00"Even the guy above who bought recently with a 30 ..."Even the guy above who bought recently with a 30 yr fixed on a good interest rate will probably come out fine, since he appears to be buying for a place to live for at least 5-10 years"<BR/><BR/>Stop being a kiss @$$ spinset.<BR/><BR/>This guy is a bagholder now. <BR/>Since this insane housing bubble was built on exotic no money down loans the reaction down is going to be that more uglier.<BR/><BR/>Some on here keep saying things will be fine just go ahead and buy.<BR/><BR/>NO It's not going to be fine for these people. They are going to regret they pruchased at such ridiculously high valuations.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156263698624524592006-08-22T12:21:00.000-04:002006-08-22T12:21:00.000-04:00My $0.02,Thanks. I think that there's enough vari...My $0.02,<BR/>Thanks. I think that there's enough variance in the marketplace - and in individuals - that everyone is probably a little right. VA_Investor is right that she made a good investment and will do well by it. Lance, as a home owner with equity in his house, will do just fine most likely (but he's building up on equity from the late 80s/early 90s - easy for him to say "hey, things are affordable"). Even the guy above who bought recently with a 30 yr fixed on a good interest rate will probably come out fine, since he appears to be buying for a place to live for at least 5-10 years.<BR/><BR/>But I think there's a lot of truth in the fact that inventory is high, that people took out risky loans and got caught up in the mania, that lots of homes thought to be valued at 600k were bought with no inspection (god forbid the home have any number of problems - termites, e.g.) and needs a lot of work. That work, sorry, does mean 10k to repair = 10k in equity. That's just not how it works.<BR/><BR/>And I remember the days when one had to live in a house *at least* 3 years in order to *just break even*. There are enough troublesome signs to suggest that at least some type of correction is in order. Good luck on it being wages - I don't see employers (and their stock holders) eager to pour profits into employee wages, especially since benefits like health care are getting increasingly expensive.<BR/><BR/>But we'll see. Everyone has somewhat unique circumstances, and yet we can still find trends in the aggregate. Overall, I imagine that folks on either side - housingheads and bubbleheads alike - will get burned by what I see not just as a housing bubble, but a credit problem.<BR/><BR/>HAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156263310611710022006-08-22T12:15:00.000-04:002006-08-22T12:15:00.000-04:00"Alot more cockiness on this blog than others. I e...<I>"Alot more cockiness on this blog than others. I expect to hang around this one for a while then pummel you when you are proven wrong.<BR/>Boooooooyaaaaaaaaa"</I><BR/><BR/>I detect emotional instability here.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156261969823512892006-08-22T11:52:00.000-04:002006-08-22T11:52:00.000-04:00Remember the concept of of buy term insurance and ...Remember the concept of of buy term insurance and invest the rest. I say, rent and invest the rest in something other than Real Estate. I would not even get into the market for at least 10 years, unless I could find a rock bottom foreclosure. Simply unwise as an investment. If bubbleheads don't get in, housingheads investments will be toast. Sorry.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156261853310475782006-08-22T11:50:00.000-04:002006-08-22T11:50:00.000-04:00Keep up the chatter Joe.You will put a foot in you...Keep up the chatter Joe.<BR/><BR/>You will put a foot in your mouth.<BR/><BR/>Alot more cockiness on this blog than others. I expect to hang around this one for a while then pummel you when you are proven wrong.<BR/>BoooooooyaaaaaaaaaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156261694872014782006-08-22T11:48:00.000-04:002006-08-22T11:48:00.000-04:00In other words, Lance has it right.In other words, Lance has it right.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156261640375933352006-08-22T11:47:00.000-04:002006-08-22T11:47:00.000-04:00I love the talk about IO loans and risk. Althou...I love the talk about IO loans and risk. Although IO loans are bad for people with tendencies for poor CC debt management...they are not riskier loans. I also have a 30yr fixed rate IO loan..not an ARM. So, I know exactly how much my payment will go up after 10 years. If I want to pay principal each month because my expected returns on the stock market (for example) decline....I can do so without penalty. The IO portion is only a minimum payment. <BR/><BR/>The IO is great for a more risk averse or risk-neutral person like myself because if I or my wife loose our job or have unexpected healthcare expenses...the minimum payment on our mortgage is significantly lower than it would be in a traditional loan.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156259805183678702006-08-22T11:16:00.000-04:002006-08-22T11:16:00.000-04:00"have to rent out properties in leau of selling th..."have to rent out properties in leau of selling them for those vanishing paper profits."<BR/><BR/>Yes to everything you said. I would just add: if the owner can swing it financially, this often turns out to be a very profitable arrangement over the long term.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156258541413961422006-08-22T10:55:00.000-04:002006-08-22T10:55:00.000-04:00"Just go back look at a chart of CSCO."You must be..."Just go back look at a chart of CSCO."<BR/><BR/>You must be a newcomer to this blog. Equities markets do not behave in the same fashion as housing markets. They are not the same animal.<BR/><BR/>And to the BOOYAAAA guy using all caps: You come across as being hysterical. <BR/><BR/>another anon., but you can call me "joe" if it helps you.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156258001333265072006-08-22T10:46:00.000-04:002006-08-22T10:46:00.000-04:00H,I enjoy reading your posts. Well reasoned and le...H,<BR/><BR/>I enjoy reading your posts. Well reasoned and level headed.<BR/><BR/>Thanks.<BR/>My $0.02.MyTwoCentshttps://www.blogger.com/profile/10642606797401998999noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156257094288830642006-08-22T10:31:00.000-04:002006-08-22T10:31:00.000-04:00Of the 30% who rent; my guess is 10% can afford to...<I>Of the 30% who rent; my guess is 10% can afford to buy, but never will due to risk-aversion. Seeing Housing prices go into a "freefall" will only confirm their fears and make them life-time renters.<BR/>Va_Investor, August 22, 2006 6:12 AM</I><BR/><BR/>Alas, VA_Investor, and then there is the portion of the population - people say in their late twenties or early thirties - who believe in fundamentals, and so while everyone else ran around buying everything on several different lines of credit, others slogged through trying to save up a down payment. And the boom happened.<BR/><BR/>I think you'd be surprised that there are several of us out there. We'd like to own a home, but when the math ain't there, it ain't there. DC is an ok place to live, but it's not *that* nice (especially when I can rent a nice SFH for a fraction of the cost of owning). As I've said before, risk has a wide margin. Buying right now is on the far side of that margin. I'd say that those who avoided risk at the early stages of the market run-up certainly would do themselves ill service to allow any sense of regret to push them into far riskier territory.<BR/><BR/>What I want to know is: when the market boomed and buyers flocked to each house, resulting in sky-rocketing, abnormal (historically speaking) prices, no one blinked an eye. Of course, buyers competing equals rising prices. So why, when *sellers* are competing, are people so adverse to believing that an *equally substantial* shift in prices can occur in the other direction?<BR/><BR/>And, by way of general comment, this bravado on either side of the housing/bubble fence is really getting tiresome. Let's be clear: no one can simply evict a renter for any reason (Lance, I believe that one was yours); and just because someone used an unconvetional loan doesn't mean they will be foreclosed upon. As for the name-calling and doomsaying (for either side), honestly.<BR/><BR/>H (who will soon choose a blogger identity, so as to un-hypocritically add to the call that only registered users be allowed to post).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156256226046339552006-08-22T10:17:00.000-04:002006-08-22T10:17:00.000-04:00My experience has shown that "most" people are bet...My experience has shown that "most" people are better off paying off their loan. Why?<BR/><BR/>Cuz they lose the money speculating somewhere else....especially when there is leverage involved.<BR/><BR/>There seems to be a few cranky RE tycoons on this board. Ya know the ones that bought at the top and are getting worried, but are now trying to rationalize it.<BR/><BR/>Ya don't make big wealth buying when every other fool is buying. Common sense.<BR/><BR/>Real estate has been exploited by every breathing fool the last several years. It's time to back away and watch the fallout.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156255818442528172006-08-22T10:10:00.000-04:002006-08-22T10:10:00.000-04:00anon said:"Can you believe this? Paying off your h...anon said:<BR/>"Can you believe this? Paying off your home is old fashioned?"<BR/><BR/>that's absolutely correct. it boils down to leverage if you are "in it for the money" as bubbleheads are. that is why put in $200,000 (and pay cash for a $200,000 house to "earn" $50,000 (or 25% "profit") when you sell your house for $250,000, when you could instead just put in $10,000 and have made a 400% profit on your $10,000 and invested the other $190,000 somewhere else. From a homeowner point of view looking for a home to live in, it makes sense to minimize your long term costs. And if you believe there will be inflation in the future (which there always is), then long term it is better to put less down and let inflation lower the real dollars you are paying. This has ALWAYS been the way to do it by the financially savy. This is especially so since the larger the mortgage interest payment, the more you benefit from the tax laws. Now, there can be times however when you are better off paying the whole in cash ... Such as if you are retired and have no real need for more tax savings. The bottom line is that there are no "one size fits all solution". What is right for one person is wrong for another. For example, despite all the bashing about neg amort loans, these are obviously the right loan for some people, or they wouldn't exist. And assuming that they were used by everyone out there just to afford that which they couldnt otherwise afford is called "projection." Projection is when a bubblehead can't afford a property they want without doing a neg amortization loan and assumes everyone who did a neg amortization loan ALSO couldn't otherwise afford a property.Lancehttps://www.blogger.com/profile/12216089306021385355noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156253528278511762006-08-22T09:32:00.000-04:002006-08-22T09:32:00.000-04:00I've been buying since the early 80's as well.Then...I've been buying since the early 80's as well.<BR/><BR/>Then you should have the experience to know that this market is irrational.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156253266551495482006-08-22T09:27:00.000-04:002006-08-22T09:27:00.000-04:00anon 6:21,Please use a name of some sort. Too man...anon 6:21,<BR/><BR/>Please use a name of some sort. Too many anon's here to follow their thoughts and arguments.<BR/><BR/>I've been buying since the early 80's as well. Try comparing the negatives from then to today's (as a percentage, of course - not real dollars).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156252900029862742006-08-22T09:21:00.000-04:002006-08-22T09:21:00.000-04:00Yes You can protect your assets by not buying when...Yes You can protect your assets by not buying when THERE is irrational buying like we have seen the last 3-4 years.<BR/><BR/>When a market is irrational you walk away and let the fools play. They have finished playing and the music has stopped. Oh no. Now they are starting to realize the predicament they are in.<BR/><BR/>THIS IS THE MOST OVERVALUED HOUSING MARKET I HAVE EVER SEEN...EVER...EVER..EVER...BEEN BUYING SINCE EARLY 1980'S.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156252702204330382006-08-22T09:18:00.000-04:002006-08-22T09:18:00.000-04:00RE: 11:41In weighing the validity of the arguments...RE: 11:41<BR/><BR/>In weighing the validity of the arguments made, the readers here would do well to actually read the full sources.<BR/><BR/>With reference to Gallin's work, if you are not up on yur regression analysis, you may wish to focus on the article's conclusion, which the quoted statement does not accurately reflect. It should also be noted that Gallin's later research, which is easily located on the web, is far less sanguine about housing price prospects than the poster would have you believe. <BR/><BR/>And really, "sillies" and "bitter renters"? Embarrassing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156252647915379752006-08-22T09:17:00.000-04:002006-08-22T09:17:00.000-04:00Va InvestorDO NOT TWIST WHAT i SAID.EXACTNESS IS ...Va Investor<BR/><BR/>DO NOT TWIST WHAT i SAID.<BR/><BR/>EXACTNESS IS IMPOSSIBLE TO ACHIEVE BUT RELATIVE VALUE IS MOST DOABLE.<BR/><BR/>RIGHT NOW ANY MEASURE YOU WANT TO LOOK AT HOUSE PRICES ARE AT HISTORIC OVERVALUED TERRITORY.ANYONE BUYING NOW IS A BAGHOLDER WHO WILL SEE THEIR EQUITY JUST GO POOOOOFFFFFF IN THE NEXT 4-10 YEARS OR 15 YEARS.WHO KNOWS BUT THIS ONE IS GOING TO BE A BAD ONE.<BR/><BR/>NOONE CAN PREDICT WHEN THE LAST REMAINING BREATHING FOOL BUYS. (THERE ARE VERY FEW LEFT NOW)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1156252424254447102006-08-22T09:13:00.000-04:002006-08-22T09:13:00.000-04:00"The loan officer told me that option ARMs are the..."The loan officer told me that option ARMs are the best loans, because they don't require you to pay principal. These days, when houses appreciate so fast, you earn your equity through appreciation, not by paying down principal. <BR/><BR/>And when the ARM resets? Get another ARM. By the time you do, your LTV is lower and you'll qualify for a lower rate. Just be sure to not spend your home equity. She said you should not borrow against your house, unless you are doing a home improvement, and even then you should be very frugal so as not to spend more than you'll get back when you sell.<BR/><BR/>Can you believe this? Paying off your home is old fashioned?" <BR/><BR/>From the FBer blog<BR/><BR/>No this is the type of BS rhetoric that all parasites will say to protect their turf when things begin to slow from peak levels.Anonymousnoreply@blogger.com